Product Warranty

9 Months Ended

Sep. 30, 2012

Product Warranty

I. Product Warranty

Teradyne generally provides a one-year warranty on its products commencing upon installation or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities.

	For the Three Months Ended						For the Nine Months Ended
	September 30,          2012			October 2, 2011			September 30,          2012			October 2, 2011
	(in thousands)
Balance at beginning of period	$	11,047		$	9,262		$	8,154		$	9,886
Accruals for warranties issued during the period		4,118			3,502			13,543			11,056
Adjustments related to pre-existing warranties		1,226			(491	)		1,369			(2,563	)
Settlements made during the period		(3,813	)		(3,220	)		(10,488	)		(9,326	)
Balance at end of period	$	12,578		$	9,053		$	12,578		$	9,053

When Teradyne receives revenue for extended warranties beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in deferred revenue and customer advances and long-term other accrued liabilities.

	For the Three Months Ended						For the Nine Months Ended
	September 30,          2012			October 2, 2011			September 30,          2012			October 2, 2011
	(in thousands)
Balance at beginning of period	$	20,754		$	10,308		$	12,742		$	8,972
Deferral of new extended warranty revenue		8,733			1,324			21,015			5,123
Recognition of extended warranty deferred revenue		(2,007	)		(2,194	)		(6,277	)		(4,657	)
Balance at end of period	$	27,480		$	9,438		$	27,480		$	9,438