Product Warranty |
I. Product Warranty
Teradyne generally provides a one-year warranty on its products,
commencing upon installation, acceptance 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 warranty
balance below is included in other accrued liabilities on the
balance sheet.
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For the Three Months
Ended |
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For the Six Months
Ended |
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July 5,
2015 |
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June 29,
2014 |
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July 5,
2015 |
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June 29,
2014 |
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(in
thousands) |
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Balance at beginning of period
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$ |
7,423 |
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$ |
6,615 |
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$ |
8,942 |
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$ |
6,660 |
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Acquisition
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372 |
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— |
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372 |
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— |
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Accruals for warranties issued during the period
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3,926 |
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5,399 |
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6,287 |
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8,257 |
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Adjustments related to pre-existing warranties
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(797 |
) |
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(302 |
) |
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(1,828 |
) |
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(442 |
) |
Settlements made during the period
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(2,696 |
) |
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(2,639 |
) |
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(5,545 |
) |
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(5,402 |
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Balance at end of period
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$ |
8,228 |
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$ |
9,073 |
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$ |
8,228 |
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$ |
9,073 |
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When Teradyne receives revenue for extended warranty beyond one
year, it is deferred and recognized on a straight-line basis over
the contract period. Related costs are expensed as incurred. The
extended warranty balance below is included in short and long-term
deferred revenue and customer advances on the balance sheet.
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For the Three Months
Ended |
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For the Six Months
Ended |
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July 5,
2015 |
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June 29,
2014 |
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July 5,
2015 |
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June 29,
2014 |
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(in
thousands) |
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Balance at beginning of period
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$ |
40,704 |
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$ |
33,949 |
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$ |
43,300 |
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$ |
34,909 |
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Acquisition
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699 |
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— |
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699 |
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— |
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Deferral of new extended warranty revenue
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8,172 |
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11,960 |
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12,376 |
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14,321 |
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Recognition of extended warranty deferred revenue
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(6,276 |
) |
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(5,857 |
) |
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(13,076 |
) |
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(9,178 |
) |
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Balance at end of period
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$ |
43,299 |
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$ |
40,052 |
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$ |
43,299 |
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$ |
40,052 |
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