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Product Warranty
6 Months Ended
Jul. 05, 2015
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.

 

     For the Three Months
Ended
    For the Six Months
Ended
 
     July 5,
    2015    
    June 29,
    2014    
    July 5,
2015
    June 29,
2014
 
     (in thousands)  

Balance at beginning of period

   $ 7,423      $ 6,615      $ 8,942      $ 6,660   

Acquisition

     372        —          372        —     

Accruals for warranties issued during the period

     3,926        5,399        6,287        8,257   

Adjustments related to pre-existing warranties

     (797     (302     (1,828     (442

Settlements made during the period

     (2,696     (2,639     (5,545     (5,402
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 8,228      $ 9,073      $ 8,228      $ 9,073   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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.

 

     For the Three Months
Ended
     For the Six Months
Ended
 
     July 5,
2015
     June 29,
2014
     July 5,
2015
     June 29,
2014
 
     (in thousands)  

Balance at beginning of period

   $ 40,704       $ 33,949       $ 43,300       $ 34,909   

Acquisition

     699         —           699         —     

Deferral of new extended warranty revenue

     8,172         11,960         12,376         14,321   

Recognition of extended warranty deferred revenue

     (6,276      (5,857      (13,076      (9,178
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at end of period

   $ 43,299       $ 40,052       $ 43,299       $ 40,052