I. Product Warranty

Teradyne generally provides a one-year warranty on its products, commencing upon installation, acceptance, delivery 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
	April 3, 2016			April 5, 2015
	(in thousands)
Balance at beginning of period	$	6,925		$	8,942
Accruals for warranties issued during the period		3,490			2,361
Adjustments related to pre-existing warranties		243			(1,031	)
Settlements made during the period		(3,162	)		(2,849	)

Balance at end of period	$	7,496		$	7,423

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
	April 3, 2016			April 5, 2015
	(in thousands)
Balance at beginning of period	$	46,499		$	43,300
Deferral of new extended warranty revenue		6,827			4,204
Recognition of extended warranty deferred revenue		(7,211	)		(6,800	)

Balance at end of period	$	46,115		$	40,704