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Product Warranty
6 Months Ended
Jun. 30, 2019
Product Warranty
L. 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
   
For the Six Months
Ended
 
 
June 30,
2019
   
July 1,
2018
   
June 30,
2019
   
July 1,
2018
 
 
(in thousands)
 
Balance at beginning of period
  $
7,752
    $
7,548
    $
7,909
    $
8,200
 
Acquisition
   
—  
     
41
     
14
     
41
 
Accruals for warranties issued during the period
   
2,295
     
3,348
     
5,360
     
6,411
 
Accruals related to
pre-existing
warranties
   
694
     
(34
)    
2,024
     
(173
)
Settlements made during the period
   
(2,608
)    
(3,767
)    
(7,174
)    
(7,343
)
                                 
Balance at end of period
  $  
8,133
    $
7,136
    $
8,133
    $
7,136
 
                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 short and long-term deferred revenue and customer advances on the balance sheet.
 
                                 
 
For the Three Months
Ended
   
For the Six Months
Ended
 
 
June 30,
2019
   
July 1,
2018
   
June 30,
2019
   
July 1,
2018
 
 
(in thousands)
 
Balance at beginning of period
  $
27,242
    $
24,590
    $
27,422
    $
24,438
 
Deferral of new extended warranty revenue
   
5,476
     
6,701
     
11,296
     
11,839
 
Recognition of extended warranty deferred revenue
   
(4,002
)    
(5,320
)    
(10,002
)    
(10,306
)
                                 
Balance at end of period
  $
28,716
    $
25,971
    $
28,716
    $
25,971