Product Warranty

9 Months Ended

Sep. 29, 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 Nine Months Ended
	September 29,			September 30,			September 29,			September 30,
	2019			2018			2019			2018
	(in thousands)
Balance at beginning of period	$	8,133		$	7,136		$	7,909		$	8,200
Acquisition		—			—			14			41
Accruals for warranties issued during the period		3,508			2,760			10,008			9,171
Accruals related to pre-existing warranties		1,132			282			3,156			109
Settlements made during the period		(4,265	)		(2,675	)		(12,579	)		(10,018	)
Balance at end of period	$	8,508		$	7,503		$	8,508		$	7,503

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 Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
	(in thousands)
Balance at beginning of period	$	28,716		$	25,971		$	27,422		$	24,438
Deferral of new extended warranty revenue		5,666			7,232			16,962			19,072
Recognition of extended warranty deferred revenue		(4,445	)		(5,586	)		(14,447	)		(15,893	)
Balance at end of period	$	29,937		$	27,617		$	29,937		$	27,617