Product Warranty

9 Months Ended

Sep. 27, 2020

K. 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 balance below is included in other accrued liabilities.


	For the Three Months Ended						For the Nine Months Ended
	September 27,			September 29,			September 27,			September 29,
	2020			2019			2020			2019
	(in thousands)
Balance at beginning of period	$	13,016		$	8,133		$	8,996		$	7,909
Acquisition		—			—			—			14
Accruals for warranties issued during the period		8,255			3,508			19,522			10,008
Accruals related to pre-existing warranties		158			1,132			1,569			3,156
Settlements made during the period		(6,272	)		(4,265	)		(14,930	)		(12,579	)

Balance at end of period	$	15,157		$	8,508		$	15,157		$	8,508

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.


	For the Three Months Ended						For the Nine Months Ended
	September 27,			September 29,			September 27,			September 29,
	2020			2019			2020			2019
	(in thousands)
Balance at beginning of period	$	40,178		$	28,716		$	30,677		$	27,422
Deferral of new extended warranty revenue		13,674			5,666			32,724			16,962
Recognition of extended warranty deferred revenue		(5,149	)		(4,445	)		(14,698	)		(14,447	)

Balance at end of period	$	48,703		$	29,937		$	48,703		$	29,937