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Product Warranty

6 Months Ended

Jul. 02, 2023

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 balance below is included in other accrued liabilities.


	For the Three Months Ended						For the Six Months Ended
	July 2,			July 3,			July 2,			July 3,
	2023			2022			2023			2022

	(in thousands)
Balance at beginning of period	$	12,901		$	20,105		$	14,181		$	24,577
Accruals for warranties issued during the period		3,261			6,429			7,378			10,530
Accruals related to pre-existing warranties		(352	)		(1,611	)		(757	)		(4,370	)
Settlements made during the period		(3,267	)		(8,887	)		(8,259	)		(14,701	)

Balance at end of period	$	12,543		$	16,036		$	12,543		$	16,036

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 Six Months Ended
	July 2,			July 3,			July 2,			July 3,
	2023			2022			2023			2022

	(in thousands)
Balance at beginning of period	$	49,343		$	65,726		$	56,180		$	64,168
Deferral of new extended warranty revenue		4,467			9,788			8,881			21,563
Recognition of extended warranty deferred revenue		(9,388	)		(9,723	)		(20,639	)		(19,940	)

Balance at end of period	$	44,422		$	65,791		$	44,422		$	65,791