Intevac provides for the estimated cost of warranty when revenue is recognized. Intevac’s warranty is subject to contract terms and, for its HDD manufacturing, DCP manufacturing, solar cell manufacturing and advanced semiconductor packaging manufacturing systems, the warranty typically ranges between 12 and 24 months from customer acceptance. During this warranty period any defective

non-consumable

parts are replaced and installed at no charge to the customer. Intevac uses estimated repair or replacement costs along with its historical warranty experience to determine its warranty obligation. The provision for the estimated future costs of warranty is based upon historical cost and product performance experience. Intevac exercises judgment in determining the underlying estimates.

On the condensed consolidated balance sheets, the short-term portion of the warranty provision is included in other accrued liabilities, while the long-term portion is included in other long-term liabilities. The expense associated with product warranties issued or adjusted is included in cost of net revenues on the condensed consolidated statements of operations.

The following table displays the activity in the warranty provision account for the three and six months ended July 3, 2021 and June 27, 2020:


	Three Months Ended						Six Months Ended
	July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020
	(In thousands)
Opening balance	$	590		$	725		$	480		$	1,022
Expenditures incurred under warranties		(217	)		(189	)		(415	)		(308	)
Accruals for product warranties issued during the reporting period		198			135			473			159
Adjustments to previously existing warranty accruals		1			(9	)		34			(211	)

Closing balance	$	572		$	662		$	572		$	662

The following table displays the balance sheet classification of the warranty provision account at July 3, 2021 and at January 2, 2021.


	July 3, 2021		January 2, 2021
	(In thousands)
Other accrued liabilities	$	527	$	405
Other long-term liabilities		45		75

Total warranty provision	$	572	$	480