Guarantees And Indemnification Obligations

3 Months Ended

Apr. 02, 2017

Guarantees And Indemnification Obligations [Abstract]

Guarantees And Indemnification Obligations

Guarantees and Indemnification Obligations

As permitted under Delaware law, we have agreements whereby we indemnify certain of our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we have directors’ and officers’ liability insurance policies that insure us with respect to certain events covered under the policies and should enable us to recover a portion of any future amounts paid under the indemnification agreements. We have no liabilities recorded from those agreements as of April 2, 2017.

We record provisions for the estimated cost of product warranties, primarily from historical information, at the time product revenue is recognized. We also record provisions with respect to any significant individual warranty issues as they arise. While we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure, and supplier warranties on parts delivered to us. Should actual product failure rates, utilization levels, material usage, service delivery costs or supplier warranties on parts differ from our estimates, revisions to the estimated warranty liability would be required.

The following table sets forth information related to our product warranty reserves for the three months ended April 2, 2017 (in thousands):

Balance beginning December 31, 2016	$	4,559
Provisions	1,898
Claims settled	(1,818		)
Currency translation adjustment	39
Balance ending April 2, 2017	$	4,678

Warranty obligations increased $0.1 million from $4.6 million as of December 31, 2016 to $4.7 million as of April 2, 2017, primarily driven by provisions recorded within our Energy segment, partially offset by claims settled.