Product Warranty Costs

9 Months Ended

Sep. 30, 2015

Disclosure Product Warranty Liability [Abstract]

Product Warranty Costs

Product Warranty Costs

The Company provides a four-year warranty on its PDMs sold in the United States and a five-year warranty on its PDMs sold in Canada and may replace any OmniPods that do not function in accordance with product specifications. The Company estimates its warranty at the time the product is shipped based on historical experience and the estimated cost to service the claims. Cost to service the claims reflects the current product cost which has been decreasing over time. As these estimates are based on historical experience, and the Company continues to introduce new products and versions, the Company also considers the anticipated performance of the product over its warranty period in estimating warranty reserves.

A reconciliation of the changes in the Company’s product warranty liability is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance at the beginning of the period	$	3,167		$	2,505		$	2,614		$	3,090
Warranty expense(1)	1,579			596			3,300			1,139
Warranty claims settled	(992		)	(566		)	(2,160		)	(1,694		)
Balance at the end of the period	$	3,754		$	2,535		$	3,754		$	2,535

⁽¹⁾  Includes $0.5 million of warranty expense related to product that was shipped during the three months ending September 30, 2015 that did not meet the Company's quality expectations.

	As of
	September 30, 2015		December 31, 2014
Composition of balance:
Short-term	$	1,925	$	981
Long-term	1,829		1,633
	$	3,754	$	2,614