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Warranty
 9 Months Ended
Oct. 01, 2022
Guarantees and Product Warranties [Abstract]  
Warranty

NOTE 3. WARRANTY

Most of our manufactured products are sold with warranties. Warranty periods, which vary by product components, generally range from 1 to 10 years; however, the warranty period for a limited number of specifically identified components in certain applications is a lifetime. The majority of the products sold have warranties on components which range from 1 to 3 years. The amount charged to expense for warranties is based on management’s assessment of the cost per service call and the number of service calls expected to be incurred to satisfy warranty obligations on the current net sales.

During the three months ended October 1, 2022, we recorded warranty expense at a rate of approximately 1.8% of sales, which was slightly lower than the rate during the three months ended October 2, 2021 of 1.9% of sales. Our warranty expense rate in the three months ended October 1, 2022 is a result of a decrease in the use of higher-cost contract labor we had used in the first half of 2022 to respond to warranty claims due to a currently tight labor market.

During the nine months ended October 1, 2022, we recorded warranty expense at a rate of approximately 2.0% of sales, which was slightly lower than the rate during the nine months ended October 2, 2021 of 2.1% of sales. Our warranty expense rate in the nine months ended October 1, 2022 was affected by the use of higher-cost contract labor during the first quarter of 2022 to respond to warranty claims in a currently tight labor market. The rate in the nine months ended October 2, 2021 includes the effect of wind-down of certain commercial business in the first quarter of 2021, which resulted in warranty costs higher than those we would incur in the normal course of business.

The following table summarizes current period charges, adjustments to previous estimates, as well as settlements, which represent actual costs incurred during the period for the three and nine months ended October 1, 2022 and October 2, 2021. The reserve is determined through assessing our claims history. Of the accrued warranty reserve of $15.5 million at October 1, 2022, $12.5 million is classified within accrued expenses as current liabilities on the condensed consolidated balance sheet at October 1, 2022, with the remainder classified within other liabilities as non-current liabilities. Of the accrued warranty reserve of $13.5 million at January 1, 2022, $11.8 million is classified within accrued expenses as current liabilities on the condensed consolidated balance sheet at January 1, 2022, with the remainder classified within other liabilities as non-current liabilities.

 

 

 

Beginning

 

 

Acquisition-

 

 

Charged

 

 

 

 

 

 

 

 

End of

 

Accrued Warranty

 

of Period

 

 

Related

 

 

to Expense

 

 

Adjustments

 

 

Settlements

 

 

Period

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended October 1, 2022

 

$

16,151

 

 

$

(2,537

)

 

$

6,880

 

 

$

750

 

 

$

(5,763

)

 

$

15,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended October 2, 2021

 

$

9,459

 

 

$

347

 

 

$

5,706

 

 

$

(531

)

 

$

(5,505

)

 

$

9,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended October 1, 2022

 

$

13,504

 

 

$

(2,537

)

 

$

22,872

 

 

$

1,263

 

 

$

(19,621

)

 

$

15,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended October 2, 2021

 

$

8,001

 

 

$

536

 

 

$

18,015

 

 

$

(890

)

 

$

(16,186

)

 

$

9,476