XML 88 R15.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
WARRANTY OBLIGATIONS
 12 Months Ended
Dec. 31, 2019
Product Warranties Disclosures [Abstract]  
WARRANTY OBLIGATIONS
WARRANTY OBLIGATIONS
The Company’s warranty activities were as follows:
 
Years Ended December 31,
 
2019
 
2018
 
2017
 
(In thousands)
Warranty obligations, beginning of period
$
31,294

 
$
29,816

 
$
31,414

Accruals for warranties issued during period
5,244

 
3,040

 
3,797

Changes in estimates
8,591

 
6,515

 
(732
)
Settlements
(10,881
)
 
(8,579
)
 
(7,037
)
Increase due to accretion expense
2,326

 
1,989

 
2,053

Other
524

 
(1,487
)
 
321

Warranty obligations, end of period
37,098

 
31,294

 
29,816

Less: current portion
(10,078
)
 
(8,083
)
 
(7,427
)
Noncurrent
$
27,020

 
$
23,211

 
$
22,389


The Company began selling its IQ series microinverters in 2017, sales of which totaled approximately 9.6 million units through 2019, and sold approximately 15.7 million units of prior generation microinverters from 2008 through 2019. IQ 7 sales represented 98% of the Company’s total microinverter sales for the year ended December 31, 2019.
Changes in Estimates
On a quarterly basis, the Company uses the best and most complete underlying information available, following a consistent, systematic and rational methodology to determine its warranty obligations. The Company considers all available evidence to assess the reasonableness of all key assumptions underlying its estimated warranty obligations for each generation of microinverter. The changes in estimates discussed below resulted from consideration of new or additional information becoming available and subsequent developments. Changes in estimates included in the table above were comprised of the following:
2019
In 2019, the Company recorded a $5.5 million increase to warranty expense related to cost increases primarily driven by increased U.S. tariffs announced during 2019 for its products manufactured in China. The Company also recorded additional warranty expense of $3.1 million based on continuing analysis of field performance data and diagnostic root-cause failure analysis primarily relating to its second and third generation products, partially offset by improved failure rates for its IQ7 series.
2018
In 2018, the Company recorded a $0.9 million increase to warranty expense related to cost increases primarily for backwards compatibility cables, supply constrained inventory components as well as tariffs. The Company also recorded additional warranty expense of $3.3 million based on continuing analysis of field performance data and diagnostic root-cause failure analysis primarily relating to its second and third generation products. In addition, the Company recorded an increase of $2.1 million related to increased estimated claim rates and an increase to warranty expense of $0.2 million for labor reimbursement costs expected to be paid to third party installers performing replacement services. These increases were partially offset by a $1.5 million reduction to warranty expense, presented as “Other” in the table above, related to changes in the discount rates for fair value accounting.
2017
In 2017, primarily in the fourth quarter, the Company recorded the impact of product-cost reduction initiatives for its sixth generation microinverters, which are backwards compatible with previous microinverter generations and will be used to fulfill future warranty obligations for all microinverter generations in the field. This resulted in a $2.2 million decrease to warranty expense related to estimated future replacement costs. The Company also recorded, primarily in the third quarter, a decrease to warranty expense of $1.9 million for labor reimbursement costs expected to be paid to third party installers performing replacement services for its second‑generation product. In addition, the Company recorded additional warranty expense of $3.9 million based on continuing analysis of field performance data and diagnostic root-cause failure analysis primarily relating to its second‑generation product.