Note 11 - Product Warranty Obligations

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

11. Product Warranty Obligations

The Company records a liability for standard product warranty obligations accounted for as assurance warranties at the time of sale to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s standard product warranty liability accounted for as an assurance warranty:

	Year Ended December 31,
	2019			2018			2017
Balance at beginning of period	$	41,785		$	35,422		$	31,695
Product warranty reserve assumed in acquisition		1,062			-			43
Payments		(26,096	)		(20,029	)		(18,861	)
Provision for warranty issued		32,060			26,910			21,347
Changes in estimates for pre-existing warranties		505			(518	)		1,198
Balance at end of period	$	49,316		$	41,785		$	35,422

Additionally, the Company sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration of five to ten years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended warranty contract period, following the standard warranty period, using the straight-line method. The Company believes the straight-line method is appropriate because the performance obligation is satisfied based on the passage of time. The amortization of deferred revenue is recorded to net sales in the consolidated statements of comprehensive income. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

	Year Ended December 31,
	2019			2018			2017
Balance at beginning of period	$	68,340		$	57,854		$	36,139
Deferred revenue contracts issued		24,483			21,440			29,262
Amortization of deferred revenue contracts		(14,085	)		(10,954	)		(7,547	)
Balance at end of period	$	78,738		$	68,340		$	57,854

The timing of recognition of the Company’s deferred revenue balance related to extended warranties at December 31, 2019 is as follows:

2020	$	15,535
2021		16,798
2022		14,705
2023		11,367
After 2023		20,333
Total	$	78,738

In 2017, the Company launched a post-sale extended warranty marketing program with a third party. In the program’s agreement, the Company is required to pay fees to the third-party service provider based on the number of extended warranty contracts that they sell, which it classifies as costs to obtain a contract. The contract costs are deferred and recorded as other assets in the consolidated balance sheets. The deferred contract costs are amortized to net sales in the consolidated statements of comprehensive income over the same period that the underlying deferred revenue is recognized. The balance of deferred contract costs as of December 31, 2019 and 2018 was $6,190 and $4,782, respectively. Amortization of deferred contract costs recorded during the years ended December 31, 2019, 2018 and 2017 was $869, $615 and $193, respectively.

Standard product warranty obligations and extended warranty related deferred revenues are included in the consolidated balance sheets as follows:

	December 31,
	2019		2018
Product warranty liability
Current portion - other accrued liabilities	$	27,885	$	25,396
Long-term portion - other long-term liabilities		21,431		16,389
Total	$	49,316	$	41,785
Deferred revenue related to extended warranties
Current portion - other accrued liabilities	$	15,519	$	13,646
Long-term portion - other long-term liabilities		63,219		54,694
Total	$	78,738	$	68,340