Note 11 - Product Warranty Obligations

12 Months Ended

Dec. 31, 2020

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,
	2020			2019			2018
Balance at beginning of period	$	49,316		$	41,785		$	35,422
Product warranty reserve assumed in acquisition		124			1,062			-
Payments		(33,496	)		(26,096	)		(20,029	)
Provision for warranty issued		42,093			32,060			26,910
Changes in estimates for pre-existing warranties		1,181			505			(518	)
Balance at end of period	$	59,218		$	49,316		$	41,785

The Company also 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,
	2020			2019			2018
Balance at beginning of period	$	78,738		$	68,340		$	57,854
Deferred revenue contracts issued		26,968			24,483			21,440
Amortization of deferred revenue contracts		(15,918	)		(14,085	)		(10,954	)
Balance at end of period	$	89,788		$	78,738		$	68,340

The timing of recognition of the Company’s deferred revenue balance related to extended warranties at December 31, 2020 is as follows:

2021	$	18,754
2022		18,819
2023		16,464
2024		11,849
After 2024		23,902
Total	$	89,788

The Company has 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, 2020 and 2019 was $6,869 and $6,190, respectively. Amortization of deferred contract costs recorded during the years ended December 31, 2020, 2019 and 2018 was $1,303, $869 and $615, respectively.

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

	December 31,
	2020		2019
Product warranty liability
Current portion - other accrued liabilities	$	37,417	$	27,885
Long-term portion - other long-term liabilities		21,801		21,431
Total	$	59,218	$	49,316
Deferred revenue related to extended warranties
Current portion - other accrued liabilities	$	18,857	$	15,519
Long-term portion - other long-term liabilities		70,931		63,219
Total	$	89,788	$	78,738