Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Loss Contingencies

We are involved in various disputes arising in the ordinary course of business. Management does not believe the outcome of these disputes will have a material adverse effect on our consolidated financial position or consolidated results of operations.

Gain Contingencies

On March 26, 2020, the U.S. Trade Representative (“USTR”) announced certain exclusion requests related to tariffs on our Chinese imports under Section 301 of the Trade Act of 1974 (“Section 301”). The tariff exemption applied to covered products exported from China to the United States from September 24, 2018 until August 7, 2020. Accordingly, we filed protests and post summary corrections with U.S. Customs and Border Protection in order to recover tariffs paid on the excluded products. The filing requests for refunds were subject to review and approval; therefore, we did not recognize these potential gains until the amounts were realized or considered realizable based on information available to us prior to issuance of the financial statements. As of September 30, 2020, we recognized approximately $14.0 million in refunds, inclusive of $0.5 million in interest. Approximately $4.0 million of the tariff recoveries related to balances included in inventory and were recorded as a reduction to inventory in the second quarter of 2020. Approximately $6.0 million and $9.5 million were recorded as credits to cost of goods sold during the three and nine months ended September 30, 2020, respectively, to offset the accounts where the tariff expenses were originally recorded. Remaining refunds applied for and not recorded as of September 30, 2020 totaled approximately $0.1 million (excluding interest) and will be recognized as a reduction to cost of goods sold when received. The tariff exemption ended August 7, 2020; therefore, we have resumed paying tariffs at 25% on the aforementioned previously excluded parts imported from China.