Commitments and Contingencies

6 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

8. Commitments and Contingencies

Warranty

The Company offers warranties on most of its products. The specific terms and conditions of the warranties offered by the Company vary depending upon the product sold. The Company estimates the costs that may be incurred under its warranty plans and the period for which claims are honored, and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company’s warranty liability include the number of units sold, the type of products sold, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

The following is an analysis of product warranty reserves and charges against those reserves (dollars in thousands):


Balance at September 30, 2021	$	28,300
Accrual for warranties issued	4,788
Warranty settlements made	(2,718)
Balance at March 31, 2022	$	30,370

The balance of warranty reserves recorded in Other long-term liabilities was $24.9 million and $23.1 million as of March 31, 2022 and September 30, 2021, respectively. The remaining current balances of $5.5 million and $5.2 million as of March 31, 2022 and September 30, 2021, respectively, were recorded in Accrued expenses.

Contingent Consideration

As part of the acquisition of all aspects of the business related to iGrill and Kitchen Thermometer products from iDevices, LLC (“iDevices”), the Company has future cash payments due to iDevices in conjunction with an earn-out and development agreement. Under this agreement, the Company paid iDevices a minimum of $8.0 million, and then must pay

additional royalty payments at fixed rates on iGrill and Kitchen Thermometer products sold for a total of 10 years or up to $15.0 million, whichever comes first. Under the terms of the earn-out and development agreement, the Company paid $0.1 million during both the six months ended March 31, 2022 and 2021. The fair value of the contingent consideration liability was $0.4 million and $0.5 million at March 31, 2022 and September 30, 2021, respectively. The fair value of these estimated future cash payments was based on valuation methods and management’s best estimates and was recorded in Other long-term liabilities in the condensed consolidated balance sheets.

Europe Manufacturing Facility

During October 2021, the Company executed an agreement to expand the Europe Manufacturing Facility in Poland. The Company does not control the asset under construction, and is therefore not deemed the accounting owner of the asset under construction.

The lease term is 14 years and will commence upon completion of the building, which is expected to occur during the quarter ended June 30, 2022. Upon commencement, the Company will record a right-of-use asset and a lease liability. In addition, the Company has options to extend the lease term for five-year periods as allowed by local laws and regulatory requirements. The annual cash rental payments due under the lease agreement during the first year will be approximately $1.2 million. The lease also requires the Company to pay real estate taxes and maintenance costs on the facility. No lease payments were made during the six months ended March 31, 2022.

Legal Proceedings

The Company is subject to a variety of investigations, claims, suits and other legal proceedings that arise from time to time in the ordinary course of business including, but not limited to, intellectual property, employment, tort, and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position or results of operations. Any legal proceedings are subject to inherent uncertainties, and management’s view of these matters and their potential effects may change in the future.