XML 33 R13.htm IDEA: XBRL DOCUMENT v3.20.2
Accrued Expenses and Other Current Liabilities
 12 Months Ended
Jul. 31, 2020
Accrued Liabilities, Current [Abstract]  
Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following at July 31, 2020 and 2019:
 20202019
Accrued wages and benefits$20,857,000 23,295,000 
Accrued contract costs15,306,000 15,007,000 
Accrued warranty obligations15,200,000 15,968,000 
Accrued legal costs2,539,000 2,835,000 
Accrued commissions and royalties4,621,000 5,114,000 
Other26,581,000 16,365,000 
Accrued expenses and other current liabilities$85,104,000 78,584,000 

As discussed further in Note (9) - "Leases," on August 1, 2019, we adopted Topic 842 and, as required by the new standard, reclassified $2,934,000 of accrued expenses and other current liabilities as follows: (i) $2,366,000 of short-term deferred rent liabilities related to operating leases were offset against the respective operating lease right-of-use assets; and (ii) the remaining $568,000 of estimated facility exit costs were reclassified to the current portion of operating lease liabilities.

Accrued contract costs represent direct and indirect costs on contracts as well as estimates of amounts owed for invoices not yet received from vendors or reflected in accounts payable.

Accrued warranty obligations as of July 31, 2020 relate to estimated liabilities for assurance type warranty coverage that we provide to our customers. We generally provide warranty coverage for some of our products for a period of at least one year from the date of delivery. We record a liability for estimated warranty expense based on historical claims, product failure rates, consideration of contractual obligations, future costs to resolve software issues and other factors. Some of our product warranties are provided under long-term contracts, the costs of which are incorporated into our estimates of total contract costs.
Changes in our accrued warranty obligations during the fiscal years ended July 31, 2020 and 2019 were as follows:
 20202019
Balance at beginning of year$15,968,000 11,738,000 
Reclass to contract liabilities (see below)— (1,679,000)
Provision for warranty obligations2,277,000 3,902,000 
Additions (in connection with acquisitions)1,000,000 6,431,000 
Charges incurred(4,347,000)(6,151,000)
Warranty settlement and reclass (see below)302,000 1,727,000 
Balance at end of year$15,200,000 15,968,000 
On August 1, 2018, in connection with our adoption of ASC 606, $1,679,000 of accrued warranty obligations presented in the above table were reclassified to contract liabilities, as they represented deferred revenue related to service-type warranty performance obligations.

Our current accrued warranty obligations at July 31, 2020 and 2019 include $2,158,000 and $3,999,000, respectively, of warranty obligations for a small product line that we refer to as the TCS 911 call handling software solution. This solution was licensed to customers prior to our acquisition of TeleCommunication Systems, Inc. ("TCS").

In connection with our acquisitions of Solacom, the GD NG-911 business and CGC, during the fiscal year ended July 31, 2020 and 2019, we assumed warranty obligations related to certain contracts acquired. See Note (2) - "Acquisitions" for further information pertaining to these acquisitions.