Note 6. Commitments and Contingent Liabilities

9 Months Ended

Mar. 31, 2015

Commitments and Contingent Liabilities [Abstract]

Commitments and Contingencies Disclosure

Commitments and Contingent Liabilities

Standby letters of credit are issued to third-party suppliers, lessors, and insurance institutions and can only be drawn upon in the event of Kimball's failure to pay its obligations to a beneficiary. As of March 31, 2015, we had a maximum financial exposure from unused standby letters of credit totaling $1.0 million. We are not aware of circumstances that would require us to perform under any of these arrangements and believe that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect our consolidated financial statements. Accordingly, no liability has been recorded as of March 31, 2015 with respect to the standby letters of credit. Kimball also enters into commercial letters of credit to facilitate payments to vendors and from customers.

We have a contractual commitment with one supplier in the normal course of business that requires us to purchase a minimum amount of components, which could potentially result in a future obligation. The minimum purchase commitment for calendar year 2015 is 0.2 million Euro (approximately $0.2 million at March 31, 2015 exchange rates). We expect our purchases to exceed the minimum amount, and therefore no additional liability has been recorded as of March 31, 2015.

We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability in cases where specific warranty issues become known.

Changes in the product warranty accrual for the nine months ended March 31, 2015 and 2014 were as follows:

	Nine Months Ended
	March 31
(Amounts in Thousands)	2015			2014
Product Warranty Liability at the beginning of the period	$	3,221		$	2,384
Additions to warranty accrual (including changes in estimates)	625			2,356
Settlements made (in cash or in kind)	(564		)	(1,346		)
Distribution of Kimball Electronics, Inc.	(910		)	—
Product Warranty Liability at the end of the period	$	2,372		$	3,394