Note 19. Commitments and Contingencies

Litigation: We are a party to legal proceedings and claims which arise during the ordinary course of business. We review our legal proceedings and claims, regulatory reviews and inspections, and other legal matters on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. We do not record an accrual when the likelihood of loss being incurred is probable, but the amount cannot be reasonably estimated, or when the loss is believed to be only reasonably possible or remote, although disclosures will be made for material matters as required by ASC 450-20, Contingencies - Loss Contingencies. Our assessment of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter following all appeals.

As of May 2, 2020 and April 27, 2019, $2,072 and $1,072, respectively, were included in the "Accrued expenses" line item in our consolidated balance sheets for a probable and reasonably estimated cost to settle a patent litigation claim. The costs are included in cost of sales in the High School Park and Recreation business unit for each fiscal year.

For other unresolved legal proceedings or claims, we do not believe there is a reasonable probability that any material loss would be incurred. Accordingly, no material accrual or disclosure of a potential range of loss has been made related to these matters. We do not expect the ultimate liability of these unresolved legal proceedings or claims to have a material effect on our financial position, liquidity or capital resources.

Warranties: See "Note 1. Nature of Business and Summary of Significant Accounting Policies" for more information regarding warranties. During fiscal 2016, we discovered a warranty issue caused by a mechanical device failure within a module for displays primarily in our OOH application built prior to fiscal 2013. During fiscal 2020, 2019, and 2018, we recognized warranty expense and estimated equipment service agreement losses for probable and reasonably estimated costs to remediate this issue of $0, $2,427, and $4,539, respectively. Our contractual warranty arrangements have expired for products with this issue, and we do not expect material changes to the equipment service agreement accrual. The additional warranty expense in fiscal 2018 is primarily based on our decision to preserve our market leadership and for customer relationship purposes in certain cases beyond our contractual obligations.

Changes in our warranty obligation for the fiscal years ended May 2, 2020 and April 27, 2019 consisted of the following:



	May 2, 2020			April 27, 2019
Beginning accrued warranty obligations	$	24,470		$	29,953
Warranties issued during the period	10,629			9,239
Settlements made during the period	(9,209		)	(16,715		)
Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations	(266		)	1,993
Ending accrued warranty obligations	$	25,624		$	24,470

Performance guarantees: We have entered into standby letters of credit and surety bonds with financial institutions relating to the guarantee of our future performance on contracts, primarily construction-type contracts. As of May 2, 2020, we had outstanding letters of credit and surety bonds in the amount of $13,090 and $18,212, respectively. Performance guarantees are issued to certain customers to guarantee the operation and installation of the equipment and our ability to complete a contract. These performance guarantees have various terms but are generally one year. We enter into written agreements with our customers, and those agreements often contain indemnification provisions that require us to make the customer whole if certain acts or omissions by us cause the customer financial loss. We make efforts to negotiate reasonable caps and limitations on the recovery of such damages. As of May 2, 2020, we were not aware of any indemnification claim from a customer.

Purchase commitments: From time to time, we commit to purchase inventory, advertising, cloud-based information systems, information technology maintenance and support services, and various other products and services over periods that extend beyond one year. As of May 2, 2020, we were obligated under the following unconditional purchase commitments:



Fiscal years ending	Amount
2021	$	4,775
2022	2,750
2023	1,754
2024	148
2025	113
Thereafter	40
	$	9,580

Investment in affiliates commitments: We agreed to invest an additional $5,000 in XDC by February 2021 if certain conditions are met.