Quarterly report pursuant to Section 13 or 15(d)

Warranty Liability

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Warranty Liability
9 Months Ended
Sep. 30, 2016
Warranty Liability  
Warranty Liability

8.Warranty Liability

 

The Company accrues for estimated warranty costs as sales are recognized and periodically assesses the adequacy of its recorded warranty liability and adjusts the amount as necessary.  The Company’s warranties generally provide, with respect to its snow and ice control equipment, that all material and workmanship will be free from defect for a period of two years after the date of purchase by the end-user, and with respect to its parts and accessories purchased separately, that such parts and accessories will be free from defect for a period of one year after the date of purchase by the end-user.  Certain snowplows only provide for a one year warranty.  The Company determines the amount of the estimated warranty costs (and its corresponding warranty reserve) based on the Company’s prior five years of warranty history utilizing a formula driven by historical warranty expense and applying management’s judgment.  The Company adjusts its historical warranty costs to take into account unique factors such as the introduction of new products into the marketplace that do not provide a historical warranty record to assess.  The warranty reserve is $6,510 at September 30, 2016 of which $1,000 is included in Other long term liabilities and $5,510 is included in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheet.  At December 31, 2015 $7,423 is included in accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheet.

 

The following is a rollforward of the Company’s warranty liability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at the beginning of the period

 

$

6,297

 

$

5,641

 

$

7,423

 

$

6,279

Establish warranty provision for Dejana

 

 

35

 

 

 -

 

 

35

 

 

 -

Warranty provision

 

 

750

 

 

1,475

 

 

1,940

 

 

3,256

Claims paid/settlements

 

 

(572)

 

 

(488)

 

 

(2,888)

 

 

(2,907)

Balance at the end of the period

 

$

6,510

 

$

6,628

 

$

6,510

 

$

6,628