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Note 9 - Product Warranty Obligations

9 Months Ended

Sep. 30, 2022

Product Warranty Disclosure [Text Block]

9. Product Warranty Obligations

The Company records a liability for standard product warranty obligations accounted for as assurance warranties at the time of sale of the product to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s standard product warranty liability accounted for as an assurance warranty:

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*
Balance at beginning of period	$	110,338		$	74,758		$	94,213		$	59,218
Product warranty reserve assumed in acquisition		-			1,085			-			1,085
Payments		(22,677	)		(10,475	)		(54,135	)		(29,536	)
Provision for warranty issued		19,076			16,527			62,169			48,521
Changes in estimates for pre-existing warranties (1)		38,571			1,089			43,061			3,696
Balance at end of period	$	145,308		$	82,984		$	145,308		$	82,984

(1)

Includes a specific warranty provision recorded during the third quarter of 2022 in the amount of $37,338 to address certain clean energy product warranty-related matters.

Additionally, the Company sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration of five to ten years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended warranty contract period, following the standard warranty period, using the straight-line method. Revenue is recognized on extended warranty contracts when the revenue recognition criteria are met, resulting in ratable recognition over the contract term. The amortization of deferred revenue is recorded to net sales in the condensed consolidated statements of comprehensive income. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*
Balance at beginning of period	$	121,898		$	100,484		$	111,647		$	89,788
Deferred revenue contracts issued		10,324			11,105			31,202			31,304
Amortization of deferred revenue contracts		(5,470	)		(5,014	)		(16,097	)		(14,517	)
Balance at end of period	$	126,752		$	106,575		$	126,752		$	106,575

The timing of recognition of the Company’s deferred revenue balance related to extended warranties as of September 30, 2022 is as follows:

Remainder of 2022	$	5,657
2023		24,119
2024		24,276
2025		21,395
2026		17,028
After 2026		34,277
Total	$	126,752

Standard product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

	*September 30,*		*December 31,*
	*2022*		*2021*
Product warranty liability
Current portion - accrued product warranty	$	100,451	$	59,052
Long-term portion - other long-term liabilities		44,857		35,161
Total	$	145,308	$	94,213

Deferred revenue related to extended warranties
Current portion - other accrued liabilities	$	23,237	$	20,556
Long-term portion - other long-term liabilities		103,515		91,091
Total	$	126,752	$	111,647