Note 18. 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 April 28, 2018, we recorded a liability and related other receivable of $1,904 for a net claim from a customer against work performed by one of our subcontractors during installation which damaged our customer's property. The amount recorded was for the probable and reasonably estimated cost to remediate the damage. During fiscal 2019, this claim settled and was fully covered by insurance.

As of April 27, 2019 and April 28, 2018, a customer was withholding $1,969 of payment claiming we did not perform to the customer's specifications. While we believe that we have performed to the agreed-upon written specifications and have strong contractual documentation to support our position, in order to preserve our relationship, we agreed to provide additional services and products in fiscal 2019 at a loss of $1,516, which is included in cost of sales in the Live Events business unit. We were paid in full on this matter after April 27, 2019.

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 2019, 2018, and 2017, we recognized warranty expense and estimated equipment service agreement losses for probable and reasonably estimated costs to remediate this issue of $2,427, $4,539, and $1,766, respectively. As of April 27, 2019, we had $984 remaining accrued for equipment service agreement obligations for the estimate of probable future claims related to this issue. Our contractual warranty arrangements have expired for products with this issue, and we do not expect material changes to the equipment service agreement accrual.

Changes in our warranty obligation for the fiscal years ended April 27, 2019, April 28, 2018, and April 29, 2017 consisted of the following:



	April 27, 2019			April 28, 2018			April 29, 2017
Beginning accrued warranty obligations	$	29,953		$	27,899		$	30,496
Warranties issued during the period	9,239			11,961			10,930
Settlements made during the period	(16,715		)	(17,653		)	(16,790		)
Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations	1,993			7,746			3,263
Ending accrued warranty obligations	$	24,470		$	29,953		$	27,899

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 April 27, 2019, we had outstanding letters of credit and surety bonds in the amount of $13,293 and $9,900, 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 April 27, 2019, we were not aware of any indemnification claim from a customer.

Leases: We lease vehicles, office space and equipment for various global sales and service locations, including manufacturing space in the United States and China. Some of these leases, including the lease for manufacturing facilities in Sioux Falls, South Dakota, include provisions for extensions or purchase. The lease for the facilities in Sioux Falls, South Dakota can be extended for an additional five years past its current term, which ends March 31, 2022. This lease contains an option to purchase the property subject to the lease from March 31, 2017 to March 31, 2022 for $9,000, which approximates fair value. If the lease is extended, the purchase option increases to $9,090 for the year ending March 31, 2023 and $9,180 for the year ending March 31, 2024. Rental expense for operating leases was $3,495, $3,477 and $3,175 for the fiscal years 2019, 2018, and 2017, respectively.

Future minimum payments under noncancelable operating leases, excluding executory costs such as management and maintenance fees, with initial or remaining terms of one year or more consisted of the following at April 27, 2019:



Fiscal years ending	Amount
2020	$	3,038
2021	2,510
2022	1,608
2023	269
2024	193
Thereafter	101
	$	7,719

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 April 27, 2019, we were obligated under the following unconditional purchase commitments:



Fiscal years ending	Amount
2020	$	6,055
2021	4,485
2022	2,693
2023	1,820
2024	113
Thereafter	153
	$	15,319