Product Warranties

Malibu and Axis brands have a limited warranty for a period up to five years. Prior to fiscal year 2016, the Company provided a limited warranty for a period of up to three years for our Malibu brand boats and two years for our Axis boats. For our Cobalt brand boats, the Company provides a structural warranty of up to ten years which covers hull/deck joints, bulkheads, floor, transom, stringers, and motor mount. In addition, the Company provides a five year bow-to-stern warranty on all components manufactured or purchased (excluding hull and deck structural components), including canvas and upholstery. Gelcoat is covered up to three years for Cobalt and one year for Malibu and Axis. For Pursuit boats, the Company provides a limited warranty for a period of up to five years on structural components such as the hull, deck and defects in the gelcoat surface of the hull bottom. Some materials, components or parts of the boat that are not covered by the Company's limited product warranties are separately warranted by their manufacturers or suppliers. These other warranties include warranties covering engines purchased from suppliers and other components. The Company provides a limited warranty of up to five years or five-hundred hours on engines that it manufactures for Malibu and Axis models.

The Company’s standard warranties require the Company or its dealers to repair or replace defective products during such warranty period at no cost to the consumer. The Company estimates the costs that may be incurred under its limited warranty and records a liability for such costs at the time the product revenue is recognized. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liabilities by brand on a quarterly basis and adjusts the amounts as necessary. The Company utilizes historical claims trends and analytical tools to assist in determining the appropriate warranty liability.

Changes in the Company’s product warranty liability were as follows:



	Fiscal Year Ended June 30,
	2019			2018			2017
Beginning balance	$	17,217		$	10,050		$	8,083
Add: Warranty Expense	12,331			9,861			6,472
Additions for Cobalt acquisition	—			4,404			—
Additions for Pursuit acquisition	1,872			—			—
Less: Warranty claims paid	(7,600		)	(7,098		)	(4,505		)
Ending balance	$	23,820		$	17,217		$	10,050