Note 12. Guarantees

Indemnification Agreements

We have entered into indemnification agreements with our directors and officers that require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature; to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and to obtain directors’ and officers’ insurance if available on reasonable terms, which we currently have in place.

Product Warranty

We provide warranties for our products for a specific period of time, generally twelve months, against material defects. We provide for the estimated future costs of warranty obligations in cost of sales when the related revenue is recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs are primarily based on historical experience as to product failures as well as current information on repair costs. On a quarterly basis, we review the accrued balances and update the historical warranty cost trends. The following table reflects the change in our warranty accrual which is included in “accrued liabilities” on the consolidated balance sheets, during 2015 and 2014 (in thousands):


	Year Ended
	December 31,
	2015		2014
Beginning accrued warranty and related costs	$	802	$	1,048
Accruals for warranties issued		662		865
Adjustments related to pre-existing warranties including expirations and changes in estimates		(238)		(467)
Cost of warranty repair		(729)		(644)
Ending accrued warranty and related costs	$	497	$	802