Quarterly report pursuant to Section 13 or 15(d)

Accrued Liabilities and Deferred Revenue (Tables)

v2.4.0.8
Accrued Liabilities and Deferred Revenue (Tables)
9 Months Ended
Sep. 30, 2014
Payables And Accruals [Abstract]  
Components of Accrued Liabilities

Accrued liabilities are comprised of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2014

 

 

2013

 

Payroll and benefits

$

1,852

 

 

$

1,898

 

Warranty accrual, current portion

 

999

 

 

 

1,096

 

Sales and excise tax

 

410

 

 

 

527

 

Accrued professional services

 

2,004

 

 

 

912

 

Accrued insurance premium

 

 

 

 

428

 

Other

 

432

 

 

 

136

 

Total accrued liabilities

$

5,697

 

 

$

4,997

 

 

Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties

Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Initial warranty accrual, beginning balance

$

1,255

 

 

$

1,518

 

 

$

1,096

 

 

$

1,699

 

Provision for estimated warranty cost

 

310

 

 

 

69

 

 

 

919

 

 

 

429

 

Warranty expenditures

 

(199

)

 

 

(257

)

 

 

(649

)

 

 

(798

)

 

 

1,366

 

 

 

1,330

 

 

 

1,366

 

 

 

1,330

 

Less warranty accrual, long-term

 

367

 

 

 

 

 

 

367

 

 

 

 

Total warranty accrual, current portion

$

999

 

 

$

1,330

 

 

$

999

 

 

$

1,330

 

 

In June 2014, the Company extended the warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014.

 

Summary of Deferred Revenue

Deferred revenue is comprised of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

2014

 

 

2013

 

Undelivered elements (training, installation and

   product and support services)

$

892

 

 

$

1,823

 

Extended warranty contracts

 

1,539

 

 

 

1,642

 

Total deferred revenue

 

2,431

 

 

 

3,465

 

Less long-term amounts:

 

 

 

 

 

 

 

Extended warranty contracts

 

 

 

 

1

 

Total deferred revenue, long-term

 

 

 

 

1

 

Total deferred revenue, current portion

$

2,431

 

 

$

3,464

 

 

In connection with its initiative to measure and improve customer satisfaction, which was initiated during the three months ended September 30, 2014, the Company performed a review of its training service policies and procedures and determined that substantially all of the training service for new customers was used within nine months of the related sale transaction. Accordingly, the Company changed the period over which deferred training service revenue is being recognized from an estimated period of 24 months to nine months.

 

The Company accounted for this change as a change in accounting estimate which, pursuant to GAAP, was accounted for on a prospective basis effective July 1, 2014. The change resulted in a reduction of deferred revenue and a corresponding recognition of revenue totaling approximately $708,000 for the three and nine months ended September 30, 2014. Revenue recognized for training is included in product and services revenue in the accompanying consolidated statements of operations.