Quarterly report pursuant to Section 13 or 15(d)

Accrued Liabilities and Deferred Revenue

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Accrued Liabilities and Deferred Revenue
6 Months Ended
Jun. 30, 2015
Payables And Accruals [Abstract]  
Accrued Liabilities and Deferred Revenue

NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE

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

 

 

June 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Payroll and benefits

$

2,384

 

 

$

1,905

 

Warranty accrual, current portion

 

1,129

 

 

 

930

 

Taxes

 

339

 

 

 

139

 

Accrued professional services

 

1,672

 

 

 

1,581

 

Accrued capital lease payments

 

157

 

 

 

 

Accrued insurance premium

 

53

 

 

 

450

 

Other

 

179

 

 

 

183

 

Total accrued liabilities

$

5,913

 

 

$

5,188

 

 

Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three and six months ended June 30, 2015 and 2014 were as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Initial warranty accrual, beginning balance

$

1,667

 

 

$

1,025

 

 

$

1,449

 

 

$

1,096

 

Provision for estimated warranty cost

 

545

 

 

 

461

 

 

 

996

 

 

 

609

 

Warranty expenditures

 

(215

)

 

 

(231

)

 

 

(448

)

 

 

(450

)

 

 

1,997

 

 

 

1,255

 

 

 

1,997

 

 

 

1,255

 

Less warranty accrual, long-term

 

868

 

 

 

247

 

 

 

868

 

 

 

247

 

Total warranty accrual, current portion

$

1,129

 

 

$

1,008

 

 

$

1,129

 

 

$

1,008

 

 

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

Current portion of deferred revenue is comprised of the following (in thousands):

 

 

June 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Undelivered elements (training, installation, and

   product and support services)

$

1,636

 

 

$

952

 

Extended warranty contracts

 

1,414

 

 

 

1,542

 

Deferred revenue, current portion

$

3,050

 

 

$

2,494

 

 

In connection with the Company’s initiatives to measure and improve customer satisfaction and concurrent with the launch of WaterLase iPlus 2.0 in February 2015, the Company introduced its exclusive Practice Growth Guarantee, which is a program that essentially guarantees growth in the Company’s clients’ dental practices through training on a select number of clinical procedures and with billing and marketing support for dentists included. Consistent with the Company’s standard terms and conditions applicable to all of its products, the Practice Growth Guarantee does not give the customer the right to return purchased laser systems or receive a refund of any amount of the purchase price. However, the Practice Growth Guarantee does provide for additional training opportunities and certain billing and marketing support activities to the customer. The Company has estimated additional deferred revenue related to the Practice Growth Guarantee for all WaterLase iPlus 2.0 system sales during the six months ended June 30, 2015 to be approximately $94,000.