BIOLASE, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Estimated Useful Lives of Property, Plant and Equipment

The cost of property, plant, and equipment is depreciated using the straight-line method over the following estimated useful lives of the respective assets, except for leasehold improvements, which are depreciated over the lesser of the estimated useful lives of the respective assets or the related lease terms.

Building	30 years
Leasehold improvements	3 to 5 years
Equipment and computers	3 to 5 years
Furniture and fixtures	5 years

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 years ended December 31 are included within accrued liabilities on the Consolidated Balance Sheets and were as follows (in thousands):

	Years Ended December 31,
	2017			2016			2015
Initial warranty accrual, beginning balance	$	1,706		$	2,188		$	1,449
Provision for estimated warranty cost		492			348			1,715
Warranty expenditures		(1,008	)		(830	)		(976	)
Initial warranty accrual, ending balance		1,190			1,706			2,188
Less warranty accrual, long-term		70			773			843
Total warranty accrual, current portion	$	1,120		$	933		$	1,345

Summary of Income Statement Classification of Compensation Expense

The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands):

	Years Ended December 31,
	2017		2016		2015
Cost of revenue	$	207	$	226	$	333
Sales and marketing		235		477		679
General and administrative		1,469		2,051		2,020
Engineering and development		296		311		318
	$	2,207	$	3,065	$	3,350

Assumptions on Estimation of Stock Option Fair Values

The stock option fair values, under the 2002 Plan, were estimated using the Black-Scholes option-pricing model with the following assumptions:

	2017			2016			2015
Expected term (years)		5.51			5.96			5.80
Volatility		79	%		86	%		90	%
Annual dividend per share	$	—		$	—		$	—
Risk-free interest rate		1.99	%		1.39	%		1.64	%