Warranty Reserve

9 Months Ended

Sep. 30, 2013

Warranty Reserve. We generally do not independently warrant the products that we sell. Instead, in most instances, the manufacturers of the products warrant the products and allow us to return and receive a credit for defective products, including those that have been returned to us by our customers. However, we sell a line of portable generators under a product supply arrangement which obligates us to provide warranty service for these products and to share the costs of providing those services with the manufacturer. We maintain a reserve for warranty claims against which the warranty costs we incur are charged. We replenish or make additions to the reserve from time to time, based primarily on our warranty claims experience and the volume of generators we sell, by a provision we make for warranty claims, recorded as a component of costs of products sold, in the condensed consolidated statements of income.

Accrued warranty expense (in thousands of dollars), which is included in accrued liabilities on the condensed consolidated balance sheets, as of September 30, 2013 and 2012, was as follows:


	2013			2012
Accrued warranty balance – January 1,	$	690		$	564
Warranty costs incurred		(854	)		(895	)
Provision for warranty expense		926			1024

Accrued warranty balance – September 30,	$	762		$	693