Note 15: Product Warranties
The Company provides warranty programs for breast implant sales primarily in the United States, Europe and certain other countries. Management estimates the amount of potential future claims from these warranty programs based on actuarial analyses. Expected future obligations are determined based on the history of product shipments and claims and are discounted to a current value. The liability is included in both current and long-term liabilities in the Company’s consolidated balance sheets. The U.S. programs include the ConfidencePlus® and ConfidencePlus® Premier warranty programs. The ConfidencePlus® program, which is limited to saline breast implants, currently provides lifetime product replacement, $1,200 of financial assistance for surgical procedures within ten years of implantation and contralateral implant replacement. The ConfidencePlus® Premier program, which is standard for silicone gel implants and requires a low enrollment fee for saline breast implants, generally provides lifetime product replacement, $2,400 of financial assistance for saline breast implants and $3,500 of financial assistance for silicone gel breast implants for surgical procedures within ten years of implantation and contralateral implant replacement. The warranty programs in non-U.S. markets have similar terms and conditions to the U.S. programs. The Company does not warrant any level of aesthetic result and, as required by government regulation, makes extensive disclosures concerning the risks of the use of its products and breast implant surgery. Changes to actual warranty claims incurred and interest rates could have a material impact on the actuarial analysis and the Company’s estimated liabilities. A large majority of the product warranty liability arises from the U.S. warranty programs. The Company does not currently offer any similar warranty program on any other product.
The following table provides a reconciliation of the change in estimated product warranty liabilities for the years ended December 31, 2013 and 2012:
|
| | | | | | | |
| 2013 | | 2012 |
| (in millions) |
Balance, beginning of year | $ | 34.4 |
| | $ | 32.6 |
|
Provision for warranties issued during the year | 8.0 |
| | 9.9 |
|
Settlements made during the year | (8.1 | ) | | (8.1 | ) |
Decreases in warranty estimates | (0.7 | ) | | — |
|
Balance, end of year | $ | 33.6 |
| | $ | 34.4 |
|
| | | |
Current portion | $ | 7.6 |
| | $ | 6.7 |
|
Non-current portion | 26.0 |
| | 27.7 |
|
Total | $ | 33.6 |
| | $ | 34.4 |
|
