The annual reports are out and the year-end warranty data is in. This week, we begin the annual examination of the warranty metrics of American manufacturers with a look at those that saw their numbers change the most.

The theory behind this exercise is that while you can't reliably compare the warranty expenses of two different companies against each other, you definitely can compare each company against itself. And then you can compare the annual changes, and make a list of the companies that changed the most.

We started with a list of all U.S.-based manufacturers that regularly report their warranty expenses, and found the Top 100 warranty providers among them, as determined by the amount of claims they reported for the calendar year of 2012. Some report only their annual expenses while others disclose those numbers quarterly. Most end their fiscal years in December, though others choose to end their fiscal years in June, September, October, January, or some other month.

Fiscal vs. Calendar Year

In all cases where fiscal years did not line up precisely with the calendar year, what we did was to count warranty expenses reported in the quarter ended in October, November, or December 2012, and the three quarters that preceded it. So if a company ended its fiscal year on June 30, we counted its third and fourth quarters of one fiscal year and the first and second quarters of the following year. If its fiscal year ended on October 31, we counted the months of November 2011 through October 2012 -- their first through fourth quarters. If the company's fiscal year ended January 31, we would also count the period of November through October, meaning their fourth through third quarters.

After finding our top 100, we found incomplete warranty data from Emerson Electric Co. and Exide Technologies, so they were excluded from the Top 100. And as of this week, we still had no new warranty data from Nortek Inc., so they also were excluded. In their place, to get the list back up to 100 companies, we added Herman Miller Inc., Visteon Corp., and Gardner Denver Inc., which came in as warranty providers number 101 through 103.

With those substitutions in mind, all of the Top 100 warranty providers of 2012 reported more than $21 million in claims paid. Their accrual totals for the year were about the same, though Itron Inc. and Nvidia Corp. set aside significantly less than $21 million last year.

The reason we made the list based on claims instead of accruals or reserves has to do with the meaning of these metrics. Technically, the "provision" of the warranty is the accrual, while the claim is the utilization of that provision. But the amount of warranty coverage actually provided to the customer is the claim. The accrual is simply an estimate of that amount, calculated at the time of the product sale based on the company's own projections.

Claims vs. Accruals

Had we ranked the Top 100 based on total accruals made during the year rather than on total claims paid in 2012, the list would have had a few different members. Itron and Nvidia would not have made the cut, nor would have D.R. Horton Inc., Dana Holding Corp., or Visteon Corp. In their place would have been Hill-Rom Holdings Inc., SanDisk Corp., SunPower Corp., Foster Wheeler AG, and Medtronic Inc.

Once we had the Top 100 list, we determined their claims rate, accrual rate, and warranty reserve balance at the end of 2001 and 2012. The six tables below contain the ten biggest increases and the ten biggest decreases among that group.

In Figure 1, we start with the biggest annual claims rate reductions. For instance, by all accounts, computer graphics card supplier Nvidia has by now put its warranty problems behind it, which caused its claims payments to soar in 2009-2011. The company paid out $50 million in 2008. After the defects were found, that bill more than tripled to $187 million in 2009. And it peaked at $205 million in 2010, as computer OEMs and end users returned their products in droves.

But then in 2011 Nvidia's warranty claims total fell to $114 million -- 1.1% of its total revenue. And in 2012, its annual warranty bill fell further, to $36 million or 0.24% of revenue. That decrease, from 1.1% to 0.24%, earned it the top spot in Figure 1.

Others that managed to cut their warranty claims rates by the most among their peers include three homebuilders, a disk drive maker, a datacomm equipment company, an HVAC company, an automotive supplier, and two huge warranty providers. General Electric, the seventh largest warranty provider of 2011, and United Technologies, the tenth largest of 2011, cut their claims payments by 25% and 36%, respectively, in 2012.