Accrued Expenses and Other Current Liabilities

6 Months Ended

Jan. 31, 2022

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following at:


	January 31, 2022		July 31, 2021
Accrued wages and benefits	$	31,774,000	26,367,000
Accrued warranty obligations	13,731,000		17,600,000
Accrued contract costs	13,930,000		12,750,000
Accrued acquisition-related costs	9,031,000		9,222,000
Accrued commissions and royalties	4,557,000		5,342,000
Accrued legal costs	2,470,000		2,854,000
Other	21,406,000		15,466,000
Accrued expenses and other current liabilities	$	96,899,000	89,601,000

Accrued wages and benefits as of January 31, 2022 include $6,015,000 of CEO transition costs, of which $5,054,000 was paid in February 2022, with the remainder payable in equal monthly installments through December 31, 2023.

Accrued contract costs represent direct and indirect costs on contracts as well as estimates of amounts owed for invoices not yet received from vendors or reflected in accounts payable.

Accrued acquisition-related costs as of January 31, 2022 and July 31, 2021 include $9,000,000 and $8,705,000, respectively, of contingent earn-out consideration related to our acquisition of UHP. See Note (2) - “Acquisitions - UHP Networks Inc.” for further discussion.

Other current liabilities as of January 31, 2022 include $5,768,000 of proxy solicitation costs (including legal and advisory fees) as a result of a now settled proxy contest initiated by a shareholder during the first quarter of fiscal 2022. The majority of such amount is expected to be settled over the remainder of fiscal 2022.

Accrued warranty obligations as of January 31, 2022 relate to estimated liabilities for assurance type warranty coverage that we provide to our customers. We generally provide warranty coverage for some of our products for a period of at least one year from the date of delivery. We record a liability for estimated warranty expense based on historical claims, product failure rates, consideration of contractual obligations, future costs to resolve software issues and other factors. Some of our product warranties are provided under long-term contracts, the costs of which are incorporated into our estimates of total contract costs.

Changes in our accrued warranty obligations during the six months ended January 31, 2022 and 2021 were as follows:


	Six months ended January 31,
	2022		2021
Balance at beginning of period	$	17,600,000	15,200,000
Provision for warranty obligations	587,000		2,329,000
Adjustments for changes in estimates	(2,500,000)		—
Charges incurred	(1,956,000)		(1,355,000)
Additions (in connection with acquisitions)	—		500,000

Balance at end of period	$	13,731,000	16,674,000

During the six months ended January 31, 2022, we recorded a $2,500,000 benefit to cost of sales in our Commercial Solutions segment due to lower than expected warranty claims associated with previously acquired NG-911 technologies.