6. WARRANTY OBLIGATIONS

Expected warranty costs for products sold are recognized principally at the time of sale of the product based on estimates of the amount that will eventually be required to settle such obligations. These accruals are based on factors such as past experience, production changes, industry developments and various other considerations. These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. Delphi has recognized its best estimate for its total aggregate warranty reserves across all of its operating segments as of March 31, 2012. The estimated reasonably possible amounts to ultimately resolve all matters are not materially different from the recorded reserves as of March 31, 2012.

The table below summarizes the activity in the product warranty liability for the three months ended March 31, 2012:


	Warranty Obligations
	(in millions)
Accrual balance at beginning of period	$	315
Provision for estimated warranties incurred during the period		19
Provision for changes in estimate for pre-existing warranties		7
Settlements made during the period (in cash or in kind)		(26	)
Foreign currency translation and other		9

Accrual balance at end of period	$	324

In March 2011, Delphi reached a settlement with its customer related to warranty claims on certain components supplied by Delphi's Powertrain segment and reflected a change in its previous estimate of probable loss as a result of the settlement agreement by recognizing $76 million of warranty expense in cost of sales. This adjustment resulted in a corresponding $76 million decrease in net income attributable to Delphi and a corresponding unfavorable earnings per share impact of $0.11 for the three months ended March 31, 2011. In April 2011, in accordance with the terms of the settlement agreement, Delphi made a payment of €90 million (approximately $133 million at April 30, 2011 exchange rates) related to this matter. In April 2012, Delphi made the final scheduled payment of €60 million (approximately $80 million at March 31, 2012 exchange rates) related to this matter.