. Product Warranty

Obligations

The Company records a liability for product warranty obligations accounted for as assurance warranties at the time of sale to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s product warranty liability:

	Three Months Ended March 31,
	2018			2017
Balance at beginning of period	$	35,422		$	31,695
Product warranty reserve assumed in acquisition		-			43
Payments		(4,985	)		(4,560	)
Provision for warranty issued		5,203			4,160
Changes in estimates for pre-existing warranties		679			670
Balance at end of period	$	36,319		$	32,008

Additionally, the Company sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration of

five

ten

years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended contract period, following the standard warranty period, using the straight-line method. The Company believes the straight-line method is appropriate because the performance obligation is satisfied based on the passage of time. The amortization of deferred revenue is recorded to selling and service expenses on the condensed consolidated statements of comprehensive income as an offset to warranty expense. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

	Three Months Ended March 31,
	2018			2017
Balance at beginning of period	$	57,854		$	36,139
Deferred revenue contracts issued		4,716			1,969
Amortization of deferred revenue contracts		(2,457	)		(546	)
Balance at end of period	$	60,113		$	37,562

The timing of recognition of the Company’s deferred revenue balance related to extended warranties at

March 31, 2018

is as follows:

Remainder of 2018	$	9,196
2019		12,041
2020		10,666
2021		8,703
2022		6,811
After 2022		12,696
Total	$	60,113

In the

second

quarter of

2017,

the Company launched a post-sale extended warranty marketing program. In the program’s agreement, the Company is required to pay fees to a

third

-party service provider based on the number of extended warranty contracts sold, which it classifies as costs to obtain a contract. The contract costs are deferred and recorded as other assets in the condensed consolidated balance sheet. The deferred contract costs are amortized to selling and service expense in the condensed consolidated statement of comprehensive income consistent with how the related deferred revenue is recognized. The balance of deferred contract costs as of

March 31, 2018

was

$3,759,

and

$127

of amortization was recorded during the

three

months ended

March 31, 2018.

There were

deferred contract costs recorded as of and for the

three

months ended

March 31, 2017.

Product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

	March 31,		December 31,
	2018		2017
Product warranty liability
Current portion - other accrued liabilities	$	20,556	$	20,576
Long-term portion - other long-term liabilities		15,763		14,846
Total	$	36,319	$	35,422

Deferred revenue related to extended warranties
Current portion - other accrued liabilities	$	11,998	$	11,017
Long-term portion - other long-term liabilities		48,115		46,837
Total	$	60,113	$	57,854