. 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 June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Balance at beginning of period	$	36,319		$	32,008		$	35,422		$	31,695
Product warranty reserve assumed in acquisition		-			-			-			43
Payments		(4,907	)		(4,285	)		(9,892	)		(8,845	)
Provision for warranty issued		6,275			4,086			11,478			8,246
Changes in estimates for pre-existing warranties		973			1,004			1,652			1,674
Balance at end of period	$	38,660		$	32,813		$	38,660		$	32,813

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 warranty 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 June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Balance at beginning of period	$	60,113		$	37,562		$	57,854		$	36,139
Deferred revenue contracts issued		5,526			7,442			10,242			10,463
Amortization of deferred revenue contracts		(2,632	)		(1,648	)		(5,089	)		(3,246	)
Balance at end of period	$	63,007		$	43,356		$	63,007		$	43,356

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

June 30, 2018

is as follows:

Remainder of 2018	$	6,125
2019		12,682
2020		11,750
2021		9,849
2022		7,711
After 2022		14,890
Total	$	63,007

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 sheets. The deferred contract costs are amortized to selling and service expense in the condensed consolidated statements of comprehensive income consistent with how the related deferred revenue is recognized. The balance of deferred contract costs as of

June 30, 2018

and

2017

was

$4,183

and

$798,

respectively. Amortization of deferred contract costs recorded during the

six

months ended

June 30, 2018

was

$277.

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

	June 30,		December 31,
	2018		2017
Product warranty liability
Current portion - other accrued liabilities	$	22,080	$	20,576
Long-term portion - other long-term liabilities		16,580		14,846
Total	$	38,660	$	35,422

Deferred revenue related to extended warranties
Current portion - other accrued liabilities	$	12,447	$	11,017
Long-term portion - other long-term liabilities		50,560		46,837
Total	$	63,007	$	57,854