Warranty Reserve. We generally do not independently provide warranties on the products that we sell. Instead, in most instances, the product manufacturers warrant their products and allow us to return defective products, including those that have been returned to us by our customers. However, we sell a line of portable generators under a product supply arrangement which obligates us to provide warranty service for these products and to share the costs of providing those services with the manufacturer. We maintain a reserve for warranty claims against which the warranty costs we incur are charged. We replenish or make additions to the reserve from time to time, based primarily on our warranty claims experience and the volume of generators we sell, by a provision we make for warranty claims, recorded as a component of costs of products sold, in the condensed consolidated statements of operations.

Accrued warranty expense, which is included in accrued liabilities on the condensed consolidated balance sheets, as of June 30, 2015 and 2014 was as follows (in thousands):


	2015			2014
Accrued warranty balance – January 1,	$	762		$	737
Warranty costs incurred		(418	)		(501	)
Provision for warranty expense		359			419

Accrued warranty balance – June 30,	$	703		$	655