Accrued Expenses and Other Current Liabilities

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



	October 31, 2019		July 31, 2019
Accrued wages and benefits	$	21,261,000	23,295,000
Accrued contract costs	13,725,000		15,007,000
Accrued warranty obligations	16,068,000		15,968,000
Accrued legal costs	2,781,000		2,835,000
Accrued commissions and royalties	4,587,000		5,114,000
Other	14,385,000		16,365,000
Accrued expenses and other current liabilities	$	72,807,000	78,584,000

As discussed further in Note (12) - "Leases," on August 1, 2019, we adopted Topic 842 and, as required by the new standard, reclassified $2,934,000 of accrued expenses and other current liabilities as follows: (i) $2,366,000 of short-term deferred rent liabilities related to operating leases were offset against the respective operating lease right-of-use assets; and (ii) the remaining $568,000 of estimated facility exit costs were reclassified to the current portion of operating lease liabilities.

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 warranty obligations as of October 31, 2019 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 three months ended October 31, 2019 and 2018 were as follows:



	Three months ended October 31,
	2019			2018
Balance at beginning of period	$	15,968,000		11,738,000
Reclass to contract liabilities (see below)	—			(1,679,000	)
Provision for warranty obligations	989,000			1,020,000
Charges incurred	(1,191,000		)	(1,515,000	)
Warranty settlement and reclass (see below)	302,000			418,000
Balance at end of period	$	16,068,000		9,982,000

On August 1, 2018, in connection with our adoption of ASC 606, $1,679,000 of accrued warranty obligations presented in the above table were reclassified to contract liabilities, as they represented deferred revenue related to service-type warranty performance obligations.

Our current accrued warranty obligations at October 31, 2019 and July 31, 2019 include $3,781,000 and $3,999,000, respectively, of warranty obligations for a small product line that we refer to as the TCS 911 call handling software solution. This solution was licensed to customers prior to our acquisition of TeleCommunication Systems, Inc. ("TCS"). During the fiscal year ended July 31, 2018, we entered into a full and final warranty settlement with AT&T, the largest customer/distributor of this product line, pursuant to which we issued thirty-six credits to AT&T of $153,000 which AT&T can apply on a monthly basis to purchases of solutions from us, beginning October 2017 through September 2020. As of October 31, 2019, the total present value of these monthly credits is $1,611,000, all of which is included in our current accrued warranty obligations on our Condensed Consolidated Balance Sheet.

In connection with our acquisition of Solacom and the GD NG-911 business during the fiscal year ended July 31, 2019, we assumed warranty obligations related to certain contracts acquired. See Note (2) - "Acquisitions" for further information pertaining to these acquisitions.