Warranties

Reserves are recorded on our Consolidated Balance Sheets to reflect our contractual liabilities relating to warranty commitments to customers. Historically, estimates of warranty commitments have not differed materially from actual results; however, unanticipated product quality issues could result in material changes to estimates in future periods.

Changes in the carrying amount and accrued product warranty costs for the periods ended September 30, 2013 and 2012 are summarized as follows:



(in millions)	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
Balance at January 1,	$	6.6		$	6.5
Settlements made (in cash or in kind)	(5.7		)	(4.6		)
Current year accrual	9.9			5.0
Effect of foreign currency translation	(0.2		)	—
Balance at September 30,	$	10.6		$	6.9

Warranty expense was $9.7 million and $5.0 million for the nine months ended September 30, 2013 and 2012, respectively. At September 30, 2013, $9.4 million was included in current liabilities and $1.2 million was included in non-current liabilities. At December 31, 2012, $5.8 million was included in current liabilities and $0.8 million was included in non-current liabilities.

The increase in this accrual is primarily due to two warranty claims. At September 30, 2013 approximately $1.4 million of the increase in the 'Current year accrual' is due to a warranty issue in Europe and $3.9 million of the increase is due to the warranty claim in India which was initially recognized in the second quarter of 2013. Settlements made (noted above), are net of the expected value of anticipated returned compressors associated with the warranty claim in India.