NOTE 9—WARRANTIES

The Company generally offers its customers a standard two-year warranty on power products sold, although warranty periods may vary by product type and application. The Company offers standard five- and ten-year warranties on its renewable energy products and also offers customers extended warranty contracts with terms between five and 10 years after the standard warranty period expires. The Company accounts for such extended warranty contracts in accordance with ASC 605-20-25, "Revenue Recognition." The Company reviews its warranty liability quarterly based on an analysis of actual expenses and failure rates by specific product lines and estimated future costs and projected failure rate trends by specific product lines. Factors taken into consideration when evaluating the Company's warranty reserve are (i) historical claims for each product, (ii) the maturity of the product within its life cycle, (iii) volume increases, (iv) life of warranty, (v) historical warranty repair costs and (vi) other factors. To the extent that actual experience differs from our estimate, the provision for product warranties will be adjusted in future periods. Actual warranty repair costs are charged against the reserve balance as incurred.

A tabular presentation of the activity within the warranty accrual account for each of the three months ended March 31, 2013 and April 1, 2012 is presented below, (in millions):

	March 31, 2013			April 1, 2012

Beginning balance	$	49.2		$	31.4
Charges and costs accrued		6.7			6.1
Adjustments related to pre-existing warranties (including changes in estimates)		1.4			2.5
Less repair costs incurred		(4.7	)		(5.2	)
Change due to foreign currency		(1.3	)		0.8

Ending balance	$	51.3		$	35.6

The increase in accrued warranties and repair costs from April 1, 2012 to March 31, 2013 primarily results from recording the warranty liability associated with inverters sold during that period partially offset by the expiration of warranties related to past sales. As of March 31, 2013 and December 30, 2012, $17.2 million and $17.5 million, respectively, of the accrued warranties were included in other accrued expenses in the accompanying consolidated balance sheets.

The Company offers its renewable energy customers extended warranty contracts with terms between five and 10 years after the base warranty period expires and revenue is recognized over the extended warranty period in accordance with ASC 605-20-25, "Revenue Recognition." Deferred revenue related to such extended warranty contracts was $29.4 million and $28.1 million, as of March 31, 2013 and December 30, 2012, respectively, and was included as part of deferred revenue in the accompanying consolidated condensed balance sheets.