NOTE 2. WARRANTY

Most of our manufactured products are sold with warranties. Warranty periods, which vary by product components, generally range from 1 to 10 years; however, the warranty period for a limited number of specifically identified components in certain applications is a lifetime. The majority of the products sold have warranties on components which range from 1 to 3 years. The reserve for warranties is based on management’s assessment of the cost per service call and the number of service calls expected to be incurred to satisfy warranty obligations on the current net sales.

During the three months ended July 2, 2016, we recorded warranty expense at a rate of approximately 2.44% of sales. This rate is slightly higher, but in line with the 2.32% of sales accrued in the first quarter of 2016.

The following table summarizes: current period charges, adjustments to previous estimates, if necessary, as well as settlements, which represent actual costs incurred during the period for the three and six months ended July 2, 2016, and July 4, 2015. The reserve is determined through specific identification and assessing Company history. Expected future obligations are discounted to a current value using a risk-free rate for obligations with similar maturities.

The following provides information with respect to our warranty accrual:


	Beginning				Charged to							End of
Accrued Warranty	of Period		Acquired		to Expense		Adjustments		Settlements			Period
(in thousands)
Three months ended July 2, 2016	$	4,713	$	—	$	2,908	$	413	$	(2,931	)	$	5,103
Three months ended July 4, 2015	$	3,608	$	—	$	2,268	$	58	$	(1,857	)	$	4,077
Six months ended July 2, 2016	$	4,237	$	264	$	5,236	$	770	$	(5,404	)	$	5,103
Six months ended July 4, 2015	$	3,302	$	—	$	4,176	$	247	$	(3,648	)	$	4,077