Note J – Warranty

The Company estimates warranty costs using quantitative measures based on historical warranty claim experience and evaluation of specific Customer warranty issues. Following is a reconciliation of warranty reserves for the six months ended January 31, 2012 and 2011 (thousands of dollars):


	January 31,
	2012			2011
Balance at beginning of year	$	19,720		$	15,707
Accruals for warranties issued during the reporting period		1,826			3,436
Adjustments related to pre - existing warranties (including changes in estimates)		(1,294	)		2,367
Less settlements made during the period		(5,638	)		(4,342	)
Balance at end of period	$	14,614		$	17,168

The prior year increase in warranty accruals was primarily due to two specific warranty matters: one in the Company's Retrofit Emissions Products group for $2.5 million and one in the Company's Off-Road Products group for $1.4 million. These warranty accruals were partially offset by supplier recoveries of $1.0 million. These warranty matters are not expected to have a material impact on our results of operations, liquidity or financial position. The settlements made during the six months ended January 31, 2012 were primarily in relation to the two above mentioned matters.