Note 7. Product Warranties

3 Months Ended

Dec. 31, 2011

Note 7. Product Warranties Disclosure

Note 7. Product Warranties

7. PRODUCT WARRANTIES

We offer warranties of various lengths to our customers depending on the specific product sold.  The warranties require us to repair or replace non-performing products during the warranty period at no cost to the customer.  At the time revenue is recognized for covered products, we record a liability for estimated costs that may be incurred under our warranties.  The costs are estimated based on historical experience, any specific warranty problems that have been identified and recovery of secondary warranty cost from component suppliers.  The amounts shown below are presented net of any expected cost recovery from suppliers.  Although historical warranty costs have been within our expectations, there can be no assurance that future warranty costs will not exceed historical amounts.  We regularly evaluate the adequacy of the warranty liability and adjust the balance as necessary.

Changes in our product warranty liability for the three months ended December 31, 2011 and January 1, 2011 are as follows:

	Three Months Ended
	Dec. 31,			Jan. 1,
	2011			2011
Accrued liability at beginning of period	$	480,000		$	570,000
(Decreases) / Increases in reserve		(41,336	)		97,422
Increase in reserve as result of MCHP asset acquisition		39,000			-
Expenses		(18,664	)		(79,422	)
Accrued liability at end of period	$	459,000		$	588,000