NOTE 6. Balance Sheet Items

Inventories.

Inventories (net of reserves of $7.3 million and $6.6 million at September 27, 2014 and December 28, 2013, respectively) were as follows:


	September 27,		December 28,
(in thousands)	2014		2013
Work-in-progress	$	17,865	$	15,847
Finished goods		16,723		15,227
	$	34,588	$	31,074

Product warranties.

The Company provides a limited warranty on most of its standard products and accrues for the estimated cost at the time of shipment. The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs and periodically reassess these estimates as actual warranty activities occur. The changes in the Company’s accrued warranty obligations from December 28, 2013 to September 27, 2014, and from December 29, 2012 to September 28, 2013 were as follows:


	Nine Months Ended
	September 27,		September 28,
(in thousands)	2014		2013
Balance, beginning of the period	$	2,163	$	5,981
Accrual for new warranties issued		371		402
Reduction for payments and product replacements		(533)		(868)
Adjustments related to revisions and changes in estimate of warranty accrual		(113)		(3,198)
Balance, end of the period	$	1,888	$	2,317

The Company’s accrual for warranty obligations is included in Accrued liabilities in the interim Condensed Consolidated Balance Sheet. The change in estimate of warranty accrual in the third quarter of 2013 includes a reduction for amounts over accrued in prior periods and amounts do not have a material impact to 2013 or prior periods.