6. INVENTORIES AND WARRANTIES:

Inventories consist of the following:


(In thousands)	March 31, 2012		December 31, 2011

Raw materials and purchased parts	$	7,639	$	6,893
Work in process		1,227		1,007
Finished goods		3,684		3,152

Total inventories	$	12,550	$	11,052

Warranty costs:

We provide for the estimated cost of product warranties at the time revenue is recognized, generally for one year. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, warranty obligations are affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required. Our warranty liability is included as a component of accrued expenses. At the end of each reporting period we revise our estimated warranty liability based on these factors.

A reconciliation of the changes in our estimated warranty liability is as follows:


	Three Months Ended March 31,
(In thousands)	2012			2011

Balance at beginning of period	$	985		$	702
Accrual for warranties		332			185
Settlements made during the period		(301	)		(191	)

Balance at end of period	$	1,016		$	696

Extended warranty:

The current portion of our extended warranty liability is included as a component of advance customer payments. A reconciliation of the changes in our extended warranty liability is as follows:


	Three Months Ended March 31,
(In thousands)	2012			2011

Balance at beginning of period	$	806		$	787
Revenue deferrals		46			86
Amortization of deferred revenue		(105	)		(110	)
Total extended warranty liability		747			763
Current portion of extended warranty liability		(482	)		(410	)

Long-term extended warranty liability	$	265		$	353