NOTE 8 – oTHER FINANCIAL STATEMENT DATA

Inventories consist of the following:



	December 31,
(In thousands)	2012		2011
Raw materials and purchased parts	$	8,152	$	6,893
Work in process		1,322		1,007
Finished goods		3,059		3,152
Total inventories	$	12,533	$	11,052

Equipment and leasehold improvements consist of the following:



	December 31,
(In thousands)	2012		2011
Equipment	$	10,800	$	10,257
Leasehold improvements		1,538		1,471
		12,338		11,728
Accumulated depreciation and amortization		(10,619)		(10,328)
	$	1,719	$	1,400

Total depreciation expense related to equipment and leasehold improvements was $958,000 for the year ended December 31, 2012 and $1,064,000 for the year ended December 31, 2011.

Intangible assets consist of the following:



	December 31, 2012						December 31, 2011
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Developed technology	$	7,775	$	(7,775)	$	—	$	7,775	$	(7,775)	$	—
Patents		2,847		(2,658)		189		2,734		(2,504)		230
	$	10,622	$	(10,433)	$	189	$	10,509	$	(10,279)	$	230

Amortization expense for the two years ended December 31, 2012 and 2011 is as follows:



	Years Ended December 31,
(In thousands)	2012		2011
Developed technology	$	—	$	108
Patents		154		200
	$	154	$	308

As of December 31, 2012, the weighted average remaining life of our intangible assets, consisting entirely of patents, was approximately 2.3 years. Amortization of patents has been classified as research and development expense in the accompanying statement of operations. Estimated aggregate amortization expense based on current intangibles for the next three years is expected to be as follows: $112,000 in 2013, $58,000 in 2014, and $19,000 in 2015.

Accrued expenses consist of the following:



	December 31,
(In thousands)	2012		2011
Wages and benefits	$	770	$	1,741
Warranty liability		694		985
Re-organization and restructure charge		192		—
Income taxes payable		—		122
Unrealized loss on foreign exchange forward contracts		—		493
Other		184		316
	$	1,840	$	3,657

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 and could be material. 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:



	Year Ended December 31,
(In thousands)	2012		2011
Balance at beginning of period	$	985	$	702
Accrual for warranties		745		1,273
Warranty revision		(2)		(15)
Settlements made during the period		(1,034)		(975)
Balance at end of period	$	694	$	985

Deferred warranty revenue:

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



	Year Ended December 31,
(In thousands)	2012		2011
Balance at beginning of period	$	806	$	787
Revenue deferrals		230		489
Amortization of deferred revenue		(454)		(470)
Total deferred warranty revenue		582		806
Current portion of deferred warranty revenue		(436)		(453)
Long-term deferred warranty revenue	$	146	$	353