Accrued liabilities at October 31, 2015 and 2014 consisted of the following (in thousands):



	2015		2014
Accrued payroll and employee benefits	$	3,914	$	4,432
Accrued contract and operating costs	—		34
Accrued product warranty costs ⁽¹⁾	964		1,156
Accrued service agreement costs	3,437		3,882
Accrued taxes, legal, professional and other	3,292		2,562
Accrued material purchases ⁽²⁾	7,568		—
	$	19,175	$	12,066

(1)

Activity in the accrued product warranty costs during the year ended October 31, 2015 and 2014 included additions for estimates of potential future warranty obligations of $0.6 million and $2.4 million, respectively, on contracts in the warranty period and reductions related to actual warranty spend of $0.8 million and $1.2 million, respectively, as contracts progress through the warranty period or are beyond the warranty period.


(2)	The Company acts as a procurement agent for POSCO under the Integrated Global Supply Chain Plan ("IGSCP") whereby the Company procures materials on POSCO's behalf for its production facility. The liability represents amounts received for the purchase of materials on behalf of POSCO. Amounts due to vendors is recorded as Accounts Payable.