11.	COMMITMENTS AND CONTINGENCIES

a. Purchase Commitments

As of

April 1, 2018,

we have made commitments to purchase approximately

$2,483

of production machinery and equipment.

b. Product Warranties

We estimate future costs associated with expected product failure rates, material usage and service costs in the development of our warranty obligations. Warranty reserves are based on historical experience of warranty claims and generally will be estimated as a percentage of sales over the warranty period. In the event the actual results of these items differ from the estimates, an adjustment to the warranty obligation would be recorded. Changes in our product warranty liability during the

first

three

months of

2018

and

2017

were as follows:

	Three -Month P eriod s E nded
	April 1 , 2018			April 2 , 2017
Accrued Warranty Obligations – Beginning	$	149		$	172
Accruals for Warranties Issued		14			7
Settlements Made		(6	)		(24	)
Accrued Warranty Obligations – Ending	$	157		$	155

c. Contingencies and Legal Matters

We are subject to legal proceedings and claims that arise from time to time in the normal course of business. We believe that the final disposition of such matters will

not

have a material adverse effect on our financial position, results of operations or cash flows.

Dreamliner Litigation

July 2013,

an unoccupied Boeing

787

Dreamliner aircraft operated by Ethiopian Airlines was damaged by fire while parked at London Heathrow Airport. Following an investigation of this incident conducted by U.K. and U.S. regulatory authorities as well as by the manufacturer of the aircraft, a final report was issued by the Air Accidents Investigative Branch – UK Civil Aviation regulatory authority, with findings indicating that the fire was primarily caused by circumstances related to the plane’s emergency locator transmitter (“ELT”) manufactured and installed by another company. A component of the ELT is a battery pack which incorporates Ultralife’s industry-standard lithium manganese dioxide non-rechargeable D-cell, which Ultralife has produced since

2001,

with wide-use in global defense and commercial applications.

May 4, 2015,

we were notified of a lawsuit in which we were named, along with other suppliers to the aircraft manufacturer, concerning that

2013

fire, which was filed by Ethiopian Airlines Enterprise in the Commercial Court, Queen’s Bench Division of the High Court of Justice, London. We immediately referred this matter to our insurers.

This lawsuit has now been resolved (

February 2018),

the claimant has terminated the action against the Company, and the Court has acknowledged and consented to this termination. The matter was terminated without financial consequences to the Company.