WARRANTY

9 Months Ended

Mar. 31, 2013

NOTE 3. WARRANTY

The warranty accrual is based on historical costs of warranty repairs and expected future identifiable warranty expenses, and is included in accrued expenses in the accompanying consolidated balance sheets. As of March 31, 2013 and June 30, 2012, the warranty reserve related to continuing operations amounted to $399,000 and $526,000, respectively. Warranty expenses are included in cost of sales in the accompanying consolidated statements of operations. Changes in estimates to previously established warranty accruals result from current period updates to assumptions regarding repair costs and warranty return rates, and are included in current period warranty expense. Total warranty expense from continuing operations for the three months ended March 31, 2013 and 2012 was $127,000 and $26,000, respectively, and for the nine months ended March 31, 2013 and 2012 was $252,000 and $444,000, respectively.

Information regarding the accrual for warranty costs relating to continuing operations for the three and nine months ended March 31, 2013 and 2012 are as follows:


	Three Months Ended March 31,
		2013			2012
Balances, beginning of period	$	361,000		$	695,000
Accruals during the period		107,000			69,000
Changes in estimates of prior period accruals		20,000			(43,000	)
Warranty expenditures		(89,000	)		(122,000	)
Balances, end of period	$	399,000		$	599,000


	Nine Months Ended March 31,
	2013			2012
Balances, beginning of period	$	526,000		$	688,000
Accruals during the period		261,000			340,000
Changes in estimates of prior period accruals		(9,000	)		104,000
Warranty expenditures		(379,000	)		(533,000	)
Balances, end of period	$	399,000		$	599,000

The changes in estimates recorded during the three and nine months ended March 31, 2013 and 2012 were due primarily to fluctuations in per-unit warranty repair costs and return rates and the effects of those fluctuations on our estimates of future warranty repair costs.

In 2013, we reclassified certain amounts, previously classified as warranty costs, to a classification as out-of-warranty repair costs. The 2012 amounts appearing in the tables above have been reclassified to conform to the 2013 presentation. Such reclassifications had no effect on the accompanying condensed consolidated statements of operations.