C. Warranty

The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers. However, its warranty obligation is affected by product failure rates, the number of units affected by the failure and the expense involved in satisfactorily addressing the situation. The warranty reserve is established based on our best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. When evaluating the adequacy of the reserve for warranty costs, management takes into consideration the term of the warranty coverage, historical claim rates and costs of repair, knowledge of the type and volume of new products and economic trends. While we believe the warranty reserve is adequate and that the judgment applied is appropriate, such amounts estimated to be due and payable in the future could differ materially from what actually transpires. The following is a listing of the activity in the warranty reserve during the three and six month periods ended December 28, 2012 and December 30, 2011 (in thousands):

	Three Months Ended		Six Months Ended
	Dec. 28,	Dec. 30,	Dec. 28,	Dec. 30,
	2012	2011	2012	2011

Reserve balance, beginning of period	$5,462	$6,583	$5,745	$6,022
Current period expense	1,086	317	1,967	1,781
Payments or credits to customers	(1,066)	(906)	(2,251)	(1,679)
Foreign currency translation	51	(111)	72	(241)

Reserve balance, end of period	$5,533	$5,883	$5,533	$5,883

The current portion of the warranty accrual ($3,812,000) is reflected in accrued liabilities, while the long-term portion ($1,721,000) is included in other long-term liabilities on the Consolidated Balance Sheets.