5. PRODUCT WARRANTIES

12 Months Ended

May 31, 2013

Product Warranties

Product Warranties

5. PRODUCT WARRANTIES:

The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is 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 the Company’s estimates, revisions to the estimated warranty liability would be required.

Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2013 and May 31, 2012 (in thousands):

	May 31,
	2013	2012
Balance at the beginning of the year.........	$  91	$ 103
Accruals for warranties issued during the year	536	208
Settlement made during the year
(in cash or in kind).......................	(405)	(220)
Balance at the end of the year...............	$ 222	$  91

The accrued warranty balance is included in Accrued Expenses on the accompanying consolidated balance sheets.