(14) PRODUCT WARRANTY COSTS AND INVENTORY VALUATION RESERVES

The Company warrants to the consumer who purchases its products that it will repair or replace, without charge, defective products within one year of purchase. The Company also has a return policy that allows its customers to return to the Company products returned to them by their customers for full or partial credit based on when the Company's customer last purchased these products. Consequently, the Company maintains a warranty reserve, which reflects historical warranty return rates by product category multiplied by the most recent six months of unit sales of that model and the unit standard cost of the model. A roll-forward of the warranty reserve follows:


	Three Months			Year
	Ended			Ended
	March 31,			December 31,
	2012			2011
	(In Thousands)
Accrued product warranty costs, beginning of period	$	1,191		$	923
Warranty provision		480			2,867
Warranty expenditures		(709	)		(2,599	)

Accrued product warranty costs, end of period	$	962		$	1,191

The Company maintains a liquidation reserve representing the write-down of returned product from its customers to its net realizable value. Returned inventory is either sold to various liquidators or returned to vendors for partial credit against similar, new models. The decision to sell or return products to vendors depends upon the estimated future demand for the models. Judgments are made as to whether various models are to be liquidated or returned to the vendor, taking into consideration the liquidation prices expected to be received and the amount of the vendor credit. The amount of the reserve is determined by comparing the cost of each unit returned to the estimated amount to be realized upon each unit's disposition, either from returning the unit to the vendor for partial credit

towards the cost of new, similar product or liquidating the unit. This reserve can fluctuate significantly from quarter to quarter depending upon quantities of returned inventory on-hand and the estimated liquidation price or vendor credit per unit. A roll-forward of the liquidation reserve follows:


	Three Months			Year
	Ended			Ended
	March 31,			December 31,
	2012			2011
	(In Thousands)
Liquidation reserve, beginning of period	$	999		$	777
Liquidation provision		509			2,156
Liquidation of models		(616	)		(1,934	)

Liquidation reserve, end of period	$	892		$	999

The Company maintains a net realizable value ("NRV") reserve to write-down, as necessary, certain finished goods, except for those goods covered by the previously discussed liquidation reserve, below cost. The reserve includes models where it is determined that the estimated realizable value is less than cost. Thus, judgments must be made about which slow-moving, excess or non-current models are included in the reserve and the NRV of such models. The estimated NRV of each model is the per unit price that is estimated to be received if the model were sold in the marketplace. This reserve will vary depending upon the specific models selected, the estimated NRV for each model and quantities of each model that are determined will be sold below cost from quarter to quarter. A roll-forward of the NRV reserve follows:


	Three Months			Year
	Ended			Ended
	March 31,			December 31,
	2012			2011
	(In Thousands)
Net realizable reserve, beginning of period	$	118		$	206
NRV provision		79			315
NRV write-offs		(76	)		(403	)

Net realizable reserve, end of period	$	121		$	118