Warranty

The Company generally provides a 12 month warranty on its gamma cameras. The Company accrues the estimated cost of this warranty at the time revenue is recorded and charges warranty expense to Product cost of revenues. Warranty reserves are established based on historical experience with failure rates and repair costs and the number of systems covered by warranty. Warranty reserves are depleted as gamma cameras are repaired. The costs consist principally of materials, personnel, overhead and transportation. The Company reviews warranty reserves quarterly and, if necessary, makes adjustments.

The activities in the Company’s warranty reserve for the period ended June 30, 2012, and 2011 are as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Balance at beginning of period	$	282		$	372		$	297		$	378
Charges to Product cost of revenues	110			242			214			458
Applied to liability	(111		)	(211		)	(230		)	(433		)
Balance at end of period	$	281		$	403		$	281		$	403