a. Inventories.

Inventories (net of reserves of $8 million and $8.3 million at July 1, 2012 and December 31, 2011, respectively) were as follows:


	July 1,		December 31,
*(in thousands)*	2012		2011
Work-in-progress	$	15,448	$	20,367
Finished goods		13,714		19,544
	$	29,162	$	39,911

b. Product warranties.

The Company provides a limited warranty on most of its standard products and accrues for the estimated cost at the time of shipment. The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs. The change in the Company's accrued warranty obligations from December 31, 2011 to July 1, 2012, and for the same period in the prior year were as follows:


	Six Months Ended
	July 1,		June 26,
*(in thousands)*	2012		2011
Balance, beginning of the period	$	5,415	$	5,457
Accrual for new warranties issued		870		982
Reduction for payments and product replacements		(112)		(120)
Adjustments related to changes in estimate of warranty accrual		(870)		(832)
Balance, end of the period	$	5,303	$	5,487

The Company’s accrual for warranty obligations is included in Accrued liabilities in the interim Condensed Consolidated Balance Sheet.