WARRANTY RESERVE

9 Months Ended

Oct. 27, 2012

WARRANTY RESERVE

WARRANTY RESERVE

NOTE 6—WARRANTY RESERVE

The Company provides warranties for both its merchandise sales and service labor. Warranties for merchandise are generally covered by the respective vendors, with the Company covering any costs above the vendor’s stipulated allowance. Service labor is warranted in full by the Company for a limited specific time period. The Company establishes its warranty reserves based on historical experiences. These costs are included in either costs of merchandise sales or costs of service revenues in the consolidated statements of operations.

The reserve for warranty cost activity for the thirty-nine weeks ended October 27, 2012 and the fifty-two weeks ended January 28, 2012 is as follows:

(dollar amounts in thousands)	October 27, 2012			January 28, 2012
Beginning balance	$	673		$	673
Additions related to current period sales	7,603			12,122
Warranty costs incurred in current period	(7,485		)	(12,122		)
Ending balance	$	791		$	673