Accrued liabilities at January 31, 2013 and October 31, 2012 consisted of the following:



	January 31, 2013		October 31, 2012
Accrued payroll and employee benefits ⁽¹⁾	$	3,560	$	3,907
Accrued contract and operating costs ⁽²⁾	36		39
Reserve for product warranty cost ⁽³⁾	2,384		2,317
Reserve for service agreement costs ⁽⁴⁾	7,957		7,222
Reserve for B1200 repair and upgrade program ⁽⁵⁾	4,669		4,753
Accrued taxes, legal, professional and other ⁽⁶⁾	2,237		2,027
	$	20,843	$	20,265


(1)	Balance relates to amounts owed to employees for compensation and benefits as of the end of the period.


(2)	Balance includes estimated losses accrued on product sales contracts.

(3)

Activity in the reserve for product warranty costs for the three months ended January 31, 2013 included additions for estimates of potential future warranty obligations of $1.7 million on contracts in the warranty period and reserve reductions related to actual warranty spend and reversals to income of $1.6 million as contracts progress through the warranty period or are beyond the warranty period.

(4)

As of January 31, 2013, the loss reserve on service agreement contracts totaled $5.6 million compared to $5.0 million as of October 31, 2012. Also included in this line item is a reserve for performance guarantees penalties under the terms of our customer contracts, which based on our ongoing analysis of historical fleet performance totaled $2.4 million and $2.2 million as of January 31, 2013 and October 31, 2012, respectively.


(5)	For the three months ended January 31, 2013, the Company incurred actual repair and upgrade costs of approximately $0.1 million.


(6)	Balance includes accrued sales, use and payroll taxes as well as accrued legal, professional and other expenses as of the end of the period.