Accrued liabilities at April 30, 2013 and October 31, 2012 consisted of the following:



	April 30, 2013		October 31, 2012
Accrued payroll and employee benefits ⁽¹⁾	$	4,580	$	3,907
Accrued contract and operating costs ⁽²⁾	41		39
Reserve for product warranty cost ⁽³⁾	1,761		2,317
Reserve for service agreement costs ⁽⁴⁾	6,205		7,222
Reserve for B1200 repair and upgrade program ⁽⁵⁾	4,669		4,753
Accrued taxes, legal, professional and other ⁽⁶⁾	2,450		2,027
	$	19,706	$	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 six months ended April 30, 2013 included additions for estimates of potential future warranty obligations of $1.3 million on contracts in the warranty period and reserve reductions related to actual warranty spend and reversals to income of $1.9 million as contracts progress through the warranty period or are beyond the warranty period.

(4)

As of April 30, 2013 and October 31, 2012, the loss reserve on SA's totaled $5.0 million. 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 $1.2 million and $2.2 million as of April 30, 2013 and October 31, 2012, respectively. The decrease in the reserve for performance guarantees penalties was due to certain amounts being reclassed to accounts payable due to the finalization of negotiations of amounts due to POSCO.


(5)	For the six months ended April 30, 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.