Current Liabilities

Deferred Services Revenue

A portion of our revenue is generated from service contracts. Payments from certain of these service contracts are collected in advance. As such, revenues from these service contracts are deferred and recognized ratably over the contract period for time based service contracts, or as service hours are delivered for contracts based on a purchased quantity of hours. Changes in our deferred service revenue are as follows:



	Three Months Ended						Nine Months Ended
(In thousands)	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Balance, beginning of the period	$	4,717		$	2,257		$	2,903		$	1,907
Service contracts sold during the period	1,132			925			5,713			2,500
Service contract revenue recognized during the period	(1,120		)	(879		)	(3,887		)	(2,104		)
Balance, end of the period	$	4,729		$	2,303		$	4,729		$	2,303
Balance sheet classification
Deferred service income-short term	$	3,360		$	2,303
Deferred service income-long term	1,369			—
Balance, end of period	$	4,729		$	2,303

Other current liabilities

Other current liabilities consist of the following:



(In thousands)	October 1, 2011		December 31, 2010
Salaries and benefits	$	7,976	$	7,513
Warranty accrual	2,276		2,111
Accrued taxes-other	1,575		291
Capital lease, current portion	174		165
Advanced billing	1,202		—
Other	1,280		1,948
Balance, end of the period	$	14,483	$	12,028

Warranty Accrual

We generally warrant our new and refurbished products for material and labor to repair the product for a period of twelve and three months, respectively, from the date of customer acceptance. Accordingly, an accrual for the estimated cost of the warranty is recorded at the time the product is shipped. Extended warranty terms, if granted, result in deferral of revenue equating to our standard pricing for similar service contracts. Recognition of the related warranty cost is deferred until product revenue is recognized. Factors that affect our warranty liability include the number of installed units, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary. We believe our warranty accrual, as of October 1, 2011, is sufficient to satisfy outstanding obligations as of that date. Changes in our warranty accrual are as follows:



	Three Months Ended						Nine Months Ended
(In thousands)	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Balance, beginning of the period	$	2,674		$	2,120		$	2,111		$	1,710
Warranties accrued for shipments during the period	545			1,140			2,313			2,433
Settlements made during the period	(529		)	(376		)	(1,633		)	(900		)
Changes in accrued warranty liabilities	(414		)	(408		)	(515		)	(767		)
Balance, end of the period	$	2,276		$	2,476		$	2,276		$	2,476

Advanced Billings

On occasion, we require, or our customers pay, a deposit in advance of order shipment. These amounts are classified as advanced billings until the related order ships. The balance of $1.2 million of advanced billings was from multiple customers as of October 1, 2011. There were no advance payments received as of December 31, 2010.