contracts and customer purchase orders are generally used to determine the existence of an arrangement . shipping documents are used to verify delivery . the company assesses whether the selling price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment . the company assesses collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis , as well as the customer 2019s payment history . accruals for customer returns for defective product are based on historical experience with similar types of sales . accruals for rebates and incentives are based on pricing agreements and are generally tied to sales volume . changes in such accruals may be required if future returns differ from historical experience or if actual sales volume differ from estimated sales volume . rebates and incentives are recognized as a reduction of sales . compensated absences . in the fourth quarter of 2001 , the company changed its vacation policy for certain employees so that vacation pay is earned ratably throughout the year and must be used by year-end . the accrual for compensated absences was reduced by $ 1.6 million in 2001 to eliminate vacation pay no longer required to be accrued under the current policy . advertising . advertising costs are charged to operations as incurred and amounted to $ 18.4 , $ 16.2 and $ 8.8 million during 2003 , 2002 and 2001 respectively . research and development . research and development costs are charged to operations as incurred and amounted to $ 34.6 , $ 30.4 and $ 27.6 million during 2003 , 2002 and 2001 , respectively . product warranty . the company 2019s products carry warranties that generally range from one to six years and are based on terms that are generally accepted in the market place . the company records a liability for the expected cost of warranty-related claims at the time of sale . the allocation of our warranty liability between current and long-term is based on expected warranty claims to be paid in the next year as determined by historical product failure rates . 1 . organization and significant accounting policies ( continued ) the following table presents the company 2019s product warranty liability activity in 2003 and 2002 : note to table : environmental costs . the company accrues for losses associated with environmental obligations when such losses are probable and reasonably estimable . costs of estimated future expenditures are not discounted to their present value . recoveries of environmental costs from other parties are recorded as assets when their receipt is considered probable . the accruals are adjusted as facts and circumstances change . stock based compensation . the company has one stock-based employee compensation plan ( see note 11 ) . sfas no . 123 , 201caccounting for stock-based compensation , 201d encourages , but does not require companies to record compensation cost for stock-based employee compensation plans at fair value . the company has chosen to continue applying accounting principles board opinion no . 25 , 201caccounting for stock issued to employees , 201d and related interpretations , in accounting for its stock option plans . accordingly , because the number of shares is fixed and the exercise price of the stock options equals the market price of the underlying stock on the date of grant , no compensation expense has been recognized . had compensation cost been determined based upon the fair value at the grant date for awards under the plans based on the provisions of sfas no . 123 , the company 2019s pro forma earnings and earnings per share would have been as follows: .

2003: balance at beginning of year: 63.2
expense: 29.1
claims settled: -30.2
customer warranty waiver ( 1 ): --
balance at end of year: 62.1
2002: balance at beginning of year: 69.6
expense: 29.9
claims settled: -29.1
customer warranty waiver ( 1 ): -7.2
balance at end of year: 63.2

( 1 ) in exchange for other concessions , the customer has agreed to accept responsibility for units they have purchased from the company which become defective . the amount of the warranty reserve applicable to the estimated number of units previously sold to this customer that may become defective has been reclassified from the product warranty liability to a deferred revenue account. .

Questions:
what were research and developments costs in 2002?
what were they in 2001?
what is the net change?
what is the percent change?

Answers:
30.4
27.6
2.8
10%