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COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Jul. 29, 2018
COMMITMENTS AND CONTINGENCIES |
COMMITMENTS AND CONTINGENCIES | (14) Commitments and contingencies: The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled $486 million and $454 million at July 29, 2018 and July 30, 2017, respectively. A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows:
|  | Three Months Ended |  | Nine Months Ended |
|  | July 29 |  | July 30 |  | July 29 |  | July 30 |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Beginning of period balance |  | $ | 1,591 |  | $ | 1,365 |  | $ | 1,468 |  | $ | 1,226 |
Payments |  |  | (212) |  |  | (197) |  |  | (642) |  |  | (529) |
Amortization of premiums received |  |  | (56) |  |  | (53) |  |  | (170) |  |  | (149) |
Accruals for warranties |  |  | 250 |  |  | 248 |  |  | 704 |  |  | 717 |
Premiums received |  |  | 72 |  |  | 58 |  |  | 198 |  |  | 153 |
Acquisitions * |  |  |  |  |  |  |  |  | 80 |  |  |  |
Foreign exchange |  |  | (21) |  |  | 17 |  |  | (14) |  |  | 20 |
End of period balance |  | $ | 1,624 |  | $ | 1,438 |  | $ | 1,624 |  | $ | 1,438 |
*  See Note 18. At July 29, 2018, the Company had approximately $445 million of guarantees issued primarily to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere and Wirtgen equipment. The increase from October 29, 2017 primarily relates to the Wirtgen acquisition. The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At July 29, 2018, the Company had accrued losses of approximately $20 million under these agreements. The maximum remaining term of the receivables guaranteed at July 29, 2018 was approximately seven years. At July 29, 2018, the Company had commitments of approximately $397 million for the construction and acquisition of property and equipment. The increase from October 29, 2017 primarily relates to the Wirtgen acquisition. Also, at July 29, 2018, the Company had restricted assets of $101 million, primarily restricted other assets. See Note 11 for additional restricted assets associated with borrowings related to securitizations. The Company also had other miscellaneous contingent liabilities totaling approximately $125 million at July 29, 2018. The accrued liability for these contingencies was not material at July 29, 2018. The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, and trademark matters. The Company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidated financial statements.

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