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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jan. 30, 2022

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

(16) 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 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 $781 million and $656 million at January 30, 2022 and January 31, 2021, respectively.

A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows:


		Three Months Ended
		January 30			January 31
		2022			2021
Beginning of period balance		$	2,086		$	1,743
Payments			(193)			(215)
Amortization of premiums received			(66)			(63)
Accruals for warranties			181			247
Premiums received			83			73
Foreign exchange			(27)			18
End of period balance		$	2,064		$	1,803

At January 30, 2022, the Company had $374 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 equipment. The Company

may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At January 30, 2022, the Company had accrued losses of $5 million under these agreements. The maximum remaining term of the receivables guaranteed at January 30, 2022 was approximately six years.

At January 30, 2022, the Company had commitments of $323 million for the construction and acquisition of property and equipment. Also, at January 30, 2022, the Company had restricted assets of $64 million, classified as “Other assets.” See Note 10 for additional restricted assets associated with borrowings related to securitizations.

The Company also had other miscellaneous contingent liabilities totaling approximately $85 million at January 30, 2022. The accrued liability for these contingencies was not material at January 30, 2022.

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.