11.	GUARANTEES AND PRODUCT WARRANTIES

We follow FASB guidance for accounting for contingencies relating to the guarantor’s accounting for, and disclosures of, the issuance of certain types of guarantees.

From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for contingencies with respect to these guarantees. As of October 31, 2011, we had 23 outstanding third party payment guarantees totaling approximately $1.2 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer has the risk of ownership. The customer does not obtain title, however, until it has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue for potential liabilities under these guarantees when we believe a loss is probable and can be estimated.

We provide warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year for machines and shorter periods for service parts. We recognize a reserve with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the reserve. The amount of the warranty reserve is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience. A reconciliation of the changes in our warranty reserve is as follows (in thousands):

	2011			2010			2009
Balance, beginning of year	$	1,591		$	1,286		$	2,536
Provision for warranties during the year		3,142			2,170			799
Charges to the accrual		(2,993	)		(1,875	)		(2,096	)
Impact of foreign currency translation		(15	)		10			47
Balance, end of year	$	1,725		$	1,591		$	1,286

The factor primarily responsible for the increase in the warranty accrual and provision from fiscal 2009 to fiscal 2011 is the increase in sales. In addition, during fiscal 2010 we introduced several new products and our product mix included a greater percentage of our higher-performance machines, which due to their complexity tend to have both a higher rate of warranty claim and a higher cost per claim. These factors, coupled with our increased production activity within a relatively short period of time, were considered when increasing the accrual and provision during fiscal 2010 and 2011.