GUARANTEES AND PRODUCT WARRANTIES

3 Months Ended

Jan. 31, 2019

Standard Product Warranty Disclosure [Abstract]

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 guarantees (codified in ASC 460). As of January 31, 2019, we had 25 outstanding third party payment guarantees totaling approximately $687,000. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer assumes the risk of ownership and control. The customer does not obtain title, however, until the customer 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 liabilities under these guarantees at fair value, which amounts are insignificant.

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 certain components 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):

	Three Months Ended January 31,
	2019			2018
Balance, beginning of period	$	2,499		$	1,772
Provision for warranties during the period		962			980
Charges to the reserve		(868	)		(771	)
Impact of foreign currency translation		27			62
Balance, end of period	$	2,620		$	2,043

The year-over-year increase in our warranty reserve was primarily due to an increase in unit sales volume.