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GUARANTEES AND PRODUCT WARRANTIES

3 Months Ended

Jan. 31, 2021

10. GUARANTEES AND PRODUCT WARRANTIES

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, 2021, we had 15 outstanding third party payment guarantees totaling approximately $0.8 million. 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. 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 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 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,
	2021		2020
Balance, beginning of year	$	1,200	$	1,760
Provision for warranties during the year		713		492
Charges to the reserve		(722)		(784)
Impact of foreign currency translation		55		3
Balance, end of year	$	1,246	$	1,471

The year-over-year decrease in our warranty reserve was primarily due to a decrease in the number of machines under warranty.