JOY GLOBAL INC | 2013 | FY | 3


Warranties

We provide for the estimated costs that may be incurred under product warranties to remedy deficiencies of quality or performance of our products. Warranty costs are accrued at the time revenue is recognized. These product warranties extend over either a specified period of time, units of production or machine hours depending on the product subject to the warranty. We accrue a provision for estimated future warranty costs based on the historical relationship of warranty costs to sales. We periodically review the adequacy of the accrual for product warranties and adjust the warranty percentage and accrued warranty reserve for actual experience as necessary.

The following table reconciles the changes in the product warranty reserve:
In thousands
October 25,
2013
 
October 26,
2012
Balance, beginning of year
$
100,646

 
$
82,737

Accrual for warranty expensed during the year
57,610

 
49,268

Settlements made during the year
(72,981
)
 
(52,736
)
Effect of foreign currency translation
457

 
(520
)
Adjusted acquired warranty accrual

 
21,897

Balance, end of year
$
85,732

 
$
100,646



Adjustments were made in fiscal 2012 to reflect a $16.1 million increase in the liability for pre-existing warranties related to the mining equipment business of LeTourneau.

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