Guarantees and Contractual Obligations

6 Months Ended

Apr. 29, 2011

Guarantees and Contractual Obligations

NOTE 10: GUARANTEES AND CONTRACTUAL OBLIGATIONS

We are required to disclose information about certain guarantees and contractual obligations in our periodic financial statements.

We sell extended furniture protection plans and offer warranties for certain of our products. Revenue related to furniture protection plans is deferred and recognized over the contract life. Historical claims data is used to forecast claims payments over the contract period and revenue is recognized based on the forecasted claims payments. Actual claims costs are reflected in earnings in the period incurred. Anticipated losses on programs in progress are charged to earnings when identified. For product warranties, we estimate the costs that may be incurred under these warranties based on historical claims data and record a liability in the amount of such costs at the time revenue is recognized.

We periodically assess the adequacy of these recorded amounts and adjust as necessary. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses can be estimated. The extended furniture protection plans that we enter into have fixed prices. To the extent the actual costs to complete contracts are higher than the amounts estimated as of the date of the financial statements, gross margin would be negatively affected in future quarters when we revise our estimates. Our practice is to revise estimates as soon as such changes in estimates become known.


Changes in the recorded amounts, both short-term and long-term, during the period are as follows:
	Six Months Ended
	April 29, 2011			April 30, 2010
Beginning balance, October	$	74,907		$	70,503
Additional net deferred revenue/accrual made during the period		7,863			6,992
Payments made during the period		(6,921	)		(3,840	)
Ending balance	$	75,849		$	73,655