XML 51 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Oct. 31, 2017
Accounting Policies [Abstract]  
Schedule of Truck Reserve
The following table presents our used truck reserve:
 
For the Years Ended October 31,
(in millions)
2017
 
2016
 
2015
Balance at beginning of period
$
208

 
$
110

 
$
43

Additions charged to expense(A)
111

 
187

 
117

Deductions/Other adjustments(B)
(209
)
 
(89
)
 
(50
)
Balance at end of period
$
110

 
$
208

 
$
110

_________________________
(A)
Additions charged to expense reflects the increase of the reserve for inventory on hand. During 2017, we implemented a shift in market mix to include an increase in volume to certain export markets, which have a lower price point as compared to sales through our domestic channels, and lower domestic pricing to enable higher sales velocity.
(B)
Deductions/Other adjustments include reductions of the reserve related to the sale of units and our Mexican subsidiary currency translation adjustments.
Property, Plant And Equipment, Useful Life
The ranges of estimated useful lives are as follows:
 
Years
Buildings
20 - 50
Leasehold improvements
3 - 20
Machinery and equipment
3 - 12
Furniture, fixtures, and equipment
3 - 15
Equipment leased to others
1 - 10
Intangible Assets, Useful Life
The ranges for the amortization periods are generally as follows:
 
Years
Customer base and relationships
3 - 15
Trademarks
20
Other
3 - 18
Schedule of Product Warranty Liability [Table Text Block]
Product Warranty Liability
The following table presents accrued product warranty and deferred warranty revenue activity:
 
For the Years Ended October 31,
(in millions)
2017
 
2016
 
2015
Balance at beginning of period
$
818

 
$
994

 
$
1,197

Costs accrued and revenues deferred
199

 
186

 
260

Currency translation adjustment
(1
)
 
3

 
(9
)
Adjustments to pre-existing warranties(A)
(1
)
 
77

 
1

Payments and revenues recognized
(386
)
 
(442
)
 
(455
)
Balance at end of period
629

 
818

 
994

Less: Current portion
307

 
396

 
429

Noncurrent accrued product warranty and deferred warranty revenue
$
322

 
$
422

 
$
565

________________________
(A)
Adjustments to pre-existing warranties reflect changes in our estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historical and expected trends. Our warranty liability is generally affected by component failure rates, repair costs, and the timing of failures. Future events and circumstances related to these factors could materially change our estimates and require adjustments to our liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available.
In the second quarter of 2016, we recorded a charge for adjustments to pre-existing warranties of $46 million or a charge of $0.56 per diluted share. The charge primarily relates to increases in both claim frequency and cost of repair across both the Medium Duty and Big Bore engine families. The charge increased the reserve for our standard warranty obligations as well as the loss positions related to our Big Bore extended service contracts. Adjustments to pre-existing warranties in 2016 include a benefit of $1 million related to our Workhorse Custom Chassis operations, which are reported in Discontinued Operations in our Consolidated Statements of Operations.
In the first quarter of 2015, we recognized a benefit for adjustments to pre-existing warranties of $57 million or a benefit of $0.70 per diluted share. In the fourth quarter of 2015, we recognized a charge for adjustments to pre-existing warranties from continuing operations of $40 million or a charge of $0.49 per diluted share. Adjustments to pre-existing warranties in 2015 include a benefit of $3 million related to our Workhorse Custom Chassis operations, which are reported in Discontinued Operations in our Consolidated Statements of Operations.
The impact of income taxes on the 2017, 2016, and 2015 adjustments are not material due to our deferred tax valuation allowances on our U.S. deferred tax assets.