Receivables

6 Months Ended

Apr. 30, 2012

Receivables

Receivables

(4)Past due balances of Receivables represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date.

The Company monitors the credit quality of Receivables as either performing or non-performing monthly. Non-performing Receivables represent loans for which the Company has ceased accruing finance income. Generally, when retail notes are approximately 120 days delinquent, accrual of finance income is suspended, the collateral is repossessed or the account is designated for litigation and the estimated uncollectible amount, after charging the dealer’s withholding account, if any, is written off to the allowance for credit losses. Revolving charge accounts are deemed to be uncollectible and written off to the allowance for credit losses when delinquency reaches 120 days. Generally, when a wholesale receivable becomes 60 days delinquent, the Company determines whether the accrual of finance income on interest-bearing wholesale receivables should be suspended, the collateral should be repossessed or the account should be designated for litigation and the estimated uncollectible amount written off to the allowance for credit losses. When a financing lease account becomes 120 days delinquent, the accrual of lease revenue is suspended, the equipment is repossessed or the account is designated for litigation, and the estimated uncollectible amount, after charging the dealer’s withholding account, if any, is written off to the allowance for credit losses. Finance income for non-performing Receivables is recognized on a cash basis. Accrual of finance income is resumed when the receivable becomes contractually current and collections are reasonably assured.

An aging of past due and non-performing Receivables was as follows (in millions of dollars):

	April 30, 2012
		30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due *		Total Past Due
Retail notes:
Agriculture and turf equipment		$	57.1	$	30.9	$	18.9	$	106.9
Construction and forestry equipment		34.5		18.3		8.6		61.4
Revolving charge accounts:
Agriculture and turf equipment		14.2		6.8		8.3		29.3
Construction and forestry equipment		1.7		.7		.4		2.8
Wholesale receivables:
Agriculture and turf equipment		2.3		2.5		1.0		5.8
Construction and forestry equipment		1.4		.2		.1		1.7
Financing leases:
Agriculture and turf equipment		3.2		6.8		.2		10.2
Construction and forestry equipment		.5		.2		.3		1.0
Operating loans:
Agriculture and turf equipment
Total Receivables		$	114.9	$	66.4	$	37.8	$	219.1

	Total Past Due		Total Non- performing		Current		Total Receivables
Retail notes:
Agriculture and turf equipment	$	106.9	$	39.0	$	12,641.7	$	12,787.6
Construction and forestry equipment	61.4		13.8		1,164.2		1,239.4
Revolving charge accounts:
Agriculture and turf equipment	29.3		.7		2,219.0		2,249.0
Construction and forestry equipment	2.8				55.0		57.8
Wholesale receivables:
Agriculture and turf equipment	5.8		.7		5,638.3		5,644.8
Construction and forestry equipment	1.7				979.6		981.3
Financing leases:
Agriculture and turf equipment	10.2		10.0		295.0		315.2
Construction and forestry equipment	1.0		2.8		134.2		138.0
Operating loans:
Agriculture and turf equipment					67.9		67.9
Total Receivables	$	219.1	$	67.0	$	23,194.9	$	23,481.0

*Receivables that are 90 days or greater past due and still accruing finance income.

	October 31, 2011
		30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due *		Total Past Due
Retail notes:
Agriculture and turf equipment		$	76.1	$	25.4	$	20.3	$	121.8
Construction and forestry equipment		43.6		19.0		11.2		73.8
Recreational products
Revolving charge accounts:
Agriculture and turf equipment		15.2		5.7		2.8		23.7
Construction and forestry equipment		2.1		.8		.4		3.3
Wholesale receivables:
Agriculture and turf equipment		1.5		3.0		.6		5.1
Construction and forestry equipment		.4				.2		.6
Financing leases:
Agriculture and turf equipment		4.7		3.4		1.1		9.2
Construction and forestry equipment		.8		1.1		.3		2.2
Operating loans:
Agriculture and turf equipment
Total Receivables		$	144.4	$	58.4	$	36.9	$	239.7

	Total Past Due		Total Non- performing		Current		Total Receivables
Retail notes:
Agriculture and turf equipment	$	121.8	$	41.1	$	12,549.8	$	12,712.7
Construction and forestry equipment	73.8		16.9		1,064.8		1,155.5
Recreational products			.1		3.4		3.5
Revolving charge accounts:
Agriculture and turf equipment	23.7		1.5		2,364.7		2,389.9
Construction and forestry equipment	3.3				59.3		62.6
Wholesale receivables:
Agriculture and turf equipment	5.1		4.7		4,350.2		4,360.0
Construction and forestry equipment	.6				851.1		851.7
Financing leases:
Agriculture and turf equipment	9.2		10.2		299.3		318.7
Construction and forestry equipment	2.2		3.0		134.8		140.0
Operating loans:
Agriculture and turf equipment			1.5		82.5		84.0
Total Receivables	$	239.7	$	79.0	$	21,759.9	$	22,078.6

*Receivables that are 90 days or greater past due and still accruing finance income.

	April 30, 2011
		30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due *		Total Past Due
Retail notes:
Agriculture and turf equipment		$	72.8	$	33.6	$	26.3	$	132.7
Construction and forestry equipment		54.1		24.8		13.7		92.6
Recreational products		.1		.1				.2
Revolving charge accounts:
Agriculture and turf equipment		14.7		6.9		9.7		31.3
Construction and forestry equipment		1.8		.7		.5		3.0
Wholesale receivables:
Agriculture and turf equipment		.7				1.8		2.5
Construction and forestry equipment		.8				.2		1.0
Financing leases:
Agriculture and turf equipment		5.7		4.3		13.1		23.1
Construction and forestry equipment		2.9		1.3		3.7		7.9
Operating loans:
Agriculture and turf equipment				.3		.1		.4
Total Receivables		$	153.6	$	72.0	$	69.1	$	294.7

	Total Past Due		Total Non- performing		Current		Total Receivables
Retail notes:
Agriculture and turf equipment	$	132.7	$	49.0	$	11,327.3	$	11,509.0
Construction and forestry equipment	92.6		28.5		1,014.2		1,135.3
Recreational products	.2		.2		5.4		5.8
Revolving charge accounts:
Agriculture and turf equipment	31.3		.8		2,148.2		2,180.3
Construction and forestry equipment	3.0				47.0		50.0
Wholesale receivables:
Agriculture and turf equipment	2.5		1.6		5,291.4		5,295.5
Construction and forestry equipment	1.0		7.7		728.2		736.9
Financing leases:
Agriculture and turf equipment	23.1		11.4		260.6		295.1
Construction and forestry equipment	7.9		3.8		128.5		140.2
Operating loans:
Agriculture and turf equipment	.4		2.4		190.9		193.7
Total Receivables	$	294.7	$	105.4	$	21,141.7	$	21,541.8

*Receivables that are 90 days or greater past due and still accruing finance income.

Allowances for credit losses on Receivables are maintained in amounts considered to be appropriate in relation to the Receivables outstanding based on historical loss experience by product category, portfolio duration, delinquency trends, economic conditions and credit risk quality.

An analysis of the allowance for credit losses and investment in Receivables was as follows (in millions of dollars):

	Three Months Ended
	April 30, 2012
	Retail Notes				Revolving Charge Accounts				Wholesale Receivables			Other			Total Receivables
Allowance:
Beginning of period balance	$		62.4		$	39.7			$	6.1		$	12.6		$		120.8
Provision (credit) for credit losses	(.9			)	1.4				.5			.8			1.8
Write-offs	(1.2			)	(7.0			)	(.1		)	(1.9		)	(10.2			)
Recoveries	1.7				5.6							.1			7.4
End of period balance	$		62.0		$	39.7			$	6.5		$	11.6		$		119.8
	Six Months Ended
	April 30, 2012
Allowance:
Beginning of period balance	$	67.8			$		39.7		$	6.0		$	12.8		$	126.3
Provision (credit) for credit losses	(5.5			)	2.5				.6			1.4			(1.0			)
Write-offs	(3.2			)	(13.5			)	(.2		)	(2.7		)	(19.6			)
Recoveries	3.2				11.0				.1			.2			14.5
Other changes (primarily translation adjustments)	(.3			)								(.1		)	(.4			)
End of period balance	$	62.0			$		39.7		$	6.5		$	11.6		$	119.8
Balance individually evaluated *									$	.5					$	.5
Receivables:
End of period balance	$	14,027.0			$		2,306.8		$	6,626.1		$	521.1		$	23,481.0
Balance individually evaluated *	$	9.8			$		1.0		$	1.2					$	12.0

*         Remainder is collectively evaluated.

	Three Months Ended
	April 30, 2011
	Retail Notes				Revolving Charge Accounts				Wholesale Receivables				Other			Total Receivables
Allowance:
Beginning of period balance	$	80.0			$	44.1			$	6.3			$	15.0		$	145.4
Provision (credit) for credit losses	1.6				1.6				(.1			)	(.1		)	3.0
Write-offs	(3.0			)	(9.2			)	(.2			)	(1.0		)	(13.4			)
Recoveries	2.7				6.8											9.5
Other changes (primarily translation adjustments)	.5								.1				.3			.9
End of period balance	$	81.8			$	43.3			$	6.1			$	14.2		$	145.4
	Six Months Ended
	April 30, 2011
Allowance:
Beginning of period balance	$		82.1		$		43.3		$		7.4		$	15.8		$		148.6
Provision (credit) for credit losses	3.3				4.3				(1.3			)	.5			6.8
Write-offs	(9.3			)	(18.5			)	(.4			)	(2.5		)	(30.7			)
Recoveries	5.2				14.2				.1				.2			19.7
Other changes (primarily translation adjustments)	.5								.3				.2			1.0
End of period balance	$		81.8		$		43.3		$		6.1		$	14.2		$		145.4
Balance individually evaluated *	$		2.4						$		.4		$	2.8		$		5.6
Receivables:
End of period balance	$		12,650.1		$		2,230.3		$		6,032.4		$	629.0		$		21,541.8
Balance individually evaluated *	$		22.8		$		1.7		$		1.2		$	5.9		$		31.6

*         Remainder is collectively evaluated.

Receivables are considered impaired when it is probable the Company will be unable to collect all amounts due according to the contractual terms. Receivables reviewed for impairment generally include those that are either past due, or have provided bankruptcy notification, or require significant collection efforts. Receivables that are impaired are generally classified as non-performing.

An analysis of  impaired Receivables was as follows (in millions of dollars):

	Recorded Investment		Unpaid Principal Balance		Specific Allowance		Average Recorded Investment
April 30, 2012 *
Receivables with specific allowance:
Wholesale receivables	$	1.0	$	1.0	$	.5	$	1.2
Receivables without specific allowance:
Retail notes	8.0		7.9				8.0
Wholesale receivables	.2		.2				.2
Total	$	9.2	$	9.1	$	.5	$	9.4
Agriculture and turf	$	6.6	$	6.5	$	.5	$	6.2
Construction and forestry	$	2.6	$	2.6			$	3.2
October 31, 2011 *
Receivables with specific allowance:
Retail notes	$	.8	$	.8	$	.5	$	.8
Wholesale receivables	4.5		4.5		.2		4.5
Financing leases							.2
Operating loans	.5		.5		.3		2.0
Total	5.8		5.8		1.0		7.5
Receivables without specific allowance:
Retail notes	7.8		7.7				9.9
Wholesale receivables	.3		.3				.3
Total	$	13.9	$	13.8	$	1.0	$	17.7
Agriculture and turf	$	11.0	$	10.9	$	1.0	$	13.5
Construction and forestry	$	2.9	$	2.9			$	4.2
April 30, 2011 *
Receivables with specific allowance:
Retail notes	$	4.6	$	4.4	$	2.4	$	4.7
Wholesale receivables	1.2		1.2		.4		1.2
Financing leases	.5		.5		.4		.5
Operating loans	3.2		3.2		2.4		4.2
Total	9.5		9.3		5.6		10.6
Receivables without specific allowance:
Retail notes	11.1		10.9				9.7
Total	$	20.6	$	20.2	$	5.6	$	20.3
Agriculture and turf	$	11.8	$	11.7	$	3.7	$	12.2
Construction and forestry	$	8.8	$	8.5	$	1.9	$	8.1

*       Finance income recognized was not material.

A troubled debt restructuring is generally the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first six months of 2012, the Company identified 102 Receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $2.7 million pre-modification and $2.5 million post-modification.  During the first six months of 2011, there were 127 contracts with $5.3 million pre-modification and $4.7 million post-modification balances. During the same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At April 30, 2012, the Company had no commitments to lend additional funds to borrowers whose accounts were modified in troubled debt restructurings.