(5) Securitization of receivables:

The Company, as a part of its overall funding strategy, periodically transfers certain Receivables (retail notes) into variable interest entities (VIEs) that are special purpose entities (SPEs), or non‑VIE banking operations, as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that the transfer of the retail notes does not meet the criteria of sales of receivables, and is, therefore, accounted for as a secured borrowing. SPEs utilized in securitizations of retail notes differ from other entities included in the Company’s consolidated statements because the assets they hold are legally isolated. Use of the assets held by the SPEs or the non‑VIEs is restricted by terms of the documents governing the securitization transactions.

In securitizations of retail notes related to secured borrowings, the retail notes are transferred to certain SPEs or to non-VIE banking operations, which in turn issue debt to investors. The resulting secured borrowings are recorded as “Securitization borrowings” on the balance sheet. The securitized retail notes are recorded as “Retail notes securitized” on the balance sheet. The total restricted assets on the balance sheet related to these securitizations include the retail notes securitized less an allowance for credit losses, and other assets primarily representing restricted cash. For those securitizations in which retail notes are transferred into SPEs, the SPEs supporting the secured borrowings are consolidated unless the Company does not have both the power to direct the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the SPEs. No additional support to these SPEs beyond what was previously contractually required has been provided during the reporting periods.

In certain securitizations, the Company consolidates the SPEs since it has both the power to direct the activities that most significantly impact the SPEs’ economic performance through its role as servicer of all the Receivables held by the SPEs and the obligation through variable interests in the SPEs to absorb losses or receive benefits that could potentially be significant to the SPEs. The restricted assets (retail notes securitized, allowance for credit losses and other assets) of the consolidated SPEs totaled $2,213.2 million, $2,717.6 million and $2,464.0 million at January 29, 2017, October 30, 2016 and January 31, 2016, respectively. The liabilities (securitization borrowings and accrued interest) of these SPEs totaled $2,174.9 million, $2,655.1 million and $2,317.1 million at January 29, 2017, October 30, 2016 and January 31, 2016, respectively. In the fourth quarter of 2015, as part of a receivable transfer, the Company retained $228.0 million of securitization borrowings, with no balance at January 29, 2017 or October 30, 2016 and $113.5 million at January 31, 2016. This amount is not shown as a liability above as the borrowing is not outstanding to a third party. The credit holders of these SPEs do not have legal recourse to the Company’s general credit.

In certain securitizations, the Company transfers retail notes to non-VIE banking operations, which are not consolidated since the Company does not have a controlling interest in the entities. The Company’s carrying values and interests related to these securitizations with the unconsolidated non-VIEs were restricted assets (retail notes securitized, allowance for credit losses and other assets) of $490.4 million, $663.6 million and $212.7 million at January 29, 2017, October 30, 2016 and January 31, 2016, respectively. The liabilities (securitization borrowings and accrued interest) were $468.1 million, $616.5 million and $205.0 million at January 29, 2017, October 30, 2016 and January 31, 2016, respectively.

In certain securitizations, the Company transfers retail notes into bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that are not consolidated. The Company does not service a significant portion of the conduits’ receivables, and therefore, does not have the power to direct the activities that most significantly impact the conduits’ economic performance. These conduits provide a funding source to the Company (as well as other transferors into the conduit) as they fund the retail notes through the issuance of commercial paper. The Company’s carrying values and variable interests related to these conduits were restricted assets (retail notes securitized, allowance for credit losses and other assets) of $1,655.1 million, $1,861.0 million and $1,405.0 million at January 29, 2017, October 30, 2016 and January 31, 2016, respectively. The liabilities (securitization borrowings and accrued interest) related to these conduits were $1,579.5 million, $1,728.8 million and $1,354.8 million at January 29, 2017, October 30, 2016 and January 31, 2016, respectively.

The Company’s carrying amount of the liabilities to the unconsolidated conduits, compared to the maximum exposure to loss related to these conduits, which would only be incurred in the event of a complete loss on the restricted assets was as follows (in millions of dollars):


	January 29
	2017
Carrying value of liabilities	$	1,579.5
Maximum exposure to loss		1,655.1

The total assets of unconsolidated VIEs related to securitizations were approximately $51.6 billion at January 29, 2017.

The components of consolidated restricted assets related to secured borrowings in securitization transactions were as follows (in millions of dollars):


	January 29		October 30		January 31
	2017		2016		2016
Retail notes securitized	$	4,262.6	$	5,141.2	$	4,015.0
Allowance for credit losses		(12.2)		(14.7)		(11.8)
Other assets		108.3		115.7		78.5
Total restricted securitized assets	$	4,358.7	$	5,242.2	$	4,081.7

The components of consolidated secured borrowings and other liabilities related to securitizations were as follows (in millions of dollars):


	January 29		October 30		January 31
	2017		2016		2016
Securitization borrowings	$	4,220.2	$	4,997.8	$	3,874.9
Accrued interest on borrowings		2.3		2.6		2.0
Total liabilities related to restricted securitized assets	$	4,222.5	$	5,000.4	$	3,876.9

The secured borrowings related to these restricted retail notes are obligations that are payable as the retail notes are liquidated. Repayment of the secured borrowings depends primarily on cash flows generated by the restricted assets. Due to the Company's short-term credit rating, cash collections from these restricted assets are not required to be placed into a restricted collection account until immediately prior to the time payment is required to the secured creditors. At January 29, 2017, the maximum remaining term of all restricted securitized retail notes was approximately six years.