Notes Receivable from and Payable to John Deere

6 Months Ended

May 01, 2022

Notes Receivable from and Payable to John Deere

Notes Receivable from and Payable to John Deere

(7)  Notes Receivable from and Payable to John Deere

The Company provides loans to and holds other receivables from affiliated companies. The loan agreements mature over the next seven years and charge interest at competitive market interest rates. Interest earned from John Deere is recorded in other income, and was $4.7 million for the second quarter and $10.2 million in the first six months of 2022, respectively, compared with $3.1 million and $6.4 million for the same periods last year, respectively.

The Company had notes receivable from John Deere with the following affiliated companies as follows (in millions of dollars):

	May 1		October 31		May 2
	2022		2021		2021
Limited Liability Company John Deere Financial			$	233.7	$	127.9
Banco John Deere S.A.	$	171.8		159.8		173.6
John Deere Agricultural Holdings, Inc.		39.7
Total Notes Receivable from John Deere	$	211.5	$	393.5	$	301.5

Limited Liability Company John Deere Financial (JDF Russia) is a John Deere financial services affiliate in Russia. The Company previously provided ruble-denominated loans to JDF Russia to fund JDF Russia’s retail portfolio. The Company had entered into non-designated cross-currency interest rate contracts and foreign currency exchange contracts to hedge against interest rate and foreign currency exchange risk associated with the loans. In April 2022, the loans to JDF Russia and related derivative contracts were assumed by Deere & Company for cash at carrying value as of the date of assumption.

John Deere Agricultural Holdings, Inc. (JDAH) is a John Deere equipment operations affiliate in Russia. The Company purchased wholesale receivables from this affiliate related to independent John Deere dealers in Russia. Cash collections on the wholesale receivables continue to remain strong. The affiliate receivable from JDAH represents cash collections on the Russia wholesale portfolio that have not yet been remitted to the Company. The remaining outstanding wholesale portfolio in Russia held by the Company did not represent a significant portion of its wholesale receivable portfolio at May 1, 2022. John Deere currently requires prepayment of existing equipment inventory in Russia, and, as such, no further wholesale receivables are being purchased by the Company.

The Company also obtains funding from affiliated companies. At May 1, 2022, October 31, 2021, and May 2, 2021, the Company had notes payable to John Deere of $5,276.4 million, $5,619.4 million and $5,752.4 million, respectively. The intercompany borrowings are primarily short-term in nature or contain a due on demand call option. At May 1, 2022, $524.7 million of the intercompany borrowings were long-term loans without a due on demand call option, which mature in 2024. The Company pays interest to John Deere for these borrowings based on competitive market rates. Interest expense paid to John Deere, which is recorded in fees paid to John Deere, was $17.5 million for the second quarter and $34.0 million for the first six months of 2022, respectively, compared with $11.5 million and $21.4 million for the same periods last year, respectively.