Securitization of Receivables

3 Months Ended

Jan. 28, 2024

Securitization of Receivables

Securitization of Receivables

(5) Securitization of Receivables

Our funding strategy includes retail note securitizations. While these securitization programs are administered in various forms, they are accomplished in the following basic steps:

1.  We transfer retail notes into a bankruptcy-remote SPE.

2.  The SPE issues debt to investors. The debt is secured by the retail notes.

3.  Investors are paid back based on cash receipts from the retail notes.

As part of step 1, these retail notes are legally isolated from the claims of our general creditors. This ensures cash receipts from the retail notes are accessible to pay back securitization program investors. The structure of these transactions does not meet the accounting criteria for a sale of receivables. As a result, they are accounted for as a secured borrowing. The receivables and borrowings remain on our balance sheet and are separately reported as “Retail notes securitized” and “Securitization borrowings,” respectively.

The components of the securitization programs were as follows:

	January 28		October 29		January 29
	2024		2023		2023
Retail notes securitized	$	6,417.7	$	7,356.8	$	5,101.4
Allowance for credit losses		(17.8)		(21.4)		(12.5)
Other assets (primarily restricted cash)		139.9		152.0		97.2
Total restricted securitized assets	$	6,539.8	$	7,487.4	$	5,186.1
Securitization borrowings	$	6,116.1	$	6,995.2	$	4,863.9
Accrued interest on borrowings		10.0		12.6		5.9
Total liabilities related to restricted securitized assets	$	6,126.1	$	7,007.8	$	4,869.8