EQUIPMENT ON OPERATING LEASES

12 Months Ended

Nov. 03, 2019

EQUIPMENT ON OPERATING LEASES

EQUIPMENT ON OPERATING LEASES

15. EQUIPMENT ON OPERATING LEASES

Operating leases arise primarily from the leasing of John Deere equipment to retail customers. Initial lease terms generally range from 12 to 60 months. Net equipment on operating leases at November 3, 2019 and October 28, 2018 consisted of the following in millions of dollars:

	2019		2018
Equipment on operating leases:
Agriculture and turf	$	5,888	$	5,682
Construction and forestry		1,679		1,483
Equipment on operating leases – net	$	7,567	$	7,165

The equipment is depreciated on a straight-line basis over the term of the lease. The accumulated depreciation on this equipment was $1,855 million and $1,515 million at November 3, 2019 and October 28, 2018, respectively. The corresponding depreciation expense was $981 million in 2019, $928 million in 2018, and $853 million in 2017.

Future payments to be received on operating leases totaled $2,498 million at November 3, 2019 and are scheduled in millions of dollars as follows: 2020 - $1,086, 2021 - $759, 2022 - $419, 2023 - $193, and 2024 - $41. At November 3, 2019 and October 28, 2018, the company’s financial services operations had $12 million and $34 million, respectively, of deposits withheld from dealers available for potential losses on residual values.

Equipment returned to the company upon termination of leases and held for subsequent sale or lease is recorded in “Other assets” at the lower of net book value or estimated fair value of the equipment less costs to sell and is not depreciated. The matured operating lease inventory at November 3, 2019 and October 28, 2018 was $163 million and $247 million, respectively.