FINANCING RECEIVABLES

3 Months Ended

Feb. 02, 2020

FINANCING RECEIVABLES

FINANCING RECEIVABLES

(11)  Financing Receivables

Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent loans for which the Company has ceased accruing finance income. The Company ceases accruing finance income when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent 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 generally resumed when the receivable becomes contractually current and collections are reasonably assured.

An age analysis of past due financing receivables that are still accruing interest and non-performing financing receivables in millions of dollars follows:

	February 2, 2020
					90 Days
	30-59 Days		60-89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
Retail Notes:
Agriculture and turf	$	150	$	65	$	3	$	218
Construction and forestry		96		36		19		151
Other:
Agriculture and turf		66		21		1		88
Construction and forestry		29		11				40
Total	$	341	$	133	$	23	$	497
							Total
	Total		Total				Financing
	Past Due		Non-Performing		Current		Receivables
Retail Notes:
Agriculture and turf	$	218	$	283	$	18,514	$	19,015
Construction and forestry		151		131		3,488		3,770
Other:
Agriculture and turf		88		100		7,457		7,645
Construction and forestry		40		28		1,431		1,499
Total	$	497	$	542	$	30,890		31,929
Less allowance for credit losses								157
Total financing receivables – net							$	31,772

	November 3, 2019
					90 Days
	30-59 Days		60-89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
Retail Notes:
Agriculture and turf	$	138	$	73	$	1	$	212
Construction and forestry		79		29		4		112
Other:
Agriculture and turf		39		19		1		59
Construction and forestry		26		7				33
Total	$	282	$	128	$	6	$	416
							Total
	Total		Total				Financing
	Past Due		Non-Performing		Current		Receivables
Retail Notes:
Agriculture and turf	$	212	$	268	$	18,931	$	19,411
Construction and forestry		112		127		3,450		3,689
Other:
Agriculture and turf		59		28		8,986		9,073
Construction and forestry		33		26		1,496		1,555
Total	$	416	$	449	$	32,863		33,728
Less allowance for credit losses								150
Total financing receivables – net							$	33,578

	January 27, 2019
					90 Days
	30-59 Days		60-89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
Retail Notes:
Agriculture and turf	$	162	$	63	$	1	$	226
Construction and forestry		102		47		1		150
Other:
Agriculture and turf		65		23		1		89
Construction and forestry		16		8				24
Total	$	345	$	141	$	3	$	489
							Total
	Total		Total				Financing
	Past Due		Non-Performing		Current		Receivables
Retail Notes:
Agriculture and turf	$	226	$	296	$	17,408	$	17,930
Construction and forestry		150		107		3,092		3,349
Other:
Agriculture and turf		89		28		7,213		7,330
Construction and forestry		24		10		1,247		1,281
Total	$	489	$	441	$	28,960		29,890
Less allowance for credit losses								177
Total financing receivables – net							$	29,713

An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:

	Three Months Ended February 2, 2020
			Revolving
	Retail		Charge
	Notes		Accounts		Other		Total
Allowance:
Beginning of period balance	$	89	$	40	$	21	$	150
Provision (credit)		15		(1)		7		21
Write-offs		(17)		(7)		(1)		(25)
Recoveries		2		8				10
Translation adjustments		(1)				2		1
End of period balance *	$	88	$	40	$	29	$	157
Financing receivables:
End of period balance	$	22,785	$	2,733	$	6,411	$	31,929
Balance individually evaluated **	$	170			$	86	$	256

	Three Months Ended January 27, 2019
			Revolving
	Retail		Charge
	Notes		Accounts		Other		Total
Allowance:
Beginning of period balance	$	113	$	43	$	22	$	178
Provision (credit)		6		(1)		2		7
Write-offs		(11)		(4)		(1)		(16)
Recoveries		4		5				9
Translation adjustments		(1)						(1)
End of period balance *	$	111	$	43	$	23	$	177
Financing receivables:
End of period balance	$	21,279	$	2,737	$	5,874	$	29,890
Balance individually evaluated **	$	118	$	2	$	13	$	133

* Individual allowances were not significant.

** Remainder is collectively evaluated.

Financing 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 the impaired financing receivables in millions of dollars follows:

			Unpaid				Average
	Recorded		Principal		Specific		Recorded
	Investment		Balance		Allowance		Investment
February 2, 2020*
Receivables with specific allowance ***	$	117	$	116	$	22	$	119
Receivables without a specific allowance **		31		30				32
Total	$	148	$	146	$	22	$	151
Agriculture and turf	$	120	$	120	$	17	$	123
Construction and forestry	$	28	$	26	$	5	$	28
November 3, 2019*
Receivables with specific allowance **	$	40	$	39	$	13	$	40
Receivables without a specific allowance **		32		31				37
Total	$	72	$	70	$	13	$	77
Agriculture and turf	$	49	$	48	$	8	$	52
Construction and forestry	$	23	$	22	$	5	$	25
January 27, 2019*
Receivables with specific allowance **	$	30	$	30	$	12	$	30
Receivables without a specific allowance **		36		34				36
Total	$	66	$	64	$	12	$	66
Agriculture and turf	$	49	$	48	$	9	$	49
Construction and forestry	$	17	$	16	$	3	$	17

*   Finance income recognized was not material.

**  Primarily retail notes.

***   Primarily retail notes and wholesale receivables.

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 three months of 2020, the Company identified 88 receivable contracts, primarily wholesale receivables in Argentina, as troubled debt restructurings with aggregate balances of $85 million pre-modification and $74 million post-modification. During the first three months of 2019, there were 70 financing receivable contracts, primarily retail notes, identified as troubled debt restructurings with aggregate balances of $2 million pre-modification and $2 million post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At February 2, 2020, the Company had commitments to lend approximately $14 million to borrowers whose accounts were modified in troubled debt restructurings.