RECEIVABLES

12 Months Ended

Oct. 29, 2023

RECEIVABLES

RECEIVABLES

11. RECEIVABLES

Trade Accounts and Notes Receivable

Trade accounts and notes receivable arise from sales of goods to independent dealers. See Note 2 for our revenue recognition policy. We evaluate and assess dealers’ credit worthiness on an ongoing basis. Receivables are secured with collateral or other credit enhancements. Trade accounts and notes receivable at the end of 2023 and 2022 follow:

	2023		2022
Trade accounts and notes receivable:
Production & precision ag	$	2,642	$	2,397
Small ag & turf		2,344		2,065
Construction & forestry		2,753		1,948
Trade accounts and notes receivable – net	$	7,739	$	6,410

These receivables have significant concentrations of credit risk in the agriculture and turf and construction and forestry markets. Credit losses have been historically low. There is not a disproportionate concentration of credit risk with any single dealer. On a geographic basis, 53 percent of our trade accounts and notes receivable are located in the U.S. and Canada at October 29, 2023.

At October 29, 2023 and October 30, 2022 trade and notes receivables balances outstanding greater than 12 months were $107 and $49, respectively.

The allowance for credit losses on trade accounts and notes receivable at October 29, 2023, October 30, 2022, and October 31, 2021, as well as the related activity, follow:

	2023		2022		2021
Beginning of year balance	$	36	$	41	$	39
ASU No. 2016-13						(2)
Provision		7		1		10
Write-offs		(8)		(5)		(7)
Translation adjustments				(1)		1
End of year balance	$	35	$	36	$	41

The equipment operations sell a significant portion of their trade receivables to financial services. Compensation is provided to financial services at market interest rates.

Financing Receivables ‒ Overall

Financing receivables originate under the following circumstances:

● Retail customers purchase (or lease) equipment from a dealer and finance the equipment through John Deere Financial.

● We sell the equipment to a dealer under trade terms. Trade terms end, and the dealer finances the equipment on a wholesale receivable. Shown as wholesale notes in “Financing Receivables related to the Sale of Equipment.”

● A dealer finances the purchase of used equipment through John Deere Financial.

● We sell (or lease) the equipment directly to a retail customer with terms typically greater than 12 months. Shown as retail notes or sales-type leases in the “Financing Receivables related to the Sale of Equipment.”

● The customer utilizes a revolving credit product to finance parts, service, or input costs.

Financing receivables at the end of 2023 and 2022 follow:

	2023				2022
	Unrestricted/Securitized				Unrestricted/Securitized
Retail notes:
Agriculture and turf	$	26,955	$	6,052	$	23,830	$	4,868
Construction and forestry		4,623		1,442		4,396		1,179
Total		31,578		7,494		28,226		6,047
Wholesale notes		6,947				3,285
Revolving charge accounts		4,789				4,316
Financing leases (direct and sales-type)		2,906				2,832
Total financing receivables		46,220		7,494		38,659		6,047
Less:
Unearned finance income:
Retail notes		1,906		137		1,358		95
Wholesale notes		25				12
Revolving charge accounts		91				61
Financing leases		350				285
Total		2,372		137		1,716		95
Allowance for credit losses		175		22		309		16
Financing receivables – net	$	43,673	$	7,335	$	36,634	$	5,936

Assets managed by financial services continue to be evaluated by market, rather than by operating segment. Financing receivables have significant concentrations of credit risk in the agriculture and turf and construction and forestry markets. On a geographic basis,

84 percent of our financing receivables were located in the U.S. and Canada at October 29, 2023. There is no disproportionate concentration of credit risk with any single customer or dealer. We retain as collateral security in the equipment associated with most financing receivables. Theft and physical damage insurance are required for this equipment.

Financing Receivables ‒ Related to the Sale of Equipment

Financing receivables related to the sale of equipment are presented in the operating section of the cash flow statement. The balances at the end of 2023 and 2022 were as follows:

	2023		2022
Retail notes*:
Agriculture and turf	$	1,084	$	1,392
Construction and forestry		320		304
Total		1,404		1,696
Wholesale notes		6,947		3,285
Direct financing and sales-type leases*		494		799
Total		8,845		5,780
Less:
Unearned finance income:
Retail notes		137		133
Wholesale notes		25		12
Direct financing and sales-type leases		60		67
Total		222		212
Financing receivables related to our sales of equipment	$	8,623	$	5,568

*    These balances arise from sales and direct financing leases of equipment by company-owned dealers or through direct sales.

Financing Receivables ‒ Contractual Installment Payments

Financing receivable installments, including unearned finance income, at October 29, 2023 and October 30, 2022 were scheduled as follows:

	2023				2022
	Unrestricted/Securitized				Unrestricted/Securitized
Due in months:
0 – 12	$	22,176	$	2,820	$	17,032	$	2,226
13 – 24		8,646		2,089		7,975		1,667
25 – 36		6,692		1,509		5,987		1,209
37 – 48		4,844		824		4,297		709
49 – 60		2,920		241		2,559		227
Thereafter		942		11		809		9
Total	$	46,220	$	7,494	$	38,659	$	6,047

Financing Receivables ‒ Credit Quality Analysis

We monitor the credit quality of financing receivables based on delinquency status, defined as follows:

● Past due balances represent any payments 30 days or more past the due date.

● Non-performing financing receivables represent receivables for which we have stopped accruing finance income. This generally occurs when receivables are 90 days delinquent.

● Write-offs generally occur when receivables are 120 days delinquent. In these situations, the estimated uncollectible amount is written off to the allowance for credit losses. Any expected recovery is presented as non-performing.

Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is resumed when the receivable becomes contractually current and collections are reasonably assured.

The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows:

	October 29, 2023
	2023		2022		2021		2020
Retail customer receivables:
Agriculture and turf
Current	$	15,191	$	8,430	$	5,120	$	2,334
30-59 days past due		62		75		39		21
60-89 days past due		18		26		18		10
90+ days past due		2		1		3		3
Non-performing		30		78		62		33
Construction and forestry
Current		2,927		1,961		1,084		353
30-59 days past due		49		34		27		9
60-89 days past due		19		14		12		5
90+ days past due				6		1
Non-performing		42		80		55		23
Total retail customer receivables	$	18,340	$	10,705	$	6,421	$	2,791
	October 29, 2023
	2019		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	853	$	280	$	4,526	$	36,734
30-59 days past due		9		3		29		238
60-89 days past due		4		2		9		87
90+ days past due								9
Non-performing		22		22		8		255
Construction and forestry
Current		84		29		119		6,557
30-59 days past due		4				4		127
60-89 days past due		2				2		54
90+ days past due				1				8
Non-performing		9		4		1		214
Total retail customer receivables	$	987	$	341	$	4,698	$	44,283

	October 30, 2022
	2022		2021		2020		2019
Retail customer receivables:
Agriculture and turf
Current	$	13,500	$	7,984	$	4,091	$	1,875
30-59 days past due		46		63		36		17
60-89 days past due		14		25		13		6
90+ days past due		1
Non-performing		27		60		44		28
Construction and forestry
Current		2,964		1,974		842		292
30-59 days past due		53		52		23		9
60-89 days past due		19		16		7		3
90+ days past due		1		4		1		3
Non-performing		25		61		34		19
Total retail customer receivables	$	16,650	$	10,239	$	5,091	$	2,252
	October 30, 2022
	2018		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	785	$	200	$	4,111	$	32,546
30-59 days past due		7		3		19		191
60-89 days past due		2		1		5		66
90+ days past due								1
Non-performing		18		19		8		204
Construction and forestry
Current		73		12		108		6,265
30-59 days past due		2		1		3		143
60-89 days past due		1				1		47
90+ days past due				1				10
Non-performing		7		3				149
Total retail customer receivables	$	895	$	240	$	4,255	$	39,622

The credit quality analysis of wholesale receivables by year of origination was as follows:

	October 29, 2023
	2023		2022		2021		2020
Wholesale receivables:
Agriculture and turf
Current	$	631	$	93	$	21	$	4
30+ days past due
Non-performing
Construction and forestry
Current		23		5		20
30+ days past due
Non-performing
Total wholesale receivables	$	654	$	98	$	41	$	4
	October 29, 2023
	2019		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	1	$	160	$	5,175	$	6,085
30+ days past due
Non-performing		1						1
Construction and forestry
Current				76		712		836
30+ days past due
Non-performing
Total wholesale receivables	$	2	$	236	$	5,887	$	6,922

	October 30, 2022
	2022		2021		2020		2019
Wholesale receivables:
Agriculture and turf
Current	$	387	$	64	$	27	$	4
30+ days past due
Non-performing								1
Construction and forestry
Current		7		29		2		1
30+ days past due
Non-performing
Total wholesale receivables	$	394	$	93	$	29	$	6
	October 30, 2022
	2018		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current			$	2	$	2,371	$	2,855
30+ days past due
Non-performing								1
Construction and forestry
Current				1		377		417
30+ days past due
Non-performing
Total wholesale receivables			$	3	$	2,748	$	3,273

Financing Receivables ‒ Allowance for Credit Losses

An analysis of the allowance for credit losses and investment in financing receivables follows:

	Retail Notes		Revolving
	& Financing		Charge		Wholesale
	Leases		Accounts		Receivables		Total
2023
Allowance:
Beginning of year balance	$	299	$	22	$	4	$	325
Provision		97		22				119
Provision transferred to held for sale		(142)						(142)
Provision (credit)		(45)		22				(23)
Write-offs		(84)		(45)				(129)
Recoveries		21		22				43
Translation adjustments		(19)						(19)
End of year balance*	$	172	$	21	$	4	$	197
Financing receivables:
End of year balance	$	39,585	$	4,698	$	6,922	$	51,205

2022
Allowance:
Beginning of year balance	$	138	$	21	$	7	$	166
Provision (credit)		197		(2)		(3)		192
Write-offs		(61)		(27)				(88)
Recoveries		22		30				52
Translation adjustments		3						3
End of year balance*	$	299	$	22	$	4	$	325
Financing receivables:
End of year balance	$	35,367	$	4,255	$	3,273	$	42,895

2021
Allowance:
Beginning of year balance	$	133	$	43	$	8	$	184
ASU No. 2016-13		44		(13)				31
Provision (credit)				(17)		(1)		(18)
Write-offs		(60)		(28)				(88)
Recoveries		20		36				56
Translation adjustments		1						1
End of year balance*	$	138	$	21	$	7	$	166
Financing receivables:
End of year balance	$	32,233	$	3,825	$	2,566	$	38,624

*    Individual allowances were not significant.

We monitor the economy as part of the allowance setting process, including potential impacts of inflation and rising interest rates. Adjustments to the allowance are incorporated, as necessary.

During 2023, we determined that the financial services business in Russia met the held for sale criteria. The financing receivables in Russia were reclassified to “Other assets” and the associated allowance for credit losses was reversed. These operations were sold in the second quarter of 2023 (see Note 3). Excluding the portfolio in Russia, the allowance increased in 2023, primarily driven by growth in the retail notes and financing lease portfolios

and higher expected losses on turf and construction customer accounts.

In 2022, the allowance for credit losses on retail notes and financing lease receivables increased due to higher reserves related to the events in Russia / Ukraine and higher portfolio balances. These increases were partially offset by continued positive agricultural market conditions. The revolving portfolio experienced low write-offs and solid recoveries.

Financing receivable analysis metrics follow:

	2023		2022
Percent of the overall financing receivable portfolio:
Past-due amounts		1.02		1.07
Non-performing		.92		.83
Allowance for credit losses		.38		.76
Deposits held as credit enhancements	$	154	$	158

The allowance for credit losses as a percent of the overall financing receivable portfolio follow:

	2023	2022	2021
Deere & Company	.38	.76	.43
Closest comparators*	.90	.93	1.15

*    Peer companies from the 6153 and 6159 standard industrial classification (SIC) codes.

Financing Receivables ‒ Troubled Debt Restructurings

Infrequently, a customer experiences financial difficulties, and we grant a concession. These concessions may include:

● a reduction of the stated interest rate,

● an extension of the maturity dates,

● a reduction of the amount of the debt, or

● a reduction of accrued interest.

A troubled debt restructuring is a significant modification of the receivable. The following table quantifies troubled debt restructurings:

	2023		2022		2021
Number of receivable contracts		209		276		397
Pre-modification balance	$	10	$	12	$	18
Post modification balance		9		10		17

Troubled debt restructurings for the presented periods related to retail notes. In 2023, 2022, and 2021, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At October 29, 2023, we had no commitments to lend to customers whose accounts were modified in troubled debt restructurings.

Other Receivables

Other receivables at the end of 2023 and 2022 consisted of:

	2023		2022
Taxes receivable	$	1,626	$	1,450
Collateral on derivatives		667		709
Receivables from unconsolidated affiliates		3
Other		327		333
Other receivables	$	2,623	$	2,492