SECURITIZATION OF FINANCING RECEIVABLES

6 Months Ended

Apr. 28, 2024

SECURITIZATION OF FINANCING RECEIVABLES

SECURITIZATION OF FINANCING RECEIVABLES

(9)  Securitization of Financing Receivables

Our funding strategy includes receivable securitizations, which allows us to receive cash for financing receivables immediately. While these securitization programs are administered in various forms, they are accomplished in the following basic steps:

1. We transfer financing receivables into a bankruptcy-remote special purpose entity (SPE).

2. The SPE issues debt to investors. The debt is secured by the financing receivables.

3. Investors are paid back based on cash receipts from the financing receivables.

As part of step 1, these receivables are legally isolated from the claims of our general creditors. This ensures cash receipts from the financing receivables 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 “Financing receivables securitized – net” and “Short-term securitization borrowings,” respectively.

The components of securitization programs were as follows:

	April 28		October 29		April 30
	2024		2023		2023
Financing receivables securitized (retail notes)	$	7,289	$	7,357	$	5,674
Allowance for credit losses		(27)		(22)		(15)
Other assets (primarily restricted cash)		164		152		115
Total restricted securitized assets	$	7,426	$	7,487	$	5,774
Short-term securitization borrowings	$	6,976	$	6,995	$	5,379
Accrued interest on borrowings		12		13		8
Total liabilities related to restricted securitized assets	$	6,988	$	7,008	$	5,387