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RECEIVABLES | 12 Months Ended
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Oct. 29, 2017
RECEIVABLES |
RECEIVABLES | 12. RECEIVABLES Trade Accounts and Notes Receivable Trade accounts and notes receivable at October 29, 2017 and October 30, 2016 in millions of dollars follows:
|  | 2017 |  | 2016 |
Trade accounts and notes: |  |  |  |  |  |  |
Agriculture and turf |  | $ | 2,991 |  | $ | 2,438 |
Construction and forestry |  |  | 934 |  |  | 573 |
Trade accounts and notes receivable – net |  | $ | 3,925 |  | $ | 3,011 |
At October 29, 2017 and October 30, 2016, dealer notes included in the previous table were $140 million and $143 million, and the allowance for credit losses was $56 million and $50 million, respectively. The equipment operations sell a significant portion of their trade receivables to financial services and provide compensation to these operations at approximate market rates of interest. Trade accounts and notes receivable primarily arise from sales of goods to independent dealers. Under the terms of the sales to dealers, interest is primarily charged to dealers on outstanding balances, from the earlier of the date when goods are sold to retail customers by the dealer or the expiration of certain interest-free periods granted at the time of the sale to the dealer, until payment is received by the company. Dealers cannot cancel purchases after the equipment is shipped and are responsible for payment even if the equipment is not sold to retail customers. The interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range from one to twelve months for most equipment. Interest-free periods may not be extended. Interest charged may not be forgiven and the past due interest rates exceed market rates. The company evaluates and assesses dealers on an ongoing basis as to their creditworthiness and generally retains a security interest in the goods associated with the trade receivables. In certain jurisdictions, the company is obligated to repurchase goods sold to a dealer upon cancellation or termination of the dealer’s contract for such causes as change in ownership and closeout of the business. Trade accounts and notes receivable have significant concentrations of credit risk in the agriculture and turf sector and construction and forestry sector as shown in the previous table. On a geographic basis, there is not a disproportionate concentration of credit risk in any area. Financing Receivables Financing receivables at October 29, 2017 and October 30, 2016 in millions of dollars follow:
|  | 2017 |  | 2016 |
|  | Unrestricted/Securitized |  | Unrestricted/Securitized |
Retail notes: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 15,200 |  | $ | 3,651 |  | $ | 14,152 |  | $ | 4,615 |
Construction and forestry |  |  | 2,297 |  |  | 599 |  |  | 2,201 |  |  | 620 |
Total |  |  | 17,497 |  |  | 4,250 |  |  | 16,353 |  |  | 5,235 |
Wholesale notes |  |  | 3,653 |  |  |  |  |  | 3,971 |  |  |  |
Revolving charge accounts |  |  | 3,629 |  |  |  |  |  | 3,135 |  |  |  |
Financing leases (direct and sales-type) |  |  | 1,613 |  |  |  |  |  | 1,326 |  |  |  |
Total financing receivables |  |  | 26,392 |  |  | 4,250 |  |  | 24,785 |  |  | 5,235 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |
Unearned finance income: |  |  |  |  |  |  |  |  |  |  |  |  |
Retail notes |  |  | 972 |  |  | 78 |  |  | 812 |  |  | 94 |
Financing leases |  |  | 142 |  |  |  |  |  | 109 |  |  |  |
Total |  |  | 1,114 |  |  | 78 |  |  | 921 |  |  | 94 |
Allowance for credit losses |  |  | 174 |  |  | 13 |  |  | 162 |  |  | 14 |
Financing receivables – net |  | $ | 25,104 |  | $ | 4,159 |  | $ | 23,702 |  | $ | 5,127 |
The residual values for investments in financing leases at October 29, 2017 and October 30, 2016 totaled $244 million and $156 million, respectively. Financing receivables have significant concentrations of credit risk in the agriculture and turf sector and construction and forestry sector as shown in the previous table. On a geographic basis, there is not a disproportionate concentration of credit risk in any area. The company generally retains as collateral a security interest in the equipment associated with retail notes, wholesale notes, and financing leases. Financing receivables at October 29, 2017 and October 30, 2016 related to the company’s sales of equipment that were included in the table above consisted of the following in millions of dollars:
|  | 2017 |  | 2016 |
|  | Unrestricted |  | Unrestricted |
Retail notes*: |  |  |  |  |  |  |
Agriculture and turf |  | $ | 2,099 |  | $ | 1,896 |
Construction and forestry |  |  | 368 |  |  | 336 |
Total |  |  | 2,467 |  |  | 2,232 |
Wholesale notes |  |  | 3,653 |  |  | 3,971 |
Sales-type leases |  |  | 763 |  |  | 648 |
Total |  |  | 6,883 |  |  | 6,851 |
Less: |  |  |  |  |  |  |
Unearned finance income: |  |  |  |  |  |  |
Retail notes |  |  | 231 |  |  | 202 |
Sales-type leases |  |  | 53 |  |  | 42 |
Total |  |  | 284 |  |  | 244 |
Financing receivables related to the company’s sales of equipment |  | $ | 6,599 |  | $ | 6,607 |
* These retail notes generally arise from sales of equipment by company-owned dealers or through direct sales. Financing receivable installments, including unearned finance income, at October 29, 2017 and October 30, 2016 are scheduled as follows in millions of dollars:
|  | 2017 |  | 2016 |
|  | Unrestricted/Securitized |  | Unrestricted/Securitized |
Due in months: |  |  |  |  |  |  |  |  |  |  |  |  |
0 – 12 |  | $ | 13,237 |  | $ | 2,027 |  | $ | 12,835 |  | $ | 2,269 |
13 – 24 |  |  | 5,056 |  |  | 1,256 |  |  | 4,760 |  |  | 1,536 |
25 – 36 |  |  | 3,708 |  |  | 672 |  |  | 3,386 |  |  | 931 |
37 – 48 |  |  | 2,518 |  |  | 243 |  |  | 2,219 |  |  | 408 |
49 – 60 |  |  | 1,398 |  |  | 50 |  |  | 1,181 |  |  | 84 |
Thereafter |  |  | 475 |  |  | 2 |  |  | 404 |  |  | 7 |
Total |  | $ | 26,392 |  | $ | 4,250 |  | $ | 24,785 |  | $ | 5,235 |
The maximum terms for retail notes are generally seven years for agriculture and turf equipment and five years for construction and forestry equipment. The maximum term for financing leases is generally five years, while the average term for wholesale notes is less than twelve months. At October 29, 2017 and October 30, 2016, the unpaid balances of receivables administered but not owned were $10 million and $15 million, respectively. At October 29, 2017 and October 30, 2016, worldwide financing receivables administered, which include financing receivables administered but not owned, totaled $29,273 million and $28,844 million, respectively. 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. These receivables are generally 120 days delinquent and the estimated uncollectible amount, after charging the dealer’s withholding account, has been 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 at October 29, 2017 and October 30, 2016 follows in millions of dollars:
|  | 30-59 |  | 60-89 |  | 90 Days |  |  |  |
|  | Days |  | Days |  | or Greater |  | Total |
|  | Past Due |  | Past Due |  | Past Due |  | Past Due |
2017 |  |  |  |  |  |  |  |  |  |  |  |  |
Retail Notes: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 118 |  | $ | 54 |  | $ | 49 |  | $ | 221 |
Construction and forestry |  |  | 75 |  |  | 33 |  |  | 39 |  |  | 147 |
Other: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  |  | 27 |  |  | 14 |  |  | 7 |  |  | 48 |
Construction and forestry |  |  | 11 |  |  | 6 |  |  | 2 |  |  | 19 |
Total |  | $ | 231 |  | $ | 107 |  | $ | 97 |  | $ | 435 |
|  |  |  |  | Total |  |  |  |  | Total |
|  | Total |  | Non- |  |  |  |  | Financing |
|  | Past Due |  | Performing |  | Current |  | Receivables |
Retail Notes: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 221 |  | $ | 173 |  | $ | 17,508 |  | $ | 17,902 |
Construction and forestry |  |  | 147 |  |  | 30 |  |  | 2,618 |  |  | 2,795 |
Other: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  |  | 48 |  |  | 12 |  |  | 7,610 |  |  | 7,670 |
Construction and forestry |  |  | 19 |  |  | 5 |  |  | 1,059 |  |  | 1,083 |
Total |  | $ | 435 |  | $ | 220 |  | $ | 28,795 |  |  | 29,450 |
Less allowance for credit losses |  |  | 187 |
Total financing receivables - net |  | $ | 29,263 |
|  | 30-59 |  | 60-89 |  | 90 Days |  |  |  |
|  | Days |  | Days |  | or Greater |  | Total |
|  | Past Due |  | Past Due |  | Past Due |  | Past Due |
2016 |  |  |  |  |  |  |  |  |  |  |  |  |
Retail Notes: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 115 |  | $ | 57 |  | $ | 65 |  | $ | 237 |
Construction and forestry |  |  | 78 |  |  | 32 |  |  | 25 |  |  | 135 |
Other: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  |  | 26 |  |  | 11 |  |  | 6 |  |  | 43 |
Construction and forestry |  |  | 10 |  |  | 5 |  |  | 4 |  |  | 19 |
Total |  | $ | 229 |  | $ | 105 |  | $ | 100 |  | $ | 434 |
|  |  |  |  | Total |  |  |  |  | Total |
|  | Total |  | Non- |  |  |  |  | Financing |
|  | Past Due |  | Performing |  | Current |  | Receivables |
Retail Notes: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 237 |  | $ | 191 |  | $ | 17,526 |  | $ | 17,954 |
Construction and forestry |  |  | 135 |  |  | 35 |  |  | 2,558 |  |  | 2,728 |
Other: |  |  |  |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  |  | 43 |  |  | 9 |  |  | 7,286 |  |  | 7,338 |
Construction and forestry |  |  | 19 |  |  | 9 |  |  | 957 |  |  | 985 |
Total |  | $ | 434 |  | $ | 244 |  | $ | 28,327 |  |  | 29,005 |
Less allowance for credit losses |  |  | 176 |
Total financing receivables - net |  | $ | 28,829 |
An analysis of the allowance for credit losses and investment in financing receivables follows in millions of dollars:
|  |  |  |  | Revolving |  |  |  |  |
|  | Retail |  | Charge |  |  |  |  |
|  | Notes |  | Accounts |  | Other |  | Total |
2017 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance: |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year balance |  | $ | 113 |  | $ | 40 |  | $ | 23 |  | $ | 176 |
Provision |  |  | 46 |  |  | 33 |  |  | 9 |  |  | 88 |
Write-offs |  |  | (56) |  |  | (53) |  |  | (7) |  |  | (116) |
Recoveries |  |  | 20 |  |  | 20 |  |  | 1 |  |  | 41 |
Translation adjustments |  |  | (2) |  |  |  |  |  |  |  |  | (2) |
End of year balance* |  | $ | 121 |  | $ | 40 |  | $ | 26 |  | $ | 187 |
Financing receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
End of year balance |  | $ | 20,697 |  | $ | 3,629 |  | $ | 5,124 |  | $ | 29,450 |
Balance individually evaluated |  | $ | 86 |  | $ | 3 |  | $ | 20 |  | $ | 109 |
2016 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance: |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year balance |  | $ | 95 |  | $ | 40 |  | $ | 22 |  | $ | 157 |
Provision |  |  | 43 |  |  | 36 |  |  | 5 |  |  | 84 |
Write-offs |  |  | (43) |  |  | (55) |  |  | (5) |  |  | (103) |
Recoveries |  |  | 11 |  |  | 19 |  |  | 1 |  |  | 31 |
Translation adjustments |  |  | 7 |  |  |  |  |  |  |  |  | 7 |
End of year balance* |  | $ | 113 |  | $ | 40 |  | $ | 23 |  | $ | 176 |
Financing receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
End of year balance |  | $ | 20,682 |  | $ | 3,135 |  | $ | 5,188 |  | $ | 29,005 |
Balance individually evaluated |  | $ | 108 |  | $ | 8 |  | $ | 20 |  | $ | 136 |
2015 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance: |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year balance |  | $ | 109 |  | $ | 41 |  | $ | 25 |  | $ | 175 |
Provision |  |  | 22 |  |  | 21 |  |  | 3 |  |  | 46 |
Write-offs |  |  | (26) |  |  | (37) |  |  | (4) |  |  | (67) |
Recoveries |  |  | 10 |  |  | 15 |  |  | 1 |  |  | 26 |
Translation adjustments |  |  | (20) |  |  |  |  |  | (3) |  |  | (23) |
End of year balance* |  | $ | 95 |  | $ | 40 |  | $ | 22 |  | $ | 157 |
Financing receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
End of year balance |  | $ | 21,567 |  | $ | 2,740 |  | $ | 5,494 |  | $ | 29,801 |
Balance individually evaluated |  | $ | 40 |  |  |  |  | $ | 6 |  | $ | 46 |
* Individual allowances were not significant. Past-due amounts over 30 days represented 1.48 percent and 1.50 percent of the receivables financed at October 29, 2017 and October 30, 2016, respectively. The allowance for credit losses represented .64 percent and .61 percent of financing receivables outstanding at October 29, 2017 and October 30, 2016, respectively. In addition, at October 29, 2017 and October 30, 2016, the company’s financial services operations had $155 million and $162 million, respectively, of deposits primarily withheld from dealers and merchants available for potential credit losses. 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 at October 29, 2017 and October 30, 2016 follows in millions of dollars:
|  |  |  |  | Unpaid |  |  |  |  | Average |
|  | Recorded |  | Principal |  | Specific |  | Recorded |
|  | Investment |  | Balance |  | Allowance |  | Investment |
2017* |  |  |  |  |  |  |  |  |  |  |  |  |
Receivables with specific allowance** |  | $ | 36 |  | $ | 33 |  | $ | 10 |  | $ | 30 |
Receivables without a specific allowance*** |  |  | 28 |  |  | 27 |  |  |  |  |  | 24 |
Total |  | $ | 64 |  | $ | 60 |  | $ | 10 |  | $ | 54 |
Agriculture and turf |  | $ | 49 |  | $ | 46 |  | $ | 10 |  | $ | 38 |
Construction and forestry |  | $ | 15 |  | $ | 14 |  |  |  |  | $ | 16 |
2016* |  |  |  |  |  |  |  |  |  |  |  |  |
Receivables with specific allowance** |  | $ | 31 |  | $ | 28 |  | $ | 9 |  | $ | 29 |
Receivables without a specific allowance*** |  |  | 29 |  |  | 27 |  |  |  |  |  | 26 |
Total |  | $ | 60 |  | $ | 55 |  | $ | 9 |  | $ | 55 |
Agriculture and turf |  | $ | 33 |  | $ | 30 |  | $ | 8 |  | $ | 27 |
Construction and forestry |  | $ | 27 |  | $ | 25 |  | $ | 1 |  | $ | 28 |
* 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 2017, 2016, and 2015, the company identified 474, 167, and 107 financing receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $16 million, $19 million, and $8 million pre-modification and $15 million, $18 million, and $7 million post-modification, respectively. In 2017, there were $3 million of troubled debt restructurings that subsequently defaulted and were written off. In 2016 and 2015, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At October 29, 2017, the company had commitments to lend approximately $12 million to borrowers whose accounts were modified in troubled debt restructurings. Other Receivables Other receivables at October 29, 2017 and October 30, 2016 consisted of the following in millions of dollars:
|  | 2017 |  | 2016 |
Taxes receivable |  | $ | 876 |  | $ | 702 |
Other |  |  | 324 |  |  | 317 |
Other receivables |  | $ | 1,200 |  | $ | 1,019 |

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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- References No definition available. + Details
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