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SECURITIZATION OF FINANCING RECEIVABLES | 12 Months Ended
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Oct. 27, 2024
SECURITIZATION OF FINANCING RECEIVABLES |
SECURITIZATION OF FINANCING RECEIVABLES | 12. 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. We offer securitization programs to institutional investors and other financial institutions through public issuances or privately through a revolving credit agreement. At October 27, 2024, the revolving agreement had a financing limit of up to $2,000. At October 27, 2024, $1,398 of securitization borrowings were outstanding under the revolving agreement. In November 2024, the agreement was renewed for one year with a capacity of $2,500. Restricted cash held by the SPE serves as a credit enhancement. It would be used to satisfy receivable payment deficiencies, if any. The cash restriction is removed either after all secured borrowing payments are made or proportionally as the secured receivables are collected and the borrowing obligations are reduced. The components of securitization programs were as follows at the end of 2024 and 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |
Financing receivables securitized (retail notes) | ​ | $ | 8,770 | ​ | $ | 7,357 |
Allowance for credit losses | ​ |  | (47) | ​ |  | (22) | ​
Other assets (primarily restricted cash) | ​ |  | 187 | ​ |  | 152 | ​
Total restricted securitized assets |  | $ | 8,910 |  | $ | 7,487 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Short-term securitization borrowings | ​ | $ | 8,431 | ​ | $ | 6,995 | ​
Accrued interest on borrowings | ​ |  | 14 | ​ |  | 13 | ​
Total liabilities related to restricted securitized assets |  | $ | 8,445 |  | $ | 7,008 | ​
​ The weighted-average interest rates on short-term securitization borrowings at October 27, 2024 and October 29, 2023 were 5.0 percent and 4.7 percent, respectively. Although these securitization borrowings are classified as short-term since payment is required if the financing receivables are liquidated early, the payment schedule for these borrowings at October 27, 2024 based on the expected liquidation of the retail notes is as follows: 2025 – $4,036, 2026 – $2,440, 2027 –$1,428, 2028 – $500, 2029 – $37, and later years – $4.

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- Definition The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 210 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.6-04(11)) -Publisher 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