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SECURITIZATION OF FINANCING RECEIVABLES

9 Months Ended

Jul. 28, 2024

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:

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

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

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:


	July 28		October 29		July 30
	2024		2023		2023
Financing receivables securitized (retail notes)	$	8,313	$	7,357	$	7,019
Allowance for credit losses		(39)		(22)		(18)
Other assets (primarily restricted cash)		178		152		153
Total restricted securitized assets	$	8,452	$	7,487	$	7,154

Short-term securitization borrowings	$	7,869	$	6,995	$	6,608
Accrued interest on borrowings		14		13		15
Total liabilities related to restricted securitized assets	$	7,883	$	7,008	$	6,623

- 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

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