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Accounting for Leases as a Lessor | 6 Months Ended
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Apr. 30, 2025
Leases [Abstract] |
Accounting for Leases as a Lessor | Accounting for Leases as a Lessor Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. These receivables typically have terms ranging from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The allowance for credit losses represents future expected credit losses over the life of the receivables based on past experience, current information and forward-looking economic considerations. The components of financing receivables were as follows:
| As of
| April 30, 2025 |  | October 31, 2024
| In millions
Minimum lease payments receivable | $ | 10,182 |  |  | $ | 10,266 |
Unguaranteed residual value | 662 |  |  | 599 |
Unearned income | (1,242) |  |  | (1,218) |
Financing receivables, gross | 9,602 |  |  | 9,647 |
Allowance for credit losses | (209) |  |  | (194) |
Financing receivables, net | 9,393 |  |  | 9,453 |
Less: current portion | (3,907) |  |  | (3,870) |
Amounts due after one year, net | $ | 5,486 |  |  | $ | 5,583 |
Sale of Financing Receivables The Company enters into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions. For the three and six months ended April 30, 2025 the Company sold $23 million and $147 million of financing receivables, respectively. For the fiscal year ended October 31, 2024, the Company sold $93 million of financing receivables. Credit Quality Indicators Due to the homogeneous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction and periodically updates the risk ratings when there is a change in the underlying credit quality. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits. The credit risk profile of gross financing receivables, based on internal risk ratings as of April 30, 2025, presented on amortized cost basis by year of origination was as follows:
| As of April 30, 2025
| Risk Rating
| Low |  | Moderate |  | High
Fiscal Year | In millions
2025 | $ | 864 |  |  | $ | 424 |  |  | $ | 3 |
2024 | 2,602 |  |  | 1,084 |  |  | 31 |
2023 | 1,516 |  |  | 812 |  |  | 52 |
2022 | 893 |  |  | 497 |  |  | 30 |
2021 and prior | 370 |  |  | 330 |  |  | 94 |
Total | $ | 6,245 |  |  | $ | 3,147 |  |  | $ | 210 |
The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2024, presented on amortized cost basis by year of origination was as follows:
| As of October 31, 2024
| Risk Rating
| Low |  | Moderate |  | High
Fiscal Year | In millions
2024 | $ | 2,630 |  |  | $ | 1,120 |  |  | $ | 19 |
2023 | 1,804 |  |  | 948 |  |  | 54 |
2022 | 1,128 |  |  | 665 |  |  | 46 |
2021 | 440 |  |  | 317 |  |  | 52 |
2020 and prior | 158 |  |  | 193 |  |  | 73 |
Total | $ | 6,160 |  |  | $ | 3,243 |  |  | $ | 244 |
Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. The credit quality indicators do not reflect any mitigation actions taken to transfer credit risk to third parties. Allowance for Credit Losses The allowance for credit losses for financing receivables as of April 30, 2025 and October 31, 2024 and the respective changes for the six and twelve months then ended were as follows:
| As of
| April 30, 2025 |  | October 31, 2024
| In millions
Balance at beginning of period | $ | 194 |  |  | $ | 243 |
Provision for credit losses | 36 |  |  | 50 |
Adjustment to the existing allowance | (1) |  |  | (4) |
Write-offs | (20) |  |  | (95) |
Balance at end of period | $ | 209 |  |  | $ | 194 |
Non-Accrual and Past-Due Financing Receivables The following table summarizes the aging and non-accrual status of gross financing receivables:
| As of
| April 30, 2025 |  | October 31, 2024
| In millions
Billed:(1) |  |  |
Current 1-30 days | $ | 333 |  |  | $ | 334 |
Past due 31-60 days | 25 |  |  | 29 |
Past due 61-90 days | 22 |  |  | 12 |
Past due > 90 days | 76 |  |  | 79 |
Unbilled sales-type and direct-financing lease receivables | 9,146 |  |  | 9,193 |
Total gross financing receivables | $ | 9,602 |  |  | $ | 9,647 |
Gross financing receivables on non-accrual status(2) | $ | 187 |  |  | $ | 214 |
Gross financing receivables 90 days past due and still accruing interest(2) | $ | 107 |  |  | $ | 82 |
(1)Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables. (2)Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables. The following table presents amounts included in the Condensed Consolidated Statements of Earnings related to lessor activity:
|  |  | For the three months ended April 30, |  | For the six months ended April 30,
|  |  | 2025 |  | 2024 |  | 2025 |  | 2024
| Location |  | In millions
Interest income from sales-type leases and direct financing leases | Financing Income |  | $ | 188 |  |  | $ | 162 |  |  | $ | 374 |  |  | $ | 318 |
Lease income from operating leases | Services |  | 539 |  |  | 594 |  |  | 1,086 |  |  | 1,193 |
Total lease income |  |  | $ | 727 |  |  | $ | 756 |  |  | $ | 1,460 |  |  | $ | 1,511 |
Variable Interest Entities The Company has issued asset-backed debt securities under a fixed-term securitization program to private investors. The asset-backed debt securities are collateralized by the U.S. fixed-term financing receivables and leased equipment in the offering, which is held by a Special Purpose Entity (“SPE”). The SPE meets the definition of a Variable Interest Entity (“VIE”) and is consolidated, along with the associated debt, into the Condensed Consolidated Financial Statements as the Company is the primary beneficiary of the VIE. The SPE is a bankruptcy-remote legal entity with separate assets and liabilities. The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets. The Company’s risk of loss related to securitized receivables and leased equipment is limited to the amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities. The following table presents the assets and liabilities held by the consolidated VIE as of April 30, 2025 and October 31, 2024, which are included in the Condensed Consolidated Balance Sheets. The assets in the table below include those that can be used to settle the obligations of the VIE. Additionally, general creditors of the Company do not have recourse to the assets of the VIE.
| As of
| April 30, 2025 |  | October 31, 2024
Assets held by VIE: | In millions
Other current assets | $ | 116 |  |  | $ | 189 |
Financing receivables |  |  |
Short-term | 731 |  |  | 872 |
Long-term | 768 |  |  | 1,079 |
Property, plant and equipment, net | 699 |  |  | 1,033 |
Liabilities held by VIE: |  |  |
Notes payable and short-term borrowings, net of unamortized debt issuance costs | 1,036 |  |  | 1,433 |
Long-term debt, net of unamortized debt issuance costs | $ | 605 |  |  | $ | 965 |
For the six months ended April 30, 2025, the Company did not transfer any financing receivables and leased equipment via securitization through the SPE. For the fiscal year ended October 31, 2024, financing receivables and leased equipment transferred via securitization through the SPE were $1.2 billion and $0.6 billion, respectively.

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- Definition Lessor, Operating, Sales-type and Direct Financing Leases [Text Block] + References No definition available. + Details
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- References No definition available. + Details
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