RECEIVABLES

12 Months Ended

Oct. 29, 2023

RECEIVABLES

RECEIVABLES

11. RECEIVABLES

Trade Accounts and Notes Receivable

Trade accounts and notes receivable arise from sales of goods to independent dealers. See Note 2 for our revenue recognition policy. We evaluate and assess dealers’ credit worthiness on an ongoing basis. Receivables are secured with collateral or other credit enhancements. Trade accounts and notes receivable at the end of 2023 and 2022 follow:


		2023			2022
Trade accounts and notes receivable:
Production & precision ag		$	2,642		$	2,397
Small ag & turf			2,344			2,065
Construction & forestry			2,753			1,948
Trade accounts and notes receivable – net		$	7,739		$	6,410

These receivables have significant concentrations of credit risk in the agriculture and turf and construction and forestry markets. Credit losses have been historically low. There is not a disproportionate concentration of credit risk with any single dealer. On a geographic basis, 53 percent of our trade accounts and notes receivable are located in the U.S. and Canada at October 29, 2023.

At October 29, 2023 and October 30, 2022 trade and notes receivables balances outstanding greater than 12 months were $107 and $49, respectively.

The allowance for credit losses on trade accounts and notes receivable at October 29, 2023, October 30, 2022, and October 31, 2021, as well as the related activity, follow:


		2023			2022			2021
Beginning of year balance		$	36		$	41		$	39
ASU No. 2016-13									(2)
Provision			7			1			10
Write-offs			(8)			(5)			(7)
Translation adjustments						(1)			1
End of year balance		$	35		$	36		$	41

The equipment operations sell a significant portion of their trade receivables to financial services. Compensation is provided to financial services at market interest rates.

Financing Receivables ‒ Overall

Financing receivables originate under the following circumstances:

●

Retail customers purchase (or lease) equipment from a dealer and finance the equipment through John Deere Financial.

●

We sell the equipment to a dealer under trade terms. Trade terms end, and the dealer finances the equipment on a wholesale receivable. Shown as wholesale notes in “Financing Receivables related to the Sale of Equipment.”

●

A dealer finances the purchase of used equipment through John Deere Financial.

●

We sell (or lease) the equipment directly to a retail customer with terms typically greater than 12 months. Shown as retail notes or sales-type leases in the “Financing Receivables related to the Sale of Equipment.”

●

The customer utilizes a revolving credit product to finance parts, service, or input costs.

Financing receivables at the end of 2023 and 2022 follow:


		2023						2022
		Unrestricted/Securitized						Unrestricted/Securitized
Retail notes:
Agriculture and turf		$	26,955		$	6,052		$	23,830		$	4,868
Construction and forestry			4,623			1,442			4,396			1,179
Total			31,578			7,494			28,226			6,047
Wholesale notes			6,947						3,285
Revolving charge accounts			4,789						4,316
Financing leases (direct and sales-type)			2,906						2,832
Total financing receivables			46,220			7,494			38,659			6,047
Less:
Unearned finance income:
Retail notes			1,906			137			1,358			95
Wholesale notes			25						12
Revolving charge accounts			91						61
Financing leases			350						285
Total			2,372			137			1,716			95
Allowance for credit losses			175			22			309			16
Financing receivables – net		$	43,673		$	7,335		$	36,634		$	5,936

Assets managed by financial services continue to be evaluated by market, rather than by operating segment. Financing receivables have significant concentrations of credit risk in the agriculture and turf and construction and forestry markets. On a geographic basis,

84 percent of our financing receivables were located in the U.S. and Canada at October 29, 2023. There is no disproportionate concentration of credit risk with any single customer or dealer. We retain as collateral security in the equipment associated with most financing receivables. Theft and physical damage insurance are required for this equipment.

Financing Receivables ‒ Related to the Sale of Equipment

Financing receivables related to the sale of equipment are presented in the operating section of the cash flow statement. The balances at the end of 2023 and 2022 were as follows:


		2023			2022
Retail notes*:
Agriculture and turf		$	1,084		$	1,392
Construction and forestry			320			304
Total			1,404			1,696
Wholesale notes			6,947			3,285
Direct financing and sales-type leases*			494			799
Total			8,845			5,780
Less:
Unearned finance income:
Retail notes			137			133
Wholesale notes			25			12
Direct financing and sales-type leases			60			67
Total			222			212
Financing receivables related to our sales of equipment		$	8,623		$	5,568

* These balances arise from sales and direct financing leases of equipment by company-owned dealers or through direct sales.

Financing Receivables ‒ Contractual Installment Payments

Financing receivable installments, including unearned finance income, at October 29, 2023 and October 30, 2022 were scheduled as follows:


		2023						2022
		Unrestricted/Securitized						Unrestricted/Securitized
Due in months:
0 – 12		$	22,176		$	2,820		$	17,032		$	2,226
13 – 24			8,646			2,089			7,975			1,667
25 – 36			6,692			1,509			5,987			1,209
37 – 48			4,844			824			4,297			709
49 – 60			2,920			241			2,559			227
Thereafter			942			11			809			9
Total		$	46,220		$	7,494		$	38,659		$	6,047

Financing Receivables ‒ Credit Quality Analysis

We monitor the credit quality of financing receivables based on delinquency status, defined as follows:

●

Past due balances represent any payments 30 days or more past the due date.

●

Non-performing financing receivables represent receivables for which we have stopped accruing finance income. This generally occurs when receivables are 90 days delinquent.

●

Write-offs generally occur when receivables are 120 days delinquent. In these situations, the estimated uncollectible amount is written off to the allowance for credit losses. Any expected recovery is presented as non-performing.

Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is resumed when the receivable becomes contractually current and collections are reasonably assured.

The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows:


		October 29, 2023
		2023			2022			2021			2020
Retail customer receivables:
Agriculture and turf
Current		$	15,191		$	8,430		$	5,120		$	2,334
30-59 days past due			62			75			39			21
60-89 days past due			18			26			18			10
90+ days past due			2			1			3			3
Non-performing			30			78			62			33
Construction and forestry
Current			2,927			1,961			1,084			353
30-59 days past due			49			34			27			9
60-89 days past due			19			14			12			5
90+ days past due						6			1
Non-performing			42			80			55			23
Total retail customer receivables		$	18,340		$	10,705		$	6,421		$	2,791

		October 29, 2023
		2019			Prior Years			Revolving Charge Accounts			Total
Retail customer receivables:
Agriculture and turf
Current		$	853		$	280		$	4,526		$	36,734
30-59 days past due			9			3			29			238
60-89 days past due			4			2			9			87
90+ days past due												9
Non-performing			22			22			8			255
Construction and forestry
Current			84			29			119			6,557
30-59 days past due			4						4			127
60-89 days past due			2						2			54
90+ days past due						1						8
Non-performing			9			4			1			214
Total retail customer receivables		$	987		$	341		$	4,698		$	44,283


		October 30, 2022
		2022			2021			2020			2019
Retail customer receivables:
Agriculture and turf
Current		$	13,500		$	7,984		$	4,091		$	1,875
30-59 days past due			46			63			36			17
60-89 days past due			14			25			13			6
90+ days past due			1
Non-performing			27			60			44			28
Construction and forestry
Current			2,964			1,974			842			292
30-59 days past due			53			52			23			9
60-89 days past due			19			16			7			3
90+ days past due			1			4			1			3
Non-performing			25			61			34			19
Total retail customer receivables		$	16,650		$	10,239		$	5,091		$	2,252

		October 30, 2022
		2018			Prior Years			Revolving Charge Accounts			Total
Retail customer receivables:
Agriculture and turf
Current		$	785		$	200		$	4,111		$	32,546
30-59 days past due			7			3			19			191
60-89 days past due			2			1			5			66
90+ days past due												1
Non-performing			18			19			8			204
Construction and forestry
Current			73			12			108			6,265
30-59 days past due			2			1			3			143
60-89 days past due			1						1			47
90+ days past due						1						10
Non-performing			7			3						149
Total retail customer receivables		$	895		$	240		$	4,255		$	39,622

The credit quality analysis of wholesale receivables by year of origination was as follows:


		October 29, 2023
		2023			2022			2021			2020
Wholesale receivables:
Agriculture and turf
Current		$	631		$	93		$	21		$	4
30+ days past due
Non-performing
Construction and forestry
Current			23			5			20
30+ days past due
Non-performing
Total wholesale receivables		$	654		$	98		$	41		$	4

		October 29, 2023
		2019			Prior Years			Revolving			Total
Wholesale receivables:
Agriculture and turf
Current		$	1		$	160		$	5,175		$	6,085
30+ days past due
Non-performing			1									1
Construction and forestry
Current						76			712			836
30+ days past due
Non-performing
Total wholesale receivables		$	2		$	236		$	5,887		$	6,922


		October 30, 2022
		2022			2021			2020			2019
Wholesale receivables:
Agriculture and turf
Current		$	387		$	64		$	27		$	4
30+ days past due
Non-performing												1
Construction and forestry
Current			7			29			2			1
30+ days past due
Non-performing
Total wholesale receivables		$	394		$	93		$	29		$	6

		October 30, 2022
		2018			Prior Years			Revolving			Total
Wholesale receivables:
Agriculture and turf
Current					$	2		$	2,371		$	2,855
30+ days past due
Non-performing												1
Construction and forestry
Current						1			377			417
30+ days past due
Non-performing
Total wholesale receivables					$	3		$	2,748		$	3,273

Financing Receivables ‒ Allowance for Credit Losses

An analysis of the allowance for credit losses and investment in financing receivables follows:


		Retail Notes			Revolving
		& Financing			Charge			Wholesale
		Leases			Accounts			Receivables			Total
2023
Allowance:
Beginning of year balance		$	299		$	22		$	4		$	325
Provision			97			22						119
Provision transferred to held for sale			(142)									(142)
Provision (credit)			(45)			22						(23)
Write-offs			(84)			(45)						(129)
Recoveries			21			22						43
Translation adjustments			(19)									(19)
End of year balance*		$	172		$	21		$	4		$	197

Financing receivables:
End of year balance		$	39,585		$	4,698		$	6,922		$	51,205


2022
Allowance:
Beginning of year balance		$	138		$	21		$	7		$	166
Provision (credit)			197			(2)			(3)			192
Write-offs			(61)			(27)						(88)
Recoveries			22			30						52
Translation adjustments			3									3
End of year balance*		$	299		$	22		$	4		$	325

Financing receivables:
End of year balance		$	35,367		$	4,255		$	3,273		$	42,895


2021
Allowance:
Beginning of year balance		$	133		$	43		$	8		$	184
ASU No. 2016-13			44			(13)						31
Provision (credit)						(17)			(1)			(18)
Write-offs			(60)			(28)						(88)
Recoveries			20			36						56
Translation adjustments			1									1
End of year balance*		$	138		$	21		$	7		$	166

Financing receivables:
End of year balance		$	32,233		$	3,825		$	2,566		$	38,624

* Individual allowances were not significant.

We monitor the economy as part of the allowance setting process, including potential impacts of inflation and rising interest rates. Adjustments to the allowance are incorporated, as necessary.

During 2023, we determined that the financial services business in Russia met the held for sale criteria. The financing receivables in Russia were reclassified to “Other assets” and the associated allowance for credit losses was reversed. These operations were sold in the second quarter of 2023 (see Note 3). Excluding the portfolio in Russia, the allowance increased in 2023, primarily driven by growth in the retail notes and financing lease portfolios

and higher expected losses on turf and construction customer accounts.

In 2022, the allowance for credit losses on retail notes and financing lease receivables increased due to higher reserves related to the events in Russia / Ukraine and higher portfolio balances. These increases were partially offset by continued positive agricultural market conditions. The revolving portfolio experienced low write-offs and solid recoveries.

Financing receivable analysis metrics follow:


		2023			2022
Percent of the overall financing receivable portfolio:
Past-due amounts			1.02			1.07
Non-performing			.92			.83
Allowance for credit losses			.38			.76
Deposits held as credit enhancements		$	154		$	158

The allowance for credit losses as a percent of the overall financing receivable portfolio follow:


		2023		2022		2021
Deere & Company		.38		.76		.43
Closest comparators*		.90		.93		1.15

* Peer companies from the 6153 and 6159 standard industrial classification (SIC) codes.

Financing Receivables ‒ Troubled Debt Restructurings

Infrequently, a customer experiences financial difficulties, and we grant a concession. These concessions may include:

●

a reduction of the stated interest rate,

●

an extension of the maturity dates,

●

a reduction of the amount of the debt, or

●

a reduction of accrued interest.

A troubled debt restructuring is a significant modification of the receivable. The following table quantifies troubled debt restructurings:


		2023			2022			2021
Number of receivable contracts			209			276			397
Pre-modification balance		$	10		$	12		$	18
Post modification balance			9			10			17

Troubled debt restructurings for the presented periods related to retail notes. In 2023, 2022, and 2021, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At October 29, 2023, we had no commitments to lend to customers whose accounts were modified in troubled debt restructurings.

Other Receivables

Other receivables at the end of 2023 and 2022 consisted of:


		2023			2022
Taxes receivable		$	1,626		$	1,450
Collateral on derivatives			667			709
Receivables from unconsolidated affiliates			3
Other			327			333
Other receivables		$	2,623		$	2,492