RECEIVABLES

12 Months Ended

Oct. 27, 2024

RECEIVABLES

RECEIVABLES

11. RECEIVABLES

Trade Accounts and Notes Receivable

Trade accounts and notes receivable arise from sales of goods and services to customers. See Note 2 for our revenue recognition policy. We evaluate and assess customers creditworthiness on an ongoing basis. Receivables are secured with collateral or other credit enhancements. Trade accounts and notes receivable at the end of 2024 and 2023 follow:


		2024			2023
Trade accounts and notes receivable:
Production & precision ag		$	1,532		$	2,642
Small ag & turf			1,657			2,344
Construction & forestry			2,137			2,753
Trade accounts and notes receivable – net		$	5,326		$	7,739

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 customer. On a geographic basis, 51 percent of our trade accounts and notes receivable are located in the U.S. and Canada at October 27, 2024.

At October 27, 2024 and October 29, 2023 trade accounts and notes receivable balances outstanding greater than 12 months were $298 and $107, respectively. The increase was due to higher dealer inventory.

The allowance for credit losses on trade accounts and notes receivable at October 27, 2024, October 29, 2023, and October 30, 2022, as well as the related activity, follow:


		2024			2023			2022
Beginning of year balance		$	35		$	36		$	41
Provision			34			7			1
Write-offs			(5)			(8)			(5)
Translation adjustments			2						(1)
End of year balance*		$	66		$	35		$	36

* Individual allowances were not significant.

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

Financing receivables at the end of 2024 and 2023 follow:


		2024						2023
		Unrestricted/Securitized						Unrestricted/Securitized
Retail notes:
Agriculture and turf		$	25,102		$	7,203		$	26,955		$	6,052
Construction and forestry			4,550			1,754			4,623			1,442
Total			29,652			8,957			31,578			7,494
Wholesale notes			8,951						6,947
Revolving charge accounts			4,730						4,789
Financing leases (direct and sales-type)			3,032						2,906
Total financing receivables			46,365			8,957			46,220			7,494
Less:
Unearned finance income:
Retail notes			1,467			187			1,906			137
Wholesale notes			24						25
Revolving charge accounts			76						91
Financing leases			307						350
Total			1,874			187			2,372			137
Allowance for credit losses			182			47			175			22
Financing receivables – net		$	44,309		$	8,723		$	43,673		$	7,335

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, 89 percent of our financing receivables were located in the U.S. and Canada at October 27, 2024. 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 2024 and 2023 were as follows:


		2024			2023
Retail notes*:
Agriculture and turf		$	376		$	1,084
Construction and forestry			271			320
Total			647			1,404
Wholesale notes			8,951			6,947
Direct financing and sales-type leases*			295			494
Total financing receivables			9,893			8,845
Less:
Unearned finance income:
Retail notes			37			137
Wholesale notes			24			25
Direct financing and sales-type leases			47			60
Total			108			222
Financing receivables related to our sales of equipment		$	9,785		$	8,623

* 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 27, 2024 and October 29, 2023 were scheduled as follows:


		2024						2023
		Unrestricted/Securitized						Unrestricted/Securitized
Due in months:
0 – 12		$	23,872		$	3,555		$	22,176		$	2,820
13 – 24			8,187			2,507			8,646			2,089
25 – 36			6,356			1,702			6,692			1,509
37 – 48			4,509			918			4,844			824
49 – 60			2,660			266			2,920			241
Thereafter			781			9			942			11
Total		$	46,365		$	8,957		$	46,220		$	7,494

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.

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 27, 2024
		2024			2023			2022			2021
Retail customer receivables:
Agriculture and turf:
Current		$	14,394		$	8,305		$	5,191		$	2,833
30-59 days past due			44			101			55			27
60-89 days past due			22			50			21			10
90+ days past due			1			1			1			2
Non-performing			23			91			76			50
Construction and forestry:
Current			3,100			1,841			1,064			458
30-59 days past due			54			47			25			10
60-89 days past due			25			28			10			7
90+ days past due			1			4			3			1
Non-performing			40			94			67			32
Total		$	17,704		$	10,562		$	6,513		$	3,430

		October 27, 2024
		2020			Prior Years			Revolving Charge Accounts			Total
Retail customer receivables:
Agriculture and turf:
Current		$	992		$	253		$	4,465		$	36,433
30-59 days past due			11			4			40			282
60-89 days past due			8			2			13			126
90+ days past due												5
Non-performing			20			13			15			288
Construction and forestry:
Current			102			45			114			6,724
30-59 days past due			3			2			4			145
60-89 days past due			2						2			74
90+ days past due												9
Non-performing			9			5			1			248
Total		$	1,147		$	324		$	4,654		$	44,334


		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		$	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		$	987		$	341		$	4,698		$	44,283

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


		October 27, 2024
		2024			2023			2022			2021
Wholesale receivables:
Agriculture and turf:
Current		$	650		$	164		$	29		$	6
30+ days past due
Non-performing
Construction and forestry:
Current			21			11			3			12
30+ days past due
Non-performing
Total		$	671		$	175		$	32		$	18

		October 27, 2024
		2020			Prior Years			Revolving			Total
Wholesale receivables:
Agriculture and turf:
Current		$	1					$	6,718		$	7,568
30+ days past due
Non-performing					$	1						1
Construction and forestry:
Current									1,311			1,358
30+ days past due
Non-performing
Total		$	1		$	1		$	8,029		$	8,927


		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		$	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		$	2		$	236		$	5,887		$	6,922

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
2024
Allowance:
Beginning of year balance		$	172		$	21		$	4		$	197
Provision			262			52						314
Provision reversal for assets held for sale			(38)									(38)
Provision subtotal			224			52						276
Write-offs			(186)			(95)						(281)
Recoveries			13			30						43
Translation adjustments			(4)						(2)			(6)
End of year balance*		$	219		$	8		$	2		$	229

Financing receivables:
End of year balance		$	39,680		$	4,654		$	8,927		$	53,261


2023
Allowance:
Beginning of year balance		$	299		$	22		$	4		$	325
Provision			97			22						119
Provision reversal for assets held for sale			(142)									(142)
Provision (credit) subtotal			(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

* Individual allowances were not significant.

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

During 2024, we determined that the financial services business in Brazil met the held for sale criteria. The receivables in Brazil were reclassified to “Assets held for sale.” The associated allowance for credit losses was reversed and a valuation allowance for the assets held for sale was recorded (see Note 4). The allowance for credit losses on retail notes and financing lease receivables increased in 2024 primarily due to higher expected losses as a result of elevated

delinquencies and a decline in market conditions impacting the agriculture receivable portfolio. This increase was partially offset by a decrease in the allowance on revolving charge accounts, driven by write-offs of seasonal financing program accounts and recoveries expected on those accounts in the future.

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.

Write-offs by year of origination were as follows:


		October 27, 2024
		2024			2023			2022			2021
Retail customer receivables:
Agriculture and turf		$	5		$	33		$	25		$	11
Construction and forestry			9			38			30			11
Total		$	14		$	71		$	55		$	22

		October 27, 2024
		2020			Prior Years			Revolving Charge Accounts			Total
Retail customer receivables:
Agriculture and turf		$	11		$	5		$	87		$	177
Construction and forestry			5			3			8			104
Total		$	16		$	8		$	95		$	281

Financing receivable analysis metrics follow:


		2024			2023
Percent of the overall financing receivable portfolio:
Past-due amounts			1.20			1.02
Non-performing			1.01			.92
Allowance for credit losses			.43			.38
Deposits held as credit enhancements		$	142		$	154

Financing Receivables – Modifications

We occasionally grant contractual modifications to customers experiencing financial difficulties. Before offering a modification, we evaluate the ability of the customer to meet the modified payment terms. Modifications offered include payment deferrals, term extensions, or a combination thereof. Finance charges continue to accrue during the deferral or extension period with the exception of modifications related to bankruptcy proceedings. Our allowance for credit losses incorporates historical loss information, including the effects of loan modifications with customers. Therefore, additional adjustments to the allowance are generally not recorded upon modification of a loan.

At October 27, 2024, the ending amortized cost and performance of modified loans with borrowers experiencing financial difficulty in 2024 was as follows:


		2024
Current		$	78
30-59 days past due			1
60-89 days past due			2
90+ days past due
Non-performing			13
Total		$	94

In 2024, these modifications represented 0.18 percent of our financing receivable portfolio. The financial effects of payment deferrals with borrowers experiencing financial difficulty resulted in a weighted average payment deferral of 8 months to the modified contracts. Term extensions provided to borrowers experiencing financial difficulty added a weighted average of 10 months to the terms of the modified contracts. Additionally, modifications with a combination of both payment deferrals and term extensions resulted in a weighted average payment deferral of 4 months and a weighted average term extension of 7 months.

Defaults and subsequent write-offs of loans modified in the prior twelve months were not significant during 2024. At October 27, 2024, commitments to provide additional financing to these customers were $27.

Financing Receivables – Troubled Debt Restructurings

Prior to adopting ASU 2022-02, modifications of loans to borrowers experiencing financial difficulty were considered troubled debt restructurings when the significant modification of the receivable resulted in a concession we would not otherwise consider.

The following table quantifies troubled debt restructurings:


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

Troubled debt restructurings for the presented periods related to retail notes. In 2023 and 2022, there were no significant troubled debt restructurings that subsequently defaulted and were written off.

Other Receivables

Other receivables at the end of 2024 and 2023 consisted of:


		2024			2023
Taxes receivable		$	1,874		$	1,626
Collateral on derivatives			254			667
Receivables from unconsolidated affiliates			3			3
Other			414			327
Other receivables		$	2,545		$	2,623