RECEIVABLES

12 Months Ended

Oct. 27, 2024

RECEIVABLES

RECEIVABLES

NOTE 3. RECEIVABLES

Retail Notes Receivable

Retail notes receivable by market at October 27, 2024 and October 29, 2023 were as follows:

	2024				2023
	Unrestricted		Securitized		Unrestricted		Securitized
Agriculture and turf – new	$	14,199.3	$	3,236.7	$	14,350.6	$	2,664.9
Agriculture and turf – used		7,811.3		3,966.2		7,344.9		3,387.4
Construction and forestry – new		3,261.9		1,280.0		2,884.1		1,010.9
Construction and forestry – used		965.3		472.5		1,067.4		430.5
Total		26,237.8		8,955.4		25,647.0		7,493.7
Unearned finance income		(1,068.4)		(187.0)		(1,005.9)		(136.9)
Retail notes receivable	$	25,169.4	$	8,768.4	$	24,641.1	$	7,356.8

Gross retail note installments at October 27, 2024 and October 29, 2023 were scheduled to be received as follows:

	2024				2023
	Unrestricted		Securitized		Unrestricted		Securitized
Due in:
0-12 months	$	8,095.1	$	3,553.6	$	7,718.5	$	2,820.5
13-24 months		6,294.7		2,506.8		6,146.8		2,088.5
25-36 months		5,140.9		1,701.7		5,047.0		1,509.0
37-48 months		3,765.7		917.8		3,724.5		824.4
49-60 months		2,251.3		265.9		2,321.1		240.5
Over 60 months		690.1		9.6		689.1		10.8
Total	$	26,237.8	$	8,955.4	$	25,647.0	$	7,493.7

Finance income is recognized over the lives of the retail notes using the interest method. During 2024, the average effective yield on retail notes held by us was approximately 5.9 percent, compared with 5.0 percent in 2023 and 3.9 percent in 2022. As of October 27, 2024 and October 29, 2023, over 95 percent of the retail notes held by us bore a fixed finance rate.

A portion of the finance income earned by us arises from financing of retail sales of John Deere equipment on which finance charges are waived or reduced by John Deere for a period from the date of the retail sale to a specified subsequent date. We receive compensation from John Deere equal to competitive market interest rates for periods during which finance charges have been waived or reduced. We compute the compensation from John Deere for waived or reduced finance charges based on our estimated funding costs, administrative and operating expenses, credit losses, and required return on equity. The financing rate following the waiver or interest reduction period is not significantly different from the compensation rate from John Deere. During 2024, 2023, and 2022, the finance income earned from John Deere on retail notes containing waiver of finance charges or reduced rates was $431.5, $388.4, and $328.3, respectively.

A deposit is withheld by us on certain John Deere agriculture and turf equipment retail notes originating from dealers. Any subsequent retail note losses, subject to certain limitations by customer, are charged against the withheld deposits. At the end of each calendar quarter, the balance of each dealer’s withholding account in excess of a specified percent (ranging from one-half to three percent based on dealer qualifications) of the total balance outstanding on retail notes originating with that dealer is remitted to the dealer. Credit losses recovered from dealer deposits are presented in “Other income” at the time the dealer deposits are charged. There is generally no withholding of dealer deposits on John Deere construction and forestry equipment retail notes.

Revolving Charge Accounts Receivable

Revolving charge account income is comprised of the following:

● discounts paid by dealers and merchants on most transactions for processing and support,

● finance charges paid by customers on their outstanding account balances, and

● finance charge subsidies from John Deere and sponsoring merchants for waiver of finance charges or reduced rates.  

During 2024, 2023, and 2022, the finance income earned from John Deere on revolving charge accounts containing waiver of finance charges or reduced rates was $42.7, $18.5, and $13.4, respectively. Revolving charge accounts receivable at October 27, 2024 and October 29, 2023 totaled $4,538.8 and $4,594.4, and were net of unearned interest income of $72.6 and $88.4 for the same periods, respectively. Generally, account holders may pay their account balance in full at any time or make payments over a number of months according to a payment schedule.

Wholesale Receivables

We also provide wholesale financing to dealers of John Deere agriculture and turf equipment and construction and forestry equipment, primarily to finance inventories of equipment for those dealers. Wholesale finance income related to these notes is generally recognized monthly based on the daily balance of wholesale receivables outstanding and the applicable effective interest rate. Interest rates vary with a bank base rate, the type of equipment financed, and dealer financial profile.

Substantially all wholesale receivables are secured with collateral or other credit enhancements. On average, the wholesale receivables portfolio turned four times and five times during 2024 and 2023, respectively. Wholesale receivables at October 27, 2024 and October 29, 2023 totaled $14,114.1 and $13,330.1, respectively.

We purchase certain wholesale trade receivables from John Deere, which are included within “Wholesale receivables.” These trade receivables arise from John Deere’s sales of goods to independent dealers. Under the terms of the sales to dealers, interest is primarily charged to dealers on outstanding balances from the earlier of the date when goods are sold to retail customers by the dealer or the expiration of certain interest-free periods granted at the time of the sale to the dealer until payment is received by us. Dealers cannot cancel purchases after John Deere recognizes a sale and are responsible for payment even if the equipment is not sold to retail customers. The interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range from one to twelve months for most equipment. Interest-free periods may not be extended. Interest charged may not be forgiven and the past due interest rates exceed market rates. We receive compensation from John Deere at approximate market interest rates for these interest-free periods. We compute the compensation from John Deere for interest-free periods based on our estimated funding costs, administrative and operating expenses, credit losses, and required return on equity. During 2024, 2023, and 2022, the compensation earned from John Deere on wholesale receivables for waiver of finance charges or reduced rates was $552.5, $542.6, and $239.0, respectively. The increase in 2023 was primarily due to higher average portfolio and higher average compensation rates due to increased funding costs.

Financing Leases

We lease agriculture and turf equipment and construction and forestry equipment directly to retail customers. Leases classified as sales-type or direct financing leases are reported in “Financing leases” on the consolidated balance sheets. See Note 6 for detailed disclosures related to financing leases.

Concentration of Credit Risk

Receivables have significant concentrations of credit risk in the agriculture and turf and construction and forestry markets. On a geographic basis, 87 percent of our Receivables portfolio was located in the U.S., at October 27, 2024. There is not a disproportionate concentration of credit risk with any single customer or dealer.