SECURITIZATION OF FINANCING RECEIVABLES

12 Months Ended

Nov. 02, 2025

SECURITIZATION OF FINANCING RECEIVABLES

SECURITIZATION OF FINANCING RECEIVABLES

12. 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:

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

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

3. 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 secured borrowings. The receivables and borrowings remain on our balance sheet and are separately reported as “Financing receivables securitized – net” and “Short-term securitization borrowings,” respectively. SPEs are consolidated as VIEs when we have the power to direct the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the SPEs.

We offer securitization programs to institutional investors and other financial institutions through public issuances or privately through a revolving credit agreement. At November 2, 2025, the revolving agreement had a financing limit of up to $2,500. At November 2, 2025, $1,563 of securitization borrowings were outstanding under the revolving agreement. In November 2025, the agreement was renewed for one year with a capacity of $2,500.

Restricted cash held by the SPE serves as a credit enhancement. It would be used to satisfy receivable payment deficiencies, if any. The cash restriction is removed either after all secured borrowing payments are made or proportionally as the secured receivables are collected and the borrowing obligations are reduced.

The components of securitization programs were as follows at the end of 2025 and 2024:

	​ ​ ​2025		​ ​ ​2024
Financing receivables securitized (retail notes)	$	6,872	$	8,770
Allowance for credit losses		(41)		(47)
Other assets (primarily restricted cash)		171		187
Total restricted securitized assets	$	7,002	$	8,910
Short-term securitization borrowings	$	6,596	$	8,431
Accrued interest on borrowings		15		14
Total liabilities related to restricted securitized assets	$	6,611	$	8,445

The weighted-average interest rates on short-term securitization borrowings at November 2, 2025, and October 27, 2024, were 4.8% and 5.0%, respectively.

Although these securitization borrowings are classified as short-term since payment is required if the financing receivables are liquidated early, the payment schedule for these borrowings at November 2, 2025, based on the expected liquidation of the retail notes is as follows: 2026 – $3,428, 2027 – $1,942, 2028 – $1,005, 2029 – $198, 2030 – $29, and later years – $3.