INVESTMENT IN JOINT VENTURE

12 Months Ended

Oct. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN JOINT VENTURE

In fiscal 2009, the company and TCFIF, a subsidiary of TCF National Bank, established Red Iron, a joint venture in the form of a Delaware limited liability company that primarily provides inventory financing to certain distributors and dealers of the company’s products in the U.S. On November 29, 2016, during the first quarter of fiscal 2017, the company entered into amended agreements for its Red Iron joint venture with TCFIF. As a result, the amended term of Red Iron will continue until October 31, 2024, subject to two-year extensions thereafter. Either the company or TCFIF may elect not to extend the amended term, or any subsequent term, by giving one-year written notice to the other party.

The company owns 45 percent of Red Iron and TCFIF owns 55 percent of Red Iron. The company accounts for its investment in Red Iron under the equity method of accounting. The company and TCFIF each contributed a specified amount of the estimated cash required to enable Red Iron to purchase the company's inventory financing receivables and to provide financial support for Red Iron's inventory financing programs. Red Iron borrows the remaining requisite estimated cash utilizing a $550,000 secured revolving credit facility established under a credit agreement between Red Iron and TCFIF. The company's total investment in Red Iron as of October 31, 2017 and 2016 was $20,626 and $18,719, respectively. The company has not guaranteed the outstanding indebtedness of Red Iron.

The company has agreed to repurchase products repossessed by Red Iron and the TCFIF Canadian affiliate, up to a maximum aggregate amount of $7,500 in a calendar year. Under the repurchase agreement between Red Iron and the company, Red Iron provides financing for certain dealers and distributors. These transactions are structured as an advance in the form of a payment by Red Iron to the company on behalf of a distributor or dealer with respect to invoices financed by Red Iron. These payments extinguish the obligation of the dealer or distributor to make payment to the company under the terms of the applicable invoice. Under separate agreements between Red Iron and the dealers and distributors, Red Iron provides loans to the dealers and distributors for the advances paid by Red Iron to the company. The net amount of receivables financed for dealers and distributors under this arrangement during fiscal 2017, 2016, and 2015 was $1,847,740, $1,713,588, and $1,430,855, respectively.

Summarized financial information for Red Iron is presented as follows:

For the Twelve Months Ended October 31	2017			2016			2015
Revenues	$	35,158		$	31,812		$	27,483
Interest and operating expenses, net	(13,030		)	(10,506		)	(8,885		)
Net income	$	22,128		$	21,306		$	18,598

As of October 31	2017		2016
Finance receivables, net	$	407,533	$	370,169
Other assets	2,888		4,416
Total assets	$	410,421	$	374,585
Notes payable	$	347,968	$	321,378
Other liabilities	16,617		11,607
Partners' capital	45,836		41,600
Total liabilities and partners' capital	$	410,421	$	374,585