

3	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 million 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, 2018 and 2017 was $22.5 million and $20.6 million, 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 $7.5 million 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 2018, 2017, and 2016 was $1,959.7 million, $1,847.7 million, and $1,713.6 million, respectively.

Summarized financial information for Red Iron is presented as follows (in thousands):



For the Twelve Months Ended October 31	2018			2017			2016
Revenues	$	42,051		$	35,158		$	31,812
Interest and operating expenses, net	(17,288		)	(13,030		)	(10,506		)
Net income	$	24,763		$	22,128		$	21,306



As of October 31	2018		2017
Finance receivables, net	$	446,138	$	407,533
Other assets	3,449		2,888
Total assets	$	449,587	$	410,421

Notes payable	$	378,128	$	347,968
Other liabilities	21,366		16,617
Partners' capital	50,093		45,836
Total liabilities and partners' capital	$	449,587	$	410,421