Finance Receivables

12 Months Ended

Oct. 31, 2019

Finance receivables are receivables of our Financial Services operations. Finance receivables generally consist of wholesale notes and accounts, as well as retail notes, finance leases and accounts. Total finance receivables reported on the Consolidated Balance Sheets are net of an allowance for doubtful accounts. Total assets of our Financial Services operations net of intercompany balances were $2.8 billion and $2.6 billion as of October 31, 2019 and 2018, respectively. Included in total assets of our Financial Services operations are finance receivables of $2.2 billion as of both October 31, 2019 and 2018. We have two portfolio segments of finance receivables that we distinguish based on the type of customer and nature of the financing inherent to each portfolio. The retail portfolio segment represents loans or leases to end-users for the purchase or lease of vehicles. The wholesale portfolio segment represents loans to dealers to finance their inventory.

Our Finance receivables, net in our Consolidated Balance Sheets consist of the following:



	As of October 31,
(in millions)	2019		2018
Retail portfolio	$	854	$	720
Wholesale portfolio	1,366		1,460
Total finance receivables	2,220		2,180
Less: Allowance for doubtful accounts	23		22
Total finance receivables, net	2,197		2,158
Less: Current portion, net^(A)	1,923		1,898
Noncurrent portion, net	$	274	$	260

_________________________


(A)	The current portion of finance receivables is computed based on contractual maturities. Actual cash collections typically vary from the contractual cash flows because of prepayments, extensions, delinquencies, credit losses, and renewals.

As of October 31, 2019, contractual maturities of our finance receivables are as follows:



(in millions)	Retail Portfolio		Wholesale Portfolio		Total
Due in:
2020	$	592	$	1,366	$	1,958
2021	145		—		145
2022	104		—		104
2023	49		—		49
2024	15		—		15
Thereafter	4		—		4
Gross finance receivables	909		1,366		2,275
Less: Unearned finance income	55		—		55
Total finance receivables	$	854	$	1,366	$	2,220

Securitizations

Generally our Financial Services operations transfer wholesale notes, retail accounts receivable, finance leases, and operating leases to special purpose entities ("SPEs"), which generally are only permitted to purchase these assets, issue asset-backed securities, and make payments on the securities issued. Certain operating leases are transferred to a third party without the use of an SPE. In addition to servicing receivables, our continued involvement in these transactions may include an economic interest in the transferred receivables and, in some cases, managing exposure to interest rate changes on the securities using interest rate swaps or interest rate caps. There were no transfers of finance receivables that qualified for sale accounting treatment as of October 31, 2019 and 2018, and as a result, the transferred finance receivables are included in our Consolidated Balance Sheets and the related interest earned is included in Finance revenues.

We generally transfer eligible finance receivables into trusts in order to issue asset-backed securities. These trusts are VIEs of which we are determined to be the primary beneficiary and, therefore, the assets and liabilities of the trusts are included in our Consolidated Balance Sheets. The outstanding balance of finance receivables transferred into these VIEs was $874 million and $956 million as of October 31, 2019 and 2018, respectively.

Other finance receivables related to secured transactions that do not qualify for sale accounting treatment were $358 million and $235 million as of October 31, 2019 and 2018, respectively. For more information on assets and liabilities of consolidated VIEs and other securitizations accounted for as secured borrowings by our Financial Services operations, see Note 1, Summary of Significant Accounting Policies.

Finance Revenues

The following table presents the portion of Finance revenues from our Financial Services operations:



	As of October 31,
(in millions)	2019		2018		2017
Retail notes and finance leases revenue	$	60	$	50	$	41
Wholesale notes interest	118		105		102
Operating lease revenue	86		72		68
Retail and wholesale accounts interest	33		30		24
Gross finance revenues	297		257		235
Less: Intercompany revenues	104		97		93
Finance revenues	$	193	$	160	$	142