John Deere 2010 Annual Report Download - page 39

39
Financing Receivables
Financing receivables at October 31 consisted of the following
in millions of dollars:
2010 2009
________________ ________________
Unrestricted/Restricted Unrestricted/Restricted
Retail notes:
Equipment:
Agriculture and turf .......... $ 11,740 $ 1,865 $ 9,687 $ 2,934
Construction and
forestry ........................ 920 427 1,084 624
Recreational products ........... 5 8
Total ................................ 12,665 2,292 10,779 3,558
Wholesale notes ....................... 2,232 1,986
Revolving charge accounts ........ 2,355 2,265
Financing leases
(direct and sales-type) .......... 1,092 993
Operating loans ........................ 239 297
Total fi nancing receivables .... 18,583 2,292 16,320 3,558
Less:
Unearned fi nance income:
Equipment notes .............. 590 27 738 425
Financing leases .............. 113 113
Total ............................ 703 27 851 425
Allowance for doubtful
receivables ...................... 198 27 214 25
Financing
receivables – net............... $ 17,682 $ 2,238 $ 15,255 $ 3,108
The residual values for investments in fi nancing leases at
October 31, 2010 and 2009 totaled $64 million and $59 million,
respectively.
Financing receivables have signifi cant concentrations of
credit risk in the agriculture and turf sector and construction and
forestry sector as shown in the previous table. On a geographic
basis, there is not a disproportionate concentration of credit risk
in any area. The company retains as collateral a security interest
in the equipment associated with retail notes, wholesale notes
and fi nancing leases.
Financing receivables at October 31 related to the
company’s sales of equipment that were included in the table
above consisted of the following in millions of dollars:
2010 2009
________________ _________________
Unrestricted Unrestricted/Restricted
Retail notes*:
Equipment:
Agriculture and turf ............... $ 1,492 $ 1,505 $ 22
Construction and forestry ...... 295 389 2
Total ................................. 1,787 1,894 24
Wholesale notes ............................ 2,232 1,986
Sales-type leases .......................... 655 583
Total ..................................... $ 4,674 $ 4,463 $ 24
* These retail notes generally arise from sales of equipment by company-owned
dealers or through direct sales.
(continued)
2010 2009
________________ _________________
Unrestricted Unrestricted/Restricted
Less:
Unearned fi nance income:
Equipment notes ................... $ 179 $ 191 $ 1
Sales-type leases .................. 57 57
Total ................................. 236 248 1
Financing receivables
related to the company’s
sales of equipment ................ $ 4,438 $ 4,215 $ 23
Financing receivable installments, including unearned
fi nance income, at October 31 are scheduled as follows in
millions of dollars:
2010 2009
________________ _________________
Unrestricted/Restricted Unrestricted/Restricted
Due in months:
0 – 12 .............................. $ 9,114 $ 1,043 $ 8,320 $ 1,286
13 – 24 .............................. 3,538 662 3,264 1,045
25 – 36 .............................. 2,606 391 2,174 699
37 – 48 .............................. 1,821 159 1,365 395
49 – 60 .............................. 1,092 35 874 125
Thereafter .......................... 412 2 323 8
Total ..................................... $ 18,583 $ 2,292 $ 16,320 $ 3,558
The maximum terms for retail notes are generally seven
years for agriculture and turf equipment and fi ve years for
construction and forestry equipment. The maximum term for
fi nancing leases is generally fi ve years, while the average term
for wholesale notes is less than twelve months.
At October 31, 2010 and 2009, the unpaid balances of
receivables administered but not owned were $202 million
and $292 million, respectively. At October 31, 2010 and 2009,
worldwide fi nancing receivables administered, which include
fi nancing receivables administered but not owned, totaled
$20,123 million and $18,656 million, respectively.
Generally when fi nancing receivables are approximately
120 days delinquent, accrual of fi nance income has been
suspended and the estimated uncollectible amount has been
written off to the allowance for credit losses. Accrual of fi nance
income is resumed when the receivable becomes contractually
current and collection doubts are removed. Investments in
fi nancing receivables on non-accrual status at October 31, 2010
and 2009 were $225 million and $284 million, respectively.
Total fi nancing receivable amounts 60 days or more past
due were $38 million at October 31, 2010, compared with
$67 million at October 31, 2009. These past-due amounts
represented .19 percent and .36 percent of the receivables
fi nanced at October 31, 2010 and 2009, respectively.
The allowance for doubtful fi nancing receivables represented
1.12 percent and 1.28 percent of fi nancing receivables
outstanding at October 31, 2010 and 2009, respectively.
In addition, at October 31, 2010 and 2009, the company’s credit
operations had $182 million and $181 million, respectively, of
deposits withheld from dealers and merchants available for
potential credit losses.