John Deere 2013 Annual Report Download - page 45

Revolving
Retail Charge
Notes Accounts Other Total
2011
Allowance:
Beginning of year
balance ........................ $ 144 $ 44 $ 37 $ 225
Provision (credit) .......... 3 8 (2) 9
Write-offs .................... (29) (40) (10) (79)
Recoveries ................... 12 28 2 42
End of year balance* ......... $ 130 $ 40 $ 27 $ 197
Financing receivables:
End of year balance .......... $ 16,296 $ 2,518 $ 4,212 $ 23,026
Balance individually
evaluated ................. $ 12 $ 11 $ 23
* Individual allowances were not significant.
Past-due amounts over 30 days represented .82 percent
and .81 percent of the receivables financed at October 31, 2013
and 2012, respectively. The allowance for credit losses repre-
sented .58 percent and .68 percent of financing receivables
outstanding at October 31, 2013 and 2012, respectively.
In addition, at October 31, 2013 and 2012, the company’s
financial services operations had $197 million and $194 million,
respectively, of deposits withheld from dealers and merchants
available for potential credit losses.
Financing receivables are considered impaired when it is
probable the company will be unable to collect all amounts due
according to the contractual terms. Receivables reviewed for
impairment generally include those that are either past due,
or have provided bankruptcy notification, or require significant
collection efforts. Receivables, which are impaired, are gener-
ally classified as non-performing.
An analysis of the impaired financing receivables at
October 31 follows in millions of dollars:
Unpaid Average
Recorded Principal Specific Recorded
Investment Balance Allowance Investment
2013*
Receivables with
specific allowance** ..... $ 18 $ 18 $ 4 $ 19
Receivables without a
specific allowance*** .... 8 8 8
Total ............................... $ 26 $ 26 $ 4 $ 27
Agriculture and turf ...... $ 23 $ 23 $ 4 $ 24
Construction and
forestry .................... $ 3 $ 3 $ 3
(continued)
Unpaid Average
Recorded Principal Specific Recorded
Investment Balance Allowance Investment
2012*
Receivables with
specific allowance** ..... $ 1 $ 1 $ 1 $ 1
Receivables without a
specific allowance*** .... 9 9 10
Total ............................... $ 10 $ 10 $ 1 $ 11
Agriculture and turf ...... $ 6 $ 6 $ 1 $ 6
Construction and
forestry .................... $ 4 $ 4 $ 5
* Finance income recognized was not material.
** Primarily operating loans and retail notes.
*** Retail notes.
A troubled debt restructuring is generally the modification
of debt in which a creditor grants a concession it would not
otherwise consider to a debtor that is experiencing financial
difficulties. These modifications may include a reduction of the
stated interest rate, an extension of the maturity dates, a
reduction of the face amount or maturity amount of the debt,
or a reduction of accrued interest. During 2013, 2012 and
2011, the company identified 92, 138 and 213 financing
receivable contracts, primarily operating loans and retail notes,
as troubled debt restructurings with aggregate balances of
$16 million, $5 million and $11 million pre-modification and
$15 million, $4 million and $10 million post-modification,
respectively. During these same periods, there were no signifi-
cant troubled debt restructurings that subsequently defaulted
and were written off. At October 31, 2013, the company had
no commitments to lend additional funds to borrowers whose
accounts were modified in troubled debt restructurings.
Other Receivables
Other receivables at October 31 consisted of the following in
millions of dollars:
2013 2012
Taxes receivable ........................................................... $ 868 $ 971
Reinsurance receivables ............................................... 351 569
Insurance premium receivables ..................................... 24 69
Other ........................................................................... 221 182
Other receivables ...................................................... $ 1,464 $ 1,791
Reinsurance and insurance premium receivables are
associated with the financial services’ crop insurance subsidiary
(see Note 9).
13. SECURITIZATION OF FINANCING RECEIVABLES
The company, as a part of its overall funding strategy,
periodically transfers certain financing receivables (retail notes)
into variable interest entities (VIEs) that are special purpose
entities (SPEs), or a non-VIE banking operation, as part of its
asset-backed securities programs (securitizations). The structure
of these transactions is such that the transfer of the retail notes
did not meet the criteria of sales of receivables, and is, therefore,
accounted for as a secured borrowing. SPEs utilized in securiti-
zations of retail notes differ from other entities included in the
company’s consolidated statements because the assets they hold
are legally isolated. Use of the assets held by the SPEs or the
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