10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File Number: 000-55510

CNH INDUSTRIAL CAPITAL LLC

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		39-1937630 (I.R.S. Employer Identification Number)
5729 Washington Avenue Racine, Wisconsin (Address of principal executive offices)	(262) 636-6011 (Registrant’s telephone number, including area code)	53406 (Zip code)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒     Emerging growth company ☐	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes  ☒ No

As of June 30, 2019, all of the limited liability company interests of the registrant were held by CNH Industrial America  LLC, a wholly-owned subsidiary of CNH Industrial N.V.

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with certain reduced disclosures as permitted by those instructions.

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)	1
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)	2
	Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 (Unaudited)	3
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 (Unaudited)	5
	Consolidated Statements of Changes in Stockholder’s Equity for the Six Months Ended June 30, 2019 and 2018 (Unaudited)	6
	Condensed Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	*
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	*
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	45

*This item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (H)(2) of Form 10‑Q

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Dollars in thousands)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
REVENUES
Interest income on retail notes and finance leases	$	57,112	$	50,201	$	112,580	$	98,831
Interest income on wholesale notes		16,993		16,256		33,735		31,825
Interest and other income from affiliates		88,992		92,392		173,245		187,407
Rental income on operating leases		60,492		59,957		121,133		121,073
Other income		5,523		7,335		10,488		13,376
Total revenues		229,112		226,141		451,181		452,512
EXPENSES
Interest expense:
Interest expense to third parties		84,989		76,020		170,205		152,856
Interest expense to affiliates		258		2,784		3,423		4,376
Total interest expense		85,247		78,804		173,628		157,232
Administrative and operating expenses:
Fees charged by affiliates		11,574		11,304		23,955		23,259
Provision for credit losses		13,097		4,295		20,066		16,110
Depreciation of equipment on operating leases		55,680		56,569		116,600		118,254
Other expenses		13,832		13,119		16,259		23,684
Total administrative and operating expenses		94,183		85,287		176,880		181,307
Total expenses		179,430		164,091		350,508		338,539
INCOME BEFORE TAXES		49,682		62,050		100,673		113,973
Income tax provision		11,898		14,422		23,678		26,542
NET INCOME	$	37,784	$	47,628	$	76,995	$	87,431

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

1

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Dollars in thousands)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
NET INCOME	$	37,784	$	47,628	$	76,995	$	87,431
Other comprehensive income (loss):
Foreign currency translation adjustment		9,244		(16,968)		17,934		(34,968)
Pension liability adjustment		89		89		177		195
Change in derivative financial instruments		(1,061)		(84)		(3,011)		(6)
Total other comprehensive income (loss)		8,272		(16,963)		15,100		(34,779)
COMPREHENSIVE INCOME	$	46,056	$	30,665	$	92,095	$	52,652

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

2

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2019 AND DECEMBER 31, 2018

(Dollars in thousands)

(Unaudited)

	June 30,		December 31,
	2019		2018
ASSETS
Cash and cash equivalents	$	97,644	$	160,328
Restricted cash and cash equivalents		488,562		639,543
Receivables, less allowance for credit losses of $77,610 and $74,412, respectively		10,189,998		9,950,926
Affiliated accounts and notes receivable		12,666		43,389
Equipment on operating leases, net		1,724,634		1,724,217
Equipment held for sale		236,349		209,991
Goodwill		109,443		108,399
Other intangible assets, net		11,123		10,182
Other assets		78,431		84,937
TOTAL	$	12,948,850	$	12,931,912
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt (including current maturities of long-term debt)	$	4,197,425	$	4,324,292
Accounts payable and other accrued liabilities		781,330		715,778
Affiliated debt		346,482		276,271
Long-term debt		6,300,528		6,259,839
Total liabilities		11,625,765		11,576,180
Commitments and contingent liabilities (Note 10)
Stockholder’s equity:
Member’s capital		—		—
Paid-in capital		843,901		843,643
Accumulated other comprehensive loss		(132,496)		(146,999)
Retained earnings		611,680		659,088
Total stockholder’s equity		1,323,085		1,355,732
TOTAL	$	12,948,850	$	12,931,912

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

3

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2019 AND DECEMBER 31, 2018

(Dollars in thousands)

(Unaudited)

The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”), which are included in the consolidated balance sheets. The assets in the table include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities in the table include third-party liabilities of the consolidated VIEs, for which creditors do not have recourse to the general credit of CNH Industrial Capital LLC.

	June 30,		December 31,
	2019		2018
Restricted cash and cash equivalents	$	488,562		$	639,543
Receivables, less allowance for credit losses of $51,447 and $54,124, respectively		6,735,185			6,687,828
TOTAL	$	7,223,747		$	7,327,371
Short-term debt (including current maturities of long-term debt)	$	3,258,797		$	3,241,347
Long-term debt		3,337,045			3,442,286
TOTAL	$	6,595,842		$	6,683,633

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

4

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Dollars in thousands)

(Unaudited)

	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	76,995	$	87,431
Adjustments to reconcile net income to net cash from (used in) operating activities:
Depreciation on property and equipment and equipment on operating leases		116,601		118,259
Amortization of intangibles		974		1,072
Provision for credit losses		20,066		16,110
Deferred income tax (benefit) expense		28,910		(27,944)
Changes in components of working capital:
Change in affiliated accounts and notes receivables		30,737		(464,469)
Change in other assets and equipment held for sale		8,599		(10,011)
Change in accounts payable and other accrued liabilities		21,943		(23,089)
Net cash from (used in) operating activities		304,825		(302,641)
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of receivables acquired		(5,539,579)		(5,411,526)
Collections of receivables		5,366,432		5,740,541
Purchase of equipment on operating leases		(347,175)		(241,788)
Proceeds from disposal of equipment on operating leases		220,817		222,126
Change in property, equipment and software, net		(1,916)		(2,816)
Net cash from (used in) investing activities		(301,421)		306,537
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of affiliated debt		653,140		670,886
Payment of affiliated debt		(583,222)		(506,385)
Proceeds from issuance of long-term debt		1,945,345		1,264,266
Payment of long-term debt		(1,958,759)		(2,110,344)
Change in short-term borrowings, net		(148,573)		489,271
Dividends paid to CNH Industrial America LLC		(125,000)		(40,000)
Net cash from (used in) financing activities		(217,069)		(232,306)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(213,665)		(228,410)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period		799,871		875,558
End of period	$	586,206	$	647,148
CASH PAID DURING THE PERIOD FOR INTEREST	$	170,758	$	161,573
CASH PAID (RECEIVED) DURING THE PERIOD FOR TAXES	$	(37,895)	$	33,037

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

5

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Dollars in thousands)

(Unaudited)

					Accumulated
					Other
	Member’s		Paid-in		Comprehensive		Retained
	Capital		Capital		Income (Loss)		Earnings		Total
BALANCE - January 1, 2019	$	—	$	843,643	$	(146,999)	$	659,088	$	1,355,732
Net income		—		—		—		39,211		39,211
Dividends paid to CNH Industrial America LLC		—		—		—		—		—
Foreign currency translation adjustment		—		—		8,690		—		8,690
Stock compensation		—		164		—		—		164
Reclassification of certain tax effects		—		—		(597)		597		—
Pension liability adjustment, net of tax		—		—		88		—		88
Change in derivative financial instruments, net of tax		—		—		(1,950)		—		(1,950)
BALANCE - March 31, 2019	$	—	$	843,807	$	(140,768)	$	698,896	$	1,401,935
Net income		—		—		—		37,784		37,784
Dividends paid to CNH Industrial America LLC		—		—		—		(125,000)		(125,000)
Foreign currency translation adjustment		—		—		9,244		—		9,244
Stock compensation		—		94		—		—		94
Pension liability adjustment, net of tax		—		—		89		—		89
Change in derivative financial instruments, net of tax		—		—		(1,061)		—		(1,061)
BALANCE - June 30, 2019	$	—	$	843,901	$	(132,496)	$	611,680	$	1,323,085

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

6

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (Continued)

(Dollars in thousands)

(Unaudited)

					Accumulated
					Other
	Member’s		Paid-in		Comprehensive		Retained
	Capital		Capital		Income (Loss)		Earnings		Total
BALANCE - January 1, 2018	$	—	$	843,559	$	(100,163)	$	632,243	$	1,375,639
Net income		—		—		—		39,803		39,803
Dividends paid to CNH Industrial America LLC		—		—		—		(20,000)		(20,000)
Foreign currency translation adjustment		—		—		(18,000)		—		(18,000)
Stock compensation		—		167		—		—		167
Pension liability adjustment, net of tax		—		—		106		—		106
Change in derivative financial instruments, net of tax		—		—		78		—		78
BALANCE - March 31, 2018	$	—	$	843,726	$	(117,979)	$	652,046	$	1,377,793
Net income		—		—		—		47,628		47,628
Dividends paid to CNH Industrial America LLC		—		—		—		(20,000)		(20,000)
Foreign currency translation adjustment		—		—		(16,968)		—		(16,968)
Stock compensation		—		96		—		—		96
Pension liability adjustment, net of tax		—		—		89		—		89
Change in derivative financial instruments, net of tax		—		—		(84)		—		(84)
BALANCE - June 30, 2018	$	—	$	843,822	$	(134,942)	$	679,674	$	1,388,554

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

7

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

(Unaudited)

NOTE 1: BASIS OF PRESENTATION

CNH Industrial Capital LLC and its primary operating subsidiaries, including New Holland Credit Company, LLC (“New Holland Credit”), CNH Industrial Capital America LLC (“CNH Industrial Capital America”), and CNH Industrial Capital Canada Ltd. (“CNH Industrial Capital Canada”) (collectively, “CNH Industrial Capital” or the “Company”), are each a subsidiary of CNH Industrial America LLC (“CNH Industrial America”), which is an indirect wholly-owned subsidiary of CNH Industrial N.V. (“CNHI” and, together with its consolidated subsidiaries, “CNH Industrial”). CNH Industrial America and CNH Industrial Canada Ltd. (collectively, “CNH Industrial North America”) design, manufacture, and sell agricultural and construction equipment. CNH Industrial Capital provides financial services for CNH Industrial North America dealers and end-use customers primarily located in the United States and Canada.

CNHI is incorporated in and under the laws of The Netherlands. CNHI has its corporate seat in Amsterdam, The Netherlands, and its principal office in London, England. The common shares of CNHI are listed on the New York Stock Exchange under the symbol “CNHI,” as well as on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A.

The Company has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information, which should be read in conjunction with the audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018. Certain financial information that is normally included in annual financial statements prepared in conformity with U.S. GAAP, which is not required for interim reporting purposes, has been condensed or omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our interim unaudited financial statements have been reflected.

The consolidated financial statements include the Company and its consolidated subsidiaries. The consolidated financial statements are expressed in U.S. dollars. The consolidated financial statements include the accounts of the Company’s subsidiaries in which the Company has a controlling financial interest and reflect the noncontrolling interests of the minority owners of the subsidiaries that are not fully owned for the periods presented, as applicable. A controlling financial interest may exist based on ownership of a majority of the voting interest of a subsidiary, or based on the Company’s determination that it is the primary beneficiary of a variable interest entity (“VIE”). The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. The Company assesses whether it is the primary beneficiary on an ongoing basis, as prescribed by the accounting guidance on the consolidation of VIEs. The consolidated status of the VIEs with which the Company is involved may change as a result of such reassessments.

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and reported amounts of revenues and expenses. Significant estimates in these consolidated financial statements include the allowance for credit losses and residual values of equipment on operating leases. Actual results could differ from those estimates.

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncements Adopted in 2019

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes ASC 840, Leases (“ASC 840”). Subsequently, the FASB has issued additional ASUs, which further clarified this guidance. The ASU’s most prominent change is the requirement for lessees to recognize leased assets and liabilities classified as operating leases under the previous standard. The ASU did not significantly change the lessee’s recognition, measurement and

8

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. ASU 2016-02 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASU 2016-02 on January 1, 2019, using the modified retrospective approach, without recasting prior periods. The adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which amends ASC 815, Derivatives and Hedging. The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements and improve the disclosures of hedging arrangements. Among other provisions, the new standard (1) requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported, (2) eliminates the separate measurement and reporting of hedge ineffectiveness and (3) permits an entity to recognize in earnings the initial value of an excluded component under a systematic and rational method over the life of the derivative instrument. The Company adopted ASU 2017-12 on January 1, 2019. The adoption of this standard did not have a material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which amends ASC 220, Income Statement – Reporting Comprehensive Income. In December 2017, the U.S. government enacted new tax legislation (“U.S. Tax Reform”). Included in the provisions of U.S. Tax Reform was a reduction of the corporate income tax rate from 35 percent to 21 percent. U.S. GAAP requires that the remeasurement of deferred taxes to the new corporate tax rate occur in the period in which the legislation is enacted, with the deferred tax adjustment being recorded in the provision for income taxes, including items for which the tax effects were originally recorded in other comprehensive income (“OCI”). This treatment results in the items in OCI reflecting a disproportionate tax rate, a result often referred to as stranded tax effects. This ASU allowed a reclassification from accumulated OCI to retained earnings for stranded tax effects resulting from U.S. Tax Reform. The Company adopted ASU 2018-02 on January 1, 2019, and reclassified $597 of tax effects from “Accumulated other comprehensive loss” to “Retained earnings” within its consolidated balance sheet.

In August 2018, the SEC adopted a final rule that amends certain disclosure requirements that have become duplicative, overlapping, or outdated in light of other SEC disclosure requirements, U.S. GAAP, or changes in the information environment. However, the guidance also added requirements for registrants to include in their interim financial statements a reconciliation of changes in stockholders’ equity for each period for which an income statement is required (both year-to-date and quarterly periods). The Company adopted the new interim disclosure requirement on January 1, 2019. The adoption of this standard did not have a material impact on its consolidated statements of changes in stockholder’s equity.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which establishes ASC 326, Financial Instruments – Credit Losses. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”), which supersedes existingASU 2016-13. The ASU introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Additional disclosures about significant estimates and credit quality are also required. ASU 2018-19 is effective for annual periods beginning after December 15, 2019. The Company has established a cross-functional implementation team. The team is currently evaluating data requirements and methodologies to assess the effect of the new guidance on its consolidated financial statements.

9

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2021, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2021 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement (“ASU 2018-15”), which expands upon the guidance set forth in ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. ASU 2018-15 aligns the requirements for capitalization of implementation costs in a cloud computing service contract with those requirements for capitalization of implementation costs incurred for an internal-use software license. ASU 2018-15 may be applied prospectively from the date the guidance is first applied or retrospectively.

ASU 2018-15 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company expects to adopt the ASU on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In October 2018, the FASB issued ASU No. 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”), which expands the application of a specific private company alternative related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. Under the new guidance, to determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportionate basis, rather than in their entirety. ASU 2018-17 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted in any interim period. ASU 2018-17 is required to be applied retrospectively from the date the guidance is first applied. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

NOTE 3: ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income (“AOCI”) includes net income plus other comprehensive income, which includes foreign currency translation gains and losses, certain changes in pension plans and changes in fair value of certain derivatives designated as cash flow hedges.

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended June 30, 2019:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(138,036)	$	(3,953)	$	372	$	(141,617)
Tax asset		—		947		(98)		849
Beginning balance, net of tax		(138,036)		(3,006)		274		(140,768)
Other comprehensive income (loss) before reclassifications		9,244		(112)		(1,328)		7,804
Amounts reclassified from accumulated other comprehensive income (loss)		—		229		(115)		114
Tax effects		—		(28)		382		354
Net current-period other comprehensive income (loss)		9,244		89		(1,061)		8,272
Total	$	(128,792)	$	(2,917)	$	(787)	$	(132,496)

10

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the six months ended June 30, 2019:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(146,726)	$	(4,070)	$	3,025	$	(147,771)
Tax asset		—		1,573		(801)		772
Beginning balance, net of tax		(146,726)		(2,497)		2,224		(146,999)
Other comprehensive income (loss) before reclassifications		17,934		(223)		(3,739)		13,972
Amounts reclassified from accumulated other comprehensive income (loss)		—		457		(357)		100
Tax effects		—		(57)		1,085		1,028
Net current-period other comprehensive income (loss)		17,934		177		(3,011)		15,100
Reclassification of stranded tax effects		—		(597)		—		(597)
Total	$	(128,792)	$	(2,917)	$	(787)	$	(132,496)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended June 30, 2018:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(116,717)	$	(4,811)	$	2,439	$	(119,089)
Tax asset		—		1,755		(645)		1,110
Beginning balance, net of tax		(116,717)		(3,056)		1,794		(117,979)
Other comprehensive income (loss) before reclassifications		(16,968)		(37)		(33)		(17,038)
Amounts reclassified from accumulated other comprehensive income (loss)		—		155		(81)		74
Tax effects		—		(29)		30		1
Net current-period other comprehensive income (loss)		(16,968)		89		(84)		(16,963)
Total	$	(133,685)	$	(2,967)	$	1,710	$	(134,942)

11

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the six months ended June 30, 2018:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(98,717)	$	(4,952)	$	2,333	$	(101,336)
Tax asset		—		1,790		(617)		1,173
Beginning balance, net of tax		(98,717)		(3,162)		1,716		(100,163)
Other comprehensive income (loss) before reclassifications		(34,968)		(72)		(83)		(35,123)
Amounts reclassified from accumulated other comprehensive income (loss)		—		331		75		406
Tax effects		—		(64)		2		(62)
Net current-period other comprehensive income (loss)		(34,968)		195		(6)		(34,779)
Total	$	(133,685)	$	(2,967)	$	1,710	$	(134,942)

The reclassifications out of AOCI and the location on the consolidated statements of income for the three and six months ended June 30, 2019 and 2018 are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018		Affected Line Item
Amortization of defined benefit pension items:
	$	(229)	$	(155)	$	(457)	$	(331)	Various line items individually insignificant
		(229)		(155)		(457)		(331)	Income before taxes
		55		38		111		82	Income tax benefit
	$	(174)	$	(117)	$	(346)	$	(249)	Net of tax
Unrealized losses on derivatives:
	$	115	$	81	$	357	$	(75)	Interest expense to third parties
		115		81		357		(75)	Income before taxes
		(30)		(21)		(94)		20	Income tax benefit
	$	85	$	60	$	263	$	(55)	Net of tax

12

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 4: RECEIVABLES

A summary of receivables included in the consolidated balance sheets as of June 30, 2019 and December 31, 2018 is as follows:

	June 30,		December 31,
	2019		2018
Retail	$	618,207	$	753,388
Wholesale		862,353		747,191
Wholesale factoring		84,474		—
Finance lease		71,169		63,936
Restricted receivables		8,631,405		8,460,823
Gross receivables		10,267,608		10,025,338
Less: Allowance for credit losses		(77,610)		(74,412)
Total receivables, net	$	10,189,998	$	9,950,926

Restricted Receivables and Securitization

As part of its overall funding strategy, the Company periodically transfers certain receivables into VIEs that are special purpose entities (“SPEs”) as part of its asset-backed securitization (“ABS”) programs.

SPEs utilized in the securitization programs differ from other entities included in the Company’s consolidated financial statements because the assets they hold are legally isolated from the Company’s assets. For bankruptcy analysis purposes, the Company has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities. Upon transfer of the receivables to the SPEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the SPEs’ creditors. The SPEs have ownership of cash balances that also have restrictions for the benefit of the SPEs’ investors. The Company’s interests in the SPEs’ receivables are subordinate to the interests of third-party investors. None of the receivables that are directly or indirectly sold or transferred in any of these transactions are available to pay the Company’s creditors until all obligations of the SPE have been fulfilled or the receivables are removed from the SPE.

The secured borrowings related to the restricted receivables are obligations that are payable as the receivables are collected. The following table summarizes the restricted receivables as of June 30, 2019 and December 31, 2018:

	June 30,		December 31,
	2019		2018
Retail	$	5,675,562	$	5,623,730
Wholesale		2,955,843		2,837,093
Total restricted receivables	$	8,631,405	$	8,460,823

Within the U.S. retail receivables securitization programs, qualifying retail receivables are sold to bankruptcy remote SPEs. In turn, these SPEs either establish separate trusts to which the receivables are transferred in exchange for proceeds from asset-backed securities issued by the trusts or pledge the receivables as collateral in exchange for proceeds from a committed asset-backed facility. In Canada, the receivables are transferred directly to the trusts. These trusts were determined to be VIEs. In its role as servicer, the Company has the power to direct the trusts’ activities. Through its retained interests, the Company has an obligation to absorb certain losses, or the right to receive certain benefits, that could potentially be significant to the trusts. Consequently, the Company has consolidated these retail trusts.

13

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

With regard to the wholesale receivable securitization programs, the Company sells eligible receivables on a revolving basis to structured master trust facilities, which are bankruptcy-remote SPEs. These trusts were determined to be VIEs. In its role as servicer, CNH Industrial Capital has the power to direct the trusts’ activities. Through its retained interests, the Company provides security to investors in the event that cash collections from the receivables are not sufficient to make principal and interest payments on the securities. Consequently, CNH Industrial Capital has consolidated these wholesale trusts.

Allowance for Credit Losses

The allowance for credit losses is the Company’s estimate of losses for receivables owned by the Company and consists of two components, depending on whether the receivable has been individually identified as being impaired. The first component of the allowance for credit losses covers the receivables specifically reviewed by management for which the Company has determined it is probable that it will not collect all the principal and interest payments as per the terms of the contract. Receivables are individually reviewed for impairment based on, among other items, amounts outstanding, days past due and prior collection history. These receivables are subject to impairment measurement at the loan level based either on the fair value of the collateral for collateral-dependent receivables or on the present value of expected future cash flows discounted at the receivables’ effective interest rate.

The second component of the allowance for credit losses covers all receivables that have not been individually reviewed for impairment. The allowance for these receivables is based on aggregated portfolio evaluations, generally by financial product. The allowance for retail and wholesale credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. In addition, qualitative factors that are not fully captured in the loss forecast models, including industry trends, and macroeconomic factors are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

Charge offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is estimated that amounts due are deemed uncollectible.

The Company’s allowance for credit losses is segregated into three portfolio segments: retail, wholesale and wholesale factoring. A portfolio segment is the level at which the Company develops a systematic methodology for determining its allowance for credit losses. The retail segment includes retail notes and finance lease receivables. The wholesale segment includes wholesale financing to CNH Industrial North America dealers and the wholesale factoring segment represents the short-term receivables purchased from Iveco Argentina S.A. (“Iveco Argentina”).

Further, the Company evaluates its retail and wholesale portfolio segments by class of receivable: United States and Canada. Typically, the Company’s receivables within a geographic area have similar risk profiles and methods for assessing and monitoring risk. These classes align with management reporting.

14

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Allowance for credit losses activity for the three months ended June 30, 2019 is as follows:

	Retail		Wholesale		Wholesale Factoring		Total
Allowance for credit losses:
Beginning balance	$	65,637	$	6,535	$	56	$	72,228
Charge-offs		(9,189)		—		—		(9,189)
Recoveries		1,369		3		—		1,372
Provision		12,410		683		4		13,097
Foreign currency translation and other		84		18		—		102
Ending balance	$	70,311	$	7,239	$	60	$	77,610

Allowance for credit losses activity for the six months ended June 30, 2019 is as follows:

	Retail		Wholesale		Wholesale Factoring		Total
Allowance for credit losses:
Beginning balance	$	66,944	$	7,468	$	—	$	74,412
Charge-offs		(16,566)		(2,165)		—		(18,731)
Recoveries		1,676		9		—		1,685
Provision		18,106		1,900		60		20,066
Foreign currency translation and other		151		27		—		178
Ending balance	$	70,311	$	7,239	$	60	$	77,610
Ending balance: individually evaluated for impairment	$	22,833	$	3,300	$	—	$	26,133
Ending balance: collectively evaluated for impairment	$	47,478	$	3,939	$	60	$	51,477
Receivables:
Ending balance	$	6,364,938	$	3,818,196	$	84,474	$	10,267,608
Ending balance: individually evaluated for impairment	$	43,050	$	4,108	$	—	$	47,158
Ending balance: collectively evaluated for impairment	$	6,321,888	$	3,814,088	$	84,474	$	10,220,450

Allowance for credit losses activity for the three months ended June 30, 2018 is as follows:

					Wholesale
	Retail		Wholesale		Factoring		Total
Allowance for credit losses:
Beginning balance	$	75,721	$	5,238	$	121	$	81,080
Charge-offs		(9,757)		—		—		(9,757)
Recoveries		1,138		6		—		1,144
Provision (benefit)		3,112		1,250		(67)		4,295
Foreign currency translation and other		102		(8)		(4)		90
Ending balance	$	70,316	$	6,486	$	50	$	76,852

15

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Allowance for credit losses activity for the six months ended June 30, 2018 is as follows:

					Wholesale
	Retail		Wholesale		Factoring		Total
Allowance for credit losses:
Beginning balance	$	73,610	$	5,444	$	142	$	79,196
Charge-offs		(20,267)		(187)		—		(20,454)
Recoveries		2,147		64		—		2,211
Provision (benefit)		15,007		1,187		(84)		16,110
Foreign currency translation and other		(181)		(22)		(8)		(211)
Ending balance	$	70,316	$	6,486	$	50	$	76,852
Ending balance: individually evaluated for impairment	$	15,659	$	3,935	$	—	$	19,594
Ending balance: collectively evaluated for impairment	$	54,657	$	2,551	$	50	$	57,258
Receivables:
Ending balance	$	6,503,831	$	3,451,677	$	83,638	$	10,039,146
Ending balance: individually evaluated for impairment	$	31,702	$	29,710	$	—	$	61,412
Ending balance: collectively evaluated for impairment	$	6,472,129	$	3,421,967	$	83,638	$	9,977,734

Allowance for credit losses activity for the year ended December 31, 2018 is as follows:

	Retail		Wholesale		Total
Allowance for credit losses:
Beginning balance	$	73,610	$	5,586	$	79,196
Charge-offs		(39,375)		(1,567)		(40,942)
Recoveries		4,702		71		4,773
Provision		28,277		3,422		31,699
Foreign currency translation and other		(270)		(44)		(314)
Ending balance	$	66,944	$	7,468	$	74,412
Ending balance: individually evaluated for impairment	$	15,801	$	4,825	$	20,626
Ending balance: collectively evaluated for impairment	$	51,143	$	2,643	$	53,786
Receivables:
Ending balance	$	6,441,054	$	3,584,284	$	10,025,338
Ending balance: individually evaluated for impairment	$	31,148	$	24,513	$	55,661
Ending balance: collectively evaluated for impairment	$	6,409,906	$	3,559,771	$	9,969,677

16

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Utilizing an internal credit scoring model, which considers customers’ attributes, prior credit history and each retail transaction’s attributes, the Company assigns a credit quality rating to each retail customer, by specific transaction, as part of the retail underwriting process. This rating is used in setting the terms on the transaction, including the interest rate. A description of the general characteristics of the customers’ risk grades is as follows:

Titanium — Customers from whom the Company expects no loss or collection effort.

Platinum — Customers from whom the Company expects minimal, if any, loss or collection effort.

Gold, Silver, Bronze — Customers defined as those with the potential for loss and collection effort.

A breakdown of the retail portfolio by the customer’s risk grade at the time of origination as of June 30, 2019 and December 31, 2018 is as follows:

	June 30,		December 31,
	2019		2018
Titanium	$	3,252,856	$	3,367,239
Platinum		1,942,086		1,942,784
Gold		986,654		943,816
Silver		147,094		152,338
Bronze		36,248		34,877
Total	$	6,364,938	$	6,441,054

As part of the ongoing monitoring of the credit quality of the wholesale portfolio, the Company utilizes an internal credit scoring model that assigns a risk grade for each dealer. The scoring model considers the strength of the dealer’s financial condition and payment history. The Company considers the dealers’ ratings in the quarterly credit allowance analysis. A description of the general characteristics of the dealer risk grades is as follows:

Grades A and B — Includes receivables due from dealers that have significant capital strength, moderate leverage, stable earnings and growth, and excellent payment performance.

Grade C — Includes receivables due from dealers with moderate credit risk. Dealers of this grade are differentiated from higher grades on a basis of leverage or payment performance.

Grade D — Includes receivables due from dealers with additional credit risk. These dealers require additional monitoring due to their weaker financial condition or payment performance.

A breakdown of the wholesale portfolio by its credit quality indicators as of June 30, 2019 and December 31, 2018 is as follows:

	June 30,		December 31,
	2019		2018
A	$	1,618,562	$	1,582,179
B		1,389,577		1,292,331
C		667,015		527,735
D		143,042		182,039
Total	$	3,818,196	$	3,584,284

17

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following tables present information at the level at which management assesses and monitors its credit risk. Receivables are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Delinquency is reported on receivables greater than 30 days past due.

The aging of receivables as of June 30, 2019 is as follows:

													Recorded
													Investment
					Greater								> 90 Days
	31 – 60 Days		61 – 90 Days		Than		Total				Total		and
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Accruing
Retail
United States	$	18,343	$	8,467	$	26,862	$	53,672	$	5,126,981	$	5,180,653	$	3,197
Canada	$	2,295	$	2,117	$	1,509	$	5,921	$	1,178,364	$	1,184,285	$	552
Wholesale
United States	$	453	$	101	$	810	$	1,364	$	2,917,630	$	2,918,994	$	13
Canada	$	159	$	54	$	—	$	213	$	898,989	$	899,202	$	—
Wholesale Factoring	$	—	$	—	$	—	$	—	$	84,474	$	84,474	$	—
Total
Retail	$	20,638	$	10,584	$	28,371	$	59,593	$	6,305,345	$	6,364,938	$	3,749
Wholesale	$	612	$	155	$	810	$	1,577	$	3,816,619	$	3,818,196	$	13
Wholesale factoring	$	—	$	—	$	—	$	—	$	84,474	$	84,474	$	—

The aging of receivables as of December 31, 2018 is as follows:

													Recorded
													Investment
					Greater								> 90 Days
	31 – 60 Days		61 – 90 Days		Than		Total				Total		and
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Accruing
Retail
United States	$	19,318	$	6,372	$	24,772	$	50,462	$	5,239,777	$	5,290,239	$	4,573
Canada	$	1,398	$	510	$	2,326	$	4,234	$	1,146,581	$	1,150,815	$	911
Wholesale
United States	$	484	$	10	$	1,368	$	1,862	$	2,788,655	$	2,790,517	$	387
Canada	$	3	$	—	$	436	$	439	$	793,328	$	793,767	$	1
Total
Retail	$	20,716	$	6,882	$	27,098	$	54,696	$	6,386,358	$	6,441,054	$	5,484
Wholesale	$	487	$	10	$	1,804	$	2,301	$	3,581,983	$	3,584,284	$	388

18

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Impaired receivables are receivables for which the Company has determined it will not collect all the principal and interest payments as per the terms of the contract. As of June 30, 2019 and December 31, 2018, the Company’s recorded investment in impaired receivables individually evaluated for impairment and the related unpaid principal balances, allowances and average recorded investment (based on a seven-month average and thirteen-month average, respectively) are as follows:

	June 30, 2019
			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Retail
United States	$	41,211	$	39,608	$	21,888	$	43,336
Canada	$	1,839	$	1,841	$	945	$	1,935
Wholesale
United States	$	4,108	$	3,861	$	3,300	$	6,138
Total
Retail	$	43,050	$	41,449	$	22,833	$	45,271
Wholesale	$	4,108	$	3,861	$	3,300	$	6,138

	December 31, 2018
			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Retail
United States	$	30,959	$	29,783	$	15,347	$	32,787
Canada	$	189	$	180	$	454	$	248
Wholesale
United States	$	24,513	$	22,985	$	4,825	$	27,269
Total
Retail	$	31,148	$	29,963	$	15,801	$	33,035
Wholesale	$	24,513	$	22,985	$	4,825	$	27,269

As of June 30, 2019 and December 31, 2018, the Company’s impaired receivables individually evaluated for impairment without an allowance were immaterial. Interest income recognized on impaired receivables for the three and six months ended June 30, 2019 and 2018 was immaterial.

Recognition of income is generally suspended when management determines that collection of future finance income is not probable or when an account becomes 120 days delinquent, whichever occurs first. Interest accrual is resumed if the receivable becomes contractually current and collection becomes probable. Previously suspended income is recognized at that time.

The receivables on nonaccrual status as of June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019						December 31, 2018
	Retail		Wholesale		Total		Retail		Wholesale		Total
United States	$	32,608	$	3,861	$	36,469	$	27,069	$	22,985	$	50,054
Canada	$	1,011	$	—	$	1,011	$	1,428	$	—	$	1,428

19

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Troubled Debt Restructurings

A restructuring of a receivable constitutes a troubled debt restructuring (“TDR”) when the lender grants a concession it would not otherwise consider to a borrower that is experiencing financial difficulties. As a collateral-based lender, the Company typically will repossess collateral in lieu of restructuring receivables. As such, for retail receivables, concessions are typically provided based on bankruptcy court proceedings. For wholesale receivables, concessions granted may include extended contract maturities, inclusion of interest-only periods, modification of a contractual interest rate to a below market interest rate and waiving of interest and principal.

TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses. The allowance for credit losses attributable to TDRs is based on the most probable source of repayment, which is normally the liquidation of the collateral. In determining collateral value, the Company estimates the current fair market value of the equipment collateral and considers credit enhancements such as additional collateral and third-party guarantees.

Before removing a receivable from TDR classification, a review of the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations based on a credit review, the TDR classification is not removed from the receivable.

As of June 30, 2019, the Company had 272 retail and finance lease contracts classified as TDRs where a court has determined the concession. The pre-modification value of these contracts was $10,216 and the post-modification value was $9,214. Additionally, the Company had 381 accounts with a balance of $16,336 undergoing bankruptcy proceedings where a concession has not yet been determined. As of June 30, 2018, the Company had 288 retail and finance lease contracts classified as TDRs where a court has determined the concession. The pre-modification value of these contracts was $9,624 and the post-modification value was $8,742. Additionally, the Company had 377 accounts with a balance of $20,262 undergoing bankruptcy proceedings where a concession has not yet been determined. As the outcome of the bankruptcy cases is determined by a court based on available assets, subsequent re-defaults are unusual and were not material for retail and finance lease contracts that were modified in a TDR during the previous 12 months ended June 30, 2019 and 2018.

As of June 30, 2019 and 2018, the Company’s wholesale TDRs were immaterial.

NOTE 5: EQUIPMENT ON OPERATING LEASES

Lease payments owed to the Company for equipment under non-cancelable operating leases (excluding deferred operating lease subsidy of $112,020) as of June 30, 2019 are as follows:

2019	$	87,740
2020		165,591
2021		105,826
2022		36,240
2023 and thereafter		12,107
Total lease payments	$	407,504

NOTE 6: CREDIT FACILITIES AND DEBT

On May 22, 2019, the Company, through a bankruptcy-remote trust, issued $751,140 of amortizing asset-backed notes secured by U.S. retail receivables.

On June 25, 2019, the Company, through a trust, issued C$415,953 ($310,946) of amortizing asset-backed notes secured by Canadian retail receivables.

20

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

As of June 30, 2019, the Company had a fully-drawn uncommitted credit line totaling $50,000, which expires in July 2020.

Committed unsecured facilities with banks as of June 30, 2019 totaled $843,188. These credit facilities, which are eligible for renewal at various future dates, are used primarily for working capital and other general corporate purposes. As of June 30, 2019, the Company had $443,188 outstanding under these credit facilities. Included in the remaining available credit commitments is $390,000 maintained primarily to provide backup liquidity for commercial paper borrowings.

NOTE 7: INCOME TAXES

The effective tax rates for the three months ended June 30, 2019 and 2018 were 23.9% and 23.2%, respectively. The effective tax rate was 23.5% for the six-month period ended June 30, 2019, compared to 23.3% for the same period in 2018. The effective tax rates were slightly higher than the U.S. federal income tax rate primarily due to state and provincial income taxes, the impact of which was partly offset by certain income tax credits.

NOTE 8: FINANCIAL INSTRUMENTS

The Company may elect to measure financial instruments and certain other items at fair value. This fair value option would be applied on an instrument-by-instrument basis with changes in fair value reported in earnings. The election can be made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once made. The Company has not elected the fair value measurement option for eligible items.

Fair-Value Hierarchy

The hierarchy of valuation techniques for financial instruments is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1 —Quoted prices for identical instruments in active markets.

Level 2 —Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires the use of observable market data when available.

Determination of Fair Value

When available, the Company uses quoted market prices to determine fair value and classifies such items in Level 1. In some cases where a market price is not available, the Company will use observable market-based inputs to calculate fair value, in which case the items are classified in Level 2.

If quoted or observable market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters such as interest rates, currency rates, or yield curves. Items valued using such internally generated valuation techniques are

21

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified. Where appropriate, the description includes details of the valuation models and the key inputs to those models, as well as any significant assumptions.

Derivatives

The Company utilizes derivative instruments to mitigate its exposure to interest rate and foreign currency exposures. Derivatives used as hedges are effective at reducing the risk associated with the exposure being hedged and are designated as a hedge at the inception of the derivative contract. The Company does not hold or enter into derivative or other financial instruments for speculative purposes. The credit and market risk related to derivatives is reduced through diversification among various counterparties, utilizing mandatory termination clauses and/or collateral support agreements. Derivative instruments are generally classified as Level 2 in the fair value hierarchy. The cash flows underlying all derivative contracts were recorded in operating activities in the consolidated statements of cash flows.

Interest Rate Derivatives

The Company has entered into interest rate derivatives in order to manage interest rate exposures arising in the normal course of business. Interest rate derivatives that have been designated as cash flow hedges are being used by the Company to mitigate the risk of rising interest rates related to existing debt and anticipated issuance of fixed-rate debt in future periods. Gains and losses on these instruments are deferred in accumulated other comprehensive income (loss) and recognized in interest expense over the period in which the Company recognizes interest expense on the related debt. As of June 30, 2019, the maximum length of time over which the Company is hedging its interest rate exposure through the use of derivative instruments designated in cash flow hedge relationships is 48 months. As of June 30, 2019, the after-tax losses deferred in accumulated other comprehensive income (loss) that will be recognized in interest expense over the next 12 months are approximately $(421).

The Company also enters into offsetting interest rate derivatives with substantially similar economic terms that are not designated as hedging instruments to mitigate interest rate risk related to the Company’s committed asset-backed facilities. Unrealized and realized gains and losses resulting from fair value changes in these instruments are recognized directly in income and were insignificant for the three and six months ended June 30, 2019 and 2018.

All of the Company’s interest rate derivatives as of June 30, 2019 and December 31, 2018 are considered Level 2. The fair market value of these derivatives is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of the Company’s interest rate derivatives was $2,809,628 and $2,960,191 at June 30, 2019 and December 31, 2018, respectively. The seven-month average notional amounts for the six months ended June 30, 2019 and 2018 were $3,004,828 and $2,887,445, respectively.

Foreign Exchange Contracts

The Company uses forward contracts to hedge certain assets and liabilities denominated in foreign currencies. Such derivatives are considered economic hedges and are not designated as hedging instruments. The changes in the fair value of these instruments are recognized directly as income in “Other expenses” and are expected to offset the foreign exchange gains or losses on the exposures being managed.

All of the Company’s foreign exchange derivatives are considered Level 2 as the fair value is calculated using market data input and can be compared to actively traded derivatives.

22

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Financial Statement Impact of the Company’s Derivatives

The fair values of the Company’s derivatives as of June 30, 2019 and December 31, 2018 in the consolidated balance sheets are recorded as follows:

	June 30,		December 31,
	2019		2018
Derivatives Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	38,388	$	15,422
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	3,526	$	8,107
Derivatives Not Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	806	$	1,157
Foreign exchange contracts		—		86
Total	$	806	$	1,243
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	806	$	1,157
Foreign exchange contracts		2,951		—
Total	$	3,757	$	1,157

Pre-tax gains (losses) on the consolidated statements of income and comprehensive income related to the Company’s derivatives for the three and six months ended June 30, 2019 and 2018 are recorded in the following accounts:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cash Flow Hedges
Recognized in accumulated other comprehensive income (loss) (effective portion):
Interest rate derivatives	$	(1,328)	$	(33)	$	(3,739)	$	(83)
Reclassified from accumulated other comprehensive income (loss) (effective portion):
Interest rate derivatives—Interest expense to third parties		115		81		357		(75)
Not Designated as Hedges
Foreign exchange contracts—Other expenses	$	3,463	$	(8,928)	$	3,193	$	(11,522)

23

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Items Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, all of which are measured as Level 2:

	June 30,		December 31,
	2019		2018
Assets
Interest rate derivatives	$	39,194	$	16,579
Foreign exchange contracts		—		86
Total assets	$	39,194	$	16,665
Liabilities
Interest rate derivatives	$	4,332	$	9,264
Foreign exchange contracts		2,951		—
Total liabilities	$	7,283	$	9,264

There were no transfers between Level 1, Level 2 and Level 3 hierarchy levels during the periods presented.

Fair Value of Other Financial Instruments

The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, floating-rate affiliated accounts and notes receivable, floating-rate short-term debt, interest payable and short-term affiliated debt was assumed to approximate its fair value. Under the fair value hierarchy, cash and cash equivalents and restricted cash and cash equivalents are classified as Level 1 and the remainder of the financial instruments listed is classified as Level 2.

Financial Instruments Not Carried at Fair Value

The carrying amount and estimated fair value of assets and liabilities considered financial instruments as of June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019				December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value *		Amount		Fair Value *
Receivables	$	10,189,998	$	10,109,802	$	9,950,926	$	9,589,920
Long-term debt	$	6,300,528	$	6,322,186	$	6,259,839	$	6,149,778

______________

*Under the fair value hierarchy, receivables measurements are classified as Level 3 and long‑term debt measurements are classified as Level 2.

Receivables

The fair value of receivables was determined by discounting the estimated future payments using a discount rate which includes an estimate for credit risk.

Long-term debt

The fair values of long-term debt were based on current market quotes for identical or similar borrowings and credit risk.

24

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 9: GEOGRAPHICAL INFORMATION

A summary of the Company’s geographical information is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues
United States	$	183,870	$	175,694	$	361,649	$	352,197
Canada		47,903		52,851		93,508		104,580
Eliminations		(2,661)		(2,404)		(3,976)		(4,265)
Total	$	229,112	$	226,141	$	451,181	$	452,512
Interest expense
United States	$	70,923	$	67,112	$	144,359	$	133,956
Canada		16,985		14,096		33,245		27,541
Eliminations		(2,661)		(2,404)		(3,976)		(4,265)
Total	$	85,247	$	78,804	$	173,628	$	157,232
Net income
United States	$	25,247	$	30,705	$	54,015	$	53,639
Canada		12,537		16,923		22,980		33,792
Total	$	37,784	$	47,628	$	76,995	$	87,431
Depreciation and amortization
United States	$	45,511	$	45,987	$	95,902	$	96,701
Canada		10,642		11,130		21,673		22,630
Total	$	56,153	$	57,117	$	117,575	$	119,331
Expenditures for equipment on operating leases
United States	$	133,803	$	106,161	$	279,584	$	183,306
Canada		37,863		33,022		67,591		58,482
Total	$	171,666	$	139,183	$	347,175	$	241,788
Provision for credit losses
United States	$	12,364	$	3,509	$	18,060	$	14,814
Canada		733		786		2,006		1,296
Total	$	13,097	$	4,295	$	20,066	$	16,110

25

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	As of		As of
	June 30,		December 31,
	2019		2018
Total assets
United States	$	10,328,274	$	10,482,805
Canada		2,717,460		2,511,839
Eliminations		(96,884)		(62,732)
Total	$	12,948,850	$	12,931,912
Managed receivables
United States	$	8,099,647	$	8,080,756
Canada		2,167,961		1,944,582
Total	$	10,267,608	$	10,025,338

NOTE 10: RELATED-PARTY TRANSACTIONS

The Company receives compensation from CNH Industrial North America for retail, wholesale and operating lease sales programs offered by CNH Industrial North America on which finance charges are waived or below market rate financing programs are offered. The Company receives compensation from CNH Industrial North America based on the Company’s estimated costs and a targeted return on equity. The Company is also compensated for lending funds to CNH Industrial North America.

In addition, the Company receives income from Iveco Argentina for wholesale factoring receivables purchased at a discount.

The summary of sources included in “Interest and other income from affiliates” in the accompanying consolidated statements of income for the three and six months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Subsidy from CNH Industrial North America
Retail	$	40,317	$	37,081	$	79,513	$	76,497
Wholesale		32,370		34,767		62,380		68,850
Operating lease		15,059		15,411		30,065		31,006
Income from Iveco Argentina
Wholesale factoring		1,206		4,983		1,206		10,292
Income from affiliated receivables
CNH Industrial North America		40		150		81		762
Total interest and other income from affiliates	$	88,992	$	92,392	$	173,245	$	187,407

Interest expense to affiliates was $258 and $2,784, respectively, for the three months ended June 30, 2019 and 2018 and $3,423 and $4,376, respectively, for the six months ended June 30, 2019 and 2018. Fees charged by affiliates were $11,574 and $11,304, respectively, for the three months ended June 30, 2019 and 2018, and $23,955 and $23,259, respectively, for the six months ended June 30, 2019 and 2018, and represents payroll and other human resource services CNH Industrial America performs on behalf of the Company.

26

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

As of June 30, 2019 and December 31, 2018, the Company had various accounts and notes receivable and debt with the following affiliates:

	June 30,		December 31,
	2019		2018
Affiliated receivables
CNH Industrial America	$	—	$	24,724
CNH Industrial Canada Ltd.		356		6,233
Other affiliates		12,310		12,432
Total affiliated receivables	$	12,666	$	43,389
Affiliated debt
CNH Industrial America	$	339,109	$	99,455
CNH Industrial Canada Ltd.		7,373		176,816
Total affiliated debt	$	346,482	$	276,271

Included in “Other Assets” in the accompanying balance sheet were tax receivables due from related parties of $39,174 as of December 31, 2018. Accounts payable and other accrued liabilities, including tax payables, of $55,803 and $4,740 were payable to related parties as of June 30, 2019 and December 31, 2018, respectively.

NOTE 11: COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is party to various litigation matters and claims arising from its operations. Management believes that the outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or results of operations.

Guarantees

The Company provides payment guarantees on the financial debt of various foreign financial services subsidiaries of CNHI for approximately $30,000. The guarantees are in effect for the term of the underlying funding facilities.

Commitments

The Company has various agreements to extend credit for the wholesale and dealer financing managed portfolio. At June 30, 2019, the total credit limit available was $5,997,972, of which $3,776,302 was utilized.

27

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 12: SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

CNH Industrial Capital America and New Holland Credit, which are 100%-owned subsidiaries of CNH Industrial Capital LLC (the “Guarantor Entities”), guarantee certain indebtedness of CNH Industrial Capital LLC. As the guarantees are full, unconditional, and joint and several and because the Guarantor Entities are 100%-owned by CNH Industrial Capital LLC, the Company has included the following condensed consolidating financial information as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018. The condensed consolidating financial information reflects investments in consolidated subsidiaries under the equity method of accounting.

	Condensed Statements of Comprehensive Income for the
	Three Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	7,708	$	49,404	$	—	$	57,112
Interest income on wholesale notes		—		(276)		17,269		—		16,993
Interest and other income from affiliates		15,482		52,420		36,572		(15,482)		88,992
Rental income on operating leases		—		47,253		13,239		—		60,492
Other income		—		21,172		652		(16,301)		5,523
Total revenues		15,482		128,277		117,136		(31,783)		229,112
EXPENSES
Interest expense:
Interest expense to third parties		52,749		(16,733)		48,973		—		84,989
Interest expense to affiliates		—		12,120		3,620		(15,482)		258
Total interest expense		52,749		(4,613)		52,593		(15,482)		85,247
Administrative and operating expenses:
Fees charged by affiliates		—		11,131		16,744		(16,301)		11,574
Provision for credit losses		—		5,366		7,731		—		13,097
Depreciation of equipment on operating leases		—		45,038		10,642		—		55,680
Other expenses		6		11,083		2,743		—		13,832
Total administrative and operating expenses		6		72,618		37,860		(16,301)		94,183
Total expenses		52,755		68,005		90,453		(31,783)		179,430
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(37,273)		60,272		26,683		—		49,682
Income tax provision (benefit)		(9,100)		14,832		6,166		—		11,898
Equity in income of consolidated subsidiaries accounted for under the equity method		65,957		20,517		—		(86,474)		—
NET INCOME	$	37,784	$	65,957	$	20,517	$	(86,474)	$	37,784
COMPREHENSIVE INCOME	$	46,056	$	74,229	$	27,633	$	(101,862)	$	46,056

28

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Statements of Comprehensive Income for the
	Six Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	13,631	$	98,949	$	—	$	112,580
Interest income on wholesale notes		—		(534)		34,269		—		33,735
Interest and other income from affiliates		31,448		102,509		70,736		(31,448)		173,245
Rental income on operating leases		—		94,256		26,877		—		121,133
Other income		—		42,027		1,173		(32,712)		10,488
Total revenues		31,448		251,889		232,004		(64,160)		451,181
EXPENSES
Interest expense:
Interest expense to third parties		100,226		(28,086)		98,065		—		170,205
Interest expense to affiliates		—		57,643		(22,772)		(31,448)		3,423
Total interest expense		100,226		29,557		75,293		(31,448)		173,628
Administrative and operating expenses:
Fees charged by affiliates		—		22,993		33,674		(32,712)		23,955
Provision for credit losses		—		8,732		11,334		—		20,066
Depreciation of equipment on operating leases		—		94,928		21,672		—		116,600
Other expenses		12		10,357		5,890		—		16,259
Total administrative and operating expenses		12		137,010		72,570		(32,712)		176,880
Total expenses		100,238		166,567		147,863		(64,160)		350,508
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(68,790)		85,322		84,141		—		100,673
Income tax provision (benefit)		(16,796)		21,064		19,410		—		23,678
Equity in income of consolidated subsidiaries accounted for under the equity method		128,989		64,731		—		(193,720)		—
NET INCOME	$	76,995	$	128,989	$	64,731	$	(193,720)	$	76,995
COMPREHENSIVE INCOME	$	92,095	$	144,089	$	76,907	$	(220,996)	$	92,095

29

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Balance Sheets as of June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	—	$	62,177	$	35,467	$	—	$	97,644
Restricted cash and cash equivalents		—		—		488,562		—		488,562
Receivables, less allowance for credit losses		—		1,513,793		8,676,205		—		10,189,998
Affiliated accounts and notes receivable		2,120,366		2,440,827		2,409,913		(6,958,440)		12,666
Equipment on operating leases, net		—		1,353,878		370,756		—		1,724,634
Equipment held for sale		—		216,716		19,633		—		236,349
Investments in consolidated subsidiaries accounted for under the equity method		2,940,396		2,515,729		—		(5,456,125)		—
Goodwill and intangible assets, net		—		92,695		27,871		—		120,566
Other assets		9,102		51,735		21,161		(3,567)		78,431
TOTAL	$	5,069,864	$	8,247,550	$	12,049,568	$	(12,418,132)	$	12,948,850
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt, including current maturities of long-term debt	$	938,628	$	—	$	3,258,797	$	—	$	4,197,425
Accounts payable and other accrued liabilities		287,773		3,232,811		1,365,429		(4,104,683)		781,330
Affiliated debt		—		2,074,343		1,129,463		(2,857,324)		346,482
Long-term debt		2,520,378		—		3,780,150		—		6,300,528
Total liabilities		3,746,779		5,307,154		9,533,839		(6,962,007)		11,625,765
Stockholder’s equity		1,323,085		2,940,396		2,515,729		(5,456,125)		1,323,085
TOTAL	$	5,069,864	$	8,247,550	$	12,049,568	$	(12,418,132)	$	12,948,850

30

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Statements of Cash Flows for the
	Six Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$	141,062	$	78,565	$	39,839	$	45,359	$	304,825
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired		—		(4,272,656)		(4,926,232)		3,659,309		(5,539,579)
Collections of receivables		—		4,222,643		4,802,932		(3,659,143)		5,366,432
Purchase of equipment on operating leases, net		—		(115,394)		(10,964)		—		(126,358)
Change in property and equipment and software, net		—		(1,916)		—		—		(1,916)
Net cash from (used in) investing activities		—		(167,323)		(134,264)		166		(301,421)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity		—		32,417		83,026		(45,525)		69,918
Net change in indebtedness		(16,062)		10		(145,935)		—		(161,987)
Dividends paid to CNH Industrial America LLC		(125,000)		—		—		—		(125,000)
Net cash from (used in) financing activities		(141,062)		32,427		(62,909)		(45,525)		(217,069)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		—		(56,331)		(157,334)		—		(213,665)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—		118,508		681,363		—		799,871
End of period	$	—	$	62,177	$	524,029	$	—	$	586,206

31

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Statements of Comprehensive Income for the
	Three Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	1,706	$	48,495	$	—	$	50,201
Interest income on wholesale notes		—		(253)		16,509		—		16,256
Interest and other income from affiliates		15,995		53,572		80,234		(57,409)		92,392
Rental income on operating leases		—		46,338		13,619		—		59,957
Other income		—		23,244		930		(16,839)		7,335
Total revenues		15,995		124,607		159,787		(74,248)		226,141
EXPENSES
Interest expense:
Interest expense to third parties		25,821		11,291		38,908		—		76,020
Interest expense to affiliates		—		57,740		2,453		(57,409)		2,784
Total interest expense		25,821		69,031		41,361		(57,409)		78,804
Administrative and operating expenses:
Fees charged by affiliates		—		10,914		17,229		(16,839)		11,304
Provision for credit losses		—		23		4,272		—		4,295
Depreciation of equipment on operating leases		—		45,439		11,130		—		56,569
Other expenses		10		(1,657)		14,766		—		13,119
Total administrative and operating expenses		10		54,719		47,397		(16,839)		85,287
Total expenses		25,831		123,750		88,758		(74,248)		164,091
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(9,836)		857		71,029		—		62,050
Income tax provision (benefit)		(2,382)		234		16,570		—		14,422
Equity in income of consolidated subsidiaries accounted for under the equity method		55,082		54,459		—		(109,541)		—
NET INCOME	$	47,628	$	55,082	$	54,459	$	(109,541)	$	47,628
COMPREHENSIVE INCOME	$	30,665	$	38,119	$	39,644	$	(77,763)	$	30,665

32

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Statements of Comprehensive Income for the
	Six Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	5,760	$	93,071	$	—	$	98,831
Interest income on wholesale notes		—		(512)		32,337		—		31,825
Interest and other income from affiliates		35,070		106,258		157,368		(111,289)		187,407
Rental income on operating leases		—		93,416		27,657		—		121,073
Other income		—		45,872		1,539		(34,035)		13,376
Total revenues		35,070		250,794		311,972		(145,324)		452,512
EXPENSES
Interest expense:
Interest expense to third parties		64,011		10,660		78,185		—		152,856
Interest expense to affiliates		—		105,348		10,317		(111,289)		4,376
Total interest expense		64,011		116,008		88,502		(111,289)		157,232
Administrative and operating expenses:
Fees charged by affiliates		—		22,398		34,896		(34,035)		23,259
Provision for credit losses		—		2,911		13,199		—		16,110
Depreciation of equipment on operating leases		—		95,625		22,629		—		118,254
Other expenses		10		4,490		19,184		—		23,684
Total administrative and operating expenses		10		125,424		89,908		(34,035)		181,307
Total expenses		64,021		241,432		178,410		(145,324)		338,539
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(28,951)		9,362		133,562		—		113,973
Income tax provision (benefit)		(7,012)		2,321		31,233		—		26,542
Equity in income of consolidated subsidiaries accounted for under the equity method		109,370		102,329		—		(211,699)		—
NET INCOME	$	87,431	$	109,370	$	102,329	$	(211,699)	$	87,431
COMPREHENSIVE INCOME	$	52,652	$	74,591	$	72,062	$	(146,653)	$	52,652

33

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Balance Sheets as of December 31, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	—	$	118,508	$	41,820	$	—	$	160,328
Restricted cash and cash equivalents		—		—		639,543		—		639,543
Receivables, less allowance for credit losses		—		1,472,678		8,478,248		—		9,950,926
Affiliated accounts and notes receivable		2,310,137		2,122,129		2,268,477		(6,657,354)		43,389
Equipment on operating leases, net		—		1,357,493		366,724		—		1,724,217
Equipment held for sale		—		192,772		17,219		—		209,991
Investments in consolidated subsidiaries accounted for under the equity method		2,796,050		2,461,139		—		(5,257,189)		—
Goodwill and intangible assets, net		—		91,754		26,827		—		118,581
Other assets		11,140		56,517		20,681		(3,401)		84,937
TOTAL	$	5,117,327	$	7,872,990	$	11,859,539	$	(11,917,944)	$	12,931,912
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt, including current maturities of long-term debt	$	987,559	$	—	$	3,336,733	$	—	$	4,324,292
Accounts payable and other accrued liabilities		286,527		3,035,024		1,243,183		(3,848,956)		715,778
Affiliated debt		—		2,041,926		1,046,144		(2,811,799)		276,271
Long-term debt		2,487,509		(10)		3,772,340		—		6,259,839
Total liabilities		3,761,595		5,076,940		9,398,400		(6,660,755)		11,576,180
Stockholder’s equity		1,355,732		2,796,050		2,461,139		(5,257,189)		1,355,732
TOTAL	$	5,117,327	$	7,872,990	$	11,859,539	$	(11,917,944)	$	12,931,912

34

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

	Condensed Statements of Cash Flows for the
	Six Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$	60,887	$	(401,722)	$	23,593	$	14,601	$	(302,641)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired		—		(4,019,429)		(4,807,932)		3,415,835		(5,411,526)
Collections of receivables		—		4,065,861		5,091,022		(3,416,342)		5,740,541
Purchase of equipment on operating leases, net		—		(330)		(19,332)		—		(19,662)
Change in property and equipment and software, net		—		(2,816)		—		—		(2,816)
Net cash from (used in) investing activities		—		43,286		263,758		(507)		306,537
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity		—		319,809		(141,214)		(14,094)		164,501
Net change in indebtedness		(20,887)		(24,411)		(311,509)		—		(356,807)
Dividends paid to CNH Industrial America LLC		(40,000)		—		—		—		(40,000)
Net cash from (used in) financing activities		(60,887)		295,398		(452,723)		(14,094)		(232,306)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		—		(63,038)		(165,372)		—		(228,410)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—		160,339		715,219		—		875,558
End of period	$	—	$	97,301	$	549,847	$	—	$	647,148

NOTE 13: SUBSEQUENT EVENTS

On July 2, 2019, Fitch Ratings affirmed the BBB- senior long-term rating and the F-3 short-term rating of CNH Industrial Capital LLC and improved the outlook to positive from stable.

On July 15, 2019, the Company repaid $500,000 of its 3.375% unsecured notes due 2019.

35

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Organization

We offer a range of financial products and services to the dealers and customers of CNH Industrial North America. The principal products offered are retail financing for the purchase or lease of new and used CNH Industrial North America equipment and wholesale financing to CNH Industrial North America dealers. Wholesale financing consists primarily of floor plan financing as well as financing equipment used in dealer‑owned rental yards, parts inventory and working capital needs. In addition, we purchase equipment from dealers that is leased to retail customers under operating lease agreements.

Trends and Economic Conditions

Our business is closely related to the agricultural and construction equipment industries because we offer financing products for such equipment. For the three months ended June 30, 2019, CNH Industrial’s net sales of agricultural equipment and net sales of construction equipment generated in North America were $1,107 million and $391 million, respectively, representing an increase of 2.8% and a decrease of 3.0% from the same period in 2018, respectively. For the six months ended June 30, 2019, CNH Industrial’s net sales of agricultural equipment and net sales of construction equipment generated in North America were $1,966 million and $694 million, respectively, representing an increase of 6.4% and a decrease of 4.3% from the same period in 2018, respectively.

In general, our receivable mix between agricultural and construction equipment financing directionally reflects the mix of equipment sales by CNH Industrial North America. As such, changes in the agricultural industry or with respect to our agricultural equipment borrowers may affect the majority of our portfolio.

Net income was $37.8 million and $77.0 million for the three and six months ended June 30, 2019, compared to $47.6 million and $87.4 million for the three and six months ended June 30, 2018. The decrease in net income for both periods was primarily due to reduced net interest income and higher provision for credit losses, partially offset by decreased expenses related to the operating lease portfolio and lower income taxes. The receivables balance greater than 30 days past due as a percentage of managed receivables was 0.6% at June 30, 2019 and December 31, 2018 and 0.7% at June 30, 2018.

Macroeconomic issues for us include the uncertainty of governmental actions with respect to monetary, fiscal and legislative policies, the global economic recovery, changes in demand and pricing for used equipment, capital market disruptions, trade agreements and financial regulatory reform. Significant volatility in the price of certain commodities could also impact CNH Industrial North America’s and our results.

36

Results of Operations

Three and Six Months Ended June 30, 2019 Compared to Three and Six Months Ended June 30, 2018

Revenues

Revenues for the three and six months ended June 30, 2019 and 2018 were as follows (dollars in thousands):

	Three Months Ended
	June 30,
	2019		2018		$ Change		% Change
Interest income on retail notes and finance leases	$	57,112	$	50,201	$	6,911	13.8	%
Interest income on wholesale notes		16,993		16,256		737	4.5
Interest and other income from affiliates		88,992		92,392		(3,400)	(3.7)
Rental income on operating leases		60,492		59,957		535	0.9
Other income		5,523		7,335		(1,812)	(24.7)
Total revenues	$	229,112	$	226,141	$	2,971	1.3	%

	Six Months Ended
	June 30,
	2019		2018		$ Change		% Change
Interest income on retail notes and finance leases	$	112,580	$	98,831	$	13,749	13.9	%
Interest income on wholesale notes		33,735		31,825		1,910	6.0
Interest and other income from affiliates		173,245		187,407		(14,162)	(7.6)
Rental income on operating leases		121,133		121,073		60	0.0
Other income		10,488		13,376		(2,888)	(21.6)
Total revenues	$	451,181	$	452,512	$	(1,331)	(0.3)	%

Revenues totaled $229.1 million and $451.2 million for the three and six months ended June 30, 2019, respectively, compared to $226.1 million and $452.5 million for the same periods in 2018. The quarter-over-quarter increase was driven by a higher average portfolio. The year-over-year decrease was driven by a lower average portfolio, partially offset by a slightly higher average yield. The average yield for the managed portfolio was 7.5% for the three months ended June 30, 2019 and 2018, and 7.5% and 7.4% for the six months ended June 30, 2019 and 2018, respectively.

Interest income on retail notes and finance leases for the three and six months ended June 30, 2019 was $57.1 million and $112.6 million, respectively, representing an increase of $6.9 million and $13.7 million from the same periods in 2018, respectively. For the second quarter, the increase was primarily due to a $8.6 million favorable impact from higher interest rates, partially offset by a $1.7 million unfavorable impact from lower average earning assets. For the six months ended June 30, 2019, compared to the same period in 2018, the increase was primarily due to a $17.7 million favorable impact from higher interest rates, partially offset by a $4.0 million unfavorable impact from lower average earning assets.

Interest income on wholesale notes for the three and six months ended June 30, 2019 was $17.0 million and $33.7 million, respectively, representing an increase of $0.7 million and $1.9 million from the same periods in 2018, respectively. For the second quarter, the increase was due to the favorable impacts of $0.4 million from higher interest rates and $0.3 million from higher average earning assets. For the six months ended June 30, 2019, compared to the same period in 2018, the increase was due to the favorable impacts of $1.4 million from higher interest rates and $0.5 million from higher average earning assets.

Interest and other income from affiliates for the three and six months ended June 30, 2019 was $89.0 million and $173.2 million, respectively, compared to $92.4 million and $187.4 million, respectively, for the three and six months ended June 30, 2018. For the three and six months ended June 30, 2019, compensation from CNH Industrial North America for retail low‑rate financing programs and interest waiver programs offered to customers was $40.3 million and $79.5 million, respectively, an increase of $3.2 million and $3.0 million from the same periods in 2018, respectively. The increases were primarily due to higher originations. For the three and six months ended June 30, 2019, compensation from CNH Industrial North America for wholesale marketing programs was $32.4 million and $62.4 million, respectively, a decrease of $2.4 million and $6.5 million from the same periods in

37

2018, respectively. The decreases were primarily due to pricing initiatives. For select operating leases, compensation from CNH Industrial North America for the difference between market rental rates and the amounts paid by customers was $15.1 million and $30.1 million for the three and six months ended June 30, 2019, a decrease of $0.4 million and $0.9 million from the same periods in 2018, respectively. Also included in interest and other income from affiliates was $1.2 million of wholesale factoring income for the three and six months ended June 30, 2019.

Rental income on operating leases for the three and six months ended June 30, 2019 was $60.5 million and $121.1 million, representing an increase of $0.5 million and no change from the same periods in 2018, respectively. The second quarter increase was primarily due to a $0.6 million favorable impact from higher average earning assets, partially offset by a $0.1 million unfavorable impact from lower rates.

Other income for the three and six months ended June 30, 2019 was $5.5 million and $10.5 million, representing a decrease of $1.8 million and $2.9 million from the same periods in 2018, respectively.

Expenses

Expenses for the three and six months ended June 30, 2019 and 2018 were as follows (dollars in thousands):

	Three Months Ended
	June 30,
	2019		2018		$ Change		% Change
Total interest expense	$	85,247	$	78,804	$	6,443	8.2	%
Fees charged by affiliates		11,574		11,304		270	2.4
Provision for credit losses		13,097		4,295		8,802	204.9
Depreciation of equipment on operating leases		55,680		56,569		(889)	(1.6)
Other expenses		13,832		13,119		713	5.4
Total expenses	$	179,430	$	164,091	$	15,339	9.3	%

	Six Months Ended
	June 30,
	2019		2018		$ Change		% Change
Total interest expense	$	173,628	$	157,232	$	16,396	10.4	%
Fees charged by affiliates		23,955		23,259		696	3.0
Provision for credit losses		20,066		16,110		3,956	24.6
Depreciation of equipment on operating leases		116,600		118,254		(1,654)	(1.4)
Other expenses		16,259		23,684		(7,425)	(31.4)
Total expenses	$	350,508	$	338,539	$	11,969	3.5	%

Interest expense totaled $85.2 million and $173.6 million for the three and six months ended June 30, 2019, respectively, compared to $78.8 million and $157.2 million for the same periods in 2018. For the three months ended June 30, 2019, the increase was primarily due to a $7.9 million unfavorable impact from higher average interest rates, partially offset by a $1.5 million favorable impact from lower average total debt. For the six months ended June 30, 2019, the increase was primarily due to a $20.7 million unfavorable impact from higher average interest rates, partially offset by a $4.3 million favorable impact from lower average total debt. The average debt cost was 3.3% for the six months ended June 30, 2019 compared to 2.9% for the six months ended June 30, 2018.

The provision for credit losses was $13.1 million and $20.1 million for the three and six months ended June 30, 2019, respectively, compared to $4.3 million and $16.1 million for the same periods in 2018. The increases in 2019 were primarily due to higher retail losses.

Depreciation of equipment on operating leases was $55.7 million and $116.6 million for the three and six months ended June 30, 2019, respectively, compared to $56.6 million and $118.3 million for the same periods in 2018. The decrease for the six months ended June 30, 2019, compared to the same period in 2018, was primarily due to a lower average operating lease portfolio.

Other expenses were $13.8 million and $16.3 million for the three and six months ended June 30, 2019, respectively, compared to $13.1 million and $23.7 million for the same periods in 2018. For the six months ended June 30, 2019, compared to the same period in 2018, the decrease was primarily due to lower losses on equipment held for sale.

38

The effective tax rates for the three months ended June 30, 2019 and 2018 were 23.9% and 23.2%, respectively. The effective tax rate was 23.5% for the six-month period ended June 30, 2019, compared to 23.3% for the same period in 2018.

Receivables and Equipment on Operating Leases Originated and Held

Receivables and equipment on operating lease originations for the three and six months ended June 30, 2019 and 2018 were as follows (dollars in thousands):

	Three Months Ended
	June 30,
	2019		2018		$ Change		% Change
Retail	$	703,361	$	701,979	$	1,382	0.2	%
Wholesale		2,283,432		2,292,659		(9,227)	(0.4)
Wholesale factoring		64,941		34,928		30,013	85.9
Equipment on operating leases		171,666		139,183		32,483	23.3
Total originations	$	3,223,400	$	3,168,749	$	54,651	1.7	%

	Six Months Ended
	June 30,
	2019		2018		$ Change		% Change
Retail	$	1,356,669	$	1,306,925	$	49,744	3.8	%
Wholesale		4,038,870		3,926,843		112,027	2.9
Wholesale factoring		144,040		177,758		(33,718)	(19.0)
Equipment on operating leases		347,175		241,788		105,387	43.6
Total originations	$	5,886,754	$	5,653,314	$	233,440	4.1	%

The year-over-year increases in retail, wholesale and equipment on operating lease originations was primarily due to an increase in unit sales of CNH Industrial North America equipment.

Total receivables and equipment on operating leases held as of June 30, 2019, December 31, 2018 and June 30, 2018 were as follows (dollars in thousands):

	June 30,		December 31,		June 30,
	2019		2018		2018
Retail	$	6,364,938	$	6,441,054	$	6,503,831
Wholesale		3,818,196		3,584,284		3,451,677
Wholesale factoring		84,474		—		83,638
Equipment on operating leases		1,724,634		1,724,217		1,681,797
Total receivables and equipment on operating leases	$	11,992,242	$	11,749,555	$	11,720,943

The total retail receivables balance greater than 30 days past due as a percentage of the retail receivables was 0.9% at June 30, 2019 and June 30, 2018 and 0.8% at December 31, 2018. The total wholesale receivables balance greater than 30 days past due as a percentage of the wholesale receivables was not significant at June 30, 2019, December 31, 2018 or June 30, 2018. Total retail receivables on nonaccrual status, which represent receivables for which we have ceased accruing finance income, were $33.6 million, $28.5 million and $31.1 million at June 30, 2019, December 31, 2018 and June 30, 2018, respectively. Total wholesale receivables on nonaccrual status were $3.9 million, $23.0 million and $29.0 million at June 30, 2019, December 31, 2018 and June 30, 2018, respectively.

39

Total receivable write‑off amounts and recoveries, by product, for the three and six months ended June 30, 2019 and 2018 were as follows (dollars in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Write-offs:
Retail	$	9,189	$	9,757	$	16,566	$	20,267
Wholesale		—		—		2,165		187
Total write-offs		9,189		9,757		18,731		20,454
Recoveries:
Retail		(1,369)		(1,138)		(1,676)		(2,147)
Wholesale		(3)		(6)		(9)		(64)
Total recoveries		(1,372)		(1,144)		(1,685)		(2,211)
Write-offs, net of recoveries:
Retail		7,820		8,619		14,890		18,120
Wholesale		(3)		(6)		2,156		123
Total write-offs, net of recoveries	$	7,817	$	8,613	$	17,046	$	18,243

Our allowance for credit losses on all receivables financed totaled $77.6 million at June 30, 2019, $74.4 million at December 31, 2018 and $76.9 million at June 30, 2018.

The allowance is subject to a quarterly evaluation based on many quantitative and qualitative factors, including historical loss experience by product category, portfolio duration, delinquency trends, economic conditions (in particular, those conditions directly affecting the profitability and financial strength of our customers), collateral value and credit risk quality. No single factor determines the adequacy of the allowance. Different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses. These qualitative factors are subjective and require a degree of management judgment.

We believe our allowance is sufficient to provide for losses in our receivable portfolio as of June 30, 2019.

Liquidity and Capital Resources

The following discussion of liquidity and capital resources principally focuses on our statements of cash flows, balance sheets and capitalization. CNH Industrial Capital’s current funding strategy is to maintain sufficient liquidity and flexible access to a wide variety of financial instruments and funding options.

In the past, securitization has been one of our most economical sources of funding and, therefore, the majority of our originated receivables are securitized, with the cash generated from such receivables utilized to repay the related debt or purchase new receivables.

In addition, we have secured and unsecured facilities, commercial paper, unsecured bonds, affiliate borrowings and cash to fund our liquidity needs. To add more diversity to our funding structure, we established a commercial paper program during 2017 and continue to access the unsecured bond market. As of June 30, 2019, our outstanding commercial paper totaled $390 million and our outstanding unsecured senior notes totaled $3.0 billion. We expect continued changes to our funding profile, with less reliance on securitization.

40

Cash Flows

For the six months ended June 30, 2019 and 2018, our cash flows were as follows (dollars in thousands):

	2019		2018
Cash flows from (used in):
Operating activities	$	304,825	$	(302,641)
Investing activities		(301,421)		306,537
Financing activities		(217,069)		(232,306)
Net cash increase (decrease)	$	(213,665)	$	(228,410)

Operating activities in the six months ended June 30, 2019 generated cash of $305 million, resulting primarily from net income of $77 million, adjusted by depreciation and amortization of $118 million, provision for credit losses of $20 million, deferred tax expenses of $29 million and changes in working capital of $61 million. The increase in cash provided by operating activities for the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to $559 million related to changes in working capital, a $57 million change in deferred income tax and a $4 million increase in provision for credit losses, partially offset by a $10 million reduction in net income and a $2 million decrease in depreciation and amortization expense.

Investing activities in the six months ended June 30, 2019 used cash of $301 million, resulting primarily from  net expenditures of $173 million for receivables, $126 million for equipment on operating leases and $2 million for property, equipment and software. The increase in cash used by investing activities for the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to a $502 million increase in net expenditures for receivables and a $107 million increase in net expenditures for equipment on operating leases, partially offset by a $1 million decrease in expenditures for property, equipment and software.

Financing activities in the six months ended June 30, 2019 used cash of $217 million, resulting primarily from net cash paid on long-term debt and short-term borrowings of $13 million and $149 million, respectively, and $125 million in dividends paid to CNH Industrial America, partially offset by net cash received on affiliated debt of $70 million. The decrease in cash used in financing activities in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to a decrease in net cash paid on long-term debt of $833 million, partially offset by increases in net cash paid on short-term borrowings and affiliated debt of $638 million and $95 million, respectively, and higher dividends of $85 million paid to CNH Industrial America.

Securitization

CNH Industrial Capital and its predecessor entities have been securitizing receivables since 1992. This market is a cost‑effective financing source and allows access to a wide investor base. CNH Industrial Capital had approximately $5.1 billion of public and private asset-backed securities outstanding in both the U.S. and Canada as of June 30, 2019. Our securitizations are treated as financing arrangements for accounting purposes.

Committed Asset‑Backed Facilities

CNH Industrial Capital has committed asset‑backed facilities with several banks or through their commercial paper conduit programs. Committed asset‑backed facilities for the U.S. and Canada totaled $2.8 billion at June 30, 2019, with original borrowing maturities of up to two years. The unused availability under the facilities varies during the year, depending on origination volume and the refinancing of receivables with term securitization transactions and/or other financing. At June 30, 2019, approximately $1.3 billion of funding was available for use under these facilities.

Unsecured Facilities and Debt

As of June 30, 2019, we had a fully-drawn uncommitted credit line totaling $50 million, which expires in July 2020.

In addition, committed unsecured facilities with banks as of June 30, 2019 totaled $843 million. These credit facilities, which are eligible for renewal at various future dates, are used primarily for working capital and other general corporate purposes. As of June 30, 2019, we had $443 million outstanding under these credit facilities.

41

Included in the remaining available credit commitments is $390 million maintained primarily to provide backup liquidity for commercial paper borrowings.

As of June 30, 2019, our outstanding unsecured senior notes were as follows (dollars in thousands):

3.375% notes, due 2019	$	500,000
4.375% notes, due 2020		600,000
4.875% notes, due 2021		500,000
3.875% notes, due 2021		400,000
4.375% notes, due 2022		500,000
4.200% notes, due 2024		500,000
Hedging, discounts and unamortized issuance costs		21,961
Total	$	3,021,961

These notes, which are senior unsecured obligations of CNH Industrial Capital LLC, are guaranteed by CNH Industrial Capital America and New Holland Credit.

On July 15, 2019, we repaid $500,000 of our 3.375% unsecured notes due 2019.

Credit Ratings

Our ability to obtain funding is affected by credit ratings of our debt, which are closely related to the outlook for and the financial condition of CNHI, and the nature and availability of our support agreement with CNHI.

To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our securities as an indicator of credit quality for fixed income investors. A credit rating agency may change or withdraw our ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, and reduced access to debt capital markets.

The senior long-term and short-term debt ratings and outlook currently assigned to our unsecured debt securities by the rating agencies engaged by us are the same as those for CNHI. Those ratings as of June 30, 2019 were as follows:

	Senior Long-Term	Short-Term	Outlook
S&P Global Ratings	BBB	A-2	Stable
Fitch Ratings	BBB-	F3	Stable
Moody's Investors Service	Baa3	—	Stable

______________

*On July 2, 2019, Fitch Ratings affirmed the BBB- senior long-term rating and the F-3 short-term rating of CNH Industrial Capital LLC and improved the outlook to positive from stable.

Affiliate Sources

CNH Industrial Capital borrows, as needed, from CNH Industrial. This source of funding is primarily used to finance various assets and provides additional flexibility when evaluating market conditions and potential third‑party financing options. We had affiliated debt of $346 million and $276 million as of June 30, 2019 and December 31, 2018, respectively.

Equity Position

Our equity position also supports our ability to access various funding sources. Our stockholder’s equity was $1.3 billion at June 30, 2019 and $1.4 billion at December 31, 2018. For the six months ended June 30, 2019, CNH Industrial Capital LLC paid cash dividends of $125 million to CNH Industrial America.

42

Liquidity

The majority of CNH Industrial Capital’s debt is self-liquidating from the cash generated by the underlying receivables. Normally, additional liquidity should not be necessary for the repayment of such debt. New originations of retail receivables are usually warehoused in committed asset-backed facilities until being refinanced in the term ABS market or with other third party debt. The majority of new wholesale receivables are financed through a master trust and funded by variable funding notes.

The liquidity available for use varies due to: (a) changes in origination volumes, reflecting the financing needs of our customers, and is influenced by the timing of any refinancing of underlying receivables; and (b) the execution of our funding strategy of maintaining a sufficient level of liquidity and flexible access to a wide variety of financial instruments including both committed and uncommitted, unsecured facilities.

Other Data

	As of or for the Six Months
	Ended June 30,
	2019			2018
	(Dollars in thousands)
Total managed receivables	$	10,267,608		$	10,039,146
Operating lease equipment		1,724,634			1,681,797
Total managed portfolio	$	11,992,242		$	11,720,943
Delinquency (1)		0.60	%		0.68	%
Average managed receivables	$	9,986,123		$	10,299,140
Net credit loss (2)		0.35	%		0.40	%
Profitability: (3)
Return on average managed portfolio (4)		1.32	%		1.29	%
Asset Quality:
Allowance for credit losses/total receivables		0.76	%		0.77	%

(1) Delinquency means managed receivables that are past due over 30 days, expressed as a percentage of the managed receivables as of the end of the respective period.

(2) Net credit losses on the managed receivables means write-offs, net of recoveries, for the preceding 12 months expressed as a percentage of the respective average managed receivables.

(3) Six months ended June 30, 2019 and 2018 annualized.

(4) Net income for the period expressed as a percentage of the average managed portfolio.

Cautionary Note Regarding Forward‑Looking Statements

This quarterly report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact contained in this filing, including statements regarding our competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, capital expenditures, dividends, capital structure or other financial items; costs; and plans and objectives of management regarding operations, products and services, are forward-looking statements. These statements may include terminology such as “may,” “will,” “expect,” “could,” “should,” “intend,” “estimate,” “anticipate,” “believe,” “outlook,” “continue,” “remain,” “on track,” “design,” “target,” “objective,” “goal,” “forecast,” “projection,” “prospects,” “plan,” or similar terminology. Forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside our control and are difficult to predict. If any of these risks and uncertainties materialize or other assumptions underlying any of the forward-looking statements prove to be incorrect, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements.

Factors, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: the many interrelated factors that affect customer confidence and demand for our financing products and services; general economic conditions; changes in government policies

43

regarding banking, monetary and fiscal policies; legislation, particularly relating to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including protectionist trade policies such as higher tariffs, sanctions, import quotas, capital controls and new barriers to entry or consequent reactions by other governments against such policies; actions of competitors in the various industries in which CNH Industrial North America competes; interest rates and currency exchange rates; inflation and deflation; energy prices; prices for agricultural commodities; housing starts and other construction activity; our ability to obtain financing or to refinance existing debt; restrictive covenants in our debt agreements; actions by rating agencies concerning the ratings on our debt and asset-backed securities and the credit rating of CNHI; a decline in the price of used equipment; political and civil unrest; volatility and deterioration of capital and financial markets, other similar risks and uncertainties and our success, and CNH Industrial North America’s success, in managing the risks involved in the foregoing.

Forward‑looking statements speak only as of the date on which such statements are made. Our outlook is based upon assumptions, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Our actual results could differ materially from those anticipated in such forward-looking statements. We undertake no obligation to update or revise publicly our forward-looking statements.

Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward‑looking statements are included in the section “Item 1A. Risk Factors” in our most recent annual report on Form 10‑K.

Critical Accounting Policies and Estimates

See our critical accounting policies and estimates discussed in our annual report for the year ended December 31, 2018 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to our audited consolidated financial statements included in such annual report. There were no material changes to these policies or estimates during the three months ended June 30, 2019.

New Accounting Pronouncements Not Yet Adopted

See Note 2: New Accounting Pronouncements to this Form 10-Q.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

Under the supervision, and with the participation, of our management, including our President and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2019. Based on that evaluation, our President and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the three months ended June 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

CNH Industrial Capital is party to various litigation matters and claims arising from its operations. Management believes that the outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on CNH Industrial Capital’s financial position or results of operations.

44

Item 1A.  Risk Factors

See our most recent annual report on Form 10‑K (Part I, Item 1A). There was no material change in our risk factors during the six months ended June 30, 2019.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

Item 6.  Exhibits

Exhibit	Description
31.1	Certifications of President Pursuant to Exchange Act Rule 13a‑14(a), as Adopted Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
31.2	Certifications of Chief Financial Officer Pursuant to Exchange Act Rule 13a‑14(a), as Adopted Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
32.1†	Certification required by Exchange Act Rule 13a‑14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
101	Interactive data files pursuant to Rule 405 of Regulation S‑T: (i) Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018, (ii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018, (iii) Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018, (v) Consolidated Statements of Changes in Stockholder’s Equity for the six months ended June 30, 2019 and 2018 and (vi) Condensed Notes to Consolidated Financial Statements.

†These certifications are deemed not filed for purposes of section 18 of the Exchange Act, or otherwise subject to the liability of that section; nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act.

Pursuant to Item 601(b)(4)(iii) of Regulation S K, copies of instruments defining the rights of holders of certain long term debt have not been filed. The registrant will furnish copies thereof to the SEC upon request.

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CNH INDUSTRIAL CAPITAL LLC
Date: August 2, 2019	By:	/s/ Carlo Alberto Sisto
		Name:	Carlo Alberto Sisto
		Title:	Chairman and President

46

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Carlo Alberto Sisto, certify that:

1. I have reviewed this quarterly report on Form 10‑Q of CNH Industrial Capital LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2019	By:	/s/ Carlo Alberto Sisto
	Name:	Carlo Alberto Sisto
	Title:	President

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Douglas MacLeod, certify that:

1. I have reviewed this quarterly report on Form 10‑Q of CNH Industrial Capital LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2019	By:	/s/ Douglas MacLeod
	Name:	Douglas MacLeod
	Title:	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of CNH Industrial Capital LLC (the “Company”) does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10‑Q for the quarter ended June 30, 2019 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 2, 2019	/s/ Carlo Alberto Sisto
	Carlo Alberto Sisto
	President
August 2, 2019	/s/ Douglas MacLeod
	Douglas MacLeod
	Chief Financial Officer

A signed original of this written statement has been provided to CNH Industrial Capital LLC and will be retained by CNH Industrial Capital LLC and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely pursuant to 18 U.S.C §1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2019 shares
Document and Entity Information
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Entity Registrant Name	CNH INDUSTRIAL CAPITAL LLC
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	0
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001552493
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
REVENUES
Interest income on retail notes and finance leases	$ 57,112		$ 50,201		$ 112,580	$ 98,831
Interest income on wholesale notes	16,993		16,256		33,735	31,825
Interest and other income from affiliates	88,992		92,392		173,245	187,407
Rental income on operating leases	60,492		59,957		121,133	121,073
Other income	5,523		7,335		10,488	13,376
Total revenues	229,112		226,141		451,181	452,512
Interest expense:
Interest expense to third parties	84,989		76,020		170,205	152,856
Interest expense to affiliates	258		2,784		3,423	4,376
Total interest expense	85,247		78,804		173,628	157,232
Administrative and operating expenses:
Fees charged by affiliates	11,574		11,304		23,955	23,259
Provision for credit losses	13,097		4,295		20,066	16,110
Depreciation of equipment on operating leases	55,680		56,569		116,600	118,254
Other expenses	13,832		13,119		16,259	23,684
Total administrative and operating expenses	94,183		85,287		176,880	181,307
Total expenses	179,430		164,091		350,508	338,539
INCOME BEFORE TAXES	49,682		62,050		100,673	113,973
Income tax provision	11,898		14,422		23,678	26,542
NET INCOME	$ 37,784	$ 39,211	$ 47,628	$ 39,803	$ 76,995	$ 87,431

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$ 37,784	$ 39,211	$ 47,628	$ 39,803	$ 76,995	$ 87,431
Other comprehensive income (loss):
Foreign currency translation adjustment	9,244	8,690	(16,968)	(18,000)	17,934	(34,968)
Pension liability adjustment	89	88	89	106	177	195
Change in derivative financial instruments	(1,061)	$ (1,950)	(84)	$ 78	(3,011)	(6)
Total other comprehensive income (loss)	8,272		(16,963)		15,100	(34,779)
COMPREHENSIVE INCOME	$ 46,056		$ 30,665		$ 92,095	$ 52,652

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 97,644	$ 160,328
Restricted cash and cash equivalents	488,562	639,543
Receivables, less allowance for credit losses of $77,610 and $74,412, respectively	10,189,998	9,950,926
Affiliated accounts and notes receivable	12,666	43,389
Equipment on operating leases, net	1,724,634	1,724,217
Equipment held for sale	236,349	209,991
Goodwill	109,443	108,399
Other intangible assets, net	11,123	10,182
Other assets	78,431	84,937
TOTAL	12,948,850	12,931,912
Liabilities:
Short-term debt (including current maturities of long-term debt)	4,197,425	4,324,292
Accounts payable and other accrued liabilities	781,330	715,778
Affiliated debt	346,482	276,271
Long-term debt	6,300,528	6,259,839
Total liabilities	11,625,765	11,576,180
Commitments and contingent liabilities (Note 10)
Stockholder's equity:
Member's capital
Paid-in capital	843,901	843,643
Accumulated other comprehensive loss	(132,496)	(146,999)
Retained earnings	611,680	659,088
Total stockholder's equity	1,323,085	1,355,732
TOTAL	$ 12,948,850	$ 12,931,912

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Allowance for credit losses	$ 77,610	$ 74,412
Restricted cash and cash equivalents	488,562	639,543
Receivables, less allowance for credit losses of $51,447 and $54,124, respectively	10,189,998	9,950,926
TOTAL	12,948,850	12,931,912
Short-term debt (including current maturities of long-term debt)	4,197,425	4,324,292
Long-term debt	6,300,528	6,259,839
Total liabilities	11,625,765	11,576,180
Consolidated variable interest entities ("VIEs")
Allowance for credit losses	51,447	54,124
Restricted cash and cash equivalents	488,562	639,543
Receivables, less allowance for credit losses of $51,447 and $54,124, respectively	6,735,185	6,687,828
TOTAL	7,223,747	7,327,371
Short-term debt (including current maturities of long-term debt)	3,258,797	3,241,347
Long-term debt	3,337,045	3,442,286
Total liabilities	$ 6,595,842	$ 6,683,633

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 76,995	$ 87,431
Adjustments to reconcile net income to net cash from (used in) operating activities:
Depreciation on property and equipment and equipment on operating leases	116,601	118,259
Amortization of intangibles	974	1,072
Provision for credit losses	20,066	16,110
Deferred income tax (benefit) expense	28,910	(27,944)
Changes in components of working capital:
Change in affiliated accounts and notes receivables	30,737	(464,469)
Change in other assets and equipment held for sale	8,599	(10,011)
Change in accounts payable and other accrued liabilities	21,943	(23,089)
Net cash from (used in) operating activities	304,825	(302,641)
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of receivables acquired	(5,539,579)	(5,411,526)
Collections of receivables	5,366,432	5,740,541
Purchase of equipment on operating leases	(347,175)	(241,788)
Proceeds from disposal of equipment on operating leases	220,817	222,126
Change in property and equipment and software, net	(1,916)	(2,816)
Net cash from (used in) investing activities	(301,421)	306,537
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of affiliated debt	653,140	670,886
Payment of affiliated debt	(583,222)	(506,385)
Proceeds from issuance of long-term debt	1,945,345	1,264,266
Payment of long-term debt	(1,958,759)	(2,110,344)
Change in short-term borrowings, net	(148,573)	489,271
Dividend paid to CNH Industrial America LLC	(125,000)	(40,000)
Net cash from (used in) financing activities	(217,069)	(232,306)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(213,665)	(228,410)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	799,871	875,558
End of period	586,206	647,148
CASH PAID DURING THE PERIOD FOR INTEREST	170,758	161,573
CASH PAID (RECEIVED) DURING THE PERIOD FOR TAXES	$ (37,895)	$ 33,037

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY - USD ($) $ in Thousands	Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total
BALANCE at Dec. 31, 2017	$ 843,559	$ (100,163)	$ 632,243	$ 1,375,639
Increase (Decrease) in Stockholder's Equity
Net income			39,803	39,803
Dividend paid to CNH Industrial America LLC			(20,000)	(20,000)
Foreign currency translation adjustment		(18,000)		(18,000)
Stock compensation	167			167
Pension liability adjustment, net of tax		106		106
Change in derivative financial instruments, net of tax		78		78
BALANCE at Mar. 31, 2018	843,726	(117,979)	652,046	1,377,793
BALANCE at Dec. 31, 2017	843,559	(100,163)	632,243	1,375,639
Increase (Decrease) in Stockholder's Equity
Net income				87,431
Foreign currency translation adjustment				(34,968)
Pension liability adjustment, net of tax				195
Change in derivative financial instruments, net of tax				(6)
BALANCE at Jun. 30, 2018	843,822	(134,942)	679,674	1,388,554
BALANCE at Mar. 31, 2018	843,726	(117,979)	652,046	1,377,793
Increase (Decrease) in Stockholder's Equity
Net income			47,628	47,628
Dividend paid to CNH Industrial America LLC			(20,000)	(20,000)
Foreign currency translation adjustment		(16,968)		(16,968)
Stock compensation	96			96
Pension liability adjustment, net of tax		89		89
Change in derivative financial instruments, net of tax		(84)		(84)
BALANCE at Jun. 30, 2018	843,822	(134,942)	679,674	1,388,554
BALANCE at Dec. 31, 2018	843,643	(146,999)	659,088	1,355,732
Increase (Decrease) in Stockholder's Equity
Net income			39,211	39,211
Foreign currency translation adjustment		8,690		8,690
Stock compensation	164			164
Reclassification of certain tax effects		(597)	597
Pension liability adjustment, net of tax		88		88
Change in derivative financial instruments, net of tax		(1,950)		(1,950)
BALANCE at Mar. 31, 2019	843,807	(140,768)	698,896	1,401,935
BALANCE at Dec. 31, 2018	843,643	(146,999)	659,088	1,355,732
Increase (Decrease) in Stockholder's Equity
Net income				76,995
Foreign currency translation adjustment				17,934
Pension liability adjustment, net of tax				177
Change in derivative financial instruments, net of tax				(3,011)
BALANCE at Jun. 30, 2019	843,901	(132,496)	611,680	1,323,085
BALANCE at Mar. 31, 2019	843,807	(140,768)	698,896	1,401,935
Increase (Decrease) in Stockholder's Equity
Net income			37,784	37,784
Dividend paid to CNH Industrial America LLC			(125,000)	(125,000)
Foreign currency translation adjustment		9,244		9,244
Stock compensation	94			94
Pension liability adjustment, net of tax		89		89
Change in derivative financial instruments, net of tax		(1,061)		(1,061)
BALANCE at Jun. 30, 2019	$ 843,901	$ (132,496)	$ 611,680	$ 1,323,085

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1: BASIS OF PRESENTATION

CNH Industrial Capital LLC and its primary operating subsidiaries, including New Holland Credit Company, LLC (“New Holland Credit”), CNH Industrial Capital America LLC (“CNH Industrial Capital America”), and CNH Industrial Capital Canada Ltd. (“CNH Industrial Capital Canada”) (collectively, “CNH Industrial Capital” or the “Company”), are each a subsidiary of CNH Industrial America LLC (“CNH Industrial America”), which is an indirect wholly-owned subsidiary of CNH Industrial N.V. (“CNHI” and, together with its consolidated subsidiaries, “CNH Industrial”). CNH Industrial America and CNH Industrial Canada Ltd. (collectively, “CNH Industrial North America”) design, manufacture, and sell agricultural and construction equipment. CNH Industrial Capital provides financial services for CNH Industrial North America dealers and end-use customers primarily located in the United States and Canada.

CNHI is incorporated in and under the laws of The Netherlands. CNHI has its corporate seat in Amsterdam, The Netherlands, and its principal office in London, England. The common shares of CNHI are listed on the New York Stock Exchange under the symbol “CNHI,” as well as on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A.

The Company has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information, which should be read in conjunction with the audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018. Certain financial information that is normally included in annual financial statements prepared in conformity with U.S. GAAP, which is not required for interim reporting purposes, has been condensed or omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our interim unaudited financial statements have been reflected.

The consolidated financial statements include the Company and its consolidated subsidiaries. The consolidated financial statements are expressed in U.S. dollars. The consolidated financial statements include the accounts of the Company’s subsidiaries in which the Company has a controlling financial interest and reflect the noncontrolling interests of the minority owners of the subsidiaries that are not fully owned for the periods presented, as applicable. A controlling financial interest may exist based on ownership of a majority of the voting interest of a subsidiary, or based on the Company’s determination that it is the primary beneficiary of a variable interest entity (“VIE”). The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. The Company assesses whether it is the primary beneficiary on an ongoing basis, as prescribed by the accounting guidance on the consolidation of VIEs. The consolidated status of the VIEs with which the Company is involved may change as a result of such reassessments.

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and reported amounts of revenues and expenses. Significant estimates in these consolidated financial statements include the allowance for credit losses and residual values of equipment on operating leases. Actual results could differ from those estimates.

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NEW ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2019

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncements Adopted in 2019

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes ASC 840, Leases (“ASC 840”). Subsequently, the FASB has issued additional ASUs, which further clarified this guidance. The ASU’s most prominent change is the requirement for lessees to recognize leased assets and liabilities classified as operating leases under the previous standard. The ASU did not significantly change the lessee’s recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. ASU 2016-02 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASU 2016-02 on January 1, 2019, using the modified retrospective approach, without recasting prior periods. The adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which amends ASC 815, Derivatives and Hedging. The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements and improve the disclosures of hedging arrangements. Among other provisions, the new standard (1) requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported, (2) eliminates the separate measurement and reporting of hedge ineffectiveness and (3) permits an entity to recognize in earnings the initial value of an excluded component under a systematic and rational method over the life of the derivative instrument. The Company adopted ASU 2017-12 on January 1, 2019. The adoption of this standard did not have a material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which amends ASC 220, Income Statement – Reporting Comprehensive Income. In December 2017, the U.S. government enacted new tax legislation (“U.S. Tax Reform”). Included in the provisions of U.S. Tax Reform was a reduction of the corporate income tax rate from 35 percent to 21 percent. U.S. GAAP requires that the remeasurement of deferred taxes to the new corporate tax rate occur in the period in which the legislation is enacted, with the deferred tax adjustment being recorded in the provision for income taxes, including items for which the tax effects were originally recorded in other comprehensive income (“OCI”). This treatment results in the items in OCI reflecting a disproportionate tax rate, a result often referred to as stranded tax effects. This ASU allowed a reclassification from accumulated OCI to retained earnings for stranded tax effects resulting from U.S. Tax Reform. The Company adopted ASU 2018-02 on January 1, 2019, and reclassified $597 of tax effects from “Accumulated other comprehensive loss” to “Retained earnings” within its consolidated balance sheet.

In August 2018, the SEC adopted a final rule that amends certain disclosure requirements that have become duplicative, overlapping, or outdated in light of other SEC disclosure requirements, U.S. GAAP, or changes in the information environment. However, the guidance also added requirements for registrants to include in their interim financial statements a reconciliation of changes in stockholders’ equity for each period for which an income statement is required (both year-to-date and quarterly periods). The Company adopted the new interim disclosure requirement on January 1, 2019. The adoption of this standard did not have a material impact on its consolidated statements of changes in stockholder’s equity.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which establishes ASC 326, Financial Instruments – Credit Losses. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”), which supersedes existingASU 2016-13. The ASU introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Additional disclosures about significant estimates and credit quality are also required. ASU 2018-19 is effective for annual periods beginning after December 15, 2019. The Company has established a cross-functional implementation team. The team is currently evaluating data requirements and methodologies to assess the effect of the new guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2021, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2021 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement (“ASU 2018-15”), which expands upon the guidance set forth in ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. ASU 2018-15 aligns the requirements for capitalization of implementation costs in a cloud computing service contract with those requirements for capitalization of implementation costs incurred for an internal-use software license. ASU 2018-15 may be applied prospectively from the date the guidance is first applied or retrospectively.

ASU 2018-15 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company expects to adopt the ASU on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In October 2018, the FASB issued ASU No. 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”), which expands the application of a specific private company alternative related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. Under the new guidance, to determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportionate basis, rather than in their entirety. ASU 2018-17 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted in any interim period. ASU 2018-17 is required to be applied retrospectively from the date the guidance is first applied. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

6 Months Ended

Jun. 30, 2019

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

NOTE 3: ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income (“AOCI”) includes net income plus other comprehensive income, which includes foreign currency translation gains and losses, certain changes in pension plans and changes in fair value of certain derivatives designated as cash flow hedges.

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended June 30, 2019:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(138,036)	$	(3,953)	$	372	$	(141,617)
Tax asset		—		947		(98)		849
Beginning balance, net of tax		(138,036)		(3,006)		274		(140,768)
Other comprehensive income (loss) before reclassifications		9,244		(112)		(1,328)		7,804
Amounts reclassified from accumulated other comprehensive income (loss)		—		229		(115)		114
Tax effects		—		(28)		382		354
Net current-period other comprehensive income (loss)		9,244		89		(1,061)		8,272
Total	$	(128,792)	$	(2,917)	$	(787)	$	(132,496)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the six months ended June 30, 2019:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(146,726)	$	(4,070)	$	3,025	$	(147,771)
Tax asset		—		1,573		(801)		772
Beginning balance, net of tax		(146,726)		(2,497)		2,224		(146,999)
Other comprehensive income (loss) before reclassifications		17,934		(223)		(3,739)		13,972
Amounts reclassified from accumulated other comprehensive income (loss)		—		457		(357)		100
Tax effects		—		(57)		1,085		1,028
Net current-period other comprehensive income (loss)		17,934		177		(3,011)		15,100
Reclassification of stranded tax effects		—		(597)		—		(597)
Total	$	(128,792)	$	(2,917)	$	(787)	$	(132,496)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended June 30, 2018:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(116,717)	$	(4,811)	$	2,439	$	(119,089)
Tax asset		—		1,755		(645)		1,110
Beginning balance, net of tax		(116,717)		(3,056)		1,794		(117,979)
Other comprehensive income (loss) before reclassifications		(16,968)		(37)		(33)		(17,038)
Amounts reclassified from accumulated other comprehensive income (loss)		—		155		(81)		74
Tax effects		—		(29)		30		1
Net current-period other comprehensive income (loss)		(16,968)		89		(84)		(16,963)
Total	$	(133,685)	$	(2,967)	$	1,710	$	(134,942)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the six months ended June 30, 2018:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(98,717)	$	(4,952)	$	2,333	$	(101,336)
Tax asset		—		1,790		(617)		1,173
Beginning balance, net of tax		(98,717)		(3,162)		1,716		(100,163)
Other comprehensive income (loss) before reclassifications		(34,968)		(72)		(83)		(35,123)
Amounts reclassified from accumulated other comprehensive income (loss)		—		331		75		406
Tax effects		—		(64)		2		(62)
Net current-period other comprehensive income (loss)		(34,968)		195		(6)		(34,779)
Total	$	(133,685)	$	(2,967)	$	1,710	$	(134,942)

The reclassifications out of AOCI and the location on the consolidated statements of income for the three and six months ended June 30, 2019 and 2018 are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018		Affected Line Item
Amortization of defined benefit pension items:
	$	(229)	$	(155)	$	(457)	$	(331)	Various line items individually insignificant
		(229)		(155)		(457)		(331)	Income before taxes
		55		38		111		82	Income tax benefit
	$	(174)	$	(117)	$	(346)	$	(249)	Net of tax
Unrealized losses on derivatives:
	$	115	$	81	$	357	$	(75)	Interest expense to third parties
		115		81		357		(75)	Income before taxes
		(30)		(21)		(94)		20	Income tax benefit
	$	85	$	60	$	263	$	(55)	Net of tax

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RECEIVABLES

6 Months Ended

Jun. 30, 2019

RECEIVABLES

RECEIVABLES

NOTE 4: RECEIVABLES

A summary of receivables included in the consolidated balance sheets as of June 30, 2019 and December 31, 2018 is as follows:

	June 30,		December 31,
	2019		2018
Retail	$	618,207	$	753,388
Wholesale		862,353		747,191
Wholesale factoring		84,474		—
Finance lease		71,169		63,936
Restricted receivables		8,631,405		8,460,823
Gross receivables		10,267,608		10,025,338
Less: Allowance for credit losses		(77,610)		(74,412)
Total receivables, net	$	10,189,998	$	9,950,926

Restricted Receivables and Securitization

As part of its overall funding strategy, the Company periodically transfers certain receivables into VIEs that are special purpose entities (“SPEs”) as part of its asset-backed securitization (“ABS”) programs.

SPEs utilized in the securitization programs differ from other entities included in the Company’s consolidated financial statements because the assets they hold are legally isolated from the Company’s assets. For bankruptcy analysis purposes, the Company has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities. Upon transfer of the receivables to the SPEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the SPEs’ creditors. The SPEs have ownership of cash balances that also have restrictions for the benefit of the SPEs’ investors. The Company’s interests in the SPEs’ receivables are subordinate to the interests of third-party investors. None of the receivables that are directly or indirectly sold or transferred in any of these transactions are available to pay the Company’s creditors until all obligations of the SPE have been fulfilled or the receivables are removed from the SPE.

The secured borrowings related to the restricted receivables are obligations that are payable as the receivables are collected. The following table summarizes the restricted receivables as of June 30, 2019 and December 31, 2018:

	June 30,		December 31,
	2019		2018
Retail	$	5,675,562	$	5,623,730
Wholesale		2,955,843		2,837,093
Total restricted receivables	$	8,631,405	$	8,460,823

Within the U.S. retail receivables securitization programs, qualifying retail receivables are sold to bankruptcy remote SPEs. In turn, these SPEs either establish separate trusts to which the receivables are transferred in exchange for proceeds from asset-backed securities issued by the trusts or pledge the receivables as collateral in exchange for proceeds from a committed asset-backed facility. In Canada, the receivables are transferred directly to the trusts. These trusts were determined to be VIEs. In its role as servicer, the Company has the power to direct the trusts’ activities. Through its retained interests, the Company has an obligation to absorb certain losses, or the right to receive certain benefits, that could potentially be significant to the trusts. Consequently, the Company has consolidated these retail trusts.

With regard to the wholesale receivable securitization programs, the Company sells eligible receivables on a revolving basis to structured master trust facilities, which are bankruptcy-remote SPEs. These trusts were determined to be VIEs. In its role as servicer, CNH Industrial Capital has the power to direct the trusts’ activities. Through its retained interests, the Company provides security to investors in the event that cash collections from the receivables are not sufficient to make principal and interest payments on the securities. Consequently, CNH Industrial Capital has consolidated these wholesale trusts.

Allowance for Credit Losses

The allowance for credit losses is the Company’s estimate of losses for receivables owned by the Company and consists of two components, depending on whether the receivable has been individually identified as being impaired. The first component of the allowance for credit losses covers the receivables specifically reviewed by management for which the Company has determined it is probable that it will not collect all the principal and interest payments as per the terms of the contract. Receivables are individually reviewed for impairment based on, among other items, amounts outstanding, days past due and prior collection history. These receivables are subject to impairment measurement at the loan level based either on the fair value of the collateral for collateral-dependent receivables or on the present value of expected future cash flows discounted at the receivables’ effective interest rate.

The second component of the allowance for credit losses covers all receivables that have not been individually reviewed for impairment. The allowance for these receivables is based on aggregated portfolio evaluations, generally by financial product. The allowance for retail and wholesale credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. In addition, qualitative factors that are not fully captured in the loss forecast models, including industry trends, and macroeconomic factors are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

Charge offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is estimated that amounts due are deemed uncollectible.

The Company’s allowance for credit losses is segregated into three portfolio segments: retail, wholesale and wholesale factoring. A portfolio segment is the level at which the Company develops a systematic methodology for determining its allowance for credit losses. The retail segment includes retail notes and finance lease receivables. The wholesale segment includes wholesale financing to CNH Industrial North America dealers and the wholesale factoring segment represents the short-term receivables purchased from Iveco Argentina S.A. (“Iveco Argentina”).

Further, the Company evaluates its retail and wholesale portfolio segments by class of receivable: United States and Canada. Typically, the Company’s receivables within a geographic area have similar risk profiles and methods for assessing and monitoring risk. These classes align with management reporting.

Allowance for credit losses activity for the three months ended June 30, 2019 is as follows:

	Retail		Wholesale		Wholesale Factoring		Total
Allowance for credit losses:
Beginning balance	$	65,637	$	6,535	$	56	$	72,228
Charge-offs		(9,189)		—		—		(9,189)
Recoveries		1,369		3		—		1,372
Provision		12,410		683		4		13,097
Foreign currency translation and other		84		18		—		102
Ending balance	$	70,311	$	7,239	$	60	$	77,610

Allowance for credit losses activity for the six months ended June 30, 2019 is as follows:

	Retail		Wholesale		Wholesale Factoring		Total
Allowance for credit losses:
Beginning balance	$	66,944	$	7,468	$	—	$	74,412
Charge-offs		(16,566)		(2,165)		—		(18,731)
Recoveries		1,676		9		—		1,685
Provision		18,106		1,900		60		20,066
Foreign currency translation and other		151		27		—		178
Ending balance	$	70,311	$	7,239	$	60	$	77,610
Ending balance: individually evaluated for impairment	$	22,833	$	3,300	$	—	$	26,133
Ending balance: collectively evaluated for impairment	$	47,478	$	3,939	$	60	$	51,477
Receivables:
Ending balance	$	6,364,938	$	3,818,196	$	84,474	$	10,267,608
Ending balance: individually evaluated for impairment	$	43,050	$	4,108	$	—	$	47,158
Ending balance: collectively evaluated for impairment	$	6,321,888	$	3,814,088	$	84,474	$	10,220,450

Allowance for credit losses activity for the three months ended June 30, 2018 is as follows:

					Wholesale
	Retail		Wholesale		Factoring		Total
Allowance for credit losses:
Beginning balance	$	75,721	$	5,238	$	121	$	81,080
Charge-offs		(9,757)		—		—		(9,757)
Recoveries		1,138		6		—		1,144
Provision (benefit)		3,112		1,250		(67)		4,295
Foreign currency translation and other		102		(8)		(4)		90
Ending balance	$	70,316	$	6,486	$	50	$	76,852

Allowance for credit losses activity for the six months ended June 30, 2018 is as follows:

					Wholesale
	Retail		Wholesale		Factoring		Total
Allowance for credit losses:
Beginning balance	$	73,610	$	5,444	$	142	$	79,196
Charge-offs		(20,267)		(187)		—		(20,454)
Recoveries		2,147		64		—		2,211
Provision (benefit)		15,007		1,187		(84)		16,110
Foreign currency translation and other		(181)		(22)		(8)		(211)
Ending balance	$	70,316	$	6,486	$	50	$	76,852
Ending balance: individually evaluated for impairment	$	15,659	$	3,935	$	—	$	19,594
Ending balance: collectively evaluated for impairment	$	54,657	$	2,551	$	50	$	57,258
Receivables:
Ending balance	$	6,503,831	$	3,451,677	$	83,638	$	10,039,146
Ending balance: individually evaluated for impairment	$	31,702	$	29,710	$	—	$	61,412
Ending balance: collectively evaluated for impairment	$	6,472,129	$	3,421,967	$	83,638	$	9,977,734

Allowance for credit losses activity for the year ended December 31, 2018 is as follows:

	Retail		Wholesale		Total
Allowance for credit losses:
Beginning balance	$	73,610	$	5,586	$	79,196
Charge-offs		(39,375)		(1,567)		(40,942)
Recoveries		4,702		71		4,773
Provision		28,277		3,422		31,699
Foreign currency translation and other		(270)		(44)		(314)
Ending balance	$	66,944	$	7,468	$	74,412
Ending balance: individually evaluated for impairment	$	15,801	$	4,825	$	20,626
Ending balance: collectively evaluated for impairment	$	51,143	$	2,643	$	53,786
Receivables:
Ending balance	$	6,441,054	$	3,584,284	$	10,025,338
Ending balance: individually evaluated for impairment	$	31,148	$	24,513	$	55,661
Ending balance: collectively evaluated for impairment	$	6,409,906	$	3,559,771	$	9,969,677

Utilizing an internal credit scoring model, which considers customers’ attributes, prior credit history and each retail transaction’s attributes, the Company assigns a credit quality rating to each retail customer, by specific transaction, as part of the retail underwriting process. This rating is used in setting the terms on the transaction, including the interest rate. A description of the general characteristics of the customers’ risk grades is as follows:

Titanium — Customers from whom the Company expects no loss or collection effort.

Platinum — Customers from whom the Company expects minimal, if any, loss or collection effort.

Gold, Silver, Bronze — Customers defined as those with the potential for loss and collection effort.

A breakdown of the retail portfolio by the customer’s risk grade at the time of origination as of June 30, 2019 and December 31, 2018 is as follows:

	June 30,		December 31,
	2019		2018
Titanium	$	3,252,856	$	3,367,239
Platinum		1,942,086		1,942,784
Gold		986,654		943,816
Silver		147,094		152,338
Bronze		36,248		34,877
Total	$	6,364,938	$	6,441,054

As part of the ongoing monitoring of the credit quality of the wholesale portfolio, the Company utilizes an internal credit scoring model that assigns a risk grade for each dealer. The scoring model considers the strength of the dealer’s financial condition and payment history. The Company considers the dealers’ ratings in the quarterly credit allowance analysis. A description of the general characteristics of the dealer risk grades is as follows:

Grades A and B — Includes receivables due from dealers that have significant capital strength, moderate leverage, stable earnings and growth, and excellent payment performance.

Grade C — Includes receivables due from dealers with moderate credit risk. Dealers of this grade are differentiated from higher grades on a basis of leverage or payment performance.

Grade D — Includes receivables due from dealers with additional credit risk. These dealers require additional monitoring due to their weaker financial condition or payment performance.

A breakdown of the wholesale portfolio by its credit quality indicators as of June 30, 2019 and December 31, 2018 is as follows:

	June 30,		December 31,
	2019		2018
A	$	1,618,562	$	1,582,179
B		1,389,577		1,292,331
C		667,015		527,735
D		143,042		182,039
Total	$	3,818,196	$	3,584,284

The following tables present information at the level at which management assesses and monitors its credit risk. Receivables are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Delinquency is reported on receivables greater than 30 days past due.

The aging of receivables as of June 30, 2019 is as follows:

													Recorded
													Investment
					Greater								> 90 Days
	31 – 60 Days		61 – 90 Days		Than		Total				Total		and
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Accruing
Retail
United States	$	18,343	$	8,467	$	26,862	$	53,672	$	5,126,981	$	5,180,653	$	3,197
Canada	$	2,295	$	2,117	$	1,509	$	5,921	$	1,178,364	$	1,184,285	$	552
Wholesale
United States	$	453	$	101	$	810	$	1,364	$	2,917,630	$	2,918,994	$	13
Canada	$	159	$	54	$	—	$	213	$	898,989	$	899,202	$	—
Wholesale Factoring	$	—	$	—	$	—	$	—	$	84,474	$	84,474	$	—
Total
Retail	$	20,638	$	10,584	$	28,371	$	59,593	$	6,305,345	$	6,364,938	$	3,749
Wholesale	$	612	$	155	$	810	$	1,577	$	3,816,619	$	3,818,196	$	13
Wholesale factoring	$	—	$	—	$	—	$	—	$	84,474	$	84,474	$	—

The aging of receivables as of December 31, 2018 is as follows:

													Recorded
													Investment
					Greater								> 90 Days
	31 – 60 Days		61 – 90 Days		Than		Total				Total		and
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Accruing
Retail
United States	$	19,318	$	6,372	$	24,772	$	50,462	$	5,239,777	$	5,290,239	$	4,573
Canada	$	1,398	$	510	$	2,326	$	4,234	$	1,146,581	$	1,150,815	$	911
Wholesale
United States	$	484	$	10	$	1,368	$	1,862	$	2,788,655	$	2,790,517	$	387
Canada	$	3	$	—	$	436	$	439	$	793,328	$	793,767	$	1
Total
Retail	$	20,716	$	6,882	$	27,098	$	54,696	$	6,386,358	$	6,441,054	$	5,484
Wholesale	$	487	$	10	$	1,804	$	2,301	$	3,581,983	$	3,584,284	$	388

Impaired receivables are receivables for which the Company has determined it will not collect all the principal and interest payments as per the terms of the contract. As of June 30, 2019 and December 31, 2018, the Company’s recorded investment in impaired receivables individually evaluated for impairment and the related unpaid principal balances, allowances and average recorded investment (based on a seven-month average and thirteen-month average, respectively) are as follows:

	June 30, 2019
			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Retail
United States	$	41,211	$	39,608	$	21,888	$	43,336
Canada	$	1,839	$	1,841	$	945	$	1,935
Wholesale
United States	$	4,108	$	3,861	$	3,300	$	6,138
Total
Retail	$	43,050	$	41,449	$	22,833	$	45,271
Wholesale	$	4,108	$	3,861	$	3,300	$	6,138

	December 31, 2018
			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Retail
United States	$	30,959	$	29,783	$	15,347	$	32,787
Canada	$	189	$	180	$	454	$	248
Wholesale
United States	$	24,513	$	22,985	$	4,825	$	27,269
Total
Retail	$	31,148	$	29,963	$	15,801	$	33,035
Wholesale	$	24,513	$	22,985	$	4,825	$	27,269

As of June 30, 2019 and December 31, 2018, the Company’s impaired receivables individually evaluated for impairment without an allowance were immaterial. Interest income recognized on impaired receivables for the three and six months ended June 30, 2019 and 2018 was immaterial.

Recognition of income is generally suspended when management determines that collection of future finance income is not probable or when an account becomes 120 days delinquent, whichever occurs first. Interest accrual is resumed if the receivable becomes contractually current and collection becomes probable. Previously suspended income is recognized at that time.

The receivables on nonaccrual status as of June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019						December 31, 2018
	Retail		Wholesale		Total		Retail		Wholesale		Total
United States	$	32,608	$	3,861	$	36,469	$	27,069	$	22,985	$	50,054
Canada	$	1,011	$	—	$	1,011	$	1,428	$	—	$	1,428

Troubled Debt Restructurings

A restructuring of a receivable constitutes a troubled debt restructuring (“TDR”) when the lender grants a concession it would not otherwise consider to a borrower that is experiencing financial difficulties. As a collateral-based lender, the Company typically will repossess collateral in lieu of restructuring receivables. As such, for retail receivables, concessions are typically provided based on bankruptcy court proceedings. For wholesale receivables, concessions granted may include extended contract maturities, inclusion of interest-only periods, modification of a contractual interest rate to a below market interest rate and waiving of interest and principal.

TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses. The allowance for credit losses attributable to TDRs is based on the most probable source of repayment, which is normally the liquidation of the collateral. In determining collateral value, the Company estimates the current fair market value of the equipment collateral and considers credit enhancements such as additional collateral and third-party guarantees.

Before removing a receivable from TDR classification, a review of the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations based on a credit review, the TDR classification is not removed from the receivable.

As of June 30, 2019, the Company had 272 retail and finance lease contracts classified as TDRs where a court has determined the concession. The pre-modification value of these contracts was $10,216 and the post-modification value was $9,214. Additionally, the Company had 381 accounts with a balance of $16,336 undergoing bankruptcy proceedings where a concession has not yet been determined. As of June 30, 2018, the Company had 288 retail and finance lease contracts classified as TDRs where a court has determined the concession. The pre-modification value of these contracts was $9,624 and the post-modification value was $8,742. Additionally, the Company had 377 accounts with a balance of $20,262 undergoing bankruptcy proceedings where a concession has not yet been determined. As the outcome of the bankruptcy cases is determined by a court based on available assets, subsequent re-defaults are unusual and were not material for retail and finance lease contracts that were modified in a TDR during the previous 12 months ended June 30, 2019 and 2018.

As of June 30, 2019 and 2018, the Company’s wholesale TDRs were immaterial.

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EQUIPMENT ON OPERATING LEASES

6 Months Ended

Jun. 30, 2019

EQUIPMENT ON OPERATING LEASES

EQUIPMENT ON OPERATING LEASES

NOTE 5: EQUIPMENT ON OPERATING LEASES

Lease payments owed to the Company for equipment under non-cancelable operating leases (excluding deferred operating lease subsidy of $112,020) as of June 30, 2019 are as follows:

2019	$	87,740
2020		165,591
2021		105,826
2022		36,240
2023 and thereafter		12,107
Total lease payments	$	407,504

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CREDIT FACILITIES AND DEBT

6 Months Ended

Jun. 30, 2019

CREDIT FACILITIES AND DEBT

CREDIT FACILITIES AND DEBT

NOTE 6: CREDIT FACILITIES AND DEBT

On May 22, 2019, the Company, through a bankruptcy-remote trust, issued $751,140 of amortizing asset-backed notes secured by U.S. retail receivables.

On June 25, 2019, the Company, through a trust, issued C$415,953 ($310,946) of amortizing asset-backed notes secured by Canadian retail receivables.

As of June 30, 2019, the Company had a fully-drawn uncommitted credit line totaling $50,000, which expires in July 2020.

Committed unsecured facilities with banks as of June 30, 2019 totaled $843,188. These credit facilities, which are eligible for renewal at various future dates, are used primarily for working capital and other general corporate purposes. As of June 30, 2019, the Company had $443,188 outstanding under these credit facilities. Included in the remaining available credit commitments is $390,000 maintained primarily to provide backup liquidity for commercial paper borrowings.

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INCOME TAXES

6 Months Ended

Jun. 30, 2019

INCOME TAXES

INCOME TAXES

NOTE 7: INCOME TAXES

The effective tax rates for the three months ended June 30, 2019 and 2018 were 23.9% and 23.2%, respectively. The effective tax rate was 23.5% for the six-month period ended June 30, 2019, compared to 23.3% for the same period in 2018. The effective tax rates were slightly higher than the U.S. federal income tax rate primarily due to state and provincial income taxes, the impact of which was partly offset by certain income tax credits.

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FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2019

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

NOTE 8: FINANCIAL INSTRUMENTS

The Company may elect to measure financial instruments and certain other items at fair value. This fair value option would be applied on an instrument-by-instrument basis with changes in fair value reported in earnings. The election can be made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once made. The Company has not elected the fair value measurement option for eligible items.

Fair-Value Hierarchy

The hierarchy of valuation techniques for financial instruments is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1 —Quoted prices for identical instruments in active markets.

Level 2 —Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires the use of observable market data when available.

Determination of Fair Value

When available, the Company uses quoted market prices to determine fair value and classifies such items in Level 1. In some cases where a market price is not available, the Company will use observable market-based inputs to calculate fair value, in which case the items are classified in Level 2.

If quoted or observable market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters such as interest rates, currency rates, or yield curves. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified. Where appropriate, the description includes details of the valuation models and the key inputs to those models, as well as any significant assumptions.

Derivatives

The Company utilizes derivative instruments to mitigate its exposure to interest rate and foreign currency exposures. Derivatives used as hedges are effective at reducing the risk associated with the exposure being hedged and are designated as a hedge at the inception of the derivative contract. The Company does not hold or enter into derivative or other financial instruments for speculative purposes. The credit and market risk related to derivatives is reduced through diversification among various counterparties, utilizing mandatory termination clauses and/or collateral support agreements. Derivative instruments are generally classified as Level 2 in the fair value hierarchy. The cash flows underlying all derivative contracts were recorded in operating activities in the consolidated statements of cash flows.

Interest Rate Derivatives

The Company has entered into interest rate derivatives in order to manage interest rate exposures arising in the normal course of business. Interest rate derivatives that have been designated as cash flow hedges are being used by the Company to mitigate the risk of rising interest rates related to existing debt and anticipated issuance of fixed-rate debt in future periods. Gains and losses on these instruments are deferred in accumulated other comprehensive income (loss) and recognized in interest expense over the period in which the Company recognizes interest expense on the related debt. As of June 30, 2019, the maximum length of time over which the Company is hedging its interest rate exposure through the use of derivative instruments designated in cash flow hedge relationships is 48 months. As of June 30, 2019, the after-tax losses deferred in accumulated other comprehensive income (loss) that will be recognized in interest expense over the next 12 months are approximately $(421).

The Company also enters into offsetting interest rate derivatives with substantially similar economic terms that are not designated as hedging instruments to mitigate interest rate risk related to the Company’s committed asset-backed facilities. Unrealized and realized gains and losses resulting from fair value changes in these instruments are recognized directly in income and were insignificant for the three and six months ended June 30, 2019 and 2018.

All of the Company’s interest rate derivatives as of June 30, 2019 and December 31, 2018 are considered Level 2. The fair market value of these derivatives is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of the Company’s interest rate derivatives was $2,809,628 and $2,960,191 at June 30, 2019 and December 31, 2018, respectively. The seven-month average notional amounts for the six months ended June 30, 2019 and 2018 were $3,004,828 and $2,887,445, respectively.

Foreign Exchange Contracts

The Company uses forward contracts to hedge certain assets and liabilities denominated in foreign currencies. Such derivatives are considered economic hedges and are not designated as hedging instruments. The changes in the fair value of these instruments are recognized directly as income in “Other expenses” and are expected to offset the foreign exchange gains or losses on the exposures being managed.

All of the Company’s foreign exchange derivatives are considered Level 2 as the fair value is calculated using market data input and can be compared to actively traded derivatives.

Financial Statement Impact of the Company’s Derivatives

The fair values of the Company’s derivatives as of June 30, 2019 and December 31, 2018 in the consolidated balance sheets are recorded as follows:

	June 30,		December 31,
	2019		2018
Derivatives Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	38,388	$	15,422
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	3,526	$	8,107
Derivatives Not Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	806	$	1,157
Foreign exchange contracts		—		86
Total	$	806	$	1,243
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	806	$	1,157
Foreign exchange contracts		2,951		—
Total	$	3,757	$	1,157

Pre-tax gains (losses) on the consolidated statements of income and comprehensive income related to the Company’s derivatives for the three and six months ended June 30, 2019 and 2018 are recorded in the following accounts:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cash Flow Hedges
Recognized in accumulated other comprehensive income (loss) (effective portion):
Interest rate derivatives	$	(1,328)	$	(33)	$	(3,739)	$	(83)
Reclassified from accumulated other comprehensive income (loss) (effective portion):
Interest rate derivatives—Interest expense to third parties		115		81		357		(75)
Not Designated as Hedges
Foreign exchange contracts—Other expenses	$	3,463	$	(8,928)	$	3,193	$	(11,522)

Items Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, all of which are measured as Level 2:

	June 30,		December 31,
	2019		2018
Assets
Interest rate derivatives	$	39,194	$	16,579
Foreign exchange contracts		—		86
Total assets	$	39,194	$	16,665
Liabilities
Interest rate derivatives	$	4,332	$	9,264
Foreign exchange contracts		2,951		—
Total liabilities	$	7,283	$	9,264

There were no transfers between Level 1, Level 2 and Level 3 hierarchy levels during the periods presented.

Fair Value of Other Financial Instruments

The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, floating-rate affiliated accounts and notes receivable, floating-rate short-term debt, interest payable and short-term affiliated debt was assumed to approximate its fair value. Under the fair value hierarchy, cash and cash equivalents and restricted cash and cash equivalents are classified as Level 1 and the remainder of the financial instruments listed is classified as Level 2.

Financial Instruments Not Carried at Fair Value

The carrying amount and estimated fair value of assets and liabilities considered financial instruments as of June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019				December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value *		Amount		Fair Value *
Receivables	$	10,189,998	$	10,109,802	$	9,950,926	$	9,589,920
Long-term debt	$	6,300,528	$	6,322,186	$	6,259,839	$	6,149,778

______________

*Under the fair value hierarchy, receivables measurements are classified as Level 3 and long‑term debt measurements are classified as Level 2.

Receivables

The fair value of receivables was determined by discounting the estimated future payments using a discount rate which includes an estimate for credit risk.

Long-term debt

The fair values of long-term debt were based on current market quotes for identical or similar borrowings and credit risk.

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GEOGRAPHICAL INFORMATION

6 Months Ended

Jun. 30, 2019

GEOGRAPHICAL INFORMATION

GEOGRAPHICAL INFORMATION

NOTE 9: GEOGRAPHICAL INFORMATION

A summary of the Company’s geographical information is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues
United States	$	183,870	$	175,694	$	361,649	$	352,197
Canada		47,903		52,851		93,508		104,580
Eliminations		(2,661)		(2,404)		(3,976)		(4,265)
Total	$	229,112	$	226,141	$	451,181	$	452,512
Interest expense
United States	$	70,923	$	67,112	$	144,359	$	133,956
Canada		16,985		14,096		33,245		27,541
Eliminations		(2,661)		(2,404)		(3,976)		(4,265)
Total	$	85,247	$	78,804	$	173,628	$	157,232
Net income
United States	$	25,247	$	30,705	$	54,015	$	53,639
Canada		12,537		16,923		22,980		33,792
Total	$	37,784	$	47,628	$	76,995	$	87,431
Depreciation and amortization
United States	$	45,511	$	45,987	$	95,902	$	96,701
Canada		10,642		11,130		21,673		22,630
Total	$	56,153	$	57,117	$	117,575	$	119,331
Expenditures for equipment on operating leases
United States	$	133,803	$	106,161	$	279,584	$	183,306
Canada		37,863		33,022		67,591		58,482
Total	$	171,666	$	139,183	$	347,175	$	241,788
Provision for credit losses
United States	$	12,364	$	3,509	$	18,060	$	14,814
Canada		733		786		2,006		1,296
Total	$	13,097	$	4,295	$	20,066	$	16,110

	As of		As of
	June 30,		December 31,
	2019		2018
Total assets
United States	$	10,328,274	$	10,482,805
Canada		2,717,460		2,511,839
Eliminations		(96,884)		(62,732)
Total	$	12,948,850	$	12,931,912
Managed receivables
United States	$	8,099,647	$	8,080,756
Canada		2,167,961		1,944,582
Total	$	10,267,608	$	10,025,338

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RELATED - PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2019

RELATED-PARTY TRANSACTIONS

RELATED-PARTY TRANSACTIONS

NOTE 10: RELATED-PARTY TRANSACTIONS

The Company receives compensation from CNH Industrial North America for retail, wholesale and operating lease sales programs offered by CNH Industrial North America on which finance charges are waived or below market rate financing programs are offered. The Company receives compensation from CNH Industrial North America based on the Company’s estimated costs and a targeted return on equity. The Company is also compensated for lending funds to CNH Industrial North America.

In addition, the Company receives income from Iveco Argentina for wholesale factoring receivables purchased at a discount.

The summary of sources included in “Interest and other income from affiliates” in the accompanying consolidated statements of income for the three and six months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Subsidy from CNH Industrial North America
Retail	$	40,317	$	37,081	$	79,513	$	76,497
Wholesale		32,370		34,767		62,380		68,850
Operating lease		15,059		15,411		30,065		31,006
Income from Iveco Argentina
Wholesale factoring		1,206		4,983		1,206		10,292
Income from affiliated receivables
CNH Industrial North America		40		150		81		762
Total interest and other income from affiliates	$	88,992	$	92,392	$	173,245	$	187,407

Interest expense to affiliates was $258 and $2,784, respectively, for the three months ended June 30, 2019 and 2018 and $3,423 and $4,376, respectively, for the six months ended June 30, 2019 and 2018. Fees charged by affiliates were $11,574 and $11,304, respectively, for the three months ended June 30, 2019 and 2018, and $23,955 and $23,259, respectively, for the six months ended June 30, 2019 and 2018, and represents payroll and other human resource services CNH Industrial America performs on behalf of the Company.

As of June 30, 2019 and December 31, 2018, the Company had various accounts and notes receivable and debt with the following affiliates:

	June 30,		December 31,
	2019		2018
Affiliated receivables
CNH Industrial America	$	—	$	24,724
CNH Industrial Canada Ltd.		356		6,233
Other affiliates		12,310		12,432
Total affiliated receivables	$	12,666	$	43,389
Affiliated debt
CNH Industrial America	$	339,109	$	99,455
CNH Industrial Canada Ltd.		7,373		176,816
Total affiliated debt	$	346,482	$	276,271

Included in “Other Assets” in the accompanying balance sheet were tax receivables due from related parties of $39,174 as of December 31, 2018. Accounts payable and other accrued liabilities, including tax payables, of $55,803 and $4,740 were payable to related parties as of June 30, 2019 and December 31, 2018, respectively.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2019

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 11: COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is party to various litigation matters and claims arising from its operations. Management believes that the outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or results of operations.

Guarantees

The Company provides payment guarantees on the financial debt of various foreign financial services subsidiaries of CNHI for approximately $30,000. The guarantees are in effect for the term of the underlying funding facilities.

Commitments

The Company has various agreements to extend credit for the wholesale and dealer financing managed portfolio. At June 30, 2019, the total credit limit available was $5,997,972, of which $3,776,302 was utilized.

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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

6 Months Ended

Jun. 30, 2019

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

NOTE 12: SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

CNH Industrial Capital America and New Holland Credit, which are 100%-owned subsidiaries of CNH Industrial Capital LLC (the “Guarantor Entities”), guarantee certain indebtedness of CNH Industrial Capital LLC. As the guarantees are full, unconditional, and joint and several and because the Guarantor Entities are 100%-owned by CNH Industrial Capital LLC, the Company has included the following condensed consolidating financial information as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018. The condensed consolidating financial information reflects investments in consolidated subsidiaries under the equity method of accounting.

	Condensed Statements of Comprehensive Income for the
	Three Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	7,708	$	49,404	$	—	$	57,112
Interest income on wholesale notes		—		(276)		17,269		—		16,993
Interest and other income from affiliates		15,482		52,420		36,572		(15,482)		88,992
Rental income on operating leases		—		47,253		13,239		—		60,492
Other income		—		21,172		652		(16,301)		5,523
Total revenues		15,482		128,277		117,136		(31,783)		229,112
EXPENSES
Interest expense:
Interest expense to third parties		52,749		(16,733)		48,973		—		84,989
Interest expense to affiliates		—		12,120		3,620		(15,482)		258
Total interest expense		52,749		(4,613)		52,593		(15,482)		85,247
Administrative and operating expenses:
Fees charged by affiliates		—		11,131		16,744		(16,301)		11,574
Provision for credit losses		—		5,366		7,731		—		13,097
Depreciation of equipment on operating leases		—		45,038		10,642		—		55,680
Other expenses		6		11,083		2,743		—		13,832
Total administrative and operating expenses		6		72,618		37,860		(16,301)		94,183
Total expenses		52,755		68,005		90,453		(31,783)		179,430
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(37,273)		60,272		26,683		—		49,682
Income tax provision (benefit)		(9,100)		14,832		6,166		—		11,898
Equity in income of consolidated subsidiaries accounted for under the equity method		65,957		20,517		—		(86,474)		—
NET INCOME	$	37,784	$	65,957	$	20,517	$	(86,474)	$	37,784
COMPREHENSIVE INCOME	$	46,056	$	74,229	$	27,633	$	(101,862)	$	46,056

	Condensed Statements of Comprehensive Income for the
	Six Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	13,631	$	98,949	$	—	$	112,580
Interest income on wholesale notes		—		(534)		34,269		—		33,735
Interest and other income from affiliates		31,448		102,509		70,736		(31,448)		173,245
Rental income on operating leases		—		94,256		26,877		—		121,133
Other income		—		42,027		1,173		(32,712)		10,488
Total revenues		31,448		251,889		232,004		(64,160)		451,181
EXPENSES
Interest expense:
Interest expense to third parties		100,226		(28,086)		98,065		—		170,205
Interest expense to affiliates		—		57,643		(22,772)		(31,448)		3,423
Total interest expense		100,226		29,557		75,293		(31,448)		173,628
Administrative and operating expenses:
Fees charged by affiliates		—		22,993		33,674		(32,712)		23,955
Provision for credit losses		—		8,732		11,334		—		20,066
Depreciation of equipment on operating leases		—		94,928		21,672		—		116,600
Other expenses		12		10,357		5,890		—		16,259
Total administrative and operating expenses		12		137,010		72,570		(32,712)		176,880
Total expenses		100,238		166,567		147,863		(64,160)		350,508
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(68,790)		85,322		84,141		—		100,673
Income tax provision (benefit)		(16,796)		21,064		19,410		—		23,678
Equity in income of consolidated subsidiaries accounted for under the equity method		128,989		64,731		—		(193,720)		—
NET INCOME	$	76,995	$	128,989	$	64,731	$	(193,720)	$	76,995
COMPREHENSIVE INCOME	$	92,095	$	144,089	$	76,907	$	(220,996)	$	92,095

	Condensed Balance Sheets as of June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	—	$	62,177	$	35,467	$	—	$	97,644
Restricted cash and cash equivalents		—		—		488,562		—		488,562
Receivables, less allowance for credit losses		—		1,513,793		8,676,205		—		10,189,998
Affiliated accounts and notes receivable		2,120,366		2,440,827		2,409,913		(6,958,440)		12,666
Equipment on operating leases, net		—		1,353,878		370,756		—		1,724,634
Equipment held for sale		—		216,716		19,633		—		236,349
Investments in consolidated subsidiaries accounted for under the equity method		2,940,396		2,515,729		—		(5,456,125)		—
Goodwill and intangible assets, net		—		92,695		27,871		—		120,566
Other assets		9,102		51,735		21,161		(3,567)		78,431
TOTAL	$	5,069,864	$	8,247,550	$	12,049,568	$	(12,418,132)	$	12,948,850
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt, including current maturities of long-term debt	$	938,628	$	—	$	3,258,797	$	—	$	4,197,425
Accounts payable and other accrued liabilities		287,773		3,232,811		1,365,429		(4,104,683)		781,330
Affiliated debt		—		2,074,343		1,129,463		(2,857,324)		346,482
Long-term debt		2,520,378		—		3,780,150		—		6,300,528
Total liabilities		3,746,779		5,307,154		9,533,839		(6,962,007)		11,625,765
Stockholder’s equity		1,323,085		2,940,396		2,515,729		(5,456,125)		1,323,085
TOTAL	$	5,069,864	$	8,247,550	$	12,049,568	$	(12,418,132)	$	12,948,850

	Condensed Statements of Cash Flows for the
	Six Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$	141,062	$	78,565	$	39,839	$	45,359	$	304,825
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired		—		(4,272,656)		(4,926,232)		3,659,309		(5,539,579)
Collections of receivables		—		4,222,643		4,802,932		(3,659,143)		5,366,432
Purchase of equipment on operating leases, net		—		(115,394)		(10,964)		—		(126,358)
Change in property and equipment and software, net		—		(1,916)		—		—		(1,916)
Net cash from (used in) investing activities		—		(167,323)		(134,264)		166		(301,421)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity		—		32,417		83,026		(45,525)		69,918
Net change in indebtedness		(16,062)		10		(145,935)		—		(161,987)
Dividends paid to CNH Industrial America LLC		(125,000)		—		—		—		(125,000)
Net cash from (used in) financing activities		(141,062)		32,427		(62,909)		(45,525)		(217,069)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		—		(56,331)		(157,334)		—		(213,665)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—		118,508		681,363		—		799,871
End of period	$	—	$	62,177	$	524,029	$	—	$	586,206

	Condensed Statements of Comprehensive Income for the
	Three Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	1,706	$	48,495	$	—	$	50,201
Interest income on wholesale notes		—		(253)		16,509		—		16,256
Interest and other income from affiliates		15,995		53,572		80,234		(57,409)		92,392
Rental income on operating leases		—		46,338		13,619		—		59,957
Other income		—		23,244		930		(16,839)		7,335
Total revenues		15,995		124,607		159,787		(74,248)		226,141
EXPENSES
Interest expense:
Interest expense to third parties		25,821		11,291		38,908		—		76,020
Interest expense to affiliates		—		57,740		2,453		(57,409)		2,784
Total interest expense		25,821		69,031		41,361		(57,409)		78,804
Administrative and operating expenses:
Fees charged by affiliates		—		10,914		17,229		(16,839)		11,304
Provision for credit losses		—		23		4,272		—		4,295
Depreciation of equipment on operating leases		—		45,439		11,130		—		56,569
Other expenses		10		(1,657)		14,766		—		13,119
Total administrative and operating expenses		10		54,719		47,397		(16,839)		85,287
Total expenses		25,831		123,750		88,758		(74,248)		164,091
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(9,836)		857		71,029		—		62,050
Income tax provision (benefit)		(2,382)		234		16,570		—		14,422
Equity in income of consolidated subsidiaries accounted for under the equity method		55,082		54,459		—		(109,541)		—
NET INCOME	$	47,628	$	55,082	$	54,459	$	(109,541)	$	47,628
COMPREHENSIVE INCOME	$	30,665	$	38,119	$	39,644	$	(77,763)	$	30,665

	Condensed Statements of Comprehensive Income for the
	Six Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	5,760	$	93,071	$	—	$	98,831
Interest income on wholesale notes		—		(512)		32,337		—		31,825
Interest and other income from affiliates		35,070		106,258		157,368		(111,289)		187,407
Rental income on operating leases		—		93,416		27,657		—		121,073
Other income		—		45,872		1,539		(34,035)		13,376
Total revenues		35,070		250,794		311,972		(145,324)		452,512
EXPENSES
Interest expense:
Interest expense to third parties		64,011		10,660		78,185		—		152,856
Interest expense to affiliates		—		105,348		10,317		(111,289)		4,376
Total interest expense		64,011		116,008		88,502		(111,289)		157,232
Administrative and operating expenses:
Fees charged by affiliates		—		22,398		34,896		(34,035)		23,259
Provision for credit losses		—		2,911		13,199		—		16,110
Depreciation of equipment on operating leases		—		95,625		22,629		—		118,254
Other expenses		10		4,490		19,184		—		23,684
Total administrative and operating expenses		10		125,424		89,908		(34,035)		181,307
Total expenses		64,021		241,432		178,410		(145,324)		338,539
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(28,951)		9,362		133,562		—		113,973
Income tax provision (benefit)		(7,012)		2,321		31,233		—		26,542
Equity in income of consolidated subsidiaries accounted for under the equity method		109,370		102,329		—		(211,699)		—
NET INCOME	$	87,431	$	109,370	$	102,329	$	(211,699)	$	87,431
COMPREHENSIVE INCOME	$	52,652	$	74,591	$	72,062	$	(146,653)	$	52,652

	Condensed Balance Sheets as of December 31, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	—	$	118,508	$	41,820	$	—	$	160,328
Restricted cash and cash equivalents		—		—		639,543		—		639,543
Receivables, less allowance for credit losses		—		1,472,678		8,478,248		—		9,950,926
Affiliated accounts and notes receivable		2,310,137		2,122,129		2,268,477		(6,657,354)		43,389
Equipment on operating leases, net		—		1,357,493		366,724		—		1,724,217
Equipment held for sale		—		192,772		17,219		—		209,991
Investments in consolidated subsidiaries accounted for under the equity method		2,796,050		2,461,139		—		(5,257,189)		—
Goodwill and intangible assets, net		—		91,754		26,827		—		118,581
Other assets		11,140		56,517		20,681		(3,401)		84,937
TOTAL	$	5,117,327	$	7,872,990	$	11,859,539	$	(11,917,944)	$	12,931,912
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt, including current maturities of long-term debt	$	987,559	$	—	$	3,336,733	$	—	$	4,324,292
Accounts payable and other accrued liabilities		286,527		3,035,024		1,243,183		(3,848,956)		715,778
Affiliated debt		—		2,041,926		1,046,144		(2,811,799)		276,271
Long-term debt		2,487,509		(10)		3,772,340		—		6,259,839
Total liabilities		3,761,595		5,076,940		9,398,400		(6,660,755)		11,576,180
Stockholder’s equity		1,355,732		2,796,050		2,461,139		(5,257,189)		1,355,732
TOTAL	$	5,117,327	$	7,872,990	$	11,859,539	$	(11,917,944)	$	12,931,912

	Condensed Statements of Cash Flows for the
	Six Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$	60,887	$	(401,722)	$	23,593	$	14,601	$	(302,641)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired		—		(4,019,429)		(4,807,932)		3,415,835		(5,411,526)
Collections of receivables		—		4,065,861		5,091,022		(3,416,342)		5,740,541
Purchase of equipment on operating leases, net		—		(330)		(19,332)		—		(19,662)
Change in property and equipment and software, net		—		(2,816)		—		—		(2,816)
Net cash from (used in) investing activities		—		43,286		263,758		(507)		306,537
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity		—		319,809		(141,214)		(14,094)		164,501
Net change in indebtedness		(20,887)		(24,411)		(311,509)		—		(356,807)
Dividends paid to CNH Industrial America LLC		(40,000)		—		—		—		(40,000)
Net cash from (used in) financing activities		(60,887)		295,398		(452,723)		(14,094)		(232,306)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		—		(63,038)		(165,372)		—		(228,410)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—		160,339		715,219		—		875,558
End of period	$	—	$	97,301	$	549,847	$	—	$	647,148

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 13: SUBSEQUENT EVENTS

On July 2, 2019, Fitch Ratings affirmed the BBB- senior long-term rating and the F-3 short-term rating of CNH Industrial Capital LLC and improved the outlook to positive from stable.

On July 15, 2019, the Company repaid $500,000 of its 3.375% unsecured notes due 2019.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

New Accounting Pronouncements

New Accounting Pronouncements Adopted in 2019

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes ASC 840, Leases (“ASC 840”). Subsequently, the FASB has issued additional ASUs, which further clarified this guidance. The ASU’s most prominent change is the requirement for lessees to recognize leased assets and liabilities classified as operating leases under the previous standard. The ASU did not significantly change the lessee’s recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. ASU 2016-02 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASU 2016-02 on January 1, 2019, using the modified retrospective approach, without recasting prior periods. The adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which amends ASC 815, Derivatives and Hedging. The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements and improve the disclosures of hedging arrangements. Among other provisions, the new standard (1) requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported, (2) eliminates the separate measurement and reporting of hedge ineffectiveness and (3) permits an entity to recognize in earnings the initial value of an excluded component under a systematic and rational method over the life of the derivative instrument. The Company adopted ASU 2017-12 on January 1, 2019. The adoption of this standard did not have a material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which amends ASC 220, Income Statement – Reporting Comprehensive Income. In December 2017, the U.S. government enacted new tax legislation (“U.S. Tax Reform”). Included in the provisions of U.S. Tax Reform was a reduction of the corporate income tax rate from 35 percent to 21 percent. U.S. GAAP requires that the remeasurement of deferred taxes to the new corporate tax rate occur in the period in which the legislation is enacted, with the deferred tax adjustment being recorded in the provision for income taxes, including items for which the tax effects were originally recorded in other comprehensive income (“OCI”). This treatment results in the items in OCI reflecting a disproportionate tax rate, a result often referred to as stranded tax effects. This ASU allowed a reclassification from accumulated OCI to retained earnings for stranded tax effects resulting from U.S. Tax Reform. The Company adopted ASU 2018-02 on January 1, 2019, and reclassified $597 of tax effects from “Accumulated other comprehensive loss” to “Retained earnings” within its consolidated balance sheet.

In August 2018, the SEC adopted a final rule that amends certain disclosure requirements that have become duplicative, overlapping, or outdated in light of other SEC disclosure requirements, U.S. GAAP, or changes in the information environment. However, the guidance also added requirements for registrants to include in their interim financial statements a reconciliation of changes in stockholders’ equity for each period for which an income statement is required (both year-to-date and quarterly periods). The Company adopted the new interim disclosure requirement on January 1, 2019. The adoption of this standard did not have a material impact on its consolidated statements of changes in stockholder’s equity.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which establishes ASC 326, Financial Instruments – Credit Losses. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”), which supersedes existingASU 2016-13. The ASU introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Additional disclosures about significant estimates and credit quality are also required. ASU 2018-19 is effective for annual periods beginning after December 15, 2019. The Company has established a cross-functional implementation team. The team is currently evaluating data requirements and methodologies to assess the effect of the new guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2021, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2021 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement (“ASU 2018-15”), which expands upon the guidance set forth in ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. ASU 2018-15 aligns the requirements for capitalization of implementation costs in a cloud computing service contract with those requirements for capitalization of implementation costs incurred for an internal-use software license. ASU 2018-15 may be applied prospectively from the date the guidance is first applied or retrospectively.

ASU 2018-15 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company expects to adopt the ASU on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In October 2018, the FASB issued ASU No. 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”), which expands the application of a specific private company alternative related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. Under the new guidance, to determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportionate basis, rather than in their entirety. ASU 2018-17 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted in any interim period. ASU 2018-17 is required to be applied retrospectively from the date the guidance is first applied. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

6 Months Ended

Jun. 30, 2019

ACCUMULATED OTHER COMPREHENSIVE INCOME

Schedule of changes in the components of AOCI and related tax effects

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended June 30, 2019:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(138,036)	$	(3,953)	$	372	$	(141,617)
Tax asset		—		947		(98)		849
Beginning balance, net of tax		(138,036)		(3,006)		274		(140,768)
Other comprehensive income (loss) before reclassifications		9,244		(112)		(1,328)		7,804
Amounts reclassified from accumulated other comprehensive income (loss)		—		229		(115)		114
Tax effects		—		(28)		382		354
Net current-period other comprehensive income (loss)		9,244		89		(1,061)		8,272
Total	$	(128,792)	$	(2,917)	$	(787)	$	(132,496)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the six months ended June 30, 2019:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(146,726)	$	(4,070)	$	3,025	$	(147,771)
Tax asset		—		1,573		(801)		772
Beginning balance, net of tax		(146,726)		(2,497)		2,224		(146,999)
Other comprehensive income (loss) before reclassifications		17,934		(223)		(3,739)		13,972
Amounts reclassified from accumulated other comprehensive income (loss)		—		457		(357)		100
Tax effects		—		(57)		1,085		1,028
Net current-period other comprehensive income (loss)		17,934		177		(3,011)		15,100
Reclassification of stranded tax effects		—		(597)		—		(597)
Total	$	(128,792)	$	(2,917)	$	(787)	$	(132,496)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended June 30, 2018:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(116,717)	$	(4,811)	$	2,439	$	(119,089)
Tax asset		—		1,755		(645)		1,110
Beginning balance, net of tax		(116,717)		(3,056)		1,794		(117,979)
Other comprehensive income (loss) before reclassifications		(16,968)		(37)		(33)		(17,038)
Amounts reclassified from accumulated other comprehensive income (loss)		—		155		(81)		74
Tax effects		—		(29)		30		1
Net current-period other comprehensive income (loss)		(16,968)		89		(84)		(16,963)
Total	$	(133,685)	$	(2,967)	$	1,710	$	(134,942)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the six months ended June 30, 2018:

	Currency				Unrealized
	Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(98,717)	$	(4,952)	$	2,333	$	(101,336)
Tax asset		—		1,790		(617)		1,173
Beginning balance, net of tax		(98,717)		(3,162)		1,716		(100,163)
Other comprehensive income (loss) before reclassifications		(34,968)		(72)		(83)		(35,123)
Amounts reclassified from accumulated other comprehensive income (loss)		—		331		75		406
Tax effects		—		(64)		2		(62)
Net current-period other comprehensive income (loss)		(34,968)		195		(6)		(34,779)
Total	$	(133,685)	$	(2,967)	$	1,710	$	(134,942)

Schedule of reclassifications out of AOCI and the location on the consolidated statements of income

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018		Affected Line Item
Amortization of defined benefit pension items:
	$	(229)	$	(155)	$	(457)	$	(331)	Various line items individually insignificant
		(229)		(155)		(457)		(331)	Income before taxes
		55		38		111		82	Income tax benefit
	$	(174)	$	(117)	$	(346)	$	(249)	Net of tax
Unrealized losses on derivatives:
	$	115	$	81	$	357	$	(75)	Interest expense to third parties
		115		81		357		(75)	Income before taxes
		(30)		(21)		(94)		20	Income tax benefit
	$	85	$	60	$	263	$	(55)	Net of tax

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RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2019

Receivables

Summary of receivables

	June 30,		December 31,
	2019		2018
Retail	$	618,207	$	753,388
Wholesale		862,353		747,191
Wholesale factoring		84,474		—
Finance lease		71,169		63,936
Restricted receivables		8,631,405		8,460,823
Gross receivables		10,267,608		10,025,338
Less: Allowance for credit losses		(77,610)		(74,412)
Total receivables, net	$	10,189,998	$	9,950,926

Summary of restricted receivables

	June 30,		December 31,
	2019		2018
Retail	$	5,675,562	$	5,623,730
Wholesale		2,955,843		2,837,093
Total restricted receivables	$	8,631,405	$	8,460,823

Schedule of allowance for credit losses activity

Allowance for credit losses activity for the three months ended June 30, 2019 is as follows:

	Retail		Wholesale		Wholesale Factoring		Total
Allowance for credit losses:
Beginning balance	$	65,637	$	6,535	$	56	$	72,228
Charge-offs		(9,189)		—		—		(9,189)
Recoveries		1,369		3		—		1,372
Provision		12,410		683		4		13,097
Foreign currency translation and other		84		18		—		102
Ending balance	$	70,311	$	7,239	$	60	$	77,610

Allowance for credit losses activity for the six months ended June 30, 2019 is as follows:

	Retail		Wholesale		Wholesale Factoring		Total
Allowance for credit losses:
Beginning balance	$	66,944	$	7,468	$	—	$	74,412
Charge-offs		(16,566)		(2,165)		—		(18,731)
Recoveries		1,676		9		—		1,685
Provision		18,106		1,900		60		20,066
Foreign currency translation and other		151		27		—		178
Ending balance	$	70,311	$	7,239	$	60	$	77,610
Ending balance: individually evaluated for impairment	$	22,833	$	3,300	$	—	$	26,133
Ending balance: collectively evaluated for impairment	$	47,478	$	3,939	$	60	$	51,477
Receivables:
Ending balance	$	6,364,938	$	3,818,196	$	84,474	$	10,267,608
Ending balance: individually evaluated for impairment	$	43,050	$	4,108	$	—	$	47,158
Ending balance: collectively evaluated for impairment	$	6,321,888	$	3,814,088	$	84,474	$	10,220,450

Allowance for credit losses activity for the three months ended June 30, 2018 is as follows:

					Wholesale
	Retail		Wholesale		Factoring		Total
Allowance for credit losses:
Beginning balance	$	75,721	$	5,238	$	121	$	81,080
Charge-offs		(9,757)		—		—		(9,757)
Recoveries		1,138		6		—		1,144
Provision (benefit)		3,112		1,250		(67)		4,295
Foreign currency translation and other		102		(8)		(4)		90
Ending balance	$	70,316	$	6,486	$	50	$	76,852

Allowance for credit losses activity for the six months ended June 30, 2018 is as follows:

					Wholesale
	Retail		Wholesale		Factoring		Total
Allowance for credit losses:
Beginning balance	$	73,610	$	5,444	$	142	$	79,196
Charge-offs		(20,267)		(187)		—		(20,454)
Recoveries		2,147		64		—		2,211
Provision (benefit)		15,007		1,187		(84)		16,110
Foreign currency translation and other		(181)		(22)		(8)		(211)
Ending balance	$	70,316	$	6,486	$	50	$	76,852
Ending balance: individually evaluated for impairment	$	15,659	$	3,935	$	—	$	19,594
Ending balance: collectively evaluated for impairment	$	54,657	$	2,551	$	50	$	57,258
Receivables:
Ending balance	$	6,503,831	$	3,451,677	$	83,638	$	10,039,146
Ending balance: individually evaluated for impairment	$	31,702	$	29,710	$	—	$	61,412
Ending balance: collectively evaluated for impairment	$	6,472,129	$	3,421,967	$	83,638	$	9,977,734

Allowance for credit losses activity for the year ended December 31, 2018 is as follows:

	Retail		Wholesale		Total
Allowance for credit losses:
Beginning balance	$	73,610	$	5,586	$	79,196
Charge-offs		(39,375)		(1,567)		(40,942)
Recoveries		4,702		71		4,773
Provision		28,277		3,422		31,699
Foreign currency translation and other		(270)		(44)		(314)
Ending balance	$	66,944	$	7,468	$	74,412
Ending balance: individually evaluated for impairment	$	15,801	$	4,825	$	20,626
Ending balance: collectively evaluated for impairment	$	51,143	$	2,643	$	53,786
Receivables:
Ending balance	$	6,441,054	$	3,584,284	$	10,025,338
Ending balance: individually evaluated for impairment	$	31,148	$	24,513	$	55,661
Ending balance: collectively evaluated for impairment	$	6,409,906	$	3,559,771	$	9,969,677

Schedule of aging of financing receivables

The aging of receivables as of June 30, 2019 is as follows:

													Recorded
													Investment
					Greater								> 90 Days
	31 – 60 Days		61 – 90 Days		Than		Total				Total		and
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Accruing
Retail
United States	$	18,343	$	8,467	$	26,862	$	53,672	$	5,126,981	$	5,180,653	$	3,197
Canada	$	2,295	$	2,117	$	1,509	$	5,921	$	1,178,364	$	1,184,285	$	552
Wholesale
United States	$	453	$	101	$	810	$	1,364	$	2,917,630	$	2,918,994	$	13
Canada	$	159	$	54	$	—	$	213	$	898,989	$	899,202	$	—
Wholesale Factoring	$	—	$	—	$	—	$	—	$	84,474	$	84,474	$	—
Total
Retail	$	20,638	$	10,584	$	28,371	$	59,593	$	6,305,345	$	6,364,938	$	3,749
Wholesale	$	612	$	155	$	810	$	1,577	$	3,816,619	$	3,818,196	$	13
Wholesale factoring	$	—	$	—	$	—	$	—	$	84,474	$	84,474	$	—

The aging of receivables as of December 31, 2018 is as follows:

													Recorded
													Investment
					Greater								> 90 Days
	31 – 60 Days		61 – 90 Days		Than		Total				Total		and
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Accruing
Retail
United States	$	19,318	$	6,372	$	24,772	$	50,462	$	5,239,777	$	5,290,239	$	4,573
Canada	$	1,398	$	510	$	2,326	$	4,234	$	1,146,581	$	1,150,815	$	911
Wholesale
United States	$	484	$	10	$	1,368	$	1,862	$	2,788,655	$	2,790,517	$	387
Canada	$	3	$	—	$	436	$	439	$	793,328	$	793,767	$	1
Total
Retail	$	20,716	$	6,882	$	27,098	$	54,696	$	6,386,358	$	6,441,054	$	5,484
Wholesale	$	487	$	10	$	1,804	$	2,301	$	3,581,983	$	3,584,284	$	388

Schedule of recorded investment in impaired receivables and the related unpaid principal balances, allowances and average recorded investment

	June 30, 2019
			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Retail
United States	$	41,211	$	39,608	$	21,888	$	43,336
Canada	$	1,839	$	1,841	$	945	$	1,935
Wholesale
United States	$	4,108	$	3,861	$	3,300	$	6,138
Total
Retail	$	43,050	$	41,449	$	22,833	$	45,271
Wholesale	$	4,108	$	3,861	$	3,300	$	6,138

	December 31, 2018
			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Retail
United States	$	30,959	$	29,783	$	15,347	$	32,787
Canada	$	189	$	180	$	454	$	248
Wholesale
United States	$	24,513	$	22,985	$	4,825	$	27,269
Total
Retail	$	31,148	$	29,963	$	15,801	$	33,035
Wholesale	$	24,513	$	22,985	$	4,825	$	27,269

Schedule of receivables on nonaccrual status

	June 30, 2019						December 31, 2018
	Retail		Wholesale		Total		Retail		Wholesale		Total
United States	$	32,608	$	3,861	$	36,469	$	27,069	$	22,985	$	50,054
Canada	$	1,011	$	—	$	1,011	$	1,428	$	—	$	1,428

Retail

Receivables

Schedule of breakdown of the portfolio by its credit quality indicators

	June 30,		December 31,
	2019		2018
Titanium	$	3,252,856	$	3,367,239
Platinum		1,942,086		1,942,784
Gold		986,654		943,816
Silver		147,094		152,338
Bronze		36,248		34,877
Total	$	6,364,938	$	6,441,054

Wholesale

Receivables

Schedule of breakdown of the portfolio by its credit quality indicators

	June 30,		December 31,
	2019		2018
A	$	1,618,562	$	1,582,179
B		1,389,577		1,292,331
C		667,015		527,735
D		143,042		182,039
Total	$	3,818,196	$	3,584,284

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EQUIPMENT ON OPERATING LEASES (Tables)

6 Months Ended

Jun. 30, 2019

EQUIPMENT ON OPERATING LEASES

Summary of equipment on operating leases

2019	$	87,740
2020		165,591
2021		105,826
2022		36,240
2023 and thereafter		12,107
Total lease payments	$	407,504

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FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

FINANCIAL INSTRUMENTS

Schedule of fair values of derivatives in the consolidated balance sheets

	June 30,		December 31,
	2019		2018
Derivatives Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	38,388	$	15,422
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	3,526	$	8,107
Derivatives Not Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	806	$	1,157
Foreign exchange contracts		—		86
Total	$	806	$	1,243
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	806	$	1,157
Foreign exchange contracts		2,951		—
Total	$	3,757	$	1,157

Schedule of pre-tax gains (losses) on the consolidated statements of income related to the Company's derivatives

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cash Flow Hedges
Recognized in accumulated other comprehensive income (loss) (effective portion):
Interest rate derivatives	$	(1,328)	$	(33)	$	(3,739)	$	(83)
Reclassified from accumulated other comprehensive income (loss) (effective portion):
Interest rate derivatives—Interest expense to third parties		115		81		357		(75)
Not Designated as Hedges
Foreign exchange contracts—Other expenses	$	3,463	$	(8,928)	$	3,193	$	(11,522)

Schedule of assets and liabilities measured at fair value on a recurring basis

	June 30,		December 31,
	2019		2018
Assets
Interest rate derivatives	$	39,194	$	16,579
Foreign exchange contracts		—		86
Total assets	$	39,194	$	16,665
Liabilities
Interest rate derivatives	$	4,332	$	9,264
Foreign exchange contracts		2,951		—
Total liabilities	$	7,283	$	9,264

Schedule of carrying amount and estimated fair value of assets and liabilities considered financial instruments

	June 30, 2019				December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value *		Amount		Fair Value *
Receivables	$	10,189,998	$	10,109,802	$	9,950,926	$	9,589,920
Long-term debt	$	6,300,528	$	6,322,186	$	6,259,839	$	6,149,778

______________

*Under the fair value hierarchy, receivables measurements are classified as Level 3 and long‑term debt measurements are classified as Level 2.

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GEOGRAPHICAL INFORMATION (Tables)

6 Months Ended

Jun. 30, 2019

GEOGRAPHICAL INFORMATION

Summary of geographic information

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues
United States	$	183,870	$	175,694	$	361,649	$	352,197
Canada		47,903		52,851		93,508		104,580
Eliminations		(2,661)		(2,404)		(3,976)		(4,265)
Total	$	229,112	$	226,141	$	451,181	$	452,512
Interest expense
United States	$	70,923	$	67,112	$	144,359	$	133,956
Canada		16,985		14,096		33,245		27,541
Eliminations		(2,661)		(2,404)		(3,976)		(4,265)
Total	$	85,247	$	78,804	$	173,628	$	157,232
Net income
United States	$	25,247	$	30,705	$	54,015	$	53,639
Canada		12,537		16,923		22,980		33,792
Total	$	37,784	$	47,628	$	76,995	$	87,431
Depreciation and amortization
United States	$	45,511	$	45,987	$	95,902	$	96,701
Canada		10,642		11,130		21,673		22,630
Total	$	56,153	$	57,117	$	117,575	$	119,331
Expenditures for equipment on operating leases
United States	$	133,803	$	106,161	$	279,584	$	183,306
Canada		37,863		33,022		67,591		58,482
Total	$	171,666	$	139,183	$	347,175	$	241,788
Provision for credit losses
United States	$	12,364	$	3,509	$	18,060	$	14,814
Canada		733		786		2,006		1,296
Total	$	13,097	$	4,295	$	20,066	$	16,110

	As of		As of
	June 30,		December 31,
	2019		2018
Total assets
United States	$	10,328,274	$	10,482,805
Canada		2,717,460		2,511,839
Eliminations		(96,884)		(62,732)
Total	$	12,948,850	$	12,931,912
Managed receivables
United States	$	8,099,647	$	8,080,756
Canada		2,167,961		1,944,582
Total	$	10,267,608	$	10,025,338

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RELATED-PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2019

RELATED-PARTY TRANSACTIONS

Summary of the sources included in "Interest and other income from affiliates" in the accompanying consolidated statements of income

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Subsidy from CNH Industrial North America
Retail	$	40,317	$	37,081	$	79,513	$	76,497
Wholesale		32,370		34,767		62,380		68,850
Operating lease		15,059		15,411		30,065		31,006
Income from Iveco Argentina
Wholesale factoring		1,206		4,983		1,206		10,292
Income from affiliated receivables
CNH Industrial North America		40		150		81		762
Total interest and other income from affiliates	$	88,992	$	92,392	$	173,245	$	187,407

Schedule of various accounts and notes receivable and debt with the affiliates

	June 30,		December 31,
	2019		2018
Affiliated receivables
CNH Industrial America	$	—	$	24,724
CNH Industrial Canada Ltd.		356		6,233
Other affiliates		12,310		12,432
Total affiliated receivables	$	12,666	$	43,389
Affiliated debt
CNH Industrial America	$	339,109	$	99,455
CNH Industrial Canada Ltd.		7,373		176,816
Total affiliated debt	$	346,482	$	276,271

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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables)

6 Months Ended

Jun. 30, 2019

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Schedule of condensed statements of comprehensive income

	Condensed Statements of Comprehensive Income for the
	Three Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	7,708	$	49,404	$	—	$	57,112
Interest income on wholesale notes		—		(276)		17,269		—		16,993
Interest and other income from affiliates		15,482		52,420		36,572		(15,482)		88,992
Rental income on operating leases		—		47,253		13,239		—		60,492
Other income		—		21,172		652		(16,301)		5,523
Total revenues		15,482		128,277		117,136		(31,783)		229,112
EXPENSES
Interest expense:
Interest expense to third parties		52,749		(16,733)		48,973		—		84,989
Interest expense to affiliates		—		12,120		3,620		(15,482)		258
Total interest expense		52,749		(4,613)		52,593		(15,482)		85,247
Administrative and operating expenses:
Fees charged by affiliates		—		11,131		16,744		(16,301)		11,574
Provision for credit losses		—		5,366		7,731		—		13,097
Depreciation of equipment on operating leases		—		45,038		10,642		—		55,680
Other expenses		6		11,083		2,743		—		13,832
Total administrative and operating expenses		6		72,618		37,860		(16,301)		94,183
Total expenses		52,755		68,005		90,453		(31,783)		179,430
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(37,273)		60,272		26,683		—		49,682
Income tax provision (benefit)		(9,100)		14,832		6,166		—		11,898
Equity in income of consolidated subsidiaries accounted for under the equity method		65,957		20,517		—		(86,474)		—
NET INCOME	$	37,784	$	65,957	$	20,517	$	(86,474)	$	37,784
COMPREHENSIVE INCOME	$	46,056	$	74,229	$	27,633	$	(101,862)	$	46,056

	Condensed Statements of Comprehensive Income for the
	Six Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	13,631	$	98,949	$	—	$	112,580
Interest income on wholesale notes		—		(534)		34,269		—		33,735
Interest and other income from affiliates		31,448		102,509		70,736		(31,448)		173,245
Rental income on operating leases		—		94,256		26,877		—		121,133
Other income		—		42,027		1,173		(32,712)		10,488
Total revenues		31,448		251,889		232,004		(64,160)		451,181
EXPENSES
Interest expense:
Interest expense to third parties		100,226		(28,086)		98,065		—		170,205
Interest expense to affiliates		—		57,643		(22,772)		(31,448)		3,423
Total interest expense		100,226		29,557		75,293		(31,448)		173,628
Administrative and operating expenses:
Fees charged by affiliates		—		22,993		33,674		(32,712)		23,955
Provision for credit losses		—		8,732		11,334		—		20,066
Depreciation of equipment on operating leases		—		94,928		21,672		—		116,600
Other expenses		12		10,357		5,890		—		16,259
Total administrative and operating expenses		12		137,010		72,570		(32,712)		176,880
Total expenses		100,238		166,567		147,863		(64,160)		350,508
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(68,790)		85,322		84,141		—		100,673
Income tax provision (benefit)		(16,796)		21,064		19,410		—		23,678
Equity in income of consolidated subsidiaries accounted for under the equity method		128,989		64,731		—		(193,720)		—
NET INCOME	$	76,995	$	128,989	$	64,731	$	(193,720)	$	76,995
COMPREHENSIVE INCOME	$	92,095	$	144,089	$	76,907	$	(220,996)	$	92,095

	Condensed Statements of Comprehensive Income for the
	Three Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	1,706	$	48,495	$	—	$	50,201
Interest income on wholesale notes		—		(253)		16,509		—		16,256
Interest and other income from affiliates		15,995		53,572		80,234		(57,409)		92,392
Rental income on operating leases		—		46,338		13,619		—		59,957
Other income		—		23,244		930		(16,839)		7,335
Total revenues		15,995		124,607		159,787		(74,248)		226,141
EXPENSES
Interest expense:
Interest expense to third parties		25,821		11,291		38,908		—		76,020
Interest expense to affiliates		—		57,740		2,453		(57,409)		2,784
Total interest expense		25,821		69,031		41,361		(57,409)		78,804
Administrative and operating expenses:
Fees charged by affiliates		—		10,914		17,229		(16,839)		11,304
Provision for credit losses		—		23		4,272		—		4,295
Depreciation of equipment on operating leases		—		45,439		11,130		—		56,569
Other expenses		10		(1,657)		14,766		—		13,119
Total administrative and operating expenses		10		54,719		47,397		(16,839)		85,287
Total expenses		25,831		123,750		88,758		(74,248)		164,091
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(9,836)		857		71,029		—		62,050
Income tax provision (benefit)		(2,382)		234		16,570		—		14,422
Equity in income of consolidated subsidiaries accounted for under the equity method		55,082		54,459		—		(109,541)		—
NET INCOME	$	47,628	$	55,082	$	54,459	$	(109,541)	$	47,628
COMPREHENSIVE INCOME	$	30,665	$	38,119	$	39,644	$	(77,763)	$	30,665

	Condensed Statements of Comprehensive Income for the
	Six Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
REVENUES
Interest income on retail notes and finance leases	$	—	$	5,760	$	93,071	$	—	$	98,831
Interest income on wholesale notes		—		(512)		32,337		—		31,825
Interest and other income from affiliates		35,070		106,258		157,368		(111,289)		187,407
Rental income on operating leases		—		93,416		27,657		—		121,073
Other income		—		45,872		1,539		(34,035)		13,376
Total revenues		35,070		250,794		311,972		(145,324)		452,512
EXPENSES
Interest expense:
Interest expense to third parties		64,011		10,660		78,185		—		152,856
Interest expense to affiliates		—		105,348		10,317		(111,289)		4,376
Total interest expense		64,011		116,008		88,502		(111,289)		157,232
Administrative and operating expenses:
Fees charged by affiliates		—		22,398		34,896		(34,035)		23,259
Provision for credit losses		—		2,911		13,199		—		16,110
Depreciation of equipment on operating leases		—		95,625		22,629		—		118,254
Other expenses		10		4,490		19,184		—		23,684
Total administrative and operating expenses		10		125,424		89,908		(34,035)		181,307
Total expenses		64,021		241,432		178,410		(145,324)		338,539
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method		(28,951)		9,362		133,562		—		113,973
Income tax provision (benefit)		(7,012)		2,321		31,233		—		26,542
Equity in income of consolidated subsidiaries accounted for under the equity method		109,370		102,329		—		(211,699)		—
NET INCOME	$	87,431	$	109,370	$	102,329	$	(211,699)	$	87,431
COMPREHENSIVE INCOME	$	52,652	$	74,591	$	72,062	$	(146,653)	$	52,652

Schedule of condensed balance sheets

	Condensed Balance Sheets as of June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	—	$	62,177	$	35,467	$	—	$	97,644
Restricted cash and cash equivalents		—		—		488,562		—		488,562
Receivables, less allowance for credit losses		—		1,513,793		8,676,205		—		10,189,998
Affiliated accounts and notes receivable		2,120,366		2,440,827		2,409,913		(6,958,440)		12,666
Equipment on operating leases, net		—		1,353,878		370,756		—		1,724,634
Equipment held for sale		—		216,716		19,633		—		236,349
Investments in consolidated subsidiaries accounted for under the equity method		2,940,396		2,515,729		—		(5,456,125)		—
Goodwill and intangible assets, net		—		92,695		27,871		—		120,566
Other assets		9,102		51,735		21,161		(3,567)		78,431
TOTAL	$	5,069,864	$	8,247,550	$	12,049,568	$	(12,418,132)	$	12,948,850
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt, including current maturities of long-term debt	$	938,628	$	—	$	3,258,797	$	—	$	4,197,425
Accounts payable and other accrued liabilities		287,773		3,232,811		1,365,429		(4,104,683)		781,330
Affiliated debt		—		2,074,343		1,129,463		(2,857,324)		346,482
Long-term debt		2,520,378		—		3,780,150		—		6,300,528
Total liabilities		3,746,779		5,307,154		9,533,839		(6,962,007)		11,625,765
Stockholder’s equity		1,323,085		2,940,396		2,515,729		(5,456,125)		1,323,085
TOTAL	$	5,069,864	$	8,247,550	$	12,049,568	$	(12,418,132)	$	12,948,850

	Condensed Balance Sheets as of December 31, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	—	$	118,508	$	41,820	$	—	$	160,328
Restricted cash and cash equivalents		—		—		639,543		—		639,543
Receivables, less allowance for credit losses		—		1,472,678		8,478,248		—		9,950,926
Affiliated accounts and notes receivable		2,310,137		2,122,129		2,268,477		(6,657,354)		43,389
Equipment on operating leases, net		—		1,357,493		366,724		—		1,724,217
Equipment held for sale		—		192,772		17,219		—		209,991
Investments in consolidated subsidiaries accounted for under the equity method		2,796,050		2,461,139		—		(5,257,189)		—
Goodwill and intangible assets, net		—		91,754		26,827		—		118,581
Other assets		11,140		56,517		20,681		(3,401)		84,937
TOTAL	$	5,117,327	$	7,872,990	$	11,859,539	$	(11,917,944)	$	12,931,912
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt, including current maturities of long-term debt	$	987,559	$	—	$	3,336,733	$	—	$	4,324,292
Accounts payable and other accrued liabilities		286,527		3,035,024		1,243,183		(3,848,956)		715,778
Affiliated debt		—		2,041,926		1,046,144		(2,811,799)		276,271
Long-term debt		2,487,509		(10)		3,772,340		—		6,259,839
Total liabilities		3,761,595		5,076,940		9,398,400		(6,660,755)		11,576,180
Stockholder’s equity		1,355,732		2,796,050		2,461,139		(5,257,189)		1,355,732
TOTAL	$	5,117,327	$	7,872,990	$	11,859,539	$	(11,917,944)	$	12,931,912

Schedule of condensed statements of cash flows

	Condensed Statements of Cash Flows for the
	Six Months Ended June 30, 2019
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$	141,062	$	78,565	$	39,839	$	45,359	$	304,825
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired		—		(4,272,656)		(4,926,232)		3,659,309		(5,539,579)
Collections of receivables		—		4,222,643		4,802,932		(3,659,143)		5,366,432
Purchase of equipment on operating leases, net		—		(115,394)		(10,964)		—		(126,358)
Change in property and equipment and software, net		—		(1,916)		—		—		(1,916)
Net cash from (used in) investing activities		—		(167,323)		(134,264)		166		(301,421)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity		—		32,417		83,026		(45,525)		69,918
Net change in indebtedness		(16,062)		10		(145,935)		—		(161,987)
Dividends paid to CNH Industrial America LLC		(125,000)		—		—		—		(125,000)
Net cash from (used in) financing activities		(141,062)		32,427		(62,909)		(45,525)		(217,069)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		—		(56,331)		(157,334)		—		(213,665)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—		118,508		681,363		—		799,871
End of period	$	—	$	62,177	$	524,029	$	—	$	586,206

	Condensed Statements of Cash Flows for the
	Six Months Ended June 30, 2018
	CNH
	Industrial		Guarantor		All Other
	Capital LLC		Entities		Subsidiaries		Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$	60,887	$	(401,722)	$	23,593	$	14,601	$	(302,641)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired		—		(4,019,429)		(4,807,932)		3,415,835		(5,411,526)
Collections of receivables		—		4,065,861		5,091,022		(3,416,342)		5,740,541
Purchase of equipment on operating leases, net		—		(330)		(19,332)		—		(19,662)
Change in property and equipment and software, net		—		(2,816)		—		—		(2,816)
Net cash from (used in) investing activities		—		43,286		263,758		(507)		306,537
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity		—		319,809		(141,214)		(14,094)		164,501
Net change in indebtedness		(20,887)		(24,411)		(311,509)		—		(356,807)
Dividends paid to CNH Industrial America LLC		(40,000)		—		—		—		(40,000)
Net cash from (used in) financing activities		(60,887)		295,398		(452,723)		(14,094)		(232,306)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		—		(63,038)		(165,372)		—		(228,410)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—		160,339		715,219		—		875,558
End of period	$	—	$	97,301	$	549,847	$	—	$	647,148

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Change in Accounting Principle (Details) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
	Jan. 01, 2019	Jun. 30, 2019	Dec. 31, 2018
Tax provision at statutory rate (as a percent)		21.00%	35.00%
Accounting Standards Update 2018-02 | Adjustment Due to Adoption of Standard
Reclassification of certain tax effects	$ 597

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ACCUMULATED OTHER COMPREHENSIVE INCOME - Change in Components of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Changes in accumulated other comprehensive income by component
Beginning balance, gross					$ (141,617)	$ (147,771)	$ (119,089)	$ (101,336)
Tax asset					849	772	1,110	1,173
Beginning balance, net of tax	$ (140,768)	$ (117,979)	$ (146,999)	$ (100,163)
Other comprehensive income (loss) before reclassifications	7,804	(17,038)	13,972	(35,123)
Amounts reclassified from accumulated other comprehensive income (loss)	114	74	100	406
Tax effects	354	1	1,028	(62)
Total other comprehensive income (loss)	8,272	(16,963)	15,100	(34,779)
Reclassification of stranded tax effects			(597)
Ending balance	(132,496)	(134,942)	(132,496)	(134,942)
Currency Translation Adjustment
Changes in accumulated other comprehensive income by component
Beginning balance, gross					(138,036)	(146,726)	(116,717)	(98,717)
Beginning balance, net of tax	(138,036)	(116,717)	(146,726)	(98,717)
Other comprehensive income (loss) before reclassifications	9,244	(16,968)	17,934	(34,968)
Total other comprehensive income (loss)	9,244	(16,968)	17,934	(34,968)
Ending balance	(128,792)	(133,685)	(128,792)	(133,685)
Pension Liability
Changes in accumulated other comprehensive income by component
Beginning balance, gross					(3,953)	(4,070)	(4,811)	(4,952)
Tax asset					947	1,573	1,755	1,790
Beginning balance, net of tax	(3,006)	(3,056)	(2,497)	(3,162)
Other comprehensive income (loss) before reclassifications	(112)	(37)	(223)	(72)
Amounts reclassified from accumulated other comprehensive income (loss)	229	155	457	331
Tax effects	(28)	(29)	(57)	(64)
Total other comprehensive income (loss)	89	89	177	195
Reclassification of stranded tax effects			(597)
Ending balance	(2,917)	(2,967)	(2,917)	(2,967)
Unrealized (Losses) Gains on Derivatives
Changes in accumulated other comprehensive income by component
Beginning balance, gross					372	3,025	2,439	2,333
Tax asset					$ (98)	$ (801)	$ (645)	$ (617)
Beginning balance, net of tax	274	1,794	2,224	1,716
Other comprehensive income (loss) before reclassifications	(1,328)	(33)	(3,739)	(83)
Amounts reclassified from accumulated other comprehensive income (loss)	(115)	(81)	(357)	75
Tax effects	382	30	1,085	2
Total other comprehensive income (loss)	(1,061)	(84)	(3,011)	(6)
Ending balance	$ (787)	$ 1,710	$ (787)	$ 1,710

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ACCUMULATED OTHER COMPREHENSIVE INCOME - Reclassifications out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassifications out of accumulated other comprehensive income and the location on the consolidated statements of income
Interest expense to third parties	$ (84,989)	$ (76,020)	$ (170,205)	$ (152,856)
Income before taxes	49,682	62,050	100,673	113,973
Income tax benefit	(11,898)	(14,422)	(23,678)	(26,542)
Net income	37,784	47,628	76,995	87,431
Pension Liability | Amounts Reclassified from AOCI
Reclassifications out of accumulated other comprehensive income and the location on the consolidated statements of income
Various line items individually insignificant	(229)	(155)	(457)	(331)
Income before taxes	(229)	(155)	(457)	(331)
Income tax benefit	55	38	111	82
Net income	(174)	(117)	(346)	(249)
Unrealized (Losses) Gains on Derivatives | Amounts Reclassified from AOCI
Reclassifications out of accumulated other comprehensive income and the location on the consolidated statements of income
Interest expense to third parties	115	81	357	(75)
Income before taxes	115	81	357	(75)
Income tax benefit	(30)	(21)	(94)	20
Net income	$ 85	$ 60	$ 263	$ (55)

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RECEIVABLES - Summary of Receivables (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) item	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Receivables
Gross receivables	$ 10,267,608		$ 10,025,338	$ 10,039,146
Less: Allowance for credit losses	(77,610)	$ (72,228)	(74,412)	$ (76,852)	$ (81,080)	$ (79,196)
Total receivables, net	10,189,998		9,950,926
Restricted Receivables	8,631,405		8,460,823
Receivables directly or indirectly sold or transferred and available to pay the entity's creditors prior to all obligations of the SPE having been fulfilled	$ 0
Number of components of allowance for credit losses | item	2
Number of portfolio segments in which allowance for credit losses is segregated | item	3
Retail
Receivables
Gross receivables	$ 618,207		753,388
Restricted Receivables	5,675,562		5,623,730
Wholesale
Receivables
Gross receivables	862,353		747,191
Restricted Receivables	2,955,843		2,837,093
Wholesale factoring
Receivables
Gross receivables	84,474
Finance lease receivables
Receivables
Gross receivables	$ 71,169		$ 63,936

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RECEIVABLES - Allowance for Credit Losses Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Allowance for credit losses:
Beginning balance	$ 72,228	$ 81,080	$ 74,412	$ 79,196	$ 79,196
Charge-offs	(9,189)	(9,757)	(18,731)	(20,454)	(40,942)
Recoveries	1,372	1,144	1,685	2,211	4,773
Provision (benefit)	13,097	4,295	20,066	16,110	31,699
Foreign currency translation and other	102	90	178	(211)	(314)
Ending balance	77,610	76,852	77,610	76,852	74,412
Ending balance: individually evaluated for impairment	26,133	19,594	26,133	19,594	20,626
Ending balance: collectively evaluated for impairment	51,477	57,258	51,477	57,258	53,786
Receivables:
Ending balance	10,267,608	10,039,146	10,267,608	10,039,146	10,025,338
Ending balance: individually evaluated for impairment	47,158	61,412	47,158	61,412	55,661
Ending balance: collectively evaluated for impairment	10,220,450	9,977,734	10,220,450	9,977,734	9,969,677
Retail
Allowance for credit losses:
Beginning balance	65,637	75,721	66,944	73,610	73,610
Charge-offs	(9,189)	(9,757)	(16,566)	(20,267)	(39,375)
Recoveries	1,369	1,138	1,676	2,147	4,702
Provision (benefit)	12,410	3,112	18,106	15,007	28,277
Foreign currency translation and other	84	102	151	(181)	(270)
Ending balance	70,311	70,316	70,311	70,316	66,944
Ending balance: individually evaluated for impairment	22,833	15,659	22,833	15,659	15,801
Ending balance: collectively evaluated for impairment	47,478	54,657	47,478	54,657	51,143
Receivables:
Ending balance	6,364,938	6,503,831	6,364,938	6,503,831	6,441,054
Ending balance: individually evaluated for impairment	43,050	31,702	43,050	31,702	31,148
Ending balance: collectively evaluated for impairment	6,321,888	6,472,129	6,321,888	6,472,129	6,409,906
Wholesale
Allowance for credit losses:
Beginning balance	6,535	5,238	7,468	5,444	5,444
Charge-offs			(2,165)	(187)
Recoveries	3	6	9	64
Provision (benefit)	683	1,250	1,900	1,187
Foreign currency translation and other	18	(8)	27	(22)
Ending balance	7,239	6,486	7,239	6,486	7,468
Ending balance: individually evaluated for impairment	3,300	3,935	3,300	3,935
Ending balance: collectively evaluated for impairment	3,939	2,551	3,939	2,551
Receivables:
Ending balance	3,818,196	3,451,677	3,818,196	3,451,677	3,584,284
Ending balance: individually evaluated for impairment	4,108	29,710	4,108	29,710
Ending balance: collectively evaluated for impairment	3,814,088	3,421,967	3,814,088	3,421,967
Wholesale factoring
Allowance for credit losses:
Beginning balance	56	121		142	142
Provision (benefit)	4	(67)	60	(84)
Foreign currency translation and other		(4)		(8)
Ending balance	60	50	60	50
Ending balance: collectively evaluated for impairment	60	50	60	50
Receivables:
Ending balance	84,474	83,638	84,474	83,638
Ending balance: collectively evaluated for impairment	$ 84,474	$ 83,638	84,474	83,638
Wholesale and wholesale factoring
Allowance for credit losses:
Beginning balance			$ 7,468	$ 5,586	5,586
Charge-offs					(1,567)
Recoveries					71
Provision (benefit)					3,422
Foreign currency translation and other					(44)
Ending balance					7,468
Ending balance: individually evaluated for impairment					4,825
Ending balance: collectively evaluated for impairment					2,643
Receivables:
Ending balance					3,584,284
Ending balance: individually evaluated for impairment					24,513
Ending balance: collectively evaluated for impairment					$ 3,559,771

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RECEIVABLES - Breakdown of Receivables by Credit Quality Indicators (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Financing receivable, recorded investment
Gross receivables	$ 10,267,608	$ 10,025,338	$ 10,039,146
Retail
Financing receivable, recorded investment
Gross receivables	6,364,938	6,441,054	6,503,831
Retail | Titanium
Financing receivable, recorded investment
Gross receivables	3,252,856	3,367,239
Retail | Platinum
Financing receivable, recorded investment
Gross receivables	1,942,086	1,942,784
Retail | Gold
Financing receivable, recorded investment
Gross receivables	986,654	943,816
Retail | Silver
Financing receivable, recorded investment
Gross receivables	147,094	152,338
Retail | Bronze
Financing receivable, recorded investment
Gross receivables	36,248	34,877
Wholesale
Financing receivable, recorded investment
Gross receivables	3,818,196	3,584,284	$ 3,451,677
Wholesale | Grade A
Financing receivable, recorded investment
Gross receivables	1,618,562	1,582,179
Wholesale | Grade B
Financing receivable, recorded investment
Gross receivables	1,389,577	1,292,331
Wholesale | Grade C
Financing receivable, recorded investment
Gross receivables	667,015	527,735
Wholesale | Grade D
Financing receivable, recorded investment
Gross receivables	$ 143,042	$ 182,039

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RECEIVABLES - Aging of Receivables (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Financing receivable, recorded investment
Total Receivables	$ 10,267,608	$ 10,025,338	$ 10,039,146
Minimum account delinquency period for an account to be classified as past due	30 days	30 days
Retail
Financing receivable, recorded investment
Total Past Due	$ 59,593	$ 54,696
Current	6,305,345	6,386,358
Total Receivables	6,364,938	6,441,054	6,503,831
Recorded Investment > 90 Days and Accruing	3,749	5,484
Retail | 31-60 Days Past Due
Financing receivable, recorded investment
Total Past Due	20,638	20,716
Retail | 61-90 Days Past Due
Financing receivable, recorded investment
Total Past Due	10,584	6,882
Retail | Greater than 90 Days
Financing receivable, recorded investment
Total Past Due	28,371	27,098
Retail | United States
Financing receivable, recorded investment
Total Past Due	53,672	50,462
Current	5,126,981	5,239,777
Total Receivables	5,180,653	5,290,239
Recorded Investment > 90 Days and Accruing	3,197	4,573
Retail | United States | 31-60 Days Past Due
Financing receivable, recorded investment
Total Past Due	18,343	19,318
Retail | United States | 61-90 Days Past Due
Financing receivable, recorded investment
Total Past Due	8,467	6,372
Retail | United States | Greater than 90 Days
Financing receivable, recorded investment
Total Past Due	26,862	24,772
Retail | Canada
Financing receivable, recorded investment
Total Past Due	5,921	4,234
Current	1,178,364	1,146,581
Total Receivables	1,184,285	1,150,815
Recorded Investment > 90 Days and Accruing	552	911
Retail | Canada | 31-60 Days Past Due
Financing receivable, recorded investment
Total Past Due	2,295	1,398
Retail | Canada | 61-90 Days Past Due
Financing receivable, recorded investment
Total Past Due	2,117	510
Retail | Canada | Greater than 90 Days
Financing receivable, recorded investment
Total Past Due	1,509	2,326
Wholesale
Financing receivable, recorded investment
Total Past Due	1,577	2,301
Current	3,816,619	3,581,983
Total Receivables	3,818,196	3,584,284	3,451,677
Recorded Investment > 90 Days and Accruing	13	388
Wholesale | 31-60 Days Past Due
Financing receivable, recorded investment
Total Past Due	612	487
Wholesale | 61-90 Days Past Due
Financing receivable, recorded investment
Total Past Due	155	10
Wholesale | Greater than 90 Days
Financing receivable, recorded investment
Total Past Due	810	1,804
Wholesale | United States
Financing receivable, recorded investment
Total Past Due	1,364	1,862
Current	2,917,630	2,788,655
Total Receivables	2,918,994	2,790,517
Recorded Investment > 90 Days and Accruing	13	387
Wholesale | United States | 31-60 Days Past Due
Financing receivable, recorded investment
Total Past Due	453	484
Wholesale | United States | 61-90 Days Past Due
Financing receivable, recorded investment
Total Past Due	101	10
Wholesale | United States | Greater than 90 Days
Financing receivable, recorded investment
Total Past Due	810	1,368
Wholesale | Canada
Financing receivable, recorded investment
Total Past Due	213	439
Current	898,989	793,328
Total Receivables	899,202	793,767
Recorded Investment > 90 Days and Accruing		1
Wholesale | Canada | 31-60 Days Past Due
Financing receivable, recorded investment
Total Past Due	159	3
Wholesale | Canada | 61-90 Days Past Due
Financing receivable, recorded investment
Total Past Due	54
Wholesale | Canada | Greater than 90 Days
Financing receivable, recorded investment
Total Past Due		$ 436
Wholesale factoring
Financing receivable, recorded investment
Current	84,474
Total Receivables	$ 84,474		$ 83,638

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RECEIVABLES - Impaired Receivables (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Average Recorded Investment
Delinquency period of accounts considered for recognition of income	120 days	120 days
United States
Average Recorded Investment
Receivables on nonaccrual status	$ 36,469	$ 50,054
Canada
Average Recorded Investment
Receivables on nonaccrual status	1,011	1,428
Retail | United States
Average Recorded Investment
Receivables on nonaccrual status	32,608	27,069
Retail | Canada
Average Recorded Investment
Receivables on nonaccrual status	1,011	1,428
Wholesale | United States
Average Recorded Investment
Receivables on nonaccrual status	$ 3,861	$ 22,985
Individually evaluated for impairment
Unpaid Principal Balance
Period considered for average recorded investment	7 months	13 months
Individually evaluated for impairment | Retail
Recorded Investment
With an allowance recorded	$ 43,050	$ 31,148
Unpaid Principal Balance
With an allowance recorded	41,449	29,963
Related Allowance	22,833	15,801
Average Recorded Investment
With an allowance recorded	45,271	33,035
Individually evaluated for impairment | Retail | United States
Recorded Investment
With an allowance recorded	41,211	30,959
Unpaid Principal Balance
With an allowance recorded	39,608	29,783
Related Allowance	21,888	15,347
Average Recorded Investment
With an allowance recorded	43,336	32,787
Individually evaluated for impairment | Retail | Canada
Recorded Investment
With an allowance recorded	1,839	189
Unpaid Principal Balance
With an allowance recorded	1,841	180
Related Allowance	945	454
Average Recorded Investment
With an allowance recorded	1,935	248
Individually evaluated for impairment | Wholesale
Recorded Investment
With an allowance recorded	4,108	24,513
Unpaid Principal Balance
With an allowance recorded	3,861	22,985
Related Allowance	3,300	4,825
Average Recorded Investment
With an allowance recorded	6,138	27,269
Individually evaluated for impairment | Wholesale | United States
Recorded Investment
With an allowance recorded	4,108	24,513
Unpaid Principal Balance
With an allowance recorded	3,861	22,985
Related Allowance	3,300	4,825
Average Recorded Investment
With an allowance recorded	$ 6,138	$ 27,269

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RECEIVABLES - Troubled Debt Restructuring of Receivables (Details) - Retail $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) item	Jun. 30, 2018 USD ($) item
Troubled Debt Restructurings
Number of contracts classified as TDRs | item	272	288
Pre-modification value	$ 10,216	$ 9,624
Post-modification value	$ 9,214	$ 8,742
Number of cases in which the court has not yet determined the concession | item	381	377
Pre-modification value for cases in which the court has not yet determined the concession	$ 16,336	$ 20,262

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EQUIPMENT ON OPERATING LEASES (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Lease payments owed to the company for equipment under non-cancelable operating leases
Deferred operating lease subsidy	$ 112,020
2019	87,740
2020	165,591
2021	105,826
2022	36,240
2023 and Thereafter	12,107
Total lease payments	$ 407,504

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CREDIT FACILITIES AND DEBT (Details) $ in Thousands, $ in Thousands	Jun. 30, 2019 USD ($)	Jun. 25, 2019 CAD ($)	Jun. 25, 2019 USD ($)	May 22, 2019 USD ($)	Dec. 31, 2018 USD ($)
Debt
Long-term debt	$ 6,300,528				$ 6,259,839
Uncommitted credit line
Debt
Short-Term Outstanding	50,000
Revolving credit facilities
Debt
Maximum borrowing capacity	843,188
Line of credit, outstanding amount	443,188
Amortizing Retail Term ABS
Debt
Debt amount		$ 415,953	$ 310,946	$ 751,140
Commercial paper
Debt
Short-Term Outstanding	$ 390,000

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INCOME TAXES (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Reconciliation of statutory and effective income tax rate
Effective tax rate (as a percent)	23.90%	23.20%	23.50%	23.30%

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FINANCIAL INSTRUMENTS - Generial Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Interest Rate Derivatives
Maximum length of time of interest rate derivative instruments designated in cash flow hedge relationships	48 months
After-tax losses deferred in accumulated other comprehensive income that will be recognized in interest expense over the next 12 months	$ (421)

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FINANCIAL INSTRUMENTS - Fair Market Value of Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Fair market value of derivatives
Derivative assets designated as hedging instruments, classified in other assets	$ 38,388		$ 38,388		$ 15,422
Derivative liabilities designated as hedging instruments, classified in accounts payable and other accrued liabilities	3,526		3,526		8,107
Interest rate derivatives, derivative assets not designated as hedging instruments, classified in other assets	806		806		1,157
Foreign exchange contracts, derivatives not designated as hedging instruments, classified in other assets					86
Derivative assets not designated as hedging instruments, classified in other assets	806		806		1,243
Interest rate derivatives, derivative not designated as hedging instruments, classified in accounts payable and other accrued liabilities	806		806		1,157
Foreign exchange contracts, derivatives not designated as hedging instruments, classified in accounts payable and other accrued liabilities	2,951		2,951
Derivative liabilities not designated as hedging instruments, classified in accounts payable and other accrued liabilities	3,757		3,757		1,157
Cash Flow Hedges, Recognized in accumulated other comprehensive income (loss), Interest rate derivatives	(1,328)	$ (33)	(3,739)	$ (83)
Cash Flow Hedges, Reclassified from accumulated other comprehensive Income (loss), Interest rate derivatives - Interest expense to third parties	115	81	357	(75)
Foreign exchange contracts, other expenses, not designated as hedges	3,463	$ (8,928)	3,193	(11,522)
Interest Rate Derivatives
Fair market value of derivatives
Total notional amount of interest rate derivatives	$ 2,809,628		2,809,628		$ 2,960,191
Seven-month average notional amounts of interest rate derivatives			$ 3,004,828	$ 2,887,445

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FINANCIAL INSTRUMENTS - Items Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Foreign exchange contracts		$ 86
Liabilities
Foreign exchange contracts	$ 2,951
Assets transferred between Level 1, Level 2 and Level 3	0	0
Liabilities transferred between Level 1, Level 2 and Level 3	0	0
Recurring | Level 2
Assets
Interest rate derivatives	39,194	16,579
Foreign exchange contracts		86
Total assets	39,194	16,665
Liabilities
Interest rate derivatives	4,332	9,264
Foreign exchange contracts	2,951
Total liabilities	$ 7,283	$ 9,264

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FINANCIAL INSTRUMENTS - Carrying Amount and Estimated Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financial Instruments Not Carried at Fair Value
Receivables	$ 10,189,998	$ 9,950,926
Long-term debt	6,300,528	6,259,839
Carrying Amount
Financial Instruments Not Carried at Fair Value
Receivables	10,189,998	9,950,926
Long-term debt	6,300,528	6,259,839
Estimated Fair Value
Financial Instruments Not Carried at Fair Value
Receivables	10,109,802	9,589,920
Long-term debt	$ 6,322,186	$ 6,149,778

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GEOGRAPHICAL INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Geographical Information
Revenues	$ 229,112	$ 226,141	$ 451,181	$ 452,512
Interest expense	85,247	78,804	173,628	157,232
Net income	37,784	47,628	76,995	87,431
Depreciation and amortization	56,153	57,117	117,575	119,331
Expenditures for equipment on operating leases	171,666	139,183	347,175	241,788
Provision (benefit) for credit losses	13,097	4,295	20,066	16,110	$ 31,699
Additional disclosures
Total assets	12,948,850		12,948,850		12,931,912
Managed receivables	10,267,608		10,267,608		10,025,338
Eliminations.
Geographical Information
Revenues	(2,661)	(2,404)	(3,976)	(4,265)
Interest expense	(2,661)	(2,404)	(3,976)	(4,265)
Additional disclosures
Total assets	(96,884)		(96,884)		(62,732)
United States
Geographical Information
Net income	25,247	30,705	54,015	53,639
Depreciation and amortization	45,511	45,987	95,902	96,701
Expenditures for equipment on operating leases	133,803	106,161	279,584	183,306
Provision (benefit) for credit losses	12,364	3,509	18,060	14,814
Additional disclosures
Managed receivables	8,099,647		8,099,647		8,080,756
United States | Operating segment
Geographical Information
Revenues	183,870	175,694	361,649	352,197
Interest expense	70,923	67,112	144,359	133,956
Additional disclosures
Total assets	10,328,274		10,328,274		10,482,805
Canada
Geographical Information
Net income	12,537	16,923	22,980	33,792
Depreciation and amortization	10,642	11,130	21,673	22,630
Expenditures for equipment on operating leases	37,863	33,022	67,591	58,482
Provision (benefit) for credit losses	733	786	2,006	1,296
Additional disclosures
Managed receivables	2,167,961		2,167,961		1,944,582
Canada | Operating segment
Geographical Information
Revenues	47,903	52,851	93,508	104,580
Interest expense	16,985	$ 14,096	33,245	$ 27,541
Additional disclosures
Total assets	$ 2,717,460		$ 2,717,460		$ 2,511,839

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
RELATED-PARTY TRANSACTIONS
Total interest and other income from affiliates	$ 88,992	$ 92,392	$ 173,245	$ 187,407
Affiliated receivables	12,666		12,666		$ 43,389
Affiliated debt	346,482		346,482		276,271
Other information
Tax receivable due from related party					39,174
Accounts payable and other accrued liabilities payable to related parties	55,803		55,803		4,740
Interest expense to related affiliates	258	2,784	3,423	4,376
Fees charged by affiliates	11,574	11,304	23,955	23,259
Gross receivables	10,267,608	10,039,146	10,267,608	10,039,146	10,025,338
Wholesale
Other information
Gross receivables	862,353		862,353		747,191
CNH Industrial North America
RELATED-PARTY TRANSACTIONS
Retail	40,317	37,081	79,513	76,497
Wholesale	32,370	34,767	62,380	68,850
Operating lease	15,059	15,411	30,065	31,006
Lending funds	40	150	81	762
CNH Industrial America
RELATED-PARTY TRANSACTIONS
Affiliated receivables					24,724
Affiliated debt	339,109		339,109		99,455
CNH Industrial Canada Ltd.
RELATED-PARTY TRANSACTIONS
Affiliated receivables	356		356		6,233
Affiliated debt	7,373		7,373		176,816
Iveco Argentina
RELATED-PARTY TRANSACTIONS
Wholesale factoring	1,206	$ 4,983	1,206	$ 10,292
Other affiliates
RELATED-PARTY TRANSACTIONS
Affiliated receivables	$ 12,310		$ 12,310		$ 12,432

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Guarantees
Payment guarantees on the financial debt of various foreign financial services subsidiaries	$ 30,000
Wholesale and dealer financing
Guarantees
Total credit limit	5,997,972
Utilized	$ 3,776,302

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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Statements of Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
REVENUES
Interest income on retail notes and finance leases	$ 57,112		$ 50,201		$ 112,580	$ 98,831
Interest income on wholesale notes	16,993		16,256		33,735	31,825
Interest and other income from affiliates	88,992		92,392		173,245	187,407
Rental income on operating leases	60,492		59,957		121,133	121,073
Other income	5,523		7,335		10,488	13,376
Total revenues	229,112		226,141		451,181	452,512
Interest expense:
Interest expense to third parties	84,989		76,020		170,205	152,856
Interest expense to affiliates	258		2,784		3,423	4,376
Total interest expense	85,247		78,804		173,628	157,232
Administrative and operating expenses:
Fees charged by affiliates	11,574		11,304		23,955	23,259
Provision (benefit) for credit losses	13,097		4,295		20,066	16,110
Depreciation of equipment on operating leases	55,680		56,569		116,600	118,254
Other expenses	13,832		13,119		16,259	23,684
Total administrative and operating expenses	94,183		85,287		176,880	181,307
Total expenses	179,430		164,091		350,508	338,539
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method	49,682		62,050		100,673	113,973
Income tax provision (benefit)	11,898		14,422		23,678	26,542
NET INCOME	37,784	$ 39,211	47,628	$ 39,803	76,995	87,431
COMPREHENSIVE INCOME	46,056		30,665		92,095	52,652
Reportable Legal Entities | CNH Industrial Capital LLC
REVENUES
Interest and other income from affiliates	15,482		15,995		31,448	35,070
Total revenues	15,482		15,995		31,448	35,070
Interest expense:
Interest expense to third parties	52,749		25,821		100,226	64,011
Total interest expense	52,749		25,821		100,226	64,011
Administrative and operating expenses:
Other expenses	6		10		12	10
Total administrative and operating expenses	6		10		12	10
Total expenses	52,755		25,831		100,238	64,021
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method	(37,273)		(9,836)		(68,790)	(28,951)
Income tax provision (benefit)	(9,100)		(2,382)		(16,796)	(7,012)
Equity in income of consolidated subsidiaries accounted for under the equity method	65,957		55,082		128,989	109,370
NET INCOME	37,784		47,628		76,995	87,431
COMPREHENSIVE INCOME	46,056		30,665		92,095	52,652
Reportable Legal Entities | Guarantor Entities
REVENUES
Interest income on retail notes and finance leases	7,708		1,706		13,631	5,760
Interest income on wholesale notes	(276)		(253)		(534)	(512)
Interest and other income from affiliates	52,420		53,572		102,509	106,258
Rental income on operating leases	47,253		46,338		94,256	93,416
Other income	21,172		23,244		42,027	45,872
Total revenues	128,277		124,607		251,889	250,794
Interest expense:
Interest expense to third parties	(16,733)		11,291		(28,086)	10,660
Interest expense to affiliates	12,120		57,740		57,643	105,348
Total interest expense	(4,613)		69,031		29,557	116,008
Administrative and operating expenses:
Fees charged by affiliates	11,131		10,914		22,993	22,398
Provision (benefit) for credit losses	5,366		23		8,732	2,911
Depreciation of equipment on operating leases	45,038		45,439		94,928	95,625
Other expenses	11,083		(1,657)		10,357	4,490
Total administrative and operating expenses	72,618		54,719		137,010	125,424
Total expenses	68,005		123,750		166,567	241,432
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method	60,272		857		85,322	9,362
Income tax provision (benefit)	14,832		234		21,064	2,321
Equity in income of consolidated subsidiaries accounted for under the equity method	20,517		54,459		64,731	102,329
NET INCOME	65,957		55,082		128,989	109,370
COMPREHENSIVE INCOME	$ 74,229		38,119		$ 144,089	74,591
Reportable Legal Entities | CNH Industrial Capital America LLC
Condensed Statements of Comprehensive Income
Ownership percentage	100.00%				100.00%
Reportable Legal Entities | New Holland Credit Company LLC
Condensed Statements of Comprehensive Income
Ownership percentage	100.00%				100.00%
Reportable Legal Entities | All Other Subsidiaries
REVENUES
Interest income on retail notes and finance leases	$ 49,404		48,495		$ 98,949	93,071
Interest income on wholesale notes	17,269		16,509		34,269	32,337
Interest and other income from affiliates	36,572		80,234		70,736	157,368
Rental income on operating leases	13,239		13,619		26,877	27,657
Other income	652		930		1,173	1,539
Total revenues	117,136		159,787		232,004	311,972
Interest expense:
Interest expense to third parties	48,973		38,908		98,065	78,185
Interest expense to affiliates	3,620		2,453		(22,772)	10,317
Total interest expense	52,593		41,361		75,293	88,502
Administrative and operating expenses:
Fees charged by affiliates	16,744		17,229		33,674	34,896
Provision (benefit) for credit losses	7,731		4,272		11,334	13,199
Depreciation of equipment on operating leases	10,642		11,130		21,672	22,629
Other expenses	2,743		14,766		5,890	19,184
Total administrative and operating expenses	37,860		47,397		72,570	89,908
Total expenses	90,453		88,758		147,863	178,410
Income (loss) before income taxes and equity in income of consolidated subsidiaries accounted for under the equity method	26,683		71,029		84,141	133,562
Income tax provision (benefit)	6,166		16,570		19,410	31,233
NET INCOME	20,517		54,459		64,731	102,329
COMPREHENSIVE INCOME	27,633		39,644		76,907	72,062
Eliminations
REVENUES
Interest and other income from affiliates	(15,482)		(57,409)		(31,448)	(111,289)
Other income	(16,301)		(16,839)		(32,712)	(34,035)
Total revenues	(31,783)		(74,248)		(64,160)	(145,324)
Interest expense:
Interest expense to affiliates	(15,482)		(57,409)		(31,448)	(111,289)
Total interest expense	(15,482)		(57,409)		(31,448)	(111,289)
Administrative and operating expenses:
Fees charged by affiliates	(16,301)		(16,839)		(32,712)	(34,035)
Total administrative and operating expenses	(16,301)		(16,839)		(32,712)	(34,035)
Total expenses	(31,783)		(74,248)		(64,160)	(145,324)
Equity in income of consolidated subsidiaries accounted for under the equity method	(86,474)		(109,541)		(193,720)	(211,699)
NET INCOME	(86,474)		(109,541)		(193,720)	(211,699)
COMPREHENSIVE INCOME	$ (101,862)		$ (77,763)		$ (220,996)	$ (146,653)

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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
ASSETS
Cash and cash equivalents	$ 97,644		$ 160,328
Restricted cash and cash equivalents	488,562		639,543
Receivables, less allowance for credit losses	10,189,998		9,950,926
Affiliated accounts and notes receivable	12,666		43,389
Equipment on operating leases, net	1,724,634		1,724,217
Equipment held for sale	236,349		209,991
Goodwill and intangible assets, net	120,566		118,581
Other assets	78,431		84,937
TOTAL	12,948,850		12,931,912
Liabilities:
Short-term debt, including current maturities of long-term debt	4,197,425		4,324,292
Accounts payable and other accrued liabilities	781,330		715,778
Affiliated debt	346,482		276,271
Long-term debt	6,300,528		6,259,839
Total liabilities	11,625,765		11,576,180
Stockholder's equity	1,323,085	$ 1,401,935	1,355,732	$ 1,388,554	$ 1,377,793	$ 1,375,639
TOTAL	12,948,850		12,931,912
Eliminations
ASSETS
Affiliated accounts and notes receivable	(6,958,440)		(6,657,354)
Investments in consolidated subsidiaries accounted for under the equity method	(5,456,125)		(5,257,189)
Other assets	(3,567)		(3,401)
TOTAL	(12,418,132)		(11,917,944)
Liabilities:
Accounts payable and other accrued liabilities	(4,104,683)		(3,848,956)
Affiliated debt	(2,857,324)		(2,811,799)
Total liabilities	(6,962,007)		(6,660,755)
Stockholder's equity	(5,456,125)		(5,257,189)
TOTAL	(12,418,132)		(11,917,944)
CNH Industrial Capital LLC | Reportable Legal Entities
ASSETS
Affiliated accounts and notes receivable	2,120,366		2,310,137
Investments in consolidated subsidiaries accounted for under the equity method	2,940,396		2,796,050
Other assets	9,102		11,140
TOTAL	5,069,864		5,117,327
Liabilities:
Short-term debt, including current maturities of long-term debt	938,628		987,559
Accounts payable and other accrued liabilities	287,773		286,527
Long-term debt	2,520,378		2,487,509
Total liabilities	3,746,779		3,761,595
Stockholder's equity	1,323,085		1,355,732
TOTAL	5,069,864		5,117,327
Guarantor Entities | Reportable Legal Entities
ASSETS
Cash and cash equivalents	62,177		118,508
Receivables, less allowance for credit losses	1,513,793		1,472,678
Affiliated accounts and notes receivable	2,440,827		2,122,129
Equipment on operating leases, net	1,353,878		1,357,493
Equipment held for sale	216,716		192,772
Investments in consolidated subsidiaries accounted for under the equity method	2,515,729		2,461,139
Goodwill and intangible assets, net	92,695		91,754
Other assets	51,735		56,517
TOTAL	8,247,550		7,872,990
Liabilities:
Accounts payable and other accrued liabilities	3,232,811		3,035,024
Affiliated debt	2,074,343		2,041,926
Long-term debt			(10)
Total liabilities	5,307,154		5,076,940
Stockholder's equity	2,940,396		2,796,050
TOTAL	8,247,550		7,872,990
All Other Subsidiaries | Reportable Legal Entities
ASSETS
Cash and cash equivalents	35,467		41,820
Restricted cash and cash equivalents	488,562		639,543
Receivables, less allowance for credit losses	8,676,205		8,478,248
Affiliated accounts and notes receivable	2,409,913		2,268,477
Equipment on operating leases, net	370,756		366,724
Equipment held for sale	19,633		17,219
Goodwill and intangible assets, net	27,871		26,827
Other assets	21,161		20,681
TOTAL	12,049,568		11,859,539
Liabilities:
Short-term debt, including current maturities of long-term debt	3,258,797		3,336,733
Accounts payable and other accrued liabilities	1,365,429		1,243,183
Affiliated debt	1,129,463		1,046,144
Long-term debt	3,780,150		3,772,340
Total liabilities	9,533,839		9,398,400
Stockholder's equity	2,515,729		2,461,139
TOTAL	$ 12,049,568		$ 11,859,539

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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Statements of Cash Flows (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	$ 304,825	$ (302,641)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired	(5,539,579)	(5,411,526)
Collections of receivables	5,366,432	5,740,541
Purchase of equipment on operating leases, net	(126,358)	(19,662)
Change in property and equipment and software, net	(1,916)	(2,816)
Net cash from (used in) investing activities	(301,421)	306,537
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity	69,918	164,501
Net change in indebtedness	(161,987)	(356,807)
Dividend paid to CNH Industrial America LLC	(125,000)	(40,000)
Net cash from (used in) financing activities	(217,069)	(232,306)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(213,665)	(228,410)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	799,871	875,558
End of period	586,206	647,148
Eliminations
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	45,359	14,601
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired	3,659,309	3,415,835
Collections of receivables	(3,659,143)	(3,416,342)
Net cash from (used in) investing activities	166	(507)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity	(45,525)	(14,094)
Net cash from (used in) financing activities	(45,525)	(14,094)
CNH Industrial Capital LLC | Reportable Legal Entities
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	141,062	60,887
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in indebtedness	(16,062)	(20,887)
Dividend paid to CNH Industrial America LLC	(125,000)	(40,000)
Net cash from (used in) financing activities	(141,062)	(60,887)
Guarantor Entities | Reportable Legal Entities
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	78,565	(401,722)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired	(4,272,656)	(4,019,429)
Collections of receivables	4,222,643	4,065,861
Purchase of equipment on operating leases, net	(115,394)	(330)
Change in property and equipment and software, net	(1,916)	(2,816)
Net cash from (used in) investing activities	(167,323)	43,286
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity	32,417	319,809
Net change in indebtedness	10	(24,411)
Net cash from (used in) financing activities	32,427	295,398
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(56,331)	(63,038)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	118,508	160,339
End of period	62,177	97,301
All Other Subsidiaries | Reportable Legal Entities
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash from (used in) operating activities	39,839	23,593
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables acquired	(4,926,232)	(4,807,932)
Collections of receivables	4,802,932	5,091,022
Purchase of equipment on operating leases, net	(10,964)	(19,332)
Net cash from (used in) investing activities	(134,264)	263,758
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity	83,026	(141,214)
Net change in indebtedness	(145,935)	(311,509)
Net cash from (used in) financing activities	(62,909)	(452,723)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(157,334)	(165,372)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	681,363	715,219
End of period	$ 524,029	$ 549,847

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SUBSEQUENT EVENTS (Details) - Subsequent event - 3.375% unsecured notes due 2019 $ in Thousands	Jul. 15, 2019 USD ($)
Subsequent Events
Repayment of debt	$ 500,000
Interest rate (as a percent)	3.375%