We adopted the accounting guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses as of December 31, 2010. See Note 3 for additional information. This guidance requires information to be disclosed at disaggregated levels, defined as portfolio segments and classes.

We further evaluate our portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Typically, our finance receivables within a geographic area have similar credit risk profiles and methods for assessing and monitoring credit risk. Our classes, which align with management reporting, are as follows:

·	Global Power Finance - Finance receivables related to marine vessels with Caterpillar engines worldwide and Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems worldwide.

For all classes, a loan or finance lease is considered impaired, based on current information and events, if it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan or finance lease. Loans and finance leases reviewed for impairment include loans and finance leases that are past due, non-performing or in bankruptcy. Recognition of income is suspended and the loan or finance lease is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due). Accrual is resumed, and previously suspended income is recognized, when the loan or finance lease becomes contractually current and/or collection doubts are removed. Cash receipts on impaired loans or finance leases are recorded against the receivable and then to any unrecognized income.

There were no impaired loans or finance leases as of September 30, 2011 and December 31, 2010, for the Dealer and Caterpillar Purchased Receivables portfolio segments. The average recorded investment for impaired loans and finance leases for the Dealer and Caterpillar Purchased Receivables portfolio segments was $0 for the three and nine months ended September 30, 2011. The average recorded investment for impaired loans and finance leases for the three and nine months ended September 30, 2010 was $0 for the Caterpillar Purchased Receivables portfolio segment and $16 million and $25 million, respectively, for the Dealer portfolio segment, all of which was in the Europe finance receivable class.

(Millions of dollars)
	As of September 30, 2011						As of December 31, 2010
Impaired Loans and Finance Leases With No Allowance Recorded(1)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Customer
North America	$	84	$	82	$	-	$	87	$	87	$	-
Europe		4		3		-		6		4		-
Asia Pacific		14		13		-		13		13		-
Latin America		8		8		-		3		3		-
Global Power Finance		196		196		-		174		174		-
Total	$	306	$	302	$	-	$	283	$	281	$	-

Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	110	$	105	$	25	$	191	$	185	$	44
Europe		39		35		13		62		57		15
Asia Pacific		21		21		4		27		27		7
Latin America		24		24		5		44		43		9
Global Power Finance		104		103		18		34		33		4
Total	$	298	$	288	$	65	$	358	$	345	$	79

Total Impaired Loans and Finance Leases
Customer
North America	$	194	$	187	$	25	$	278	$	272	$	44
Europe		43		38		13		68		61		15
Asia Pacific		35		34		4		40		40		7
Latin America		32		32		5		47		46		9
Global Power Finance		300		299		18		208		207		4
Total	$	604	$	590	$	65	$	641	$	626	$	79

(Millions of dollars)
	Three Months Ended September 30, 2011				Three Months Ended September 30, 2010
Impaired Loans and Finance Leases With No Allowance Recorded(1)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Customer
North America	$	92	$	1	$	43	$	1
Europe		5		-		4		-
Asia Pacific		13		1		7		1
Latin America		12		-		4		-
Global Power Finance		231		-		113		-
Total	$	353	$	2	$	171	$	2

Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	126	$	-	$	270	$	2
Europe		44		1		84		1
Asia Pacific		19		-		41		-
Latin America		40		-		37		1
Global Power Finance		126		-		10		-
Total	$	355	$	1	$	442	$	4

Total Impaired Loans and Finance Leases
Customer
North America	$	218	$	1	$	313	$	3
Europe		49		1		88		1
Asia Pacific		32		1		48		1
Latin America		52		-		41		1
Global Power Finance		357		-		123		-
Total	$	708	$	3	$	613	$	6

(Millions of dollars)
	Nine Months Ended September 30, 2011				Nine Months Ended September 30, 2010
Impaired Loans and Finance Leases With No Allowance Recorded(1)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Customer
North America	$	93	$	3	$	29	$	1
Europe		6		-		7		-
Asia Pacific		13		1		7		1
Latin America		8		-		4		-
Global Power Finance		223		1		74		-
Total	$	343	$	5	$	121	$	2

Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	160	$	4	$	292	$	9
Europe		53		2		90		3
Asia Pacific		22		1		44		2
Latin America		44		2		34		2
Global Power Finance		79		-		13		-
Total	$	358	$	9	$	473	$	16

Total Impaired Loans and Finance Leases
Customer
North America	$	253	$	7	$	321	$	10
Europe		59		2		97		3
Asia Pacific		35		2		51		3
Latin America		52		2		38		2
Global Power Finance		302		1		87		-
Total	$	701	$	14	$	594	$	18

For all classes, we consider a loan or finance lease past due if any portion of a contractual payment is due and unpaid for more than 30 days. Recognition of income is suspended and the loan or finance lease is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due). Accrual is resumed, and previously suspended income is recognized, when the loan or finance lease becomes contractually current and/or collection doubts are removed.

(Millions of dollars)
	September 30, 2011
		31-60		61-90		91+	Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	90	$	31	$	139	$	260	$	5,290	$	5,550	$	13
Europe		31		18		113		162		2,142		2,304		10
Asia Pacific		59		23		53		135		4,307		4,442		16
Latin America		45		17		104		166		2,267		2,433		-
Global Power Finance		52		16		111		179		2,739		2,918		10
Dealer
North America		-		-		-		-		2,377		2,377		-
Europe		-		-		-		-		328		328		-
Asia Pacific		-		-		-		-		433		433		-
Latin America		-		-		-		-		708		708		-
Global Power Finance		-		-		-		-		-		-		-
Caterpillar Purchased Receivables
North America		16		4		6		26		1,486		1,512		6
Europe		1		-		-		1		440		441		-
Asia Pacific		-		-		-		-		391		391		-
Latin America		-		-		-		-		407		407		-
Global Power Finance		-		-		-		-		27		27		-
Total	$	294	$	109	$	526	$	929	$	23,342	$	24,271	$	55

(Millions of dollars)
	December 31, 2010
		31-60		61-90		91+	Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	139	$	44	$	228	$	411	$	6,037	$	6,448	$	27
Europe		27		12		106		145		2,365		2,510		26
Asia Pacific		63		17		37		117		3,412		3,529		12
Latin America		44		16		144		204		2,222		2,426		1
Global Power Finance		18		17		54		89		2,978		3,067		25
Dealer
North America		-		-		-		-		1,993		1,993		-
Europe		-		-		-		-		344		344		-
Asia Pacific		-		-		-		-		296		296		-
Latin America		-		-		-		-		659		659		-
Global Power Finance		-		-		-		-		19		19		-
Caterpillar Purchased Receivables
North America		3		1		1		5		1,285		1,290		1
Europe		1		-		-		1		109		110		-
Asia Pacific		-		-		-		-		215		215		-
Latin America		-		-		-		-		173		173		-
Global Power Finance		3		-		-		3		24		27		-
Total	$	298	$	107	$	570	$	975	$	22,131	$	23,106	$	92

(Millions of dollars)
	September 30, 2011
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	357		$	5	$	1	$	363
Receivables written off		(159	)		-		-		(159	)
Recoveries on receivables previously written off		39			-		-		39
Provision for credit losses		119			1		2		122
Adjustment due to sale of receivables		(1	)		-		-		(1	)
Foreign currency translation adjustment		(2	)		-		-		(2	)
Balance at end of period	$	353		$	6	$	3	$	362

Individually evaluated for impairment	$	65		$	-	$	-	$	65
Collectively evaluated for impairment		288			6		3		297
Ending Balance	$	353		$	6	$	3	$	362

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	604		$	-	$	-	$	604
Collectively evaluated for impairment		17,043			3,846		2,778		23,667
Ending Balance	$	17,647		$	3,846	$	2,778	$	24,271

(Millions of dollars)
Allowance for Credit Losses:	December 31, 2010
Balance at beginning of year	$	377
Adjustment to adopt consolidation of variable-interest entities		18
Receivables written off		(288	)
Recoveries on receivables previously written off		51
Provision for credit losses		205
Adjustment due to sale of receivables		-
Foreign currency translation adjustment		-
Balance at end of year	$	363

	December 31, 2010
	Customer			Dealer		Caterpillar Purchased Receivables		Total
Individually evaluated for impairment	$	79		$	-	$	-	$	79
Collectively evaluated for impairment		278			5		1		284
Ending Balance	$	357		$	5	$	1	$	363

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	641		$	-	$	-	$	641
Collectively evaluated for impairment		17,339			3,311		1,815		22,465
Ending Balance	$	17,980		$	3,311	$	1,815	$	23,106

The credit quality of finance receivables is reviewed on a monthly basis. Credit quality indicators include performing and non-performing. Non-performing is defined as finance receivables currently over 120 days past due and/or on non-accrual status or in bankruptcy. Finance receivables not meeting the criteria listed above are considered performing. Non-performing receivables have the highest probability for credit loss. The allowance for credit losses attributable to non-performing receivables is based on the most probable source of repayment, which is normally the liquidation of collateral. In determining collateral value, we estimate the current fair market value of the collateral and consider credit enhancements such as additional collateral and third-party guarantees.

(Millions of dollars)
	September 30, 2011
	Customer		Dealer		Caterpillar Purchased Receivables		Total
Performing
North America	$	5,400	$	2,377	$	1,512	$	9,289
Europe		2,192		328		441		2,961
Asia Pacific		4,403		433		391		5,227
Latin America		2,317		708		407		3,432
Global Power Finance		2,707		-		27		2,734
Total Performing	$	17,019	$	3,846	$	2,778	$	23,643
Non-Performing
North America	$	150	$	-	$	-	$	150
Europe		112		-		-		112
Asia Pacific		39		-		-		39
Latin America		116		-		-		116
Global Power Finance		211		-		-		211
Total Non-Performing	$	628	$	-	$	-	$	628
Total Performing and Non-Performing
North America	$	5,550	$	2,377	$	1,512	$	9,439
Europe		2,304		328		441		3,073
Asia Pacific		4,442		433		391		5,266
Latin America		2,433		708		407		3,548
Global Power Finance		2,918		-		27		2,945
Total	$	17,647	$	3,846	$	2,778	$	24,271

(Millions of dollars)
	December 31, 2010
	Customer		Dealer		Caterpillar Purchased Receivables		Total
Performing
North America	$	6,231	$	1,993	$	1,290	$	9,514
Europe		2,421		344		110		2,875
Asia Pacific		3,498		296		215		4,009
Latin America		2,287		659		173		3,119
Global Power Finance		2,904		19		27		2,950
Total Performing	$	17,341	$	3,311	$	1,815	$	22,467
Non-Performing
North America	$	217	$	-	$	-	$	217
Europe		89		-		-		89
Asia Pacific		31		-		-		31
Latin America		139		-		-		139
Global Power Finance		163		-		-		163
Total Non-Performing	$	639	$	-	$	-	$	639
Total Performing and Non-Performing
North America	$	6,448	$	1,993	$	1,290	$	9,731
Europe		2,510		344		110		2,964
Asia Pacific		3,529		296		215		4,040
Latin America		2,426		659		173		3,258
Global Power Finance		3,067		19		27		3,113
Total	$	17,980	$	3,311	$	1,815	$	23,106

A restructuring of a loan or finance lease receivable constitutes a troubled debt restructuring (TDR) when the lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may include extended contract maturities, inclusion of interest only periods, below market interest rates, and extended skip payment periods.

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 collateral. In determining collateral value, we estimate the current fair market value of the collateral and factor in credit enhancements such as additional collateral and third-party guarantees.

(Dollars in millions)
	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	Number of Contracts		Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts		Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America		14	$	2	$	2		53	$	11	$	11
Europe		-		-		-		6		7		7
Asia Pacific		-		-		-		-		-		-
Latin America		-		-		-		12		10		10
Global Power Finance (1) (2)		-		-		-		31		113		113
Total(3)		14	$	2	$	2		102	$	141	$	141

(1) During the nine months ended September 30, 2011, $11 million of additional funds were subsequently loaned to a borrower whose terms had been modified in a TDR. The $11 million of additional funds is not reflected in the table above. At September 30, 2011, remaining commitments to lend additional funds to a borrower whose terms have been modified in a TDR were $2 million.

(Dollars in millions)

	Three Months Ended September 30, 2011				Nine Months Ended September 30, 2011
	Number of Contracts		Post-TDR Recorded Investment		Number of Contracts		Post-TDR Recorded Investment
Customer
North America		3	$	16		44	$	25
Europe		-		-		1		1
Asia Pacific		-		-		-		-
Latin America		7		4		7		4
Global Power Finance		5		65		14		70
Total		15	$	85		66	$	100

We securitize certain finance receivables relating to our retail installment sale contracts and finance leases as part of our asset-backed securitization program. These transactions provide a source of liquidity and allow for better management of our balance sheet capacity. Included in our other managed assets are individual loans and leases that have been sold to third parties to mitigate the concentration of credit risk with certain customers. None of the receivables that are directly or indirectly sold or transferred to third parties in any of the foregoing transactions are available to pay our creditors.

We periodically transfer certain finance receivables relating to our retail installment sale contracts and finance leases to special purpose entities (SPEs) as part of our asset-backed securitization program. The SPEs have limited purposes and generally are only permitted to purchase the finance receivables, issue asset-backed securities and make payments on the securities. The SPEs only issue a single series of securities and generally are dissolved when those securities have been paid in full. The SPEs issue debt to pay for the finance receivables they acquire from us. The primary source for repayment of the debt is the cash flows generated from the finance receivables owned by the SPEs. The assets of the SPEs are legally isolated and are not available to pay our creditors. We retain interests in our securitization transactions, including subordinated certificates issued by the SPEs, rights to cash reserves and residual interests. For bankruptcy analysis purposes, we sold the finance receivables to the SPEs in a true sale and the SPEs are separate legal entities. The investors and the SPEs have no recourse to any of our other assets for failure of debtors to pay when due.

In accordance with the new consolidation accounting guidance adopted on January 1, 2010, these SPEs were concluded to be VIEs. We determined that we were the primary beneficiary based on our power to direct activities through our role as servicer and our obligation to absorb losses and right to receive benefits and therefore consolidated the entities using the carrying amounts of the SPEs’ assets and liabilities.

On April 25, 2011, we exercised a cleanup call on our only outstanding asset-backed securitization transaction. As a result, we had no assets or liabilities related to a consolidated SPE as of September 30, 2011. The restricted assets (Finance leases and installment sale contracts - Retail, Unearned income, Allowance for credit losses and Other assets) of the consolidated SPE totaled $136 million at December 31, 2010. The liabilities (Accrued expenses and Current maturities of long-term debt) of the consolidated SPE totaled $73 million at December 31, 2010.

We also sell individual leases and finance receivables to third parties with limited or no recourse to us to either reduce our concentration of credit risk related to certain customers or as an additional source of liquidity. In accordance with accounting for transfers and servicing of financial assets, the transfers to the third parties are accounted for as sales. We maintain servicing responsibilities for these third-party assets, which totaled $180 million and $225 million as of September 30, 2011 and December 31, 2010, respectively. Since we do not receive a servicing fee for these assets, a servicing liability is recorded. As of September 30, 2011 and December 31, 2010, these liabilities were not significant.

We purchase trade receivables from Caterpillar entities at a discount. The discount is an estimate of the amount of financing revenue that would be earned at a market rate on these trade receivables over their expected life. The discount is amortized into revenue on an effective yield basis over the life of the receivables and recognized as Wholesale finance revenue. Amortized discounts for the trade receivables were $55 million and $35 million for the three months ended September 30, 2011 and 2010, respectively, and $157 million and $95 million for the nine months ended September 30, 2011 and 2010, respectively. In the Consolidated Statements of Cash Flows, collection of the discount is included in investing activities as the receivables are collected.