Financing Activities

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Financing Activities

FINANCING ACTIVITIES

A. Contractual Maturities of Finance Receivables

The contractual maturities and future scheduled payments of outstanding receivables, as of December 31, 2013, were:

(Millions of dollars)
Amounts due in	Retail Installment Sale Contracts			Wholesale Installment Sale  Contracts			Retail Finance  Leases			Wholesale Finance  Leases			Retail Notes			Wholesale Notes			Total
2014	$	2,218		$	145		$	3,277		$	84		$	3,628		$	3,749		$	13,101
2015	1,709			24			2,215			64			2,263			231			6,506
2016	1,156			14			1,314			37			1,758			150			4,429
2017	626			3			595			17			1,475			18			2,734
2018	215			—			207			9			669			5			1,105
Thereafter	29			—			139			—			1,070			—			1,238
	5,953			186			7,747			211			10,863			4,153			29,113
Guaranteed residual value	—			—			386			58			—			—			444
Unguaranteed residual value	—			—			496			25			—			—			521
Less: Unearned income	(100		)	(1		)	(739		)	(22		)	(89		)	(25		)	(976		)
Total	$	5,853		$	185		$	7,890		$	272		$	10,774		$	4,128		$	29,102
Less: Allowance for credit losses																			(378		)
Total net finance receivables																			$	28,724

Receivables generally may be repaid or refinanced without penalty prior to contractual maturity, and we also sell receivables.  Accordingly, this presentation should not be regarded as a forecast of future cash collections.

B. Credit Quality of Financing Receivables and Allowance for Credit Losses

We apply a systematic methodology to determine the Allowance for credit losses for finance receivables. Based upon our analysis of credit losses and risk factors, our portfolio segments are as follows:

• Customer - Finance receivables with retail customers.

• Dealer - Finance receivables with Caterpillar dealers.

• Caterpillar Purchased Receivables - Trade receivables purchased from Caterpillar entities.

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 for credit losses, are as follows:

• North America - Finance receivables originated in the United States or Canada.

• Europe - Finance receivables originated in Europe, Africa, Middle East and the Commonwealth of Independent States.

• Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, South Korea and Southeast Asia.

• Mining - Finance receivables related to large mining customers worldwide.

• Latin America - Finance receivables originated in Central and South American countries and Mexico.

• Caterpillar 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.

Impaired loans and finance leases

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 except in locations where local regulatory requirements dictate a different method, or instances in which relevant information is known that warrants placing the loan or finance lease on non-accrual status). 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 December 31, 2013, 2012 and 2011, 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 zero during 2013, 2012 and 2011.

Individually impaired loans and finance leases for the Customer portfolio segment were as follows:

(Millions of dollars)
	As of December 31, 2013						As of December 31, 2012
Impaired Loans and Finance Leases With No Allowance Recorded	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Customer
North America	$	23	$	22	$	—	$	28	$	27	$	—
Europe	48		47		—		45		45		—
Asia/Pacific	7		7		—		2		2		—
Mining	134		134		—		1		1		—
Latin America	11		11		—		7		7		—
Caterpillar Power Finance	223		222		—		295		295		—
Total	$	446	$	443	$	—	$	378	$	377	$	—
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	13	$	13	$	4	$	25	$	23	$	7
Europe	20		19		7		28		26		11
Asia/Pacific	17		17		2		19		19		4
Mining	—		—		—		—		—		—
Latin America	23		23		6		30		30		8
Caterpillar Power Finance	110		106		51		113		109		24
Total	$	183	$	178	$	70	$	215	$	207	$	54
Total Impaired Loans and Finance Leases
Customer
North America	$	36	$	35	$	4	$	53	$	50	$	7
Europe	68		66		7		73		71		11
Asia/Pacific	24		24		2		21		21		4
Mining	134		134		—		1		1		—
Latin America	34		34		6		37		37		8
Caterpillar Power Finance	333		328		51		408		404		24
Total	$	629	$	621	$	70	$	593	$	584	$	54

(Millions of dollars)
	As of December 31, 2011
Impaired Loans and Finance Leases With No Allowance Recorded	Recorded Investment		Unpaid Principal Balance		Related Allowance
Customer
North America	$	83	$	80	$	—
Europe	47		46		—
Asia/Pacific	4		4		—
Mining	8		8		—
Latin America	9		9		—
Caterpillar Power Finance	175		170		—
Total	$	326	$	317	$	—
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	23	$	20	$	6
Europe	22		21		8
Asia/Pacific	9		9		3
Mining	—		—		—
Latin America	19		19		4
Caterpillar Power Finance	85		85		13
Total	$	158	$	154	$	34
Total Impaired Loans and Finance Leases
Customer
North America	$	106	$	100	$	6
Europe	69		67		8
Asia/Pacific	13		13		3
Mining	8		8		—
Latin America	28		28		4
Caterpillar Power Finance	260		255		13
Total	$	484	$	471	$	34

(Millions of dollars)
	Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
Impaired Loans and Finance Leases With No Allowance Recorded	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Customer
North America	$	25	$	3	$	50	$	3	$	91	$	4
Europe	49		1		45		1		11		—
Asia/Pacific	4		—		3		—		5		—
Mining	61		3		8		—		8		1
Latin America	11		—		6		—		9		1
Caterpillar Power Finance	271		5		220		2		221		6
Total	$	421	$	12	$	332	$	6	$	345	$	12
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	18	$	1	$	25	$	1	$	56	$	2
Europe	22		1		27		1		20		—
Asia/Pacific	18		1		15		1		11		1
Mining	1		—		—		—		—		—
Latin America	44		2		27		2		11		—
Caterpillar Power Finance	135		1		94		—		61		—
Total	$	238	$	6	$	188	$	5	$	159	$	3
Total Impaired Loans and Finance Leases
Customer
North America	$	43	$	4	$	75	$	4	$	147	$	6
Europe	71		2		72		2		31		—
Asia/Pacific	22		1		18		1		16		1
Mining	62		3		8		—		8		1
Latin America	55		2		33		2		20		1
Caterpillar Power Finance	406		6		314		2		282		6
Total	$	659	$	18	$	520	$	11	$	504	$	15

Non-accrual and past due loans and finance leases

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 except in locations where local regulatory requirements dictate a different method, or instances in which relevant information is known that warrants placing the loan or finance lease on non-accrual status). Accrual is resumed and previously suspended income is recognized, when the loan or finance lease becomes contractually current and/or collection doubts are removed.

As of December 31, 2013, 2012 and 2011, there were no loans or finance leases on non-accrual status for the Dealer or Caterpillar Purchased Receivables portfolio segments.

The investment in customer loans and finance leases on non-accrual status as of December 31, was as follows: 

(Millions of dollars)
	2013		2012		2011
Customer
North America	$	26	$	59	$	112
Europe	28		38		58
Asia/Pacific	50		36		24
Mining	23		12		12
Latin America	179		148		108
Caterpillar Power Finance	119		220		158
Total	$	425	$	513	$	472

Aging related to loans and finance leases was as follows:

(Millions of dollars)
	December 31, 2013
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	37	$	12	$	24	$	73	$	6,522	$	6,595	$	—
Europe	26		15		29		70		2,805		2,875		6
Asia/Pacific	55		46		59		160		3,174		3,334		11
Mining	3		—		12		15		2,128		2,143		—
Latin America	54		25		165		244		2,474		2,718		5
Caterpillar Power Finance	55		30		60		145		2,946		3,091		—
Dealer
North America	—		—		—		—		3,034		3,034		—
Europe	—		—		—		—		569		569		—
Asia/Pacific	—		—		—		—		706		706		—
Mining	—		—		—		—		5		5		—
Latin America	—		—		—		—		940		940		—
Caterpillar Power Finance	—		—		—		—		—		—		—
Caterpillar Purchased Receivables
North America	26		5		2		33		1,539		1,572		2
Europe	2		1		1		4		423		427		—
Asia/Pacific	—		—		—		—		468		468		—
Mining	—		—		—		—		—		—		—
Latin America	—		—		—		—		616		616		—
Caterpillar Power Finance	—		—		1		1		8		9		1
Total	$	258	$	134	$	353	$	745	$	28,357	$	29,102	$	25

(Millions of dollars)
	December 31, 2012
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	35	$	8	$	52	$	95	$	5,889	$	5,984	$	—
Europe	23		9		36		68		2,487		2,555		6
Asia/Pacific	53		19		54		126		3,354		3,480		18
Mining	—		1		12		13		1,960		1,973		—
Latin America	62		19		138		219		2,500		2,719		—
Caterpillar Power Finance	15		14		126		155		3,017		3,172		4
Dealer
North America	—		—		—		—		2,931		2,931		—
Europe	—		—		—		—		652		652		—
Asia/Pacific	—		—		—		—		945		945		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		—		—		1,057		1,057		—
Caterpillar Power Finance	—		—		—		—		—		—		—
Caterpillar Purchased Receivables
North America	17		3		2		22		1,334		1,356		2
Europe	1		—		—		1		331		332		—
Asia/Pacific	—		—		—		—		868		868		—
Mining	—		—		—		—		—		—		—
Latin America	—		—		—		—		547		547		—
Caterpillar Power Finance	—		—		1		1		10		11		1
Total	$	206	$	73	$	421	$	700	$	27,883	$	28,583	$	31

(Millions of dollars)
	December 31, 2011
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	75	$	39	$	111	$	225	$	5,448	$	5,673	$	9
Europe	27		11		57		95		2,129		2,224		10
Asia/Pacific	48		23		38		109		3,102		3,211		14
Mining	—		—		12		12		1,473		1,485		—
Latin America	32		15		99		146		2,339		2,485		—
Caterpillar Power Finance	14		16		125		155		2,765		2,920		25
Dealer
North America	—		—		2		2		2,412		2,414		2
Europe	—		—		—		—		334		334		—
Asia/Pacific	—		—		—		—		516		516		—
Mining	—		—		—		—		—		—		—
Latin America	—		—		—		—		709		709		—
Caterpillar Power Finance	—		—		—		—		—		—		—
Caterpillar Purchased Receivables
North America	25		4		6		35		1,801		1,836		6
Europe	3		—		—		3		399		402		—
Asia/Pacific	—		—		—		—		465		465		—
Mining	—		—		—		—		—		—		—
Latin America	—		—		—		—		422		422		—
Caterpillar Power Finance	—		—		—		—		29		29		—
Total	$	224	$	108	$	450	$	782	$	24,343	$	25,125	$	66

Allowance for credit losses

The Allowance for credit losses as of December 31, 2013 was $378 million or 1.30 percent of net finance receivables compared with $426 million or 1.49 percent as of December 31, 2012.  The overall decrease of $48 million in Allowance for credit losses during the year reflects a $55 million decrease associated with the lower allowance rate, partially offset by a $7 million increase due to an increase in our net finance receivables portfolio. The lower allowance rate reflects write-offs taken in 2013, primarily related to our European marine portfolio that had been previously provided for in the Allowance for credit losses, favorable changes in our estimated probabilities of default (due to improved financial health of our customers), continued refinements of estimated loss emergence periods and general improvement in the economic conditions of the industries we serve.

The Allowance for credit losses as of December 31, 2012 was $426 million or 1.49 percent of net finance receivables compared with $369 million or 1.47 percent as of December 31, 2011. The overall increase of $57 million in Allowance for credit losses during the year reflects a $51 million increase in allowance due to an increase in our net finance receivables portfolio and a $6 million increase associated with the higher allowance rate.

An analysis of the Allowance for credit losses during 2013, 2012 and 2011 was as follows:

(Millions of dollars)
	December 31, 2013
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	414		$	9	$	3	$	426
Receivables written off	(179		)	—		—		(179		)
Recoveries on receivables previously written off	56			—		—		56
Provision for credit losses	83			1		—		84
Adjustment due to sale of receivables	(3		)	—		—		(3		)
Foreign currency translation adjustment	(6		)	—		—		(6		)
Balance at end of year	$	365		$	10	$	3	$	378
Individually evaluated for impairment	$	70		$	—	$	—	$	70
Collectively evaluated for impairment	295			10		3		308
Ending Balance	$	365		$	10	$	3	$	378
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	629		$	—	$	—	$	629
Collectively evaluated for impairment	20,127			5,254		3,092		28,473
Ending Balance	$	20,756		$	5,254	$	3,092	$	29,102

(Millions of dollars)
	December 31, 2012
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	360		$	6	$	3	$	369
Receivables written off	(149		)	—		—		(149		)
Recoveries on receivables previously written off	47			—		—		47
Provision for credit losses	157			3		—		160
Adjustment due to sale of receivables	(2		)	—		—		(2		)
Foreign currency translation adjustment	1			—		—		1
Balance at end of year	$	414		$	9	$	3	$	426
Individually evaluated for impairment	$	54		$	—	$	—	$	54
Collectively evaluated for impairment	360			9		3		372
Ending Balance	$	414		$	9	$	3	$	426
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	593		$	—	$	—	$	593
Collectively evaluated for impairment	19,290			5,586		3,114		27,990
Ending Balance	$	19,883		$	5,586	$	3,114	$	28,583

(Millions of dollars)
	December 31, 2011
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	357		$	5	$	1	$	363
Receivables written off	(210		)	—		—		(210		)
Recoveries on receivables previously written off	52			—		—		52
Provision for credit losses	167			1		2		170
Adjustment due to sale of receivables	(3		)	—		—		(3		)
Foreign currency translation adjustment	(3		)	—		—		(3		)
Balance at end of year	$	360		$	6	$	3	$	369
Individually evaluated for impairment	$	34		$	—	$	—	$	34
Collectively evaluated for impairment	326			6		3		335
Ending Balance	$	360		$	6	$	3	$	369
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	484		$	—	$	—	$	484
Collectively evaluated for impairment	17,514			3,973		3,154		24,641
Ending Balance	$	17,998		$	3,973	$	3,154	$	25,125

Credit quality of finance receivables

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 less selling costs. In addition, consideration is given to credit enhancements such as additional collateral and contractual third-party guarantees in determining the Allowance for credit losses attributable to non-performing receivables.

The recorded investment in performing and non-performing finance receivables was as follows:

(Millions of dollars)
	December 31, 2013
	Customer		Dealer		Caterpillar Purchased Receivables		Total
Performing
North America	$	6,569	$	3,034	$	1,572	$	11,175
Europe	2,847		569		427		3,843
Asia/Pacific	3,284		706		468		4,458
Mining	2,120		5		—		2,125
Latin America	2,539		940		616		4,095
Caterpillar Power Finance	2,972		—		9		2,981
Total Performing	$	20,331	$	5,254	$	3,092	$	28,677
Non-Performing
North America	$	26	$	—	$	—	$	26
Europe	28		—		—		28
Asia/Pacific	50		—		—		50
Mining	23		—		—		23
Latin America	179		—		—		179
Caterpillar Power Finance	119		—		—		119
Total Non-Performing	$	425	$	—	$	—	$	425
Total Performing and Non-Performing
North America	$	6,595	$	3,034	$	1,572	$	11,201
Europe	2,875		569		427		3,871
Asia/Pacific	3,334		706		468		4,508
Mining	2,143		5		—		2,148
Latin America	2,718		940		616		4,274
Caterpillar Power Finance	3,091		—		9		3,100
Total	$	20,756	$	5,254	$	3,092	$	29,102

(Millions of dollars)
	December 31, 2012
	Customer		Dealer		Caterpillar Purchased Receivables		Total
Performing
North America	$	5,925	$	2,931	$	1,356	$	10,212
Europe	2,517		652		332		3,501
Asia/Pacific	3,444		945		868		5,257
Mining	1,961		1		—		1,962
Latin America	2,571		1,057		547		4,175
Caterpillar Power Finance	2,952		—		11		2,963
Total Performing	$	19,370	$	5,586	$	3,114	$	28,070
Non-Performing
North America	$	59	$	—	$	—	$	59
Europe	38		—		—		38
Asia/Pacific	36		—		—		36
Mining	12		—		—		12
Latin America	148		—		—		148
Caterpillar Power Finance	220		—		—		220
Total Non-Performing	$	513	$	—	$	—	$	513
Total Performing and Non-Performing
North America	$	5,984	$	2,931	$	1,356	$	10,271
Europe	2,555		652		332		3,539
Asia/Pacific	3,480		945		868		5,293
Mining	1,973		1		—		1,974
Latin America	2,719		1,057		547		4,323
Caterpillar Power Finance	3,172		—		11		3,183
Total	$	19,883	$	5,586	$	3,114	$	28,583

(Millions of dollars)
	December 31, 2011
	Customer		Dealer		Caterpillar Purchased Receivables		Total
Performing
North America	$	5,561	$	2,414	$	1,836	$	9,811
Europe	2,166		334		402		2,902
Asia/Pacific	3,187		516		465		4,168
Mining	1,473		—		—		1,473
Latin America	2,377		709		422		3,508
Caterpillar Power Finance	2,762		—		29		2,791
Total Performing	$	17,526	$	3,973	$	3,154	$	24,653
Non-Performing
North America	$	112	$	—	$	—	$	112
Europe	58		—		—		58
Asia/Pacific	24		—		—		24
Mining	12		—		—		12
Latin America	108		—		—		108
Caterpillar Power Finance	158		—		—		158
Total Non-Performing	$	472	$	—	$	—	$	472
Total Performing and Non-Performing
North America	$	5,673	$	2,414	$	1,836	$	9,923
Europe	2,224		334		402		2,960
Asia/Pacific	3,211		516		465		4,192
Mining	1,485		—		—		1,485
Latin America	2,485		709		422		3,616
Caterpillar Power Finance	2,920		—		29		2,949
Total	$	17,998	$	3,973	$	3,154	$	25,125

Troubled debt restructurings

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 less selling costs. In addition, consideration is given to credit enhancements such as additional collateral and contractual third-party guarantees in determining the Allowance for credit losses attributable to TDRs.

There were no loans or finance lease receivables modified as TDRs during the years ended December 31, 2013, 2012 and 2011 for the Dealer or Caterpillar Purchased Receivables portfolio segments.

Loans and finance lease receivables in the Customer portfolio segment modified as TDRs during the years ended December 31, 2013, 2012 and 2011, were as follows:

(Dollars in millions)
	Year Ended December 31, 2013
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	62	$	9	$	9
Europe	51	7		7
Asia/Pacific	3	1		1
Mining	45	123		123
Latin America	16	2		2
Caterpillar Power Finance(1)	17	153		157
Total(2)	194	$	295	$	299
	Year Ended December 31, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	98	$	15	$	15
Europe	21	8		8
Asia/Pacific	12	3		3
Latin America	41	5		5
Caterpillar Power Finance(1)	27	253		253
Total(2)	199	$	284	$	284
	Year Ended December 31, 2011
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	71	$	13	$	13
Europe	7	44		44
Latin America	12	10		10
Caterpillar Power Finance(1)	35	117		117
Total(2)	125	$	184	$	184

⁽¹⁾ During the years ended December 31, 2013, 2012 and 2011, $25 million, $24 million and $15 million, respectively, of additional funds were subsequently loaned to a borrower whose terms had been modified in a TDR.  The $25 million, $24 million and $15 million of additional funds are not reflected in the tables above as no incremental modifications have been made with the borrower during the periods presented.  At December 31, 2013, remaining commitments to lend additional funds to a borrower whose terms have been modified in a TDR were $6 million.

⁽²⁾ Modifications include extended contract maturities, inclusion of interest only periods, below market interest rates, and extended skip payment periods.

TDRs in the Customer portfolio segment with a payment default during the years ended December 31, 2013, 2012 and 2011, which had been modified within twelve months prior to the default date, were as follows:

(Dollars in millions)
	Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	19	$	4	49	$	4	48	$	26
Europe	5	—		—	—		1	1
Asia/Pacific	—	—		2	1		—	—
Latin America	—	—		—	—		7	4
Caterpillar Power Finance	2	3		16	21		14	70
Total	26	$	7	67	$	26	70	$	101

C. Transfers of Receivables

Securitized retail installment sale contracts and finance leases

We have periodically transferred 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. 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 these securitization SPEs.

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 our securitization program as of December 31, 2013, 2012 or 2011.

Off-balance sheet managed assets

Certain finance receivables and equipment on operating leases are sold to third parties with limited or no recourse to us to mitigate the concentration of credit risk with certain customers and are generally accounted for as sales. In 2013, 2012 and 2011, we received $243 million, $206 million and $207 million, respectively, of cash proceeds and recognized pre-tax gains of $4 million,$3 million and $4 million, respectively, from the sale of such assets.  We typically maintain servicing responsibilities for these third-party assets, which totaled $322 million,$291 million and $235 million as of December 31, 2013, 2012 and 2011, respectively.  Because we do not receive a servicing fee for these assets, a servicing liability is recorded.  As of December 31, 2013, 2012 and 2011, these liabilities were not material. 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.

Total off-balance sheet managed assets as of December 31, were as follows:

(Millions of dollars)
	2013		2012		2011
Retail notes receivable	$	126	$	49	$	39
Retail finance leases	103		116		133
Operating leases	61		60		15
Retail installment sale contracts	32		66		48
Total off-balance sheet managed assets	$	322	$	291	$	235

D. Purchases of Trade Receivables from Caterpillar Entities

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. For the years ended December 31, 2013, 2012 and 2011, amortized discounts for the trade receivables were $233 million, $241 million and $212 million, respectively.  In the Consolidated Statements of Cash Flows, collection of the discount is included in investing activities as the receivables are collected.