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Finance Receivables (Tables)
 6 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Summary of finance receivables included in the Consolidated Statements of Financial Position
A summary of finance receivables included in the Consolidated Statements of Financial Position was as follows:
(Millions of dollars)
 
June 30,
2018
 
December 31,
2017
Finance leases and installment sale contracts – Retail
 
$
15,340

 
$
14,647

Retail notes receivable
 
8,736

 
9,417

Wholesale notes receivable
 
4,874

 
4,161

Finance leases and installment sale contracts – Wholesale
 
125

 
119

 
 
29,075

 
28,344

Less: Unearned income
 
(920
)
 
(853
)
Recorded investment in finance receivables
 
28,155

 
27,491

Less: Allowance for credit losses
 
(416
)
 
(365
)
Total finance receivables, net(1)
 
$
27,739


$
27,126

 
 
 
 
 

(1) Includes $240 million of finance receivables classified as held for sale as of June 30, 2018.

Allowance for credit losses and recorded investment in finance receivables
An analysis of the allowance for credit losses was as follows:
(Millions of dollars)
 
 
 
 
 
 
 
 
June 30, 2018
Allowance for Credit Losses:
Customer
 
Dealer
 
Caterpillar
Purchased
Receivables
 
Total
Balance at beginning of year
$
353

 
$
9

 
$
3

 
$
365

Receivables written off
(130
)
 
—

 
—

 
(130
)
Recoveries on receivables previously written off
20

 
—

 
—

 
20

Provision for credit losses
170

 
(1
)
 
1

 
170

Adjustment due to sale of receivables
(3
)
 
—

 
—

 
(3
)
Foreign currency translation adjustment
(6
)
 
—

 
—

 
(6
)
Balance at end of period
$
404

 
$
8

 
$
4

 
$
416

 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
205

 
$
—

 
$
—

 
$
205

Collectively evaluated for impairment
199

 
8

 
4

 
211

Ending Balance
$
404

 
$
8

 
$
4

 
$
416

 
 
 
 
 
 
 
 
Recorded Investment in Finance Receivables:
 

 
 

 
 

 
 

Individually evaluated for impairment
$
828

 
$
—

 
$
—

 
$
828

Collectively evaluated for impairment
18,922

 
4,299

 
4,106

 
27,327

Ending Balance
$
19,750

 
$
4,299

 
$
4,106

 
$
28,155

 
 
 
 
 
 
 
 

(Millions of dollars)
 
 
 
 
 
 
 
 
December 31, 2017
Allowance for Credit Losses:
Customer
 
Dealer
 
Caterpillar
Purchased
Receivables
 
Total
Balance at beginning of year
$
331

 
$
10

 
$
2

 
$
343

Receivables written off
(157
)
 
—

 
—

 
(157
)
Recoveries on receivables previously written off
43

 
—

 
—

 
43

Provision for credit losses
129

 
(1
)
 
1

 
129

Adjustment due to sale of receivables
(1
)
 
—

 
—

 
(1
)
Foreign currency translation adjustment
8

 
—

 
—

 
8

Balance at end of year
$
353

 
$
9

 
$
3

 
$
365

 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
149

 
$
—

 
$
—

 
$
149

Collectively evaluated for impairment
204

 
9

 
3

 
216

Ending Balance
$
353

 
$
9

 
$
3

 
$
365

 
 
 
 
 
 
 
 
Recorded Investment in Finance Receivables:
 

 
 

 
 

 
 

Individually evaluated for impairment
$
942

 
$
—

 
$
—

 
$
942

Collectively evaluated for impairment
18,847

 
4,241

 
3,461

 
26,549

Ending Balance
$
19,789

 
$
4,241

 
$
3,461

 
$
27,491

 
 
 
 
 
 
 
 
Aging related to finance receivables
The tables below summarize our recorded investment in finance receivables by aging category.
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2018
 
31-60
Days
Past Due
 
61-90
Days
Past Due
 
91+
Days
Past Due
 
Total
Past Due
 
Current
 
Recorded
Investment in
Finance
Receivables
 
91+ Still
Accruing
Customer
 

 
 

 
 

 
 
 
 
 
 
 
 
North America
$
72

 
$
16

 
$
43

 
$
131

 
$
8,138

 
$
8,269

 
$
7

Europe
31

 
12

 
106

 
149

 
2,659

 
2,808

 
42

Asia/Pacific
31

 
12

 
8

 
51

 
2,920

 
2,971

 
3

Mining
2

 
—

 
10

 
12

 
1,631

 
1,643

 
—

Latin America
42

 
17

 
102

 
161

 
1,418

 
1,579

 
—

Caterpillar Power Finance
37

 
61

 
250

 
348

 
2,132

 
2,480

 
30

Dealer
 

 
 

 
 

 
 
 
 
 
 
 
 
North America
—

 
—

 
—

 
—

 
2,374

 
2,374

 
—

Europe
—

 
—

 
—

 
—

 
546

 
546

 
—

Asia/Pacific
—

 
—

 
—

 
—

 
519

 
519

 
—

Mining
—

 
—

 
—

 
—

 
3

 
3

 
—

Latin America
—

 
1

 
77

 
78

 
777

 
855

 
—

Caterpillar Power Finance
—

 
—

 
—

 
—

 
2

 
2

 
—

Caterpillar Purchased Receivables(1)
 

 
 

 
 

 
 
 
 
 
 
 
 
North America
15

 
6

 
15

 
36

 
2,608

 
2,644

 
 
Europe
1

 
—

 
1

 
2

 
396

 
398

 
 
Asia/Pacific
—

 
2

 
3

 
5

 
739

 
744

 
 
Mining
—

 
—

 
—

 
—

 
—

 
—

 
 
Latin America
—

 
—

 
—

 
—

 
311

 
311

 
 
Caterpillar Power Finance
—

 
—

 
—

 
—

 
9

 
9

 
 
Total
$
231

 
$
127

 
$
615

 
$
973

 
$
27,182

 
$
28,155

 
$
82

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Caterpillar Purchased Receivables are non-interest bearing trade receivables purchased at a discount.
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
31-60
Days
Past Due
 
61-90
Days
Past Due
 
91+
Days
Past Due
 
Total
Past Due
 
Current
 
Recorded
Investment in
Finance
Receivables
 
91+ Still
Accruing
Customer
 

 
 

 
 

 
 
 
 
 
 
 
 
North America
$
71

 
$
15

 
$
42

 
$
128

 
$
8,040

 
$
8,168

 
$
8

Europe
21

 
10

 
46

 
77

 
2,718

 
2,795

 
13

Asia/Pacific
18

 
7

 
14

 
39

 
2,520

 
2,559

 
5

Mining
3

 
1

 
60

 
64

 
1,751

 
1,815

 
9

Latin America
37

 
55

 
142

 
234

 
1,546

 
1,780

 
—

Caterpillar Power Finance
20

 
32

 
144

 
196

 
2,476

 
2,672

 
1

Dealer
 

 
 

 
 

 
 
 
 
 
 
 
 
North America
—

 
—

 
—

 
—

 
2,394

 
2,394

 
—

Europe
—

 
—

 
—

 
—

 
417

 
417

 
—

Asia/Pacific
—

 
—

 
—

 
—

 
578

 
578

 
—

Mining
—

 
—

 
—

 
—

 
5

 
5

 
—

Latin America
—

 
72

 
—

 
72

 
773

 
845

 
—

Caterpillar Power Finance
—

 
—

 
—

 
—

 
2

 
2

 
—

Caterpillar Purchased Receivables(1)
 

 
 

 
 

 
 
 
 
 
 
 
 
North America
24

 
5

 
2

 
31

 
2,010

 
2,041

 
 
Europe
1

 
2

 
1

 
4

 
344

 
348

 
 
Asia/Pacific
—

 
—

 
—

 
—

 
630

 
630

 
 
Mining
—

 
—

 
—

 
—

 
—

 
—

 
 
Latin America
—

 
—

 
—

 
—

 
437

 
437

 
 
Caterpillar Power Finance
—

 
—

 
—

 
—

 
5

 
5

 
 
Total
$
195

 
$
199

 
$
451

 
$
845

 
$
26,646

 
$
27,491

 
$
36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Caterpillar Purchased Receivables are non-interest bearing trade receivables purchased at a discount.
Impaired finance receivables
Our recorded investment in impaired finance receivables and the related unpaid principal balances and allowance for the Customer portfolio segment were as follows:
(Millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2018
 
As of December 31, 2017
Impaired Finance Receivables With
No Allowance Recorded
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
North America
$
20

 
$
20

 
$
—

 
$
19

 
$
19

 
$
—

Europe
6

 
6

 
—

 
45

 
45

 
—

Asia/Pacific
30

 
30

 
—

 
34

 
33

 
—

Mining
38

 
38

 
—

 
121

 
121

 
—

Latin America
40

 
40

 
—

 
45

 
45

 
—

Caterpillar Power Finance
139

 
159

 
—

 
160

 
172

 
—

Total
$
273

 
$
293

 
$
—

 
$
424

 
$
435

 
$
—

Impaired Finance Receivables With
An Allowance Recorded
 

 
 

 
 

 
 

 
 

 
 

North America
$
49

 
$
47

 
$
23

 
$
44

 
$
43

 
$
17

Europe
48

 
47

 
24

 
9

 
8

 
5

Asia/Pacific
3

 
3

 
1

 
8

 
8

 
2

Mining
62

 
62

 
21

 
—

 
—

 
—

Latin America
50

 
50

 
37

 
95

 
106

 
42

Caterpillar Power Finance
343

 
345

 
99

 
362

 
365

 
83

Total
$
555

 
$
554

 
$
205

 
$
518

 
$
530

 
$
149

Total Impaired Finance Receivables
 

 
 

 
 

 
 

 
 

 
 

North America
$
69

 
$
67

 
$
23

 
$
63

 
$
62

 
$
17

Europe
54

 
53

 
24

 
54

 
53

 
5

Asia/Pacific
33

 
33

 
1

 
42

 
41

 
2

Mining
100

 
100

 
21

 
121

 
121

 
—

Latin America
90

 
90

 
37

 
140

 
151

 
42

Caterpillar Power Finance
482

 
504

 
99

 
522

 
537

 
83

Total
$
828

 
$
847

 
$
205

 
$
942

 
$
965

 
$
149

 
 
 
 
 
 
 
 
 
 
 
 
 
(Millions of dollars)
 
 
 
 
 
 
 
 
Three Months Ended
June 30, 2018
 
Three Months Ended
June 30, 2017
Impaired Finance Receivables With
No Allowance Recorded
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
North America
$
18

 
$
1

 
$
11

 
$
—

Europe
7

 
—

 
48

 
1

Asia/Pacific
29

 
—

 
30

 
1

Mining
45

 
1

 
130

 
3

Latin America
43

 
—

 
67

 
—

Caterpillar Power Finance
189

 
1

 
257

 
3

Total
$
331

 
$
3

 
$
543

 
$
8

Impaired Finance Receivables With
An Allowance Recorded
 

 
 

 
 

 
 

North America
$
56

 
$
—

 
$
52

 
$
1

Europe
48

 
1

 
5

 
—

Asia/Pacific
5

 
—

 
30

 
—

Mining
64

 
1

 
—

 
—

Latin America
65

 
1

 
107

 
1

Caterpillar Power Finance
356

 
3

 
125

 
—

Total
$
594

 
$
6

 
$
319

 
$
2

Total Impaired Finance Receivables
 

 
 

 
 

 
 

North America
$
74

 
$
1

 
$
63

 
$
1

Europe
55

 
1

 
53

 
1

Asia/Pacific
34

 
—

 
60

 
1

Mining
109

 
2

 
130

 
3

Latin America
108

 
1

 
174

 
1

Caterpillar Power Finance
545

 
4

 
382

 
3

Total
$
925

 
$
9

 
$
862

 
$
10

 
 
 
 
 
 
 
 

(Millions of dollars)
 
 
 
 
 
 
 
 
Six Months Ended
June 30, 2018
 
Six Months Ended
June 30, 2017
Impaired Finance Receivables With
No Allowance Recorded
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
North America
$
18

 
$
1

 
$
11

 
$
—

Europe
23

 
—

 
48

 
1

Asia/Pacific
31

 
1

 
18

 
1

Mining
78

 
2

 
129

 
4

Latin America
44

 
1

 
70

 
1

Caterpillar Power Finance
178

 
3

 
258

 
6

Total
$
372

 
$
8

 
$
534

 
$
13

Impaired Finance Receivables With
An Allowance Recorded
 

 
 

 
 

 
 

North America
$
53

 
$
1

 
$
56

 
$
1

Europe
32

 
1

 
6

 
—

Asia/Pacific
6

 
—

 
38

 
1

Mining
36

 
1

 
—

 
—

Latin America
76

 
2

 
101

 
2

Caterpillar Power Finance
355

 
4

 
96

 
1

Total
$
558

 
$
9

 
$
297

 
$
5

Total Impaired Finance Receivables
 

 
 

 
 

 
 

North America
$
71

 
$
2

 
$
67

 
$
1

Europe
55

 
1

 
54

 
1

Asia/Pacific
37

 
1

 
56

 
2

Mining
114

 
3

 
129

 
4

Latin America
120

 
3

 
171

 
3

Caterpillar Power Finance
533

 
7

 
354

 
7

Total
$
930

 
$
17

 
$
831

 
$
18

 
 
 
 
 
 
 
 
Recorded investment in customer finance receivables on non-accrual status
The recorded investment in Customer finance receivables on non-accrual status was as follows: 
(Millions of dollars)
June 30,
2018
 
December 31,
2017
North America
$
42

 
$
38

Europe
69

 
37

Asia/Pacific
6

 
10

Mining
13

 
63

Latin America
142

 
192

Caterpillar Power Finance
357

 
343

Total
$
629

 
$
683

 
 
 
 
Finance receivables modified as TDRs
Our recorded investment in finance receivables in the Customer portfolio segment modified as TDRs were as follows:
(Dollars in millions)
Three Months Ended
June 30, 2018
 
Three Months Ended
June 30, 2017
 
Number of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
 
Number of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
North America
17

 
$
7

 
$
7

 
17

 
$
8

 
$
7

Europe
—

 
—

 
—

 
—

 
—

 
—

Asia/Pacific
—

 
—

 
—

 
1

 
—

 
—

Mining
—

 
—

 
—

 
—

 
—

 
—

Latin America
—

 
—

 
—

 
7

 
3

 
3

Caterpillar Power Finance(1)
2

 
50

 
17

 
48

 
243

 
237

Total
19

 
$
57

 
$
24

 
73

 
$
254

 
$
247

 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
June 30, 2018
 
Six Months Ended
June 30, 2017
 
Number of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
 
Number of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
North America
30

 
$
13

 
$
13

 
26

 
$
9

 
$
8

Europe
—

 
—

 
—

 
1

 
—

 
—

Asia/Pacific
—

 
—

 
—

 
6

 
39

 
30

Mining
1

 
29

 
29

 
2

 
57

 
56

Latin America
1

 
3

 
3

 
14

 
5

 
5

Caterpillar Power Finance
5

 
53

 
20

 
54

 
268

 
261

Total
37

 
$
98

 
$
65

 
103

 
$
378

 
$
360

 
 
 
 
 
 
 
 
 
 
 
 

(1) In Caterpillar Power Finance, during the three months ended June 30, 2017, 42 contracts with a pre-TDR recorded investment of $175 million and a post-TDR recorded investment of $175 million were related to three customers.

During the three and six months ended June 30, 2017, there were 240 contracts, primarily related to two customers, with a recorded investment of $16 million with a payment default (defined as 91+ days past due) which had been modified within twelve months prior to the default date in the Customer portfolio segment, all of which were in the Latin America finance receivable class.