Finance Receivables (Tables)

9 Months Ended

Sep. 30, 2018

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)	September 30, 2018			December 31, 2017
Finance leases and installment sale contracts – Retail	$	15,544		$	14,647
Retail notes receivable	8,382			9,417
Wholesale notes receivable	4,781			4,161
Finance leases and installment sale contracts – Wholesale	147			119
	28,854			28,344
Less: Unearned income	(926		)	(853		)
Recorded investment in finance receivables	27,928			27,491
Less: Allowance for credit losses	(416		)	(365		)
Total finance receivables, net	$	27,512		$	27,126

Allowance for credit losses and recorded investment in finance receivables

An analysis of the allowance for credit losses was as follows:



(Millions of dollars)
	September 30, 2018
Allowance for Credit Losses:	Customer			Dealer			Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	353		$	9		$	3	$	365
Receivables written off	(181		)	—			—		(181		)
Recoveries on receivables previously written off	31			—			—		31
Provision for credit losses	216			(2		)	1		215
Adjustment due to sale of receivables	(6		)	—			—		(6		)
Foreign currency translation adjustment	(8		)	—			—		(8		)
Balance at end of period	$	405		$	7		$	4	$	416

Individually evaluated for impairment	$	229		$	—		$	—	$	229
Collectively evaluated for impairment	176			7			4		187
Ending Balance	$	405		$	7		$	4	$	416

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	803		$	—		$	—	$	803
Collectively evaluated for impairment	18,771			4,338			4,016		27,125
Ending Balance	$	19,574		$	4,338		$	4,016	$	27,928



(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)
	September 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	$	74	$	17	$	46	$	137	$	7,921	$	8,058	$	7
Europe	19		9		122		150		2,848		2,998		6
Asia/Pacific	31		14		8		53		2,885		2,938		5
Mining	5		—		9		14		1,623		1,637		—
Latin America	35		15		84		134		1,385		1,519		—
Caterpillar Power Finance	116		45		298		459		1,965		2,424		8
Dealer
North America	—		—		—		—		2,435		2,435		—
Europe	—		—		—		—		580		580		—
Asia/Pacific	—		—		—		—		502		502		—
Mining	—		—		—		—		4		4		—
Latin America	—		—		79		79		734		813		—
Caterpillar Power Finance	—		—		—		—		4		4		—
Caterpillar Purchased Receivables⁽¹⁾
North America	17		10		11		38		2,618		2,656
Europe	1		—		2		3		448		451
Asia/Pacific	2		—		1		3		588		591
Mining	—		—		—		—		—		—
Latin America	—		—		—		—		314		314
Caterpillar Power Finance	1		—		—		1		3		4
Total	$	301	$	110	$	660	$	1,071	$	26,857	$	27,928	$	26

⁽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 September 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	$	17	$	17	$	—	$	19	$	19	$	—
Europe	2		1		—		45		45		—
Asia/Pacific	29		29		—		34		33		—
Mining	34		34		—		121		121		—
Latin America	31		31		—		45		45		—
Caterpillar Power Finance	61		74		—		160		172		—
Total	$	174	$	186	$	—	$	424	$	435	$	—
Impaired Finance Receivables With An Allowance Recorded
North America	$	41	$	39	$	18	$	44	$	43	$	17
Europe	66		66		36		9		8		5
Asia/Pacific	2		2		1		8		8		2
Mining	58		58		22		—		—		—
Latin America	61		61		34		95		106		42
Caterpillar Power Finance	401		408		118		362		365		83
Total	$	629	$	634	$	229	$	518	$	530	$	149
Total Impaired Finance Receivables
North America	$	58	$	56	$	18	$	63	$	62	$	17
Europe	68		67		36		54		53		5
Asia/Pacific	31		31		1		42		41		2
Mining	92		92		22		121		121		—
Latin America	92		92		34		140		151		42
Caterpillar Power Finance	462		482		118		522		537		83
Total	$	803	$	820	$	229	$	942	$	965	$	149



(Millions of dollars)
	Three Months Ended September 30, 2018				Three Months Ended September 30, 2017
Impaired Finance Receivables With No Allowance Recorded	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
North America	$	19	$	—	$	14	$	1
Europe	4		—		47		—
Asia/Pacific	30		1		30		1
Mining	35		—		128		1
Latin America	37		1		68		1
Caterpillar Power Finance	94		2		171		1
Total	$	219	$	4	$	458	$	5
Impaired Finance Receivables With An Allowance Recorded
North America	$	47	$	—	$	44	$	—
Europe	59		—		6		—
Asia/Pacific	2		—		28		1
Mining	60		1		—		—
Latin America	51		1		102		1
Caterpillar Power Finance	374		4		251		3
Total	$	593	$	6	$	431	$	5
Total Impaired Finance Receivables
North America	$	66	$	—	$	58	$	1
Europe	63		—		53		—
Asia/Pacific	32		1		58		2
Mining	95		1		128		1
Latin America	88		2		170		2
Caterpillar Power Finance	468		6		422		4
Total	$	812	$	10	$	889	$	10



(Millions of dollars)
	Nine Months Ended September 30, 2018				Nine Months Ended September 30, 2017
Impaired Finance Receivables With No Allowance Recorded	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
North America	$	17	$	1	$	12	$	1
Europe	17		—		48		1
Asia/Pacific	31		2		22		2
Mining	65		2		128		5
Latin America	41		2		69		2
Caterpillar Power Finance	149		5		233		7
Total	$	320	$	12	$	512	$	18
Impaired Finance Receivables With An Allowance Recorded
North America	$	51	$	1	$	52	$	1
Europe	41		1		6		—
Asia/Pacific	5		—		35		2
Mining	43		2		—		—
Latin America	69		3		101		3
Caterpillar Power Finance	364		8		141		4
Total	$	573	$	15	$	335	$	10
Total Impaired Finance Receivables
North America	$	68	$	2	$	64	$	2
Europe	58		1		54		1
Asia/Pacific	36		2		57		4
Mining	108		4		128		5
Latin America	110		5		170		5
Caterpillar Power Finance	513		13		374		11
Total	$	893	$	27	$	847	$	28

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)	September 30, 2018		December 31, 2017
North America	$	44	$	38
Europe	124		37
Asia/Pacific	4		10
Mining	10		63
Latin America	118		192
Caterpillar Power Finance	451		343
Total	$	751	$	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 September 30, 2018					Three Months Ended September 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	4	$	—	$	—	11	$	4	$	5
Europe	—	—		—		1	—		—
Latin America	—	—		—		3	21		22
Caterpillar Power Finance	2	40		40		5	51		44
Total	6	$	40	$	40	20	$	76	$	71

	Nine Months Ended September 30, 2018					Nine Months Ended September 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	34	$	13	$	13	37	$	13	$	13
Europe	—	—		—		2	—		—
Asia/Pacific	—	—		—		6	39		30
Mining	1	29		29		2	57		56
Latin America	1	3		3		17	26		27
Caterpillar Power Finance⁽¹⁾	7	93		60		59	319		305
Total	43	$	138	$	105	123	$	454	$	431

⁽¹⁾In Caterpillar Power Finance, during the nine months ended September 30, 2017, 44 contracts with a pre-TDR recorded investment of $200 million and a post-TDR recorded investment of $200 million were related to four customers.

TDRs in the Customer portfolio segment with a payment default (defined as 91+ days past due) which had been modified within twelve months prior to the default date, were as follows:



(Dollars in millions)	Three Months Ended September 30, 2018			Three Months Ended September 30, 2017
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
North America	7	$	9	—	$	—
Latin America	1	—		1	—
Caterpillar Power Finance	3	33		—	—
Total	11	$	42	1	$	—

	Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
North America	10	$	10	—	$	—
Latin America	3	1		241	16
Caterpillar Power Finance	3	33		—	—
Total	16	$	44	241	$	16