Finance Receivables (Tables)

12 Months Ended

Dec. 31, 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 as of December 31, was as follows:



(Millions of dollars)
	2018			2017
Retail loans, net	$	15,509		$	16,142
Retail leases, net	7,499			7,111
Caterpillar purchased receivables, net	4,691			3,461
Wholesale loans, net	626			691
Wholesale leases, net	109			86
Recorded investment in finance receivables	28,434			27,491
Less: Allowance for credit losses	(511		)	(365		)
Total finance receivables, net	$	27,923		$	27,126

Maturities of finance receivables

Maturities of our finance receivables, as of December 31, 2018, reflect contractual repayments due from borrowers and were as follows:



(Millions of dollars)
Amounts due in	Retail loans			Retail leases			Caterpillar purchased receivables			Wholesale loans		Wholesale leases			Total
2019	$	5,947		$	3,024		$	4,745		$	386	$	29		$	14,131
2020	3,851			2,055			—			120		21			6,047
2021	2,629			1,092			—			88		12			3,821
2022	1,790			465			—			31		5			2,291
2023	853			171			—			1		2			1,027
Thereafter	699			62			—			—		2			763
Total	15,769			6,869			4,745			626		71			28,080
Guaranteed residual value	—			416			—			—		42			458
Unguaranteed residual value	—			854			—			—		3			857
Unearned income	(260		)	(640		)	(54		)	—		(7		)	(961		)
Total	$	15,509		$	7,499		$	4,691		$	626	$	109		$	28,434

Allowance for credit losses and recorded investment in finance receivables

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



(Millions of dollars)
	December 31, 2018
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	353		$	9	$	3	$	365
Receivables written off	(235		)	—		—		(235		)
Recoveries on receivables previously written off	46			—		—		46
Provision for credit losses	337			12		1		350
Adjustment due to sale of receivables	(7		)	—		—		(7		)
Foreign currency translation adjustment	(8		)	—		—		(8		)
Balance at end of year	$	486		$	21	$	4	$	511

Individually evaluated for impairment	$	288		$	14	$	—	$	302
Collectively evaluated for impairment	198			7		4		209
Ending Balance	$	486		$	21	$	4	$	511

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	859		$	78	$	—	$	937
Collectively evaluated for impairment	18,724			4,082		4,691		27,497
Ending Balance	$	19,583		$	4,160	$	4,691	$	28,434



(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)
	December 31, 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	$	65	$	18	$	84	$	167	$	7,883	$	8,050	$	14
Europe	19		9		153		181		2,850		3,031		5
Asia/Pacific	25		9		8		42		2,923		2,965		5
Mining	28		1		9		38		1,642		1,680		—
Latin America	38		29		71		138		1,421		1,559		—
Caterpillar Power Finance	10		1		384		395		1,903		2,298		—
Dealer
North America	—		—		—		—		2,210		2,210		—
Europe	—		—		—		—		619		619		—
Asia/Pacific	—		—		—		—		514		514		—
Mining	—		—		—		—		4		4		—
Latin America	—		—		78		78		731		809		—
Caterpillar Power Finance	—		—		—		—		4		4		—
Caterpillar Purchased Receivables⁽¹⁾
North America	22		12		18		52		2,982		3,034
Europe	1		—		1		2		546		548
Asia/Pacific	5		1		1		7		756		763
Mining	—		—		—		—		—		—
Latin America	—		—		—		—		338		338
Caterpillar Power Finance	—		—		—		—		8		8
Total	$	213	$	80	$	807	$	1,100	$	27,334	$	28,434	$	24

⁽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



(Millions of dollars)
	As of December 31, 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	$	10	$	10	$	—	$	19	$	19	$	—
Europe	1		1		—		45		45		—
Asia/Pacific	1		1		—		34		33		—
Mining	33		33		—		121		121		—
Latin America	29		29		—		45		45		—
Caterpillar Power Finance	69		83		—		160		172		—
Total	$	143	$	157	$	—	$	424	$	435	$	—
Impaired Finance Receivables With An Allowance Recorded
North America	$	40	$	41	$	14	$	44	$	43	$	17
Europe	92		92		57		9		8		5
Asia/Pacific	4		4		2		8		8		2
Mining	56		55		26		—		—		—
Latin America	75		75		25		95		106		42
Caterpillar Power Finance	449		455		164		362		365		83
Total	$	716	$	722	$	288	$	518	$	530	$	149
Total Impaired Finance Receivables
North America	$	50	$	51	$	14	$	63	$	62	$	17
Europe	93		93		57		54		53		5
Asia/Pacific	5		5		2		42		41		2
Mining	89		88		26		121		121		—
Latin America	104		104		25		140		151		42
Caterpillar Power Finance	518		538		164		522		537		83
Total	$	859	$	879	$	288	$	942	$	965	$	149



(Millions of dollars)
	Year Ended December 31, 2018				Year Ended December 31, 2017				Year Ended December 31, 2016
Impaired Finance Receivables With No Allowance Recorded	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
North America	$	16	$	1	$	13	$	1	$	18	$	1
Europe	14		—		48		1		46		1
Asia/Pacific	28		3		24		2		2		—
Mining	57		2		126		7		98		4
Latin America	38		2		64		3		47		1
Caterpillar Power Finance	130		7		221		9		270		11
Total	$	283	$	15	$	496	$	23	$	481	$	18
Impaired Finance Receivables With An Allowance Recorded
North America	$	49	$	2	$	49	$	1	$	34	$	—
Europe	53		2		6		—		11		1
Asia/Pacific	5		—		31		2		37		3
Mining	46		3		—		—		13		—
Latin America	67		3		99		4		66		2
Caterpillar Power Finance	378		12		180		6		50		1
Total	$	598	$	22	$	365	$	13	$	211	$	7
Total Impaired Finance Receivables
North America	$	65	$	3	$	62	$	2	$	52	$	1
Europe	67		2		54		1		57		2
Asia/Pacific	33		3		55		4		39		3
Mining	103		5		126		7		111		4
Latin America	105		5		163		7		113		3
Caterpillar Power Finance	508		19		401		15		320		12
Total	$	881	$	37	$	861	$	36	$	692	$	25

Recorded investment in Customer finance receivables on non-accrual status

The recorded investment in Customer finance receivables on non-accrual status as of December 31, was as follows:



(Millions of dollars)
	2018		2017
North America	$	77	$	38
Europe	154		37
Asia/Pacific	4		10
Mining	50		63
Latin America	106		192
Caterpillar Power Finance	416		343
Total	$	807	$	683

Finance receivables modified as TDRs

Our recorded investment in finance receivables in the Customer portfolio segment modified as TDRs during the years ended December 31, 2018, 2017 and 2016, were as follows:



(Dollars in millions)	Year Ended December 31, 2018
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	38	$	21	$	21
Europe	—	—		—
Asia/Pacific	—	—		—
Mining	1	29		29
Latin America	1	3		3
Caterpillar Power Finance	12	133		99
Total	52	$	186	$	152

	Year Ended December 31, 2017
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	43	$	34	$	35
Europe	4	1		1
Asia/Pacific	10	39		31
Mining	2	57		56
Latin America	17	26		27
Caterpillar Power Finance⁽¹⁾	68	422		407
Total	144	$	579	$	557

	Year Ended December 31, 2016
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	25	$	25	$	25
Europe	43	12		9
Asia/Pacific	31	29		28
Mining	4	74		66
Latin America⁽²⁾	437	118		82
Caterpillar Power Finance	34	196		177
Total	574	$	454	$	387

⁽¹⁾ In Caterpillar Power Finance, 48 contracts with a pre-TDR recorded investment of $265 million and a post-TDR recorded investment of $258 million were related to six customers.

⁽²⁾ In Latin America, 321 contracts with a pre-TDR recorded investment of $94 million and a post-TDR recorded investment of $64 million were related to four customers.

TDRs in the Customer portfolio segment with a payment default (defined as 91+ days past due) during the years ended December 31, 2018, 2017 and 2016, which had been modified within twelve months prior to the default date, were as follows:



(Dollars in millions)	Year Ended December 31, 2018			Year Ended December 31, 2017			Year Ended December 31, 2016
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
North America	10	$	10	4	$	3	5	$	2
Europe	—	—		1	—		5	2
Asia/Pacific	—	—		4	1		1	—
Latin America⁽¹⁾	3	1		243	17		4	1
Caterpillar Power Finance	3	33		—	—		—	—
Total	16	$	44	252	$	21	15	$	5

⁽¹⁾ In Latin America, 238 contracts with a post-TDR recorded investment of $16 million were related to two customers for the year ended December 31, 2017.