Finance receivables, net consist of retail and dealer accounts including accrued interest and deferred fees and costs, net of the allowance for credit losses and unearned income. Pledged receivables represent retail loan receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements. Cash flows from these receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions. They are not available for payment of our other obligations or to satisfy claims of our other creditors.


(Dollars in millions)			March 31, 2012		March 31, 2011
Retail receivables			$	35,020	$	34,951
Pledged retail receivables				10,726		11,546
Dealer financing				12,865		12,189
				58,611		58,686
Deferred origination (fees) and costs, net				639		650
Unearned income				(684)		(846)
Allowance for credit losses
	Retail and pledged retail receivables			(405)		(613)
	Dealer financing			(119)		(141)
		Total allowance for credit losses		(524)		(754)
Finance receivables, net			$	58,042	$	57,736

Contractual maturities on retail receivables and dealer financing are as follows (dollars in millions):

	Contractual maturities
Years ending March 31,	Retail receivables		Dealer financing
2013	$	13,606	$	8,638
2014		11,740		2,239
2015		9,688		586
2016		6,589		490
2017		3,189		534
Thereafter		925		378
Total	$	45,737	$	12,865

Finance receivables, net and retail receivables presented in the previous tables include direct finance lease receivables, net of $213 million and $237 million at March 31, 2012 and March 31, 2011, respectively. Contractual maturities of retail receivables exclude $9 million of estimated unguaranteed residual values related to direct finance leases.

A significant portion of our finance receivables has historically been repaid prior to contractual maturity.

We are exposed to credit risk on our finance receivables. Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

While we use various credit quality metrics to develop our allowance for credit losses on the retail loan and commercial portfolio segments, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables. Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables. Payment status also impacts charge-offs.

Individual borrower accounts for each class of finance receivables within the retail loan and commercial portfolio segments are segregated into one of four aging categories based on the number of days outstanding. The aging for each class of finance receivables is updated quarterly.

For three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer, affiliated entity or dealership group are aggregated and evaluated collectively by dealer or dealership group. This reflects the interconnected nature of financing provided to our individual dealer, affiliated entities and dealer group customers.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four distinct credit quality indicators based on internal risk assessments. The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

Note 4 - Finance Receivables, Net (Continued)

The tables below present each credit quality indicator by class of finance receivable as of March 31, 2012 and March 31, 2011:

		Retail Loan				Commercial
(Dollars in millions)		March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011

Aging of finance receivables:
	Current	$	44,842	$	45,351	$	352	$	416
	30-59 days past due		433		562		8		15
	60-89 days past due		80		108		2		5
	90 days past due		28		39		1		1
Total		$	45,383	$	46,060	$	363	$	437

		Wholesale				Real Estate				Working Capital
(Dollars in millions)		March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011

Credit quality indicators:
	Performing	$	6,249	$	6,073	$	3,746	$	3,409	$	1,422	$	1,088
	Credit Watch		675		699		467		505		61		147
	At Risk		78		78		148		148		8		13
	Default		6		10		-		11		5		8
Total		$	7,008	$	6,860	$	4,361	$	4,073	$	1,496	$	1,256

Note 4 – Finance Receivables, Net (Continued)

Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivable as of March 31, 2012 and March 31, 2011:

	Impaired								Individually Evaluated
	Finance Receivables				Unpaid Principal Balance				Allowance
(Dollars in millions)	2012		2011		2012		2011		2012		2011

Impaired account balances individually evaluated for impairment with an allowance:

Wholesale	$	7	$	19	$	7	$	19	$	1	$	3
Real estate		136		156		136		156		37		50
Working capital		7		18		7		18		7		14
Total	$	150	$	193	$	150	$	193	$	45	$	67

Impaired account balances individually evaluated for impairment without an allowance:

Wholesale	$	60	$	62	$	60	$	62
Real estate		-		-		-		-
Working capital		1		3		1		3
Total	$	61	$	65	$	61	$	65

Impaired account balances aggregated and evaluated for impairment:

Retail loan	$	502	$	581	$	496	$	573
Commercial		1		3		1		3
Total	$	503	$	584	$	497	$	576

Total impaired account balances:

Retail loan	$	502	$	581	$	496	$	573
Commercial		1		3		1		3
Wholesale		67		81		67		81
Real estate		136		156		136		156
Working capital		8		21		8		21
Total	$	714	$	842	$	708	$	834

As of March 31, 2012 and March 31, 2011, all impaired finance receivables within the dealer products portfolio segment were on nonaccrual status and there were no charge-offs against the allowance for credit losses. Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.

The following table summarizes the average impaired finance receivables as of the balance sheet date and the interest income recognized on these loans during fiscal 2012 and fiscal 2011:

	Average Impaired Finance Receivables				Interest Income Recognized
	Years ended March 31,				Years ended March 31,
(Dollars in millions)	2012		2011		2012		2011

Impaired account balances individually evaluated for impairment with an allowance:

Wholesale	$	5	$	20	$	-	$	-
Real estate		138		157		5		6
Working capital		8		18		-		1
Total	$	151	$	195	$	5	$	7

Impaired account balances individually evaluated for impairment without an allowance:

Wholesale	$	43	$	57	$	1	$	2
Real estate		-		-		-		-
Working capital		1		3		1		-
Total	$	44	$	60	$	2	$	2

Impaired account balances aggregated and evaluated for impairment:

Retail loan	$	553	$	569	$	47	$	51
Commercial		1		4		-		-
Total	$	554	$	573	$	47	$	51

Total impaired account balances:

Retail loan	$	553	$	569	$	47	$	51
Commercial		1		4		-		-
Wholesale		48		77		1		2
Real estate		138		157		5		6
Working capital		9		21		1		1
Total	$	749	$	828	$	54	$	60

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during fiscal 2012 is not significant for each class of finance receivables. Troubled debt restructurings for these accounts within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the customer, while accounts within the commercial class of finance receivables consist of contract term extensions, interest rate adjustments, or a combination of the two. For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three. No troubled debt restructurings of accounts not under bankruptcy protection included forgiveness of principal during fiscal 2012.

We recognize finance receivables under bankruptcy protection within the retail loan and commercial classes as troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection regardless of the ultimate outcome of the bankruptcy proceedings. The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal. For fiscal 2012, the financial impact of troubled debt restructurings related to accounts under bankruptcy protection was not significant to our Consolidated Statement of Income and Consolidated Balance Sheet.

Finance receivables modified as troubled debt restructurings for which there was a payment default during fiscal 2012, and for which the modification occurred within twelve months of the payment default, were not significant for all classes of such receivables.