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Finance Receivables (Tables) | 6 Months Ended
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Jun. 28, 2020
Receivables [Abstract] |
Finance Receivables | Finance receivables, net, consisted of the following (in thousands):
| June 28, 2020 |  | December 31, 2019 |  | June 30, 2019
Retail finance receivables | $ | 6,520,919 |  |  | $ | 6,416,428 |  |  | $ | 6,549,707 |
Wholesale finance receivables | 870,087 |  |  | 1,156,519 |  |  | 1,239,694 |
| 7,391,006 |  |  | 7,572,947 |  |  | 7,789,401 |
Allowance for credit losses | (411,015) |  |  | (198,581) |  |  | (194,996) |
| $ | 6,979,991 |  |  | $ | 7,374,366 |  |  | $ | 7,594,405 |
Allowance for Credit Losses on Finance Receivables | Changes in the allowance for credit losses on finance receivables by portfolio were as follows (in thousands):
| Three months ended June 28, 2020 |  |  |  |
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 311,368 |  |  | $ | 24,128 |  |  | $ | 335,496 |
Provision for credit losses | 94,050 |  |  | (2,871) |  |  | 91,179 |
Charge-offs | (29,859) |  |  | — |  |  | (29,859) |
Recoveries | 14,199 |  |  | — |  |  | 14,199 |
Balance, end of period | $ | 389,758 |  |  | $ | 21,257 |  |  | $ | 411,015 |
| Three months ended June 30, 2019 |  |  |  |
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 181,426 |  |  | $ | 9,446 |  |  | $ | 190,872 |
Provision for credit losses | 27,555 |  |  | (1,172) |  |  | 26,383 |
Charge-offs | (35,741) |  |  | — |  |  | (35,741) |
Recoveries | 13,482 |  |  | — |  |  | 13,482 |
Balance, end of period | $ | 186,722 |  |  | $ | 8,274 |  |  | $ | 194,996 |
| Six months ended June 28, 2020 |  |  |  |
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 188,501 |  |  | $ | 10,080 |  |  | $ | 198,581 |
Cumulative effect of change in accounting(a) | 95,558 |  |  | 5,046 |  |  | 100,604 |
Provision for credit losses | 164,467 |  |  | 6,131 |  |  | 170,598 |
Charge-offs | (85,074) |  |  | — |  |  | (85,074) |
Recoveries | 26,306 |  |  | — |  |  | 26,306 |
Balance, end of period | $ | 389,758 |  |  | $ | 21,257 |  |  | $ | 411,015 |
| Six months ended June 30, 2019 |  |  |  |
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 182,098 |  |  | $ | 7,787 |  |  | $ | 189,885 |
Provision for credit losses | 60,387 |  |  | 487 |  |  | 60,874 |
Charge-offs | (80,462) |  |  | — |  |  | (80,462) |
Recoveries | 24,699 |  |  | — |  |  | 24,699 |
Balance, end of period | $ | 186,722 |  |  | $ | 8,274 |  |  | $ | 194,996 |
(a)On January 1, 2020, the Company adopted ASU 2016-13 and increased the allowance for loan loss through Retained earnings, net of income taxes, to establish an allowance that represents expected lifetime credit losses on the finance receivable portfolios at date of adoption. The allowance for credit losses and finance receivables by portfolio, segregated by those amounts that were individually evaluated for impairment and those that were collectively evaluated for impairment, were as follows (in thousands):
| December 31, 2019 |  |  |  |
| Retail |  | Wholesale |  | Total
Allowance for credit losses, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | 2,100 |  |  | $ | 2,100 |
Collectively evaluated for impairment | 188,501 |  |  | 7,980 |  |  | 196,481 |
| $ | 188,501 |  |  | $ | 10,080 |  |  | $ | 198,581 |
Finance receivables, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | 4,601 |  |  | $ | 4,601 |
Collectively evaluated for impairment | 6,416,428 |  |  | 1,151,918 |  |  | 7,568,346 |
| $ | 6,416,428 |  |  | $ | 1,156,519 |  |  | $ | 7,572,947 |
| June 30, 2019 |  |  |  |
| Retail |  | Wholesale |  | Total
Allowance for credit losses, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 186,722 |  |  | 8,274 |  |  | 194,996 |
| $ | 186,722 |  |  | $ | 8,274 |  |  | $ | 194,996 |
Finance receivables, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 6,549,707 |  |  | 1,239,694 |  |  | 7,789,401 |
| $ | 6,549,707 |  |  | $ | 1,239,694 |  |  | $ | 7,789,401 |
Financing Receivable Credit Quality Indicators | The amortized cost of the Company's U.S. and Canadian retail finance receivables by credit quality indicator and vintage, as of June 28, 2020, was as follows (in thousands):
| 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | 2015 & Prior |  | Total
U.S. Retail: |  |  |  |  |  |  |  |  |  |  |  |  |
Super prime | $ | 486,327 |  |  | $ | 737,419 |  |  | $ | 474,280 |  |  | $ | 234,239 |  |  | $ | 114,496 |  |  | $ | 54,661 |  |  | $ | 2,101,422 |
Prime | 670,363 |  |  | 973,046 |  |  | 644,846 |  |  | 388,039 |  |  | 223,960 |  |  | 131,367 |  |  | 3,031,621 |
Sub-prime | 271,843 |  |  | 360,812 |  |  | 217,720 |  |  | 138,998 |  |  | 95,630 |  |  | 79,754 |  |  | 1,164,757 |
| 1,428,533 |  |  | 2,071,277 |  |  | 1,336,846 |  |  | 761,276 |  |  | 434,086 |  |  | 265,782 |  |  | 6,297,800 |
Canadian Retail: |  |  |  |  |  |  |  |  |  |  |  |  |
Super prime | 34,715 |  |  | 57,818 |  |  | 35,786 |  |  | 19,265 |  |  | 8,508 |  |  | 3,687 |  |  | 159,779 |
Prime | 11,548 |  |  | 15,741 |  |  | 11,598 |  |  | 7,932 |  |  | 4,093 |  |  | 3,187 |  |  | 54,099 |
Sub-prime | 1,970 |  |  | 2,720 |  |  | 1,881 |  |  | 1,289 |  |  | 782 |  |  | 599 |  |  | 9,241 |
| 48,233 |  |  | 76,279 |  |  | 49,265 |  |  | 28,486 |  |  | 13,383 |  |  | 7,473 |  |  | 223,119 |
| $ | 1,476,766 |  |  | $ | 2,147,556 |  |  | $ | 1,386,111 |  |  | $ | 789,762 |  |  | $ | 447,469 |  |  | $ | 273,255 |  |  | $ | 6,520,919 |
The recorded investment in retail finance receivables, by credit quality indicator, was as follows (in thousands):
|  | December 31, 2019 |  | June 30, 2019
Prime |  | $ | 5,278,093 |  |  | $ | 5,372,712 |
Sub-prime |  | 1,138,335 |  |  | 1,176,995 |
|  | $ | 6,416,428 |  |  | $ | 6,549,707 |
The amortized cost of wholesale financial receivables, by credit quality indicator and vintage, was as follows as of June 28, 2020 (in thousands):
| 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | 2015 & Prior |  | Total
Non-Performing | $ | — |  |  | $ | 2,376 |  |  | $ | 1,774 |  |  | $ | 107 |  |  | $ | 25 |  |  | $ | 43 |  |  | $ | 4,325 |
Doubtful | 579 |  |  | 1,009 |  |  | 188 |  |  | — |  |  | — |  |  | — |  |  | 1,776 |
Substandard | 944 |  |  | 966 |  |  | 53 |  |  | — |  |  | — |  |  | — |  |  | 1,963 |
Special Mention | 5,345 |  |  | 5,281 |  |  | 564 |  |  | — |  |  | — |  |  | 1,805 |  |  | 12,995 |
Medium Risk | 6,690 |  |  | 3,587 |  |  | 301 |  |  | 63 |  |  | — |  |  | — |  |  | 10,641 |
Low Risk | 517,708 |  |  | 273,408 |  |  | 29,301 |  |  | 8,965 |  |  | 6,006 |  |  | 2,999 |  |  | 838,387 |
| $ | 531,266 |  |  | $ | 286,627 |  |  | $ | 32,181 |  |  | $ | 9,135 |  |  | $ | 6,031 |  |  | $ | 4,847 |  |  | $ | 870,087 |
The recorded investment in wholesale finance receivables, by internal credit quality indicator, was as follows (in thousands):
|  | December 31, 2019 |  | June 30, 2019
Doubtful |  | $ | 11,664 |  |  | $ | 6,850 |
Substandard |  | 6,122 |  |  | 7,643 |
Special Mention |  | 16,125 |  |  | 12,642 |
Medium Risk |  | 16,800 |  |  | 6,170 |
Low Risk |  | 1,105,808 |  |  | 1,206,389 |
|  | $ | 1,156,519 |  |  | $ | 1,239,694 |
Impaired Financing Receivables Under ASC 310 | Additional information related to the wholesale finance receivables on non-accrual status was as follows (in thousands):
| Amortized Cost |  |  |  | Amortized Cost |  | Interest Income
| January 1, 2020 |  |  |  | June 28, 2020 |  | Recognized
Wholesale: |  |  |  |  |  |  |
No related allowance recorded | $ | — |  |  |  |  | $ | — |  |  | $ | — |
Related allowance recorded | 4,994 |  |  |  |  | 4,325 |  |  | — |
| $ | 4,994 |  |  |  |  | $ | 4,325 |  |  | $ | — |
At June 30, 2019, there were no wholesale receivables that were individually deemed to be impaired under ASC Topic 310, Receivables. Additional information related to the wholesale finance receivables that were individually deemed to be impaired at December 31, 2019 included the following (in thousands):
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
Wholesale: |  |  |  |  |  |  |  |  |
No related allowance recorded | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Related allowance recorded | 4,994 |  |  | 4,601 |  |  | 2,100 |  |  | 4,976 |  |  | — |
| $ | 4,994 |  |  | $ | 4,601 |  |  | $ | 2,100 |  |  | $ | 4,976 |  |  | $ | — |
Aging of Past Due Finance Receivables Including Non-Accrual Status Finance Receivables | The aging analysis of finance receivables was as follows (in thousands):
| June 28, 2020 |  |  |  |  |  |  |  |  |  |
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Total
Retail finance receivables | $ | 6,425,078 |  |  | $ | 63,190 |  |  | $ | 16,631 |  |  | $ | 16,020 |  |  | $ | 95,841 |  |  | $ | 6,520,919 |
Wholesale finance receivables | 864,911 |  |  | 1,261 |  |  | 413 |  |  | 3,502 |  |  | 5,176 |  |  | 870,087 |
| $ | 7,289,989 |  |  | $ | 64,451 |  |  | $ | 17,044 |  |  | $ | 19,522 |  |  | $ | 101,017 |  |  | $ | 7,391,006 |
| December 31, 2019 |  |  |  |  |  |  |  |  |  |
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Total
Retail finance receivables | $ | 6,171,930 |  |  | $ | 142,479 |  |  | $ | 53,995 |  |  | $ | 48,024 |  |  | $ | 244,498 |  |  | $ | 6,416,428 |
Wholesale finance receivables | 1,152,416 |  |  | 1,145 |  |  | 384 |  |  | 2,574 |  |  | 4,103 |  |  | 1,156,519 |
| $ | 7,324,346 |  |  | $ | 143,624 |  |  | $ | 54,379 |  |  | $ | 50,598 |  |  | $ | 248,601 |  |  | $ | 7,572,947 |
| June 30, 2019 |  |  |  |  |  |  |  |  |  |
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Total
Retail finance receivables | $ | 6,359,499 |  |  | $ | 119,770 |  |  | $ | 40,015 |  |  | $ | 30,423 |  |  | $ | 190,208 |  |  | $ | 6,549,707 |
Wholesale finance receivables | 1,236,747 |  |  | 577 |  |  | 320 |  |  | 2,050 |  |  | 2,947 |  |  | 1,239,694 |
| $ | 7,596,246 |  |  | $ | 120,347 |  |  | $ | 40,335 |  |  | $ | 32,473 |  |  | $ | 193,155 |  |  | $ | 7,789,401 |

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- Definition Tabular disclosure of financing receivables by credit quality indicator. The credit quality indicator is a statistic about the credit quality of financing receivables. Examples include, but not limited to, consumer credit risk scores, credit-rating-agency ratings, an entity's internal credit risk grades, loan-to-value ratios, collateral, collection experience and other internal metrics. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=121599337&loc=SL82919230-210447 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=121611835&loc=SL6953659-111524 + Details
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- Definition Tabular disclosure of the various types of trade accounts and notes receivable and for each the gross carrying value, allowance, and net carrying value as of the balance sheet date. Presentation is categorized by current, noncurrent and unclassified receivables. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682 + Details
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