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Finance Assets | 9 Months Ended
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Sep. 30, 2013
Receivables [Abstract] |
Finance Assets | Finance Assets Finance Receivables Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our customers for postage and related supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances. Finance receivables consisted of the following:
| September 30, 2013
| North America |  | International |  | Total
Sales-type lease receivables |  |  |  |  |  |  |  |
Gross finance receivables | $ | 1,466,556 |  |  | $ | 446,810 |  |  | $ | 1,913,366 |
Unguaranteed residual values | 127,846 |  |  | 21,248 |  |  | 149,094 |
Unearned income | (299,700 | ) |  | (100,451 | ) |  | (400,151 | )
Allowance for credit losses | (15,326 | ) |  | (7,823 | ) |  | (23,149 | )
Net investment in sales-type lease receivables | 1,279,376 |  |  | 359,784 |  |  | 1,639,160 |
Loan receivables |  |  |  |  |  |  |  |
Loan receivables | 389,828 |  |  | 51,455 |  |  | 441,283 |
Allowance for credit losses | (11,498 | ) |  | (1,849 | ) |  | (13,347 | )
Net investment in loan receivables | 378,330 |  |  | 49,606 |  |  | 427,936 |
Net investment in finance receivables | $ | 1,657,706 |  |  | $ | 409,390 |  |  | $ | 2,067,096 |
| December 31, 2012
| North America |  | International |  | Total
Sales-type lease receivables |  |  |  |  |  |  |  |
Gross finance receivables | $ | 1,581,711 |  |  | $ | 461,510 |  |  | $ | 2,043,221 |
Unguaranteed residual values | 148,664 |  |  | 21,025 |  |  | 169,689 |
Unearned income | (316,030 | ) |  | (104,258 | ) |  | (420,288 | )
Allowance for credit losses | (16,979 | ) |  | (8,662 | ) |  | (25,641 | )
Net investment in sales-type lease receivables | 1,397,366 |  |  | 369,615 |  |  | 1,766,981 |
Loan receivables |  |  |  |  |  |  |  |
Loan receivables | 414,960 |  |  | 47,293 |  |  | 462,253 |
Allowance for credit losses | (12,322 | ) |  | (2,131 | ) |  | (14,453 | )
Net investment in loan receivables | 402,638 |  |  | 45,162 |  |  | 447,800 |
Net investment in finance receivables | $ | 1,800,004 |  |  | $ | 414,777 |  |  | $ | 2,214,781 |
Allowance for Credit Losses and Aging of Receivables We estimate our finance receivable risks and provide an allowance for credit losses accordingly. We evaluate the adequacy of the allowance for credit losses based on historical loss experience, the nature and volume of our portfolios, adverse situations that may affect a client's ability to pay, prevailing economic conditions and our ability to manage the collateral and make adjustments to the allowance as necessary. This evaluation is inherently subjective and actual results may differ significantly from estimated reserves. We establish credit approval limits based on the credit quality of the client and the type of equipment financed. Our policy is to discontinue revenue recognition for lease receivables that are more than 120 days past due and for unsecured loan receivables that are more than 90 days past due. We resume revenue recognition when payments reduce the account balance aging to 60 days or less past due. Finance receivables deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. We believe that our finance receivable credit risk is limited because of our large number of clients, small account balances for most of our clients, and geographic and industry diversification. Activity in the allowance for credit losses for the nine months ended September 30, 2013 and 2012 was as follows:
| Sales-type Lease Receivables |  | Loan Receivables |  |
| North America |  | International |  | North America |  | International |  | Total
Balance at January 1, 2013 | $ | 16,979 |  |  | $ | 8,662 |  |  | $ | 12,322 |  |  | $ | 2,131 |  |  | $ | 40,094 |
Amounts charged to expense | 4,617 |  |  | 2,031 |  |  | 7,265 |  |  | 793 |  |  | 14,706 |
Accounts written off | (6,270 | ) |  | (2,870 | ) |  | (8,089 | ) |  | (1,075 | ) |  | (18,304 | )
Balance at September 30, 2013 | $ | 15,326 |  |  | $ | 7,823 |  |  | $ | 11,498 |  |  | $ | 1,849 |  |  | $ | 36,496 |
| Sales-type Lease Receivables |  | Loan Receivables |  |
| North America |  | International |  | North America |  | International |  | Total
Balance at January 1, 2012 | $ | 28,661 |  |  | $ | 12,039 |  |  | $ | 20,272 |  |  | $ | 2,458 |  |  | $ | 63,430 |
Amounts charged to expense | 1,171 |  |  | 1,489 |  |  | 4,069 |  |  | 703 |  |  | 7,432 |
Accounts written off | (12,694 | ) |  | (3,708 | ) |  | (8,864 | ) |  | (973 | ) |  | (26,239 | )
Balance at September 30, 2012 | $ | 17,138 |  |  | $ | 9,820 |  |  | $ | 15,477 |  |  | $ | 2,188 |  |  | $ | 44,623 |
Aging of Receivables The aging of gross finance receivables at September 30, 2013 and December 31, 2012 was as follows:
| September 30, 2013
| Sales-type Lease Receivables |  | Loan Receivables |  |
| North America |  | International |  | North America |  | International |  | Total
< 31 days | $ | 1,400,998 |  |  | $ | 417,881 |  |  | $ | 372,330 |  |  | $ | 49,330 |  |  | $ | 2,240,539 |
> 30 days and < 61 days | 27,467 |  |  | 8,845 |  |  | 9,233 |  |  | 1,276 |  |  | 46,821 |
> 60 days and < 91 days | 18,255 |  |  | 5,346 |  |  | 3,544 |  |  | 431 |  |  | 27,576 |
> 90 days and < 121 days | 5,383 |  |  | 3,982 |  |  | 2,026 |  |  | 221 |  |  | 11,612 |
> 120 days | 14,453 |  |  | 10,756 |  |  | 2,695 |  |  | 197 |  |  | 28,101 |
Total | $ | 1,466,556 |  |  | $ | 446,810 |  |  | $ | 389,828 |  |  | $ | 51,455 |  |  | $ | 2,354,649 |
Past due amounts > 90 days |  |  |  |  |  |  |  |  |  |  |  |  |  |
Still accruing interest | $ | 5,383 |  |  | $ | 3,982 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,365 |
Not accruing interest | 14,453 |  |  | 10,756 |  |  | 4,721 |  |  | 418 |  |  | 30,348 |
Total | $ | 19,836 |  |  | $ | 14,738 |  |  | $ | 4,721 |  |  | $ | 418 |  |  | $ | 39,713 |
| December 31, 2012
| Sales-type Lease Receivables |  | Loan Receivables |  |
| North America |  | International |  | North America |  | International |  | Total
< 31 days | $ | 1,497,797 |  |  | $ | 435,780 |  |  | $ | 392,108 |  |  | $ | 45,324 |  |  | $ | 2,371,009 |
> 30 days and < 61 days | 37,348 |  |  | 9,994 |  |  | 12,666 |  |  | 1,368 |  |  | 61,376 |
> 60 days and < 91 days | 24,059 |  |  | 5,198 |  |  | 4,577 |  |  | 285 |  |  | 34,119 |
> 90 days and < 121 days | 6,665 |  |  | 3,327 |  |  | 2,319 |  |  | 179 |  |  | 12,490 |
> 120 days | 15,842 |  |  | 7,211 |  |  | 3,290 |  |  | 137 |  |  | 26,480 |
Total | $ | 1,581,711 |  |  | $ | 461,510 |  |  | $ | 414,960 |  |  | $ | 47,293 |  |  | $ | 2,505,474 |
Past due amounts > 90 days |  |  |  |  |  |  |  |  |  |  |  |  |  |
Still accruing interest | $ | 6,665 |  |  | $ | 3,327 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,992 |
Not accruing interest | 15,842 |  |  | 7,211 |  |  | 5,609 |  |  | 316 |  |  | 28,978 |
Total | $ | 22,507 |  |  | $ | 10,538 |  |  | $ | 5,609 |  |  | $ | 316 |  |  | $ | 38,970 |
Credit Quality The extension of credit and management of credit lines to new and existing clients uses a combination of an automated credit score, where available, and a detailed manual review of the client’s financial condition and, when applicable, payment history. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes. The portfolio management processes ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed. We use a third party to score the majority of the North America portfolio on a quarterly basis using a commercial credit score. We do not use a third party to score our International portfolios because the cost to do so is prohibitive, it is a localized process and there is no single credit score model that covers all countries. The table below shows the North America portfolio at September 30, 2013 and December 31, 2012 by relative risk class (low, medium, high) based on the relative scores of the accounts within each class. The relative scores are determined based on a number of factors, including the company type, ownership structure, payment history and financial information. A fourth class is shown for accounts that are not scored. Absence of a score is not indicative of the credit quality of the account. The degree of risk, as defined by the third party, refers to the relative risk that an account in the next 12 month period may become delinquent.
• | Low risk accounts are companies with very good credit scores and are considered to approximate the top 30% of all commercial borrowers.
• | Medium risk accounts are companies with average to good credit scores and are considered to approximate the middle 40% of all commercial borrowers.
• | High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent and are considered to approximate the bottom 30% of all commercial borrowers.
| September 30, 2013 |  | December 31, 2012
Sales-type lease receivables |  |  |  |  |
Low | $ | 1,097,080 |  |  | $ | 1,016,413 |
Medium | 260,434 |  |  | 450,432 |
High | 53,569 |  |  | 43,658 |
Not Scored | 55,473 |  |  | 71,208 |
Total | $ | 1,466,556 |  |  | $ | 1,581,711 |
Loan receivables |  |  |  |  |
Low | $ | 271,874 |  |  | $ | 254,567 |
Medium | 92,579 |  |  | 136,069 |
High | 11,666 |  |  | 14,624 |
Not Scored | 13,709 |  |  | 9,700 |
Total | $ | 389,828 |  |  | $ | 414,960 |
Troubled Debt We maintain a program for U.S. clients in our North America loan portfolio who are experiencing financial difficulties, but are able to make reduced payments over an extended period of time. Upon acceptance into the program, the client’s credit line is closed and interest accrual is suspended. There is generally no forgiveness of debt or reduction of balances owed. The balance of loans in this program, related loan loss allowance and write-offs are insignificant to the overall portfolio. Leveraged Leases Our investment in leveraged lease assets at September 30, 2013 and December 31, 2012 consisted of the following:
| September 30, 2013 |  | December 31, 2012
Rental receivables | $ | 68,918 |  |  | $ | 83,254 |
Unguaranteed residual values | 13,644 |  |  | 14,177 |
Principal and interest on non-recourse loans | (41,836 | ) |  | (55,092 | )
Unearned income | (5,868 | ) |  | (7,793 | )
Investment in leveraged leases | 34,858 |  |  | 34,546 |
Less: deferred taxes related to leveraged leases | (16,319 | ) |  | (19,372 | )
Net investment in leveraged leases | $ | 18,539 |  |  | $ | 15,174 |

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=7880640&loc=SL6953791-111525 + Details
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