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RECEIVABLES | 6 Months Ended
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Jun. 30, 2019
Receivables [Abstract] |
RECEIVABLES | RECEIVABLES Financing Receivables, net A summary of financing receivables as of June 30, 2019 and December 31, 2018 is as follows:
| June 30, 2019 |  | December 31, 2018
| (in millions)
Retail | $ | 9,065 |  |  | $ | 9,350 |
Wholesale | 10,600 |  |  | 9,749 |
Other | 69 |  |  | 68 |
Total | $ | 19,734 |  |  | $ | 19,167 |
Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent loans for which the Company has ceased accruing finance income. These receivables are generally 120 days delinquent. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is resumed when the receivable becomes contractually current and collections are reasonably assured. The aging of financing receivables as of June 30, 2019 and December 31, 2018 is as follows (in millions):
| June 30, 2019
| 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater Than 90 Days |  | Total Past Due |  | Current |  | Total Performing |  | Non- Performing |  | Total
Retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America | $ | 21 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 26 |  |  | $ | 6,225 |  |  | $ | 6,251 |  |  | $ | 10 |  |  | $ | 6,261 |
Europe | — |  |  | — |  |  | — |  |  | — |  |  | 177 |  |  | 177 |  |  | — |  |  | 177 |
South America | 79 |  |  | 5 |  |  | 6 |  |  | 90 |  |  | 1,735 |  |  | 1,825 |  |  | 10 |  |  | 1,835 |
Rest of World | 2 |  |  | 3 |  |  | — |  |  | 5 |  |  | 787 |  |  | 792 |  |  | — |  |  | 792 |
Total Retail | $ | 102 |  |  | $ | 13 |  |  | $ | 6 |  |  | $ | 121 |  |  | $ | 8,924 |  |  | $ | 9,045 |  |  | $ | 20 |  |  | $ | 9,065 |
Wholesale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,927 |  |  | $ | 3,927 |  |  | $ | 1 |  |  | $ | 3,928 |
Europe | 30 |  |  | 24 |  |  | 21 |  |  | 75 |  |  | 5,130 |  |  | 5,205 |  |  | — |  |  | 5,205 |
South America | 1 |  |  | — |  |  | 5 |  |  | 6 |  |  | 697 |  |  | 703 |  |  | 59 |  |  | 762 |
Rest of World | 8 |  |  | 4 |  |  | 6 |  |  | 18 |  |  | 687 |  |  | 705 |  |  | — |  |  | 705 |
Total Wholesale | $ | 39 |  |  | $ | 28 |  |  | $ | 32 |  |  | $ | 99 |  |  | $ | 10,441 |  |  | $ | 10,540 |  |  | $ | 60 |  |  | $ | 10,600 |
| December 31, 2018
| 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater Than 90 Days |  | Total Past Due |  | Current |  | Total Performing |  | Non- Performing |  | Total
Retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America | $ | 21 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 26 |  |  | $ | 6,285 |  |  | $ | 6,311 |  |  | $ | 12 |  |  | $ | 6,323 |
Europe | 1 |  |  | — |  |  | 10 |  |  | 11 |  |  | 164 |  |  | 175 |  |  | 40 |  |  | 215 |
South America | 11 |  |  | 9 |  |  | 7 |  |  | 27 |  |  | 1,885 |  |  | 1,912 |  |  | 83 |  |  | 1,995 |
Rest of World | 2 |  |  | 1 |  |  | — |  |  | 3 |  |  | 814 |  |  | 817 |  |  | — |  |  | 817 |
Total Retail | $ | 35 |  |  | $ | 15 |  |  | $ | 17 |  |  | $ | 67 |  |  | $ | 9,148 |  |  | $ | 9,215 |  |  | $ | 135 |  |  | $ | 9,350 |
Wholesale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,613 |  |  | $ | 3,613 |  |  | $ | 18 |  |  | $ | 3,631 |
Europe | 20 |  |  | 9 |  |  | — |  |  | 29 |  |  | 4,727 |  |  | 4,756 |  |  | — |  |  | 4,756 |
South America | — |  |  | — |  |  | — |  |  | — |  |  | 656 |  |  | 656 |  |  | — |  |  | 656 |
Rest of World | 7 |  |  | 3 |  |  | — |  |  | 10 |  |  | 696 |  |  | 706 |  |  | — |  |  | 706 |
Total Wholesale | $ | 27 |  |  | $ | 12 |  |  | $ | — |  |  | $ | 39 |  |  | $ | 9,692 |  |  | $ | 9,731 |  |  | $ | 18 |  |  | $ | 9,749 |
Allowance for credit losses activity for the three and six months ended June 30, 2019 and 2018 is as follows:
| Three Months Ended June 30, 2019
| Retail |  | Wholesale |  | Other |  | Total
Opening balance | $ | 317 |  |  | $ | 157 |  |  | $ | — |  |  | $ | 474 |
Provision | 15 |  |  | 4 |  |  | — |  |  | 19 |
Charge-offs, net of recoveries | (16 | ) |  | (4 | ) |  | — |  |  | (20 | )
Foreign currency translation and other | 3 |  |  | 1 |  |  | — |  |  | 4 |
Ending balance | $ | 319 |  |  | $ | 158 |  |  | $ | — |  |  | $ | 477 |
| Six Months Ended June 30, 2019
| Retail |  | Wholesale |  | Other |  | Total
Opening Balance | $ | 326 |  |  | $ | 164 |  |  | $ | — |  |  | $ | 490 |
Provision (benefit) | 23 |  |  | 1 |  |  | — |  |  | 24 |
Charge-offs, net of recoveries | (27 | ) |  | (6 | ) |  | — |  |  | (33 | )
Foreign Currency Translation and Other | (3 | ) |  | (1 | ) |  | — |  |  | (4 | )
Ending Balance | 319 |  |  | 158 |  |  | — |  |  | 477 |
Ending Balance: Individually Evaluated for Impairment | 213 |  |  | 125 |  |  | — |  |  | 338 |
Ending Balance: Collectively Evaluated for Impairment | 106 |  |  | 33 |  |  | — |  |  | 139 |
Receivables: |  |  |  |  |  |  |
Ending Balance | 9,065 |  |  | 10,600 |  |  | 69 |  |  | 19,734 |
Ending Balance: Individually Evaluated for Impairment | 351 |  |  | 288 |  |  | — |  |  | 639 |
Ending Balance: Collectively Evaluated for Impairment | $ | 8,714 |  |  | $ | 10,312 |  |  | $ | 69 |  |  | $ | 19,095 |
| Three Months Ended June 30, 2018
| Retail |  | Wholesale |  | Other |  | Total
Opening balance | $ | 394 |  |  | $ | 202 |  |  | $ | — |  |  | $ | 596 |
Provision | 5 |  |  | 4 |  |  | — |  |  | 9 |
Charge-offs, net of recoveries | (26 | ) |  | — |  |  | — |  |  | (26 | )
Foreign currency translation and other | (24 | ) |  | (13 | ) |  | — |  |  | (37 | )
Ending balance | $ | 349 |  |  | $ | 193 |  |  | $ | — |  |  | $ | 542 |
| Six Months Ended June 30, 2018
| Retail |  | Wholesale |  | Other |  | Total
Opening Balance | $ | 383 |  |  | $ | 200 |  |  | $ | — |  |  | $ | 583 |
Provision (benefit) | 25 |  |  | 3 |  |  | — |  |  | 28 |
Charge-offs, net of recoveries | (40 | ) |  | (1 | ) |  | — |  |  | (41 | )
Foreign Currency Translation and Other | (19 | ) |  | (9 | ) |  | — |  |  | (28 | )
Ending Balance | 349 |  |  | 193 |  |  | — |  |  | 542 |
Ending Balance: Individually Evaluated for Impairment | 231 |  |  | 161 |  |  | — |  |  | 392 |
Ending Balance: Collectively Evaluated for Impairment | 118 |  |  | 32 |  |  | — |  |  | 150 |
Receivables: |  |  |  |  |  |  |
Ending Balance | 9,076 |  |  | 9,804 |  |  | 77 |  |  | 18,957 |
Ending Balance: Individually Evaluated for Impairment | 338 |  |  | 327 |  |  | — |  |  | 665 |
Ending Balance: Collectively Evaluated for Impairment | $ | 8,738 |  |  | $ | 9,477 |  |  | $ | 77 |  |  | $ | 18,292 |
Allowance for credit losses activity for the year ended December 31, 2018 is as follows:
| December 31, 2018
| Retail |  | Wholesale |  | Other |  | Total
Opening Balance | $ | 383 |  |  | $ | 200 |  |  | $ | — |  |  | $ | 583 |
Provision (benefit) | 53 |  |  | (5 | ) |  | — |  |  | 48 |
Charge-offs, net of recoveries | (85 | ) |  | (15 | ) |  | — |  |  | (100 | )
Foreign Currency Translation and Other | (25 | ) |  | (16 | ) |  | — |  |  | (41 | )
Ending Balance | 326 |  |  | 164 |  |  | — |  |  | 490 |
Ending Balance: Individually Evaluated for Impairment | 204 |  |  | 135 |  |  | — |  |  | 339 |
Ending Balance: Collectively Evaluated for Impairment | 122 |  |  | 29 |  |  | — |  |  | 151 |
Receivables: |  |  |  |  |  |  |
Ending Balance | 9,350 |  |  | 9,749 |  |  | 68 |  |  | 19,167 |
Ending Balance: Individually Evaluated for Impairment | 359 |  |  | 314 |  |  | — |  |  | 673 |
Ending Balance: Collectively Evaluated for Impairment | $ | 8,991 |  |  | $ | 9,435 |  |  | $ | 68 |  |  | $ | 18,494 |
Financing receivables are considered impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms. Receivables reviewed for impairment generally include those that are either past due, have provided bankruptcy notification, or require significant collection efforts. Impaired receivables are generally classified as non-performing.
| June 30, 2019 |  | December 31, 2018
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Investment |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Investment
| (in millions)
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America | $ | 43 |  |  | $ | 41 |  |  | $ | 23 |  |  | $ | 45 |  |  | $ | 31 |  |  | $ | 30 |  |  | $ | 16 |  |  | $ | 33 |
Europe | $ | 219 |  |  | $ | 219 |  |  | $ | 157 |  |  | $ | 226 |  |  | $ | 234 |  |  | $ | 234 |  |  | $ | 167 |  |  | $ | 249 |
South America | $ | 84 |  |  | $ | 84 |  |  | $ | 31 |  |  | $ | 87 |  |  | $ | 91 |  |  | $ | 91 |  |  | $ | 20 |  |  | $ | 88 |
Rest of World | $ | 5 |  |  | $ | 5 |  |  | $ | 2 |  |  | $ | 4 |  |  | $ | 3 |  |  | $ | 3 |  |  | $ | 1 |  |  | $ | 4 |
Wholesale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America | $ | 4 |  |  | $ | 4 |  |  | $ | 3 |  |  | $ | 6 |  |  | $ | 25 |  |  | $ | 23 |  |  | $ | 5 |  |  | $ | 27 |
Europe | $ | 261 |  |  | $ | 261 |  |  | $ | 97 |  |  | $ | 260 |  |  | $ | 256 |  |  | $ | 256 |  |  | $ | 107 |  |  | $ | 260 |
South America | $ | 17 |  |  | $ | 9 |  |  | $ | 14 |  |  | $ | 17 |  |  | $ | 23 |  |  | $ | 14 |  |  | $ | 16 |  |  | $ | 26 |
Rest of World | $ | 6 |  |  | $ | 6 |  |  | $ | 11 |  |  | $ | 8 |  |  | $ | 10 |  |  | $ | 10 |  |  | $ | 7 |  |  | $ | 9 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail | $ | 351 |  |  | $ | 349 |  |  | $ | 213 |  |  | $ | 362 |  |  | $ | 359 |  |  | $ | 358 |  |  | $ | 204 |  |  | $ | 374 |
Wholesale | $ | 288 |  |  | $ | 280 |  |  | $ | 125 |  |  | $ | 291 |  |  | $ | 314 |  |  | $ | 303 |  |  | $ | 135 |  |  | $ | 322 |
Troubled Debt Restructurings A restructuring of a receivable constitutes a troubled debt restructuring (“TDR”) when a lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. As a collateral based lender, the Company typically will repossess collateral in lieu of restructuring receivables. As such, for retail receivables, concessions are typically provided based on bankruptcy court proceedings. For wholesale receivables, concessions granted may include extended contract maturities, inclusion of interest-only periods, modification of a contractual interest rate to a below market interest rate and waiving of interest and principal. TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses. The allowance for credit losses attributable to TDRs is based on the most probable source of repayment, which is normally the liquidation of collateral. In determining collateral value, the Company estimates the current fair market value of the equipment collateral and considers credit enhancements such as additional collateral and third-party guarantees. Before removing a receivable from TDR classification, a review of the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations based on a credit review, the TDR classification is not removed from the receivable. As of June 30, 2019, the Company had 272 retail and finance lease contracts classified as TDRs where a court in the North America region has determined the concession. The pre-modification value was $10 million and the post-modification value was $9 million. Additionally, the Company had 381 accounts with a balance of $16 million undergoing bankruptcy proceedings where a concession has not yet been determined. As of June 30, 2018, the Company had 288 retail and finance lease contracts classified as TDRs where a court in the North America region has determined the concession. The pre-modification value of these contracts was $10 million and the post-modification value was $9 million. Additionally, the Company had 377 accounts with a balance of $20 million undergoing bankruptcy proceedings in North America where a concession has not yet been determined. As the outcome of the bankruptcy cases is determined by a court based on available assets, subsequent re-defaults are unusual and were not material for retail and finance lease contracts that were modified in a TDR during the previous twelve months ended June 30, 2019 and 2018. As of June 30, 2019, the Company had retail and finance lease receivable contracts classified as TDRs in Europe. The pre-modification value was $98 million and the post-modification value was $91 million. Subsequent re-defaults were not material for retail and finance lease receivable contracts that were modified in a TDR during the previous twelve months ended June 30, 2019. As of June 30, 2019 and 2018, the Company’s wholesale TDR agreements were immaterial. Transfers of Financial Assets The Company transfers a number of its financial receivables to securitization programs or factoring transactions. A securitization transaction entails the sale of a portfolio of receivables to a securitization vehicle. This special purpose entity (“SPE”) finances the purchase of the receivables by issuing asset-backed securities (i.e. securities whose repayment and interest flow depend upon the cash flow generated by the portfolio). SPEs utilized in securitizations differ from other entities included in the Company’s condensed consolidated financial statements because the assets they hold are legally isolated. For bankruptcy analysis purposes, the Company has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities. Upon transfer of the receivables to the SPEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the SPEs creditors. The SPEs have ownership of cash balances that also have restrictions for the benefit of the SPEs’ investors. The Company’s interests in the SPEs’ receivables are subordinate to the interests of third party investors. None of the receivables that are directly or indirectly sold or transferred in any of these transactions are available to pay the Company’s creditors until all obligations of the SPE have been fulfilled. These securitization trusts were determined to be VIEs, and consequently, the Company has consolidated these trusts. In its role as servicer, the Company has the power to direct the trusts’ activities. Through its retained interests, the Company has an obligation to absorb certain losses or the right to receive certain benefits that could potentially be significant to the trusts. No recourse provisions exist that allow holders of the asset-backed securities issued by the trusts to put those securities back to the Company although the Company provides customary representations and warranties that could give rise to an obligation to repurchase from the trusts any receivables for which there is a breach of the representations and warranties. Moreover, the Company does not guarantee any securities issued by the trusts. The trusts have a limited life and generally terminate upon final distribution of amounts owed to investors or upon exercise of a cleanup-call option by the Company in its role as servicer. Furthermore, factoring transactions may be either with recourse or without recourse; certain without recourse transfers include deferred payment clauses (for example, when the payment by the factor of a minor part of the purchase price is dependent on the total amount collected from the receivables), requiring first loss cover, meaning that the transferor takes priority participation in the losses, or requires a significant exposure to the cash flows arising from the transferred receivables to be retained. These types of transactions do not qualify for the derecognition of the assets since the risks and rewards connected with collection are not substantially transferred, and, accordingly, the Company continues to recognize the receivables transferred by this means in its balance sheet and a financial liability of the same amount under asset-backed financing. At June 30, 2019 and December 31, 2018, the carrying amount of such restricted assets included in financing receivables above are the following (in millions):
| Restricted Receivables
| June 30, 2019 |  | December 31, 2018
Retail note and finance lease receivables | $ | 6,359 |  |  | $ | 6,371 |
Wholesale receivables | 7,414 |  |  | 7,052 |
Total | $ | 13,773 |  |  | $ | 13,423 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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- References No definition available. + Details
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