Finance Receivables, Net (Tables)

9 Months Ended

Sep. 30, 2014

Financing Receivable, Net [Abstract]

The following is a summary of our prior sales activity:



	Year Ended December 31,
	2013		2012
Net carrying value (NCV) sold	$	676	$	682
Allowance included in NCV	17		18
Cash proceeds received	635		630
Beneficial interests received	86		101
Pre-tax gain on sales	40		44
Net fees and expenses	5		5

Finance Receivables Sales Impact on Operating Cash Flows

The net impact from the sales of finance receivables on operating cash flows is summarized below:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net cash received for sales of finance receivables⁽¹⁾	$	—		$	384		$	—		$	384
Impact from prior sales of finance receivables⁽²⁾	(125		)	(84		)	(411		)	(258		)
Collections on beneficial interest	23			16			74			43
Estimated (Decrease) Increase to Operating Cash Flows	$	(102	)	$	316		$	(337	)	$	169

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(1)	Net of beneficial interest, fees and expenses.


(2)	Represents cash that would have been collected had we not sold finance receivables.

Allowance for Credit Losses on Financing Receivables

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:



Allowance for Credit Losses:	United States			Canada			Europe			Other⁽³⁾			Total
Balance at December 31, 2013	$	45		$	22		$	81		$	6		$	154
Provision	3			2			7			3			15
Charge-offs	(1		)	(4		)	(5		)	(2		)	(12		)
Recoveries and other⁽¹⁾	1			—			—			—			1
Balance at March 31, 2014	$	48		$	20		$	83		$	7		$	158
Provision	1			2			11			1			15
Charge-offs	—			(4		)	(8		)	1			(11		)
Recoveries and other⁽¹⁾	—			2			—			—			2
Balance at June 30, 2014	$	49		$	20		$	86		$	9		$	164
Provision	(1		)	2			7			2			10
Charge-offs	(2		)	(2		)	(7		)	(1		)	(12		)
Recoveries and other⁽¹⁾	1			1			(6		)	(1		)	(5		)
Balance at September 30, 2014	$	47		$	21		$	80		$	9		$	157
Finance receivables as of September 30, 2014 collectively evaluated for impairment⁽²⁾	$	1,699		$	404		$	1,952		$	363		$	4,418

Balance at December 31, 2012	$	50		$	31		$	85		$	4		$	170
Provision	2			2			9			—			13
Charge-offs	(2		)	(4		)	(15		)	—			(21		)
Recoveries and other⁽¹⁾	1			—			(3		)	—			(2		)
Balance at March 31, 2013	$	51		$	29		$	76		$	4		$	160
Provision	6			3			10			2			21
Charge-offs	(2		)	(3		)	(14		)	(1		)	(20		)
Recoveries and other⁽¹⁾	(1		)	—			2			—			1
Balance at June 30, 2013	$	54		$	29		$	74		$	5		$	162
Provision	3			3			12			1			19
Charge-offs	(3		)	(4		)	(12		)	—			(19		)
Recoveries and other⁽¹⁾	1			2			2			(1		)	4
Sale of finance receivables	(12		)	—			—			—			(12		)
Balance at September 30, 2013	$	43		$	30		$	76		$	5		$	154
Finance receivables as of September 30, 2013 collectively evaluated for impairment⁽²⁾	$	1,587		$	696		$	2,279		$	270		$	4,832

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(1)	Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.


(2)	Total Finance receivables exclude residual values of $0 and $1, and the allowance for credit losses of $157 and $154 at September 30, 2014 and 2013, respectively.


(3)	Includes developing market countries and smaller units.

Financing Receivable Credit Quality Indicators

Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:



	September 30, 2014								December 31, 2013
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	188	$	143	$	52	$	383	$	189	$	102	$	34	$	325
Government and education	600		14		4		618		656		12		3		671
Graphic arts	139		72		97		308		142		59		108		309
Industrial	96		34		19		149		92		28		15		135
Healthcare	80		25		14		119		74		25		16		115
Other	55		37		30		122		55		27		29		111
Total United States	1,158		325		216		1,699		1,208		253		205		1,666
Finance and other services	49		26		11		86		46		18		11		75
Government and education	78		8		2		88		96		9		1		106
Graphic arts	54		48		36		138		56		52		48		156
Industrial	23		12		5		40		23		12		6		41
Other	33		15		4		52		29		9		5		43
Total Canada⁽¹⁾	237		109		58		404		250		100		71		421
France	255		272		123		650		282		314		122		718
U.K./Ireland	170		170		35		375		199		171		42		412
Central⁽²⁾	245		299		38		582		287		394		43		724
Southern⁽³⁾	73		153		43		269		102		187		58		347
Nordics⁽⁴⁾	26		50		—		76		46		42		3		91
Total Europe	769		944		239		1,952		916		1,108		268		2,292
Other	202		132		29		363		226		69		9		304
Total	$	2,366	$	1,510	$	542	$	4,418	$	2,600	$	1,530	$	553	$	4,683

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(1)

Historically, the Company had included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been revised to reclassify $33 of graphic arts customers from Finance and Other Services and to reclassify $38 from Industrial to be consistent with the September 30, 2014 presentation.


(2)	Switzerland, Germany, Austria, Belgium and Holland.


(3)	Italy, Greece, Spain and Portugal.


(4)	Sweden, Norway, Denmark and Finland.

Finance Receivables Aging

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:



	September 30, 2014
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	9	$	2	$	1	$	12	$	371	$	383	$	12
Government and education	18		3		2		23		595		618		20
Graphic arts	15		1		—		16		292		308		9
Industrial	4		1		1		6		143		149		6
Healthcare	4		1		—		5		114		119		5
Other	3		1		—		4		118		122		4
Total United States	53		9		4		66		1,633		1,699		56
Canada	3		2		1		6		398		404		15
France	1		3		6		10		640		650		43
U.K./Ireland	—		3		—		3		372		375		1
Central⁽¹⁾	5		1		1		7		575		582		19
Southern⁽²⁾	17		6		6		29		240		269		23
Nordics⁽³⁾	1		—		—		1		75		76		5
Total Europe	24		13		13		50		1,902		1,952		91
Other	9		1		—		10		353		363		—
Total	$	89	$	25	$	18	$	132	$	4,286	$	4,418	$	162

	December 31, 2013
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	7	$	2	$	1	$	10	$	315	$	325	$	12
Government and education	17		4		3		24		647		671		34
Graphic arts	12		1		—		13		296		309		5
Industrial	3		1		1		5		130		135		6
Healthcare	3		1		—		4		111		115		5
Other	3		1		—		4		107		111		3
Total United States	45		10		5		60		1,606		1,666		65
Canada	4		3		3		10		411		421		19
France	—		—		—		—		718		718		40
U.K./Ireland	1		1		—		2		410		412		2
Central⁽¹⁾	3		2		3		8		716		724		23
Southern⁽²⁾	21		5		7		33		314		347		45
Nordics⁽³⁾	2		—		—		2		89		91		—
Total Europe	27		8		10		45		2,247		2,292		110
Other	8		1		—		9		295		304		—
Total	$	84	$	22	$	18	$	124	$	4,559	$	4,683	$	194

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(1)	Switzerland, Germany, Austria, Belgium and Holland.


(2)	Italy, Greece, Spain and Portugal.


(3)	Sweden, Norway, Denmark and Finland.