(11) Financing Receivables

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. Beginning in the first quarter of 2019, the Company ceased accruing finance income when these receivables are generally 90 days delinquent. Previously, finance income ceased accruing when the receivables were 120 days delinquent. This change in estimate was made on a prospective basis and did not have a significant effect on the Company’s consolidated financial statements. Management’s methodology to determine the collectability of delinquent accounts was not affected by the change.

Generally, when receivables are 120 days delinquent the estimated uncollectible amount, after charging the dealer’s withholding account, if any, is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured.

An age analysis of past due financing receivables that are still accruing interest and non-performing financing receivables in millions of dollars follows:


	January 27, 2019
					90 Days
	30-59 Days		60-89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
Retail Notes:
Agriculture and turf	$	162	$	63	$	1	$	226
Construction and forestry		102		47		1		150
Other:
Agriculture and turf		65		23		1		89
Construction and forestry		16		8				24
Total	$	345	$	141	$	3	$	489

							Total
	Total		Total				Financing
	Past Due		Non-Performing		Current		Receivables
Retail Notes:
Agriculture and turf	$	226	$	296	$	17,408	$	17,930
Construction and forestry		150		107		3,092		3,349
Other:
Agriculture and turf		89		28		7,213		7,330
Construction and forestry		24		10		1,247		1,281
Total	$	489	$	441	$	28,960		29,890
Less allowance for credit losses								177
Total financing receivables – net							$	29,713


	October 28, 2018
					90 Days
	30-59 Days		60-89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
Retail Notes:
Agriculture and turf	$	133	$	74	$	63	$	270
Construction and forestry		79		45		52		176
Other:
Agriculture and turf		36		16		8		60
Construction and forestry		18		5		3		26
Total	$	266	$	140	$	126	$	532

							Total
	Total		Total				Financing
	Past Due		Non-Performing		Current		Receivables
Retail Notes:
Agriculture and turf	$	270	$	201	$	17,836	$	18,307
Construction and forestry		176		40		3,101		3,317
Other:
Agriculture and turf		60		15		8,274		8,349
Construction and forestry		26		3		1,252		1,281
Total	$	532	$	259	$	30,463		31,254
Less allowance for credit losses								178
Total financing receivables – net							$	31,076


	January 28, 2018
					90 Days
	30-59 Days		60-89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
Retail Notes:
Agriculture and turf	$	149	$	49	$	59	$	257
Construction and forestry		78		38		39		155
Other:
Agriculture and turf		51		20		6		77
Construction and forestry		9		5		2		16
Total	$	287	$	112	$	106	$	505

							Total
	Total		Total				Financing
	Past Due		Non-Performing		Current		Receivables
Retail Notes:
Agriculture and turf	$	257	$	185	$	17,287	$	17,729
Construction and forestry		155		36		2,869		3,060
Other:
Agriculture and turf		77		13		6,481		6,571
Construction and forestry		16		4		1,139		1,159
Total	$	505	$	238	$	27,776		28,519
Less allowance for credit losses								190
Total financing receivables – net							$	28,329

An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:


	Three Months Ended January 27, 2019
			Revolving
	Retail		Charge
	Notes		Accounts		Other		Total
Allowance:
Beginning of period balance	$	113	$	43	$	22	$	178
Provision (credit)		6		(1)		2		7
Write-offs		(11)		(4)		(1)		(16)
Recoveries		4		5				9
Translation adjustments		(1)						(1)
End of period balance *	$	111	$	43	$	23	$	177

Financing receivables:
End of period balance	$	21,279	$	2,737	$	5,874	$	29,890
Balance individually evaluated **	$	118	$	2	$	13	$	133


	Three Months Ended January 28, 2018
			Revolving
	Retail		Charge
	Notes		Accounts		Other		Total
Allowance:
Beginning of period balance	$	121	$	40	$	26	$	187
Provision						2		2
Write-offs		(7)		(5)		(1)		(13)
Recoveries		6		5				11
Translation adjustments		3						3
End of period balance *	$	123	$	40	$	27	$	190

Financing receivables:
End of period balance	$	20,789	$	2,652	$	5,078	$	28,519
Balance individually evaluated **	$	101	$	2	$	16	$	119

* Individual allowances were not significant.

** Remainder is collectively evaluated.

Financing receivables are considered impaired when it is probable 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, or have provided bankruptcy notification, or require significant collection efforts. Receivables that are impaired are generally classified as non-performing.

An analysis of the impaired financing receivables in millions of dollars follows:


			Unpaid				Average
	Recorded		Principal		Specific		Recorded
	Investment		Balance		Allowance		Investment
January 27, 2019*
Receivables with specific allowance **	$	30	$	30	$	12	$	30
Receivables without a specific allowance **		36		34				36
Total	$	66	$	64	$	12	$	66
Agriculture and turf	$	49	$	48	$	9	$	49
Construction and forestry	$	17	$	16	$	3	$	17

October 28, 2018*
Receivables with specific allowance **	$	28	$	27	$	10	$	30
Receivables without a specific allowance **		37		35				41
Total	$	65	$	62	$	10	$	71
Agriculture and turf	$	50	$	48	$	9	$	54
Construction and forestry	$	15	$	14	$	1	$	17

January 28, 2018*
Receivables with specific allowance ***	$	30	$	28	$	9	$	32
Receivables without a specific allowance ***		34		33				31
Total	$	64	$	61	$	9	$	63
Agriculture and turf	$	47	$	45	$	9	$	47
Construction and forestry	$	17	$	16			$	16

* Finance income recognized was not material.

** Primarily retail notes.

*** Primarily retail notes and wholesale receivables.

A troubled debt restructuring is generally the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first three months of 2019, the Company identified 70 financing receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $2 million pre-modification and $2 million post-modification. During the first three months of 2018, there were 102 financing receivable contracts, primarily retail notes, identified as troubled debt restructurings with aggregate balances of $6 million pre-modification and $5 million post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At January 27, 2019, the Company had commitments to lend approximately $13 million to borrowers whose accounts were modified in troubled debt restructurings.