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Finance Receivables (Tables)

3 Months Ended

Mar. 29, 2020

Finance receivables, net, consisted of the following (in thousands):


	March 29, 2020		December 31, 2019		March 31, 2019
Retail finance receivables	$	6,269,247	$	6,416,428	$	6,290,036
Wholesale finance receivables	1,358,656		1,156,519		1,339,428
	7,627,903		7,572,947		7,629,464
Allowance for credit losses	(335,496)		(198,581)		(190,872)
	$	7,292,407	$	7,374,366	$	7,438,592

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 March 29, 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	70,417		9,002		79,419
Charge-offs	(55,215)		—		(55,215)
Recoveries	12,107		—		12,107
Balance, end of period	$	311,368	$	24,128	$	335,496
	Three months ended March 31, 2019
	Retail		Wholesale		Total
Balance, beginning of period	$	182,098	$	7,787	$	189,885
Provision for credit losses	32,832		1,659		34,491
Charge-offs	(44,721)		—		(44,721)
Recoveries	11,217		—		11,217
Balance, end of period	$	181,426	$	9,446	$	190,872

(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

	March 31, 2019
	Retail		Wholesale		Total
Allowance for credit losses, ending balance:
Individually evaluated for impairment	$	—	$	—	$	—
Collectively evaluated for impairment	181,426		9,446		190,872
	$	181,426	$	9,446	$	190,872
Finance receivables, ending balance:
Individually evaluated for impairment	$	—	$	—	$	—
Collectively evaluated for impairment	6,290,036		1,339,428		7,629,464
	$	6,290,036	$	1,339,428	$	7,629,464

Financing Receivable Credit Quality Indicators

The amortized cost of the Company's U.S. and Canada retail finance receivable portfolios by credit quality indicator and vintage, as of March 29, 2020, was as follows (in thousands):


	2020		2019		2018		2017		2016		2015 & Prior		Total
U.S. Retail:
Super prime	$	204,937	$	825,176	$	539,296	$	275,621	$	140,284	$	62,924	$	2,048,238
Prime	265,365		1,065,132		717,234		441,284		262,421		155,338		2,906,774
Sub-prime	108,068		394,291		239,571		155,391		108,531		98,124		1,103,976
	578,370		2,284,599		1,496,101		872,296		511,236		316,386		$	6,058,988
Canadian Retail:
Super prime	$	12,819	$	61,889	$	39,516	$	22,186	$	10,565	$	4,989	$	151,964
Prime	3,968		16,479		12,389		8,441		4,549		3,929		49,755
Sub-prime	768		2,827		1,919		1,348		921		757		8,540
	17,555		81,195		53,824		31,975		16,035		9,675		210,259
	$	595,925	$	2,365,794	$	1,549,925	$	904,271	$	527,271	$	326,061	$	6,269,247

The recorded investment in retail finance receivables, by credit quality indicator, was as follows (in thousands):


	December 31, 2019		March 31, 2019
Prime	$	5,278,093	$	5,160,942
Sub-prime	1,138,335		1,129,094
	$	6,416,428	$	6,290,036

The amortized cost of wholesale financial receivables, by credit quality indicator and vintage, was as follows as of March 29, 2020 (in thousands):


	2020		2019		2018		2017		2016		2015 & Prior		Total
Non-Performing	$	—	$	2,376	$	1,774	$	107	$	25	$	43	$	4,325
Doubtful	478		4,169		529		51		—		726		5,953
Substandard	5,375		6,374		391		131		—		—		12,271
Special Mention	5,239		8,001		977		6		—		1,268		15,491
Medium Risk	8,307		10,996		1,091		23		—		826		21,243
Low Risk	658,137		574,401		47,101		10,997		6,323		2,414		1,299,373
	$	677,536	$	606,317	$	51,863	$	11,315	$	6,348	$	5,277	$	1,358,656

The recorded investment in wholesale finance receivables, by internal credit quality indicator, was as follows (in thousands):


	December 31, 2019		March 31, 2019

Doubtful	$	11,664	$	8,679
Substandard	6,122		7,866
Special Mention	16,125		11,484
Medium Risk	16,800		917
Low Risk	1,105,808		1,310,482
	$	1,156,519	$	1,339,428

Impaired Financing Receivables Under ASC 310

Additional information related to the wholesale finance receivables on non-accrual status at March 29, 2020 includes (in thousands):


	Amortized Cost, Beginning of Period		Amortized Cost, End of Period		Interest Income Recognized
Wholesale:
No related allowance recorded	$	—	$	—	$	—
Related allowance recorded	4,994		4,325		—
	$	4,994	$	4,325	$	—

Additional information related to the wholesale finance receivables that were individually deemed to be impaired under ASC Topic 310, Receivables at December 31, 2019 included the following (in thousands). There were no wholesale receivables individually deemed to be impaired at March 31, 2019.


	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):


	March 29, 2020
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Finance Receivables
Retail finance receivables	$	6,091,319	$	101,412	$	37,816	$	38,700	$	177,928	$	6,269,247
Wholesale finance receivables	1,352,084		2,051		1,437		3,084		6,572		1,358,656
	$	7,443,403	$	103,463	$	39,253	$	41,784	$	184,500	$	7,627,903

	December 31, 2019
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Finance Receivables
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

	March 31, 2019
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Finance Receivables
Retail finance receivables	$	6,088,894	$	119,150	$	43,028	$	38,964	$	201,142	$	6,290,036
Wholesale finance receivables	1,337,429		862		355		782		1,999		1,339,428
	$	7,426,323	$	120,012	$	43,383	$	39,746	$	203,141	$	7,629,464