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Finance Receivables (Tables)

6 Months Ended

Jun. 28, 2020

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


	June 28, 2020		December 31, 2019		June 30, 2019
Retail finance receivables	$	6,520,919	$	6,416,428	$	6,549,707
Wholesale finance receivables	870,087		1,156,519		1,239,694
	7,391,006		7,572,947		7,789,401
Allowance for credit losses	(411,015)		(198,581)		(194,996)
	$	6,979,991	$	7,374,366	$	7,594,405

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 June 28, 2020
	Retail		Wholesale		Total
Balance, beginning of period	$	311,368	$	24,128	$	335,496
Provision for credit losses	94,050		(2,871)		91,179
Charge-offs	(29,859)		—		(29,859)
Recoveries	14,199		—		14,199
Balance, end of period	$	389,758	$	21,257	$	411,015
	Three months ended June 30, 2019
	Retail		Wholesale		Total
Balance, beginning of period	$	181,426	$	9,446	$	190,872
Provision for credit losses	27,555		(1,172)		26,383
Charge-offs	(35,741)		—		(35,741)
Recoveries	13,482		—		13,482
Balance, end of period	$	186,722	$	8,274	$	194,996
	Six months ended June 28, 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	164,467		6,131		170,598
Charge-offs	(85,074)		—		(85,074)
Recoveries	26,306		—		26,306
Balance, end of period	$	389,758	$	21,257	$	411,015


	Six months ended June 30, 2019
	Retail		Wholesale		Total
Balance, beginning of period	$	182,098	$	7,787	$	189,885
Provision for credit losses	60,387		487		60,874
Charge-offs	(80,462)		—		(80,462)
Recoveries	24,699		—		24,699
Balance, end of period	$	186,722	$	8,274	$	194,996

(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


	June 30, 2019
	Retail		Wholesale		Total
Allowance for credit losses, ending balance:
Individually evaluated for impairment	$	—	$	—	$	—
Collectively evaluated for impairment	186,722		8,274		194,996
	$	186,722	$	8,274	$	194,996
Finance receivables, ending balance:
Individually evaluated for impairment	$	—	$	—	$	—
Collectively evaluated for impairment	6,549,707		1,239,694		7,789,401
	$	6,549,707	$	1,239,694	$	7,789,401

Financing Receivable Credit Quality Indicators

The amortized cost of the Company's U.S. and Canadian retail finance receivables by credit quality indicator and vintage, as of June 28, 2020, was as follows (in thousands):


	2020		2019		2018		2017		2016		2015 & Prior		Total
U.S. Retail:
Super prime	$	486,327	$	737,419	$	474,280	$	234,239	$	114,496	$	54,661	$	2,101,422
Prime	670,363		973,046		644,846		388,039		223,960		131,367		3,031,621
Sub-prime	271,843		360,812		217,720		138,998		95,630		79,754		1,164,757
	1,428,533		2,071,277		1,336,846		761,276		434,086		265,782		6,297,800
Canadian Retail:
Super prime	34,715		57,818		35,786		19,265		8,508		3,687		159,779
Prime	11,548		15,741		11,598		7,932		4,093		3,187		54,099
Sub-prime	1,970		2,720		1,881		1,289		782		599		9,241
	48,233		76,279		49,265		28,486		13,383		7,473		223,119
	$	1,476,766	$	2,147,556	$	1,386,111	$	789,762	$	447,469	$	273,255	$	6,520,919

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


	December 31, 2019		June 30, 2019
Prime	$	5,278,093	$	5,372,712
Sub-prime	1,138,335		1,176,995
	$	6,416,428	$	6,549,707

The amortized cost of wholesale financial receivables, by credit quality indicator and vintage, was as follows as of June 28, 2020 (in thousands):


	2020		2019		2018		2017		2016		2015 & Prior		Total
Non-Performing	$	—	$	2,376	$	1,774	$	107	$	25	$	43	$	4,325
Doubtful	579		1,009		188		—		—		—		1,776
Substandard	944		966		53		—		—		—		1,963
Special Mention	5,345		5,281		564		—		—		1,805		12,995
Medium Risk	6,690		3,587		301		63		—		—		10,641
Low Risk	517,708		273,408		29,301		8,965		6,006		2,999		838,387
	$	531,266	$	286,627	$	32,181	$	9,135	$	6,031	$	4,847	$	870,087

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


	December 31, 2019		June 30, 2019

Doubtful	$	11,664	$	6,850
Substandard	6,122		7,643
Special Mention	16,125		12,642
Medium Risk	16,800		6,170
Low Risk	1,105,808		1,206,389
	$	1,156,519	$	1,239,694

Impaired Financing Receivables Under ASC 310

Additional information related to the wholesale finance receivables on non-accrual status was as follows (in thousands):


	Amortized Cost		Amortized Cost		Interest Income
	January 1, 2020		June 28, 2020		Recognized
Wholesale:
No related allowance recorded	$	—	$	—	$	—
Related allowance recorded	4,994		4,325		—
	$	4,994	$	4,325	$	—

At June 30, 2019, there were no wholesale receivables that were individually deemed to be impaired under ASC Topic 310, Receivables. Additional information related to the wholesale finance receivables that were individually deemed to be impaired at December 31, 2019 included the following (in thousands):


	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):


	June 28, 2020
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total
Retail finance receivables	$	6,425,078	$	63,190	$	16,631	$	16,020	$	95,841	$	6,520,919
Wholesale finance receivables	864,911		1,261		413		3,502		5,176		870,087
	$	7,289,989	$	64,451	$	17,044	$	19,522	$	101,017	$	7,391,006

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

	June 30, 2019
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total
Retail finance receivables	$	6,359,499	$	119,770	$	40,015	$	30,423	$	190,208	$	6,549,707
Wholesale finance receivables	1,236,747		577		320		2,050		2,947		1,239,694
	$	7,596,246	$	120,347	$	40,335	$	32,473	$	193,155	$	7,789,401