Finance Receivables (Tables)

9 Months Ended

Sep. 27, 2020

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


	September 27, 2020		December 31, 2019		September 29, 2019
Retail finance receivables	$	6,585,298	$	6,416,428	$	6,642,809
Wholesale finance receivables	666,896		1,156,519		1,071,347
	7,252,194		7,572,947		7,714,156
Allowance for credit losses	(408,702)		(198,581)		(198,576)
	$	6,843,492	$	7,374,366	$	7,515,580

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 September 27, 2020
	Retail		Wholesale		Total
Balance, beginning of period	$	389,758	$	21,257	$	411,015
Provision for credit losses	8,024		(189)		7,835
Charge-offs	(20,378)		(2,442)		(22,820)
Recoveries	12,672		—		12,672
Balance, end of period	$	390,076	$	18,626	$	408,702
	Three months ended September 29, 2019
	Retail		Wholesale		Total
Balance, beginning of period	$	186,722	$	8,274	$	194,996
Provision for credit losses	35,071		(1,324)		33,747
Charge-offs	(41,076)		—		(41,076)
Recoveries	10,909		—		10,909
Balance, end of period	$	191,626	$	6,950	$	198,576
	Nine months ended September 27, 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	172,491		5,942		178,433
Charge-offs	(105,452)		(2,442)		(107,894)
Recoveries	38,978		—		38,978
Balance, end of period	$	390,076	$	18,626	$	408,702

	Nine months ended September 29, 2019
	Retail		Wholesale		Total
Balance, beginning of period	$	182,098	$	7,787	$	189,885
Provision for credit losses	95,458		(837)		94,621
Charge-offs	(121,538)		—		(121,538)
Recoveries	35,608		—		35,608
Balance, end of period	$	191,626	$	6,950	$	198,576

(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


	September 29, 2019
	Retail		Wholesale		Total
Allowance for credit losses, ending balance:
Individually evaluated for impairment	$	—	$	—	$	—
Collectively evaluated for impairment	191,626		6,950		198,576
	$	191,626	$	6,950	$	198,576
Finance receivables, ending balance:
Individually evaluated for impairment	$	—	$	—	$	—
Collectively evaluated for impairment	6,642,809		1,071,347		7,714,156
	$	6,642,809	$	1,071,347	$	7,714,156

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 September 27, 2020, was as follows (in thousands):


	2020		2019		2018		2017		2016		2015 & Prior		Total
U.S. Retail:
Super prime	$	730,539	$	649,174	$	408,201	$	196,050	$	90,179	$	39,749	$	2,113,892
Prime	993,429		877,714		570,851		336,134		187,067		101,403		3,066,598
Sub-prime	387,766		326,537		196,001		124,312		82,975		64,537		1,182,128
	2,111,734		1,853,425		1,175,053		656,496		360,221		205,689		6,362,618
Canadian Retail:
Super prime	48,974		51,939		31,351		16,013		6,526		2,723		157,526
Prime	17,053		14,681		10,630		7,285		3,555		2,489		55,693
Sub-prime	2,790		2,630		1,706		1,171		685		479		9,461
	68,817		69,250		43,687		24,469		10,766		5,691		222,680
	$	2,180,551	$	1,922,675	$	1,218,740	$	680,965	$	370,987	$	211,380	$	6,585,298

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


	December 31, 2019		September 29, 2019
Prime	$	5,278,093	$	5,454,920
Sub-prime	1,138,335		1,187,889
	$	6,416,428	$	6,642,809

The amortized cost of wholesale financial receivables, by credit quality indicator and vintage, was as follows as of September 27, 2020 (in thousands):


	2020		2019		2018		2017		2016		2015 & Prior		Total
Non-Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Doubtful	—		—		14		—		—		—		14
Substandard	277		238		—		—		—		—		515
Special Mention	2,316		1,213		160		—		—		1,139		4,828
Medium Risk	1,283		448		33		—		—		—		1,764
Low Risk	505,328		118,466		18,602		8,551		5,525		3,303		659,775
	$	509,204	$	120,365	$	18,809	$	8,551	$	5,525	$	4,442	$	666,896

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


	December 31, 2019		September 29, 2019

Doubtful	$	11,664	$	4,964
Substandard	6,122		752
Special Mention	16,125		14,813
Medium Risk	16,800		11,544
Low Risk	1,105,808		1,039,274
	$	1,156,519	$	1,071,347

Impaired Financing Receivables Under ASC 310

At September 29, 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):


	September 27, 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	$	6,434,642	$	96,243	$	31,467	$	22,946	$	150,656	$	6,585,298
Wholesale finance receivables	666,335		244		3		314		561		666,896
	$	7,100,977	$	96,487	$	31,470	$	23,260	$	151,217	$	7,252,194

	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

	September 29, 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	$	6,425,097	$	134,074	$	48,033	$	35,605	$	217,712	$	6,642,809
Wholesale finance receivables	1,068,510		615		209		2,013		2,837		1,071,347
	$	7,493,607	$	134,689	$	48,242	$	37,618	$	220,549	$	7,714,156