Financing Receivables, Receivables Purchased/Participated from IBM (Tables)

3 Months Ended

Mar. 31, 2020


					Client Loan and
					Installment
			Commercial		Payment
(Dollars in millions)	Investment in		Financing		Receivables
At March 31, 2020:	Leases		Receivables		(Loans)		Total
Financing receivables, gross	$	4,081	$	2,008	$	8,742	$	14,831
Unearned income		(337)		(3)		(330)		(669)
Deferred initial direct costs		28		—		64		93
Residual value*		542		—		—		542
Amortized cost	$	4,314	$	2,005	$	8,476	$	14,796
Allowance for credit losses		(64)		(9)		(85)		(158)
Total financing receivables, net	$	4,250	$	1,996	$	8,391	$	14,638

* Includes guaranteed and unguaranteed residual value


					Client Loan and
					Installment
			Commercial		Payment
(Dollars in millions)	Investment in		Financing		Receivables
At December 31, 2019:	Leases		Receivables		(Loans)		Total
Financing receivables, gross	$	4,626	$	3,400	$	9,566	$	17,592
Unearned income		(384)		(4)		(373)		(761)
Deferred initial direct costs		32		—		71		103
Recorded investment	$	4,274	$	3,396	$	9,264	$	16,934
Allowance for credit losses		(56)		(9)		(82)		(148)
Unguaranteed residual value		531		—		—		531
Guaranteed residual value		47		—		—		47
Total financing receivables, net	$	4,796	$	3,387	$	9,181	$	17,365

Purchased and participated receivables from IBM


	At March 31,		At December 31,
(Dollars in millions)	2020		2019
Short-term purchased receivables from IBM	$	72	$	56
Allowance for credit losses		0		0
Total short-term purchased receivables from IBM, net	$	72	$	56

Long-term participated receivables from IBM	$	4,206	$	4,310
Allowance for credit losses		(21)		(7)
Total long-term participated receivables from IBM, net	$	4,186	$	4,303

Total purchased and participated receivables from IBM, net	$	4,258	$	4,359


(Dollars in millions)
At March 31, 2020:	Americas		EMEA		Asia Pacific		Total
Amortized cost
Lease receivables	$	3,338	$	601	$	376	$	4,314
Loan receivables		5,657		2,219		600		8,476
Participated receivables from IBM		631		1,715		1,860		4,206
Ending balance	$	9,626	$	4,534	$	2,836	$	16,997

Allowance for credit losses
Beginning balance at December 31, 2019	$	98	$	36	$	11	$	146
Adjustment for adoption of new standard		21		13		4		39
Beginning balance at January 1, 2020
Lease receivables	$	38	$	22	$	9	$	69
Loan receivables		78		18		3		98
Participated receivables from IBM		4		10		4		18
Total	$	120	$	50	$	16	$	185
Write-offs	$	(14)	$	(1)	$	(1)	$	(16)
Recoveries		0		—		0		0
Provision		5		8		1		14
Other*		(12)		(1)		0		(13)
Ending balance at March 31, 2020	$	99	$	56	$	15	$	170
Lease receivables	$	37	$	20	$	7	$	64
Loan receivables	$	57	$	24	$	4	$	85
Participated receivables from IBM	$	4	$	12	$	4	$	21

* Primarily represents translation adjustments.


(Dollars in millions)
At December 31, 2019:	Americas		EMEA		Asia Pacific		Total
Recorded investment
Lease receivables	$	3,160	$	710	$	404	$	4,274
Loan receivables		6,173		2,415		676		9,264
Participated receivables from IBM		717		1,671		1,922		4,310
Ending balance	$	10,049	$	4,796	$	3,003	$	17,848
Recorded investment collectively evaluated for impairment	$	9,957	$	4,770	$	2,993	$	17,720
Recorded investment individually evaluated for impairment	$	92	$	26	$	10	$	128

Allowance for credit losses
Beginning balance at January 1, 2019
Lease receivables	$	38	$	17	$	10	$	65
Loan receivables		66		28		5		98
Participated receivables from IBM		3		8		3		14
Total	$	107	$	53	$	17	$	177
Write-offs	$	(14)	$	(10)	$	(4)	$	(29)
Recoveries		0		0		0		1
Provision		7		(6)		(2)		(2)
Foreign currency translation adjustment		(1)		0		0		(1)
Other		0		0		0		0
Ending balance at December 31, 2019	$	98	$	36	$	11	$	146
Lease receivables	$	27	$	21	$	8	$	56
Loan receivables	$	68	$	12	$	2	$	82
Participated receivables from IBM	$	3	$	3	$	1	$	7

Related allowance, collectively evaluated for impairment	$	23	$	11	$	3	$	36
Related allowance, individually evaluated for impairment	$	75	$	26	$	9	$	110


					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At March 31, 2020:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	3,338	$	136	$	106	$	7	$	35
EMEA		601		19		6		0		15
Asia Pacific		376		9		3		0		6
Total lease receivables	$	4,314	$	164	$	115	$	7	$	56

Americas	$	5,657	$	97	$	60	$	10	$	38
EMEA		2,219		55		7		3		50
Asia Pacific		600		7		5		0		1
Total loan receivables	$	8,476	$	158	$	72	$	14	$	90

Americas	$	631	$	7	$	5	$	1	$	3
EMEA		1,715		1		0		0		1
Asia Pacific		1,860		4		4		1		0
Total participated receivables from IBM	$	4,206	$	12	$	9	$	2	$	4

Total	$	16,997	$	333	$	195	$	23	$	149

(1)	At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.

(2)	Of the amortized cost not accruing, there was a related allowance of $95 million. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2020.


					Recorded		Billed		Recorded
	Total		Recorded		Investment		Invoices		Investment
(Dollars in millions)	Recorded		Investment		> 90 Days and		> 90 Days and		Not
At December 31, 2019:	Investment		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	3,160	$	179	$	143	$	10	$	37
EMEA		710		24		11		1		16
Asia Pacific		404		9		2		0		7
Total lease receivables	$	4,274	$	213	$	156	$	11	$	59

Americas	$	6,173	$	107	$	66	$	10	$	56
EMEA		2,415		51		3		1		51
Asia Pacific		676		3		1		0		2
Total loan receivables	$	9,264	$	161	$	69	$	11	$	110

Americas	$	717	$	8	$	8	$	1	$	0
EMEA		1,671		7		7		1		1
Asia Pacific		1,922		6		5		1		1
Total participated receivables from IBM	$	4,310	$	21	$	20	$	3	$	2

Total	$	17,848	$	394	$	245	$	25	$	171

(1)	At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.

(2)	Of the recorded investment not accruing, $128 million was individually evaluated for impairment with a related allowance of $110 million.


	Lease Receivables						Loan Receivables						Participated Receivables from IBM
(Dollars in millions)					Asia						Asia						Asia
At December 31, 2019	Americas		EMEA		Pacific		Americas		EMEA		Pacific		Americas		EMEA		Pacific
Credit Ratings:
Aaa – Aa3	$	305	$	55	$	31	$	732	$	89	$	89	$	440	$	88	$	89
A1 – A3		700		88		124		1,166		178		237		71		271		934
Baa1 – Baa3		949		153		83		1,756		907		107		104		762		500
Ba1 – Ba2		733		206		61		1,461		532		159		49		442		245
Ba3 – B1		196		137		62		444		455		46		43		88		126
B2 – B3		236		45		32		513		228		33		4		18		26
Caa – D		13		5		2		32		15		3		2		0		2
Total	$	3,133	$	689	$	396	$	6,105	$	2,403	$	674	$	714	$	1,668	$	1,921