Financing Receivables (Tables)

3 Months Ended

Mar. 31, 2017

Financing Receivables:

Financing receivables, net of allowances for credit losses, including residual values

	At March 31,		At December 31,
(Dollars in millions)	2017		2016
Current:
Net investment in sales-type and direct financing leases	$	2,875	$	2,909
Commercial financing receivables	7,460		9,706
Client loan and installment payment receivables (loans)	6,027		6,390
Total	$	16,362	$	19,006
Noncurrent:
Net investment in sales-type and direct financing leases	$	3,733	$	3,950
Client loan and installment payment receivables (loans)	4,769		5,071
Total	$	8,502	$	9,021

Schedule of financing receivables and allowance for credit losses by portfolio segment

(Dollars in millions)
At March 31, 2017	Americas			EMEA		Asia Pacific			Total
Financing receivables
Lease receivables	$	3,602		$	1,154	$	1,342		$	6,098
Loan receivables	5,826			3,062		2,193			11,081
Ending balance	$	9,428		$	4,216	$	3,535		$	17,179
Collectively evaluated for impairment	$	9,250		$	4,190	$	3,371		$	16,811
Individually evaluated for impairment	$	179		$	26	$	164		$	368
Allowance for credit losses
Beginning balance at January 1, 2017
Lease receivables	$	54		$	4	$	76		$	133
Loan receivables	169			18		89			276
Total	$	223		$	22	$	165		$	410
Write-offs	$	(9	)	$	0	$	0		$	(9	)
Recoveries	0			0		0			0
Provision	6			7		(1		)	12
Other	2			1		8			11
Ending balance at March 31, 2017	$	223		$	29	$	172		$	424
Lease receivables	$	61		$	4	$	75		$	140
Loan receivables	$	162		$	26	$	97		$	285
Collectively evaluated for impairment	$	54		$	11	$	14		$	80
Individually evaluated for impairment	$	169		$	18	$	157		$	344

(Dollars in millions)
At December 31, 2016:*	Americas			EMEA			Asia Pacific			Total
Financing receivables:
Lease receivables	$	3,830		$	1,171		$	1,335		$	6,336
Loan receivables	6,185			3,309			2,243			11,737
Ending balance	$	10,015		$	4,480		$	3,578		$	18,073
Collectively evaluated for impairment	$	9,847		$	4,460		$	3,419		$	17,726
Individually evaluated for impairment	$	168		$	20		$	159		$	347
Allowance for credit losses
Beginning balance at January 1, 2016
Lease receivables	$	52		$	17		$	143		$	213
Loan receivables	122			55			200			377
Total	$	175		$	72		$	343		$	590
Write-offs	$	(36	)	$	(48	)	$	(154	)	$	(237	)
Recoveries	2			0			0			2
Provision	65			(1		)	(6		)	58
Other	17			(1		)	(18		)	(3		)
Ending balance at December 31, 2016	$	223		$	22		$	165		$	410
Lease receivables	$	54		$	4		$	76		$	133
Loan receivables	$	169		$	18		$	89		$	276
Collectively evaluated for impairment	$	62		$	13		$	15		$	90
Individually evaluated for impairment	$	161		$	9		$	150		$	320

* Reclassified to conform to 2017 presentation.

Schedule of recorded investment in financing receivables which are on non-accrual status

	At March 31,		At December 31,
(Dollars in millions)	2017		2016*
Americas	$	28	$	23
EMEA	27		2
Asia Pacific	14		14
Total lease receivables	$	68	$	40
Americas	$	133	$	128
EMEA	31		5
Asia Pacific	8		12
Total loan receivables	$	172	$	145
Total receivables	$	241	$	185

* Reclassified to conform to 2017 presentation.

Schedule of impaired client loan and lease receivables

	At March 31, 2017				At December 31, 2016*
	Recorded		Related		Recorded		Related
(Dollars in millions)	Investment		Allowance		Investment		Allowance
Americas	$	179	$	169	$	168	$	161
EMEA	26		18		20		9
Asia Pacific	164		157		159		150
Total	$	368	$	344	$	347	$	320

* Reclassified to conform to 2017 presentation.

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the three months ended March 31, 2017:	Investment		Recognized		Cash Basis
Americas	$	173	$	0	$	—
EMEA	23		0		—
Asia Pacific	161		1		—
Total	$	357	$	1	$	—

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the three months ended March 31, 2016:*	Investment		Recognized		Cash Basis
Americas	$	133	$	0	$	—
EMEA	69		0		—
Asia Pacific	342		0		—
Total	$	544	$	0	$	—

* Reclassified to conform to 2017 presentation.

Schedule of net recorded investment by credit quality indicator

	Lease Receivables						Loan Receivables
(Dollars in millions)					Asia						Asia
At March 31, 2017:	Americas		EMEA		Pacific		Americas		EMEA		Pacific
Credit Ratings:
Aaa — Aa3	$	397	$	48	$	57	$	635	$	127	$	95
A1 — A3	703		99		550		1,125		261		910
Baa1 — Baa3	699		355		313		1,117		937		517
Ba1 — Ba2	776		355		180		1,241		937		297
Ba3 — B1	547		207		88		875		546		146
B2 — B3	354		74		62		566		197		103
Caa — D	65		12		17		104		32		28
Total	$	3,541	$	1,150	$	1,267	$	5,664	$	3,036	$	2,096

	Lease Receivables						Loan Receivables
(Dollars in millions)					Asia						Asia
At December 31, 2016:*	Americas		EMEA		Pacific		Americas		EMEA		Pacific
Credit Ratings:
Aaa — Aa3	$	447	$	51	$	53	$	712	$	143	$	90
A1 — A3	782		113		486		1,246		318		832
Baa1 — Baa3	772		366		330		1,230		1,032		565
Ba1 — Ba2	822		350		185		1,309		987		316
Ba3 — B1	574		208		106		914		585		182
B2 — B3	297		71		84		472		201		143
Caa — D	83		9		15		133		25		25
Total	$	3,776	$	1,167	$	1,259	$	6,016	$	3,291	$	2,154

* Reclassified to conform to 2017 presentation.

Schedule of past due financing receivables

			Fully		<90 Days				Recorded
	Total		Reserved		or Unbilled		Total		Investment
(Dollars in millions)	Past Due		Financing		Financing		Financing		> 90 Days and
At March 31, 2017:	> 90 days (1)		Receivables		Receivables		Receivables		Accruing (2)
Americas	$	21	$	27	$	3,554	$	3,602	$	102
EMEA	6		8		1,140		1,154		13
Asia Pacific	11		64		1,267		1,342		16
Total lease receivables	$	38	$	100	$	5,961	$	6,098	$	130
Americas	$	25	$	97	$	5,704	$	5,826	$	141
EMEA	15		10		3,037		3,062		34
Asia Pacific	8		93		2,093		2,193		16
Total loan receivables	$	47	$	200	$	10,833	$	11,081	$	191
Total	$	85	$	300	$	16,794	$	17,179	$	321

(1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved.

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

			Fully		<90 Days				Recorded
	Total		Reserved		or Unbilled		Total		Investment
(Dollars in millions)	Past Due		Financing		Financing		Financing		> 90 Days and
At December 31, 2016:*	> 90 days (1)		Receivables		Receivables		Receivables		Accruing (2)
Americas	$	17	$	20	$	3,793	$	3,830	$	66
EMEA	2		10		1,159		1,171		6
Asia Pacific	12		59		1,264		1,335		40
Total lease receivables	$	31	$	89	$	6,216	$	6,336	$	111
Americas	$	19	$	90	$	6,075	$	6,185	$	80
EMEA	5		5		3,299		3,309		15
Asia Pacific	6		87		2,150		2,243		46
Total loan receivables	$	31	$	182	$	11,524	$	11,737	$	141
Total	$	62	$	271	$	17,740	$	18,073	$	253

(1) Only the portion of a financing receivable which is greater than 90 days past due, excluding amounts that are fully reserved.

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

* Reclassified to conform with 2017 presentation.