Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2017

Financing Receivables:

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

	At June 30,		At December 31,
(Dollars in millions)	2017		2016
Current:
Net investment in sales-type and direct financing leases	$	2,846	$	2,909
Commercial financing receivables	8,178		9,706
Client loan and installment payment receivables (loans)	6,539		6,390
Total	$	17,563	$	19,006
Noncurrent:
Net investment in sales-type and direct financing leases	$	3,627	$	3,950
Client loan and installment payment receivables (loans)	4,669		5,071
Total	$	8,296	$	9,021

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

(Dollars in millions)
At June 30, 2017	Americas			EMEA		Asia Pacific			Total
Financing receivables
Lease receivables	$	3,442		$	1,202	$	1,302		$	5,946
Loan receivables	6,014			3,101		2,340			11,455
Ending balance	$	9,456		$	4,303	$	3,642		$	17,401
Collectively evaluated for impairment	$	9,284		$	4,272	$	3,541		$	17,097
Individually evaluated for impairment	$	173		$	31	$	100		$	304
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	$	(11	)	$	0	$	(59	)	$	(70	)
Recoveries	0			0		0			0
Provision	13			9		(4		)	17
Other	(1		)	4		7			10
Ending balance at June 30, 2017	$	224		$	35	$	109		$	368
Lease receivables	$	69		$	4	$	48		$	121
Loan receivables	$	154		$	31	$	61		$	246
Collectively evaluated for impairment	$	62		$	14	$	15		$	91
Individually evaluated for impairment	$	162		$	21	$	94		$	277

(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 June 30,		At December 31,
(Dollars in millions)	2017		2016*
Americas	$	24	$	23
EMEA	2		2
Asia Pacific	9		14
Total lease receivables	$	35	$	40
Americas	$	118	$	128
EMEA	52		5
Asia Pacific	7		12
Total loan receivables	$	177	$	145
Total receivables	$	211	$	185

* Reclassified to conform to 2017 presentation.

Schedule of impaired client loan and lease receivables

	At June 30, 2017				At December 31, 2016*
	Recorded		Related		Recorded		Related
(Dollars in millions)	Investment		Allowance		Investment		Allowance
Americas	$	173	$	162	$	168	$	161
EMEA	31		21		20		9
Asia Pacific	100		94		159		150
Total	$	304	$	277	$	347	$	320

* Reclassified to conform to 2017 presentation.

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the three months ended June 30, 2017:	Investment		Recognized		Cash Basis
Americas	$	176	$	0	$	—
EMEA	28		0		—
Asia Pacific	132		0		—
Total	$	336	$	0	$	—

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the three months ended June 30, 2016:*	Investment		Recognized		Cash Basis
Americas	$	163	$	0	$	—
EMEA	71		0		—
Asia Pacific	324		0		—
Total	$	557	$	0	$	—

* Reclassified to conform to 2017 presentation.

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the six months ended June 30, 2017:	Investment		Recognized		Cash Basis
Americas	$	173	$	0	$	—
EMEA	25		0		—
Asia Pacific	141		0		—
Total	$	339	$	0	$	—

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the six months ended June 30, 2016:*	Investment		Recognized		Cash Basis
Americas	$	149	$	0	$	—
EMEA	69		0		—
Asia Pacific	333		0		—
Total	$	551	$	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 June 30, 2017:	Americas		EMEA		Pacific		Americas		EMEA		Pacific
Credit Ratings:
Aaa — Aa3	$	356	$	56	$	66	$	619	$	143	$	119
A1 — A3	724		103		511		1,258		265		929
Baa1 — Baa3	728		358		333		1,264		919		605
Ba1 — Ba2	710		386		186		1,233		989		338
Ba3 — B1	474		201		84		823		514		153
B2 — B3	326		82		58		566		210		105
Caa — D	56		12		16		97		30		30
Total	$	3,373	$	1,198	$	1,254	$	5,859	$	3,070	$	2,279

	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 June 30, 2017:	> 90 days (1)		Receivables		Receivables		Receivables		Accruing (2)
Americas	$	21	$	19	$	3,402	$	3,442	$	112
EMEA	7		9		1,186		1,202		12
Asia Pacific	7		40		1,255		1,302		12
Total lease receivables	$	35	$	68	$	5,844	$	5,946	$	136
Americas	$	31	$	96	$	5,886	$	6,014	$	145
EMEA	17		16		3,068		3,101		30
Asia Pacific	6		55		2,279		2,340		10
Total loan receivables	$	55	$	167	$	11,233	$	11,455	$	184
Total	$	89	$	235	$	17,077	$	17,401	$	320

(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 to 2017 presentation.