Financing Receivables (Tables)

9 Months Ended

Sep. 30, 2017

Financing Receivables:

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

	At September 30,		At December 31,
(Dollars in millions)	2017		2016
Current:
Net investment in sales-type and direct financing leases	$	3,092	$	2,909
Commercial financing receivables	8,563		9,706
Client loan and installment payment receivables (loans)	6,395		6,390
Total	$	18,050	$	19,006
Noncurrent:
Net investment in sales-type and direct financing leases	$	3,579	$	3,950
Client loan and installment payment receivables (loans)	4,879		5,071
Total	$	8,459	$	9,021

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

(Dollars in millions)
At September 30, 2017	Americas			EMEA		Asia Pacific			Total
Financing receivables
Lease receivables	$	3,541		$	1,297	$	1,304		$	6,142
Loan receivables	6,180			3,120		2,189			11,489
Ending balance	$	9,721		$	4,417	$	3,493		$	17,631
Collectively evaluated for impairment	$	9,581		$	4,386	$	3,391		$	17,358
Individually evaluated for impairment	$	140		$	31	$	102		$	273
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	$	(49	)	$	0	$	(63	)	$	(112	)
Recoveries	0			0		0			0
Provision	11			9		(4		)	16
Other	12			5		2			19
Ending balance at September 30, 2017	$	197		$	36	$	100		$	333
Lease receivables	$	77		$	6	$	35		$	118
Loan receivables	$	120		$	29	$	65		$	215
Collectively evaluated for impairment	$	66		$	12	$	6		$	85
Individually evaluated for impairment	$	131		$	23	$	94		$	248

(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 September 30,		At December 31,
(Dollars in millions)	2017		2016*
Americas	$	25	$	23
EMEA	0		2
Asia Pacific	4		14
Total lease receivables	$	30	$	40
Americas	$	79	$	128
EMEA	53		5
Asia Pacific	10		12
Total loan receivables	$	142	$	145
Total receivables	$	172	$	185

* Reclassified to conform to 2017 presentation.

Schedule of impaired client loan and lease receivables

	At September 30, 2017				At December 31, 2016*
	Recorded		Related		Recorded		Related
(Dollars in millions)	Investment		Allowance		Investment		Allowance
Americas	$	140	$	131	$	168	$	161
EMEA	31		23		20		9
Asia Pacific	102		94		159		150
Total	$	273	$	248	$	347	$	320

* Reclassified to conform to 2017 presentation.

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the three months ended September 30, 2017:	Investment		Recognized		Cash Basis
Americas	$	156	$	0	$	—
EMEA	31		0		—
Asia Pacific	101		0		—
Total	$	288	$	0	$	—

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the three months ended September 30, 2016:*	Investment		Recognized		Cash Basis
Americas	$	182	$	0	$	—
EMEA	61		0		—
Asia Pacific	302		0		—
Total	$	545	$	0	$	—

* Reclassified to conform to 2017 presentation.

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the nine months ended September 30, 2017:	Investment		Recognized		Cash Basis
Americas	$	165	$	0	$	—
EMEA	27		0		—
Asia Pacific	131		0		—
Total	$	323	$	0	$	—

					Interest
	Average		Interest		Income
(Dollars in millions)	Recorded		Income		Recognized on
For the nine months ended September 30, 2016:*	Investment		Recognized		Cash Basis
Americas	$	158	$	0	$	—
EMEA	65		0		—
Asia Pacific	322		0		—
Total	$	545	$	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 September 30, 2017:	Americas		EMEA		Pacific		Americas		EMEA		Pacific
Credit Ratings:
Aaa – Aa3	$	358	$	52	$	56	$	626	$	124	$	94
A1 – A3	715		126		543		1,251		302		908
Baa1 – Baa3	807		404		329		1,412		968		550
Ba1 – Ba2	762		415		172		1,333		993		289
Ba3 – B1	421		197		86		736		473		143
B2 – B3	345		83		69		604		200		116
Caa – D	56		13		15		98		31		25
Total	$	3,465	$	1,290	$	1,269	$	6,059	$	3,091	$	2,124

	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 September 30, 2017:	> 90 days (1)		Receivables		Receivables		Receivables		Accruing (2)
Americas	$	28	$	51	$	3,463	$	3,541	$	255
EMEA	9		4		1,283		1,297		15
Asia Pacific	5		32		1,266		1,304		19
Total lease receivables	$	42	$	87	$	6,012	$	6,142	$	290
Americas	$	43	$	80	$	6,057	$	6,180	$	401
EMEA	26		19		3,076		3,120		46
Asia Pacific	6		61		2,122		2,189		9
Total loan receivables	$	75	$	160	$	11,255	$	11,489	$	456
Total	$	117	$	247	$	17,267	$	17,631	$	746

(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.