Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2019

Financing Receivables

Summary of the components of financing receivables

	Investment in				Client Loan and
	Sales-Type and		Commercial		Installment Payment
(Dollars in millions)	Direct Financing		Financing		Receivables/
At June 30, 2019:	Leases		Receivables		(Loans)		Total
Financing receivables, gross	$	5,978	$	5,936	$	12,800	$	24,714
Unearned income		(473)		(18)		(611)		(1,102)
Recorded investment	$	5,505	$	5,918	$	12,189	$	23,612
Allowance for credit losses		(89)		(15)		(175)		(278)
Unguaranteed residual value		582		—		—		582
Guaranteed residual value		68		—		—		68
Total financing receivables, net	$	6,066	$	5,903	$	12,014	$	23,984
Current portion	$	2,338	$	5,903	$	7,302	$	15,543
Noncurrent portion	$	3,728	$	—	$	4,713	$	8,441

	Investment in				Client Loan and
	Sales-Type and		Commercial		Installment Payment
(Dollars in millions)	Direct Financing		Financing		Receivables/
At December 31, 2018:	Leases		Receivables		(Loans)		Total
Financing receivables, gross	$	6,846	$	11,889	$	13,614	$	32,348
Unearned income		(526)		(37)		(632)		(1,195)
Recorded investment	$	6,320	$	11,852	$	12,981	$	31,153
Allowance for credit losses		(99)		(13)		(179)		(292)
Unguaranteed residual value		589		—		—		589
Guaranteed residual value		85		—		—		85
Total financing receivables, net	$	6,895	$	11,838	$	12,802	$	31,536
Current portion	$	2,834	$	11,838	$	7,716	$	22,388
Noncurrent portion	$	4,061	$	—	$	5,086	$	9,148

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

(Dollars in millions)
At June 30, 2019:	Americas		EMEA		Asia Pacific		Total
Recorded investment
Lease receivables	$	3,336	$	1,149	$	1,020	$	5,505
Loan receivables		6,208		3,443	$	2,538	$	12,189
Ending balance	$	9,544	$	4,592	$	3,558	$	17,694
Recorded investment collectively evaluated for impairment	$	9,400	$	4,544	$	3,509	$	17,453
Recorded investment individually evaluated for impairment	$	144	$	48	$	49	$	241
Allowance for credit losses
Beginning balance at January 1, 2019
Lease receivables	$	53	$	22	$	24	$	99
Loan receivables		105		43	$	32	$	179
Total	$	158	$	65	$	56	$	279
Write-offs	$	(11)	$	(2)	$	(3)	$	(16)
Recoveries		0		0	$	0	$	0
Provision / (benefit)		(1)		(6)	$	0	$	(7)
Other*		6		0	$	0	$	6
Ending balance at June 30, 2019	$	152	$	57	$	54	$	263
Lease receivables	$	48	$	17	$	24	$	89
Loan receivables	$	104	$	41	$	30	$	175
Related allowance, collectively evaluated for impairment	$	31	$	12	$	5	$	48
Related allowance, individually evaluated for impairment	$	122	$	45	$	49	$	215

* Primarily represents translation adjustments.

(Dollars in millions)
At December 31, 2018:	Americas		EMEA		Asia Pacific		Total
Recorded investment
Lease receivables	$	3,827	$	1,341	$	1,152	$	6,320
Loan receivables		6,817		3,675	$	2,489	$	12,981
Ending balance	$	10,644	$	5,016	$	3,641	$	19,301
Recorded investment collectively evaluated for impairment	$	10,498	$	4,964	$	3,590	$	19,052
Recorded investment individually evaluated for impairment	$	146	$	52	$	51	$	249
Allowance for credit losses
Beginning balance at January 1, 2018
Lease receivables	$	63	$	9	$	31	$	103
Loan receivables		108		52	$	51	$	211
Total	$	172	$	61	$	82	$	314
Write-offs	$	(10)	$	(2)	$	(23)	$	(35)
Recoveries		0		0	$	2	$	2
Provision		7		9	$	0	$	16
Other*		(11)		(3)	$	(4)	$	(19)
Ending balance at December 31, 2018	$	158	$	65	$	56	$	279
Lease receivables	$	53	$	22	$	24	$	99
Loan receivables	$	105	$	43	$	32	$	179
Related allowance, collectively evaluated for impairment	$	39	$	16	$	5	$	59
Related allowance, individually evaluated for impairment	$	119	$	49	$	51	$	219

* Primarily represents translation adjustments.

Schedule of past due financing receivables

					Recorded		Billed		Recorded
	Total		Recorded		Investment		Invoices		Investment
(Dollars in millions)	Recorded		Investment		> 90 Days and		> 90 Days and		Not
At June 30, 2019:	Investment		> 90 Days(1)		Accruing(1)		Accruing		Accruing(2)
Americas	$	3,336	$	364	$	345	$	13	$	39
EMEA		1,149		31		12		4		19
Asia Pacific		1,020		25		13		2		13
Total lease receivables	$	5,505	$	421	$	370	$	19	$	71
Americas	$	6,208	$	204	$	105	$	17	$	120
EMEA		3,443		85		15		3		71
Asia Pacific		2,538		42		10		5		34
Total loan receivables	$	12,189	$	330	$	129	$	25	$	224
Total	$	17,694	$	751	$	499	$	44	$	295

(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, $241 million is individually evaluated for impairment with a related allowance of $215 million.

					Recorded		Billed		Recorded
	Total		Recorded		Investment		Invoices		Investment
(Dollars in millions)	Recorded		Investment		> 90 Days and		> 90 Days and		Not
At December 31, 2018:	Investment		> 90 Days(1)		Accruing(1)		Accruing		Accruing(2)
Americas	$	3,827	$	310	$	256	$	19	$	57
EMEA		1,341		25		9		1		16
Asia Pacific		1,152		49		27		3		24
Total lease receivables	$	6,320	$	385	$	292	$	24	$	97
Americas	$	6,817	$	259	$	166	$	24	$	99
EMEA		3,675		98		25		3		73
Asia Pacific		2,489		40		11		1		31
Total loan receivables	$	12,981	$	397	$	202	$	29	$	203
Total	$	19,301	$	782	$	494	$	52	$	300

(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, $249 million is individually evaluated for impairment with a related allowance of $219 million.

Schedule of net recorded investment by credit quality indicator

(Dollars in millions)	Lease Receivables						Loan Receivables
At June 30, 2019:	Americas		EMEA		Asia Pacific		Americas		EMEA		Asia Pacific
Credit ratings:
Aaa – Aa3	$	428	$	12	$	60	$	998	$	160	$	185
A1 – A3		750		137		488		859		219		834
Baa1 – Baa3		780		365		170		1,615		1,271		718
Ba1 – Ba2		834		412		127		1,554		947		556
Ba3 – B1		229		136		96		461		542		130
B2 – B3		251		65		50		589		240		77
Caa – D		18		4		5		27		23		9
Total	$	3,288	$	1,132	$	996	$	6,103	$	3,402	$	2,508

(Dollars in millions)	Lease Receivables						Loan Receivables
At December 31, 2018:	Americas		EMEA		Asia Pacific		Americas		EMEA		Asia Pacific
Credit ratings:
Aaa – Aa3	$	593	$	45	$	85	$	1,055	$	125	$	185
A1 – A3		678		158		413		1,206		436		901
Baa1 – Baa3		892		417		297		1,587		1,148		648
Ba1 – Ba2		852		426		191		1,516		1,175		417
Ba3 – B1		433		171		84		770		472		184
B2 – B3		299		90		50		531		249		109
Caa – D		26		10		7		47		28		15
Total	$	3,774	$	1,319	$	1,128	$	6,712	$	3,633	$	2,457