Financing Receivables (Tables)

9 Months Ended

Sep. 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 September 30, 2019:	Leases		Receivables		(Loans)		Total
Financing receivables, gross	$	5,781	$	2,953	$	11,958	$	20,692
Unearned income		(444)		(5)		(543)		(992)
Recorded investment	$	5,337	$	2,948	$	11,415	$	19,700
Allowance for credit losses		(81)		(11)		(165)		(257)
Unguaranteed residual value		565		—		—		565
Guaranteed residual value		61		—		—		61
Total financing receivables, net	$	5,882	$	2,937	$	11,250	$	20,069
Current portion	$	2,433	$	2,937	$	6,960	$	12,330
Noncurrent portion	$	3,449	$	—	$	4,290	$	7,739

	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 September 30, 2019:	Americas		EMEA		Asia Pacific		Total
Recorded investment
Lease receivables	$	3,279	$	1,096	$	961	$	5,337
Loan receivables		5,899		3,161		2,356		11,415
Ending balance	$	9,178	$	4,257	$	3,317	$	16,752
Recorded investment collectively evaluated for impairment	$	9,039	$	4,209	$	3,275	$	16,523
Recorded investment individually evaluated for impairment	$	139	$	48	$	43	$	229
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	$	(14)	$	(3)	$	(6)	$	(23)
Recoveries		0		0		0		1
Provision / (benefit)		4		(6)		(1)		(4)
Other*		(3)		(2)		(1)		(6)
Ending balance at September 30, 2019	$	144	$	54	$	48	$	246
Lease receivables	$	35	$	23	$	22	$	81
Loan receivables	$	109	$	31	$	26	$	165
Related allowance, collectively evaluated for impairment	$	29	$	11	$	4	$	44
Related allowance, individually evaluated for impairment	$	115	$	43	$	43	$	202

* 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 September 30, 2019:	Investment		> 90 Days(1)		Accruing(1)		Accruing		Accruing(2)
Americas	$	3,279	$	213	$	179	$	13	$	37
EMEA		1,096		34		17		3		19
Asia Pacific		961		37		19		2		18
Total lease receivables	$	5,337	$	284	$	215	$	18	$	74
Americas	$	5,899	$	155	$	64	$	10	$	108
EMEA		3,161		93		28		15		67
Asia Pacific		2,356		41		16		6		26
Total loan receivables	$	11,415	$	288	$	108	$	31	$	200
Total	$	16,752	$	572	$	323	$	50	$	274

(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, $229 million is individually evaluated for impairment with a related allowance of $202 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 September 30, 2019:	Americas		EMEA		Asia Pacific		Americas		EMEA		Asia Pacific
Credit ratings:
Aaa – Aa3	$	443	$	11	$	44	$	1,006	$	167	$	160
A1 – A3		727		201		441		855		308		874
Baa1 – Baa3		843		380		153		1,560		1,120		617
Ba1 – Ba2		697		311		149		1,380		830		396
Ba3 – B1		259		123		104		444		476		208
B2 – B3		258		46		44		499		222		62
Caa – D		16		1		5		47		7		14
Total	$	3,245	$	1,073	$	939	$	5,789	$	3,130	$	2,330

(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