Financing Receivables (Tables)

3 Months Ended

Mar. 31, 2021

Financing Receivables

Summary of the components of financing receivables

	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial
(Dollars in millions)	Receivables		Direct Financing		Financing
At March 31, 2021:	(Loans)		Leases		Receivables		Total
Financing receivables, gross	$	10,218	$	3,923	$	1,119	$	15,261
Unearned income		(421)		(290)		0		(711)
Residual value*		—		430		—		430
Amortized cost	$	9,797	$	4,064	$	1,119	$	14,980
Allowance for credit losses		(154)		(74)		(7)		(236)
Total financing receivables, net	$	9,643	$	3,989	$	1,112	$	14,744
Current portion	$	6,050	$	1,660	$	1,112	$	8,822
Noncurrent portion	$	3,592	$	2,329	$	—	$	5,922

	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial
(Dollars in millions)	Receivables		Direct Financing		Financing
At December 31, 2020:	(Loans)		Leases		Receivables		Total
Financing receivables, gross	$	12,159	$	4,001	$	2,419	$	18,580
Unearned income		(488)		(335)		0		(823)
Residual value*		—		485		—		485
Amortized cost	$	11,671	$	4,151	$	2,419	$	18,242
Allowance for credit losses		(173)		(82)		(8)		(263)
Total financing receivables, net	$	11,498	$	4,069	$	2,411	$	17,979
Current portion	$	6,955	$	1,525	$	2,411	$	10,892
Noncurrent portion	$	4,542	$	2,544	$	—	$	7,086

* Includes guaranteed and unguaranteed residual value.

Schedule of financing receivables and allowance for credit losses by class

(Dollars in millions)
At March 31, 2021:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,867	$	4,244	$	2,750	$	13,861
Allowance for credit losses
Beginning balance at January 1, 2021	$	141	$	77	$	37	$	255
Write-offs		(2)		(1)		(6)		(9)
Recoveries		0		0		0		1
Additions/(releases)		(11)		2		(3)		(12)
Other*		(3)		(3)		0		(6)
Ending balance at March 31, 2021	$	125	$	76	$	27	$	229

(Dollars in millions)
At December 31, 2020:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	7,758	$	5,023	$	3,042	$	15,822
Allowance for credit losses
Beginning balance at January 1, 2020	$	142	$	69	$	41	$	252
Write-offs	$	(28)	$	(3)	$	(3)	$	(34)
Recoveries		0		0		2		3
Additions/(releases)		33		5		(4)		34
Other*		(6)		6		1		1
Ending balance at December 31, 2020	$	141	$	77	$	37	$	255

* Primarily represents translation adjustments.

Schedule of past due financing receivables

					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At March 31, 2021:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	6,867	$	271	$	182	$	11	$	94
EMEA		4,244		102		14		3		93
Asia Pacific		2,750		32		9		4		24
Total client financing receivables	$	13,861	$	405	$	205	$	18	$	212

					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At December 31, 2020:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	7,758	$	295	$	200	$	12	$	96
EMEA		5,023		119		28		5		95
Asia Pacific		3,042		42		12		4		32
Total client financing receivables	$	15,822	$	456	$	241	$	20	$	223

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

(2) Of the amortized cost not accruing, there was a related allowance of $167 million and $178 million at March 31, 2021 and December 31, 2020, respectively. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2021 and 2020, respectively.

Schedule of amortized cost/net recorded investment by credit quality indicator

(Dollars in millions)	Americas				EMEA				Asia Pacific
At March 31, 2021:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2021	$	808	$	421	$	310	$	349	$	253	$	105
2020		1,966		923		1,086		887		721		230
2019		871		457		471		431		499		94
2018		666		283		311		166		365		133
2017		206		117		43		103		165		40
2016 and prior		56		92		34		53		109		36
Total	$	4,573	$	2,294	$	2,254	$	1,989	$	2,111	$	639

(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2020:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2020	$	2,818	$	1,449	$	1,513	$	1,427	$	958	$	351
2019		988		623		668		519		564		123
2018		829		360		329		245		419		167
2017		285		154		70		128		205		52
2016		90		52		33		46		114		33
2015 and prior		28		81		22		22		38		18
Total	$	5,038	$	2,720	$	2,635	$	2,387	$	2,298	$	743