Financing Receivables (Tables)

3 Months Ended

Mar. 31, 2022

Financing Receivables

Summary of the components of financing receivables

	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial Financing Receivables
(Dollars in millions)	Receivables		Direct Financing		Held for		Held for
At March 31, 2022:	(Loans)		Leases		Investment		Sale*		Total
Financing receivables, gross	$	8,342	$	3,213	$	198	$	410	$	12,164
Unearned income		(321)		(211)		—		—		(532)
Unguaranteed residual value		—		325		—		—		325
Amortized cost	$	8,022	$	3,328	$	198	$	410	$	11,957
Allowance for credit losses		(114)		(59)		(6)		—		(179)
Total financing receivables, net	$	7,908	$	3,269	$	192	$	410	$	11,779
Current portion	$	5,133	$	1,434	$	192	$	410	$	7,169
Noncurrent portion	$	2,775	$	1,835	$	—	$	—	$	4,610

* The carrying value of the receivables classified as held for sale approximates fair value.

	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial Financing Receivables
(Dollars in millions)	Receivables		Direct Financing		Held for		Held for
At December 31, 2021:	(Loans)		Leases		Investment		Sale*		Total
Financing receivables, gross	$	9,303	$	3,336	$	450	$	793	$	13,881
Unearned income		(353)		(223)		—		—		(576)
Unguaranteed residual value		—		335		—		—		335
Amortized cost	$	8,949	$	3,448	$	450	$	793	$	13,640
Allowance for credit losses		(131)		(64)		(6)		—		(201)
Total financing receivables, net	$	8,818	$	3,384	$	444	$	793	$	13,439
Current portion	$	5,371	$	1,406	$	444	$	793	$	8,014
Noncurrent portion	$	3,447	$	1,978	$	—	$	—	$	5,425

* The carrying value of the receivables classified as held for sale approximates fair value.

Schedule of transfer of client and commercial financing assets

(Dollars in millions)
For the three months ended March 31:	2022		2021
Client financing receivables
Lease receivables	$	15	$	342
Loan receivables		2		653
Total client financing receivables transferred	$	17	$	995
Commercial financing receivables
Receivables transferred during the period	$	1,989	$	1,167
Receivables uncollected at end of period*		724		724

* Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from the business partners as of March 31, 2022 and 2021.

Schedule of financing receivables and allowance for credit losses by class

(Dollars in millions)
At March 31, 2022:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,116	$	3,333	$	1,900	$	11,349
Allowance for credit losses:
Beginning balance at January 1, 2022	$	111	$	61	$	23	$	195
Write-offs	$	(15)	$	0	$	(2)	$	(17)
Recoveries		1		0		0		1
Additions/(releases)		(5)		(3)		(1)		(8)
Other*		3		(1)		0		2
Ending balance at March 31, 2022	$	95	$	56	$	21	$	172

(Dollars in millions)
At December 31, 2021:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,573	$	3,793	$	2,031	$	12,397
Allowance for credit losses:
Beginning balance at January 1, 2021	$	141	$	77	$	37	$	255
Write-offs	$	(8)	$	(2)	$	(7)	$	(17)
Recoveries		0		0		1		1
Additions/(releases)		(19)		(11)		(7)		(38)
Other*		(3)		(3)		0		(7)
Ending balance at December 31, 2021	$	111	$	61	$	23	$	195

* 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, 2022:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	6,116	$	356	$	282	$	8	$	77
EMEA		3,333		97		7		2		90
Asia Pacific		1,900		45		26		2		19
Total client financing receivables	$	11,349	$	498	$	315	$	12	$	186

					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At December 31, 2021:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	6,573	$	188	$	100	$	6	$	90
EMEA		3,793		99		7		2		95
Asia Pacific		2,031		25		5		2		20
Total client financing receivables	$	12,397	$	312	$	112	$	10	$	205

(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 $135 million and $153 million at March 31, 2022 and December 31, 2021, respectively. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2022 and 2021, respectively.

Schedule of amortized cost by credit quality indicator

(Dollars in millions)	Americas				EMEA				Asia Pacific
At March 31, 2022:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2022	$	512	$	314	$	290	$	178	$	177	$	48
2021		2,110		869		914		544		444		175
2020		845		363		404		282		338		78
2019		450		194		206		241		256		41
2018		223		91		104		65		182		52
2017 and prior		81		64		23		82		79		29
Total	$	4,221	$	1,896	$	1,940	$	1,393	$	1,477	$	423

(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2021:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2021	$	2,556	$	1,147	$	1,181	$	778	$	565	$	226
2020		1,013		392		506		342		381		86
2019		544		236		287		291		297		51
2018		338		117		189		85		211		64
2017		108		50		15		52		74		17
2016 and prior		20		53		21		46		38		20
Total	$	4,579	$	1,994	$	2,198	$	1,595	$	1,567	$	464