Financing Receivables (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2022:	(Loans)		Leases		Investment		Sale*		Total
Financing receivables, gross	$	7,777	$	3,566	$	169	$	395	$	11,907
Unearned income		(330)		(285)		—		—		(615)
Unguaranteed residual value		—		323		—		—		323
Amortized cost	$	7,447	$	3,604	$	169	$	395	$	11,616
Allowance for credit losses		(101)		(53)		(5)		—		(159)
Total financing receivables, net	$	7,346	$	3,551	$	164	$	395	$	11,456
Current portion	$	4,750	$	1,366	$	164	$	395	$	6,676
Noncurrent portion	$	2,596	$	2,185	$	—	$	—	$	4,781

* 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 nine months ended September 30:	2022		2021
Client financing receivables:
Lease receivables	$	15	$	781
Loan receivables		2		2,189
Total client financing receivables transferred	$	17	$	2,970
Commercial financing receivables:
Receivables transferred during the period	$	6,091	$	4,465
Receivables uncollected at end of period*	$	816	$	707

* Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of September 30, 2022 and 2021.

Schedule of financing receivables and allowance for credit losses by class

(Dollars in millions)
At September 30, 2022:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,900	$	2,731	$	1,420	$	11,051
Allowance for credit losses:
Beginning balance at January 1, 2022	$	111	$	61	$	23	$	195
Write-offs	$	(20)	$	(1)	$	(2)	$	(23)
Recoveries		1		0		4		5
Additions/(releases)		(6)		(3)		(5)		(13)
Other*		1		(8)		(2)		(10)
Ending balance at September 30, 2022	$	87	$	49	$	18	$	154

(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 September 30, 2022:	Cost		> 90 Days*		Accruing*		Accruing		Accruing**
Americas	$	6,900	$	266	$	197	$	22	$	70
EMEA		2,731		81		1		0		81
Asia Pacific		1,420		23		6		1		17
Total client financing receivables	$	11,051	$	369	$	204	$	23	$	168

					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*		Accruing*		Accruing		Accruing**
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

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

** Of the amortized cost not accruing, there was a related allowance of $120 million and $153 million at September 30, 2022 and December 31, 2021, respectively. Financing income recognized on these receivables was immaterial for the three and nine months ended September 30, 2022, respectively.

Schedule of amortized cost by credit quality indicator

(Dollars in millions)	Americas				EMEA				Asia Pacific
At September 30, 2022:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2022	$	2,475	$	1,012	$	716	$	465	$	471	$	83
2021		1,401		387		487		198		210		77
2020		660		265		268		168		213		53
2019		310		119		167		110		133		24
2018		147		40		45		37		87		25
2017 and prior		40		47		15		54		25		18
Total	$	5,031	$	1,869	$	1,698	$	1,033	$	1,140	$	280

(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