Financing Receivables (Tables)
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9 Months Ended |
Sep. 30, 2019 |
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| Financing Receivables |
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| 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 |
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| 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.
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| 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. |
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| 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 |
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