Financing Receivables (Tables)
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3 Months Ended |
Mar. 31, 2022 |
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| Financing Receivables |
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| 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.
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| 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. |
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| 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.
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| 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. |
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| 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 |
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