Accounts Receivable and Finance Receivables (Tables)

3 Months Ended

Apr. 01, 2023

Receivables [Abstract]

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)	April 1, 2023		December 31, 2022
Commercial	$	824	$	755
U.S. Government contracts	126		124
	950		879
Allowance for credit losses	(22)		(24)
Total accounts receivable, net	$	928	$	855

Finance Receivables

Finance receivables are presented in the following table:

(In millions)	April 1, 2023		December 31, 2022
Finance receivables	$	577	$	587
Allowance for credit losses	(22)		(24)
Total finance receivables, net	$	555	$	563

Finance Receivables Categorized Based On Credit Quality Indicators

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Performing	$	512	$	515
Watchlist	26		26
Nonaccrual	39		46
Nonaccrual as a percentage of finance receivables	6.76%		7.84%
Current and less than 31 days past due	$	570	$	579
31-60 days past due	5		7
61-90 days past due	2		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

Finance Receivables By Delinquency Aging Category

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)	April 1, 2023		December 31, 2022
Performing	$	512	$	515
Watchlist	26		26
Nonaccrual	39		46
Nonaccrual as a percentage of finance receivables	6.76%		7.84%
Current and less than 31 days past due	$	570	$	579
31-60 days past due	5		7
61-90 days past due	2		—
Over 90 days past due	—		1
60+ days contractual delinquency as a percentage of finance receivables	0.35%		0.17%

Finance Receivables and Allowance For Credit Losses Based on Impairment Evaluation

A summary of finance receivables and the allowance for credit losses, based on the results of our impairment evaluation, is provided below. The finance receivables included in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

(In millions)	April 1, 2023		December 31, 2022
Finance receivables evaluated collectively	$	451	$	450
Finance receivables evaluated individually	39		46
Allowance for credit losses based on collective evaluation	19		21
Allowance for credit losses based on individual evaluation	3		3
Impaired finance receivables with specific allowance for credit losses	$	12	$	15
Impaired finance receivables with no specific allowance for credit losses	27		31
Unpaid principal balance of impaired finance receivables	53		60
Allowance for credit losses on impaired finance receivables	3		3
Average recorded investment of impaired finance receivables	43		67