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Financing Receivables (Tables)
 9 Months Ended
Sep. 30, 2018
Financing Receivables  
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, 2018:

 

Leases

 

Receivables

 

(Loans)

 

Total

 

Financing receivables, gross

 

$
6,566

 

$
9,397

 

$
12,259

 

$
28,222

 

Unearned income

 
(502

)
(30

)
(576

)
(1,108

)

 

 

 

 

 

 

 

 

 

 

Recorded Investment

 

$
6,064

 

$
9,367

 

$
11,683

 

$
27,114

 

Allowance for credit losses

 
(103

)
(12

)
(210

)
(325

)

Unguaranteed residual value

 
549

 

—

 

—

 
549

 

Guaranteed residual value

 
90

 

—

 

—

 
90

 

 

 

 

 

 

 

 

 

 

 

Total financing receivables, net

 

$
6,599

 

$
9,355

 

$
11,473

 

$
27,427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion

 

$
2,764

 

$
9,355

 

$
7,130

 

$
19,249

 

Noncurrent portion

 

$
3,836

 

$

—

 

$
4,343

 

$
8,179

 

 

 

 

Investment in

 

 

 

Client Loan and

 

 

 

 

 

Sales-Type and

 

Commercial

 

Installment Payment

 

 

 

(Dollars in millions)

 

Direct Financing

 

Financing

 

Receivables/

 

 

 

At December 31, 2017:

 

Leases

 

Receivables

 

(Loans)

 

Total

 

Financing receivables, gross

 

$
7,128

 

$
11,649

 

$
13,311

 

$
32,087

 

Unearned income

 
(535

)
(32

)
(644

)
(1,210

)

 

 

 

 

 

 

 

 

 

 

Recorded Investment

 

$
6,593

 

$
11,617

 

$
12,667

 

$
30,877

 

Allowance for credit losses

 
(103

)
(21

)
(211

)
(336

)

Unguaranteed residual value

 
630

 

—

 

—

 
630

 

Guaranteed residual value

 
100

 

—

 

—

 
100

 

 

 

 

 

 

 

 

 

 

 

Total financing receivables, net

 

$
7,220

 

$
11,596

 

$
12,456

 

$
31,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion

 

$
2,900

 

$
11,596

 

$
7,226

 

$
21,721

 

Noncurrent portion

 

$
4,320

 

$

—

 

$
5,230

 

$
9,550

 

 

Schedule of financing receivables and allowance for credit losses by portfolio segment

(Dollars in millions)

 

 

 

 

 

 

 

 

 

At September 30, 2018:

 

Americas

 

EMEA

 

Asia Pacific

 

Total

 

Recorded investment

 

 

 

 

 

 

 

 

 

Lease receivables

 

$
3,526

 

$
1,377

 

$
1,161

 

$
6,064

 

Loan receivables

 
6,118

 
3,313

 
2,252

 
11,683

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$
9,644

 

$
4,690

 

$
3,413

 

$
17,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recorded investment collectively evaluated for impairment

 

$
9,484

 

$
4,634

 

$
3,338

 

$
17,456

 

Recorded investment individually evaluated for impairment

 

$
161

 

$
56

 

$
75

 

$
291

 

 

 

 

 

 

 

 

 

 

 

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

 

$
(5

)

$
(1

)

$
(3

)

$
(9

)

Recoveries

 
0

 
0

 
2

 
2

 

Provision

 
10

 
10

 
2

 
21

 

Other*

 
(9

)
(2

)
(4

)
(15

)

 

 

 

 

 

 

 

 

 

 

Ending balance at September 30, 2018

 

$
167

 

$
68

 

$
78

 

$
313

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease receivables

 

$
61

 

$
12

 

$
29

 

$
103

 

Loan receivables

 

$
106

 

$
55

 

$
48

 

$
210

 

 

 

 

 

 

 

 

 

 

 

Related allowance, collectively evaluated for impairment

 

$
42

 

$
15

 

$
5

 

$
62

 

Related allowance, individually evaluated for impairment

 

$
125

 

$
52

 

$
73

 

$
250

 

 

* Primarily represents translation adjustments.

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

At December 31, 2017:

 

Americas

 

EMEA

 

Asia Pacific

 

Total

 

Recorded investment

 

 

 

 

 

 

 

 

 

Lease receivables

 

$
3,911

 

$
1,349

 

$
1,333

 

$
6,593

 

Loan receivables

 
6,715

 
3,597

 
2,354

 
12,667

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$
10,626

 

$
4,946

 

$
3,687

 

$
19,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recorded investment collectively evaluated for impairment

 

$
10,497

 

$
4,889

 

$
3,604

 

$
18,990

 

Recorded investment individually evaluated for impairment

 

$
129

 

$
57

 

$
83

 

$
269

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

 

 

 

 

 

 

 

Beginning balance at January 1, 2017

 

 

 

 

 

 

 

 

 

Lease receivables

 

$
54

 

$
4

 

$
76

 

$
133

 

Loan receivables

 
169

 
18

 
89

 
276

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
223

 

$
22

 

$
165

 

$
410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-offs

 

$
(51

)

$
(1

)

$
(85

)

$
(137

)

Recoveries

 
1

 
1

 
0

 
2

 

Provision

 
(8

)
29

 
(4

)
16

 

Other*

 
7

 
11

 
6

 
24

 

 

 

 

 

 

 

 

 

 

 

Ending balance at December 31, 2017

 

$
172

 

$
61

 

$
82

 

$
314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease receivables

 

$
63

 

$
9

 

$
31

 

$
103

 

Loan receivables

 

$
108

 

$
52

 

$
51

 

$
211

 

 

 

 

 

 

 

 

 

 

 

Related allowance, collectively evaluated for impairment

 

$
43

 

$
15

 

$
6

 

$
64

 

Related allowance, individually evaluated for impairment

 

$
128

 

$
46

 

$
76

 

$
250

 

 

* Primarily represents translation adjustments.

 

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, 2018:

 

Investment

 

> 90 Days (1)

 

Accruing (1)

 

Accruing

 

Accruing (2)

 

Americas

 

$
3,526

 

$
268

 

$
213

 

$
27

 

$
59

 

EMEA

 
1,377

 
26

 
10

 
2

 
17

 

Asia Pacific

 
1,161

 
36

 
8

 
2

 
29

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease receivables

 

$
6,064

 

$
330

 

$
230

 

$
31

 

$
105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$
6,118

 

$
382

 

$
276

 

$
27

 

$
128

 

EMEA

 
3,313

 
62

 
23

 
4

 
77

 

Asia Pacific

 
2,252

 
78

 
31

 
8

 
49

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loan receivables

 

$
11,683

 

$
523

 

$
330

 

$
39

 

$
254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
17,747

 

$
853

 

$
561

 

$
70

 

$
359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, $291 million is individually evaluated for impairment with a related allowance of $250 million.

 

 

 

 

 

 

 

Recorded

 

Billed

 

Recorded

 

 

 

Total

 

Recorded

 

Investment

 

Invoices

 

Investment

 

(Dollars in millions)

 

Recorded

 

Investment

 

> 90 Days and

 

> 90 Days and

 

Not

 

At December 31, 2017:

 

Investment

 

> 90 Days (1)

 

Accruing (1)

 

Accruing

 

Accruing (2)(3)

 

Americas

 

$
3,911

 

$
239

 

$
197

 

$
29

 

$
44

 

EMEA

 
1,349

 
32

 
5

 
3

 
27

 

Asia Pacific

 
1,333

 
57

 
23

 
3

 
36

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease receivables

 

$
6,593

 

$
328

 

$
225

 

$
36

 

$
107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$
6,715

 

$
345

 

$
254

 

$
38

 

$
96

 

EMEA

 
3,597

 
90

 
17

 
0

 
74

 

Asia Pacific

 
2,354

 
63

 
12

 
3

 
54

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loan receivables

 

$
12,667

 

$
498

 

$
283

 

$
41

 

$
224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
19,259

 

$
825

 

$
507

 

$
77

 

$
331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, $269 million is individually evaluated for impairment with a related allowance of $250 million.

(3)

Recast to conform to current period presentation, which includes billed impaired amounts.

 

Schedule of net recorded investment by credit quality indicator

(Dollars in millions)

 

Lease Receivables

 

Loan Receivables

 

At September 30, 2018:

 

Americas

 

EMEA

 

Asia Pacific

 

Americas

 

EMEA

 

Asia Pacific

 

Credit ratings:

 

 

 

 

 

 

 

 

 

 

 

 

 

Aaa – Aa3

 

$
385

 

$
54

 

$
87

 

$
668

 

$
128

 

$
169

 

A1 – A3

 
741

 
167

 
434

 
1,285

 
400

 
845

 

Baa1 – Baa3

 
796

 
416

 
278

 
1,381

 
994

 
541

 

Ba1 – Ba2

 
754

 
432

 
184

 
1,308

 
1,032

 
358

 

Ba3 – B1

 
459

 
185

 
88

 
797

 
443

 
172

 

B2 – B3

 
298

 
100

 
52

 
517

 
239

 
102

 

Caa – D

 
32

 
10

 
8

 
55

 
23

 
16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
3,465

 

$
1,365

 

$
1,132

 

$
6,012

 

$
3,258

 

$
2,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

Lease Receivables

 

Loan Receivables

 

At December 31, 2017:

 

Americas

 

EMEA

 

Asia Pacific

 

Americas

 

EMEA

 

Asia Pacific

 

Credit ratings:

 

 

 

 

 

 

 

 

 

 

 

 

 

Aaa – Aa3

 

$
422

 

$
49

 

$
68

 

$
724

 

$
129

 

$
120

 

A1 – A3

 
855

 
190

 
544

 
1,469

 
502

 
961

 

Baa1 – Baa3

 
980

 
371

 
337

 
1,683

 
982

 
596

 

Ba1 – Ba2

 
730

 
448

 
184

 
1,253

 
1,186

 
325

 

Ba3 – B1

 
443

 
192

 
89

 
760

 
508

 
157

 

B2 – B3

 
367

 
77

 
64

 
630

 
204

 
113

 

Caa – D

 
51

 
13

 
18

 
88

 
34

 
31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$
3,847

 

$
1,340

 

$
1,302

 

$
6,607

 

$
3,545

 

$
2,303