Financing Receivables (Tables)
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3 Months Ended |
Mar. 31, 2020 |
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 March 31, 2020: | | Leases | | Receivables | | (Loans) | | Total | Financing receivables, gross | | $ | 5,479 | | $ | 2,334 | | $ | 12,605 | | $ | 20,418 | Unearned income | | | (471) | | | (3) | | | (517) | | | (991) | Residual value* | | | 646 | | | — | | | — | | | 646 | Amortized cost | | $ | 5,654 | | $ | 2,331 | | $ | 12,087 | | $ | 20,072 | Allowance for credit losses | | | (79) | | | (12) | | | (147) | | | (238) | Total financing receivables, net | | $ | 5,575 | | $ | 2,319 | | $ | 11,940 | | $ | 19,834 | Current portion | | $ | 2,112 | | $ | 2,319 | | $ | 7,695 | | $ | 12,126 | Noncurrent portion | | $ | 3,463 | | $ | — | | $ | 4,245 | | $ | 7,708 |
* Includes guaranteed and unguaranteed residual value. | | | | | | | | | | | | | | | Investment in | | | | | Client Loan and | | | | | | Sales-Type and | | Commercial | | Installment Payment | | | | (Dollars in millions) | | Direct Financing | | Financing | | Receivables | | | | At December 31, 2019: | | Leases | | Receivables | | (Loans) | | Total | Financing receivables, gross | | $ | 6,077 | | $ | 3,836 | | $ | 13,592 | | $ | 23,504 | Unearned income | | | (509) | | | (4) | | | (570) | | | (1,083) | Recorded investment | | $ | 5,567 | | $ | 3,831 | | $ | 13,022 | | $ | 22,421 | Allowance for credit losses | | | (72) | | | (11) | | | (138) | | | (221) | Unguaranteed residual value | | | 652 | | | — | | | — | | | 652 | Guaranteed residual value | | | 53 | | | — | | | — | | | 53 | Total financing receivables, net | | $ | 6,199 | | $ | 3,820 | | $ | 12,884 | | $ | 22,904 | Current portion | | $ | 2,334 | | $ | 3,820 | | $ | 8,037 | | $ | 14,192 | Noncurrent portion | | $ | 3,865 | | $ | — | | $ | 4,847 | | $ | 8,712 |
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Schedule of financing receivables and allowance for credit losses by portfolio segment |
| | | | | | | | | | | | | (Dollars in millions) | | | | | | | | | | | | | At March 31, 2020: | | Americas | | EMEA | | Asia Pacific | | Total | Amortized cost | | | | | | | | | | | | | Lease receivables | | $ | 3,609 | | $ | 1,122 | | $ | 923 | | $ | 5,654 | Loan receivables | | | 6,151 | | | 3,663 | | | 2,273 | | | 12,087 | Ending balance | | $ | 9,760 | | $ | 4,785 | | $ | 3,196 | | $ | 17,741 | | | | | | | | | | | | | | Allowance for credit losses | | | | | | | | | | | | | Beginning balance at December 31, 2019 | | $ | 120 | | $ | 54 | | $ | 36 | | $ | 210 | Adjustment for adoption of new standard | | | 21 | | | 15 | | | 5 | | | 41 | Beginning balance at January 1, 2020 | | | | | | | | | | | | | Lease receivables | | $ | 44 | | $ | 27 | | $ | 18 | | $ | 89 | Loan receivables | | | 98 | | | 42 | | | 22 | | | 163 | Total | | $ | 142 | | $ | 69 | | $ | 41 | | $ | 252 | Write-offs | | $ | (16) | | $ | (1) | | $ | (2) | | $ | (19) | Recoveries | | | 0 | | | — | | | 1 | | | 1 | Provision | | | 3 | | | 7 | | | (1) | | | 9 | Other* | | | (13) | | | (2) | | | (1) | | | (16) | Ending balance at March 31, 2020 | | $ | 117 | | $ | 73 | | $ | 36 | | $ | 226 | Lease receivables | | $ | 41 | | $ | 23 | | $ | 15 | | $ | 79 | Loan receivables | | $ | 75 | | $ | 50 | | $ | 22 | | $ | 147 |
* | Primarily represents translation adjustments. |
| | | | | | | | | | | | | (Dollars in millions) | | | | | | | | | | | | | At December 31, 2019: | | Americas | | EMEA | | Asia Pacific | | Total | Recorded investment | | | | | | | | | | | | | Lease receivables | | $ | 3,419 | | $ | 1,186 | | $ | 963 | | $ | 5,567 | Loan receivables | | | 6,726 | | | 3,901 | | | 2,395 | | | 13,022 | Ending balance | | $ | 10,144 | | $ | 5,087 | | $ | 3,359 | | $ | 18,590 | Recorded investment collectively evaluated for impairment | | $ | 10,032 | | $ | 5,040 | | $ | 3,326 | | $ | 18,399 | Recorded investment individually evaluated for impairment | | $ | 112 | | $ | 47 | | $ | 32 | | $ | 191 | | | | | | | | | | | | | | 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 | | $ | (42) | | $ | (3) | | $ | (18) | | $ | (63) | Recoveries | | | 1 | | | 0 | | | 1 | | | 2 | Provision | | | 5 | | | (7) | | | (3) | | | (5) | Other* | | | (1) | | | 0 | | | (1) | | | (2) | Ending balance at December 31, 2019 | | $ | 120 | | $ | 54 | | $ | 36 | | $ | 210 | Lease receivables | | $ | 33 | | $ | 23 | | $ | 16 | | $ | 72 | Loan receivables | | $ | 88 | | $ | 31 | | $ | 20 | | $ | 138 | | | | | | | | | | | | | | Related allowance, collectively evaluated for impairment | | $ | 25 | | $ | 11 | | $ | 4 | | $ | 39 | Related allowance, individually evaluated for impairment | | $ | 96 | | $ | 43 | | $ | 32 | | $ | 171 |
* Primarily represents translation adjustments.
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Schedule of past due financing receivables |
| | | | | | | | | | | | | | | | | | | | | | | | Amortized | | Billed | | | | | Total | | Amortized | | Cost | | Invoices | | Amortized | (Dollars in millions) | | Amortized | | Cost | | > 90 Days and | | > 90 Days and | | Cost Not | At March 31, 2020: | | Cost | | > 90 Days (1) | | Accruing (1) | | Accruing | | Accruing (2) | Americas | | $ | 3,609 | | $ | 144 | | $ | 110 | | $ | 8 | | $ | 40 | EMEA | | | 1,122 | | | 20 | | | 6 | | | 0 | | | 16 | Asia Pacific | | | 923 | | | 24 | | | 13 | | | 1 | | | 10 | Total lease receivables | | $ | 5,654 | | $ | 188 | | $ | 129 | | $ | 9 | | $ | 65 | | | | | | | | | | | | | | | | | Americas | | $ | 6,151 | | $ | 115 | | $ | 62 | | $ | 11 | | $ | 54 | EMEA | | | 3,663 | | | 74 | | | 7 | | | 3 | | | 69 | Asia Pacific | | | 2,273 | | | 27 | | | 10 | | | 1 | | | 17 | Total loan receivables | | $ | 12,087 | | $ | 215 | | $ | 80 | | $ | 16 | | $ | 140 | | | | | | | | | | | | | | | | | Total | | $ | 17,741 | | $ | 403 | | $ | 209 | | $ | 26 | | $ | 206 |
(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 $148 million. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | Recorded | | Billed | | Recorded | | | Total | | Recorded | | Investment | | Invoices | | Investment | (Dollars in millions) | | Recorded | | Investment | | > 90 Days and | | > 90 Days and | | Not | At December 31, 2019: | | Investment | | > 90 Days (1) | | Accruing (1) | | Accruing | | Accruing (2) | Americas | | $ | 3,419 | | $ | 187 | | $ | 147 | | $ | 11 | | $ | 41 | EMEA | | | 1,186 | | | 28 | | | 13 | | | 2 | | | 17 | Asia Pacific | | | 963 | | | 19 | | | 7 | | | 1 | | | 11 | Total lease receivables | | $ | 5,567 | | $ | 234 | | $ | 168 | | $ | 14 | | $ | 69 | | | | | | | | | | | | | | | | | Americas | | $ | 6,726 | | $ | 127 | | $ | 71 | | $ | 11 | | $ | 72 | EMEA | | | 3,901 | | | 77 | | | 8 | | | 3 | | | 72 | Asia Pacific | | | 2,395 | | | 26 | | | 6 | | | 2 | | | 21 | Total loan receivables | | $ | 13,022 | | $ | 231 | | $ | 85 | | $ | 15 | | $ | 166 | | | | | | | | | | | | | | | | | Total | | $ | 18,590 | | $ | 465 | | $ | 253 | | $ | 29 | | $ | 235 |
(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, $191 million was individually evaluated for impairment with a related allowance of $171 million. |
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Schedule of net recorded investment by credit quality indicator |
| | | | | | | | | | | | | | | | | | | (Dollars in millions) | | Americas | | EMEA | | Asia Pacific | At March 31, 2020: | | Aaa – Baa3 | | Ba1 – D | | Aaa – Baa3 | | Ba1 – D | | Aaa – Baa3 | | Ba1 – D | Vintage year: | | | | | | | | | | | | | | | | | | | 2020 | | $ | 1,422 | | $ | 883 | | $ | 633 | | $ | 806 | | $ | 251 | | $ | 163 | 2019 | | | 2,213 | | | 1,601 | | | 966 | | | 1,043 | | | 1,607 | | | 678 | 2018 | | | 1,148 | | | 736 | | | 400 | | | 359 | | | 208 | | | 82 | 2017 | | | 722 | | | 386 | | | 141 | | | 191 | | | 79 | | | 37 | 2016 | | | 292 | | | 309 | | | 94 | | | 68 | | | 36 | | | 20 | 2015 and prior | | | 18 | | | 30 | | | 45 | | | 40 | | | 20 | | | 16 | Total | | $ | 5,815 | | $ | 3,945 | | $ | 2,278 | | $ | 2,506 | | $ | 2,200 | | $ | 996 |
| | | | | | | | | | | | | | | | | | | (Dollars in millions) | | Lease Receivables | | Loan Receivables | At December 31, 2019: | | Americas | | EMEA | | Asia Pacific | | Americas | | EMEA | | Asia Pacific | Credit rating: | | | | | | | | | | | | | | | | | | | Aaa – Aa3 | | $ | 465 | | $ | 54 | | $ | 43 | | $ | 1,028 | | $ | 193 | | $ | 189 | A1 – A3 | | | 750 | | | 181 | | | 454 | | | 1,186 | | | 395 | | | 892 | Baa1 – Baa3 | | | 955 | | | 409 | | | 147 | | | 1,882 | | | 1,527 | | | 619 | Ba1 – Ba2 | | | 746 | | | 326 | | | 154 | | | 1,513 | | | 921 | | | 388 | Ba3 – B1 | | | 215 | | | 140 | | | 101 | | | 471 | | | 564 | | | 205 | B2 – B3 | | | 242 | | | 50 | | | 47 | | | 522 | | | 253 | | | 72 | Caa – D | | | 13 | | | 2 | | | 2 | | | 36 | | | 18 | | | 10 | Total | | $ | 3,385 | | $ | 1,162 | | $ | 947 | | $ | 6,638 | | $ | 3,871 | | $ | 2,376 |
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