Financing Receivables (Tables)

9 Months Ended

Sep. 30, 2021

Financing Receivables

Summary of the components of financing receivables

	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial
(Dollars in millions)	Receivables		Direct Financing		Financing
At September 30, 2021:	(Loans)		Leases		Receivables		Total
Financing receivables, gross	$	8,708	$	3,216	$	727	$	12,651
Unearned income		(355)		(228)		0		(583)
Residual value*		—		345		—		345
Amortized cost	$	8,353	$	3,333	$	727	$	12,413
Allowance for credit losses		(135)		(65)		(6)		(207)
Total financing receivables, net	$	8,218	$	3,268	$	721	$	12,207
Current portion	$	5,022	$	1,419	$	721	$	7,161
Noncurrent portion	$	3,196	$	1,850	$	—	$	5,046

	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial
(Dollars in millions)	Receivables		Direct Financing		Financing
At December 31, 2020:	(Loans)		Leases		Receivables		Total
Financing receivables, gross	$	12,159	$	4,001	$	2,419	$	18,580
Unearned income		(488)		(335)		0		(823)
Residual value*		—		485		—		485
Amortized cost	$	11,671	$	4,151	$	2,419	$	18,242
Allowance for credit losses		(173)		(82)		(8)		(263)
Total financing receivables, net	$	11,498	$	4,069	$	2,411	$	17,979
Current portion	$	6,955	$	1,525	$	2,411	$	10,892
Noncurrent portion	$	4,542	$	2,544	$	—	$	7,086

Schedule of financing receivables and allowance for credit losses by class

(Dollars in millions)
At September 30, 2021:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	5,966	$	3,616	$	2,105	$	11,687
Allowance for credit losses:
Beginning balance at January 1, 2021	$	141	$	77	$	37	$	255
Write-offs	$	(6)	$	(1)	$	(7)	$	(14)
Recoveries		—		—		1		1
Additions/(releases)		(20)		(10)		(6)		(36)
Other*		(2)		(3)		0		(5)
Ending balance at September 30, 2021	$	113	$	64	$	24	$	201

(Dollars in millions)
At December 31, 2020:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	7,758	$	5,023	$	3,042	$	15,822
Allowance for credit losses:
Beginning balance at January 1, 2020	$	142	$	69	$	41	$	252
Write-offs	$	(28)	$	(3)	$	(3)	$	(34)
Recoveries		0		0		2		3
Additions/(releases)		33		5		(4)		34
Other*		(6)		6		1		1
Ending balance at December 31, 2020	$	141	$	77	$	37	$	255

* Primarily represents translation adjustments.

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 September 30, 2021:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	5,966	$	179	$	94	$	15	$	88
EMEA		3,616		89		3		2		89
Asia Pacific		2,105		28		6		3		22
Total client financing receivables	$	11,687	$	296	$	103	$	20	$	200

					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At December 31, 2020:	Cost		> 90 Days (1)		Accruing (1)		Accruing		Accruing (2)
Americas	$	7,758	$	295	$	200	$	12	$	96
EMEA		5,023		119		28		5		95
Asia Pacific		3,042		42		12		4		32
Total client financing receivables	$	15,822	$	456	$	241	$	20	$	223

(1) At a contract level, which includes total billed and unbilled amounts of financing receivables aged greater than 90 days.

(2) Of the amortized cost not accruing, there was a related allowance of $161 million and $178 million at September 30, 2021 and December 31, 2020, respectively. Financing income recognized on these receivables was immaterial for the three and nine months ended September 30, 2021, respectively.

Schedule of amortized cost by credit quality indicator

(Dollars in millions)	Americas				EMEA				Asia Pacific
At September 30, 2021:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2021	$	1,667	$	858	$	746	$	614	$	498	$	174
2020		1,177		481		663		427		411		102
2019		657		282		335		341		335		60
2018		420		146		229		108		245		74
2017		137		59		23		62		100		23
2016 and prior		25		57		23		42		57		24
Total	$	4,083	$	1,883	$	2,020	$	1,595	$	1,647	$	458

(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2020:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2020	$	2,818	$	1,449	$	1,513	$	1,427	$	958	$	351
2019		988		623		668		519		564		123
2018		829		360		329		245		419		167
2017		285		154		70		128		205		52
2016		90		52		33		46		114		33
2015 and prior		28		81		22		22		38		18
Total	$	5,038	$	2,720	$	2,635	$	2,387	$	2,298	$	743