E-Z-GO 2003 Annual Report Download - page 50

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(In millions) 2004 2005 2006 2007 Thereafter 2002
Installment contracts $ 281 $ 174 $ 148 $ 148 $ 645 $ 1,396 $ 1,775
Distribution finance 767 11 — — — 778 792
Revolving loans 350 156 125 220 343 1,194 1,200
Finance leases 68 95 24 19 103 309 345
Golf course and resort
mortgages 129 161 217 156 282 945 962
Leveraged leases 16 (1) (2) (10) 510 513 460
$ 1,611 $ 596 $ 512 $ 533 $ 1,883 5,135 5,534
Less allowance for
credit losses 119 145
$ 5,016 $ 5,389
The net investment in finance and leveraged leases was as follows:
(In millions) 2002
Finance and leveraged lease receivables, net of nonrecourse debt $ 784 $ 723
Estimated residual values on leased assets 603 589
1,387 1,312
Unearned income (565) (506)
Investment in leases 822 806
Deferred income taxes (353) (328)
Net investment in leases $ 469 $ 478
The activity in the allowance for credit losses on finance receivables was as follows:
(In millions) 2002 2001
Balance at the beginning of the year $ 145 $ 125 $ 116
Provision for losses 81 111 69
Charge-offs (131) (114) (69)
Recoveries 14 11 8
Acquisitions and other 10 12 1
Balance at the end of the year $ 119 $ 145 $ 125
Textron Finance manages and services finance receivables for a variety of investors, participants and
third-party portfolio owners. The total managed and serviced finance receivable portfolio, including
owned finance receivables, was $8.5 billion at the end of 2003 and $9.0 billion at the end of 2002. Man-
aged receivables include owned finance receivables and finance receivables sold in securitizations and
private transactions where Textron Finance has retained some element of credit risk and continues to
service the portfolio.
At January 3, 2004, Textron Finance’s receivables are primarily diversified geographically across the
United States, along with 4% held in South America and 9% in other countries. The most significant col-
lateral concentration was in general aviation aircraft, which accounted for 22% of managed receivables.
Textron Finance also has industry concentrations in the golf and vacation interval industries, which each
accounted for 15% and 14%, respectively, of managed receivables at January 3, 2004.
A portion of Textron Finance’s business involves financing retail purchases and leases for new and used
aircraft and equipment manufactured by Textron Manufacturing’s Bell, Cessna and Industrial segments.
In 2003, 2002 and 2001, Textron Finance paid Textron Manufacturing $0.8 billion, $1.1 billion, and $1.3
billion, respectively, relating to the sale of manufactured products to third parties that were financed by
Textron Finance, and $56 million, $104 million and $62 million, respectively, for the purchase of operat-
ing lease equipment. Operating agreements specify that Textron Finance has recourse to Textron Manu-
facturing for outstanding balances from some of these transactions. At the end of 2003 and 2002, the
amounts guaranteed by Textron Manufacturing totaled $467 million and $562 million, respectively. In
addition, Textron Finance has recourse to Textron Manufacturing for the $87 million lease with C&A and
for retained interests in securitizations of $30 million at the end of 2003 and $70 million at the end of
2002.
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