E-Z-GO 2005 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2005 E-Z-GO annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

51
Note 4. Accounts Receivable
Accounts receivable is composed of the following:
December 31, January 1,
(In millions)
2005 2005
Commercial $ 660 $ 677
U.S. Government contracts 269 220
929 897
Less allowance for doubtful accounts (38) (54)
$ 891 $ 843
Unbillable receivables on U.S. Government contracts arise when the revenues based on performance attainment, though appropriately recog-
nized, cannot be billed yet under terms of the contract. Unbillable receivables within Accounts Receivable totaled $125 million at December 31,
2005 and $133 million at January 1, 2005. Long-term contract receivables due from the U.S. Government do not include significant amounts
billed but unpaid due to contractual retainage provisions or subject to collection uncertainty.
Note 5. Finance Receivables and Securitizations
Finance Receivables
Textron Finance provides financial services primarily to the aircraft, golf, vacation interval resort, dealer floorplan and middle market industries
under a variety of financing vehicles with various contractual maturities.
Installment contracts generally require the customer to pay a significant down payment, along with periodic scheduled principal payments that
reduce the outstanding balance through the term of the loan. Finance leases include residual values expected to be realized at contractual matu-
rity. Finance leases with no significant residual value at the end of the contractual term are classified as installment contracts, as their legal and
economic substance is more equivalent to a secured borrowing than a finance lease with a significant residual value. Installment contracts and
finance leases have initial terms ranging from two to 20 years and are primarily secured by the financed equipment.
Distribution finance receivables are generally secured by the inventory of the financed distributor and include floor plan financing for third-party
dealers for inventory sold by the E-Z-GO and Jacobsen businesses. Revolving loans are secured by trade receivables, inventory, plant and equip-
ment, pools of vacation interval notes receivables, pools of residential and recreational land loans, and the underlying property. Distribution
finance and revolving loans generally mature within one to five years.
Golf course and resort mortgages are secured by real property and are generally limited to 75% or less of the property’s appraised market value at
loan origination. Golf course mortgages have initial terms ranging from five to seven years with amortization periods from 15 to 25 years. Resort
mortgages generally represent construction and inventory loans with terms up to two years. Leveraged leases are secured by the ownership of the
leased equipment and real property and have initial terms up to approximately 30 years.
The following table displays the contractual maturity of the finance receivables. It does not necessarily reflect future cash collections because of
various factors, including the repayment or refinancing of receivables prior to contractual maturity:
Finance Receivables
Contractual Maturities Outstanding
(In millions)
2006 2007 2008 2009 2010 Thereafter 2005 2004
Installment contracts $ 252 $ 167 $ 171 $ 146 $ 125 $ 513 $ 1,374 $ 1,455
Distribution finance 1,057 428 49 3 117 — 1,654 1,026
Revolving loans 676 205 303 211 123 115 1,633 1,402
Finance leases 165 80 96 66 47 59 513 410
Golf course and resort mortgages 193 146 160 121 158 242 1,020 1,005
Leveraged leases 7 (11) 71 37 (4) 469 569 539
$ 2,350 $ 1,015 $ 850 $ 584 $ 566 $ 1,398 6,763 5,837
Less allowance for credit losses 96 99
$ 6,667 $ 5,738
Notes to the Consolidated Financial Statements