E-Z-GO 2005 Annual Report Download - page 72

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Contractual maturities for finance leases classified as installment contracts include the minimum lease payments, net of the unearned income to
be recognized over the life of the lease. Total minimum lease payments and unearned income related to these finance leases were $751 million
and $164 million, respectively, at December 31, 2005 and $708 million and $136 million, respectively, at January 1, 2005. Minimum lease pay-
ments due under these contracts for each of the next five years are as follows: $150 million in 2006, $125 million in 2007, $109 million in 2008,
$108 million in 2009 and $81 million in 2010.
Textron Finance’s net investment in finance leases, excluding leases classified as installment contracts, is provided below:
(In millions)
2005 2004
Total minimum lease payments receivable $ 457 $ 383
Estimated residual values of leased equipment 241 205
698 588
Less unearned income (185) (178)
Net investment in finance leases $ 513 $ 410
Minimum lease payments due under finance leases for each of the next five years are as follows: $99 million in 2006, $87 million in 2007,
$67 million in 2008, $37 million in 2009 and $11 million in 2010.
The net investment in leveraged leases was as follows:
(In millions)
2005 2004
Rental receivable, net of nonrecourse debt $ 520 $ 545
Estimated residual values on leased assets 311 286
831 831
Unearned income (262) (292)
Investment in leveraged leases 569 539
Deferred income taxes (349) (358)
Net investment in leveraged leases $ 220 $ 181
Excluding receivables with recourse to Textron Manufacturing, at the end of 2005 and 2004, Textron Finance had nonaccrual finance receivables
totaling $89 million and $119 million, respectively, of which $67 million and $85 million, respectively, were impaired. In addition, Textron
Finance had impaired accrual finance receivables totaling $36 million at December 31, 2005 and $58 million at January 1, 2005. The allowance
for losses on finance receivables related to impaired loans is determined using assumptions related to the fair market value of the underlying col-
lateral and totaled $18 million and $16 million at the end of 2005 and 2004, respectively. The average recorded investment in impaired loans dur-
ing 2005 was $113 million, compared with $145 million in 2004. No interest income was recognized on these loans using the cash basis method.
Textron Finance manages and services finance receivables for a variety of investors, participants and third-party portfolio owners. The total man-
aged and serviced finance receivable portfolio, including owned finance receivables, was $9.9 billion at the end of 2005 and $9.3 billion at the
end of 2004. Managed 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 December 31, 2005, Textron Finance’s receivables were primarily diversified geographically across the United States, along with 14% in other
countries. The most significant collateral concentration was in general aviation aircraft, which accounted for 19% of managed receivables. Textron
Finance also has industry concentrations in the golf and vacation interval industries, which each accounted for 17% and 13%, respectively, of
managed receivables at December 31, 2005.
52
Textron Inc.