E-Z-GO 2006 Annual Report Download - page 70

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Note 5. Finance Receivables and Securitizations
Finance Receivables
Through our Finance group, we provide financial services primarily to the aircraft, golf, vacation interval resort, dealer floorplan and middle mar-
ket industries under a variety of financing vehicles with various contractual maturities. The contractual maturities of finance receivables outstand-
ing at December 30, 2006 were as follows:
Finance Receivables
Contractual Maturities Outstanding
(In millions)
2007 2008 2009 2010 2011 Thereafter 2006 2005
Distribution finance receivables $ 1,519 $ 559 $ 233 $ 44 $ 66 $ 2 $ 2,423 $ 1,654
Revolving loans 1,422 287 127 60 28 24 1,948 1,633
Installment contracts 273 185 188 165 215 648 1,674 1,374
Golf course and resort mortgages 149 171 137 146 167 290 1,060 1,020
Leveraged leases (11) 70 35 (5) 14 512 615 569
Finance leases 202 124 101 87 14 62 590 513
$ 3,554 $ 1,396 $ 821 $ 497 $ 504 $ 1,538 8,310 6,763
Less allowance for credit losses 93 96
$ 8,217 $ 6,667
This table does not necessarily reflect future cash collections as receivables are often repaid or refinanced prior to contractual maturity.
Distribution finance receivables and revolving loans generally mature within one to five years. Distribution finance receivables generally are
secured by the inventory of the financed distributor and include floorplan 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 equipment, pools of vacation interval notes receiv-
ables, pools of residential and recreational land loans, and the underlying property.
Installment contracts and finance leases have initial terms ranging from two to 20 years and primarily are secured by the financed equipment.
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. 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. Contractual maturities for finance
leases classified as installment contracts in the table above 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 contracts were $719 million and $222 million,
respectively, at December 30, 2006 and $751 million and $164 million, respectively, at December 31, 2005. Minimum lease payments due under
these contracts for each of the next five years are as follows: $132 million in 2007, $117 million in 2008, $104 million in 2009, $88 million in
2010 and $97 million in 2011.
Golf course and resort mortgages are secured by real property and generally are 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.
Leveraged leases reflect contractual maturities net of contractual nonrecourse debt payments and include residual values expected to be realized
at contractual maturity.
49
Textron Inc.