E-Z-GO 2007 Annual Report Download - page 72

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Textron Inc.
Note 5. Finance Receivables and Securitizations
Finance Receivables
Through our Finance group, we provide fi nancial services primarily to the aviation, golf, vacation interval resort, dealer fl oorplan and middle
market industries under a variety of fi nancing vehicles with various contractual maturities. The contractual maturities of fi nance receivables
outstanding at December 29, 2007 were as follows:
Finance Receivables
Contractual Maturities Outstanding
(In millions) 2008 2009 2010 2011 2012 Thereafter 2007 2006
Revolving loans $ 1,631 $ 315 $ 156 $ 77 $ 38 $ 37 $ 2,254 $ 1,948
Installment contracts 257 234 209 248 290 814 2,052 1,674
Distribution fi nance receivables 1,190 506 62 42 63 37 1,900 2,423
Golf course and resort mortgages 66 253 121 193 277 330 1,240 1,060
Finance leases 160 133 127 70 28 95 613 590
Leveraged leases 58 43 (6) 15 (10) 444 544 615
$ 3,362 $ 1,484 $ 669 $ 645 $ 686 $ 1,757 8,603 8,310
Less allowance for credit losses 89 93
$ 8,514 $ 8,217
The above table does not necessarily refl ect future cash collections, as receivables often are repaid or refi nanced prior to contractual maturity.
Revolving loans and distribution fi nance receivables generally mature within one to fi ve years. Revolving loans are secured by trade receivables,
inventory, plant and equipment, pools of vacation interval notes receivables, pools of residential and recreational land loans, and the underlying
property. Distribution fi nance receivables generally are secured by the inventory of the fi nanced distributor and include fl oorplan fi nancing for
third-party dealers for inventory sold by the E-Z-GO and Jacobsen businesses.
Installment contracts and fi nance leases have initial terms ranging from two to 20 years and primarily are secured by the fi nanced equipment.
Installment contracts generally require the customer to pay a signifi cant 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
maturity. Leases with no signifi cant residual value at the end of the contractual term are classifi ed as installment contracts, as their legal and
economic substance is more equivalent to a secured borrowing than a fi nance lease with a signifi cant residual value. Contractual maturities
for fi nance leases classifi ed as installment contracts in the table above represent 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 $1.0 billion and
$315 million, respectively, at December 29, 2007 and $719 million and $222 million, respectively, at December 30, 2006. Minimum lease
payments due under these contracts for each of the next fi ve years are as follows: $173 million in 2008, $149 million in 2009, $132 million in
2010, $141 million in 2011 and $106 million in 2012. Minimum lease payments due under fi nance leases for each of the next fi ve years are as
follows: $156 million in 2008, $113 million in 2009, $75 million in 2010, $46 million in 2011 and $8 million in 2012.
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 fi ve to 10 years with amortization periods from 15 to 25 years. Golf course
mortgages, totaling $1.1 billion, consist of loans with an average balance of $5 million and a weighted-average remaining contractual maturity of
fi ve years. Resort mortgages generally represent construction and inventory loans with terms up to fi ve 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 refl ect contractual maturities net of contractual nonrecourse debt payments and include residual values expected to be realized
at contractual maturity.
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