E-Z-GO 2008 Annual Report Download - page 73

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Notes to the Consolidated Financial Statements
60
Note 4. Accounts Receivable
Accounts receivable is comprised of the following:
January 3, December 29,
(In millions) 2009 2007
Commercial $ 511 $ 618
U.S. Government contracts 437 369
948 987
Allowance for doubtful accounts (24) (29)
$ 924 $ 958
We have unbillable receivables on U.S. Government contracts that arise when the revenues we have appropriately recognized based on
performance cannot be billed yet under terms of the contract. Unbillable receivables within accounts receivable totaled $157 million at January 3,
2009 and $166 million at December 29, 2007. Long-term contract receivables due from the U.S. Government exclude significant amounts billed
but unpaid due to contractual retainage provisions.
Note 5. Finance Receivables and Securitizations
We evaluate finance receivables on a managed as well as owned basis since we retain subordinated interests in finance receivables sold in
securitizations resulting in credit risk. In contrast, we do not have a retained financial interest or credit risk in the performance of the serviced
portfolio and, therefore, performance of these portfolios is limited to billing and collection activities. Our Finance group manages and services
finance receivables for a variety of investors, participants and third-party portfolio owners. Managed and serviced finance receivables are
summarized as follows:
January 3, December 29,
(In millions) 2009 2007
Total managed and serviced finance receivables $ 12,173 $ 12,478
Nonrecourse participations sold to independent investors (820) (760)
Third-party portfolio servicing (532) (595)
Total managed finance receivables 10,821 11,123
Securitized receivables (2,248) (2,520)
Owned finance receivables 8,573 8,603
Finance receivables held for sale (1,658) —
Finance receivables held for investment $ 6,915 $ 8,603
Finance receivables are classified as held for investment when we have the intent and the ability to hold the receivable for the foreseeable
future or until maturity or payoff. Finance receivables are classified as held for sale based on the determination that we no longer have the intent
to hold the receivable until maturity. As a result of the exit plan discussed in Note 12, Special Charges, at January 3, 2009, approximately
$2.9 billion of the managed liquidating finance receivables were designated for sale or transfer, of which about $1.2 billion represent securitized
receivables managed by the Finance segment and $1.7 billion represent owned finance receivables classified as held
for sale.
Owned finance receivables at January 3, 2009 include approximately $1.1 billion of receivables that have been legally sold to special purpose
entities (SPE), which are consolidated subsidiaries of Textron Financial Corporation. The assets of the SPEs are pledged as collateral for their
debt, which have been reflected as securitized on-balance sheet debt in Note 8, Debt and Credit Facilities.
Our finance receivables are diversified across geographic region, borrower industry and type of collateral. At January 3, 2009, 77% of our finance
receivables, including held for investment and held for sale portfolios, were distributed throughout the U.S., compared with 78% at the end of
2007. The most significant collateral concentration was in general aviation, which accounted for 26% of managed receivables at the end of 2008
and 22% at the end of 2007. Industry concentrations in the golf and vacation interval industries accounted for 16% and 15%, respectively, of
managed receivables at January 3, 2009, compared with 15% and 13%, respectively, at the end of 2007.