E-Z-GO 2008 Annual Report Download - page 75

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Notes to the Consolidated Financial Statements
62
The net investments in finance leases, excluding leases classified as installment contracts and leveraged leases, are provided below:
January 3, December 29,
(In millions) 2009 2007
Finance leases:
Total minimum lease payments receivable $ 557 $ 568
Estimated residual values of leased equipment 259 267
816 835
Less unearned income (208) (222)
Net investment in finance leases $ 608 $ 613
Leveraged leases:
Rental receivable, net of nonrecourse debt $ 493 $ 531
Estimated residual values of leased assets 229 297
722 828
Less unearned income (263) (284)
Investment in leveraged leases 459 544
Deferred income taxes (350) (408)
Net investment in leveraged leases $ 109 $ 136
Nonaccrual loans include accounts that are contractually delinquent by more than three months for which the accrual of interest income is
suspended. These loans are considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual
terms of the loan agreement. Impaired accrual loans represent loans with original terms that have been significantly modified to reflect deferred
principal payments, generally at market interest rates, for which collection of principal and interest is not doubtful. Past due loans for which the
Finance group has recourse to the Manufacturing group are not considered impaired in the table below; these loans totaled $0.8 million and
$3 million at the end of 2008 and 2007, respectively.
The impaired loans included within finance receivables held for investment and related reserves at the end of 2008 and 2007 are as follows:
January 3, December 29,
(In millions) 2009 2007
Impaired nonaccrual loans $ 234 $ 59
Impaired accrual loans 19 143
Total impaired loans 253 202
Average recorded investment in impaired loans 177 84
Impaired nonaccrual loans with identified reserve requirements 182 40
Allowance for losses on impaired nonaccrual loans 43 15
In the fourth quarter of 2008, we classified $1.7 billion of finance receivables as held for sale. These receivables are reflected at fair value in
2008 and are excluded from the loan impairment disclosures above. The increase in impaired nonaccrual finance receivables primarily reflects a
$71 million account in the Golf Finance division and a $68 million account in the Resort Finance division. The decrease in impaired accrual
finance receivables primarily reflects one account in the Golf Finance division that moved to impaired nonaccrual status and two accounts in the
Asset-Based Lending division that have been transferred to the finance receivables held for sale classification.
Captive and Other Intercompany Financing
Our Finance group provides financing for retail purchases and leases for new and used aircraft and equipment manufactured by our
Manufacturing group. The captive finance receivables for these inventory sales that are included in the Finance group’s balance sheets are
summarized below:
January 3, December 29,
(In millions) 2009 2007
Installment contracts $ 1,468 $ 1,184
Finance leases 544 535
Distribution finance 33 31
Total $ 2,045 $ 1,750