E-Z-GO 2009 Annual Report Download - page 65

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Notes to the Consolidated Financial Statements
56
Our finance receivables are diversified across geographic region, borrower industry and type of collateral. At January 2, 2010, 70% of our
managed finance receivables were distributed throughout the U.S., compared with 77% at the end of 2008. The most significant collateral
concentration was in general aviation, which accounted for 35% of managed receivables at the end of 2009 and 26% at the end of 2008. Industry
concentrations in the resort and golf industries accounted for 19% and 18%, respectively, of managed receivables at January 2, 2010, compared
with 13% and 16%, respectively, at the end of 2008.
Finance receivables include installment contracts, revolving loans, golf course and resort mortgages, distribution finance receivables, and finance
and leveraged leases. Installment contracts and finance leases have initial terms ranging from two to 20 years and are secured by the financed
equipment, and, in many instances, by the personal guarantee of the principals or recourse arrangements with the originating vendor. 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 maturity. 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. In the contractual maturities table in the “Finance
Receivables Held for Investment” section below, contractual maturities for finance leases classified as installment contracts 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 $194 million, respectively, at January 2, 2010 and $1.2 billion and $299 million,
respectively, at January 3, 2009. Minimum lease payments due under these contracts for each of the next five years are as follows: $199 million in
2010, $182 million in 2011, $147 million in 2012, $121 million in 2013 and $82 million in 2014. Minimum lease payments due under finance
leases for each of the next five years are as follows: $88 million in 2010, $66 million in 2011, $41 million in 2012, $17 million in 2013 and $9
million in 2014.
Revolving loans and distribution finance receivables generally mature within one to five years, and, at times, convert to term loans that
contractually amortize over an additional one to five years. Revolving loans are secured by trade receivables, inventory, plant and equipment,
pools of timeshare interval resort notes receivables, finance receivable portfolios, pools of residential and recreational land loans and the
underlying property, and, in many instances, by the personal guarantee of the principals. 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.
Golf course, timeshare and hotel 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 10 years with amortization periods from 15 to 25
years. Golf course mortgages consist of loans with an average balance of $6 million and a weighted-average remaining contractual maturity of
three years. Timeshare and hotel mortgages generally represent construction and inventory, or operating property loans with an average balance
of $9 million and a weighted-average remaining contractual maturity of three 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.
Finance Receivables Held for Investment
The contractual maturities of finance receivables held for investment at January 2, 2010 were as follows:
Finance Receivables
Contractual Maturities Held for Investment
(In millions) 2010 2011 2012 2013 2014 Thereafter 2009 2008
Installment contracts $ 383 $ 333 $ 363 $ 358 $ 261 $ 811 $ 2,509 $ 2,787
Revolving loans 288 430 242 131 49 43 1,183 1,208
Golf course, timeshare and
hotel mortgages 209 298 176 178 63 162 1,086 1,206
Distribution finance receivables 650 125 12 4 2 — 793 647
Finance leases 102 77 79 28 5 112 403 608
Leveraged leases (2) 3 (6) (9) 1 326 313 459
$ 1,630 $ 1,266 $ 866 $ 690 $ 381 $ 1,454 6,287 6,915
Allowance for credit losses and
valuation allowance (422) (191)
$ 5,865 $ 6,724