E-Z-GO 2009 Annual Report Download - page 66

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Textron Inc.
Finance receivables often are repaid or refinanced prior to maturity, and, in some instances, payment may be delayed or extended beyond the
scheduled maturity. Accordingly, the above tabulations should not be regarded as a forecast of future cash collections. Finance receivable receipts
related to distribution finance receivables and revolving loans are based on historical cash flow experience. Finance receivables held for
investment include certain amounts previously classified as held for sale that have an $81 million valuation allowance.
The net investments in finance leases, excluding leases classified as installment contracts, and leveraged leases are provided below:
January 2, January 3,
(In millions) 2010 2009
Finance leases:
Total minimum lease payments receivable $ 395 $ 557
Estimated residual values of leased equipment 183 259
578 816
Less unearned income (175) (208)
Net investment in finance leases $ 403 $ 608
Leveraged leases:
Rental receivable, net of nonrecourse debt $ 378 $ 493
Estimated residual values of leased assets 152 229
530 722
Less unearned income (217) (263)
Investment in leveraged leases 313 459
Deferred income taxes (238) (350)
Net investment in leveraged leases $ 75 $ 109
Nonaccrual and Impaired Finance Receivables
We periodically evaluate finance receivables held for investment, excluding homogeneous loan portfolios and finance leases, for impairment.
Finance receivables classified as held for sale are reflected at fair value and are excluded from this assessment. A finance receivable is 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
finance receivables are classified as either nonaccrual or accrual loans. Nonaccrual finance receivables include accounts that are contractually
delinquent by more than three months for which the accrual of interest income is suspended. Impaired accrual finance receivables 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.
The impaired finance receivables are as follows:
January 2, January 3,
(In millions) 2010 2009
Impaired nonaccrual finance receivables $ 984 $ 234
Impaired accrual finance receivables 217 19
Total impaired finance receivables $ 1,201 $ 253
Less: Impaired finance receivables without identified reserve requirements 362 71
Impaired nonaccrual finance receivables with identified reserve requirements $ 839 $ 182
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