E-Z-GO 2010 Annual Report Download - page 69

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57
In 2010, 2009 and 2008, our Finance group paid our Manufacturing group $0.4 billion, $0.6 billion and $1.0 billion, respectively,
related to the sale of Textron-manufactured products to third parties that were financed by the Finance group. Our Cessna and
Industrial segments also received proceeds in those years of $10 million, $13 million and $18 million, respectively, from the sale of
equipment from their manufacturing operations to our Finance group for use under operating lease agreements. At January 1, 2011
and January 2, 2010, the amounts guaranteed by the Manufacturing group totaled $69 million and $216 million, respectively, on
which the Manufacturing group had reserves for losses of $17 million for both periods.
In 2009, Textron Inc. agreed to lend TFC, with interest at 7%, funds to pay down maturing debt. As of January 1, 2011 and January 2,
2010, the outstanding balance due to Textron Inc. for these borrowings was $315 million and $413 million, respectively. These
amounts are included in other current assets for the Manufacturing group and other liabilities for the Finance group in the
Consolidated Balance Sheets.
Finance Receivables Held for Sale
At the end of 2010 and 2009, approximately $413 million and $819 million of finance receivables were classified as held for sale. A
significant portion of the reduction in these finance receivables related to sales, primarily in the distribution finance and asset-based
lending portfolios. We received proceeds of $582 million and $569 million in 2010 and 2009, respectively, from the sale of these
receivables and $86 million and $208 million, respectively, from collections. In the fourth quarter of 2010, we reclassified $219
million of timeshare finance receivables from held for investment to held for sale as a result of an unanticipated inquiry we have
received to purchase these finance receivables; we determined a sale of these finance receivables would be consistent with our goal to
maximize the economic value of our portfolio and accelerate cash collections. At the end of 2010, the remaining finance receivables
held for sale primarily are composed of assets in the timeshare and golf mortgage product lines.
In 2009, we reclassified $878 million of finance receivables, net of a $188 million valuation allowance, from held for sale to held for
investment following efforts to market the portfolios and progress made through orderly liquidation. We also reclassified $421
million of other finance receivable portfolios, net of a $43 million valuation allowance, from held for investment to held for sale as a
result of unanticipated purchase inquiries. Due to the nature of these inquiries, we determined a sale of these portfolios would be
consistent with our goal to maximize the economic value of our portfolio and accelerate cash collections. During the fourth quarter of
2009, we recorded $720 million in finance receivables previously sold to the distribution finance securitization trust in our balance
sheet. In connection with these finance receivables, $359 million were classified as held for sale and were sold during the quarter.
Note 5. Inventories
Inventories are composed of the following:
(In millions)
January 1,
2011
January 2,
2010
Finished goods
$ 784
$ 735
Work in process
2,125
1,861
Raw materials and components
506
613
3,415
3,209
Progress/milestone payments
(1,138)
(936)
$ 2,277
$ 2,273
Inventories valued by the LIFO method totaled $1.3 billion at the end of 2010 and 2009, and the carrying values of these inventories
would have been approximately $441 million and $414 million, respectively, higher had our LIFO inventories been valued at current
costs. Inventories related to long-term contracts, net of progress/milestone payments, were $322 million and $366 million at the end
of 2010 and 2009, respectively.