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57 Textron Inc. Annual Report • 2013
A summary of impaired finance receivables, excluding leveraged leases, at year end and the average recorded investment for the
year is provided below:
(In millions)
December 28,
2013
December 29,
2012
Recorded investment:
Impaired loans with no related allowance for credit losses $ 78 $ 72
Impaired loans with related allowance for credit losses 59 99
Total $ 137 $ 171
Unpaid principal balance $ 141 $ 187
Allowance for losses on impaired loans 14 27
Average recorded investment 155 270
Allowance for Losses
A rollforward of the allowance for losses on finance receivables and a summary of its composition, based on how the underlying
finance receivables are evaluated for impairment, is provided below. The finance receivables reported in this table specifically
exclude $120 million and $122 million of leveraged leases at December 28, 2013 and December 29, 2012, respectively, in
accordance with authoritative accounting standards.
(In millions)
December 28,
2013
December 29,
2012
Balance at beginning of period $ 84 $ 156
Provision for losses (23) (3)
Charge-offs (17) (84)
Recoveries 12 15
Transfers (1) —
Balance at end of period $ 55 $ 84
Allowance based on collective evaluation $ 41 $ 57
Allowance based on individual evaluation 14 27
Finance receivables evaluated collectively $ 1,226 $ 1,641
Finance receivables evaluated individually 137 171
Our Finance group provides financing for retail purchases and leases for new and used aircraft and equipment manufactured by our
Manufacturing group. The finance receivables for these inventory sales that are included in the Finance group’s balance sheets are
summarized below:
(In millions)
December 28,
2013
December 29,
2012
Loans $ 1,121 $ 1,389
Finance leases 80 107
Total $ 1,201 $ 1,496
In 2013, 2012 and 2011, our Finance group paid our Manufacturing group $248 million, $309 million and $284 million,
respectively, related to the sale of Textron-manufactured products to third parties that were financed by the Finance group.
Operating agreements specify that our Finance group has recourse to our Manufacturing group for certain uncollected amounts
related to these transactions. At December 28, 2013 and December 29, 2012, finance receivables and operating leases subject to
recourse to the Manufacturing group totaled $75 million and $83 million, respectively. Our Manufacturing group has established
reserves for losses on its balance sheet within accrued and other liabilities for the amounts it guarantees.