Long-term Customer Financing and Sales of Receivables

Long-term Customer Financing

Long-term receivables consist of trade receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following:



	September 29, 2012			December 31, 2011
Long-term receivables	$	114		$	177
Less allowance for losses	(1		)	(10		)
	113			167
Less current portion	(70		)	(130		)
Non-current long-term receivables, net	$	43		$	37

The current portion of long-term receivables is included in Accounts receivable, net and the non-current portion of long-term receivables is included in Other assets in the Company’s condensed consolidated balance sheets.

Certain purchasers of the Company’s products and services may request that the Company provide long-term financing (defined as financing with a term of greater than one year) in connection with the sale of products and services. These requests may include all or a portion of the purchase price of the products and services. The Company’s obligation to provide long-term financing may be conditioned on the issuance of a letter of credit in favor of the Company by a reputable bank to support the purchaser’s credit or a pre-existing commitment from a reputable bank to purchase the long-term receivables from the Company. The Company had outstanding commitments to provide long-term financing to third parties totaling $100 million at September 29, 2012, compared to $138 million at December 31, 2011. The majority of the outstanding commitments at September 29, 2012 are related to a variety of government and public safety customers.

The Company retained the funded portion of the financing arrangements related to the Networks business following the sale to NSN, which totaled a net amount of $51 million at September 29, 2012. These receivables have an allowance for uncollectable accounts of $9 million classified as current, and $1 million classified as non-current.

As of September 29, 2012, $43 million of net receivables are classified as long-term. The remainder of the long-term receivables are current and included in Accounts receivable, net.

Sales of Receivables

The Company had no committed facilities for the sale of accounts receivable or long-term receivables at September 29, 2012 or at December 31, 2011.

The following table summarizes the proceeds received from non-recourse sales of accounts receivable and long-term receivables for the three and nine months ended September 29, 2012 and October 1, 2011:



	Three Months Ended				Nine Months Ended
	September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
Cumulative quarterly proceeds received from one-time sales:
Accounts receivable sales proceeds	$	5	$	3	$	12	$	4
Long-term receivable sales proceeds	32		170		156		193
Total proceeds from one-time sales of accounts receivable	$	37	$	173	$	168	$	197

At September 29, 2012, the Company had retained servicing obligations for $349 million of long-term receivables, compared to $263 million of long-term receivables at December 31, 2011. Servicing obligations are limited to collection activities related to the non-recourse sales of accounts receivables and long-term receivables.

At September 29, 2012, the Company was subject to a recourse obligation related to the sale of $200 million of accounts receivable sold during 2011 and the nine months ended September 29, 2012 generated by the Networks business and retained after the sale to NSN. This obligation is only triggered upon the insufficiency of a third party legally binding support letter backing the sold receivables. The conditions which must occur in order for the Company to be required to make a payment under this obligation are deemed remote and the fair value of this obligation at the outset of the arrangement and as of September 29, 2012, is zero.

Credit Quality of Customer Financing Receivables and Allowance for Credit Losses

An aging analysis of financing receivables at September 29, 2012 and December 31, 2011 is as follows:



September 29, 2012	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	5	$	—	$	—	$	—
Commercial loans and leases secured	79		2		—		4
Commercial loans unsecured	30		—		—		—
Total gross long-term receivables, including current portion	$	114	$	2	$	—	$	4



December 31, 2011	Total Long-term Receivable		Current Billed Due		Past Due Under 90 Days		Past Due Over 90 Days
Municipal leases secured tax exempt	$	14	$	—	$	—	$	—
Commercial loans and leases secured	61		1		2		—
Commercial loans unsecured	102		—		—		—
Total gross long-term receivables, including current portion	$	177	$	1	$	2	$	—

The Company did have financing receivables past due over 90 days as of September 29, 2012 in relation to a loan related to the funded portion of a financing arrangement from the Networks business following the sale to NSN. The Company is no longer accruing interest on this loan as of December 31, 2011. A $10 million reserve was established for this loan due to collectability issues at December 31, 2011, of which $9 million is classified as current, and $1 million is classified as non-current at September 29, 2012.