Receivables

Receivables consisted of the following (in millions):



	September 30,
	2018			2017
U.S. government:
Amounts billed	$	156.3		$	137.8
Cost and profits not billed	235.4			137.9
	391.7			275.7
Other trade receivables	1,089.4			985.4
Finance receivables	11.7			5.8
Notes receivable	1.4			34.2
Other receivables	48.6			46.3
	1,542.8			1,347.4
Less allowance for doubtful accounts	(9.9		)	(18.3		)
	$	1,532.9		$	1,329.1

Classification of receivables in the Consolidated Balance Sheets consisted of the following (in millions):



	September 30,
	2018		2017
Current receivables	$	1,521.6	$	1,306.3
Long-term receivables	11.3		22.8
	$	1,532.9	$	1,329.1

Finance and notes receivable accrual status consisted of the following (in millions):



	September 30,
	Finance Receivables						Notes Receivable
	2018			2017			2018		2017
Receivables on nonaccrual status	$	10.2		$	3.7		$	—	$	21.3
Receivables past due 90 days or more and still accruing	—			—			—		—

Receivables subject to general reserves	1.5			2.1			—		—
Allowance for doubtful accounts	—			—			—		—
Receivables subject to specific reserves	10.2			3.7			1.4		34.2
Allowance for doubtful accounts	(2.8		)	(1.5		)	—		(10.0		)

Finance Receivables: Finance receivables represent sales-type leases resulting from the sale of the Company’s products and the purchase of finance receivables from lenders pursuant to customer defaults under program agreements with finance companies. As of September 30, 2018, approximately 82% of the Company’s outstanding finance receivables balance was due from three parties. Finance receivables originated by the Company generally include a residual value component. Residual values are determined based on the expectation that the underlying equipment will have a minimum fair market value at the end of the lease term. This residual value accrues to the Company at the end of the lease. The Company uses its experience and knowledge as an original equipment manufacturer and participant in end markets for the related products along with third-party studies to estimate residual values. The Company monitors these values for impairment on a continuous basis and reflects any resulting reductions in value in current earnings.

Delinquency is the primary indicator of credit quality of finance receivables. The Company maintains a general allowance for finance receivables considered doubtful of future collection based upon historical experience. Additional allowances are established based upon the Company’s evaluation of the quality of the finance receivables, including the length of time the receivables are past due, past experience of collectability and underlying economic conditions. In circumstances where the Company believes collectability is no longer reasonably assured, a specific allowance is recorded to reduce the net recognized receivable to the amount reasonably expected to be collected. The terms of the finance agreements generally give the Company the ability to take possession of the underlying collateral. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers’ financial obligations is not realized.

Notes Receivable: Notes receivable include amounts related to refinancing of trade accounts and finance receivables. As of September 30, 2018, approximately 98% of the notes receivable balance outstanding was due from one party. The Company continually evaluates the creditworthiness of its customers and establishes reserves where the Company believes collectability is no longer reasonably assured. Notes receivable are written down if management determines that the specific borrower does not have the ability to repay the loan in full. Certain notes receivable are collateralized by a security interest in the underlying assets and/or other assets owned by the debtor. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers’ financial obligations is not realized.

During the second quarter of fiscal 2018, the Company received $19.6 million from a customer that had previously been accounted for under the cost recovery method of accounting and on non-accrual status. The payment resulted in the recognition of $11.5 million of margin, the reversal of $2.4 million of bad debt expense and the recognition of $6.6 million of interest income for the fiscal year ended September 30, 2018.

Quality of Finance and Notes Receivable: The Company does not accrue interest income on finance and notes receivable in circumstances where the Company believes collectability is no longer reasonably assured. Any cash payments received on nonaccrual finance and notes receivable are applied first to the principal balances. The Company does not resume accrual of interest income until the customer has shown that it is capable of meeting its financial obligations by making timely payments over a sustained period of time. The Company determines past due or delinquency status based upon the due date of the receivable.

Receivables subject to specific reserves also include loans that the Company has modified in troubled debt restructurings as a concession to customers experiencing financial difficulty. To minimize the economic loss, the Company may modify certain finance and notes receivable. Modifications generally consist of restructured payment terms and time-frames in which no payments are required. Losses on troubled debt restructurings were not significant during fiscal 2018, 2017 or 2016, respectively.

Changes in the Company’s allowance for doubtful accounts by type of receivable were as follows (in millions):



	Fiscal Year Ended September 30, 2018
	Finance Receivables		Notes Receivable			Trade and Other Receivables			Total
Allowance for doubtful accounts at beginning of year	$	1.5	$	10.0		$	6.8		$	18.3
Provision for doubtful accounts, net of recoveries	1.3		(8.2		)	0.9			(6.0		)
Charge-off of accounts	—		(1.7		)	(0.5		)	(2.2		)
Foreign currency translation	—		(0.1		)	(0.1		)	(0.2		)
Allowance for doubtful accounts at end of year	$	2.8	$	—		$	7.1		$	9.9



	Fiscal Year Ended September 30, 2017
	Finance Receivables			Notes Receivable			Trade and Other Receivables			Total
Allowance for doubtful accounts at beginning of year	$	1.0		$	13.0		$	7.2		$	21.2
Provision for doubtful accounts, net of recoveries	1.4			(1.3		)	0.7			0.8
Charge-off of accounts	(0.9		)	(2.2		)	(1.1		)	(4.2		)
Foreign currency translation	—			0.5			—			0.5
Allowance for doubtful accounts at end of year	$	1.5		$	10.0		$	6.8		$	18.3