ACCOUNTS AND NOTES RECEIVABLE



(Millions of Dollars)	2018			2017 ¹
Trade accounts receivable	$	1,437.1		$	1,388.1
Trade notes receivable	150.0			158.7
Other accounts receivable	122.7			162.3
Gross accounts and notes receivable	1,709.8			1,709.1
Allowance for doubtful accounts	(102.0		)	(80.4		)
Accounts and notes receivable, net	$	1,607.8		$	1,628.7
Long-term receivable, net	$	153.7		$	176.9

¹Certain prior year amounts have been recast as a result of the adoption of the new revenue standard. Refer to Note A, Significant Accounting Policies, for further discussion.

Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries. Adequate reserves have been established to cover anticipated credit losses. Long-term receivable, net, of $153.7 million and $176.9 million at December 29, 2018 and December 30, 2017, respectively, are reported within Other Assets in the Consolidated Balance Sheets. The Company's financing receivables are predominantly related to certain security equipment leases with commercial businesses. Generally, the Company retains legal title to any equipment leases and bears the right to repossess such equipment in an event of default. All financing receivables are interest bearing and the Company has not classified any financing receivables as held-for-sale. Interest income earned from financing receivables that are not delinquent is recorded on the effective interest method.

The Company considers any financing receivable that has not been collected within 90 days of original billing date as past-due or delinquent. Additionally, the Company considers the credit quality of all past-due or delinquent financing receivables as nonperforming. The Company does not adjust the promised amount of consideration for the effects of a significant financing component when the period between transfer of the product and receipt of payment is less than one year. Any significant financing components for contracts greater than one year are included in revenue over time.

In October 2018, the Company entered into a new accounts receivable sale program. According to the terms, the Company is required to sell certain of its trade accounts receivables at fair value to a wholly owned, consolidated, bankruptcy-remote special purpose subsidiary (“BRS"). The BRS, in turn, is required to sell such receivables to a third-party financial institution (“Purchaser”) for cash. The Purchaser’s maximum cash investment in the receivables at any time is $110.0 million. The purpose of the program is to provide liquidity to the Company. These transfers qualify as sales under ASC 860 and receivables are derecognized from the Company’s Consolidated Balance Sheets when the BRS sells those receivables to the Purchaser. The Company has no retained interests in the transferred receivables, other than collection and administrative responsibilities. At December 29, 2018, the Company did not record a servicing asset or liability related to its retained responsibility, based on its assessment of the servicing fee, market values for similar transactions and its cost of servicing the receivables sold.

At December 29, 2018, $100.1 million of net receivables were derecognized. Gross receivables sold amounted to $618.3 million ($481.8 million, net) for the year ended December 29, 2018. These sales resulted in a pre-tax loss of $0.7 million for the year ended December 29, 2018, which included servicing fees of $0.2 million. Proceeds from transfers of receivables to the Purchaser totaled $194.3 million for the year ended December 29, 2018. Collections of previously sold receivables resulted in payments to the Purchaser of $94.3 million for the year ended December 29, 2018. All cash flows under the program are reported as a component of changes in accounts receivable within operating activities in the Consolidated Statements of Cash Flows since all the cash from the Purchaser is received upon the initial sale of the receivable.

Prior to January 2018, the Company had a separate accounts receivable sale program. According to the terms of that program, the Company was required to sell certain of its trade accounts receivables at fair value to the BRS. The BRS, in turn, was required to sell such receivables to a third-party financial institution (“Purchasing Institution”) for cash and a deferred purchase price receivable. The Purchasing Institution’s maximum cash investment in the receivables at any time was $100.0 million. The purpose of the program was to provide liquidity to the Company. The Company accounted for these transfers as sales under ASC 860, Transfers and Servicing. Receivables were derecognized from the Company’s Consolidated Balance Sheets when the BRS sold those receivables to the Purchasing Institution. The Company had no retained interests in the transferred receivables, other than collection and administrative responsibilities and its right to the deferred purchase price receivable. In January 2018, the Company signed an amendment that changed the structure of this program which eliminated the deferred purchase price receivable from the Purchasing Institution and resulted in the BRS retaining ownership of the trade accounts receivables. This program was then terminated on February 1, 2018.

At December 30, 2017, $100.8 million of net receivables were derecognized. Gross receivables sold amounted to $2.181 billion ($1.830 billion, net) and resulted in a pre-tax loss of $7.5 million for the year ended December 30, 2017, which included servicing fees of $1.4 million. Proceeds from transfers of receivables to the Purchasing Institution totaled $1.023 billion for the year ended December 30, 2017. Collections of previously sold receivables, including deferred purchase price receivables, and all fees, which were settled one month in arrears, resulted in payments to the Purchasing Institution of $1.785 billion for the year ended December 30, 2017.

The Company’s risk of loss following the sale of the receivables was limited to the deferred purchase price receivable, which was $106.9 million at December 30, 2017. The deferred purchase price receivable was settled in full in January 2018, and historically was repaid in cash as receivables were collected, generally within 30 days. As such, the carrying value of the receivable recorded at December 30, 2017 approximated fair value. Delinquencies and credit losses on receivables sold were $0.2 million for the year ended December 30, 2017. Cash inflows related to the deferred purchase price receivable totaled $704.7 million for the year ended December 30, 2017. In accordance with the adoption of the new cash flows standards described in Note A, Significant Accounting Policies, the proceeds related to the deferred purchase price receivable are classified as investing activities.

As of December 29, 2018 and December 30, 2017, the Company's deferred revenue totaled $202.0 million and $117.0 million, respectively, of which $98.6 million and $95.6 million, respectively, was classified as current.

Revenue recognized for the years ended December 29, 2018 and December 30, 2017 that was previously deferred as of December 30, 2017 and December 31, 2016 totaled $89.3 million and $76.3 million, respectively.

As of December 29, 2018, approximately $1.160 billion of revenue from long-term contracts primarily in the Security segment was unearned related to customer contracts which were not completely fulfilled and will be recognized on a decelerating basis over the next 5 years. This amount excludes any of the Company's contracts with an original expected duration of one year or less.