ACCOUNTS AND NOTES RECEIVABLE

12 Months Ended

Jan. 02, 2021


(Millions of Dollars)	2020		2019
Trade accounts receivable	$	1,345.7	$	1,284.0
Trade notes receivable	156.1		156.7
Other accounts receivable	151.5		126.3
Gross accounts and notes receivable	1,653.3		1,567.0
Allowance for credit losses	(141.1)		(112.4)
Accounts and notes receivable, net	$	1,512.2	$	1,454.6
Long-term receivable, net	$	139.9	$	146.1

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 receivables, net of $139.9 million and $146.1 million at January 2, 2021 and December 28, 2019, respectively, are reported within Other Assets in the Consolidated Balance Sheets. The Company's financing receivables are predominantly related to certain security equipment sales-type leases with commercial businesses. As of January 2, 2021, the current portion of finance receivables within Trade notes receivable approximated $80.3 million. Generally, the Company retains legal title to any equipment under lease and holds 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 are recorded on the effective interest method.

The changes in the allowance for credit losses at January 2, 2021 are as follows:


(Millions of Dollars)	Balance December 28, 2019		Cumulative Effect Adjustment (a)		Charged To Costs and Expenses		Charged To Other Accounts (b)		Deductions (c)		Balance January 2, 2021
Accounts receivable	$	99.3	$	2.9	$	41.1	$	15.3	$	(31.9)	$	126.7
Notes receivable	$	13.1	$	0.9	$	—	$	4.6	$	(4.2)	$	14.4
Total	$	112.4	$	3.8	$	41.1	$	19.9	$	(36.1)	$	141.1

(a) Represents the cumulative-effect adjustment to opening retained earnings due to the adoption of ASU 2016-13. Refer to Note A, Significant Accounting Policies, for further discussion.

(b) Amounts represent the impacts of foreign currency translation, acquisitions and net transfers to/from other accounts.

The Company considers any financing receivable that has not been collected within 90 days of original billing date as past-due or delinquent. The Company's payment terms are generally consistent with the industries in which their businesses operate and typically range from 30-90 days globally. 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.

The following is a summary of the expected timing of receipt of payments from customers on an undiscounted basis as of January 2, 2021 relating to the Company's lease receivables:


(Millions of Dollars)	Total		Within 1 Year		2 Years		3 Years		4 Years		5 Years		Thereafter
Finance receivables	$	209.5	$	80.3	$	56.5	$	38.9	$	21.4	$	8.1	$	4.3
Operating leases	$	39.7	$	38.5	$	0.9	$	0.3	$	—	$	—	$	—

The following is a summary of lease revenue and sales-type lease profit for the years ended January 2, 2021 and December 28, 2019:


(Millions of Dollars)	2020		2019
Sales-type lease revenue	$	113.0	$	88.9
Lease interest revenue	13.3		12.7
Operating lease revenue	131.5		148.9
Total lease revenue	$	257.8	$	250.5
Sales-type lease profit	$	45.0	$	35.3

The Company has an accounts receivable sale program. According to the terms, the Company sells certain of its trade accounts receivables at fair value to a wholly owned, consolidated, bankruptcy-remote special purpose subsidiary (“BRS"). The BRS, in turn, can 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, Transfers and Servicing, 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 January 2, 2021, 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 January 2, 2021 and December 28, 2019, net receivables of approximately $86.8 million and $100.0 million, respectively, were derecognized. Proceeds from transfers of receivables to the Purchaser totaled $259.6 million and $495.4 million for the years ended January 2, 2021 and December 28, 2019, respectively, and payments to the Purchaser totaled $272.8 million and $495.5 million, respectively. The program resulted in a pre-tax loss of $1.7 million and $3.6 million for the years ended January 2, 2021 and December 28, 2019, respectively, which included service fees of $0.6 million and $0.9 million, respectively. 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.

As of January 2, 2021 and December 28, 2019, the Company's deferred revenue totaled $207.6 million and $209.8 million, respectively, of which $108.7 million and $108.9 million, respectively, was classified as current. Revenue recognized for the years ended January 2, 2021 and December 28, 2019 that was previously deferred as of December 28, 2019 and December 29, 2018 totaled $96.8 million and $96.4 million, respectively.

As of January 2, 2021, approximately $1.107 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.