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ACCOUNTS AND NOTES RECEIVABLE, NET | 6 Months Ended
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Jul. 03, 2021
Receivables [Abstract] |
ACCOUNTS AND NOTES RECEIVABLE, NET | ACCOUNTS AND NOTES RECEIVABLE, NET
(Millions of Dollars) | July 3, 2021 |  | January 2, 2021
Trade accounts receivable | $ | 1,790.1 |  |  | $ | 1,345.7 |
Trade notes receivable | 160.2 |  |  | 156.1 |
Other accounts receivable | 185.6 |  |  | 151.5 |
Gross accounts and notes receivable | $ | 2,135.9 |  |  | $ | 1,653.3 |
Allowance for credit losses | (141.2) |  |  | (141.1) |
Accounts and notes receivable, net | $ | 1,994.7 |  |  | $ | 1,512.2 |
Long-term receivables, net | $ | 142.7 |  |  | $ | 139.9 |
Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries. Adequate reserves have been established to cover expected credit losses. Long-term receivables, net, of $142.7 million and $139.9 million at July 3, 2021 and January 2, 2021, respectively, are reported within Other assets in the Condensed Consolidated Balance Sheets. The Company's financing receivables are predominantly related to certain security equipment sales-type leases with commercial businesses. As of July 3, 2021, the current portion of financing receivables within Trade notes receivable approximated $76.4 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 is recorded on the effective interest method. The changes in the allowance for credit losses for the three and six months ended July 3, 2021 and June 27, 2020 are as follows:
(Millions of Dollars) |  | Balance April 3, 2021 |  | Cumulative Effect Adjustment (a) |  | Charged To Costs and Expenses |  | Charged To Other Accounts (b) |  | Deductions (c) |  | Balance July 3, 2021
Accounts receivable |  | $ | 129.5 |  |  | $ | — |  |  | $ | (1.3) |  |  | $ | (0.7) |  |  | $ | (1.1) |  |  | $ | 126.4 |
Notes receivable |  | 14.6 |  |  | — |  |  | 0.4 |  |  | (0.2) |  |  | — |  |  | 14.8 |
Total |  | $ | 144.1 |  |  | $ | — |  |  | $ | (0.9) |  |  | $ | (0.9) |  |  | $ | (1.1) |  |  | $ | 141.2 |
(Millions of Dollars) |  | Balance January 2, 2021 |  | Cumulative Effect Adjustment (a) |  | Charged To Costs and Expenses |  | Charged To Other Accounts (b) |  | Deductions (c) |  | Balance July 3, 2021
Accounts receivable |  | $ | 126.7 |  |  | $ | — |  |  | $ | 4.2 |  |  | $ | 0.8 |  |  | $ | (5.3) |  |  | $ | 126.4 |
Notes receivable |  | 14.4 |  |  | — |  |  | 0.4 |  |  | — |  |  | — |  |  | 14.8 |
Total |  | $ | 141.1 |  |  | $ | — |  |  | $ | 4.6 |  |  | $ | 0.8 |  |  | $ | (5.3) |  |  | $ | 141.2 |
(Millions of Dollars) |  | Balance March 28, 2020 |  | Cumulative Effect Adjustment (a) |  | Charged To Costs and Expenses |  | Charged To Other Accounts (b) |  | Deductions (c) |  | Balance June 27, 2020
Accounts receivable |  | $ | 108.1 |  |  | $ | — |  |  | $ | 19.0 |  |  | $ | — |  |  | $ | (4.2) |  |  | $ | 122.9 |
Notes receivable |  | 13.6 |  |  | — |  |  | — |  |  | 0.1 |  |  | (0.1) |  |  | 13.6 |
Total |  | $ | 121.7 |  |  | $ | — |  |  | $ | 19.0 |  |  | $ | 0.1 |  |  | $ | (4.3) |  |  | $ | 136.5 |
(Millions of Dollars) |  | Balance December 28, 2019 |  | Cumulative Effect Adjustment (a) |  | Charged To Costs and Expenses |  | Charged To Other Accounts (b) |  | Deductions (c) |  | Balance June 27, 2020
Accounts receivable |  | $ | 99.3 |  |  | $ | 2.9 |  |  | $ | 29.7 |  |  | $ | (2.8) |  |  | $ | (6.2) |  |  | $ | 122.9 |
Notes receivable |  | 13.1 |  |  | 0.9 |  |  | — |  |  | (0.1) |  |  | (0.3) |  |  | 13.6 |
Total |  | $ | 112.4 |  |  | $ | 3.8 |  |  | $ | 29.7 |  |  | $ | (2.9) |  |  | $ | (6.5) |  |  | $ | 136.5 |
(a) Represents the cumulative-effect adjustment to opening retained earnings due to the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), in the first quarter of 2020. (b) Amounts represent the impacts of foreign currency translation, acquisitions and net transfers to/from other accounts. (c) Amounts represent charge-offs less recoveries of accounts previously charged-off. The following is a summary of the expected timing of receipt of payments from customers on an undiscounted basis as of July 3, 2021 relating to the Company’s lease receivables:
(Millions of Dollars) |  | Total |  | Within 1 Year |  | 2 Years |  | 3 Years |  | 4 Years |  | 5 Years |  | Thereafter
Financing receivables |  | $ | 207.6 |  |  | $ | 76.4 |  |  | $ | 56.2 |  |  | $ | 38.6 |  |  | $ | 22.4 |  |  | $ | 11.0 |  |  | $ | 3.0 |
Operating leases |  | $ | 19.3 |  |  | $ | 17.6 |  |  | $ | 0.8 |  |  | $ | 0.4 |  |  | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 0.3 |
The following is a summary of lease revenue and sales-type lease profit for the three and six months ended July 3, 2021 and June 27, 2020:
|  | Second Quarter |  | Year-to-Date
(Millions of Dollars) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Sales-type lease revenue |  | $ | 31.4 |  |  | $ | 30.8 |  |  | $ | 66.0 |  |  | $ | 53.8 |
Lease interest revenue |  | 3.7 |  |  | 3.0 |  |  | 6.7 |  |  | 6.1 |
Operating lease revenue |  | 15.9 |  |  | 35.2 |  |  | 40.1 |  |  | 71.5 |
Total lease revenue |  | $ | 51.0 |  |  | $ | 69.0 |  |  | $ | 112.8 |  |  | $ | 131.4 |
Sales-type lease profit |  | $ | 12.5 |  |  | $ | 12.3 |  |  | $ | 26.3 |  |  | $ | 21.4 |
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 sheet 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 July 3, 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 July 3, 2021 and January 2, 2021, approximately $100.0 million and $86.8 million of net receivables were derecognized, respectively. For the three and six months ended July 3, 2021, proceeds from transfers of receivables to the Purchaser totaled $119.3 million and $182.7 million, respectively, and payments to the Purchaser totaled $83.6 million and $169.5 million, respectively. For the three and six months ended June 27, 2020, proceeds from transfers of receivables to the Purchaser totaled $28.9 million and $78.0 million, respectively, and payments to the Purchaser totaled $58.3 million and $152.4 million, respectively. The program resulted in a pre-tax loss of $0.4 million and $0.8 million for the three and six months ended July 3, 2021, respectively, which included service fees of $0.2 million and $0.4 million, respectively. The program resulted in a pre-tax loss of $0.3 million and $1.0 million for the three and six months ended June 27, 2020, respectively, which included service fees of $0.1 million and $0.3 million, respectively. All cash flows under the program are reported as a component of changes in working capital within operating activities in the Condensed Consolidated Statements of Cash Flows since all the cash from the Purchaser is received upon the initial sale of the receivable. As of July 3, 2021 and January 2, 2021, the Company's deferred revenue totaled $203.5 million and $207.6 million, respectively, of which $105.7 million and $108.7 million, respectively, was classified as current within Accrued expenses in the Condensed Consolidated Balance Sheets. Revenue recognized for the six months ended July 3, 2021 and June 27, 2020 that was previously deferred as of January 2, 2021 and December 28, 2019 totaled $77.7 million and $70.8 million, respectively. As of July 3, 2021, approximately $1.138 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 five years. This amount excludes any of the Company's contracts with an original expected duration of one year or less.

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- Definition The entire disclosure for financing receivable. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2196816 + Details
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