ELON » Topics » Concentrations of Credit Risk

This excerpt taken from the ELON 10-K filed Mar 16, 2005.

Concentrations of Credit Risk


Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments, which are classified as either cash equivalents, short-term, or restricted, and trade receivables. The Company has an investment policy that limits the amount of credit exposure to any one financial institution and restricts placement of the Company’s investments to financial institutions independently evaluated as highly creditworthy. With the exception of amounts owed the Company on sales made to Enel and its contract manufacturers, concentrations of credit risk with respect to trade receivables are limited due to the Company’s large number of customers and their dispersion across many different industries and geographies. As of December 31, 2004 and 2003, about 67.6% and 71.2% of the total accounts receivable balance, respectively, were due from Enel and its contract manufacturers. As of December 31, 2004 and 2003, about 9.1% and 5.5% of the total accounts receivable balance, respectively, were due from EBV, the Company’s sole distributor of products in Europe. With respect to its trade receivables, the Company performs ongoing credit evaluations of its customers’ financial condition. Additionally, the Company establishes an allowance for doubtful accounts and sales return allowances based upon factors surrounding the credit risk of specific customers, historical trends, and other available information.



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