Tecumseh Products 2014 Annual Report Download - page 27

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operations to provide the funds necessary to meet our obligations in each of our legal jurisdictions. There are no significant
restrictions on the ability of our subsidiaries to pay dividends or make other distributions.
Cash Flow
2014 vs. 2013
Cash provided by operations was $7.2 million in 2014, as compared to $11.6 million in 2013. The 2014 cash flows from
operations include our net loss of $32.7 million, a gain from the disposal of property and equipment of $3.1 million, non-cash
employee retirement benefits of $1.2 million and non-cash share-based compensation income of $0.2 million, partially offset
by depreciation and amortization of $25.0 million and a non-cash change in deferred income taxes of $0.1 million.
With respect to the changes in working capital, decreased inventory levels provided cash of $25.3 million for the year 2014, as
we adjusted our inventory levels to the decline in sales. Our inventory days on hand improved by 9 days to 68 days at
December 31, 2014 compared to December 31, 2013.
Accounts receivable provided cash of $9.9 million. Accounts receivable were lower due to decline in sales, as well as an
improvement in our days sales outstanding by 7 days as compared to December 31, 2013 to 45 days at December 31, 2014.
This decline was partially offset by lower accounts receivable factoring at our French and Brazilian locations. The
improvement in days sales outstanding related to higher collections of accounts receivable in India and Brazil, as well as a
favorable change in the mix of the discounted accounts receivable in Brazil.
Payables and accrued expenses resulted in a use of cash of $4.9 million, mainly as a result of a decrease in inventory purchases,
as well as payments of employee-related accruals, restructuring and warranty accruals, partially offset by an increase in
accruals for environmental matters and legal settlements during 2014. We saw an increase in payable days outstanding of 4
days to 63 days at December 31, 2014.
Recoverable non-income taxes used cash of $3.5 million, which is due to accruals of additional recoverable non-income taxes,
which are expected to be collected in future periods, partially offset by $5.4 million cash received from the Brazilian
government and $1.9 million cash received from the Indian government.
Employee retirement benefits used cash of $1.1 million primarily due to benefit payments and contributions related to our non-
U.S. pension.
Cash used in investing activities was $1.7 million in 2014 as compared to $22.0 million in 2013. The 2014 cash provided by
investing activities is primarily related to the net release of restricted cash of $8.0 million and proceeds received from the sale
of fixed assets of $3.9 million, partially offset by capital expenditures of $13.6 million. The release of restricted cash included
the reclassification of the proceeds from the PNC Term Loan in the amount of $12.7 million due to satisfying all of the closing
conditions related to this loan in the first quarter of 2014, $0.6 million that became available to fund our 401(k) matching
contributions and $0.3 million decrease in cash pledged on our derivatives related to our hedging activities, partially offset by a
$5.6 million increase in restricted cash pledged as collateral for a special term governmental loan at our Brazilian location, the
first installment of which we received during the third quarter of 2014. (See Note 8 "Debt", of the Notes to Consolidated
Financial Statements in Item 8 of this report for additional information regarding this loan.)
Cash used in financing activities was $12.9 million in 2014 compared to $9.8 million provided by financing activities in 2013.
The cash used during the first nine months of 2014 primarily related to a $2.1 million prepayment on the PNC Term Loan
because of a sale of fixed assets that were collateral for the loan, the agreement to use $1.6 million of the released Term Loan
proceeds to prepay the Term Loan, a $4.2 million payment on the PNC revolving facility due to a decline in the availability due
to issuance of letters of credit and a decline in the borrowing base assets as well as $8.6 million of other net repayments of
borrowings and capital leases which primarily related to net repayments of short term debt at our Brazilian location as part of
our strategy to reduce the higher interest rate bearing short term borrowings at this location. These repayments were partially
offset by $11.0 million of funds received under our special term governmental loan at our Brazilian location.
2013 vs. 2012
Cash provided by operations was $11.6 million in 2013, as compared to $8.8 million in 2012. The 2013 cash flows from
operations include our net loss of $37.5 million which included a non-cash gain on an adjustment for employee retirement
benefits of $11.6 million, partially offset by non-cash depreciation and amortization of $33.5 million, a $6.3 million release of
deferred taxes from "Accumulated other comprehensive loss" in relation to the curtailment of our postretirement benefit plans
(see Note 5 "Pension and Other Postretirement Benefit plans" of the Notes to Consolidated Financial Statements in Item 8 of
this report for additional information), non-cash share-based compensation of $0.8 million and a non-cash loss on the disposal
of property and equipment of $0.2 million.