E-Z-GO 2001 Annual Report Download - page 30

Short-Term Financing
For liquidity purposes, we maintain sufficient unused lines of credit to support all of our outstanding
commercial paper. During 2001, Textron Manufacturing increased its primary committed credit facilities by
$600 million to $1.6 billion. Of these primary facilities, $600 million expires in 2002 and $1.0 billion expires
in 2003. At December 29, 2001, these facilities remain undraw n, and only $96 million has been reserved
as support for commercial paper. Textron M anufacturing’s credit facilities contain material adverse change
(M AC) clauses at every borrow ing along w ith certain financial covenants. M AC clauses allow financial
institutions to withhold future financing if there is a significant change in the business, operations, proper-
ties, assets or condition of Textron or any of its subsidiaries, w hich has a material adverse impact on
Textron. There w ere no material adverse changes during 2001 and we are in compliance w ith the financial
covenants. We expect to renegotiate and extend the maturity of these facilities in the first half of 2002.
Textron Finance has bank line of credit agreements of $1.5 billion, of w hich $500 million w ill expire in 2002
and $1.0 billion w ill expire in 2006. None of these lines of credit w ere used at December 29, 2001, and
the amount not reserved as support for commercial paper totaled $875 million. These facilities contain
certain financial covenants that Textron Finance needs to comply with to maintain its ability to borrow
under the facilities, but do not include M AC clauses. Textron Finance w as in full compliance with these
covenants at year-end 2001. We expect to negotiate and extend the maturity of the $500 million facility
by the end of the second quarter of 2002.
Textron Manufacturing received approximately $582 million in after-tax proceeds from the sale of the
Automotive Trim business, along w ith other consideration as described in Note 2 to the consolidated
financial statements. Approximately $510 million of these proceeds w as invested with Textron Finance as
a temporary investment under a short-term revolving note agreement. On January 24, 2002, Textron
Finance paid off its obligation and terminated this agreement with Textron M anufacturing. The proceeds
from the sale w ill ultimately be deployed to pay for share repurchases and debt retirement.
Textron Finance utilizes the asset securitization market to manage credit exposures and diversify funding
sources. During 2001, Textron Finance received proceeds from securitizations of $625 million of floorplan
finance receivables (on a revolving basis), $309 million of aircraft finance receivables, $198 million of
captive golf and turf finance receivables, $90 million of franchise finance receivables, $56 million of land
finance receivables and $19 million of resort receivables. These securitizations provided Textron Finance
with an alternate source of financing w hile maintaining desired debt-to-capital ratios. Textron Finance used
the proceeds from the securitizations to retire commercial paper. We anticipate that we will enter into
additional securitization transactions in 2002.
Long-Term Financing
At December 29, 2001, Textron M anufacturing had $1.2 billion available under its existing shelf registration
statement filed w ith the SEC. During 2001, Textron M anufacturing's Euro M edium-Term Note facility
expired. It is anticipated that this facility w ill be reactivated early in 2002.
Under a shelf registration statement filed with the SEC, Textron Finance may issue public debt securities
in one or more offerings up to a total maximum offering of $3.0 billion. At December 29, 2001, Textron
Finance had $3.0 billion available under this facility. During 2001, Textron Finance issued $550 million of
floating-rate notes and $300 million of fixed-rate notes that mature in 2003 and 2004, respectively. The
proceeds from these issuances w ere used to refinance maturing commercial paper and long-term debt at
par. Through a private issuance in 2001, Textron Finance also entered into a $50 million variable-rate note
maturing in 2003.
Other Arrangements
We participate in tw o joint ventures for the development of certain aircraft. Bell Helicopter has partnered
with The Boeing Company in the development of the V-22 tiltrotor and with Agusta in the development of
the BA609 and Agusta’s AB139. These agreements enable us to share expertise and costs, and ultimately
the profits, w ith our partners in these ventures. We have not guaranteed any debt obligations related to
these ventures.
We do have certain other ventures w here w e have guaranteed an aggregate amount of approximately
$85 million. Included in this amount, is our guarantee of one-half of CitationShare’s debt and lease obligations
up to a maximum of $70 million. At year-end 2001, Textron’s portion of the outstanding debt and operating
lease commitments covered by this guarantee totaled $25 million. See Note 15 to the consolidated
financial statements regarding our joint ventures.
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