E-Z-GO 2005 Annual Report Download - page 45

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25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Operating Cash Flows of Continuing Operations
(In millions)
2005 2004 2003
Consolidated $ 952 $ 949 $ 846
Textron Manufacturing $ 894 $ 973 $ 552
Textron Finance $ 247 $ 161 $ 242
Operating cash flows on a consolidated basis have remained fairly consistent over the past few years. These consolidated cash flows exclude net
captive financing activity (cash outflows from finance receivable originations, net of cash inflows from repayments, sales and securitizations)
between Textron Manufacturing and Textron Finance. In 2005 and 2004, this net captive financing activity increased Textron Manufacturing’s sep-
arate cash flows by $100 million and $165 million, respectively, while in 2003, cash flows were decreased by $86 million. Excluding these net
changes from Textron Manufacturing’s cash flows, the increase in 2005 is largely due to increased income from operations, while the increase in
2004 is largely due to increased customer deposits in the Bell and Cessna segments resulting from an increase in orders for jets and commercial
helicopters.
Textron Manufacturing’s operating cash flows include after-tax cash used to fund Textron’s restructuring program of $12 million in 2005, $24 mil-
lion in 2004 and $34 million in 2003. This program was substantially completed at the end of 2005 with forecasted cash payments in 2006 of
approximately $4 million.
Investing Cash Flows of Continuing Operations
(In millions)
2005 2004 2003
Consolidated $ (1,223) $ (800) $ (37)
Textron Manufacturing $ (362) $ (158) $ (182)
Textron Finance $ (950) $ (756) $ 272
Over the past three years, Textron’s consolidated cash flows used in investing activities have been largely driven by an increase in net financing
activities at Textron Finance. The 2005 and 2004 increases in cash used in investing activities in the consolidated cash flows reflect a higher use
of cash resulting from the increase in finance receivable originations, net of cash collections from repayments, sales and securitizations, of $198
million and $744 million, respectively.
Textron Manufacturing increased its use of cash for investing activities by $204 million in 2005 primarily with a $118 million increase in capital
expenditures and a $38 million decrease in proceeds that were received in 2004 from the sale of C&A common stock. The increase in capital
expenditures is primarily related to higher spending at the Bell segment in response to increased production demands. Capital expenditures for
Textron Manufacturing totaled $371 million in 2005, $282 million in 2004 and $272 million in 2003, including expenditures purchased through
capital leases of $15 million in 2005, $44 million in 2004 and $26 million in 2003.
The separate borrowing group cash flows of Textron Finance reflect investing activities that include $824 million, $892 million and $886 million
in non-cash activity for finance receivables originated in connection with the sale of Textron Manufacturing’s inventory in 2005, 2004 and 2003,
respectively. Cash received from customers and securitizations related to the sale of this inventory is also included within Textron Finance’s
investing activities totaling $724 million, $727 million and $972 million in 2005, 2004 and 2003, respectively. Within the Consolidated State-
ments of Cash Flows these amounts have been eliminated from investing activities and are recorded as a net amount in operating cash flows
under the caption “Captive Finance Receivables, Net.”
Financing Cash Flows of Continuing Operations
(In millions)
2005 2004 2003
Consolidated $ 284 $ (276) $ (735)
Textron Manufacturing $ (403) $ (708) $ (456)
Textron Finance $ 587 $ 361 $ (354)
The 2005 increase in cash provided by financing activities in the consolidated cash flows was largely due to an increase in debt outstanding at
both Textron Manufacturing and Textron Finance. The increase in Textron Manufacturing principally reflects a retirement of debt of $300 million in
2004 and the issuance of $281 million in short term debt in 2005. Textron Finance increased its debt outstanding to fund asset growth. These