E-Z-GO 2006 Annual Report Download - page 44

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Textron Inc.
Stock Repurchases
In 2006, 2005 and 2004, we repurchased approximately 8,574,000, 8,035,000 and 6,534,000 shares of common stock, respectively, under
Board-authorized share repurchase programs for an aggregate cost of $751 million, $606 million and $425 million, respectively. On January 26,
2006, our Board of Directors authorized a new 12 million-share repurchase program of which 4.4 million shares remained at December 30, 2006.
Dividends
On January 26, 2006, the Board of Directors authorized a $0.15 per share increase in our annualized common stock dividend to $1.55 per share.
Dividend payments to shareholders totaled $244 million, $189 million and $135 million in 2006, 2005 and 2004, respectively. The timing of our
quarterly dividend payments resulted in five payments in 2006, four payments in 2005 and three payments in 2004.
Discontinued Operations Cash Flows
(In millions) 2006 2005 2004
Operating activities $ (48) $ 84 $ 1
Investing activities $ 653 $ 28 $ (18)
Financing activities $ 2 $ (1) $ —
Discontinued operations cash flows from investing activities increased in 2006 primarily due to net cash proceeds of $636 million related to the
sale of the Fastening Systems business. See Note 2 to the consolidated financial statements for details concerning our discontinued operations.
Capital Resources
The debt (net of cash)-to-capital ratio for our Manufacturing group as of December 30, 2006 was 29%, compared with 26% at December 31,
2005, and the gross debt-to-capital ratio as of December 30, 2006 was 40%, compared with 37% at December 30, 2005. The 2006 ratio reflects
the adoption of SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An amendment of Financial
Accounting Standards Board (“FASB”) Statement Nos. 87, 88, 106, 132(R)”. Our Manufacturing group targets a gross debt-to-capital ratio that is
consistent with an A rated company. Consistent with the methodology used by members of the financial community, leverage of the Manufactur-
ing group excludes the debt of our Finance group. In turn, our Finance group limits its borrowings to an amount, taking into account the risk pro-
file of its assets, consistent with a single A credit rating. Surplus capital of Textron Financial Corporation is returned to Textron Inc.
Borrowings historically have been a secondary source of funds for our Manufacturing group and, along with the collection of finance receivables,
are a primary source of funds for our Finance group. Both borrowing groups utilize a broad base of financial sources for their respective liquidity
and capital needs. Our credit ratings are predominantly a function of our ability to generate operating cash flows and satisfy certain financial ratios.
Since high-quality credit ratings provide us with access to a broad base of global investors at an attractive cost, we target a long-term A rating
from the independent debt-rating agencies. The credit ratings and outlooks of these three debt-rating agencies by borrowing group are as follows:
Standard &
Fitch Moody’s Poor’s
Long-term ratings:
Manufacturing A- A3 A-
Finance A- A3 A-
Short-term ratings:
Manufacturing F2 P2 A2
Finance F2 P2 A2
Outlook Positive Stable Stable
We have a policy of maintaining unused committed bank lines of credit in an amount not less than outstanding commercial paper balances.
These facilities are in support of commercial paper and letters of credit issuances only, and neither of these primary lines of credit was drawn at
December 30, 2006 or December 31, 2005.