E-Z-GO 2006 Annual Report Download - page 45

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our primary committed credit facilities at December 30, 2006 include the following:
Amount Not
Reserved as
Support for
Commercial Letters of Commercial
Facility Paper Credit Paper and
(In millions) Amount Outstanding Outstanding Letters of Credit
Manufacturing group - multi-year facility expiring in 2011* $ 1,250 $ — $ 23 $ 1,227
Finance group - multi-year facility expiring in 2011 $ 1,750 $ 1,719 $ 13 $ 18
* The Finance group is permitted to borrow under this multi-year facility.
Under a shelf registration statement filed with the Securities and Exchange Commission, the Manufacturing group may issue public debt and
other securities in one or more offerings up to a total maximum offering of $2.0 billion. At December 30, 2006, we had $1.6 billion available under
the Manufacturing group’s registration statement.
During the fourth quarter of 2006, the Finance group renewed a previously filed statement to enable it to issue an unlimited amount of public debt.
Our Finance group issued $1.8 billion of term debt and CAD 100 million of term debt during 2006 under its registration statements. We used the
proceeds from these issuances to fund receivable growth and repay short-term debt.
Contractual Obligations
Manufacturing Group
The following table summarizes the known contractual obligations of our Manufacturing group to make future payments or other consideration
pursuant to certain contracts as of December 30, 2006, as well as an estimate of the timing in which these obligations are expected to be satisfied:
Payment Due by Period
Less than More than
(In millions) 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years Total
Liabilities reflected in balance sheet:
Long-term debt (a) $ 75 $ 346 $ — $ 251 $ 16 $ 976 $ 1,664
Capital lease obligations (a) 55333117136
Pension benefits for unfunded plans (b) 13 15 16 16 15 173 248
Postretirement benefits other than
pensions (b) 77 69 66 63 60 493 828
Other long-term liabilities (c) 138 75 46 33 30 300 622
Liabilities not reflected in balance sheet:
Operating leases (a) 57 49 42 36 28 201 413
Purchase obligations (d) 1,980 378 118 36 15 22 2,549
Total Manufacturing group $ 2,345 $ 937 $ 291 $ 438 $ 167 $ 2,282 $ 6,460
(a) Long-term debt and capital lease obligations exclude interest payments. Operating leases represent undiscounted obligations under noncancelable leases.
(b) We maintain defined benefit pension plans and postretirement benefit plans other than pensions as discussed in Note 12 to the consolidated financial state-
ments. Included in the table above are discounted estimated benefit payments we expect to make related to unfunded pension and other postretirement benefit
plans. Actual benefit payments are dependent on a number of factors, including mortality assumptions, expected retirement age, rate of compensation increases
and medical trend rates, which are subject to change in future years. We also expect to make contributions to our funded pension plans in the range of approxi-
mately $45 million to $60 million per year over the next five years, which are not reflected in this table.
(c) Other long-term liabilities primarily include undiscounted amounts on the consolidated balance sheet as of December 30, 2006 representing obligations
under deferred compensation arrangements and estimated environmental remediation costs. Payments under deferred compensation arrangements have been
estimated based on management’s assumptions of expected retirement age, mortality, stock price and rates of return on participant deferrals. Timing of cash flows
associated with environmental remediation costs are largely based on historical experience. Many of our other long-term liabilities have been excluded from the
table due to the uncertainty of the timing of payments combined with the absence of historical trends to be used as a predictor for such payments. These excluded
liabilities primarily include deferred income taxes.
(d) Purchase obligations represent undiscounted obligations for which we are committed to purchase goods and services as of December 30, 2006. The ultimate
liability for these obligations may be reduced based upon termination provisions included in certain purchase contracts, the costs incurred to date by vendors
under these contracts or by recourse under firm contracts with the U.S. Government under normal termination clauses.
In January 2005, we contracted with a third-party service provider for the oversight of our information technology infrastructure, including main-
tenance, operational oversight and purchases of hardware (the “IT Contract”). The IT Contract covers a 10-year period and is subject to variable
pricing and quantity provisions for both purchases of computer hardware and system design modifications. We have retained the right to approve
significant design, equipment purchase and related decisions by the service provider. We can terminate the IT Contract for convenience prior to