E-Z-GO 2008 Annual Report Download - page 46

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33
customer deposits within accrued liabilities, which provided a significant source of operating cash. Customer deposits increased $88 million,
$290 million and $128 million in 2008, 2007 and 2006, respectively.
Investing cash flows in 2008 were largely driven by capital expenditures of $542 million in 2008, $375 million in 2007 and $407 million in 2006.
For 2009, we plan to reduce our capital spending to about $315 million, consistent with our reduced capacity requirements. In 2008 and 2007, we
paid $109 million and $1.1 billion, largely related to the AAI acquisition; in 2006, we paid $338 million, primarily related to the acquisition of
Overwatch Systems.
In 2008, financing activities include $867 million in commercial paper borrowings of which a portion was used to make a cash payment for a
capital contribution and for a loan to the Finance group. As we experienced limited ability to obtain financing at favorable rates in the second half
of 2008, we borrowed $222 million against the cash surrender value of our corporate-owned officers’ life insurance policies in 2008. These cash
inflows from financing activities were offset by share repurchases of $533 million, the maturity of two bonds requiring payments of $348 million,
dividends paid to shareholders of $284 million and net lending to the Finance group of $133 million.
During the fourth quarter of 2008, the Manufacturing group utilized its commercial paper borrowings to lend cash to the Finance group. A portion
of these inter-group borrowings were repaid in the fourth quarter, primarily with funds from the $625 million capital contribution discussed above.
At January 3, 2009, the Finance group owed the Manufacturing group $133 million related to these borrowings.
In 2008, 2007 and 2006, we repurchased approximately 12 million, 6 million and 17 million shares of common stock, respectively, under Board-
authorized share repurchase programs. In September 2008, we suspended all share repurchase activity.
We used $996 million less cash for financing activities in 2007, compared with 2006. The decrease is due principally to the issuance of
$350 million in 10-year notes in 2007, the paydown of $241 million of short-term debt in 2006 and a $457 million decrease in 2007 in purchases
of our common stock from 2006.
Our annual dividend increased to $0.92 in 2008 from $0.85 in 2007. Dividend payments to shareholders totaled $284 million, $154 million and
$244 million in 2008, 2007 and 2006, respectively. The timing of our quarterly dividend payments resulted in four payments in 2008, three
payments in 2007 and five payments in 2006.
Finance Group Cash Flows
The cash flows from continuing operations for the Finance group are summarized below:
(In millions) 2008 2007 2006
Operating activities $ 167 $ 262 $ 338
Investing activities (64) (281) (1,680)
Financing activities (146) 29 1,391
The decrease in cash provided by operating activities for both 2008 and 2007 was primarily due to the timing of payments of income taxes and
accrued interest and other liabilities.
Cash flows used in investing activities decreased during 2008, primarily due to a $627 million decrease in finance receivable originations, net
of collections, mostly the result of the decision to exit portions of the finance business resulting in lower originations, partially offset by lower
proceeds from receivable sales, including securitizations of $363 million and the purchase of notes receivable issued by securitization trusts
of $100 million. Cash used for investing activities decreased in 2007, compared with 2006, largely due to a $774 million decrease in finance
receivable originations, net of collections, a $481 million increase in proceeds from receivable sales, including securitizations, and the
$164 million impact in 2006 of cash used for an acquisition. Proceeds from receivable sales increased primarily due to the sale of $588 million
of receivables into the distribution finance revolving securitization in 2007.
Less cash was provided by financing activities in 2008, primarily due to lower proceeds from borrowings related to the reduction in managed
receivable growth and higher principal payments, largely offset by the $625 million capital contribution received from the Manufacturing group in
2008 under its support agreement The decrease in financing cash inflows in 2007 primarily reflects a reduction in borrowings due to lower
managed receivable growth in comparison with 2006. In addition, during 2007, we used the proceeds from receivable sales, including
securitizations to fund asset growth, instead of additional borrowings.
Textron Inc.