E-Z-GO 2008 Annual Report Download - page 47

Download and view the complete annual report

Please find page 47 of the 2008 E-Z-GO annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

34
Consolidated Cash Flows
The consolidated cash flows from continuing operations, after elimination of activity between the borrowing groups, are summarized below:
(In millions) 2008 2007 2006
Operating activities $ 773 $ 995 $ 972
Investing activities (413) (1,470) (2,050)
Financing activities (788) 89 400
Consolidated cash provided by operating activities decreased, primarily due to investment in working capital as discussed in more detail within
the “Manufacturing Group Cash Flows” section herein.
Cash used for investing activities decreased due to the $1.1 billion in cash used for acquisitions in 2007, primarily related to AAI. Cash used for
investing activities decreased in 2007, compared with 2006, largely due to a $786 million decrease in finance receivable originations, net of
collections (excluding $12 million from captive financing activities) and a $424 million increase in proceeds from receivable sales and
securitizations collections (excluding $57 million from captive financing activities). These decreases were partially offset by $590 million in
higher cash outflows for acquisitions. In 2007, we acquired four businesses, including AAI, for a total outflow of $1.1 billion, while in 2006, we
acquired three businesses for $502 million, including Overwatch Systems and Electrolux Financial Corporation.
We received less cash from financing activities in 2008, primarily due to $663 million in lower proceeds from borrowings, net of principal
payments. We also used $229 million more for share repurchases and $130 million more for dividend payments to shareholders, which were
partially offset by $222 million in proceeds we received from borrowings against the cash surrender value of corporate-owned officers’ life
insurance policies in 2008.
We received less cash from financing activities in 2007, primarily due to a reduction in borrowings, largely a result of lower managed receivable
growth in comparison with 2006. In addition, during 2007, we used the proceeds from the sale of receivables, including securitizations to fund
asset growth, instead of additional borrowings. The decrease in cash borrowed by the Finance group in 2007 from 2006 was partially offset by
proceeds from the issuance of $350 million in 10-year notes by the Manufacturing group in 2007, a $457 million decrease in the purchases of our
common stock and $90 million in lower dividend payments due to timing.
Captive Financing and Other Intercompany Transactions
The Finance group finances retail purchases and leases for new and used aircraft and equipment manufactured by our Manufacturing group,
otherwise known as captive financing. In the Consolidated Statements of Cash Flows, cash received from customers or from securitizations is
reflected as operating activities when received from third parties. However, in the cash flow information provided for the separate borrowing
groups, cash flows related to captive financing activities are reflected based on the operations of each group. For example, when product is sold
by our Manufacturing group to a customer and is financed by the Finance group, the origination of the finance receivable is recorded within
investing activities as a cash outflow in the Finance group’s statement of cash flows. Meanwhile, in the Manufacturing group’s statement of cash
flows, the cash received from the Finance group on the customer’s behalf is recorded within operating cash flows as a cash inflow. Although cash
is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows at the time of the original
financing. These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated from the
Consolidated Statements of Cash Flows.
Reclassification and elimination adjustments included in the Consolidated Statement of Cash Flows are summarized below:
(In millions) 2008 2007 2006
Reclassifications from investing activities:
Finance receivable originations for Manufacturing group inventory sales $ (1,019) $ (1,160) $ (1,015)
Cash received from customers, sale of receivables and securitizations 728 881 691
Other (2) (7) (36)
Total reclassifications from investing activities (293) (286) (360)
Reclassifications from financing activities:
Capital contribution paid by Manufacturing group to Finance group 625 — —
Dividends received by Manufacturing group from Finance group (142) (135) (80)
Total reclassifications from financing activities 483 (135) (80)
Total reclassifications and adjustments to cash flow from operating activities $ 190 $ (421) $ (440)
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations