E-Z-GO 2009 Annual Report Download - page 36

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27
Textron Inc.
A summary of these finance receivables and the related allowance for losses by collateral type is as follows:
January 2, 2010 January 3, 2009
Allowance Allowance
for Losses for Losses
Impaired on Impaired Impaired on Impaired
Nonaccrual Nonaccrual Nonaccrual Nonaccrual Nonaccrual Nonaccrual
Finance Finance Finance Finance Finance Finance
Collateral Type (In millions) Receivables Receivables Receivables Receivables Receivables Receivables
Timeshare notes receivable* $ 259 $ 254 $ 53 $ 78 $ 74 $ 9
General aviation aircraft 286 272 46 17 6 2
Golf course property 166 165 27 107 107 25
Resort construction/inventory 104 104 — — — —
Dealer inventory 88 68 14 43 34 3
Hotels 78 78 7 — — —
Other 59 43 6 32 13 4
Total $ 1,040 $ 984 $ 153 $ 277 $ 234 $ 43
* Finance receivables collateralized primarily by timeshare notes receivable also may be collateralized by certain real estate and other assets of our borrowers.
The increase in nonaccrual finance receivables primarily is attributable to the lack of liquidity available to borrowers in the timeshare portfolio,
weaker general economic conditions and depressed aircraft values. The increase in timeshare notes receivable includes one $203 million
account, of which $120 million is collateralized by notes receivable and $83 million is collateralized by several resort properties, which are
included in the resort construction/inventory line above.
Liquidity and Capital Resources
Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron Inc. consolidated with its
majority-owned subsidiaries that operate in the Cessna, Bell, Textron Systems and Industrial segments. The Finance group, which is also the
Finance segment, consists of Textron Financial Corporation (TFC), its subsidiaries and the securitization trusts consolidated into it, along with
two other finance subsidiaries owned by Textron Inc. We designed this framework to enhance our borrowing power by separating the Finance
group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance
group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and
analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow
information for each borrowing group within the Consolidated Financial Statements.
Key information that is utilized in assessing our liquidity is summarized below:
(Dollars in millions) 2009 2008
Manufacturing group
Cash and cash equivalents $ 1,748 $ 531
Total debt $ 3,584 $ 2,569
Total equity $ 2,826 $ 2,366
Total capital (debt plus equity) $ 6,410 $ 4,935
Net debt to capital (net of cash and cash equivalents) 39.4% 46.3%
Gross debt to capital 55.9% 52.1%
Free cash flow* $ 424 $ 362
Finance group
Cash and cash equivalents $ 144 $ 16
Securitized off-balance sheet debt $ 31 $ 2,067
Total debt on-balance sheet $ 5,667 $ 7,388
* Free cash flow represents a non-GAAP measure. See page 29 for a reconciliation to GAAP.