E-Z-GO 2009 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2009 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 108

  • 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

Due to the nature of these contributions, we classify these contributions within cash flows used by operating activities for the Manufacturing
group in the Consolidated Statement of Cash Flows. Capital contributions to support Finance group growth in the ongoing captive finance
business are classified as cash flows from financing activities. The Finance group’s net income (loss) is excluded from the Manufacturing group’s
cash flows, while dividends from the Finance group are included within cash flows from operating activities for the Manufacturing group as they
represent a return on investment.
Finance Group Cash Flows
The cash flows from continuing operations for the Finance group are summarized below:
(In millions) 2009 2008 2007
Operating activities $ 196 $ 167 $ 262
Investing activities 2,153 (64) (281)
Financing activities (2,235) (146) 29
We generated cash from investing activities in the Finance group as new finance receivable originations declined to $3.7 billion in 2009 from
$11.9 billion in 2008 as we effected our exit plan for the non-captive business. Finance receivables repaid and proceeds from sales and
securitizations decreased to $5.4 billion in 2009 from $11.9 billion in 2008. In 2008, cash used in investing activities decreased from 2007,
primarily due to a decrease in finance receivable originations, net of collections and sale proceeds, largely related to our decision to exit the non-
captive business, resulting in lower originations.
The Finance group used more cash for financing activities in 2009, compared with 2008, primarily due to the repayment of debt and commercial
paper in 2009, totaling $4.5 billion, compared with $2.2 billion in 2008. The Finance group’s financing outflows were partially offset by
$1.7 billion in proceeds from the first quarter 2009 drawdown on its bank lines of credit. In 2008, proceeds from the issuance of long-term debt
totaled $1.5 billion.
In 2009 and 2008, the Manufacturing group agreed to lend the Finance group, with interest, funds to pay down maturing debt. As of January 2,
2010 and January 3, 2009, the outstanding balance due to the Manufacturing group was $447 million and $133 million, respectively.
The Finance group received $270 million in capital contributions from the Manufacturing group in 2009, compared with $625 million in 2008, to
enable it to maintain compliance with the fixed charge coverage ratio required by the Support Agreement. In addition, the Finance group paid
$207 million more in dividends to the Manufacturing group in 2009, compared with 2008.
More cash was used for financing activities in 2008, compared with 2007, primarily due to an increase in debt payments, partially offset by the
2008 capital contribution received from the Manufacturing group and lower proceeds from borrowings related to the reduction in managed
receivable growth.
Consolidated Cash Flows
The consolidated cash flows from continuing operations, after elimination of activity between the borrowing groups, are summarized below:
(In millions) 2009 2008 2007
Operating activities $ 1,032 $ 764 $ 985
Investing activities 1,728 (408) (1,464)
Financing activities (1,633) (788) 89
Consolidated cash provided by operating activities increased, primarily due to working capital improvements, largely related to a reduction in
inventory, partially offset by lower earnings and an increase in cash used in connection with our restructuring program.
We received more cash from investing activities, primarily due to the Finance group’s exit plan, which resulted in lower finance receivable
originations. In 2007, $1.1 billion in cash was used for acquisitions, primarily related to AAI.
More cash was used for financing activities as we repaid $4.2 billion in maturing long-term debt, including early debt extinguishments, compared
with $1.9 billion in 2008. This use was partially offset by the receipt of $3.0 billion from drawing on our lines of credit, which was partially offset
by a $1.6 billion decrease in commercial paper borrowings in 2009, compared with a $218 million increase in net commercial paper borrowings
in 2008. We also used more cash in 2008 for stock repurchases and dividend payments, compared with 2009 as discussed in the “Manufacturing
Group Cash Flow” section. In 2008, we received less cash from financing activities, compared with 2007, primarily due to $663 million in lower
proceeds from borrowings, net of principal payments.
31
Textron Inc.