E-Z-GO 2009 Annual Report Download - page 41

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32
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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) 2009 2008 2007
Reclassifications from investing activities:
Finance receivable originations for Manufacturing group inventory sales $ (654) $ (1,019) $ (1,160)
Cash received from customers, sale of receivables and securitizations 831 728 881
Capital contributions made to Cessna Export Finance Corp. (40) — —
Other — (2) (7)
Total reclassifications from investing activities 137 (293) (286)
Reclassifications from financing activities:
Capital contribution paid by Manufacturing group to Finance group 270 625 —
Dividends received by Manufacturing group from Finance group (349) (142) (135)
Capital contributions made to Cessna Export Finance Corp. 40 — —
Total reclassifications from financing activities (39) 483 (135)
Total reclassifications and adjustments to cash flow from operating activities $ 98 $ 190 $ (421)
In 2009, captive finance receivable originations have decreased largely due to lower aircraft sales. In addition, in April 2009, we signed a three-
year agreement with a financial services company that now provides financing to third parties for a portion of our sales of E-Z-GO golf cars. We
expect this agreement to reduce future finance receivable originations in this business.
Consolidated Discontinued Operations Cash Flows
The cash flows from discontinued operations are summarized below:
(In millions) 2009 2008 2007
Operating activities $ (17) $ (14) $ 64
Investing activities 211 471 58
Financing activities — (2) (2)
In 2009, cash flows from investing activities primarily include approximately $280 million in after-tax net proceeds upon the sale of HR Textron,
partially offset by $69 million in tax payments related to the sale of the Fluid & Power business. In the fourth quarter of 2008, we received net cash
proceeds from the sale of the Fluid & Power business of approximately $479 million. In 2007, cash flows from investing activities are primarily
related to the realization of cash tax benefits from the Fastening Systems business. See Note 2 to the Consolidated Financial Statements for details
concerning these dispositions.