E-Z-GO 2010 Annual Report Download - page 12

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2
10
The following footnotes pertain to the Chairman’s Letter:
(1) Free cash flow is not a financial measure under generally accepted accounting principles (GAAP) and should be used in conjunction
with GAAP cash measures provided in our Consolidated Statement of Cash Flows. Free cash flow is a measure generally used by
investors, analysts and management to gauge a company’s ability to generate cash from operations in excess of that necessary to
be reinvested to sustain and grow the business and fund its obligations. Our definition of Manufacturing free cash flow adjusts net
cash from operating activities of continuing operations for dividends received from TFC, capital contributions provided under the
Support Agreement, capital expenditures, proceeds from the sale of property, plant and equipment and voluntary contributions to
our pension plans. We believe that our Manufacturing free cash flow calculation provides a relevant measure of liquidity and a
useful basis for assessing our ability to fund operations. Our Manufacturing free cash flow measure may not be comparable with
similarly titled measures reported by other companies, as there is no definitive accounting standard on how the measure should be
calculated. A reconciliation of net cash from operating activities of continuing operations as presented in our Consolidated Statement
of Cash Flows to manufacturing free cash flow is provided below:
(In millions) 2010 2009
Net cash from operating activities of continuing operations – GAAP $ 730 $ 738
Less: Capital expenditures (270) (238)
Dividends received from TFC (505) (349)
Plus: Capital contributions paid to TFC 383 270
Proceeds on sale of property, plant and equipment 4 3
Voluntary contributions to pension plans 350 —
Manufacturing free cash flow – Non-GAAP $ 692 $ 424
(2) Net debt represents on- and off-balance sheet debt, along with borrowing on officers’ life insurance policies, less cash and
equivalents. Our calculation of net debt is provided below:
(In millions) 2010 2009 2008
On-balance sheet debt $5,962 $ 9,251 $ 9,957
Off- balance sheet debt — 31 2,067
Borrowings on officers’ life insurance policies — — 411
Less: Total cash and cash equivalents (931) (1,892) (547)
$5,031 $ 7,390 $11,888