E-Z-GO 2010 Annual Report Download - page 41

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Manufacturing Group Cash Flows
Cash flows from continuing operations for the Manufacturing group as presented in our Consolidated Statement of Cash Flows are
summarized below:
(In millions)
2010
2009
2008
Operating activities
$ 730
$ 738
$ 407
Investing activities
(353)
(288)
(637)
Financing activities
(1,215)
563
(159)
In the aggregate, cash flow from operating activities in 2010 was comparable with 2009; however, our earnings for the Manufacturing
group, adjusted for non-cash items such as depreciation and amortization, were stronger in 2010 and totaled $941 million, compared
with similarly adjusted earnings in 2009 of $701 million. The cash inflow from higher earnings was offset by a $350 million
voluntary cash contribution we made to our pension plans in the fourth quarter of 2010, which is included in the Accrued and other
liabilities line on the Consolidated Statement of Cash Flows. We also used less cash for restructuring activities in 2010, compared
with 2009, with cash payments of $58 million, $132 million and $3 million in 2010, 2009 and 2008, respectively.
In 2009, cash flow from operating activities increased $331 million, compared with 2008, largely due to $562 million in lower capital
contributions paid to the Finance group, net of dividends received, and working capital improvements, partially offset by lower
earnings. In 2008, cash flow from operating activities included a $625 million capital contribution to the Finance group as discussed
below. Our use of working capital improved significantly in 2009, largely related to significant inventory reductions.
Investing cash flows in 2010, 2009 and 2008 primarily included capital expenditures of $270 million, $238 million and $537 million,
respectively. The decrease in 2009 is largely due to a reduction in discretionary spending due to the economic recession. In addition,
the increase in investing activities in 2010 from 2009 was primarily due to three acquisitions in the Bell, Textron Systems and
Industrial segments for $57 million. In 2008, we paid $109 million for acquisitions, primarily due to transaction settlements related to
AAI, which was acquired at the end of 2007.
Financing cash flows in 2010 primarily consist of the $1.2 billion repayment of the Manufacturing group’s bank line of credit. In
2009, financing activities provided more cash than in 2008, primarily due to the draw of our $1.2 billion bank line of credit, a portion
of which was used to repay outstanding commercial paper borrowings, net proceeds of $442 million from the issuance of the
Convertible Notes (net of call options), $333 million in cash from the issuance of our common stock and common stock warrants,
$595 million in net proceeds from the issuance of senior notes and a decrease in dividends paid. These increases in cash provided in
2009 were partially offset by an $869 million decrease in commercial paper borrowings in 2009, compared with an $867 million
increase in these borrowings in 2008. In addition, we made $412 million in payments to settle advances against our company-owned
officer life insurance policies in 2009, while in 2008 we received $222 million in advances against these policies.
Dividend payments to shareholders totaled $22 million, $21 million and $284 million in 2010, 2009 and 2008, respectively. The
decrease in 2009 from 2008 payments was due to a reduction in the annual per share dividend to $0.08 in 2009 from $0.92 in 2008.
We have not repurchased any of our common stock (other than in connection with an executive compensation award) since we
suspended all share repurchase activity under our repurchase program in September 2008. Under Board-authorized share repurchase
programs, we spent $533 million in 2008 for share repurchases representing approximately 12 million shares of common stock.
Capital Contributions Paid To and Dividends Received From the Finance Group
Under a Support Agreement between Textron Inc. and TFC, Textron Inc. is required to maintain a controlling interest in TFC. The
agreement also requires Textron Inc. to ensure that TFC maintains fixed charge coverage of no less than 125% and consolidated
shareholder’s equity of no less than $200 million. Cash contributions paid to TFC to maintain compliance with the Support
Agreement and dividends paid by TFC to Textron Inc. are detailed below:
(In millions)
2010
2009
2008
Dividends paid by TFC to Textron Inc.
$ 505
$ 349
$ 142
Capital contributions paid to TFC under Support Agreement
(383)
(270)
(625)
An additional cash contribution of $63 million was paid to TFC on January 11, 2011 as required by the Support Agreement.
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.