E-Z-GO 2010 Annual Report Download - page 43

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31
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)
2010
2009
2008
Reclassifications from investing activities:
Finance receivable originations for Manufacturing group inventory sales
$ (416)
$ (654)
$ (1,019)
Cash received from customers, sale of receivables and securitizations
840
831
728
Other capital contributions made to Finance group
(30)
(40)
—
Other
9
—
(2)
Total reclassifications from investing activities
403
137
(293)
Reclassifications from financing activities:
Capital contribution paid by Manufacturing group to Finance group under Support
Agreement 383 270 625
Dividends received by Manufacturing group from Finance group
(505)
(349)
(142)
Other capital contributions made to Finance group
30
40
—
Other
(13)
—
—
Total reclassifications from financing activities
(105)
(39)
483
Total reclassifications and adjustments to cash flow from operating activities
$ 298
$ 98
$ 190
In 2010 and 2009, captive finance receivable originations have decreased largely due to lower aircraft sales.
Consolidated Discontinued Operations Cash Flows
The cash flows from discontinued operations are summarized below:
(In millions)
2010
2009
2008
Operating activities
$ (9)
$ (17)
$ (14)
Investing activities
—
211
471
Financing activities
—
—
(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. See Note 2 to the
Consolidated Financial Statements for details concerning these dispositions.
Contractual Obligations
Manufacturing Group
The following table summarizes the known contractual obligations, as defined by reporting regulations, of our Manufacturing
group as of January 1, 2011, as well as an estimate of the year in which these obligations are expected to be paid:
(In millions)
2011
2012
2013
2014
2015
2016 and
Thereafter
Total
Liabilities reflected in balance sheet:
Long-term debt
$ 19
$ 161
$ 921
$ 7
$ 357
$ 945
$ 2,410
Interest on borrowings
130
124
105
79
68
242
748
Pension benefits for unfunded plans
20
22
22
21
20
228
333
Postretirement benefits other than pensions
60
56
52
49
45
352
614
Other long-term liabilities
76
141
67
38
33
240
595
Liabilities not reflected in balance sheet:
Operating leases
55
46
38
31
27
152
349
Purchase obligations
1,360
332
139
40
7
2
1,880
Total Manufacturing group
$ 1,720
$ 882
$ 1,344
$ 265
$ 557
$ 2,161
$ 6,929