E-Z-GO 2011 Annual Report Download - page 42

Nonaccrual finance receivables include accounts that are contractually delinquent by more than three months, unless collection of
principal and interest is not doubtful as well as accounts whose credit quality indicators other than delinquency suggest full
collection of principal and interest is doubtful. Nonaccrual finance receivables decreased $529 million, 62%, from the year-end
balance, primarily due to the following reductions:
$219 million in the Golf Mortgage portfolio, primarily due to the transfer of the remaining portfolio to the held for sale
classification; and
$215 million in the Timeshare portfolio, largely due to the resolution of several significant accounts and cash collections
on several other accounts.
These factors were also the primary reason for the improvement in the 60+ days contractual delinquency amount.
See Note 4 to the Consolidated Financial Statements for more detailed information on the nonaccrual finance receivables by
product line, along with a summary of finance receivables held for investment based on our internally assigned credit quality
indicators.
Liquidity and Capital Resources
Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron Inc.
consolidated with its majority-owned subsidiaries that operate in the Cessna, Bell, Textron Systems and Industrial segments. The
Finance group, which also is the Finance segment, consists of TFC, its consolidated subsidiaries and three other finance
subsidiaries owned by Textron Inc. We designed this framework to enhance our borrowing power by separating the Finance group.
Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our
Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities,
investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations,
we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.
Key information that is utilized in assessing our liquidity is summarized below:
(In millions)
December 31,
2011
January 1,
2011
Manufacturing group
Cash and equivalents
$ 871
$ 898
Debt
2,459
2,302
Shareholders’ equity
2,745
2,972
Capital (debt plus shareholders’ equity)
5,204
5,274
Net debt (net of cash and equivalents) to capital
36.6%
32.1%
Debt to capital
47.3%
43.6%
Finance group
Cash and equivalents
$ 14
$ 33
Debt
1,974
3,660
We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication
of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of
the capacity to add further leverage. We believe that with our existing cash and equivalents, along with the cash we expect to
generate from our manufacturing operations, we will have sufficient cash to meet our future needs.
In 2011, Textron Inc. entered into a senior unsecured revolving credit facility that expires in March 2015 for an aggregate principal
amount of $1.0 billion, up to $200 million of which is available for the issuance of letters of credit. At December 31, 2011, there
were no amounts borrowed against the facility, and there were $38 million of letters of credits issued against it.
We maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an
unlimited amount of public debt and other securities. In September 2011, we issued $250 million in 4.625% notes due 2016 and
$250 million in 5.950% notes due 2021 under this registration statement.
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