E-Z-GO 2011 Annual Report Download - page 43

In September 2011, we announced a cash tender offer for any and all of the outstanding convertible notes. In accordance with the
terms of the tender offer, for each $1,000 principal amount of the convertible notes tendered, we paid the holder $1,524 plus
accrued and unpaid interest up to the October 13, 2011 settlement date. In the aggregate, the holders validly tendered $225 million
principal amount, or 37.5%, of the convertible notes. Subsequent to the tender offer, we also purchased $151 million principal
amount of the convertible notes in a small number of privately negotiated transactions and retired another $8 million related to a
holder-initiated conversion in the fourth quarter of 2011. By the end of 2011, we had paid approximately $580 million in cash
related to these transactions and had reduced the principal amount of the convertible notes by 64%. At December 31, 2011, $216
million principal amount of convertible notes were outstanding. For at least 20 trading days during the 30 consecutive trading
days ended December 31, 2011, our common stock price exceeded the conversion threshold price for the convertible notes of
$17.06 per share. Accordingly, the remaining notes are convertible at the holder’s option through March 31, 2012. We may
deliver shares of common stock, cash or a combination of cash and shares of common stock in satisfaction of our obligations upon
conversion of the convertible notes. We intend to settle the face value of the convertible notes in cash. We have continued to
classify these convertible notes as long term based on our intent and ability to maintain the debt outstanding for at least one year
through the use of various funding sources available to us.
During 2011, we reduced our total finance receivable portfolio by $1.7 billion primarily through liquidations, mark-to-market
adjustments on certain portfolios and impairments. These finance receivable reductions occurred in both the non-captive and
captive finance portfolios, but were primarily driven by the non-captive portfolio in connection with our exit plan, including $576
million and $495 million in the Timeshare and Golf Mortgage product lines, respectively. Depending on market conditions, we
expect continued progress in liquidating the remaining $950 million in the non-captive portfolio over the next several years.
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)
2011
2010
2009
Operating activities
$ 761
$ 730
$ 738
Investing activities
(423)
(353)
(288)
Financing activities
(360)
(1,215)
563
Cash flows from operating activities increased in 2011, compared with 2010, primarily due to higher earnings for the
Manufacturing group. In addition, cash payments related to the restructuring program that we substantially completed at the end
of 2010 decreased to $38 million in 2011, from $58 million in 2010 and $132 million in 2009. These decreases were partially
offset by $225 million in higher cash contributions made to our pension plans, as we made $642 million in contributions to our
pension plans in 2011, compared with $417 million in contributions in 2010.
Investing cash flows in 2011, 2010 and 2009 primarily included capital expenditures of $423 million, $270 million, and $238
million, respectively, as we increased investment in the areas of new product development and cost productivity improvements.
In 2011, financing activities primarily consisted of $580 million in payments related to the purchase and cancellation of
convertible notes that were originally issued in 2009, as described above, and $175 million in intergroup financing for our Finance
Group, partially offset by $496 million in proceeds from the issuance of notes. We used significantly more cash for financing
activities in 2010, compared with 2009, largely due to the repayment of $1.2 billion on our bank credit lines in 2010 that we had
drawn on in 2009.
Dividend payments to shareholders totaled $22 million, $22 million and $21 million in 2011, 2010 and 2009, respectively.
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)
2011
2010
2009
Dividends paid by TFC to Textron Inc.
$ 179
$ 505
$ 349
Capital contributions paid to TFC under Support Agreement
(182)
(383)
(270)
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32 Textron Inc. Annual Report • 2011