E-Z-GO 2011 Annual Report Download - page 44

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An additional cash contribution of $240 million was paid to TFC on January 17, 2012 as required by the Support Agreement, and
on January 20, 2012, TFC paid an additional $172 million in dividends to Textron Inc.
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.
Finance Group Cash Flows
The cash flows from continuing operations for the Finance group are summarized below:
(In millions)
2011
2010
2009
Operating activities
$ 65
$ (35)
$ 196
Investing activities
1,453
2,305
2,153
Financing activities
(1,536)
(2,383)
(2,235)
Cash flows from operating activities improved in 2011 largely due to $65 million in tax refunds, net of payments received in 2011.
In 2010, the Finance Group had $101 million in tax payments, net of refunds, primarily attributable to the settlement of the IRS’s
challenge of tax deductions we took in prior years for certain leverage lease transactions; in 2009, tax refunds, net of payments
totaled $75 million.
Cash receipts from the collection of finance receivables continued to outpace finance receivable originations, which resulted in net
cash inflow from investing activities for the past three years. Finance receivables repaid and proceeds from sales and
securitizations totaled $1.8 billion in 2011, $3.0 billion in 2010 and $5.4 billion in 2009. Cash outflows for originations declined
to $0.5 billion in 2011 from $0.9 billion in 2010 and $3.7 billion in 2009. These decreases are largely due to our ongoing exit
from the non-captive business.
In 2011 and 2010, financing activities include repayments of $1.4 billion and $0.3 billion, respectively, against the outstanding
balance on TFC’s bank line of credit that we had drawn down in 2009. In October 2011, we paid off and elected to terminate this
bank line of credit. As we liquidate the non-captive business, we have continued to pay down our debt with principal payments on
short- and long-term debt of $0.8 billion, $2.1 billion and $4.5 billion in 2011, 2010 and 2009, respectively. These cash outflows
were partially offset by proceeds from the issuance of long term debt of $0.4 billion, $0.2 billion and $0.3 billion, respectively.
TFC borrowed funds from Textron Inc. in 2011, 2010 and 2009, with interest, to pay down maturing debt. As of December 31,
2011 and January 1, 2011, the outstanding balance due to Textron Inc. for these borrowings was $490 million and $315 million,
respectively.
Consolidated Cash Flows
The consolidated cash flows from continuing operations, after elimination of activity between the borrowing groups, are
summarized below:
(In millions)
2011
2010
2009
Operating activities
$ 1,068
$ 993
$ 1,032
Investing activities
843
1,549
1,728
Financing activities
(1,951)
(3,493)
(1,633)
Cash flow 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 $44 million in 2011, from $72 million in 2010 and $144 million in 2009. These decreases were partially
offset by $225 million in higher cash pension contributions made on behalf of the Manufacturing group with $642 million in
contributions in 2011, compared with $417 million in contributions in 2010.
33
Textron Inc. Annual Report • 2011 33