E-Z-GO 2011 Annual Report Download - page 45

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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 $1.2 billion in 2011, $2.2 billion in 2010 and $4.6 billion in 2009. Cash outflows for originations declined
to $0.2 billion in 2011 from $0.5 billion in 2010 and $3.0 billion in 2009. These decreases are largely due to our ongoing exit
from the non-captive business.
We also used more cash for investing activities in the current year due to higher capital expenditures, which totaled $423 million,
$270 million, and $238 million in 2011, 2010 and 2009, respectively, as we increased investment in the areas of new product
development and cost productivity improvements.
In 2011 and 2010, financing activities include repayments of $1.4 billion and $1.5 billion, respectively, against the outstanding
balance on our bank line of credit that we had drawn down in 2009. We also made principal payments on short-and long-term
debt of $0.8 billion, $2.2 billion and $5.8 billion in 2011, 2010 and 2009, respectively. These reductions were largely related to
the liquidation of the non-captive business and debt maturities. In 2011, financing activities include $580 million in payments
related to the purchase of convertible notes that were originally issued in 2009. Cash outflows were partially offset by proceeds
from the issuance of long term debt of $0.9 billion, $0.2 billion and $0.9 billion, respectively.
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 the sale of receivables 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)
2011
2010
2009
Reclassifications from investing activities:
Finance receivable originations for Manufacturing group inventory sales
$ (284)
$ (416)
$ (654)
Cash received from customers and the sale of receivables
520
840
831
Other capital contributions made to Finance group
(60)
(30)
(40)
Other
11
9
—
Total reclassifications from investing activities
187
403
137
Reclassifications from financing activities:
Capital contribution paid by Manufacturing group to Finance group under Support
Agreement
182
383
270
Dividends received by Manufacturing group from Finance group
(179)
(505)
(349)
Other capital contributions made to Finance group
60
30
40
Other
(8)
(13)
—
Total reclassifications from financing activities
55
(105)
(39)
Total reclassifications and adjustments to cash flow from operating activities
$ 242
$ 298
$ (654)
Consolidated Discontinued Operations Cash Flows
Cash flows from discontinued operations in 2009 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. See Note 2
to the Consolidated Financial Statements for details concerning these dispositions.
34
34 Textron Inc. Annual Report • 2011