E-Z-GO 2012 Annual Report Download - page 45

Textron Inc. Annual Report ● 2012 33
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 totaled $0.7
billion in 2012, $1.2 billion in 2011 and $2.2 billion in 2010. Cash outflows for originations declined to $22 million in 2012 from
$187 million in 2011 and $450 million in 2010. These decreases are largely due to our ongoing exit from the non-captive
business. Investing activities also included capital expenditures of $480 million, $423 million, and $270 million in 2012, 2011 and
2010, respectively, in support of our new product development and cost improvement strategies.
Cash used in financing activities included principal payments on long-term debt of $0.6 billion, $0.8 billion and $2.2 billion in
2012, 2011 and 2010, respectively. In 2011 and 2010, financing activities also included repayments of $1.4 billion and $1.5
billion, respectively, against the outstanding balance on our bank credit lines. Cash used in financing activities also included $272
million of share repurchases in 2012 and $580 million in payments related to the purchase of convertible notes in 2011. These
cash outflows were partially offset by proceeds from the issuance of long term debt of $106 million, $926 million and $231
million, 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) 2012 2011 2010
Reclassifications from investing activities:
Finance receivable originations for Manufacturing group inventory sales $ (309) $ (284) $ (416)
Cash received from customers and the sale of receivables 405 520 840
Other capital contributions made to Finance group — (60) (30)
Other (16) 11 9
Total reclassifications from investing activities 80 187 403
Reclassifications from financing activities:
Capital contribution paid by Manufacturing group to Finance group under Support
Agreement 240 182 383
Dividends received by Manufacturing group from Finance group (345) (179) (505)
Other capital contributions made to Finance group — 60 30
Other (3) (8) (13)
Total reclassifications from financing activities (108) 55 (105)
Total reclassifications and adjustments to cash flow from operating activities $ (28) $ 242 $ 298