E-Z-GO 2014 Annual Report Download - page 35

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Liquidity and Capital Resources
Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated
with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments. The
Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. 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:
(Dollars in millions)
January 3,
2015
December 28,
2013
Manufacturing group
Cash and equivalents
$ 731
$ 1,163
Debt
2,811
1,931
Shareholders’ equity
4,272
4,384
Capital (debt plus shareholders’ equity)
7,083
6,315
Net debt (net of cash and equivalents) to capital
33%
15%
Debt to capital
40%
31%
Finance group
Cash and equivalents
$ 91
$ 48
Debt
1,063
1,256
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 we will have sufficient cash to meet our future needs, based on our existing
cash balances, the cash we expect to generate from our manufacturing operations and other available funding alternatives, as
appropriate.
Textron has a senior unsecured revolving credit facility that expires in October 2018 for an aggregate principal amount of $1.0
billion, of which up to $100 million is available for the issuance of letters of credit. At January 3, 2015, there were no amounts
borrowed against the facility, and there were $35 million of letters of credits issued against it.
We maintain an effective shelf registration statement filed with the Securities and Exchange Commission that authorizes us to
issue an unlimited amount of public debt and other securities. Under this shelf registration statement, in January 2014, we issued
$250 million of 3.65% notes due 2021 and $350 million of 4.30% notes due 2024. We also entered into a five-year term loan
agreement with a syndicate of banks in the principal amount of $500 million. Upon the closing of the Beechcraft acquisition on
March 14, 2014, we fully drew down on the five-year term loan and used the cash, along with the net proceeds of the notes issued,
to finance a portion of the acquisition. The balance of the Beechcraft acquisition purchase price was paid from cash on hand.
During the third quarter of 2014, we repaid $200 million of the five-year term loan. Also under the shelf registration statement, in
November 2014, we issued $350 million of 3.875% notes due 2025. Subsequently, prior to year-end, we prepaid $350 million of
6.2% notes which were due in March 2015.
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)
2014
2013
2012
Operating activities
$ 1,097
$ 658
$ 958
Investing activities
(2,065)
(624)
(476)
Financing activities
552
(240)
29
Cash flows from operating activities increased $439 million during 2014, compared with 2013, largely due to a favorable change
in working capital, higher income from continuing operations of $120 million and lower contributions of $118 million to our
pension plans, partially offset by $175 million of dividends received from the Finance group in 2013. Working capital was
29 Textron Inc. Annual Report • 2014