E-Z-GO 2014 Annual Report Download - page 38

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Captive Financing and Other Intercompany Transactions
The Finance group finances retail purchases and leases for new and pre-owned 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)
2014
2013
2012
Reclassifications from investing activities:
Finance receivable originations for Manufacturing group inventory sales
$ (215)
$ (248)
$ (309)
Cash received from customers and the sale of receivables
365
485
405
Other
(41)
27
(16)
Total reclassifications from investing activities
109
264
80
Reclassifications from financing activities:
Capital contributions paid by Manufacturing group to Finance group
—
1
240
Dividends received by Manufacturing group from Finance group
—
(175)
(345)
Other
—
(1)
(3)
Total reclassifications from financing activities
—
(175)
(108)
Total reclassifications and adjustments to cash flow from operating activities
$ 109
$ 89
$ (28)
Contractual Obligations
Manufacturing Group
The following table summarizes the known contractual obligations, as defined by reporting regulations, of our Manufacturing
group as of January 3, 2015:
Payments Due by Period
(In millions)
Total
Year 1
Years 2-3
Years 4-5
More Than 5
Years
Liabilities reflected in balance sheet:
Long-term debt
$ 2,816
$ 8
$ 766
$ 562
$ 1,480
Interest on borrowings
747
128
242
176
201
Pension benefits for unfunded plans
392
26
49
46
271
Postretirement benefits other than pensions
413
45
79
65
224
Other long-term liabilities
650
121
194
76
259
Liabilities not reflected in balance sheet:
Purchase obligations
3,370
2,651
677
28
14
Operating leases
438
73
104
68
193
Total Manufacturing group
$ 8,826
$ 3,052
$ 2,111
$ 1,021
$ 2,642
Pension and Postretirement Benefits
We maintain defined benefit pension plans and postretirement benefit plans other than pensions as discussed in Note 11 to the
Consolidated Financial Statements. Included in the above table are discounted estimated benefit payments we expect to make
related to unfunded pension and other postretirement benefit plans. Actual benefit payments are dependent on a number of factors,
including mortality assumptions, expected retirement age, rate of compensation increases and medical trend rates, which are
subject to change in future years. Our policy for funding pension plans is to make contributions annually, consistent with
applicable laws and regulations; however, future contributions to our pension plans are not included in the above table. In 2015,
we expect to make approximately $54 million of contributions to our funded pension plans and the Retirement Account Plan.
Based on our current assumptions, which may change with changes in market conditions, our current contribution estimates for
each of the years from 2016 through 2019 are estimated to be in the range of approximately $65 million to $155 million under the
plan provisions in place at this time.
32 Textron Inc. Annual Report • 2014