Medtronic 2016 Annual Report Download - page 61

Table of Contents
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Free Cash Flow
Free cash flow, a non-GAAP financial measure, is calculated by subtracting property, plant, and equipment additions from operating
cash flows. Management uses this non-GAAP financial measure, in addition to U.S. GAAP financial measures to evaluate our
operating results. Free cash flow should be considered supplemental to, and not a substitute for, our reported financial results
prepared in accordance with U.S. GAAP. Reconciliations between net cash provided by operating activities (the most comparable
U.S. GAAP measure) and free cash flow are as follows:
Fiscal Year
(in millions) 2016 2015 2014
Net cash provided by operating activities $ 5,218 $ 4,902 $ 4,959
Net cash provided by (used in) investing activities 2,245 (17,058)(3,594)
Net cash (used in) provided by financing activities (9,543) 15,949 (918)
Net cash provided by operating activities 5,218 4,902 4,959
Additions to property, plant, and equipment (1,046)(571)(396)
Free cash flow $ 4,172 $ 4,331 $ 4,563
Dividends to shareholders $ 2,139 $ 1,337 $ 1,116
Repurchase of ordinary shares 2,830 1,920 2,553
Issuances of ordinary shares (491)(649)(1,307)
Return to shareholders $ 4,478 $ 2,608 $ 2,362
Return of operating cash flow percentage 86% 53% 48%
Return of free cash flow percentage 107% 60% 52%
Debt and Capital
Our capital structure consists of equity and interest-bearing debt. Interest-bearing debt as a percentage of total interest-bearing
debt and equity was 38 percent as of April 29, 2016 and 40 percent as of April 24, 2015.
As part of our focus on returning value to our shareholders, shares are repurchased from time to time. In January 2015, the
Company's Board of Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the adoption of the
existing Medtronic, Inc. share redemption program. During fiscal years 2016 and 2015, we repurchased a total of 38 million and
30 million shares at an average price of $74.92 and $64.53, respectively. In June 2015, the Company's Board of Directors authorized,
subject to the ongoing existence of sufficient distributable reserves, the redemption of an additional 80 million of the Company's
ordinary shares. As of April 29, 2016, we have approximately 72 million shares remaining under the current Board authorization.
We use a combination of bank borrowings and commercial paper issuances to fund our short-term financing needs. Short-term
debt, including the current portion of our long-term debt and capital lease obligations, as of April 29, 2016, was $993 million
compared to $2.4 billion as of April 24, 2015.
We maintain a commercial paper program for short term financing, which allows us to issue unsecured commercial paper notes
on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.5 billion. No amounts were
outstanding under this program as of April 29, 2016 and April 24, 2015, respectively.
During fiscal years 2016 and 2015, the weighted average original maturity of the commercial paper outstanding was approximately
49 and 52 days, respectively, and the weighted average interest rate was 0.57 percent and 0.13 percent, respectively. The issuance
of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.
We also have a $3.5 billion syndicated line of credit facility ($3.5 Billion Revolving Credit Facility) which expires in January
2020. The $3.5 Billion Revolving Credit Facility provides backup funding for the commercial paper program and may also be
used for general corporate purposes. The $3.5 Billion Revolving Credit Facility provides us with the ability to increase its borrowing
capacity by an additional $500 million at any time during the term of the agreement. At each anniversary date of the $3.5 Billion
Revolving Credit Facility, but not more than twice prior to the maturity date, the Company could also request a one-year extension
of the maturity date. As of April 29, 2016 and April 24, 2015, no amounts were outstanding on the committed line of credit.
Interest rates on advances on our $3.5 Billion Revolving Credit Facility are determined by a pricing matrix, based on our long-
term debt ratings assigned by S&P Ratings Services and Moody’s. For additional information on our credit ratings status by S&P