Pepsi 2005 Annual Report Download - page 51

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Management operating cash flow was
used primarily to repurchase shares and pay
dividends. We expect to continue to return
approximately all of our management
operating cash flow to our shareholders
through dividends and share repurchases.
However, see “Our Business Risks” for
certain factors that may impact our operating
cash flows.
Credit Ratings
Our debt ratings of Aa3 from Moody’s and
A+ from Standard & Poor’s contribute to
our ability to access global capital markets.
We have maintained strong investment
grade ratings for over a decade. Our Moody’s
rating reflects an upgrade from A1 to
Aa3 in 2004 due to the strength of our
balance sheet and cash flows. Each rating
is considered strong investment grade and
is in the first quartile of their respective
ranking systems. These ratings also reflect
the impact of our anchor bottlers’ cash
flows and debt.
Credit Facilities and Long-Term
Contractual Commitments
See Note 9 for a description of our
credit facilities and long-term contractual
commitments.
Off-Balance Sheet Arrangements
It is not our business practice to enter
into off-balance sheet arrangements, other
than in the normal course of business, nor
is it our policy to issue guarantees to our
bottlers, noncontrolled affiliates or third
parties. However, certain guarantees were
necessary to facilitate the separation of our
bottling and restaurant operations from us.
As of year-end 2005, we believe it is remote
that these guarantees would require any
cash payment. See Note 9 for a description
of our off-balance sheet arrangements.
Financial Position
Significant changes in our Consolidated
Balance Sheet from December 25, 2004
to December 31, 2005 not discussed
above were as follows:
• Other assets increased primarily reflect-
ing our increased pension contributions
in the current year.
• Income taxes payable increased primarily
reflecting $460 million of taxes accrued
related to our repatriation of interna-
tional earnings in connection with the
AJCA to be paid in the first quarter of
2006.
49
2005 2004 2003
Net cash provided by operating activities $ 5,852 $ 5,054 $ 4,328
Capital spending (1,736) (1,387) (1,345)
Sales of property, plant and equipment 88 38 49
Management operating cash flow $ 4,204 $ 3,705 $ 3,032
Use of CashSource of Cash
Operating activities
$5,054
Short-term borrowings
$1,112
Other, net $69
Stock option
exercises $965
Dividends $1,329
Capital spending
$1,387
Share repurchases
$3,055
Short-term
investments $969
2004 Cash Utilization
Operating activities
$4,328
Long-term debt $589
Short-term investments
$950
Dividends $1,070
Capital spending
$1,345
Share repurchases
$1,945
Use of Cash
Source of Cash
Stock option exercises
$689
Other, net $64
2003 Cash Utilization
The table below reconciles the net cash provided by operating activities as reflected in our
Consolidated Statement of Cash Flows to our management operating cash flow.