Pepsi 2007 Annual Report Download - page 57

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Operating activities
$6,084
Acquisitions
$522
Capital spending
$2,068
Share repurchases
$3,010
Long-term debt $106
Use of CashSource of Cash
Dividends
$1,854
Short-term
investments $2,017
Cash proceeds
from sale of PBG stock
$318
Stock option exercises
$1,194
Other, net $223
Short-term
borrowings
$2,341
Management Operating Cash Flow
We focus on management operating
cash fl ow as a key element in achieving
maximum shareholder value, and it is the
primary measure we use to monitor cash
fl ow performance. However, it is not a
measure provided by accounting prin-
ciples generally accepted in the U.S. Since
net capital spending is essential to our
product innovation initiatives and main-
taining our operational capabilities, we
believe that it is a recurring and necessary
use of cash. As such, we believe investors
should also consider net capital spending
when evaluating our cash from operating
activities. The table above reconciles the
net cash provided by operating activities,
as refl ected in our cash fl ow statement, to
our management operating cash fl ow.
Management operating cash fl ow
was used primarily to repurchase shares
and pay dividends. We expect to con-
tinue to return approximately all of our
management operating cash fl ow to our
shareholders through dividends and share
repurchases. However, see “Our Business
Risks” for certain factors that may impact
our operating cash fl ows.
Credit Ratings
Our debt ratings of Aa2 from Moody’s
and A+ from Standard & Poor’s contribute
to our ability to access global capital mar-
kets. We have maintained strong invest-
ment grade ratings for over a decade.
Each rating is considered strong invest-
ment grade and is in the fi rst quartile of
their respective ranking systems. These
ratings also refl ect the impact of our
anchor bottlers’ cash fl ows 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 busi-
ness. However, certain guarantees were
necessary to facilitate the separation of
our bottling and restaurant operations
from us. At year-end 2007, we believe it
is remote that these guarantees would
require any cash payment. We do not
enter into off-balance-sheet transactions
specifi cally structured to provide income
or tax benefi ts or to avoid recognizing
or disclosing assets or liabilities. See
Note 9 for a description of our
off-balance-sheet arrangements.
2007 2006 2005
Net cash provided by operating activities $ 6,934 $ 6,084 $ 5,852
Capital spending (2,430) (2,068) (1,736)
Sales of property, plant and equipment 47 49 88
Management operating cash flow $ 4,551 $ 4,065 $ 4,204
Operating activities
$5,852
Acquisitions
$1,095
Dividends
$1,642
Short-term investments
$991
Capital spending
$1,736
Share repurchases
$3,031
Use of CashSource of Cash
Stock option exercises
$1,099
Short-term borrowings
$1,848
Cash proceeds
from sale of PBG stock
$214
Other, net
$70 Long-term debt
$152
2006 Cash Utilization 2005 Cash Utilization
55