Pepsi 2015 Annual Report Download - page 87

Table of Contents
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Investing Activities
During 2015, net cash used for investing activities was $3.6 billion, primarily reflecting net capital spending
of $2.7 billion, a reduction of cash of $568 million due to the deconsolidation of our Venezuelan subsidiaries
and net purchases of debt securities greater than three months of $317 million. See Note 1 to our consolidated
financial statements for further discussion of capital spending by division and for further discussion of
Venezuela. See Note 10 to our consolidated financial statements for further discussion of our investments in
debt securities.
During 2014, net cash used for investing activities was $4.9 billion, primarily reflecting net capital spending
of $2.7 billion and net purchases of debt securities greater than three months of $2.4 billion.
We expect 2016 net capital spending to be approximately $3 billion, within our long-term capital spending
target of less than or equal to 5% of net revenue.
Financing Activities
During 2015, net cash used for financing activities was $3.8 billion, primarily reflecting the return of operating
cash flow to our shareholders through dividend payments and share repurchases of $9.0 billion, partially
offset by net proceeds from long-term debt of $4.6 billion and proceeds from exercises of stock options of
$0.5 billion.
During 2014, net cash used for financing activities was $8.3 billion, primarily reflecting the return of operating
cash flow to our shareholders through dividend payments and share repurchases of $8.7 billion and net
payments of short-term borrowings of $2.0 billion, partially offset by net proceeds from long-term debt of
$1.7 billion and proceeds from exercises of stock options of $0.8 billion.
We annually review our capital structure with our Board of Directors, including our dividend policy and
share repurchase activity. On February 11, 2015, we announced a new share repurchase program providing
for the repurchase of up to $12.0 billion of PepsiCo common stock commencing from July 1, 2015 and
expiring on June 30, 2018. This repurchase program was in addition to the $10.0 billion repurchase program
authorized by our Board of Directors and publicly announced in the first quarter of 2013, which commenced
on July 1, 2013 and under which we completed repurchases during the fourth quarter of 2015. In addition,
on February 11, 2016, we announced a 7.1% increase in our annualized dividend to $3.01 per share from
$2.81 per share, effective with the dividend that is expected to be paid in June 2016. We expect to return a
total of $7 billion to shareholders in 2016 through share repurchases of approximately $3 billion and dividends
of approximately $4 billion.
Free Cash Flow
We focus on free cash flow as an important element in evaluating our performance. Since net capital spending
is essential to our product innovation initiatives and maintaining 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. Additionally, we consider certain items
(included in the table below) in evaluating free cash flow. We believe investors should consider these items
in evaluating our free cash flow results. Free cash flow excluding certain items is the primary measure we
use to monitor cash flow performance. However, free cash flow and free cash flow excluding certain items
are not measures provided by U.S. GAAP. Therefore, these measures are not, and should not be viewed as,
substitutes for U.S. GAAP cash flow measures.