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Table of Contents Alphabet Inc. and Google Inc.
38
debt or equity financing to provide for greater flexibility to fund these activities. Additional financing may not be available
or on terms favorable to us.
We have a debt financing program of up to $3.0 billion through the issuance of commercial paper. Net proceeds
from this program are used for general corporate purposes. As of December 31, 2015, we had $2.0 billion of commercial
paper outstanding recorded as short-term debt, with a weighted-average interest rate of 0.2% that matures at various
dates through February 2016. In conjunction with this program, we have a $3.0 billion revolving credit facility expiring
in July 2016. The interest rate for the credit facility is determined based on a formula using certain market rates. As of
December 31, 2015, we were in compliance with the financial covenant in the credit facility and no amounts were
outstanding.
We intend to align our capital structure so that debt is held at the holding company level. In January 2016, the
board of directors of Alphabet authorized the company to issue up to $5.0 billion of commercial paper from time to
time and to enter into a $4.0 billion revolving credit facility to replace Google's existing $3.0 billion revolving credit
facility.
In May 2011, we issued $3.0 billion of unsecured senior notes (2011 Notes) in three equal tranches, due in 2014,
2016, and 2021. The net proceeds from the sale of the 2011 Notes were used to repay a portion of our outstanding
commercial paper and for general corporate purposes. In February 2014, we issued $1.0 billion of unsecured senior
notes (2014 Notes) due in 2024, which was used to repay $1.0 billion of the first tranche of our 2011 Notes that matured
in May 2014 and for general corporate purposes.
As of December 31, 2015, the outstanding notes had a total carrying value of $3.0 billion and a total estimated
fair value of $3.1 billion. We are not subject to any financial covenants under the notes.
In August 2013, we entered into a $258 million capital lease obligation on certain property expiring in 2028. We
intend to exercise the option to purchase the property in 2016. The effective rate of the capital lease obligation
approximates the market rate.
In October 2015, the board of directors of Alphabet authorized the company to repurchase up to $5,099,019,513.59
of its Class C capital stock, commencing in the fourth quarter of 2015. The repurchases are being executed from time
to time, subject to general business and market conditions and other investment opportunities, through open market
purchases or privately negotiated transactions, including through the use of 10b5-1 plans. The repurchase program
does not have an expiration date. As of December 31, 2015, Alphabet repurchased and subsequently retired $1.8
billion of its Class C capital stock. Alphabet's share repurchases in the year ended December 31, 2015 were funded
by Google via a return of capital to Alphabet. In January 2016, the board of directors of Alphabet authorized the company
to repurchase an additional amount of approximately 514 thousand shares.
For 2013, 2014 and 2015, our cash flows were as follows (in millions):
Year Ended December 31,
2013 2014 2015
Net cash provided by operating activities $ 18,659 $ 22,376 $ 26,024
Net cash used in investing activities (13,679) (21,055) (23,711)
Net cash used in financing activities (857) (1,439) (3,677)
Cash Provided by Operating Activities
Our largest source of cash provided by our operations is advertising revenues generated by Google websites
and Google Network Members' websites. Additionally, we generate cash through sales of apps and digital content,
hardware products, licensing arrangements, and service fees received for cloud and apps and our Maps API. Prior to
its divestiture in October 2014, we also generated cash from sales of hardware products related to the Motorola Mobile
business.
Our primary uses of cash from our operating activities include payments to our Google Network Members and
distribution partners, and payments for content acquisition costs. Prior to the sale of the Motorola Mobile business,
our use of cash also included payment for manufacturing and inventory-related costs in the Motorola Mobile business.
In addition, uses of cash from operating activities include compensation and related costs, other general corporate
expenditures, and income taxes.
Net cash provided by operating activities increased from 2014 to 2015 primarily due to increased net income
adjusted for depreciation and stock-based compensation expense, and loss on sales of marketable and non-marketable
securities. This is partially offset by a net decrease in cash from changes in working capital.