Medtronic 2015 Annual Report Download - page 70

Free Cash Flow
Free cash flow represents the cash that we have available to pursue opportunities that we believe enhance shareholder value.
Management uses this non-GAAP financial measure, in addition to U.S. GAAP financial measures to evaluate our operating
results. Free cash flow is a non-GAAP financial measure, which 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) 2015 2014 2013
Net cash provided by operating activities $ 4,902 $ 4,959 $ 4,942
Net cash used in investing activities (17,058) (3,594) (3,101)
Net cash provided by (used in) financing activities 15,949 (918) (2,101)
Net cash provided by operating activities 4,902 4,959 4,942
Additions to property, plant, and equipment (571) (396) (457)
Free cash flow $ 4,331 $ 4,563 $ 4,485
Dividends to shareholders $ 1,337 $ 1,116 $ 1,055
Repurchase of ordinary shares 1,920 2,553 1,247
Issuances of ordinary shares (649) (1,307) (267)
Return to shareholders $ 2,608 $ 2,362 $ 2,035
Return of operating cash flow percentage 53% 48% 41%
Return of free cash flow percentage 60% 52% 45%
We returned 53 percent, 48 percent, and 41 percent of our operating cash flow to shareholders in fiscal years 2015, 2014, and
2013, respectively, through a combination of share repurchases and dividend payments. Free cash flow returned to shareholders
was 60 percent, 52 percent, and 45 percent in fiscal years 2015, 2014, and 2013, respectively.
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 40 percent as of April 24, 2015 and 38 percent as of April 25, 2014.
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 2015 and 2014, we repurchased a total of
29.8 million and 47.8 million shares at an average price of $64.53 and $53.37, respectively. As of April 24, 2015, we have
approximately 29.7 million shares remaining under the current Board authorization. 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.
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 24, 2015, was $2.434 billion
compared to $1.613 billion as of April 25, 2014.
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 $3.500 billion. We previously
maintained a commercial paper program that allowed us to have a maximum of $2.250 billion in commercial paper outstanding,
with maturities up to 364 days from the date of issuance. No amounts were outstanding under either of these programs as of
April 24, 2015 and April 25, 2014, respectively.
During fiscal years 2015 and 2014, the weighted average original maturity of the commercial paper outstanding was
approximately 52 and 53 days, respectively, and the weighted average interest rate was 0.13 percent and 0.09 percent,
respectively. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as
explained below.
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