Proctor and Gamble 2008 Annual Report Download - page 52

50 TheProcter&GambleCompany Management’sDiscussionandAnalysis

Netinvestingactivitiesused$2.5billionofcashinboth2008and2007.
Acquisitions. Acquisitionsused$381millionofcashin2008primarily
fortheacquisitionofFredericFekkai,apremiumhaircarebrand,in
Beauty.In2007,acquisitionsused$492millionofcashforseveral
minortransactions,primarilyinBeautyandHealthCare,includingthe
SwissPrecisionDiagnosticsbusiness.
Capital Spending. Weviewcapitalspendingefciencyasacritical
componentofouroverallcashmanagementstrategy.Capitalexpen-
dituresin2008were$3.0billion,comparedto$2.9billionin2007.
Capitalspendingasapercentageofnetsaleswas3.6%in2008,
comparedto3.9%in2007.
3.9%

3.9%
06

07

(%ofnetsales)
Proceeds from Asset Sales. Proceedsfromassetsaleswere$928million
in2008primarilybehindthesaleofourWesternEuropefamilycare
businessaswellasseveralminorBeautyandHealthCaredivestitures.
In2007,proceedsfromassetsaleswere$281millionprimarilydueto
thedivestituresofPertinNorthAmerica,Sureandseveralnon-strategic
minorBeautybrands.

Dividend Payments. Ourrstdiscretionaryuseofcashisdividend
payments.Dividendspercommonshareincreased13%to$1.45per
sharein2008.Thisincreaserepresentsthe52ndconsecutivescalyear
theCompanyhasincreaseditscommonsharedividend.Totaldividend
paymentstobothcommonandpreferredshareholderswere$4.7billion,
$4.2billionand$3.7billionin2008,2007and2006,respectively.
1.15

1.28
06

07

(percommonshare)
Long-Term and Short-Term Debt. Wemaintaindebtlevelsweconsider
appropriateafterevaluatinganumberoffactors,includingcashow
expectations,cashrequirementsforongoingoperations,investmentand
nancingplans(includingacquisitionsandsharerepurchaseactivities)
andtheoverallcostofcapital.Totaldebtwas$36.7billionin2008,
$35.4billionin2007and$38.1billionin2006.Debtincreasedin2008
primarilytofundtheCompany’streasurysharerepurchaseprogram
discussedbelow.Thedecreaseindebtin2007wasprimarilydueto
theutilizationofoperatingcashowtopaydownexistingbalances.
Liquidity. Ourprimarysourceofliquidityiscashgeneratedfrom
operations.Webelieveinternallygeneratedcashowsadequately
supportbusinessoperations,capitalexpendituresandshareholder
dividends,aswellasalevelofotherdiscretionarycashuses
(e.g.,forminoracquisitionsorsharerepurchases).
Weareabletosupplementourliquidityneeds,asrequired,withbroad
accesstonancingincapitalmarketsandfourbankcreditfacilities.
Broadaccesstonancingincludescommercialpaperprogramsin
multiplemarketsatfavorableratesgivenourstrongcreditratings
(includingseparateU.S.dollarandEuromulticurrencyprograms).
Wemaintainfourbankcreditfacilities:a$6billion364-dayfacility
expiringinAugust2008,a$6billion5-yearfacilityexpiringin
August2012,a$3billion5-yearfacilityexpiringinAugust2012anda
$1.8billion364-dayfacilityexpiringinJune2009.Thefacilityexpiring
inAugust2008isnolongerneededandisnotplannedtobereplaced.
Theremainingcreditfacilitiesareinplacetosupportourongoing
commercialpaperprogramandcanbeextendedforcertainperiods
oftimeasspeciedin,andinaccordancewith,thetermsofeach
creditagreement.Weanticipatethatthesefacilitieswillremainlargely
undrawnfortheforeseeablefuture.Thesecreditfacilitiesdonothave
cross-defaultorratingstriggers,nordotheyhavematerialadverse
eventsclauses,exceptatthetimeofsigning.Inadditiontothesecredit
facilities,wehaveanautomaticallyeffectiveregistrationstatementon
FormS-3ledwiththeSECthatisavailableforregisteredofferingsof
short-orlong-termdebtsecurities.
TheCompany’sMoody’sandStandard&Poor’s(S&P)short-term
creditratingsareP-1andA-1+,respectively.OurMoody’sandS&P
long-termcreditratingsareAa3withanegativeoutlookandAA-
withastableoutlook,respectively.
Treasury Purchases.Totalsharerepurchasesin2008were$10.0bil-
lion,nearlyallofwhichweremadeunderourpubliclyannounced
sharerepurchaseplan.Underthisplan,whichbeganinJuly2007,the
Companyexpectstorepurchase$24–30billionofCompanyshares
atarateof$8–10billionperyear.Totalsharerepurchasesin2007
were$5.6billion.
Guarantees and Other Off-Balance Sheet Arrangements. Wedo
nothaveguaranteesorotheroff-balancesheetnancingarrangements,
includingvariableinterestentities,whichwebelievecouldhavea
materialimpactonnancialconditionorliquidity.
Contractual Commitments. Thefollowingtableprovidesinformation
onourcontractualcommitmentsasofJune30,2008.