Proctor and Gamble 2008 Annual Report Download - page 67
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Please find page 67 of the 2008 Proctor and Gamble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.NotestoConsolidatedFinancialStatements TheProcter&GambleCompany 65
Amountsinmillionsofdollarsexceptpershareamountsorasotherwisespecied.
NOT E 5
June30 2007
Currentportionoflong-termdebt $ 2,544
Commercialpaper 9,410
FloatingratenotedueFebruary2009 —
Other 85
12,039
Theweightedaverageshort-terminterestrateswere2.7%and5.0%
asofJune30,2008and2007,respectively,includingtheeffectsof
interestrateswapsdiscussedinNote6.
June30 2007
4.30%USDnotedueAugust2008 $ 500
3.50%USDnotedueDecember2008 650
FloatingratenotedueJuly2009 —
FloatingratenotedueAugust2009 —
6.88%USDnotedueSeptember2009 1,000
4.88%EURnotedueOctober2011 —
3.38%EURnotedueDecember2012 1,882
4.50%EURnotedueMay2014 2,016
4.95%USDnotedueAugust2014 900
4.85%USDnotedueDecember2015 700
5.13%EURnotedueOctober2017 —
4.13%EURnotedueDecember2020 806
9.36%ESOPdebenturesdue2008–2021(1) 968
4.88%EURnotedueMay2027 1,344
6.25%GBPnotedueJanuary2030 1,001
5.50%USDnotedueFebruary2034 500
5.80%USDnotedueAugust2034 600
5.55%USDnotedueMarch2037 1,400
Capitalleaseobligations 628
Allotherlong-termdebt 11,024
Currentportionoflong-termdebt (2,544)
23,375
(1)DebtissuedbytheESOPisguaranteedbytheCompanyandmustberecordedasdebtofthe
CompanyasdiscussedinNote9.
Long-termweightedaverageinterestrateswere4.5%and3.3%as
ofJune30,2008and2007,respectively,includingtheeffectsof
interestrateswapsandnetinvestmenthedgesdiscussedinNote6.
Thefairvalueofthelong-termdebtwas$23,276and$23,122at
June30,2008and2007,respectively.Long-termdebtmaturities
duringthenextveyearsareasfollows:2009–$1,746;2010–$5,508;
2011–$43;2012–$1,643;and2013–$2,240.
NOT E 6
Asamultinationalcompanywithdiverseproductofferings,weare
exposedtomarketrisks,suchaschangesininterestrates,currency
exchangeratesandcommodityprices.Tomanagethevolatility
relatedtotheseexposures,weevaluateexposuresonaconsolidated
basistotakeadvantageoflogicalexposurenettingandcorrelation.
Fortheremainingexposures,weenterintovariousnancialtransactions,
whichweaccountforunderSFAS133,“AccountingforDerivative
InstrumentsandHedgingActivities,”asamendedandinterpreted.
Theutilizationofthesenancialtransactionsisgovernedbyour
policiescoveringacceptablecounterpartyexposure,instrumenttypes
andotherhedgingpractices.Wedonotholdorissuederivative
nancialinstrumentsforspeculativetradingpurposes.
Atinception,weformallydesignateanddocumentqualifyinginstru-
mentsashedgesofunderlyingexposures.Weformallyassess,both
atinceptionandatleastquarterlyonanongoingbasis,whetherthe
nancialinstrumentsusedinhedgingtransactionsareeffectiveat
offsettingchangesineitherthefairvalueorcashowsoftherelated
underlyingexposure.Fluctuationsinthevalueoftheseinstruments
generallyareoffsetbychangesinthefairvalueorcashowsofthe
underlyingexposuresbeinghedged.Thisoffsetisdrivenbythehigh
degreeofeffectivenessbetweentheexposurebeinghedgedandthe
hedginginstrument.Anyineffectiveportionofachangeinthefair
valueofaqualifyinginstrumentisimmediatelyrecognizedinearnings.
Wehavecounterpartycreditguidelinesandnormallyenterinto
transactionswithinvestmentgradenancialinstitutions.Counterparty
exposuresaremonitoreddailyanddowngradesincreditratingare
reviewedonatimelybasis.Creditriskarisingfromtheinabilityofa
counterpartytomeetthetermsofournancialinstrumentcontracts
generallyislimitedtotheamounts,ifany,bywhichthecounterparty’s
obligationsexceedourobligationstothecounterparty.Wehavenot
incurredanddonotexpecttoincurmaterialcreditlossesonourrisk
managementorothernancialinstruments.
Ourpolicyistomanageinterestcostusingamixtureofxed-rateand
variable-ratedebt.Tomanagethisriskinacost-efcientmanner,we
enterintointerestrateswapsinwhichweagreetoexchangewith
thecounterparty,atspeciedintervals,thedifferencebetweenxed
andvariableinterestamountscalculatedbyreferencetoanagreed-
uponnotionalprincipalamount.
InterestrateswapsthatmeetspeciccriteriaunderSFAS133are
accountedforasfairvalueandcashowhedges.Therewerenofair
valuehedginginstrumentsatJune30,2008,orJune30,2007.For
cashowhedges,theeffectiveportionofthechangesinfairvalueof
thehedginginstrumentisreportedinothercomprehensiveincome
(OCI)andreclassiedintointerestexpenseoverthelifeoftheunder-
lyingdebt.Theineffectiveportion,whichisnotmaterialforanyyear