Proctor and Gamble 2013 Annual Report Download - page 61

The Procter & Gamble Company 59
Amounts in millions of dollars except per share amounts or as otherwise specified.
NOTE 4
SHORT-TERM AND LONG-TERM DEBT
June 30 2013 2012
DEBT DUE WITHIN ONE YEAR
Current portion of long-term debt $ 4,506 $ 4,083
Commercial paper 7,642 4,574
Other 284 41
TOTAL 12,432 8,698
Short-term weighted average interest
rates(1) 0.5% 0.6%
(1) Weighted average short-term interest rates include the effects of
interest rate swaps discussed in Note 5.
June 30 2013 2012
LONG-TERM DEBT
Floating rate USD notes due February
2014 $ 2,000 $ 1,000
4.50% EUR note due May 2014 1,960 1,887
4.95% USD note due August 2014 900 900
0.70% USD note due August 2014 1,000 1,000
3.50% USD note due February 2015 750 750
0.95% JPY note due May 2015 1,012 1,261
3.15% USD note due September 2015 500 500
1.80% USD note due November 2015 1,000 1,000
4.85% USD note due December 2015 700 700
1.45% USD note due August 2016 1,000 1,000
5.13% EUR note due October 2017 1,437 1,383
4.70% USD note due February 2019 1,250 1,250
4.13% EUR note due December 2020 784 755
9.36% ESOP debentures due
2013-2021(1) 701 757
2.30% USD note due February 2022 1,000 1,000
2.00% EUR note due August 2022 1,307 —
4.88% EUR note due May 2027 1,307 1,258
6.25% GBP note due January 2030 764 780
5.50% USD note due February 2034 500 500
5.80% USD note due August 2034 600 600
5.55% USD note due March 2037 1,400 1,400
Capital lease obligations 31 45
All other long-term debt 1,714 5,437
Current portion of long-term debt (4,506) (4,083)
TOTAL 19,111 21,080
Long-term weighted average interest
rates(2) 3.3% 3.3%
(1) Debt issued by the ESOP is guaranteed by the Company and
must be recorded as debt of the Company as discussed in Note 9.
(2) Weighted average long-term interest rates include the effects of
interest rate swaps discussed in Note 5.
Long-term debt maturities during the next five fiscal years are
as follows:
June 30 2014 2015 2016 2017 2018
Debt maturities $4,506 $3,798 $2,379 $1,085 $ 1,531
The Procter & Gamble Company fully and unconditionally
guarantees the registered debt and securities issued by its
100% finance subsidiaries.
NOTE 5
RISK MANAGEMENT ACTIVITIES AND FAIR
VALUE MEASUREMENTS
As a multinational company with diverse product offerings,
we are exposed to market risks, such as changes in interest
rates, currency exchange rates and commodity prices. We
evaluate exposures on a centralized basis to take advantage
of natural exposure correlation and netting. To the extent we
choose to manage volatility associated with the net
exposures, we enter into various financial transactions that
we account for using the applicable accounting guidance for
derivative instruments and hedging activities. These
financial transactions are governed by our policies covering
acceptable counterparty exposure, instrument types and
other hedging practices.
At inception, we formally designate and document
qualifying instruments as hedges of underlying exposures.
We formally assess, at inception and at least quarterly,
whether the financial instruments used in hedging
transactions are effective at offsetting changes in either the
fair value or cash flows of the related underlying exposures.
Fluctuations in the value of these instruments generally are
offset by changes in the value or cash flows of the
underlying exposures being hedged. This is driven by the
high degree of effectiveness between the exposure being
hedged and the hedging instrument. The ineffective portion
of a change in the fair value of a qualifying instrument is
immediately recognized in earnings. The amount of
ineffectiveness recognized was immaterial for all years
presented.
Credit Risk Management
We have counterparty credit guidelines and normally enter
into transactions with investment grade financial institutions.
Counterparty exposures are monitored daily and downgrades
in counterparty credit ratings are reviewed on a timely basis.
We have not incurred, and do not expect to incur, material
credit losses on our risk management or other financial
instruments.
Certain of the Company's financial instruments used in
hedging transactions are governed by industry standard
netting and collateral agreements with counterparties. If the
Company's credit rating were to fall below the levels
stipulated in the agreements, the counterparties could
demand either collateralization or termination of the