Page 641 - Accounting Principles (A Business Perspective)

This book is licensed under a Creative Commons Attribution 3.0 License

During 2010, long-term debt decreased from USD 3,634.8 to USD 3,476.6. The Company continued to focus on
enhancing its debt portfolio, resulting in the refinancing of a substantial portion of commercial paper and other
short-term borrowings to longer term instruments. In 2010, the Company entered into a USD 595.6 loan agreement

and obtained a USD 487.2 term loan with foreign commercial banks.
As of 2010 December 31, USD 410.3 of domestic and foreign commercial paper was outstanding. These
borrowings carry a Standard & Poor's rating of A1. The commercial paper as well as other short-term borrowings
are classified as long-term debt at 2010 December 31, as it is the Company's intent and ability to refinance such
obligations on a long-term basis. The Company has additional sources of liquidity available in the form of lines of
credit maintained with various banks. At 2010 December 31, such unused lines of credit amounted to USD 2,142.8.
The ratio of net debt to total capitalization (defined as the ratio of the book values of debt less cash and

marketable securities ["net debt"] to net debt plus equity) decreased to 58 per cent during 2010 from 64 per cent in
2009. The decrease is primarily the result of higher Company earnings in 2010 as well as effective working capital
management and lower acquisitions than in prior years. The ratio of market debt to market capitalization (defined
as above using fair market values) decreased to 17 per cent during 2010 from 23 per cent in 2009. The Company
primarily uses market value analyses to evaluate its optimal capitalization.
Capital expenditures were 5.2 per cent of net sales in both 2010 and 2009 and were 5.3 per cent of net sales in
2008. Capital spending continues to be focused primarily on projects that yield high aftertax returns, thereby
reducing the Company's cost structure. Capital expenditures for 2008 are expected to continue at the current rate
of approximately 5 per cent of net sales.

Other investing activities in 2010, 2009 and 2008 included strategic acquisitions and equity investments
worldwide. The aggregate purchase price of all 2010, 2009 and 2008 acquisitions was USD 46.2, USD 1,586.3 and
USD 179.8, respectively.
During 2008, the Company repurchased a significant amount of common shares in the open market and private
transactions to provide for employee benefit plans and to maintain its targeted capital structure. Aggregate
repurchases for the year approximated 6.9 million shares with a total purchase price of USD 493.3.

Accounting Principles: A Business Perspective 642 A Global Text