Page 667 - Accounting Principles (A Business Perspective)

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Gillette manufacturing operations are conducted at 38 facilities in 19 countries, and products are distributed
through wholesalers, retailers, and agents in over 200 countries and territories.
The company's statements of cash flows for the years 2001-2003 follow. Then the relevant portion of

Management's Discussion and Analysis of the statement of cash flows is provided.
Consolidated statement of cash flows (millions of dollars)
Years ended 2003,2002, 2001 December 31 2003 2002 2001
Operating activities
Income from continuing operations $ 832 $1,248 $1,073
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision of restructuring and asset impairment 572 --- 440
Depreciation and amortization 535 464 421
Other 5 (7) (46)
Changes in assets and liabilities, excluding
effects from acquisition and divestitures:
Accounts receivable (100) (48) (442)
Inventories 149 (140) (62)
Accounts payable and accrued liabilities (45) 65 72
Other working capital items (136) 97 (104)
Other noncurrent assets and liabilities (197) (252) (142)
Funding German pension plans --- --- (252)
Net cash provided by operating activities $ 1,604 $1,427 $ 958
Investing activities
Additions to property, plant and equipment $ (793) $ (889) $ (952)
Disposals of property, plant and equipment 41 124 65
Acquisitions of businesses, less cash acquired --- --- (91)
Sale of businesses 539 --- 200
Other (1) 2 5
Net cash used in investing act $(214) $ (763) $ (773)
Financing activities
Purchase of treasury stock $ (944) $(2,021) $(1,066)
Proceeds from sale of put options 23 72 56
Proceeds from exercise of stock options and 36 149 126
purchase plans
Proceeds from long-term debt 494 1,105 500
Repayment of long-term debt (365) --- (12)
Increase (decrease) in loans payable (385) 484 708
Dividends paid (671) (626) (552)
Settlements of debt-related derivative contracts 279 42 9
Net cash used in financing activities $ (1,553) $ (795) $ (231)
Effect of exchange rate changes on cash $ (5) $ (2) $ (2)
Net cash provided by discontinued operations 130 111 45
Decrease in cash and cash equivalents $ (18) $ (22) $ (3)
Cash and cash equivalents at beginning of year 80 102 105
Cash and cash equivalents at end of year $ 62 $ 80 $ 102
Supplemental disclosure of cash paid for:
Interest $ 243 $ 126 $ 120
Income taxes $ 480 $ 457 $ 473
Noncash investing and financing activities:
Acquisition of businesses
Fair value of assets acquired $--- $--- $ 100
Cash paid --- --- 91
Liabilities assumed $ --- $ ---- $ 9
Management's discussion and analysis*
Financial condition
The Company's financial condition continued to be strong in 2003. Net debt (total debt net of associated swaps,

less cash and cash equivalents) decreased USD 82 million during 2003, despite additional spending under the
Company's share repurchase program, due to improved cash flow from operations, proceeds from the sale of the
Stationery Products business and the favorable exchange impact on foreign currency debt. Net debt at 2003
December 31, amounted to USD 4.45 billion, compared with USD 4.53 billion and USD 3.18 billion at 2002
December 31 and 2001, respectively. The market value of Gillette equity was USD 38 billion at the end of 2003,

Accounting Principles: A Business Perspective 668 A Global Text