Avon 2008 Annual Report Download - page 41

Net Cash Used by Financing Activities
Net cash used by financing activities during 2008 was $455.6
lower than during 2007, primarily due to lower repurchases of
common stock during 2008.
Net cash used by financing activities in 2007 was $106.7 higher
than in 2006, mainly driven by higher repurchases of common
stock during 2007, partially offset by higher short-term borrow-
ings and higher proceeds from stock option exercises during
2007.
We purchased approximately 4.6 million shares of Avon com-
mon stock for $172.1 during 2008, as compared to approx-
imately 17.3 million shares of Avon common stock for $666.8
during 2007 and approximately 11.6 million shares of Avon
common stock for $355.1 during 2006, under our previously
announced share repurchase programs and through acquisition
of stock from employees in connection with tax payments upon
vesting of restricted stock units. In October 2007, the Board of
Directors authorized the repurchase of $2,000.0 of our common
stock over a five-year period, which began in December 2007.
We increased our quarterly dividend payments to $.20 per share
in 2008 from $.185 per share in 2007. In February 2009, our
Board approved an increase in the quarterly dividend to
$.21 per share.
Debt and Contractual Financial Obligations and Commitments
At December 31, 2008, our debt and contractual financial obligations and commitments by due dates were as follows:
2009 2010 2011 2012 2013
2014 and
Beyond Total
Short-term debt $1,027.1 $ – $ – $ – $ – $ – $1,027.1
Long-term debt – – 500.0 – 375.0 500.0 1,375.0
Capital lease obligations 4.3 4.3 2.8 2.5 0.8 – 14.7
Total debt 1,031.4 4.3 502.8 2.5 375.8 500.0 2,416.8
Debt-related interest 90.7 68.9 55.8 42.8 33.8 63.0 355.0
Total debt-related 1,122.1 73.2 558.6 45.3 409.6 563.0 2,771.8
Operating leases 87.9 61.6 42.7 21.8 17.0 45.6 276.6
Purchase obligations 106.3 55.3 25.8 17.7 16.1 49.9 271.1
Benefit obligations(1) 77.4 13.9 11.6 10.4 11.3 50.4 175.0
Total debt and contractual
financial obligations and
commitments(2) $1,393.7 $204.0 $638.7 $95.2 $454.0 $708.9 $3,494.5
(1) Amounts represent expected future benefit payments for our unfunded pension and postretirement benefit plans, as well as expected contributions for 2009
to our funded pension benefit plans.
(2) The amount of debt and contractual financial obligations and commitments excludes amounts due pursuant to derivative transactions. The table also excludes
information on recurring purchases of inventory as these purchase orders are non-binding, are generally consistent from year to year, and are short-term in
nature. The table does not include any reserves for income taxes under FIN 48 because we are unable to reasonably predict the ultimate amount or timing of
settlement of our reserves for income taxes. At December 31, 2008, our reserves for income taxes, including interest and penalties, totaled $118.3.
See Note 4, Debt and Other Financing, and Note 13, Leases and Commitments, for further information on our debt and contractual financial
obligations and commitments. Additionally, as disclosed in Note 14, Restructuring Initiatives, we have a remaining liability of $93.9 at
December 31, 2008, associated with the restructuring charges recorded to date, and we also expect to record additional restructuring
charges of $21.9 in future periods to implement the actions approved to date. The significant majority of these liabilities will require cash
payments during 2009.
Off Balance Sheet Arrangements
At December 31, 2008, we had no material off-balance-sheet
arrangements.
Capital Resources
We have a five-year, $1,000.0 revolving credit and competitive
advance facility (the “credit facility”), which expires in January
2011. The credit facility may be used for general corporate
purposes. The interest rate on borrowings under this credit
facility is based on LIBOR or on the higher of prime or
1
⁄ 2 % plus
the federal funds rate. The credit facility has an annual fee of
$.7, payable quarterly, based on our current credit ratings. The
credit facility contains various covenants, including a financial
covenant which requires Avon’s interest coverage ratio
A V O N 2008 35