Proctor and Gamble 2003 Annual Report Download - page 27

Financial Review
reporting, with 100% recognition of the income statement and sepa-
rate elimination of minority interest. Entries to eliminate the individual
revenue and expense line items, adjusting the method of accounting to
the equity method as required by accounting principles generally
accepted in the United States of America (U.S. GAAP), are included
in Corporate. Taxes are reflected in the business segments at estimated
local statutory tax rates. The effects of this convention are also elimi-
nated in Corporate to adjust management reporting conventions to
U.S. GAAP.
Fabric and Home Care
Fabric and Home Care delivered balanced top and bottom line growth
behind a program of new product launches and cost reductions. Volume
growth of 9% was balanced across both fabric care and home care as
well as across regions, with particular strength in developing markets.
Net sales increased 8% to $12.56 billion. Foreign exchange contributed
a positive impact of 1% to overall sales, driven primarily by the strong
Euro. Sales were negatively impacted by 1% due to pricing investments
to deliver improved in-store presence and increased merchandising, pri-
marily in North America and Western Europe. Sales were also reduced
by 1% from mix due to growth of lower-priced products, including rap-
id growth in developing markets and broadening of the mid-tier portfo-
lio of brands in major geographies, including the launches of Mr. Proper
in Western Europe and Bold in Japan.
Segment Results
The following pages provide perspective on the Company’s business
segments. To reflect management and business changes, the Company
realigned its reporting segments. Effective July 1, 2002, the feminine
care business is included in the Beauty Care segment and the former
Baby, Feminine and Family Care segment was renamed the Baby and
Family Care segment. Prior year operating information has been restated
to conform to this change. In addition, the Food and Beverage segment
was renamed Snacks and Beverages to reflect its remaining businesses.
The historical results for the elements of the former Food and Beverage
segment that have been divested or spun off (i.e., Jif, Crisco and com-
mercial shortening and oils) are now reflected in Corporate.
Product-based segment results exclude items that are not included in
measuring business performance for management reporting purposes,
most notably certain financing, investing, employee benefit and restruc-
turing costs.
Investments in companies over which the Company exerts significant
influence, but does not control the financial and operating decisions,
are managed as integral parts of the Company’s business units. Consis-
tent with internal management reporting, these investments are
accounted for as if they were consolidated subsidiaries in segment
The Procter & Gamble Company and Subsidiaries 25
Percentage Change in Net Sales vs. Prior Year
Volume
9%
15%
7%
18%
-2%
8%
Pricing
-1%
-2%
-3%
-2%
-2%
-2%
Mix/Other
-1%
-2%
1%
-2%
1%
–%
Total
Net Sales
8%
14%
8%
16%
–%
8%
Fabric and Home Care
Beauty Care
Baby and Family Care
Health Care
Snacks and Beverages
Total Company
Foreign
Exchange
1%
3%
3%
2%
3%
2%
2003 Net Sales by Business Segment
29%
23%
7%
13%
28%
2003 Net Earnings by Business Segment
35%
5%
15%
12%
33%
Fabric and Home Care
Beauty Care
Baby and Family Care
Health Care
Snacks and Beverages
Fabric and Home Care
Beauty Care
Baby and Family Care
Health Care
Snacks and Beverages
(1)
(1) Excludes net sales and net earnings held in Corporate
(1)