Proctor and Gamble 2005 Annual Report Download - page 44
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Please find page 44 of the 2005 Proctor and Gamble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Management’sDiscussionandAnalysisTheProcter&GambleCompanyandSubsidiaries
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RestructuringProgram
In1999,concurrentwithareorganizationofouroperationsinto
product-basedGBUs,weinitiatedamulti-yearOrganization2005
RestructuringProgram.Totalrestructuringprogramchargeswere$538
millionaftertaxin2003.Theprogramwassubstantiallycomplete
attheendofJune2003witharemainingreserveof$335million.
Substantiallyalloftheliabilitywassettledthroughcashpaymentsby
June30,2004.
TheCompanycontinuestoundertakeprojectstomaintainacompetitive
coststructure,includingmanufacturingconsolidationsandworkforce
rationalization,aspartofitsnormaloperations.Weexpecttorecognize
between$150millionto$200millionaftertaxperyearinchargesfor
thesetypesofprojects.Spendinginboth2005and2004wasconsistent
andwithintherangedescribedabove.
MeasuresNotDefinedByU.SGAAP
Ourdiscussionoffinancialresultsincludesseveral“non-GAAP”
financialmeasures.Webelievethesemeasuresprovideourinvestors
withadditionalinformationaboutourunderlyingresultsandtrends,as
wellasinsighttosomeofthemetricsusedtoevaluatemanagement.
WhenusedinMD&A,wehaveprovidedthecomparableGAAPmeasure
inthediscussion.Thesemeasuresinclude:
OrganicSalesGrowth.Organicsalesgrowthmeasuressalesgrowth
excludingtheimpactsofacquisitions,divestituresandforeignexchange
fromyear-over-yearcomparisons.TheCompanybelievesthisprovides
investorswithamorecompleteunderstandingofunderlyingresultsand
trendsbyprovidingsalesgrowthonaconsistentbasis.
FreeCashFlow.Freecashflowisdefinedasoperatingcashflowless
capitalspending.TheCompanyviewsfreecashflowasanimportant
measurebecauseitisonefactorindeterminingtheamountofcash
availablefordividendsanddiscretionaryinvestment.Freecashflowis
alsooneofthemeasuresusedtoevaluateseniormanagementandisa
factorindeterminingtheirat-riskcompensation.
FreeCashFlowProductivity.Freecashflowproductivityisdefined
astheratiooffreecashflowtonetearnings.TheCompany’starget
istogeneratefreecashflowatorabove90%ofnetearnings.
Freecashflowproductivityisoneofthemeasuresusedtoevaluate
seniormanagement.