Proctor and Gamble 2005 Annual Report Download - page 53
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Please find page 53 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’sDiscussionandAnalysis TheProcter&GambleCompanyandSubsidiaries 49
theintegrationofWella.Accordingly,suchamountsarenotnecessarily
indicativeoftheresultsthatwouldhaveoccurrediftheacquisitionhad
occurredonthedatesindicated.
Thefollowingtablepresentstheallocationofpurchasepricerelatedto
theWellabusinessasofthedateofacquisition.
TheWellaacquisitionresultedin$5.94billioningoodwill,allofwhich
wasallocatedtotheP&GBeautyGlobalBusinessUnit.Thefollowing
tablepresentstheintangibleassetsacquired.
ChinaVenture
OnJune18,2004,wepurchasedtheremaining20%stakeinourChina
venturefromourpartner,HutchisonWhampoaChinaLtd.(Hutchison),
givingusfullownershipinouroperationsinChina.Thenetpurchase
pricewas$1.85billion,whichisthepurchasepriceof$2.00billion
netofminorityinterestandrelatedobligationsthatwereeliminated
asaresultofthetransaction.Theacquisitionwasfundedbydebt.The
fairvalueoftheincrementalindividualassetsandliabilitiesacquired
approximatescurrentbookvalue.Accordingly,thepurchasepricewas
recordedasgoodwill,whichwasallocatedtomultiplebusinesses.
NotestoConsolidatedFinancialStatements TheProcter&GambleCompanyandSubsidiaries
facilitycarriesavariableinterestrate.Interestonthefacilitywillbe
managedwithinouroverallinterestratemanagementpoliciesdescribed
inNote6.
WellaAcquisition
OnSeptember2,2003,weacquiredacontrollinginterestinWella.
Throughastockpurchaseagreementwiththemajorityshareholders
ofWellaandatenderoffermadeontheremainingshares,we
acquiredatotalof81%ofWella’soutstandingshares,including99%
ofWella’soutstandingvotingclassshares.InJune2004,theCompany
andWellaenteredintoaDominationandProfitTransferAgreement
(theDominationAgreement)pursuanttowhichweareentitledto
exercisefulloperatingcontrolandreceive100%ofthefutureearnings
ofWella.AsconsiderationfortheDominationAgreement,wewillpay
theholdersoftheremainingoutstandingsharesofWellaaguaranteed
perpetualannualdividendpayment.Alternatively,theremainingWella
shareholdersmayelecttotendertheirsharestousforanagreedprice.
Thefairvalueofthetotalguaranteedannualdividendpaymentswas
$1.11billion,whichapproximatesthecostifallremainingshareswere
tendered.BecausetheDominationAgreementtransfersoperationaland
economiccontroloftheremainingoutstandingsharestotheCompany,
ithasbeenaccountedforasanacquisitionoftheremainingshares,
withaliabilityrecordedequaltothefairvalueoftheguaranteed
payments.Becauseofthetenderfeature,theliabilityisrecordedasa
currentliabilityintheaccruedand otherliabilities lineofthe
ConsolidatedBalanceSheets.Paymentsmadeundertheguaranteed
annualdividendandtenderprovisionsareallocatedbetweeninterest
expenseandareductionoftheliability,asappropriate.Thetotal
purchasepriceforWella,includingacquisitioncosts,was$6.27billion
basedonexchangeratesattheacquisitiondates.Itwasfundedwith
acombinationofcash,debtandtheliabilityrecordedunderthe
DominationAgreement.
TheacquisitionofWella,withover$3billioninannualnetsales,gives
usaccesstotheprofessionalhaircarecategoryplusgreaterscaleand
scopeinhaircare,haircolorants,cosmeticsandfragranceproducts,
whileprovidingpotentialforsignificantsynergies.Theoperatingresults
oftheWellabusinessarereportedinourP&GBeautyGlobalBusiness
UnitbeginningSeptember2,2003.
Thefollowingtableprovidesproformaresultsofoperationsforthe
yearsendedJune30,2004and2003,asifWellahadbeenacquiredas
ofthebeginningofeachfiscalyearpresented.Proformainformation
for2005isnotprovidedastheresultsofWellaareincludedinour
resultsfortheentireyear.Theproformaresultsincludecertain
adjustments,includingadjustmentstoconvertWella’shistoricalfinancial
informationfromInternationalFinancialReportingStandards(IFRS)into
U.S.GAAP,estimatedinterestimpactsfromfundingoftheacquisition
andestimatedamortizationofdefinite-livedintangibleassets.However,
proformaresultsdonotincludeanycostsavingsorothereffectsof
Millionsofdollarsexceptpershareamountsorotherwisespecified.
YearsendedJune30
Proformaresults 2004 2003
NetSales $51,958 $46,751
NetEarnings 6,402 5,222
DilutedNetEarningsperCommonShare $2.29 $1.86
Weighted
averagelife
IntangibleAssetswith
DeterminableLives
Trademarks
$267 9
Professionalcustomerrelationships 196 15
Patentsandtechnology
10 5
Other 46 23
519
Trademarkswith
IndefiniteLives
1,152
1,671
Currentassets $1,797
Property,plantandequipment 407
Goodwill 5,941
Intangibleassets 1,671
Othernon-currentassets 157
9,973
Currentliabilities 2,099
Non-currentliabilities 1,601
3,700
6,273