Proctor and Gamble 2007 Annual Report Download - page 59

Millions of dollars except per share amounts or as otherwise specied.
Notes to Consolidated Financial Statements The Procter & Gamble Company 57
Pro forma results; Years ended June 30 2006 2005
Net sales $71,005 $67,920
Net earnings 8,871 8,522
Diluted net earnings per common share $ 2.51 $ 2.29
During the three months ended September 30, 2006, we completed
the allocation of the purchase price to the individual assets acquired
and liabilities assumed. To assist management in the allocation, we
engaged valuation specialists to prepare independent appraisals. The
following table presents the completed allocation of purchase price
for the Gillette business as of the date of the acquisition.
Current assets $ 5,681
Property, plant and equipment 3,655
Goodwill 35,298
Intangible assets 29,707
Other noncurrent assets 382
 74,723
Current liabilities 5,346
Noncurrent liabilities 15,951
 21,297
 53,426
The Gillette acquisition resulted in $35.3 billion in goodwill, allocated
primarily to the segments comprising the Gillette businesses (Blades
and Razors, Duracell and Braun, Health Care and Beauty). A portion
of the goodwill has also been allocated to the other segments on the
basis that certain cost synergies will benet these businesses.
The purchase price allocation to the identiable intangible assets
included in these nancial statements is as follows:
Weighted
average life


Brands $ 1,627 20
Patents and technology 2,716 17
Customer relationships 1,436 27
 23,928 Indefinite
 29,707
The majority of the intangible asset valuation relates to brands.
Our assessment as to brands that have an indenite life and those
that have a determinable life was based on a number of factors,
including the competitive environment, market share, brand history,
product life cycles, operating plan and macroeconomic environment
of the countries in which the brands are sold. The indenite-lived brands
include Gillette, Venus, Duracell, Oral-B and Braun. The determinable-
lived brands include certain brand sub-names, such as Mach3 and
Sensor in the blades and razors business, and other regional or local
brands. The determinable-lived brands have asset lives ranging from
10 to 40 years. The patents and technology intangibles are concentrated
in the blades and razors and oral care businesses and have asset
lives ranging from 5 to 20 years. The customer relationship intangible
asset useful lives ranging from 20 to 30 years reect the very low
historical and projected customer attrition rates among Gillette’s
major retailer and distributor customers.
We also completed our analysis of integration plans, pursuant to
which the Company is incurring costs primarily related to the
elimination of selling, general and administrative overlap between the
two companies in areas like Global Business Services, corporate staff
and go-to-market support, as well as redundant manufacturing
capacity. We recognized an assumed liability for Gillette exit costs of
$1.2 billion, including $854 in separations related to approximately
5,500 people, $55 in employee relocation costs and $320 in other
exit costs. As of June 30, 2007, the remaining liability was $608. Total
integration plan charges against the assumed liability were $438 and
$204 for the years ended June 30, 2007 and 2006, respectively. We
expect such activities to be substantially complete by June 30, 2008.
Other minor business purchases and intangible asset acquisitions
totaled $540, $395 and $572 in 2007, 2006 and 2005, respectively.