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TheProcter&GambleCompany 39
ThepurposeofthisdiscussionistoprovideanunderstandingofP&G’s
nancialresultsandconditionbyfocusingonchangesincertainkey
measuresfromyeartoyear.Management’sDiscussionandAnalysis
(MD&A)isorganizedinthefollowingsections:
Overview•
Summaryof2008Results•
Forward-LookingStatements•
ResultsofOperations•
SegmentResults•
FinancialCondition•
SignicantAccountingPoliciesandEstimates•
OtherInformation•
ThroughoutMD&A,werefertomeasuresusedbymanagementto
evaluateperformanceincludingunitvolumegrowth,netoutsidesales
andafter-taxprot.Wealsorefertoanumberofnancialmeasures
thatarenotdenedunderaccountingprinciplesgenerallyaccepted
intheUnitedStatesofAmerica(U.S.GAAP),includingorganicsales
growth,freecashowandfreecashowproductivity.Webelieve
thesemeasuresprovideinvestorswithimportantinformationthatis
usefulinunderstandingourbusinessresultsandtrends.Theexplana-
tionofthesemeasuresattheendofMD&Aprovidesmoredetailson
theuseandthederivationofthesemeasures.Managementalsouses
certainmarketshareandmarketconsumptionestimatestoevaluate
performancerelativetocompetitiondespitesomelimitationsonthe
availabilityandcomparabilityofshareinformation.Referencesto
marketshareandmarketconsumptioninMD&Aarebasedona
combinationofvendor-reportedconsumptionandmarketsizedata,
aswellasinternalestimates.
OnOctober1,2005,wecompletedtheacquisitionofTheGillette
Companyfor$53.4billion.TheGilletteacquisitionultimatelyresulted
inthecreationofGrooming,anewreportablesegment,primarily
consistingofGillette’sBladesandRazorsandBraunbusinesses.Results
ofGillette’sPersonalCare,OralCareandDuracellbusinesseswere
primarilysubsumedwithintheBeauty,theHealthCareandtheFabric
CareandHomeCarereportablesegments,respectively.Ourdiscussion
of2007resultswithinMD&Aareincomparisonto2006resultsthat
includedtheGillettebusinessonlyforthenine-monthperiodfrom
October1,2005(theacquisitiondate)throughJune30,2006.We
previouslyprovideddetailsregardingthechangestoourreportable
segmentstructureresultingfromtheintegrationoftheGillettebusi-
nesses(aspresentedinourForm8-KledonOctober31,2007).

P&G’sbusinessisfocusedonprovidingbrandedconsumergoods
products.Ourgoalistoprovideproductsofsuperiorqualityand
valuetoimprovethelivesoftheworld’sconsumers.Webelievethis
willresultinleadershipsales,protsandvaluecreation,allowing
employees,shareholdersandthecommunitiesinwhichweoperate
toprosper.
Ourproductsaresoldinmorethan180countriesprimarilythrough
massmerchandisers,grocerystores,membershipclubstoresand
drugstores.Wecontinuetoexpandourpresenceinotherchannels
includingdepartmentstores,salonsand“highfrequencystores,”
theneighborhoodstoreswhichservemanyconsumersindeveloping
markets.Wehaveon-the-groundoperationsinapproximately80
countries.
Ourmarketenvironmentishighlycompetitive,withglobal,regional
andlocalcompetitors.Inmanyofthemarketsandindustrysegments
inwhichwesellourproducts,wecompeteagainstotherbranded
productsaswellasretailers’private-labelbrands.Additionally,many
oftheproductsegmentsinwhichwecompetearedifferentiated
byprice(referredtoaspremium,mid-tierandvalue-tierproducts).
Generallyspeaking,wecompetewithpremiumandmid-tierproducts
andarewellpositionedintheindustrysegmentsandmarketsinwhich
weoperate—oftenholdingaleadershiporsignicantmarketshare
position.

OurorganizationalstructureiscomprisedofthreeGlobalBusiness
Units(GBUs)andaGlobalOperationsgroup.TheGlobalOperations
groupconsistsoftheMarketDevelopmentOrganization(MDO)and
GlobalBusinessServices(GBS).

OurthreeGBUsareBeauty,HealthandWell-Being,andHousehold
Care.TheprimaryresponsibilityoftheGBUsistodeveloptheoverall
strategyforourbrands.Theyidentifycommonconsumerneeds,
developnewproductinnovationsandupgrades,andbuildourbrands
througheffectivecommercialinnovations,marketingandsales.
UnderU.S.GAAP,thebusinessunitscomprisingtheGBUsareaggre-
gatedintosixreportablesegments:Beauty;Grooming;HealthCare;
Snacks,CoffeeandPetCare;FabricCareandHomeCare;andBaby
CareandFamilyCare.Thefollowingprovidesadditionaldetailon
ourGBUsandreportablesegmentsandthekeyproductandbrand
compositionwithineach.
