Proctor and Gamble 2008 Annual Report Download - page 41
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Please find page 41 of the 2008 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.TheProcter&GambleCompany 39
ThepurposeofthisdiscussionistoprovideanunderstandingofP&G’s
nancialresultsandconditionbyfocusingonchangesincertainkey
measuresfromyeartoyear.Management’sDiscussionandAnalysis
(MD&A)isorganizedinthefollowingsections:
Overview•
Summaryof2008Results•
Forward-LookingStatements•
ResultsofOperations•
SegmentResults•
FinancialCondition•
SignicantAccountingPoliciesandEstimates•
OtherInformation•
ThroughoutMD&A,werefertomeasuresusedbymanagementto
evaluateperformanceincludingunitvolumegrowth,netoutsidesales
andafter-taxprot.Wealsorefertoanumberofnancialmeasures
thatarenotdenedunderaccountingprinciplesgenerallyaccepted
intheUnitedStatesofAmerica(U.S.GAAP),includingorganicsales
growth,freecashowandfreecashowproductivity.Webelieve
thesemeasuresprovideinvestorswithimportantinformationthatis
usefulinunderstandingourbusinessresultsandtrends.Theexplana-
tionofthesemeasuresattheendofMD&Aprovidesmoredetailson
theuseandthederivationofthesemeasures.Managementalsouses
certainmarketshareandmarketconsumptionestimatestoevaluate
performancerelativetocompetitiondespitesomelimitationsonthe
availabilityandcomparabilityofshareinformation.Referencesto
marketshareandmarketconsumptioninMD&Aarebasedona
combinationofvendor-reportedconsumptionandmarketsizedata,
aswellasinternalestimates.
OnOctober1,2005,wecompletedtheacquisitionofTheGillette
Companyfor$53.4billion.TheGilletteacquisitionultimatelyresulted
inthecreationofGrooming,anewreportablesegment,primarily
consistingofGillette’sBladesandRazorsandBraunbusinesses.Results
ofGillette’sPersonalCare,OralCareandDuracellbusinesseswere
primarilysubsumedwithintheBeauty,theHealthCareandtheFabric
CareandHomeCarereportablesegments,respectively.Ourdiscussion
of2007resultswithinMD&Aareincomparisonto2006resultsthat
includedtheGillettebusinessonlyforthenine-monthperiodfrom
October1,2005(theacquisitiondate)throughJune30,2006.We
previouslyprovideddetailsregardingthechangestoourreportable
segmentstructureresultingfromtheintegrationoftheGillettebusi-
nesses(aspresentedinourForm8-KledonOctober31,2007).
P&G’sbusinessisfocusedonprovidingbrandedconsumergoods
products.Ourgoalistoprovideproductsofsuperiorqualityand
valuetoimprovethelivesoftheworld’sconsumers.Webelievethis
willresultinleadershipsales,protsandvaluecreation,allowing
employees,shareholdersandthecommunitiesinwhichweoperate
toprosper.
Ourproductsaresoldinmorethan180countriesprimarilythrough
massmerchandisers,grocerystores,membershipclubstoresand
drugstores.Wecontinuetoexpandourpresenceinotherchannels
includingdepartmentstores,salonsand“highfrequencystores,”
theneighborhoodstoreswhichservemanyconsumersindeveloping
markets.Wehaveon-the-groundoperationsinapproximately80
countries.
Ourmarketenvironmentishighlycompetitive,withglobal,regional
andlocalcompetitors.Inmanyofthemarketsandindustrysegments
inwhichwesellourproducts,wecompeteagainstotherbranded
productsaswellasretailers’private-labelbrands.Additionally,many
oftheproductsegmentsinwhichwecompetearedifferentiated
byprice(referredtoaspremium,mid-tierandvalue-tierproducts).
Generallyspeaking,wecompetewithpremiumandmid-tierproducts
andarewellpositionedintheindustrysegmentsandmarketsinwhich
weoperate—oftenholdingaleadershiporsignicantmarketshare
position.
OurorganizationalstructureiscomprisedofthreeGlobalBusiness
Units(GBUs)andaGlobalOperationsgroup.TheGlobalOperations
groupconsistsoftheMarketDevelopmentOrganization(MDO)and
GlobalBusinessServices(GBS).
OurthreeGBUsareBeauty,HealthandWell-Being,andHousehold
Care.TheprimaryresponsibilityoftheGBUsistodeveloptheoverall
strategyforourbrands.Theyidentifycommonconsumerneeds,
developnewproductinnovationsandupgrades,andbuildourbrands
througheffectivecommercialinnovations,marketingandsales.
UnderU.S.GAAP,thebusinessunitscomprisingtheGBUsareaggre-
gatedintosixreportablesegments:Beauty;Grooming;HealthCare;
Snacks,CoffeeandPetCare;FabricCareandHomeCare;andBaby
CareandFamilyCare.Thefollowingprovidesadditionaldetailon
ourGBUsandreportablesegmentsandthekeyproductandbrand
compositionwithineach.