Proctor and Gamble 2008 Annual Report Download - page 76

Amountsinmillionsofdollarsexceptpershareamountsorasotherwisespecied.
74 TheProcter&GambleCompany NotestoConsolidatedFinancialStatements

Wearesubjecttovariouslegalproceedingsandclaimsarisingoutof
ourbusinesswhichcoverawiderangeofmatterssuchasgovernmental
regulations,antitrustandtraderegulations,productliability,patent
andtrademarkmatters,incometaxesandotheractions.
Recently,theCompanybecamesubjecttoavarietyofinvestigations
intopotentialcompetitionlawviolationsintheEuropeanUnion,
includinginvestigationsinitiatedinthefourthquarterofscal2008by
theEuropeanCommissionwiththeassistanceofthenationalauthorities
fromavarietyofcountries.Webelievethesemattersinvolveanumber
ofotherconsumerproductscompaniesand/orretailcustomers.The
Company’spolicyistocomplywithalllawsandregulations,including
allantitrustandcompetitionlaws.Competitionandantitrustlaw
inquiriesoftencontinueforseveralyearsand,ifviolationsarefound,
canresultinsubstantialnes.Atthispoint,nosignicantformalclaims
havebeenmadeagainsttheCompanyoranyofoursubsidiariesin
connectionwithanyoftheaboveinquiries.Wecannotatthistime
predictthenalnancialimpactofthesecompetitionlawissues.
However,theultimateresolutionofthesematterscouldresultinnes
orothercoststhatcouldmateriallyimpactfutureresults.Asthese
mattersevolvewewill,ifnecessary,recognizetheappropriatereserves.
Withrespecttootherlitigationandclaims,whileconsiderableuncer-
taintyexists,intheopinionofmanagementandourcounsel,the
ultimateresolutionofthevariouslawsuitsandclaimswillnotmaterially
affectournancialposition,resultsofoperationsorcashows.
Wearealsosubjecttocontingenciespursuanttoenvironmentallaws
andregulationsthatinthefuturemayrequireustotakeactionto
correcttheeffectsontheenvironmentofpriormanufacturingand
wastedisposalpractices.Basedoncurrentlyavailableinformation,we
donotbelievetheultimateresolutionofenvironmentalremediation
willhaveamaterialadverseeffectonournancialposition,resultsof
operationsorcashows.
NOTE 12

EffectiveJuly1,2007,wemadeanumberofchangestoourorgani-
zationalstructureandcertainofourkeyleadershippositions.These
resultedinchangestoourGlobalBusinessUnits(GBU)andreporting
segmentstructure.Thefollowingdiscussionandsegmentinformation
reecttheorganizationalchangesforallperiodspresented.Weare
organizedunderthreeGlobalBusinessUnitsasfollows:
TheBeautyGBUincludestheBeautyandtheGroomingbusinesses.•
TheBeautybusinessiscomprisedofcosmetics,deodorants,prestige
fragrances,haircare,personalcleansingandskincare.TheGrooming
businessincludesbladesandrazors,electrichairremovaldevices,
faceandshaveproductsandhomeappliances.
TheHealthandWell-BeingGBUincludestheHealthCareand•
theSnacks,CoffeeandPetCarebusinesses.TheHealthCarebusi-
nessincludesfemininecare,oralcare,personalhealthcareand
pharmaceuticals.TheSnacks,CoffeeandPetCarebusinessincludes
coffee,petfoodandsnacks.
TheHouseholdCareGBUincludestheFabricCareandHomeCareas•
wellastheBabyCareandFamilyCarebusinesses.TheFabricCareand
HomeCarebusinessincludesaircare,batteries,dishcare,fabriccare
andsurfacecare.TheBabyCareandFamilyCarebusinessincludes
babywipes,bathtissue,diapers,facialtissueandpapertowels.
UnderU.S.GAAP,wehavesixreportablesegments:Beauty;Grooming;
HealthCare;Snacks,CoffeeandPetCare;FabricCareandHomeCare;
andBabyCareandFamilyCare.Theaccountingpoliciesofthebusi-
nessesaregenerallythesameasthosedescribedinNote1.Differences
betweenthesepoliciesandU.S.GAAPprimarilyreect:incometaxes,
whicharereectedinthebusinessesusingapplicableblendedstatutory
rates;therecordingofxedassetsathistoricalexchangeratesincertain
high-inationeconomies;andthetreatmentofcertainunconsolidated
investees.Certainunconsolidatedinvesteesaremanagedasintegral
partsofourbusinessunitsformanagementreportingpurposes.
Accordingly,thesepartiallyownedoperationsarereectedasconsoli-
datedsubsidiariesinsegmentresults,with100%recognitionofthe
individualincomestatementlineitemsthroughbefore-taxearnings.
EliminationstoadjusttheselineitemstoU.S.GAAPareincludedin
Corporate.Indeterminingafter-taxearningsforthebusinesses,we
eliminatetheshareofearningsapplicabletootherownershipinterests,
inamannersimilartominorityinterest,andapplystatutorytaxrates.
Adjustmentstoarriveatoureffectivetaxratearealsoincludedin
Corporate.
Corporateincludescertainoperatingandnon-operatingactivitiesthat
arenotreectedintheoperatingresultsusedinternallytomeasureand
evaluatethebusinesses,aswellaseliminationstoadjustmanagement
reportingprinciplestoU.S.GAAP.OperatingactivitiesinCorporate
includetheresultsofincidentalbusinessesmanagedatthecorporate
levelalongwiththeeliminationofindividualrevenuesandexpenses
generatedbycertainunconsolidatedinvesteesdiscussedinthepreced-
ingparagraphoverwhichweexertsignicantinuence,butdonot
control.Operatingelementsalsocomprisecertainemployeebenet
costs,thecostsofcertainrestructuring-typeactivitiestomaintaina
competitivecoststructureincludingmanufacturingandworkforce
rationalizationandothergeneralcorporateitems.Thenon-operating
elementsprimarilyincludeinterestexpense,divestituregainsand
interestandinvestingincome.Inaddition,Corporateincludesthe
historicalresultsofcertaindivestedbusinesses,includingcertainGillette
brandsthatweredivestedin2006asrequiredbytheregulatory
authoritiesinrelationtotheGilletteacquisition.Corporateassets
primarilyincludecash,investmentsecuritiesandallgoodwill.
WehadnetsalesintheU.S.of$33.0billion,$31.9billionand
$29.5billionfortheyearsendedJune30,2008,2007and2006,
respectively.AssetsintheU.S.totaled$73.8billionand$73.5billion
asofJune30,2008and2007,respectively.
Ourlargestcustomer,Wal-MartStores,Inc.anditsafliates,accounted
for15%ofconsolidatednetsalesin2008,2007and2006.