Proctor and Gamble 1999 Annual Report Download

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obc5
ANNUAL REPORT
EMBRACING THE FUTURE
’99

Table of contents

  • Page 1
    EMBRACING THE FUTURE ANNUAL REPORT '99 obc5

  • Page 2
    ...Russia, Brazil and many parts of Asia. • Net earnings for the fiscal year were $3.76 billion, including charges of $385 million after tax for the Fiscal 1999 costs of Organization 2005, our major initiative to accelerate growth through far-reaching changes in structure, work processes and culture...

  • Page 3
    ... Amounts 1999 1998 % Change Net Sales Operating Income Core Operating Income* Net Earnings Core Net Earnings* Per Common Share Basic Net Earnings Core Basic Net Earnings* Diluted Net Earnings Core Diluted Net Earnings* Dividends *Excludes Organization 2005 Program Costs $38,125 6,253 6,734 3,763...

  • Page 4
    ... active women online. The marketing focus for Noxzema Skin Fitness brings consumers to the Noxzema Skin Fitness Web site for skin fitness tips and product samples. Using the Internet as a significant part of the brand's introduction helped get this product to market in less than 12 months. This new...

  • Page 5
    ...the stain removal formula built on cleaning agents from laundry and dish care, our work with Bounce brought understanding of heat-activated systems in dryers, and our expertise in packaging created the dryer bag. www.dryel.com BREADTH OF BUSINESSES PROVIDES ADVANTAGE The first key to faster growth...

  • Page 6
    ... DISPOSABLE MOP CLEANERS BABY WIPES DEODORANTS FACIAL TISSUE DISPOSABLE BRIEFS SOAP FLAKES CELLULOSE SOAP FEMININE PRODUCTS TOILET TISSUE SHORTENING LIQUID SOAP SHA CONDI LOTION DISPOSABLE DIAPERS PEANUT BUTTER VEGETABLE OIL COSMETICS DENTAL ADHESIV PAPER TOWELS FABRIC NAPKINS COFFEE ORAL...

  • Page 7
    ... of FOOD SANITIZER CLEANSERS LIQUID CLEANERS "DRY CLEAN ONLY" FABRIC CARE vegetable oil products like Crisco and Crisco Oil. Crushing seeds to produce oil gave us expertise in plant fibers, DRY DISHWASHING DETERGENT which led to insights into paper and SOAP POWDERS DETERGENTS FABRIC REFRESHER...

  • Page 8
    ... global investor in research and development. We invest to drive clear product superiority in our core businesses and to acquire new technologies and fund entrepreneurial programs that create big, discontinuous product innovation. Ten years ago, our investment in R&D was 2.9% of net sales. Today...

  • Page 9
    ... Rash Guard makes a real difference. P&G introduced Pampers Rash Guard in North America in March and in Puerto Rico in August. www.pampers.com Today, we have tapped only a portion of our innovation capacity. With Organization 2005, we are making changes to unleash this capability and to capitalize...

  • Page 10
    ... costs. • Leaner Corporate Functions will focus single-mindedly on cutting- edge new knowledge in every area of our business. • New reward systems put more of senior management's pay at risk, and better align compensation with our expectations for growth and increased shareholder return. The...

  • Page 11
    ... that Organization 2005 will help us deliver - consistently. removes odors from clothes and household fabrics - was a product with something to prove. Consumers who tried it said Febreze was a big idea. But conventional wisdom said it was a niche product. Febreze had trouble meeting early sales...

  • Page 12
    ... almost 36 years of service, John Pepper retires September 1, 1999, as Chairman of the Board of Procter & Gamble to become Chairman of the Executive Committee. He led P&G's expansion into emerging markets, was instrumental in the introduction of dozens of innovative new products and, with Durk Jager...

  • Page 13
    ...ARIEL BOUNCE CASCADE CHEER DAWN DOWNY FAIRY JOY LENOR MR. CLEAN TIDE FEMININE PROTECTION ALWAYS ALWAYS ALLDAYS LINES FEM PRO TAMPAX WHISPER HEALTH CARE ASACOL ACTONEL BLEND-A-MED CREST DIDRONEL MACROBID METAMUCIL NYQUIL/DAYQUIL PEPTO-BISMOL SCOPE VICKS FORMULA 44 VICKS VAPORUB FOOD & BEVERAGE CRISCO...

  • Page 14
    ... in the way we operate. As the cover of this report says, we are "Embracing the Future" today at Procter & Gamble - more aggressively than ever in our history. We are changing the way we're structured to create many more new brands and categories, and to expand our best ideas globally far faster. We...

  • Page 15
    ... us benefiting from "win-win" relationships with our retail P&G: SERVING THE WORLD'S CONSUMERS customers. • I see us capitalizing on the revolutionary power of information technology to share knowledge, design products, provide service to consumers and create whole new businesses. POSITIONED...

  • Page 16

  • Page 17

  • Page 18
    ... to increased research spending, primarily in the paper and health care businesses, and increased spending for new initiatives. Organization 2005 costs increased marketing, research and administrative expenses by $38 million, related primarily to employee separation expenses. Operating income grew...

  • Page 19
    ... in paper businesses and included Tambrands, Inc., the Loreto y Peña paper company in Mexico and the Ssangyong Paper Company in Korea. The Company also increased ownership of various joint ventures in Asia and Latin America in 1998. The Company continued to divest certain non-strategic brands in...

  • Page 20
    ... asset write-downs and costs related to the Company's Organization 2005 and simplification and standardization programs. NORTH AMERICA REGION '97 '98 '99 1999 NET SALES BY GEOGRAPHIC REGION Billions of Dollars North America Europe, Middle East and Africa Asia Latin America Corporate & Other...

  • Page 21
    ... to focus on developing even more productive relationships with customers. Middle East, Africa and General Export, which includes the region's snack business, increased unit volume 9% over the prior year base period, which generated a double-digit increase over 1997. Increased snack sales across the...

  • Page 22
    ..., a paper business in Korea, and increased ownership of a joint venture in China. Japan also demonstrated growth, behind innovative products and increased share. Both Japan and China increased share in core categories. Price recovery strategies, especially in Korea and the ASEAN countries grew sales...

  • Page 23
    ... snacks supplemented the prior year acquisition of Loreto y Peña, a paper company in Mexico, and the buyout of a paper joint venture in the Southern Cone. Laundry results reflect the strengthening of the base business in Mexico and the launch of Ariel in the Southern Cone. In the prior year, sales...

  • Page 24
    ... normal course of business. Corporate policy prescribes the range of allowable hedging activity. The Company primarily utilizes forward exchange contracts and purchased options with maturities of less than eighteen months. In addition, the Company enters into certain foreign currency swaps to hedge...

  • Page 25
    ... the Company's global essential business services, such as accounting, employee benefits management, order management and information technology services, to a common Global Business Services organization. The intention to redesign the Company's management and operating structures was first...

  • Page 26
    ...are included in cost of products sold, while those for administrative employees are reported in marketing, research and administrative expenses. Asset write-downs relate primarily to manufacturing assets that, based on a shift in global strategy enabled by Organization 2005, as well as demand trends...

  • Page 27
    ... of fiscal 2000. FORWARD-LOOKING STATEMENT The Company has made and will make certain forward-looking statements in the Annual Report and in other contexts relating to volume growth, increases in market shares, Year 2000 compliance, Organization 2005, financial goals and cost reduction, among...

  • Page 28
    ... of Introducing a tasteful new way to reduce your risk of heart disease. a e h Now, the psyllium fiber found in Metamucil® does more than treat...favorite juice. Try Metamucil. Good for you. Good for your heart. rt. © 1999 Procter & Gamble GJAN98097 Use only as directed. www.metamucil.com

  • Page 29
    www.dryel.com ©1999 Procter & Gamble

  • Page 30
    ..., NC "I've tried your new lipsticks and mascara and I think that they are wonderful. Thank you for such beautiful cosmetics." DIANNE, COLUMBIA, SC "I've had on the foundation, blusher, powder and lipstick all day. My face has never felt fresher." MARY ANN, KNOXVILLE, TN "I've recently purchased...

  • Page 31
    ... 5,249 1,834 $ 3,415 Basic Net Earnings Per Common Share Diluted Net Earnings Per Common Share Dividends Per Common Share See accompanying Notes to Consolidated Financial Statements. $ 2.75 $ 2.59 $ 1.14 $ 2.74 $ 2.56 $ 1.01 $ 2.43 $ 2.28 $ .90 The Procter & Gamble Company and Subsidiaries 27

  • Page 32
    ...SHEETS June 30 Amounts in Millions Except Per Share Amounts ASSETS Current Assets Cash and cash equivalents Investment securities Accounts receivable Inventories... accompanying Notes to Consolidated Financial Statements. 1,307 $32,113 1,198 $30,966 28 The Procter & Gamble Company and Subsidiaries

  • Page 33
    ...: 1999 - 1,319.8 and 1998 - 1,337.4) Additional paid-in capital Reserve for Employee Stock Ownership Plan debt retirement Accumulated other comprehensive income Retained earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity 1,320 1,337 (1,552) (1,606) 10,778 12,058 $32,113...

  • Page 34
    ... comprehensive income Dividends to shareholders: Common Preferred, net of tax benefit Treasury purchases Employee plan issuances Preferred stock conversions ESOP... $(1,606) $10,778 $12,058 See accompanying Notes to Consolidated Financial Statements. 30 The Procter & Gamble Company and Subsidiaries

  • Page 35
    ...sales Acquisitions Change in investment securities Total Investing Activities Financing Activities Dividends to shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Proceeds from stock options Treasury purchases Total Financing Activities Effect of Exchange...

  • Page 36
    ... Company's "Worldwide Business Conduct Manual" sets forth management's commitment to conduct its business affairs with the highest ethical standards. Deloitte & Touche LLP, independent public accountants, have audited and reported on the Company's consolidated financial statements. Their audits were...

  • Page 37
    ... and operating decisions, are accounted for by the equity method. These investments are managed as integral parts of the Company's segment operations, and the Company's share of their results is included in net sales for the related segments. Use of Estimates: Preparation of financial statements in...

  • Page 38
    ... streamline essential business services such as accounting, employee benefits, order management and information technology services, by creating a Global Business Services organization. In order to implement the program's structural changes and achieve the benefits of faster growth, the Company also...

  • Page 39
    ... global leading brand, Tampax, for approximately $1,844 in cash. Other acquisitions in 1998 totaled $1,425 and included the acquisition of paper businesses and increased ownership in various ventures in Latin America and Asia. The 1998 acquisitions, all of which were accounted for using the purchase...

  • Page 40
    ... normal course of business. Corporate policy prescribes the range of allowable hedging activity. The Company primarily utilizes forward exchange contracts and purchased options with maturities of less than eighteen months. In addition, the Company enters into certain foreign currency swaps to hedge...

  • Page 41
    ...by local governments. Pursuant to FASB Statement No. 123, "Accounting for Stock-Based Compensation," the Company has elected to account for its employee stock option plans under APB Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, compensation cost has not been recognized for...

  • Page 42
    ... benefits to its employees. Defined Contribution Retirement Plans Within the U.S., the most significant retirement benefit is the defined contribution profit sharing plan described in Note 8. Other Retiree Benefits The Company also provides certain health care and life insurance benefits...

  • Page 43
    ... Except Per Share Amounts service requirements. Generally, the health care plans require contributions from retirees and pay a stated percentage of expenses, reduced by deductibles and other coverages. Retiree contributions change annually in line with health care cost trends. These benefits are...

  • Page 44
    ... health care cost trend rates would have the following effects: One Percentage Point Increase Effect on total of service and interest cost components Effect on postretirement benefit obligation One Percentage Point Decrease U.S. statutory rate of 35.0%. Excluding the Organization 2005 program...

  • Page 45
    ... 1999, the Company was organized and managed on a geographical basis, with four operating segments: North America, which includes the United States and Canada; Europe, Middle East and Africa; Asia; and Latin America. The Corporate & Other segment includes certain financing and employee benefit costs...

  • Page 46
    ...Net Sales Operating Income Net Earnings Net Earnings Margin Basic Net Earnings Per Common Share Diluted Net Earnings Per Common Share Dividends Per Common Share Research and Development Expense Advertising Expense Total Assets Capital Expenditures Long-Term Debt Shareholders' Equity *Operating 1999...

  • Page 47
    ... come into contact with, like a sponge that harbors germs from previous uses. Bounty is tough enough to handle the messes that a regular towel can't. And... messes, but can redeposit germs from previous uses. Ordinary paper towels can't handle tough messes. Bounty handles tough messes without ...

  • Page 48
    www.folgers.com ©1999 Procter & Gamble

  • Page 49
    ... and Asia Michael Clasper President - Global Home Care and New Business Development Stephen P. Donovan Jr. President - Global Beverage and North America Food & Beverage Mark D. Ketchum President - Global Baby Care Fuad O. Kuraytim President - Middle East, Africa & General Export A. G. Lafley...

  • Page 50
    here! are Use it to Tasting, of Great tected o r P l l e W rom Just f s p i h C Pringles Once You Pop, You Can' t www.pringles.com Stop!

  • Page 51
    ... helps say no to diaper ra The next time you buy diapers, look for the only ones specially designed to help treat and prevent diape New Pampers® Rash Guard. They're clinically proven to help protect against diaper rash and leading pediatrician they'd recommend them. Which means all that's left for...

  • Page 52
    ...you via e-mail. • Check out the latest new, innovative P&G products available in a store near you. • Sign up for P&G's direct stock purchase The Procter & Gamble Company Shareholder Services Department P.O. Box 5572 Cincinnati, Ohio 45201-5572 and dividend reinvestment plan by downloading the...

  • Page 53
    ..., grandchildren, nieces, nephews and friends. The gift of P&G stock is perfect for any occasion, including baptisms, birthdays, holidays and graduations. The friend or relative you enroll in our Shareholder Investment Program will be able to reinvest dividend payments, as well as learn about the...

  • Page 54
    ...and common allergens. The cloth's Lift and Lock TM/MC pockets hold the dirt in until you throw it out. And just like that, another of life's everyday worries bites the dust. ©1999 Procter & Gamble We m a k e e v e r y d a y b e t t e r ...i n e v e r y w a y w e c a n. www.swiffer.com 0038-7060