Proctor and Gamble 2000 Annual Report Download - page 25

FINANCIAL REVIEW (CONTINUED)
The Procter & Gamble Company and Subsidiaries
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Charges for accelerated depreciation were $386 mil-
lion ($335 million after tax) in 2000 and $208 million
($206 million after tax) in 1999. The charges for accel-
erated depreciation related to long-lived assets that will
be taken out of service prior to the end of their normal
service period due to manufacturing consolidations,
technology standardization and plant closures. The
Company has shortened the estimated useful lives of
such assets, resulting in an acceleration of deprecia-
tion. The underlying plant closures and consolidations
will impact substantially all businesses. Accelerated
depreciation charges are expected to be approximately
$250 million in 2001. Both asset write-downs and accel-
erated depreciation are charged to cost of products sold.
Other costs were $211 million ($208 million after tax)
and $11 million ($8 million after tax) in 2000 and 1999,
respectively. These costs were incurred as a direct result
of Organization 2005 and were expensed as incurred.
The nature of the costs included training, relocation,
tax and other incremental costs relating to establish-
ment of Global Business Services and the new legal and
organizational structure of Organization 2005. Such
before-tax costs were primarily charged to marketing,
research and administrative expense and were included
in the Corporate segment. Charges for other costs are
expected to be approximately $225 million in 2001.
Most charges under Organization 2005 are paid shortly
after accrual or charged directly to the related assets.
The reserve balances at June 30, 2000 and 1999 were
$88 million and $44 million, respectively.
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, Organization 2005, financial goals and cost
reduction, among others.
These forward-looking statements are based on assump-
tions and estimates regarding competitive activity,
pricing, product introductions, economic conditions, tech-
nological innovation, currency movements, governmental
action and the development of certain markets. Among
the key factors necessary to achieve the Company’s goals
are: (1) the successful implementation of Organization
2005, including achievement of expected cost and tax
savings and successful management of organizational
and work process restructuring; (2) the ability to achieve
business plans, including volume growth and pricing plans,
despite high levels of competitive activity; (3) the ability
to maintain key customer relationships; (4) the achieve-
ment of growth in significant developing markets such as
China, Mexico, the Southern Cone of Latin America and
the countries of Central and Eastern Europe; (5) the abil-
ity to successfully manage regulatory, tax and legal
matters, including resolution of pending matters within
current estimates; (6) the successful execution of planned
minor brand divestitures; (7) the ability to successfully
implement cost improvement plans in manufacturing and
overhead areas; and (8) the ability to successfully manage
currency, interest rate and certain commodity cost expo-
sures. If the Company’s assumptions and estimates are
incorrect or do not come to fruition, or if the Company
does not achieve all of these key factors, then the
Company’s actual performance could vary materially from
the forward-looking statements made herein.