Proctor and Gamble 2000 Annual Report Download - page 33

The Procter & Gamble Company and Subsidiaries
31
Millions of dollars except per share amounts
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Charges for the program were $814 ($688 after tax) and $481
($385 after tax) in 2000 and1999, respectively. Estimated costs for
fiscal 2001 are $750 ($550 after tax). The balance of the charges are
not expected to materially affect any single year, and savings
are expected to offset the charges. All charges for the program are
reflected in the Corporate segment for management and external
reporting.
The before-tax amounts consisted of the following:
Asset
Write- Accelerated
Separations Downs Depreciation Other Total
1999:
Charges $ 45 $ 217 $ 208 $ 11 $ 481
Cash spent (10) – – (2) (12)
Charged against
assets – (217) (208) – (425)
Reserve balance
June 30, 1999 35 – – 9 44
2000:
Charges 153 64 386 211 814
Cash spent (100) – – (220) (320)
Charged against
assets – (64) (386) – (450)
Reserve balance
June 30, 2000 88 – – – 88
Employee separation charges related to severance packages for
approximately 2,800 people in 2000 and 400 people in 1999. The
packages are predominantly voluntary and are formula driven
based on salary levels and past service. Severance costs related to
voluntary separations are charged to earnings when the employee
accepts the offer.
Asset write-downs in 2000 related to assets held for sale or disposal
and represented excess capacity that is in the process of being
removed from service or disposed. These assets were written down
to the lower of their current carrying basis or amounts expected to
be realized upon disposal, less minor disposal costs. Asset write-
downs in 1999 related primarily to manufacturing assets that are
expected to operate at levels significantly below their capacity.
The projected cash flows from such assets over their remaining
useful lives are now estimated to be less than their current carrying
values; therefore, the assets were written down to estimated fair
value as determined using discounted cash flows. The asset write-
downs charged to earnings will not have a significant impact on
future depreciation charges.
Charges for accelerated 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 accelerated
depreciation.
Other costs included primarily relocation, training costs and legal
entity restructuring costs directly related to the Organization 2005
initiative.
NOTE 3 ACQUISITIONS
In 2000, the Company acquired The Iams Company and Affiliates
for approximately $2,222 in cash. Other acquisitions in 2000
totaled $745 and consisted primarily of Recovery Engineering,
Inc. and a joint venture ownership increase in China. The 2000
acquisitions were accounted for using the purchase method, and
resulted in goodwill of $2,508. Purchase acquisitions in 1999
totaled $137. In 1998, the Company acquired Tambrands, Inc.,
and its leading brand, Tampax, for approximately $1,844 in cash.
Other acquisitions in 1998 totaled $1,425 and included the acqui-
sition 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 method, resulted in
goodwill of $3,335.
NOTE 4 SUPPLEMENTAL FINANCIAL INFORMATION
June 30
2000 1999
Accrued and Other Liabilities
Marketing expenses $1,142 $1,094
Compensation expenses 462 449
Other 2,117 2,540
3,721 4,083
Other Non-Current Liabilities
Other postretirement benefits $ 824 $1,081
Pension benefits 975 926
Other 502 694
2,301 2,701
Selected Operating Expenses
Research and development costs are charged to earnings as
incurred and were $1,899 in 2000, $1,726 in 1999 and $1,546 in
1998. Advertising costs are charged to earnings as incurred and
were $3,667 in 2000, $3,538 in 1999 and $3,704 in 1998.