Proctor and Gamble 2007 Annual Report Download - page 58

Millions of dollars except per share amounts or as otherwise specied.
Notes to Consolidated Financial Statements
The Procter & Gamble Company
56
SFAS 158 had no impact on our measurement date, which continues
to be as of our scal year end. Refer to Note 9 for additional
information regarding our pension and postretirement plans.
The following table reects the effect of the adoption of SFAS 158 on
our Consolidated Balance Sheets:
Before After
Application SFAS 158 Application
 of SFAS 158 Adjustments of SFAS 158
Other noncurrent assets       
   
Deferred income taxes   
Other noncurrent liabilities   
   
Accumulated other
comprehensive income   
   

   


In July 2006, the FASB issued FASB Interpretation (FIN) 48, “Accounting
for Uncertainty in Income Taxes.” FIN 48 addresses the accounting
and disclosure of uncertain tax positions. FIN 48 prescribes a recognition
threshold and measurement attribute for the nancial statement
recognition and measurement of a tax position taken or expected
to be taken in a tax return. We will adopt FIN 48 on July 1, 2007.
We estimate that the adoption of FIN 48 will result in a net decrease
to beginning retained earnings of approximately $200 – $250,
primarily related to the accrual of additional interest and penalties on
unrecognized tax benets.
NOTE 2


On October 1, 2005, we completed our acquisition of The Gillette
Company. Pursuant to the acquisition agreement, which provided for
the exchange of 0.975 shares of The Procter & Gamble Company
common stock, on a tax-free basis, for each share of The Gillette
Company, we issued 962 million shares of The Procter & Gamble
Company common stock. The value of these shares was determined
using the average Company stock prices beginning two days before
and ending two days after January 28, 2005, the date the acquisition
was announced. We also issued 79 million stock options in exchange
for Gillette’s outstanding stock options. Under the purchase method
of accounting, the total consideration was approximately $53.4 billion
including common stock, the fair value of vested stock options and
acquisition costs. This acquisition resulted in two new reportable
segments: Blades and Razors, and Duracell and Braun. The Gillette
oral care and personal care businesses were subsumed within the
Health Care and Beauty reportable segments, respectively. The operating
results of the Gillette businesses are reported in our nancial statements
beginning October 1, 2005.
The Gillette Company is a market leader in several global product
categories including blades and razors, oral care and batteries. Total
sales for Gillette during its most recent pre-acquisition year ended
December 31, 2004, were $10.5 billion.
In order to obtain regulatory approval of the transaction, we were
required to divest certain overlapping businesses. We completed the
divestiture of the Spinbrush toothbrush business, Rembrandt (a Gillette
oral care product line), Right Guard and other Gillette deodorant brands
during the scal year ended June 30, 2006.
In connection with this acquisition, we also announced a share buyback
plan under which we planned to acquire up to $22.0 billion of
Company common shares through the open market or from private
transactions. We completed this share buyback plan in July 2006 with
cumulative purchases of $20.1 billion. The repurchases were nanced by
borrowings under a $24.0 billion three-year credit facility with a
syndicate of banks (see Note 5).
The following table provides pro forma results of operations for the
years ended June 30, 2006 and 2005, as if Gillette had been acquired
as of the beginning of each scal year presented. The pro forma results
include certain purchase accounting adjustments such as the changes
in depreciation and amortization expense on acquired tangible and
intangible assets. However, pro forma results do not include any
anticipated cost savings or other effects of the integration activities of
Gillette. Accordingly, such amounts are not necessarily indicative of
the results if the acquisition had occurred on the date indicated or
that may result in the future.