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Article by DailyStocks_admin    (05-02-08 05:24 AM)

The Daily Warren Buffett Stock is PG. Berkshire Hathaway owns 105,847,000 shares. As of Dec 31,2007, this represents 11.3% percent of portfolio.


In fiscal year 2007, the Company was organized into three Global Business Units: Beauty and Health; Household Care; and Gillette GBU. We had seven reportable segments under U.S. GAAP: Beauty; Health Care; Fabric Care and Home Care; Snacks, Coffee and Pet Care; Baby Care and Family Care; Blades and Razors; and Duracell and Braun. Many of the factors necessary for an understanding of these businesses are similar. Operating margins of the individual businesses vary slightly due to the nature of materials and processes used to manufacture the products, the capital intensity of the businesses and differences in selling, general and administrative expenses as a percentage of net sales. Net sales growth by business is also expected to vary slightly due to the underlying growth of the markets of each business and products. None of our businesses are highly seasonal except our Duracell and Braun businesses which have a disproportionately high level of sales in the December quarter due to the December holiday season. In addition, anticipation or occurrence of natural disasters, such as hurricanes, can drive unusually high demand for batteries.
We recently announced a number of changes to our organization structure and certain of our key leadership positions, which resulted in changes to our GBU and segment structure, effective fiscal year 2008. Specifically, our fiscal 2008 structure is comprised of three GBUs with a total of six reportable segments:

The businesses that previously comprised the Gillette GBU will now be included within the Beauty and Household Care GBUs. As a result of these moves, the Duracell and Braun businesses will no longer comprise a separate reportable segment. The Braun business will be managed and combined with the Blades and Razors business to form the “Grooming” reportable segment within the Beauty GBU. The Grooming reportable segment will also include all shave prep products currently being reported within the Beauty reportable segment. The Duracell business will be moved to our Household Care GBU and will be reported as part of our Fabric Care and Home Care reportable segment. Finally, our feminine care business, which was part of our Beauty GBU and reportable segment, will now be moved to our Health and Well Being GBU and will be managed and reported as part of the Health Care reportable segment.
These changes were effective as of July 1, 2007. They will be reflected in our segment reporting beginning in fiscal year 2008, at which time our historical segment reporting will also be restated to reflect the new structure. The GBU and segment discussion in this Form 10-K reflects the organizational structure that existed through June 30, 2007.
Additional information about our businesses can be found in Management’s Discussion and Analysis, pages 31-48, and Note 12, Segment Information, which appears on pages 67-68 of the Annual Report to Shareholders for the fiscal year ended June 30, 2007.
Narrative Description of Business
Business Model . Our business model relies on the continued growth and success of existing brands and products, as well as the creation of new products. The markets and industry segments in which we offer our products are highly competitive. Our products are sold in over 180 countries around the world primarily through mass merchandisers, grocery stores, membership club stores and drug stores. We have also expanded our presence in “high-frequency stores,” the neighborhood stores which serve many consumers in developing markets. We work collaboratively with our customers to improve the in-store presence of our products and win the “first moment of truth” — when a consumer is shopping in the store. We must also win the “second moment of truth” — when a consumer uses the product, evaluates how well it met his or her expectations and whether it was a good value. We believe we must continue to provide new, innovative products and branding to the consumer in order to grow our business. Research and product development activities, designed to enable sustained organic growth, continued to carry a high priority during the past fiscal year. While many of the benefits from these efforts will not be realized until future years, we believe these activities demonstrate our commitment to future growth.

Key Product Categories . In 2007, one product category accounted for 10% or more of consolidated net sales. The laundry category constituted approximately 16% of net sales for fiscal years 2007 and 2006 and 17% of net sales in fiscal year 2005. In fiscal year 2005, we had three product categories, including the laundry category described above, that accounted for 10% or more of consolidated net sales. The diaper category represented approximately 11% of net sales in fiscal year 2005. The retail hair care category accounted for approximately 10% of net sales in fiscal year 2005. Fiscal year 2006 net sales percentages for the above categories decreased due to the addition of The Gillette Company on October 1, 2005.
Key Customers . Our customers include mass merchandisers, grocery stores, membership club stores, drug stores and high-frequency stores. Sales to Wal-Mart Stores, Inc. and its affiliates represent approximately 15% of our total revenue in both 2007 and 2006 and 16% of total revenue in 2005. No other customer represents more than 10% of our net sales. Our top ten customers account for approximately 30% of total unit volume in 2007, compared to 31% in 2006 and 32% in 2005. The nature of our business results in no material backlog orders or contracts with the government. We believe our practices related to working capital items for customers and suppliers are consistent with the industry segments in which we compete.
Sources and Availability of Materials . Almost all of the raw and packaging materials used by the Company are purchased from others, some of whom are single-source suppliers. We produce raw materials, primarily chemicals, for further use in the manufacturing process. In addition, fuel and natural gas are important commodities used in our plants and in the trucks used to deliver our products to customers. The prices we pay for materials and other commodities are subject to fluctuation. When prices for these items change, we may or may not pass on the change to our customers, depending on the magnitude and expected duration of the change. The Company purchases a substantial variety of raw and packaging materials, no one of which is material to our business taken as a whole.
Trademarks and Patents . We own or have licenses under patents and registered trademarks which are used in connection with our activity in all businesses. Some of these patents or licenses cover significant product formulation and processes used to manufacture our products. The trademarks of all major products in each business are registered. In part, our success can be attributed to the existence and continued protection of these trademarks, patents and licenses.
Competitive Condition. The markets in which our products are sold are highly competitive. Our products compete against similar products of many large and small companies, including well-known global competitors. We market our products with advertising, promotions and other vehicles to build awareness of our brands in conjunction with an extensive sales force. We believe this combination provides the most efficient method of marketing for these types of products. Product quality, performance, value and packaging are also important competitive factors.
Research and Development Expenditures. Research and development expenditures enable P&G to develop technologies and obtain patents across all categories in order to meet the needs and improve the lives of its consumers. Total research and development expenses were $2,112 million in 2007, $2,075 million in 2006 and $1,940 million in 2005.

Expenditures for Environmental Compliance . Expenditures for compliance with federal, state and local environmental laws and regulations are fairly consistent from year to year and are not material to the Company. No material change is expected in fiscal year 2008.
Employees . The Company has approximately 138,000 employees. During the fiscal year, approximately 2,200 employee positions were eliminated from the Company as a result of the Gillette integration. This brings the total positions eliminated as a result of the Gillette integration to approximately 5,000.
Financial Information About Foreign and Domestic Operations
Net sales in the United States account for approximately 42% of total net sales. No other individual country had net sales exceeding 10% of total net sales. Operations outside the United States are generally characterized by the same conditions discussed in the description of the business above and may also be affected by additional factors including changing currency values, different rates of inflation, economic growth and political and economic uncertainties and disruptions.

Development of the Business
The discussion below provides insight to the general development of our business, including the material acquisitions and disposition of assets over the past five years.
Gillette Acquisition. On October 1, 2005, we completed the 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 of 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 The Gillette Company’s outstanding stock options. Under the purchase method of accounting, the total consideration was approximately $53.43 billion including common stock, the fair value of vested stock options and acquisition costs.

The acquisition of The Gillette Company provides us with global market leadership in male grooming, selected female grooming products, alkaline batteries and in manual and power toothbrushes. Total sales for The Gillette Company 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) and Right Guard and other Gillette deodorant brands during the fiscal year ended June 30, 2006.
Juice Divestiture. In August 2004 the Company completed the divestiture of its Juice business.
Wella Acquisition . In September 2003, the Company acquired a controlling interest in Wella. Through a stock purchase agreement with the majority shareholders of Wella and a tender offer made on the remaining shares, we acquired approximately 81% of the outstanding Wella shares (99% of the voting class shares and 45% of the preference shares). In June 2004, the Company and Wella entered into a Domination and Profit Transfer Agreement (the Domination Agreement). Under the Domination Agreement, we are entitled to exercise full operating control and receive 100% of the future earnings of Wella. As consideration for the Domination Agreement, we will pay the remaining shareholders of Wella a guaranteed annual dividend payment. Alternatively, the remaining Wella shareholders may elect to tender their shares to the Company for an agreed price. The fair value of the total guaranteed annual dividend payments was $1.11 billion, which is the approximate cost if all remaining shares were tendered. During the year ended June 30, 2006, a portion of the remaining shares were tendered, resulting in a $944 million reduction in our liability under the Domination Agreement.
The total purchase price for Wella, including acquisition costs, was $6.27 billion based on exchange rates at the acquisition dates. The acquisition was financed by a mixture of available cash balances, debt and the liability recorded under the Domination Agreement.
Hutchison Acquisition . In June 2004, we purchased the remaining 20% stake of our China venture from our partner, Hutchison Whampoa China Ltd. (Hutchison), giving us full ownership of our operations in China. The net purchase price was $1.85 billion, which is the purchase price of $2.00 billion net of minority interest and certain obligations that were eliminated as a result of the transaction. The acquisition was funded by debt.


Annual Cash Compensation

The building blocks of the Company’s compensation program are base salary and STAR annual bonus. We collect and analyze data from the Peer Group on the total short-term compensation (base salary plus annual bonus) of positions comparable to those at the Company. For each position, we set a target amount for both base salary and STAR, where the STAR target is the amount payable as a percentage of salary if all goals are met. The sum of these targets for base salary and STAR is equal to the median annual compensation of our Peer Group, adjusted for size using a regression of Peer Group revenues. The STAR target determines the amount of annual compensation at-risk. Since 2003, we have reflected any increase in median total annual cash compensation in higher STAR targets rather than higher salary ranges for Named Executives. This has increased the amount of annual cash compensation at-risk for our Named Executives.

Base Salary

The purpose of base salary is to provide a competitive fixed rate of pay, recognizing different levels of responsibility within the Company. Base salary ranges for a given position are established with a minimum, maximum and midpoint so that the salary midpoint plus the STAR target equals the size-adjusted, median, short-term target compensation of our Peer Group. Salaries are the basis for establishing the target payouts of the performance-driven programs discussed below, as well as the basis for retirement programs, executive group life insurance and certain benefits available to all employees.

STAR Annual Bonus

The purpose of the STAR bonus program is to provide an incentive to achieve the annual business goals set for the business units and the total Company. The program rewards the achievement of outstanding business results and reduces or eliminates the award for those who fail to achieve target business results. STAR awards are paid in cash, RSUs, stock options or deferred compensation at the executive’s election.

STAR awards in 2006-07 were based on three factors:


Total Company Factor —Ranging from 80% to 130%, this factor is determined by equally weighting the following two measures which were selected because they are barometers of Company success and visible to the approximately 14,000 STAR participants:


Total shareholder return (TSR) relative to similar consumer products companies against which we compete (this group is not the same as the earlier-referenced Peer Group that is

more diversified and representative of general industry). By measuring results relative to other consumer products companies, we reward the Company’s performance and not simply a general market increase; and


Earnings-per-share (EPS) growth relative to a target pre-established for the year.


Business Unit Factor —Ranging from 53% to 167%, specific business unit results are included in the calculation to motivate and reward participants based on the businesses most directly impacted by their work. The targets for each business unit are established at the beginning of the fiscal year and vary by business unit, reflecting the different industries in which these businesses compete, varying levels of investment in each business unit by the Company and other factors. Business unit results are determined by:


Quantitative measurements of volume, sales, market share, profits, operating cash flow and operating total shareholder return (a cash flow return on investment model that measures sales growth, earnings growth and cash flow to determine the rate of return that a business earns); and


Qualitative measures of performance relative to competitors, collaboration with other Company business units, the quality of future innovation and strategy and other considerations, such as adherence to ethical standards and response to unpredictable events like natural disasters.


Gillette Integration Factor —Ranging from 80% to 130%, this factor assesses the achievement of Gillette integration goals during key transition years to assure that all participants work toward achieving the goals set for this important integration. The factor is based on four categories:


Business Momentum—goals relating to maintaining P&G base business momentum in areas such as sales, profit and EPS growth while integrating Gillette;


Integration Financials—including dilution, cost and revenue synergies and total investment required to deliver the synergies;


Project Management—measuring our results in retaining key Gillette heritage employees, plus assessments from our annual employee survey regarding how well Gillette heritage employees feel their skills and capabilities are being utilized; and


Fielding the Best Team—relating to continuity of members of integration teams and achievement of critical milestones.

The STAR payment calculation for the Named Executives leading specific business units, that is, Ms. Arnold, Mr. Byrnes and Mr. McDonald, is shown below, where the STAR Target was 85% of base salary this year:

By multiplying these factors, each factor is interrelated and can impact the total award, with the Business Unit Factor having the greatest potential impact due to its wider range. The Total Company Factor is determined by formula, the Business Unit Factor and the Gillette Integration Factor are recommended to the Committee by the Chief Executive Officer, the Chief Financial Officer and the Global Human Resources Officer after evaluating the relevant performance measurement results for the fiscal year. The Committee, after reviewing the recommendations in light of total performance results, determines final payments for all Senior Executives, up to and including the authority to make no award in a given year. In doing so, the Committee retains the discretion to accept, modify, or reject management’s recommendations in full or in part.

2006-07 Performance Results

For 2006-07, the following performance results were used by the Committee in determining STAR awards:


Total Company Factor —To receive maximum payout, the Company must be one of the top three companies with which we compare our TSR for STAR and must exceed our EPS target. In 2006-07, our TSR ranking was in the bottom third. Our EPS growth for the year was 15%, with about 4% of this growth due to the year to year impact of dilution. The resulting 11% EPS growth compares to a goal of 10% EPS growth (the result and the goal both exclude the dilutive impact of the Gillette merger). These two results, when entered into a formula previously approved by the Committee, derive a Total Company Factor of 91%, as compared with the 100% target value. This same factor was applied to the STAR award calculation for Ms. Arnold, Mr. Byrnes and Mr. McDonald.


Business Unit Factor —As noted previously, targets for various business units differ, and actual results are compared to those pre-established targets to determine the Business Unit Factor. For Ms. Arnold, who led the Beauty and Health business, a Business Unit Factor of 112% was applied to reflect 8% sales growth and 15% earnings growth for her businesses. Mr. Byrnes’ Business Unit Factor of 122% was based on 8% sales growth and 16% earnings growth for his Household Care business. Mr. McDonald’s award was based on the results for Global Operations — which achieved a Business Unit Factor of 126% due to 8% sales growth, 15% earnings growth and strong results in Global Business Services. The results across these businesses reflect the benefit of synergies from the Gillette merger.


Gillette Integration Factor —All four components of the Gillette Integration Factor were at or ahead of target for the fiscal year. Business momentum was strong as both the heritage Gillette and P&G businesses continued to deliver sales and earnings growth at or ahead of target. The Company’s integration financials were ahead of target, as the dilutive impact of the Gillette merger earnings per share was $0.10 to $0.12 per share — ahead of our target of $0.12 to $0.18 per share. Retention was ahead of the target we established at close of the merger, and our employee survey results indicate that Gillette heritage employees are satisfied with their integration into the Company. Finally, project tracking was also on target as we have completed approximately 99% of our commercial systems integration. Based on these results, the Committee approved an overall Gillette Integration Factor of 120%.

For the remaining Named Executives, Messrs. Lafley and Daley, who participate in the initial assessments and STAR recommendations, STAR awards are determined directly by the Committee. The Committee determines their awards once the range of awards for all other STAR payments is decided. The Committee takes into account the performance factors above, considers personal contributions to these results and uses its discretion to determine the final STAR payments for Messrs. Lafley and Daley.

Long-Term Incentive Programs

The majority of total compensation for Senior Executives is long-term compensation paid through two programs—the Key Manager Annual Stock Grant and the BGP three-year incentive. The Committee establishes a target for total long-term compensation equal to the size-adjusted, median, total long-term compensation of comparable positions at Peer Group companies producing similar results, and then splits this overall target into a target for each of the two components. Actual amounts earned depend upon performance.

Key Manager Annual Stock Grant

The purpose of the Key Manager Annual Stock Grant program is to focus executives’ attention on the long-term performance of the Company. This program generally takes the form of stock option grants. These stock options are not exercisable (do not vest) until after three years and expire after ten years. The Committee believes that stock options, as a part of a well balanced compensation program, align participants’ interests with those of the Company’s shareholders and produce no return whatsoever if shareholders do not realize gains. This ties a significant portion of our executives’ total compensation to stock price performance. This program aligns with overall compensation program objectives by focusing on long-term Company performance and drives shareholder value by rewarding sustained increases in share price. The three-year vest enhances retention, because employees who resign from the Company forfeit their unvested options.

Once the Key Manager target is established, the Chief Executive Officer recommends specific awards for each Senior Executive to the Committee for its review and approval. These recommendations can be for up to 50% above or below the target award or, in exceptional cases, for no award, based on each Senior Executive’s individual performance. As noted previously, the Committee retains full authority to accept, modify or reject these recommendations. The Committee also reviews total Company performance and individual performance to determine the Key Manager award for the Chief Executive Officer.

Business Growth Program (BGP) Three-Year Incentive

BGP is the second long-term incentive component for Senior Executives and focuses these leaders on the long-term goals most critical to the overall success of the Company. BGP places compensation at-risk subject to the achievement of specific growth objectives of the Company. BGP is designed to reward the achievement of three-year performance goals with a new period beginning when the preceding three-year period ends. The current period is from July 1, 2005 to June 30, 2008. Recommended BGP payments are calculated based on a formula comparing actual results to performance targets, but the Committee can reduce awards if they determine the final results are inconsistent with shareholders’ best interests. The target BGP award for the three-year period is set at the beginning of the performance period. It is six times base salary for the Chief Executive Officer and three times base salary for the other Named Executives.

The amount of BGP payout is based on results with respect to two metrics that balance Senior Executives’ focus and lead to sound business decisions for the long-term health of the Company:


Compound EPS Growth—Earnings per share growth as measured against goals set by the Committee for the performance period; and


Operating Total Shareholder Return—a cash flow return on investment model that measures sales growth, earnings growth and cash flow generation to determine the rate of return that a business earns.

These two results, when entered into a formula previously approved by the Committee, yield a BGP payment factor of 170% in fiscal year 2006-07.

Interim payments of 30% of the total anticipated BGP award may be earned and paid in year one and year two, but only if both target metrics are met or exceeded for these periods. Any interim payments are subtracted from the final three-year award calculation. In the unlikely event that total interim payments exceed the final award, the Committee will require repayment of any amount overpaid.

Each BGP payment is divided in half. One-half is paid in RSUs that do not deliver in shares of stock until three years following the date of payment. This encourages participants to focus on the health of the Company beyond the performance period and promotes the retention of key top talent who will forfeit undelivered units if they resign. The other half of each BGP payment is awarded in cash, RSUs or deferred compensation, at the executive’s election.


The purpose of this discussion is to provide an understanding of P&G’s financial results and condition by focusing on changes in certain key measures from year to year. Management's Discussion and Analysis (MD&A) is organized in the following sections:



Summary of Results

Forward-Looking Statements

Results of Operations – Three Months Ended December 31, 2007

Results of Operations – Six Months Ended December 31, 2007

Business Segment Discussion – Three Months Ended December 31, 2007

Business Segment Discussion – Six Months Ended December 31, 2007

Financial Condition

Reconciliation of Non-GAAP Measures

Throughout MD&A, we refer to measures used by management to evaluate performance , including unit volume growth, net outside sales and after-tax profit. We also refer to financial measures that are not defined under accounting principles generally accepted in the United States of America (U.S. GAAP) , including organic sales growth, free cash flow and free cash flow productivity. The explanation of these measures at the end of MD&A provides more details on the use and the derivation of these measures. Management also uses certain market share and market consumption estimates to evaluate performance relative to competition despite some limitations on the availability and comparability of share information. References to market share and market consumption in MD&A are based on a combination of vendor-reported consumption and market size data, as well as internal estimates.

P&G's business is focused on providing branded consumer goods products. Our goal is to provide products of superior quality and value to improve the lives of the world's consumers. We believe this will result in leadership sales, profits and value creation, allowing employees, shareholders and the communities in which we operate to prosper.

Our products are sold in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores and drug stores. We have also expanded our presence in "high frequency stores," the neighborhood stores which serve many consumers in developing markets. We compete in multiple product categories and have three global business units (GBUs): Beauty; Health and Well-Being; and Household Care. Under U.S. Generally Accepted Accounting Principles, the business units comprising the GBUs are aggregated into six reportable segments: Beauty; Grooming; Health Care; Snacks, Coffee and Pet Care; Fabric Care and Home Care; and Baby Care and Family Care. We have on-the-ground operations in over 80 countries through our Market Development Organization, which leads country business teams to build our brands in local markets and is organized along seven geographic areas comprised of three developed regions (North America, Western Europe and Northeast Asia) and four developing regions (Latin America, Central and Eastern Europe/Middle East/Africa, Greater China and ASEAN/Australasia/India).

Following are highlights of results for the six months ended December 31, 2007:


Net sales grew eight percent to $41.8 billion. Organic sales, which exclude the impacts of acquisitions, divestitures and foreign exchange, increased five percent.

Unit volume increased five percent and organic volume grew six percent. Every reportable segment and geographic region posted year-on-year organic volume growth.

Net earnings increased 14 percent to $6.3 billion. Net earnings increased behind sales growth, higher operating profit, a lower tax rate and favorable foreign exchange.

Diluted net earnings per share were $1.90, an increase of 17 percent versus the comparable prior year period.

Operating cash flow was $7.4 billion, an increase of 36 percent versus the prior year period. Free cash flow productivity was 97 percent for the fiscal year to date period. Free cash flow productivity is defined as the ratio of operating cash flow less capital expenditures to net earnings.

We discuss expectations regarding future performance, events and outcomes, such as our business outlook and objectives, in annual and quarterly reports, press releases and other written and oral communications. All such statements, except for historical and present factual information, are "forward-looking statements," and are based on financial data and our business plans available only as of the time the statements are made, which may become out-of-date or incomplete. We assume no obligation to update any forward-looking statements as a result of new information, future events or other factors. Forward-looking statements are inherently uncertain, and investors must recognize that events could be significantly different from our expectations.

Ability to Achieve Business Plans. We are a consumer products company and rely on continued demand for our brands and products. To achieve business goals, we must develop and sell products that appeal to consumers and retail trade customers. Our continued success is dependent on leading-edge innovation with respect to both products and operations and on the continued positive reputations of our brands. This means we must be able to obtain patents and respond to technological advances and patents granted to competition. Our success is also dependent on effective sales, advertising and marketing programs in an increasingly fragmented media environment. Our ability to innovate and execute in these areas will determine the extent to which we are able to grow existing sales and volume profitably, especially with respect to the product categories and geographic markets (including developing markets) in which we have chosen to focus. There are high levels of competitive activity in the environments in which we operate. To address these challenges, we must respond to competitive factors, including pricing, promotional incentives and trade terms. We must manage each of these factors, as well as maintain mutually beneficial relationships with our key customers, in order to effectively compete and achieve our business plans. Since our goals include a growth component which can be affected by acquisitions and divestitures, we must manage and integrate key company transactions, such as the Gillette and Wella acquisitions, including achieving the cost and growth synergies for those transactions in accordance with stated goals, and the successful separation of the Company’s coffee business while continuing to deliver the Company’s goals.

Cost Pressures. Our costs are subject to fluctuations, particularly due to changes in commodity prices, raw materials, cost of labor, foreign exchange and interest rates. Therefore, our success is dependent, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings projects, sourcing decisions and certain hedging transactions. We also must manage our debt and currency exposure, especially in volatile countries. We need to maintain key manufacturing and supply arrangements, including sole supplier and sole manufacturing plant arrangements. We must implement, achieve and sustain cost improvement plans, including our outsourcing projects and those related to general overhead and workforce rationalization.

Global Economic Conditions. Economic changes, terrorist activity and political unrest may result in business interruption, inflation, deflation or decreased demand for our products. Our success will depend in part on our ability to manage continued global political and/or economic uncertainty, especially in our significant geographic markets, as well as any political or economic disruption due to terrorist and other hostile activities.

Regulatory Environment. Changes in laws, regulations and the related interpretations may alter the environment in which we do business. This includes changes in environmental, competitive and product-related laws, as well as changes in accounting standards and taxation requirements. Accordingly, our ability to manage regulatory, tax and legal matters (including product liability, patent and intellectual property matters, as well as those related to the integration of Gillette and its subsidiaries) and to resolve pending matters within current estimates may impact our results.

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Username Comments
Posts: 31

Reg: 02-16-09

02-18-09 09:03 PM - Post#2086    
    In response to DailyStocks_admin

Barron's came out with article of potential goodwill impairments. This stock was in the list. The other 2 Buffett Stocks are Conoco-Phillips and Kraft.

HERE IS THE LATEST INSTALLMENT IN THE ONGOING heartbreak called corporate-earnings releases.

In coming months, don't be surprised to see more charges against earnings -- and resulting losses -- owing to goodwill impairment. Last week, NYSE Euronext (ticker: NYX) recorded a $1.34 billion fourth-quarter loss, as it took a charge related to the New York bourse's 2007 purchase of its European counterpart. The charge involved a write-down of $1.59 billion of goodwill. Without the charge, NYSE Euronext would have posted a profit.

AMONG THE MEASURES INCLUDED in the proprietary model are rising ratios of the following: accounts receivable over sales; accumulated depreciation over plant, property and equipment; underfunded pension benefits versus liabilities; and cumulative accounting changes. It also flags companies with several amended filings in the past year. Traditionally, Audit Integrity explains, ratios shouldn't change much, and the ratio of receivables to sales, for example, ought to be pretty consistent from quarter to quarter. When they change, it is a red flag -- a sign of potential problems. Those companies with lower AGR ratings, Audit Integrity says, have a greater potential for events like restatements or regulatory actions that are obviously negative for stock prices.


Some of the companies include Procter & Gamble (PG), which bought Gillette for $57 billion in January 2005; serial acquirer ConocoPhillips (COP), created in a 2002 merger, and which in 2006 bought Burlington Resources; biotech giant Amgen (AMGN), which has been buying companies since taking over Immunex in 2002; Monsanto (MON), which bought Delta & Pineland Seeds and Seminis; Kraft (KFT), which bought Group Danone's cookie and cereal division in 2007 and is itself the product of a merger with Nabisco; and CVS Caremark (CVS), which has acquired companies since its 2006 megamerger.

The Bottom Line

We are going to see a jump in corporate goodwill impairments in the next two months. They will hit earnings and, in many cases, stock prices as well.
Mostly, companies declined to comment, without knowing the specifics of the analysis.

http://online.barrons.com/article/SB12345769152 828...

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Edited by dailystock on 02-18-09 09:41 PM. Reason for edit: No reason given.

Posts: 31

Reg: 02-16-09

02-18-09 09:04 PM - Post#2087    
    In response to graham

Video of Barron's journalist Leslie P. Norton naming companies vulnerable to goodwill impairment. Procter & Gamble, ConocoPhillips, Amgen, Monsanto, Kraft, CVS Caremark. ConocoPhillips bought Burlington Resources in 2002.

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Posts: 249

Reg: 09-24-07

02-18-09 09:25 PM - Post#2091    
    In response to graham

Buy P&G Shares Before They Crest 2/10/2009

The consumer-staples king has sold off of late and now offers stability at a historic discount. Barron's Alex Eule reports.

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