The Procter & Gamble Company

1 Procter & Gamble Plaza

Cincinnati, OH 45202
United States

TELEPHONE: 513-983-1100
FAX: 513-983-9369
URL: http://www.pg.com

LEGAL STATUS: Public

EMPLOYEES: 138,000
ONE YEAR EMPLOYEE GROWTH: 0.0%

FORTUNE 500 RANKING: 23

FT Global 500 RANKING: 10

The Procter & Gamble Company (P&G) is a brand behemoth. The world's #1 maker of
household products courts market share and billion-dollar brands. Its business is divided
into three global units: health and well being, beauty, and household care. It also makes
pet food and water filters and produces soap operas. Some 25 of P&G's brands are
billion-dollar sellers, including Fusion, Always/Whisper, Braun, Bounty, Charmin, Crest,
Downy/Lenor, Folgers (which it's planning to sell), Gillette, Iams, Olay, Pampers,
Pantene, Pringles, Tide, and Wella, among others. Acquisitive P&G bought Clairol in
2001 and Wella, which is now owns outright, in 2003. Its biggest buy in company history
was Gillette in late 2005.

Few people worldwide go a day without using at least one product made by P&G. The
company's hundreds of brands are available in more than 180 countries.

In a push to increase productivity, P&G announced in early 2008 that it plans to cut about
15% of its management staff. (Most of the job cuts will come through attrition.) The
consumer products giant also will focus greater resources on its 44 best-selling brands --
those that generate more than $500 million annually and represent some 85% of sales.
One brand that didn't make the cut is Noxzema, which P&G is selling to Alberto-Culver
through an agreement inked in September 2008 (but retaining the business in portions of
Western Europe). P&G also is looking to fast-growing markets, such as Brazil, Russia,
India, and China, to help it offset an economic slowdown in the US. P&G generated 40%
of its 2008 sales in the US, down from 42% in 2007. This drop was offset by revenue
gains from other countries that reached 60% of 2008 revenue, up from 58% in 2007.
India, where Unilever already has a strong presence, will prove to be one of the more
difficult markets for P&G to tap. Developing markets, which comprise Latin America,
Central and Eastern Europe/Middle East and Africa, Greater China, and
ASEAN/Australasia/India, accounted for some 30% of P&G's 2008 sales.
In one of its boldest moves, P&G bought The Gillette Company for about $57 billion in
late 2005. The deal created the world's largest consumer products company, ahead of
Unilever. (In its effort to leap-frog back into the top position, Unilever in 2008 announced
that it has appointed Paul Polman, an executive for Nestle USA, as its CEO to take the
top spot at the end of the year. Polman spent 26 years at P&G.) The purchase added well-
known complementary brands to P&G's already vast portfolio, such as Gillette razors and
blades, Duracell batteries, Oral-B oral care items, and Braun appliances. Because some of
the two companies' brands competed (such as P&G's Old Spice and Crest vs. Gillette's
Right Guard and Oral-B) and to satisfy antitrust regulators, P&G divested certain assets.
It sold its SpinBrush business to Church & Dwight for $75 million. Gillette sold its Right
Guard, Soft & Dri, and Dry Idea brands to Henkel's Dial Corporation. P&G also sold its
33-year-old Sure brand in 2006 to Najafi Companies' Innovative Brands (which picked
up its Pert Plus shampoo brand earlier that year) to focus on products with a global reach
and deodorants that are gender-specific. P&G also made plans to shed about 6,000
workers from both companies.

P&G has seen the marriage of the two giants offering it increased bargaining power
against the likes of Wal-Mart in the US (which has accounted for 15% of total revenue
since 2006) and Aldi in Europe, as those two companies delve deeper into private
labeling and cost-conscious positioning. The P&G-Gillette entity also flexes more muscle
in media-spending negotiations. For example, P&G spent more than $3.9 billion for ads
in 2004. In 2005 the company spent $4.61 billion and unseated General Motors as the top
ad spender with its $4.35 billion. (P&G also digs deep into its pockets to advertise to
Hispanics. The company spends the most, with some $170 million annually in the US, on
Hispanic marketing.)

About six months after the company's Gillette acquisition, P&G began to boost its
consumer products portfolio by inking a deal with Garrity Industries, a flashlight and
lantern maker, to strategically pair with its Duracell battery unit. It has also boosted its
research and development efforts, having logged expenses of more than $2 million in
2007 and 2006 -- up from $1.9 million in 2005 and $1.8 million in 2004.

Having accelerated its integration of Gillette, P&G in July 2007 folded a few of its
businesses (for example, biggies Gillette and Braun) into existing global business units
and renamed its trio of global business units: beauty care, global health and well being,
and household care. The primary objective of the reorganization is to sharpen P&G's
focus as a nimble manufacturing and marketing machine. Having inked several of the
industry's largest acquisitions in recent years and having nearly doubled its size since
2000, P&G hopes its latest restructuring will help it maintain its ability to react quickly
and strategically in its industries. And although Gillette will still retain its headquarters
for now, this move dissolves historic Gillette as its own entity. As part of the move, P&G
appointed Susan Arnold as president of its global business units. And Robert McDonald
now fills the role of COO, a new position, to head global operations.

P&G has expanded its beauty business to improve its worldwide market share in that
segment. Through a series of purchases that began in 2003 and ended in November 2007,
the firm now owns 100% of beauty care giant Wella. The deal gave P&G a significant
boost in the international hair care market, as well as a small fashion division, Rochas.
The Rochas's fragrance business remains intact. In mid-2006 P&G partnered with Gucci
to develop a line of Gucci-branded fine fragrances. (The deal replaces a previous
agreement between Gucci and Wella/Cosmopolitan Cosmetics that was inked in 2003.) In
the ethnic beauty products arena, P&G signed a licensing deal in 2004 with former
fashion model Iman. I-Iman products are manufactured by Impala, which is 51% owned
by Iman. Iman's Urban Exotic collection (the first product from the licensing deal) is sold
at Wal-Mart, Target, Walgreens, and others. To extend its reach into fine fragrances and
boost the company's prestige products division, P&G partnered with Italian fashion house
Dolce & Gabbana in mid-2006 to make a line of perfumes. As it reaches into another
niche of the beauty market, P&G acquired HDS Cosmetics Lab in early 2007 to secure its
foothold in dermatology-focused skin care products. HDS makes the DDF Skin Care
brand.

Besides its beauty business, P&G has been boosting use of its cleaning products (outside
customers' homes) and solidifying its reputation in the commercial cleaning products
niche by way of the lodging industry. In 2005 P&G launched the P&G Pro Line Lodging
Program for in-room cleaning and on-premise laundry (OPL) and daily cleaner service.
P&G's Pro Line cleaning products -- that are part of the services -- include Comet,
Downy, Febreze, Mr. Clean Magic Eraser, Spic and Span, Swiffer Dusters, and Tide.

The company also is courting market share worldwide in the laundry detergents sector.
P&G, which sells its Ariel and Tide brands in Southeast Asia, bought four more brands to
sell in the region in its effort to erode market share from Unilever (which leads there). In
late 2005 P&G bought Fab, Trojan, Dynamo, and Paic laundry brands from Colgate-
Palmolive sold in Hong Kong, Singapore, Thailand, and Malaysia.

For years P&G has partnered with pharmaceutical firms to extend its reach into that
industry. The company licensed its topical anti-infective technology in 2004 to
pharmaceutical firm GMP Companies, which uses it in health care settings. P&G has also
partnered with Novartis AG to give Enablex, a Swiss pill used to treat overactive bladder,
a deeper and broader reach into the US. In addition, P&G is working with therapeutic
drug development firm Curis to research and develop potential hair growth treatments
leveraging Curis' Hedgehog agonist technology. As part of this focus, P&G in September
2008 acquired NIOXIN Research Laboratories, which specializes in professional haircare
to improve the appearance of thinning hair. The product line is distributed in 40 countries
through salons and their stores. In 2006 P&G partnered with Aryx Therapeutics to
develop that company's gastrointestinal disorder treatment. A deal with Inverness Medical
Innovations formed a joint venture company (called SPD Swiss Precision Diagnostics)
that pairs Inverness's diagnostics expertise with P&G's marketing savvy. The joint
venture, formed in May 2007, makes and markets in-home diagnostic products, including
pregnancy tests and ovulation/fertility monitoring products, under the Clearblue,
PERSONA, Accu-Clear, and other names. P&G paid $325 million for its 50% stake in
the venture.
On the heels of its successful launch of Prilosec as an over-the-counter acid-reflux
medication, P&G partnered with Watson Pharmaceuticals to develop the Intrinsa patch.
What Viagra has done for men and Pfizer, P&G hopes Intrinsa will eventually do for both
women's sex drives and its bottom line. However, in 2004 the FDA delayed the debut of
Intrinsa by demanding P&G to collect additional safety data regarding the risk of heart
attack in post-menopausal women already taking estrogen hormone therapy. P&G
withdrew its Intrinsa application and plans to submit a new one to the FDA.

The company has been shedding products that do not fit into its long-term plans for
increasing sales and profits. (Spic and Span, Coast, Jif, Crisco, Clearasil, Sea Breeze,
Punica, and Sunny Delight are among those it has sold.) P&G also stopped selling its
Vidal Sassoon brand in North America due to stale sales. In 2008 the company also is
selling its Folgers business to The J.M. Smucker Company in an all-stock transaction
valued at more than $3 billion. Despite Folgers' status of having captured a third of the
North American coffee market, P&G wants to focus on its health and beauty products.
Smucker's portfolio already includes P&G's former Jif and Crisco brands.

In addition, P&G is less patient with newer initiatives that fail to deliver profits, such as
its olestra ("fake fat") production plant. Another business that P&G eventually dropped
was Reflect.com, the online retailer of customized beauty products. After investing some
$60 million in the e-tailer, P&G shut the service down in mid-2005. P&G said it would
use techniques it learned at Reflect.com at its Olay and CoverGirl brands.

In a revisit to the faces of the 1980s, P&G signed former CoverGirl spokesperson
Christie Brinkley to a multiyear deal that cross-markets CoverGirl and Olay products.
P&G has also partnered with Atlantic Records to create a CG Vibes record label --
primarily to increase the CoverGirl brand's cool quotient. Proceeds from the label's CD
sales finance grants to recognize young women in community service.

P&G also continues to be a player in the broadcast television industry. The consumer
products giant is celebrating its long-standing relationship with CBS as the network
renewed contracts for Guiding Light (which began as a radio program in 1937) and As
the World Turns (which has been on the air for 50 years in 2006). To reach younger
consumers, P&G has launched an online soap opera called "Crescent Heights," which
viewers can watch on their PCs and cellphones.

HISTORY:

Candle maker William Procter and soap maker James Gamble merged their small
Cincinnati businesses in 1837, creating The Procter & Gamble Company (P&G), which
incorporated in 1905. By 1859 P&G had become one of the largest companies in
Cincinnati, with sales of $1 million. It introduced Ivory, a floating soap, in 1879, and
Crisco shortening in 1911.

The Ivory campaign was one of the first to advertise directly to the consumer. Other
advertising innovations included sponsorship of daytime radio dramas in 1932. P&G's
first TV commercial, for Ivory, aired in 1939.

Family members headed the company until 1930, when William Deupree became
president. In the 29 years that Deupree served as president and then chairman, P&G
became the largest US seller of packaged goods.

After years of researching cleansers for use in hard water, P&G introduced Tide detergent
in 1947. It began a string of acquisitions when it picked up Spic and Span (1945; sold
2001), Duncan Hines (1956; sold 1998), Charmin Paper Mills (1957), and Folgers Coffee
(1963). P&G launched Crest toothpaste in 1955 and Head & Shoulders shampoo and
Pampers disposable diapers in 1961.

Rely tampons were pulled from shelves in 1980 when investigators linked them to toxic
shock syndrome. In 1985 P&G moved into health care when it purchased Richardson-
Vicks (NyQuil, Vicks) and G.D. Searle's nonprescription drug division (Metamucil). The
acquisitions of Noxell (1989; CoverGirl, Noxzema) and Max Factor (1991) made it a top
cosmetics company in the US.

P&G began a major restructuring in 1993, cutting 13,000 jobs and closing 30 plants. The
firm acquired Eagle Snacks from Anheuser-Busch in 1996 and sued rival Amway over
rumors connecting P&G and its moon-and-stars logo to Satanism. (The suit was
dismissed in 1999.) Also in 1996 the FDA approved the use of olestra, a controversial fat
substitute developed by P&G.

In 1997 it acquired Tambrands (Tampax tampons), making P&G #1 in feminine sanitary

protection. Impatient with progress on its sales goals, in 1998 P&G began restructuring to
focus on global business units rather than geographic regions. Chairman John Pepper
handed over his chairman and CEO title in 1999 to president Durk Jager, who promised
five new products a year and a shakeup of the corporate culture.

In 1999 the company announced further reorganization plans, including 15,000 job cuts
worldwide by 2005. That same year P&G bought The Iams Company (maker of
Eukanuba- and Iams-brand dog and cat foods).

With earnings flat, Jager resigned in 2000. P&G insider Alan G. Lafley immediately
assumed the president and CEO duties, and Pepper returned to succeed Jager as
chairman.

In 2001 P&G announced job cuts for 9,600 employees to further reduce costs. It also sold
its Comet cleaner business. That year P&G completed its purchase of the Clairol hair care
company from Bristol-Myers Squibb for nearly $5 billion.

In 2002 P&G closed three Clairol plants, one warehouse, and one distribution center --
eliminating about 750 jobs. Production of Clairol products was moved to existing P&G
plants. It also sold its olestra plant in Cincinnati to Twin Rivers Technologies but retained
ownership of the Olean brand and technology. Additionally, it sold its Jif peanut butter
and Crisco shortening brands to J.M. Smucker and several personal care brands
(including Sea Breeze and Vitalis) to Helen of Troy.

In 2002 P&G branched out in a joint venture with Clorox to help it improve the Glad-
brand plastic bags and wraps. P&G held a 10% stake in the Glad venture until late 2004,
when the company invested another $133 million to boost its stake to 20%, the limit
allowed by the agreement.

In December 2002 Lafley announced that P&G had completed its multiyear restructuring
and would stop reporting two sets of results (one with restructuring charges and one
without).

Further expanding its hair care segment and building on its successes with Clairol, P&G
purchased the first of several stakes in Wella in 2003 (it now owns the entire company).
Also that year P&G entered the premium pet food market with its purchase of The Iams
Company for $2.3 billion. And to secure its foothold in China, P&G bought the
remaining 20% stake in its joint venture with Hutchison Whampoa China Ltd. in 2004 for
$1.8 billion.

Further expanding its luxury hair-care portfolio, in May 2008 P&G purchased Frédéric
Fekkai & Co. from Chrysallis, a management company of private equity firm Catterton
Partners. The acquisition gives P&G a foothold in department store hair care, which for
Fekkai has generated double-digit gains each year. Fekkai caters to prestige stores located
in the US, such as Neiman Marcus, Nordstrom, and Sephora.

2008 Sales
$ mil. % of total
US 33,005 40
Other countries 50,498 60

Total 83,503 100

2008 Sales
% of total
North America 44
Developing Markets 30
Western Europe 22
Northeast Asia 4

Total 100

2008 Sales
$ mil. % of total
Beauty
Beauty 19,515 23
Grooming 8,254 9
Health & Well Being
Health Care 14,578 17
Snacks, Coffee & Pet Care 4,852 6
Household Care
Fabric Care & Home Care 23,831 28
Baby Care & Family Care 13,898 17
Corporate (1,425) (2)

Total 83,503 100

•
• Global Business Units & Their Reportable Segments
•
• Beauty Care
• Beauty
• Grooming
• Health & Well Being
• Health Care
• Snacks, Coffee & Pet Care
• Household Care
• Fabric Care & Home Care
• Baby Care & Family Care
• Selected Brand Names By Global Business Unit
•
• Beauty Care
• Braun
• Clairol
• CoverGirl
• Frédéric Fekkai & Co.
• Fusion
• Gillette
• Head & Shoulders
• Herbal Essence
• I-Iman
• Ivory
• Mach3
• Max Factor
• Nice 'n Easy
• Noxzema
• Olay
• Old Spice
• Pantene
• Safeguard
• Secret
• Ultresse
 • Wella
• Zest
• Health & Well Being
• Actonel
• Always
• Crest
• Folgers
• Iams
• Oral-B
• Prilosec
• Pringles
• Household Care
• Ariel
• Bounty
• Charmin
• Dawn
• Downy
• Duracell
• Gain
• Pampers
• P&G Pro Line (commercial cleaning)
• Swiffer
• Tide
• Soap Operas
•
• As The World Turns
• Guiding Light

FISCAL YEAR DATE: June, 2008

(Millions U.S. Dollars) 2008 2007 2006
Revenue $83,503.0 $76,476.0 $68,222.0
Net Income $12,075.0 $10,340.0 $8,684.0
Net Profit 14.5% 13.5% 12.7%
Employees - 138,000 138,000

• One Year Sales Growth: 9.2%

• One Year Income Growth: 16.8%

2008
Debt Ratio 34.6%
Return on Equity 17.7%
Cash $3,541,000,000
Current Ratio 0.79
Long-term debt $23,581,000,000
* * * * * * * * * * SECURITIES INFORMATION * * * * * * * * * *
EXCHANGE: NYSE
EPS: $3.64
HISTORICAL STOCK INFORMATION:
2007 2006 2005
Earnings $3.04 $2.64 $2.66

2004 2003 2002

Earnings $2.32 $1.85 $1.54

2001 2000 1999

Earnings $1.03 $1.24 $1.29