01—Abstract
Summary
Summary of the 8-K filed October 22, 2004. Cited figures are marked; the original filing is the authoritative source.
This Form 8-K filing from Procter & Gamble (PG) on October 21, 2004, primarily serves to disclose significant changes to its business segments and the basis of segment performance measurement, effective July 1, 2004.
These changes are crucial for investors to understand how the company will report its future financial results and how past performance will be restated for comparability. The realignment reorganizes the company into three global business units: Beauty Care; Health, Baby and Family Care; and Household Care (which now includes Fabric and Home Care, as well as the renamed Snacks and Coffee business). These structural changes are accompanied by adjustments in how segment performance is measured, notably the inclusion of amortization of identifiable intangible assets within segment results, a change from previous accounting where it was held in Corporate.
02—Key points
Key Highlights
- Procter & Gamble (PG) has realigned its business units into three global segments: Beauty Care, Health, Baby and Family Care, and Household Care, effective July 1, 2004.
- The Household Care segment now encompasses Fabric and Home Care, and the former Snacks and Beverages business has been renamed Snacks and Coffee.
- The company completed the divestiture of its Juice business in August 2004, with historical results to be reported under Corporate.
- A significant change in segment performance measurement is the inclusion of amortization of identifiable intangible assets with determinable lives in segment results, rather than being classified under Corporate.
- This amortization expense amounted to $165 million for FY2004, $100 million for FY2003, and $97 million for FY2002.
- Adjustments were also made to the allocation methodologies of certain overhead items managed by Global Business Services, along with other immaterial cost allocation changes.
- These modifications will be reflected in future consolidated financial statements and require reclassification of all comparative prior period segment information as per SFAS No. 131.
03—Questions
Frequently Asked Questions
What are the new business segments for Procter & Gamble?
Effective July 1, 2004, Procter & Gamble realigned into three global business units: Beauty Care; Health, Baby and Family Care; and Household Care. The Household Care segment now includes the Fabric and Home Care business, and the former Snacks and Beverages business has been renamed Snacks and Coffee.
What significant change has been made to how segment performance is measured?
The most significant change is the inclusion of amortization of identifiable intangible assets with determinable lives in segment results, rather than being reported under Corporate. This adjustment reflects changes in how senior management performance is evaluated and is consistent with increased acquisition and licensing activity.
How does the divestiture of the Juice business impact reporting?
Procter & Gamble completed the divestiture of its Juice business in August 2004. Historical results of this business will be included in 'Corporate' to ensure segment results are presented on a comparable basis.
Will past financial reports be restated due to these changes?
Yes, as required by SFAS No. 131, Procter & Gamble will reclassify all comparative prior period segment information to conform to the new segment presentation and measurement basis. This means that future filings will present historical segment data that reflects these modifications.
04—Continue