The Procter & Gamble Company Address: One Procter & Gamble Plaza Cincinnati, Ohio 45202-3315 U.S.A. Telephone: (513) 983-1100 Fax: (513) 983-9369 http://www.pg.com/ Statistics: Public Company Incorporated: 1890 Employees: 110,000 Sales: $51.41 billion (2004) Stock Exchanges: New York National (NSX) Amsterdam Paris Basel Geneva Lausanne Z� rich Frankfurt Brussels Ticker Symbol: PG NAIC: 311111 Dog and Cat Food Manufacturing; 311919 Other Snack Food Manufacturing; 311920 Coffee and Tea Manufacturing; 322291 Sanitary Paper Product Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 325611 Soap and Other Detergent Manufacturing; 325612 Polish and Other Sanitation Good Manufacturing; 325620 Toilet Preparation Manufacturing; 339994 Broom, Brush, and Mop Manufacturing Company Perspectives: We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. Key Dates: 1837: William Procter and James Gamble form Procter & Gamble, a partnership in Cincinnati, Ohio, to manufacture and sell candles and soap. c. 1851: Company's famous moon-and-stars symbol is created. 1878: P&G introduces White Soap, soon renamed Ivory. 1890: The Procter & Gamble Company is incorporated. 1911: Crisco, the first all-vegetable shortening, debuts. 1931: Brand management system is formally introduced. 1946: P&G introduces Tide laundry detergent. 1955: Crest toothpaste makes its debut. 1957: Charmin Paper Company is acquired. 1961: Test marketing of Pampers disposable diapers begins. 1963: Company acquires the Folgers coffee brand. 1982: Norwich-Eaton Pharmaceuticals is acquired. 1985: P&G purchases Richardson-Vicks Company, owner of the Vicks, NyQuil, and Oil of Olay brands. 1988: Noxell Corporation, maker of Noxema products and Cover Girl cosmetics, is acquired. 1991: Max Factor and Betrix cosmetic and fragrance lines are bought from Revlon, Inc. 1992: Pantene Pro-V shampoo is introduced. 1993: Major restructuring is launched, involving 13,000 job cuts and 30 plant closures. 1997: Company acquires Tambrands, Inc., maker of the Tampax line of tampons. TUhMs 1998: Organization 2005 restructuring is launched. 1999: Premium pet food maker Iams Company is purchased. 2001: P&G acquires the Clairol hair-care business from Bristol-Myers Squibb Company. 2002: Jif peanut butter and Crisco shortening brands are divested. 2003: Company acquires a controlling interest in German hair-care firm Wella AG. Company History: The Procter & Gamble Company (P&G) is a giant in the area of consumer goods. The leading maker of household products in the United States, P&G has operations in nearly 80 countries around the world and markets its nearly 300 brands in more than 160 countries; more than half of the company's revenues are derived overseas. Among its products, which fall into the main categories of fabric care, home care, beauty care, baby care, family care, health care, snacks, and beverages, are 16 that generate more than $1 billion in annual revenues: Actonel (osteoporosis treatment); Always (feminine protection); Ariel, Downy, and Tide (laundry care); Bounty (paper towels); Charmin (bathroom tissue); Crest (toothpaste); Folgers (coffee); Head & Shoulders, Pantene, and Wella (hair care); Iams (pet food); Olay (skin care); Pampers (diapers); and Pringles (snacks). Committed to remaining the leader in its markets, P&G is one of the most aggressive marketers and is the largest advertiser in the world. Many innovations that are now common practices in corporate America--including extensive market research, the brand-management system, and employee profit-sharing programs--were first developed at Procter & Gamble. 1837 Launch: Maker of Candles and Soap In 1837 William Procter and James Gamble formed Procter & Gamble, a partnership in Cincinnati, Ohio, to manufacture and sell candles and soap. Both men had emigrated from the United Kingdom. William Procter had emigrated from England in 1832 after his woolens shop in London was destroyed by fire and burglary; Gamble came from Ireland as a boy in 1819 when famine struck his native land. Both men settled in Cincinnati, then nicknamed "Porkopolis" for its booming hog-butchering trade. The suggestion for the partnership apparently came from their mutual father-in-law, Alexander Norris, who pointed out that Gamble's trade, soap making, and Procter's trade, candle making, both required use of lye, which was made from animal fat and wood ashes. Procter & Gamble first operated out of a storeroom at Main and Sixth streets. Procter ran the store while Gamble ran the manufacturing operation, which at that time consisted of a wooden kettle with a cast-iron bottom set up behind the shop. Early each morning Gamble visited houses, hotels, and steamboats collecting ash and meat scraps, bartering soap cakes for the raw materials. Candles were Procter & Gamble's most important product at that time. Procter & Gamble was in competition with at least 14 other manufacturers in its early years, but the enterprising partners soon expanded their operations throughout neighboring Hamilton and Butler counties. Cincinnati's location on the Ohio River proved advantageous as the company began sending its goods downriver. In 1848 Cincinnati was also linked to the major cities of the East via rail, and Procter & Gamble grew. Around 1851, when P&G shipments were moving up and down the river and across the country by rail, the company's famous moon-and-stars symbol was created. Because many people were illiterate at this time, trademarks were used to distinguish one company's products from another's. Company lore asserts that the symbol was first drawn as a simple cross on boxes of Procter & Gamble's Star brand candles by dockhands so that they would be easily identifiable when they arrived at their destinations. Another shipper later replaced the cross with an encircled star, and eventually William Procter added the familiar 13 stars, representing the original 13 U.S. colonies, and the man in the moon. The moon-and-stars trademark became a symbol of quality to Procter & Gamble's base 2 of loyal customers. In the days before advertising, trademarks were a product's principal means of identification, and in 1875 when a Chicago soap maker began using an almost-identical symbol, P&G sued and won. The emblem, which was registered with the U.S. Patent Office in 1882, changed slightly over the years until 1930, when Cincinnati sculptor Ernest Bruce Haswell developed its modern-day form. During the 1850s Procter & Gamble's business grew rapidly. In the early part of the decade the company moved its operations to a bigger factory. The new location gave the company better access to shipping routes and stockyards where hogs were slaughtered. In 1854 the company leased an office building in downtown Cincinnati. Procter managed sales and bookkeeping and Gamble continued to run the manufacturing. By the end of the decade, the company's annual sales were more than $1 million, and Procter & Gamble employed about 80 people. Prospering During the Civil War Procter & Gamble's operations were heavily dependent upon rosin--derived from pine sap--which was supplied from the South. In 1860, on the brink of the Civil War, two young cousins, James Norris Gamble and William Alexander Procter (sons of the founders), traveled to New Orleans to buy as much rosin as they could, procuring a large supply at the bargain price of $1 a barrel. When wartime shortages forced competitors to cut production, Procter & Gamble prospered. The company supplied the Union Army with soap and candles, and the moon and stars became a familiar symbol with Union soldiers. Although Procter & Gamble had foreseen the wartime scarcities, as time wore on, its stockpile of raw materials shrank. In order to keep up full production the company had to find new ways of manufacturing. Until 1863 lard stearin was used to produce the stearic acid for candle making. With lard expensive and in short supply, a new method was discovered to produce the stearic acid using tallow. What lard and lard stearin was available was instead developed into a cooking compound. The same process was later adapted to create Crisco, the first all-vegetable shortening. When P&G's supply of rosin ran out toward the end of the war, the company experimented with silicate of soda as a substitute, which later became a key ingredient in modern soaps and detergents. Launching Ivory Soap in 1878 After the war Procter & Gamble expanded and updated its facilities. In 1869 the transcontinental railroad linked the two coasts and opened still more markets to Procter & Gamble. In 1875 the company hired its first full-time chemist to work with James Gamble on new products, including a soap that was equal in quality to expensive castile soaps, but which could be produced less expensively. In 1878 Procter & Gamble's White Soap hit the market and catapulted P&G to the forefront of its industry. The most distinctive characteristic of the product, soon renamed Ivory soap, was developed by chance. A worker accidentally left a soap mixer on during his lunch break, causing more air than usual to be mixed in. Before long Procter & Gamble was receiving orders for "the floating soap." Although the office was at first perplexed, the confusion was soon cleared up, and P&G's formula for White Soap changed permanently. Harley Procter, William Procter's son, developed the new soap's potential. Harley Procter was inspired to rename the soap by Psalm 45: "all thy garments smell of myrrh, and aloes, and cassia, out of the ivory palaces whereby they have made thee glad." Procter devoted himself to the success of the new product and convinced the board of directors to advertise Ivory.