Fellow P&G Shareholders: In last year’s annual report, I explained how P&G is designed to grow.

We’ve designed a global, diversified business portfolio that enables P&G to grow consistently and reliably. We’ve developed the core strengths — consumer understanding, brand-building, innovation, go-to-market capability, and scale — that are needed to win in the consumer products industry. We manage the business with rigorous strategic, financial and operating discipline. We’ve built the most diverse, globally experienced team of business leaders in P&G’s 171-year history. These elements work in combination to ensure P&G can meet or exceed its growth targets reliably year after year.

At the heart of P&G’s design for growth is our capability to innovate — broadly, reliably, and successfully, year after year, in every part of our business. We innovate across more categories and on more leading brands than any other consumer products company. We have a broader range of science and technology than any of our competitors. We invest more in innovation and marketing support than any other consumer products company.

We deliver an unrelenting stream of innovation with systematic discipline. And P&G’s businesses are run by women and men who are not only globally experienced general managers but also highly skilled innovation leaders.

This helps P&G deliver consistent, reliable innovation and reliable, sustainable growth. Innovation drives growth.

We saw this in fiscal 2008, as P&G delivered another year of innovation-driven growth at or above the Company’s target levels for sales, earnings-per-share and cash generation.

Fiscal 2008 Results
• Net sales increased 9%, to $83.5 billion. Organic sales increased 5%.
• Diluted earnings per share increased 20%, to $3.64 per share.
• Free cash flow from operating activities was $12.8 billion, or 106% of net earnings, well ahead of the 90% cash productivity target.

Fiscal 2008 was P&G’s seventh consecutive year of organic sales growth at or ahead of the long-term target range; brand and new product innovations, particularly in developing markets, accounted for virtually all this sales growth. Over the same period, diluted earnings per share have grown at a compound average growth rate of 13%, well ahead of our long-term target.

We’ve generated more than $60 billion in free cash flow since the beginning of the decade. Most importantly, we’ve delivered consistently strong total shareholder return over the past ten-, five-, three- and one-year periods, above the Dow Jones Industrial Average. ...

Read P&G Annual Report Online

P&G is designed to innovate consistently and successfully in every part of our business.

We define innovation broadly, in terms of what it is, where it comes from, and who’s responsible for it.
We invest in innovation at industry-leading levels with ongoing productivity savings.
We manage innovation with discipline.
We deliver innovation that builds consumer trust and loyalty over time.
We lead innovation on leading global brands and with an outstanding team of innovation leaders.

P&G is Designed to Innovate… and to grow.

Download P&G 2008 Annual Report

PDF format, 4.6MB, 86Pages.

Contents
Letter to Shareholders 2
Defining Innovation 10
Investing in Innovation 14
Managing Innovation 18
Delivering Innovation 22
Leading Innovation 26
Financial Contents 35
Corporate Officers 77
Board of Directors 78
Shareholder Information 79
11-Year Financial Summary 80
P&G at a Glance 82

Recognition
P&G is recognized as a leading global company, including a #5 ranking on Fortune’s “Global Most Admired Companies,” the #2 ranking on Fortune’s “Top Companies for Leaders” survey, the #4 ranking on Barron’s “World’s Most Respected List,” a #8 ranking on Business Week’s list of “World’s Most Innovative Companies,” top rankings on the Dow Jones Sustainability Index from 2000 – 2008, the “Advertiser of the Year” award at the 2008 Cannes International Advertising Festival, and a consistent #1 ranking within our industry on Fortune’s Most Admired list for 23 of 24 total years and for 11 years in a row.

P&G ranks among the top companies for Executive Women (National Association for Female Executives), African Americans (Working Mother and Black Enterprise Magazines), and Diversity (Diversity Inc. Magazine).

Supplier diversity is a fundamental business strategy at P&G. In 2008, P&G again spent over $1.9 billion with minority- and women-owned businesses. Since 2005, P&G has been a member of the Billion Dollar Roundtable, a forum of 14 corporations that spend more than $1 billion annually with diverse suppliers.

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