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A

Case Study on

P&G

For the Course of International Business(IF)

Prepared by

ARVIND PRAJAPATI(10MBA081)

MBA 2010-12, Semester4

Submitted to

Mrs. Vaishali Shah

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT

(I2IM)

CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY (CHARUSAT)

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P&G Introduction

Founded in 1837, Procter & Gamble is one of the largest consumer products companies in the

world. In fiscal year 2007, it had annual revenue of US$ 68.2 billion, and ranked 74th on Fortune

500 list of the world's largest corporations. P&G has also been ranked 5th on Fortune's GlobalMost Admired Company list and 1st in Soaps and Cosmetics catrgory in 2011. We have been

ranked first in our category every year since the survey started in 1997.

P&G has operations in more than 80 countries, with more than 300 brands on market in 160

countries. These include beauty care, household care and Gillette products. Three billion times a

day, P&G brands touch the lives of people around the world. P&G Greater China business

includes Mainland China, Hong Kong and Taiwan, which were established in 1988, 1987 and

1985 respectively.

Procter & Gamble (P&G) is a Fortune 500 (Fortune 100) American multinational corporation

headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods.

In 2011, P&G recorded $82.6 billion dollars in sales. Fortune magazine ranked P&G at fifth

place of the "World's Most Admired Companies" list, which was up from sixth place in 2010.[4]

Procter & Gamble is the only Fortune 500 company to issue C Share common stock.

P&G Taiwan

Since starting operations in 1985, P&G has continuously invested in Taiwan, bringing not only

capital, but also the technology and concepts of marketing household products.

P&G Taiwan is the leading consumer products\ company and is the top 3 Advertisers in Taiwan.

We are known as innovation leader in market and has brought breakthrough like first shampoo-

condition in one, first disposable diaper .

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In Corporate social responsibility, P&G Taiwan has been a long-term sponsor of the "Six Minute

Protect A Life" program with Department of Heath to build the awareness of women cancer

screening.

P&G Taiwan follows the Asia sustainability plan to engage all employees to build sustainabilitythinking and practices into everyday work (i.e. lunch time light off, double sided printing). We

are strong advocates of global Earth Day campaign.

P&G Hong Kong

Since starting operations in 1987, P&G is the No. 1 consumer goods company in Hong Kong. It

is also the category market leader in Baby care, Shampoo, Conditioner, and Facial Moisturizer.

Noticeably, P&Gs brands are the most recalled advertising in the Media Magazine tracking.

P&G HK has been recognized as a lead site and learning lab for upstream technologies and new

products. P&G HK introduced the first 2-in-1 shampoo conditioner and the first feminine

protection product with wing to Hong Kong in the early years. Apart from marketing

excellence, P&G HK also take leadership with best practice in Efficient Customer Response

(ECR).

In 2009, P&G was awarded Caring Company for 5th consecutive years by the HK Council of

Social Services. The award recognizes company that has cultivated for a caring community and

promotes strategic partnership between business and social service sectors.

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History

William Procter, a candlemaker, and James Gamble, a soapmaker, emmigrated from England

and Ireland respectively. They settled in Cincinnati initially and met when they married sisters,

Olivia and Elizabeth Norris.[5] Alexander Norris, their father-in-law, called a meeting in which

he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result

of the suggestion, Procter & Gamble was born.

In 18581859, sales reached $1 million. By this point, approximately 80 employees worked for

Procter & Gamble. During the American Civil War, the company won contracts to supply the

Union Army with soap and candles. In addition to the increased profits experienced during the

war, the military contracts introduced soldiers from all over the country to Procter & Gamble's

products.

In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats

in water. The company called the soap Ivory. William Arnett Procter, William Procter's

grandson, began a profit-sharing program for the company's workforce in 1887. By giving the

workers a stake in the company, he correctly assumed that they would be less likely to go on

strike.

The company began to build factories in other locations in the United States because the demand

for products had outgrown the capacity of the Cincinnati facilities. The company's leaders began

to diversify its products as well and, in 1911, began producing Crisco, a shortening made of

vegetable oils rather than animal fats. As radio became more popular in the 1920s and 1930s, the

company sponsored a number of radio programs. As a result, these shows often became

commonly known as "soap operas."

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Procter & Gamble headquarters in Downtown Cincinnati, Ohio

The company moved into other countries, both in terms of manufacturing and product sales,

becoming an international corporation with its 1930 acquisition of the Thomas Hedley Co.,

based in Newcastle upon Tyne, England. Procter & Gamble maintained a strong link to the NorthEast of England after this acquisition. Numerous new products and brand names were introduced

over time, and Procter & Gamble began branching out into new areas. The company introduced

Tide laundry detergent in 1946 and Prell shampoo in 1947. In 1955, Procter & Gamble began

selling the first toothpaste to contain fluoride, known as Crest. Branching out once again in 1957,

the company purchased Charmin Paper Mills and began manufacturing toilet paper and other

paper products. Once again focusing on laundry, Procter & Gamble began making Downy fabric

softener in 1960 and Bounce fabric softener sheets in 1972. One of the most revolutionary

products to come out on the market was the company's Pampers, first test-marketed in 1961.

Prior to this point disposable diapers were not popular, although Johnson & Johnson had

developed a product called Chux. Babies always wore cloth diapers, which were leaky and labor

intensive to wash. Pampers provided a convenient alternative, albeit at the environmental cost of

more waste requiring landfilling.

Procter & Gamble acquired a number of other companies that diversified its product line and

significantly increased profits. These acquisitions included Folgers Coffee, Norwich Eaton

Pharmaceuticals (the makers of Pepto-Bismol), Richardson-Vicks, Noxell (Noxzema), Shulton's

Old Spice, Max Factor, and the Iams Company, among others. In 1994, the company made

headlines for big losses resulting from leveraged positions in interest rate derivatives, and

subsequently sued Bankers Trust for fraud; this placed their management in the unusual position

of testifying in court that they had entered into transactions that they were not capable of

understanding. In 1996, Procter & Gamble again made headlines when the Food and Drug

Administration approved a new product developed by the company, Olestra. Also known by its

brand name 'Olean', Olestra is a lower-calorie substitute for fat in cooking potato chips and othersnacks that during its development stages is known to have caused anal leakage and

gastrointestinal difficulties in humans.

Procter & Gamble has dramatically expanded throughout its history, but its headquarters still

remains in Cincinnati.

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In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods

company and placing Unilever into second place. This added brands such as Gillette razors,

Duracell, Braun, and Oral-B to their stable. The acquisition was approved by the European

Union and the Federal Trade Commission, with conditions to a spinoff of certain overlapping

brands. P&G agreed to sell its SpinBrush battery-operated electric toothbrush business to Church

& Dwight. It also divested Gillette's oral-care toothpaste line, Rembrandt. The deodorant brands

Right Guard, Soft & Dri, and Dry Idea were sold to Dial Corporation. The companies officially

merged on October 1, 2005. Liquid Paper, and Gillette's stationery division, Paper Mate were

sold to Newell Rubbermaid. In 2008, P&G branched into the record business with its

sponsorship of Tag Records, as an endorsement for TAG Body Spray.

P&G's dominance in many categories of consumer products makes its brand management

decisions worthy of study. For example, P&G's corporate strategists must account for the

likelihood of one of their products cannibalizing the sales of another.

On August 24, 2009, the Ireland-based pharmaceutical company Warner Chilcott announced

they had bought P&G's prescription-drug business for $3.1 billion.

P&G exited the food business in 2012 when it sold its Pringles snack food business to Kellogg's.

The company had previously sold Jif peanut butter and Folgers coffee in separate transactions to

Smucker's Procter and Gamble is a tier one sponsor of the London's Olympic Games 2012 and

sponsors 150 Athletes

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Key Dates:

1837: William Procter and James Gamble form Procter & Gamble, a partnership in Cincinnati,

Ohio, to manu-facture and sell candles and soap.

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.

1998: Organization 2005 restructuring is launched.

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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.

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Procter & Gamble

Type Public company

Traded as NYSE:PG

Dow Jones Industrial Average Component

S&P 500 Component

Industry Consumer goods

Personal care

Founded 1837

Headquarters Cincinnati, Ohio, USA

Area served Worldwide

Key people Bob McDonald

(Chairman,PresidentandCEO)

Products SeeList of Procter & Gamble brands

Revenue US$ 82.559 billion (FY 2011)

Operating

income

US$ 15.818 billion (FY 2011)

Net income US$ 11.797 billion (FY 2011)

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Total assets US$ 138.354 billion (FY 2011)

Total equity US$ 68.001 billion (FY 2011)[1]

Employees 129,000 (2010)[2]

Website www.pg.com

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Operations

As of July 1, 2011, the company's operations are categorized into two "Global Business Units"

with each Global Business Unit divided into "Business Segments" according to the company's

2011 Annual Report. Dimitri Panayotopoulos is Vice Chairman of Global Business Units

Beauty segment

Grooming segment

Health Care segment

Snacks & Pet Care segment

Fabric Care & Home Care segment

Baby Care & Family Home Care segment

Management and staff

The board of directors of Procter & Gamble currently has eleven members:

Robert A. McDonald,

Angela Braly,Meg Whitman

Johnathan A. Rodgers

Ernesto Zedillo,Scott Cook

Patricia A. Woertz

Susan D. Desmond-Hellmann

Maggie Wilderotter

W. James McNerney

Jr.andKenneth Chenault.

In March 2011Rajat Guptaresigned from the board after anSECaccusation ofGalleonGroupinsider trading.

In October 2008, P&G was named one of "Canada's Top 100 Employers" by Mediacorp Canada

Inc., and was featured inMaclean'snewsmagazine. Later that month, P&G was also named one

ofGreater Toronto's Top Employers, which was announced by theToronto Starnewspaper.

In May 2011Fortuneeditor-at-large Patricia Sellers praised P&G's board diversity, as five of the

company's eleven current directors are female and have all been on Fortune's annual Most

Powerful Women list.

Procter & Gamble is a member of theU.S. Global Leadership Coalition, a Washington, D.C.-based coalition of over 400 major companies and NGOs that advocates for a larger International

Affairs Budget, which funds American diplomatic and development efforts abroad.

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On November 19, 2011, the Associated Press and USA Today reported that a company

spokesman confirmed Dr. John Smale, former CEO, has died at age 84. [18]Online memorial

page for Dr. John Smale[19]

Brands

Leadership Brands

Aceis a brand oflaundry detergent/liquidavailable in numerous forms and scents.

Alwaysis a brand of feminine care products.

Arielis a brand oflaundry detergent/liquidavailable in numerous forms and scents.

Boldis a brand oflaundry detergent/liquid.

Bounceis a brand of laundry products sold in the United States and Canada.

Bountyis a brand ofpaper towelsold in the United States and Canada.

Braunis a small-appliances manufacturer specializing in electric shavers, epilators, hair care

appliances and blenders. Cascadeis a brand of dishwashing products.

CoverGirlis a brand of women's cosmetics.

Crest/Oral Bis a brand oftoothpasteand teeth-whitening products.

Dashis a brand oflaundry detergent/liquid.

Dawn/Fairyis a brand of dishwashingdetergent.[20]

Dolce & Gabbanais a brand of fine fragrances.

Downy/Lenoris a brand offabric softener.

Duracellis a brand of batteries and flashlights.

Eukanubais a brand of pet food.

Febreze/Ambi Puris a brand of air fresheners. Fixodentis a brand of air denture adhesives.

Fusionis a brand of men's wet shave razors and the first P&G brand to have reached

$1 billion in annual sales.

Gainis a brand of laundry detergent, fabric softeners and liquid dish soap.

Gilletteis a brand ofsafety razorand male grooming products.

Head & Shouldersis a brand of anti-dandruffshampooand conditioners.

Herbal Essencesis a brand ofshampooand conditioners.

Hugo Bossis a brand of fine fragrances.

Iamsis a brand of pet food.

Luvsis a brand of baby diapers. Mach3is a brand ofsafety razorand male grooming products.

Max Factoris a brand of women's cosmetics.

Mister Cleanis a brand of multi-purpose cleaner sold in the United States and Great Britain.

Olayis a brand of women'sskin careproducts.

Old Spiceis a brand of men's grooming products.

Oral-Bis a brand of toothbrush, and oral care products.

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Pampersis a brand of disposablediaperand other baby care products.

Panteneis a brand ofhair careproducts (conditioners/styling aids).

Prestobarba/Blueis a brand ofsafety razorand male grooming products.

Pringlesis a brand of potato- and wheat-based snacks.

Prilosecis an over-the-counter drug.

Puffsis a brand of tissues.

Rejoice/Pertis a brand ofhair careproducts (conditioners/styling aids).

Safeguardis a brand of soaps.

Secretis a female anti-perspirant brand.

SK-IIis a brand of women's and men'sskin careproducts.

Swifferis a brand of house-cleaning products.

Tampaxis a brand of feminine care products.

Tideis a brand of laundry detergent.

Venusis a brand female hair-removal products.

Vicksis an over the counter medication.

Wellais a brand name of hair care products (shampoo, conditioner, styling, hair color).

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Productions

Procter & Gamble produced and sponsored the first radio soap operas in the 1930s (Procter &Gamble's being known for detergents--soaps--was probably the genesis of the term "soap

opera")[citation needed]. When the medium switched to television in the 1950s and 1960s, most of the

new serials were sponsored and produced by the company. The serialThe Young and the

Restlessis currently broadcast on CBS and is still partially sponsored by Procter & Gamble.

WhenAs the World Turnsleft the air on September 17, 2010,The Young and the Restless,

became the only soap left that is partially sponsored by Procter & Gamble.

These past serials were produced by Procter & Gamble:

Another World

As the World Turns

The Brighter Day

The Catlins

The Edge of Night

The First Hundred Years

From These Roots

Guiding Light

Lovers and Friends/For Richer, for Poorer

Our Private World

Search for Tomorrow

Somerset

Texas

Young Doctor Malone

Procter & Gamble also was the first company to produce and sponsor a prime-time show, a 1965

spinoff of the daytime soap operaAs the World Turns calledOur Private World. PGP also

produced Shirley, a prime-timeNBCseries starringShirley Jones, in 1979; it lasted thirteen

episodes. They also producedTBS' first original comedy series,Down to Earth, which ran from

1984 to 1987 (110 episodes were produced). They also distributed the syndicated comedy

seriesThrob. Procter & Gamble Productions originally co-producedDawson's CreekwithSony

Pictures Televisionbut withdrew before the series premiere due to early press reviews. It also

produced the 1991 TV movieA Triumph of the Heart: The Ricky Bell Story, which was co-

produced byThe Landsburg Company. It also produces thePeople's Choice Awards.

In addition to self-produced items, Procter & Gamble also supports many Spanish-language

novellas through advertising on networks such asUnivision,Telemundo,Telefutura, andAzteca

America. Procter & Gamble was one of the first mainstream advertisers on Spanish-language TV

during the mid-1980s.

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In 2000, the company'sself careBeingGirlwebsite was launched.

In 2008, P&G expanded into music sponsorship when it joined Island Def Jam to create Tag

Records, named after a body spray that P&G acquired from Gillette. In April 2010, after the

cancellation ofAs the World Turns, PGP announced they were officially phasing out of the soap

industry, and expanding into more family appropriate programming.

Procter & Gamble also gave a $100,000 contract to the winners of Cycle 1 through 3

ofCanada's Next Top Model, makingAndrea Muizelaar,Rebecca HardyandMeaghan

Wallerwon the prize.

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STRATEGIC FOCUS

We are focused on strategies that we believe are right for the long-term health of theCompany and will deliver total shareholder return in the top one-third of our peer group.The Companys long-term financial targets are:

Grow organic sales 1% to 2% faster than market growth in the categories and geographiesin which we compete,

Deliver Core EPS growth of high single digits to low double digits, and

Generate free cash flow productivity of 90% or greater.In order to achieve these targets, we have created one over-arching strategy, inspired byour Purpose. At the heart of this strategy is innovating to win by touching and improving

the lives of:

More Consumers. We are improving more consumers' lives by innovating and expandingour product portfolio vertically, up and down value tiers. We continue to successfullydevelop and launch premium innovations focused on improving consumer value throughenhanced performance. We are also serving consumers who are more price consciousthrough lower-priced offerings with superior performance versus other mid-tier and value-tier alternatives.

In More Parts of the World. We are improving lives in more parts of the world byinnovating and expanding our existing product portfolio geographically into new markets.

We are increasing our presence in developing markets and increasing the amount of salesfrom these markets by focusing on affordability, accessibility and awareness of ourbrands.

More Completely. We are improving lives more completely by innovating to improveexisting products, creating or entering adjacent categories and expanding into newchannels to reach consumers where they shop. We are driving regimen use that broadensthe occasions for which our brands can serve the needs of each consumer. By attractingnew consumers into our existing brand franchises and broadening the products used byour current consumers, we are able to build scale, reduce costs and profitably grow marketshare.

We will leverage P&Gs five core strengths that create competitive advantages and arecritical to winning in the consumer products industry: consumer knowledge; innovation;brand-building; go-to-market capabilities and scale. We are coordinating our activitiesacross categories and markets, acting more intentionally as one Company. We are placingparticular emphasis on execution, simplification and scale as key improvement areas thatwill enable P&G to create the greatest value and competitive advantage. Finally, we arestrengthening the depth, breadth and quality of leadership at all levels of the Company tomake P&G a more demand-driven, real-time, future-focused organization.

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FIVE FORCE MODEL FOR P&G

Buyer Bargaining Power

A high absolute value of research and development spending allows the development of products

that actually do add value over the products of rivals, and high spending on advertising facilitates

the signaling of this value. Some examples:

Detergent optimized for cold water washing (saves energy costs)

Detergent optimized for single rinse (where clothes are washed by hand)

Compact detergents to reduce packaging waste

P&Gs three tiered product line helps with pricing power, as the lowest tier acts as a price

benchmark for customers deciding whether the higher tiers are appropriately priced. There issome retailer concentration, with Wal-Mart accounting almost 20% of sales. But Wal-Mart

needs P&G about as much as P&G needs Wal-Mart, so their bargaining power is not enough to

hurt P&Gs profitability. If the companys on-line sales channel grows ufficiently (see under

Threat of Substitutes) then this will give P&G additional

Supplier Bargaining Power

Raw materials are primarily commodities, and are readily available from multiple sources.

Labor is not organized, and is productive, with earnings per employee of close to $100,000.

Threat of New Entrants

Economies of scale allow P&G to spend much more than rivals on R&D and advertising. For

example, P & G spends over twice as much on research and development than its nearest

competitor. P&Gs largest competitors by trailing 4 quarters revenue are Unilever ($60B),

Kimberly Clark ($19B), and Johnson & Johnsons consumer segment ($16B). Only Unilever has

the scale to come close to what P&G can spend on advertising.

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Degree of Rivalry.

Consumers in this category enjoy a multitude of choices for everything from cleaning products to

bath washes. While many consumers prefer certain brands, switching costs in this industry are

quite low. It does not cost anything for a consumer to buy one brand of shampoo instead of

another. This, along with a variety of other factors, including the forces we've already examined,makes the industry quite competitive. Verdict: High degree of rivalry.

Examining an industry through the framework of Porter's five forces helps illustrate the different

dynamics at work. It's not always clear-cut, either, so one wouldn't expect all of the firms in this

industry to fall into one big bucket labeled wide moat or narrow moat. Instead, there are firms

with distinct, long-term advantages and wide moats, like Procter & Gamble and Colgate, while

others have advantages that we think may be less sustainable, such as Clorox and Kimberly-

Clark

Threat of Substitutes

Private label goods are a viable substitute for branded products; however, P&Gs three tier

pricing can reduce this threat. If the third tier (lowest cost brand) is priced close to that of private

label products, and consumers prefer the tier 3 brand to the private label product, then retailers

will need to allocate a proportionally higher amount of shelf space available for the tier 3 brand,

at the expense of shelf space for private labels, thereby creating a barrier to entry for private label

manufacturers and other potential new entrants to the industry. In their Q208 transcript, P&G

mentioned that private label is not really an issue in developing world. Overall, it is not

impacting P&Gs market share. In theirQ308 transcript, P&G mentioned that their products

together with private label are gaining share.

A potential offset to the private label threat is the on-line sales channel, where the

company can price their products closer to that of private label competitors and still

maintain the same margins. Today, P&G sells diapers directly from their Pampers website,

and also sells numerous products on Amazon.com. P&G sells the types of goods that aretypically resistant to diminishing demand during a recession.

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Market share/importance:

Procter & Gamble (P&G) is Americas biggest maker of household products, with at least 250

brands in six main categories: laundry and cleaning (detergents), paper goods (toilet paper),

beauty care (cosmetics, shampoos), food and beverages (coffee, snacks), feminine care (sanitary

towels) and health care (toothpaste, medicine).

P&Gs famous brands include Ariel, Pantene, Head & Shoulders, Fabreze, Sunny Delight, and

Oil of Olaz. About half of P&G's sales come from its top ten brands.

P&G also makes pet food and PUR water filters and produces the soap operas Guiding Light and

As the World Turns. Finally, P&G produces chemicals. Today, P&G markets its products to

more than five billion consumers in 130 countries. The company has on-the-ground operations in

over 70 countries around the world, and employs more than 106,000 people. Last years (2000)

turnover equalled $37 billion [25,6 billion].

P&G is one of the worlds biggest advertisers . Advertising Age estimate a 1999 media spend of

$4.7bn [3,3bn], of which around $3bn [3,253bn] was outside the US, making it the world's 2

advertiser .

Fortune 500 lists Americas Top Performing Companies. P&G ranks #39 on the list, before its

main competitor Johnson & Johnson (#57) and Kimberly-Clark (#142). P&G also outperforms

Unilever and Nestle, the companys main competitors overseas .

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New Alliances

One of P&G's new strategies is linking up with other companies to extract as much value from

its brands as possible. Last February (2001) Coke and P&G announced a $4bn [2,77bn]

alliance. The alliance would involve the union of some 40 consumer products (including SunnyDelight, Pringles and Minute Maid) under the umbrella of a Coke-P&G joint venture. P&G was

hoping Cokes far-reaching distribution network could give the company a boost. P&Gs

renowned R&D capacities were attractive to Coke. Eight months later the consumer goods

behemoths called the wedding off. A spokesman for Coke said: "After many months of due

diligence with Procter & Gamble, we felt that we could unlock the value of our brands more

effectively and profitably by retaining full control of them."[

However, P&G successfully tied up with chewing gum giant the Wrigley Company. The deal

will allow P&G to cash in on the global gum, mint, and breath-freshener market. This is bigger

than the toothpaste market and equal in size to the shampoo or skincare sectors. We will soon be

able to sweeten our mouths with Crest gum, Crest mints and Crest breath freshener, the

Guardian reports . P&G has recently announced it will sell the Jif and Crisco brands in a bid to

get rid of under-performing brands. P&G and J.M. Smucker Co., which makes a wide variety of

jams, jellies and other foods, is acquiring the Jif peanut butter and Crisco cooking oil brands

from P&G for $1 billion in stock

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Amounts in millions except per share amounts; Years ended

June 30 2011 2010 2009

NET SALES $82,559 $78,938 $76,694

Cost of products sold 40,768 37,919 38,690

Selling, general and administrative expense 25,973 24,998 22,630

OPERATING INCOME 15,818 16,021 15,374

Interest expense 831 946 1,358

Other non-operating income/(expense), net 202 (28) 397

EARNINGS FROM CONTINUING OPERATIONSBEFORE INCOME TAXES 15,189 15,047 14,413

Income taxes on continuing operations 3,392 4,101 3,733

NET EARNINGS FROM CONTINUING OPERATIONS 11,797 10,946 10,680

NET EARNINGS FROM DISCONTINUEDOPERATIONS 1,790 2,756

NET EARNINGS $11,797 $12,736 $13,436

BASIC NET EARNINGS PER COMMON SHARE:

Earnings from continuing operations $ 4.12 $ 3.70 $ 3.55

Earnings from discontinued operations

0.62 0.94BASIC NET EARNINGS PER COMMON SHARE 4.12 4.32 4.49

DILUTED NET EARNINGS PER COMMON SHARE:

Earnings from continuing operations 3.93 3.53 3.39

Earnings from discontinued operations 0.58 0.87

DILUTED NET EARNINGS PER COMMON SHARE 3.93 4.11 4.26

DIVIDENDS PER COMMON SHARE $ 1.97 $ 1.80 $ 1.64

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Liabilities and Shareholders Equity 2011 2

CURRENT LIABILITIESAccounts payable $ 8,022 $ 7

Accrued and other liabilities 9,290 8

Debt due within one year 9,981 8

TOTAL CURRENT LIABILITIES 27,293 24

LONG-TERM DEBT 22,033 21

DEFERRED INCOME TAXES 11,070 10

OTHER NONCURRENT LIABILITIES 9,957 10

TOTAL LIABILITIES 70,353 66

SHAREHOLDERS EQUITY

Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) 1,234 1

Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized)

Common stock, stated value $1 per share 4,008 4

Additional paid-in capital 62,405 61

Reserve for ESOP debt retirement (1,357) (1,3

Accumulated other comprehensive income (loss) (2,054) (7,8

Treasury stock, at cost (shares held: 20111,242.2, 20101,164.1) (67,278) (61,3

Retained earnings 70,682 64

Non controlling interest 361

TOTAL SHAREHOLDERS EQUITY 68,001 61

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $138,354 $128