1. November 10, 2009 By: Ron Sivick

2.  Current price: $61.94  52 week range: $43.93 - 66.82  Market cap: 180B  Large Core, Classic Growth  Sector: Consumer Goods  Industry: Personal Products  Rating:  Beta: 0.55

3. Company Overview  Founded in 1837  Headquarters: Cincinnati, Ohio  engages in the manufacture and sale of consumer goods worldwide  Offers products to mass merchandisers, grocery stores, drug stores, and membership club stores  Operates in three global business units  Beauty  Health and Well-Being  Household Care

4. Company Overview Cont’d  Largest consumer product manufacturer  Offers multiple products in a category and often more than one brand, in order to reach the most possible shoppers  Continually improving products to increase brand loyalty  Has 23 brands which generate more than $1 billion in sales annually and another 20 brands that generate more than $500 million in sale  Focuses marketing and product development on its beauty-care and health-care segments as well as on developing markets

5. Overview cont’d  Continuing to expand to countries where they have no presence  Has doubled the sales it derives from developing markets, acquired and integrated Wella and Gillette, and divested a number of lower-margin brands  Beat EPS estimates for fourth quarter and year

7. Categories of Products  Air Fresheners  Antiperspirants & Deodorants  Baby and Child Care  Hair Care  Hair Color  Health Care  Pet Nutrition  Prescription Drugs  Prestige Fragrances  Batteries  Household Cleaners  Shaving  Skin Care  Small Appliances  Snacks  Paper Products  Oral Care  Laundry & Fabric Care  Cosmetics  Dish Washing  Feminine Care  Body Wash & Soap

8. Global Presence ArgentinaEgyptJapanPoland AustraliaFinlandLebanonPortugal AustriaFranceMexicoSpain BelgiumGermanyMoroccoSweden BrazilGreat BritainNetherlandsSwitzerland CanadaGreeceNorwayTurkey ChinaIndiaPanamaUSA ColombiaIrelandPeruVenezuela Czech RepublicItalyPhilippines

9. Net Sales Change Net Sales Change Drivers vs. Year Ago (2009 vs. 2008) Volume with Acquisitions & Divestitures Volume Excluding Acquisitions & Divestitures Foreign Exchan gePrice Mix/ Other Net Sales Growth BEAUTY Beauty-2%-1%-4%2%0%-4% Grooming-6%-5%-6%5%-2%-9% HEALTH AND WELL- BEING Health Care-4%-3%-5%4%-2%-7% Snacks and Pet Care-6% -4%9%-2%-3% HOUSEHOLD CARE Fabric Care and Home Care-3% -5%6%0%-2% Baby Care and Family Care1%2%-4%5%-1%1% TOTAL COMPANY-3%-2%-4%5%-1%-3%

10. Net Income 2000-2009 Year Net Income (Millions) 2000 $3,542 2001 $2,922 2002 $4,352 2003 $5,186 2004 $6,481 2005 $7,257 2006 $8,684 2007 $10,340 2008 $12,075 2009 $13,436 TTM $13,395

11. Sales by Business Segments

12. Cross Sectional Analysis ValuationP & G Johnson & Johnson Kimberly-Clark P/E 14.2313.1714.6 P/B 2.73.574.79 P/S 2.272.731.41 P/CF 1211.18.8 Dividend Yield 2.90%3.30%3.80% Forward P/E 15.1112.2312.28 Wall St. Rec. 2.2 2.5 Sell (5) Hold (3) Buy (1)

13. SWOT Analysis Strengths  Strong focus on Research and development  Leading market position  Diversified product portfolio  Strong brand portfolio

14. SWOT Analysis Weaknesses  Increasing instances of product  Dependent on Wal-Mart Stores for majority of its revenue

15. SWOT Analysis Opportunities  Expansion in developing markets  Future growth plans  Growing Indian FMCG market

16. SWOT Analysis Threats  Regulatory Environment  Global Economic Conditions  Counterfeit goods

17. Valuation Morningstar  Fair Value $77.00  Consider buying $61.60 My Estimate  $80.36

18. Recommendation Investment rationale  Focus on disciplined cash and cost management along with investing in capacity, innovation and consumer value to sustain market share during the recession  Continuing to utilize their billion-dollar brands in growing markets  Have turned their focus to the business segments that will derive the most profit growth  Extended the availability and affordability of P&G brands to more low-income consumers

19. Recommendation  Have chosen to focus on five core strengths that are required to win in the consumer products industry:  Consumer understanding  Interact with more than five million consumers each year in nearly 60 countries  Brand-building  Built the strongest portfolio of brands in the industry with 23 billion- dollar brands and 20 half-billion-dollar brands  Innovation  Leader in the industry  Go-to-market capability  Scale  Knowledge sharing, common systems and processes, and best practices as it is by size and scope