By Cliff Peale
Enquirer staff writer

DOWNTOWN—Even Procter & Gamble Co.'s problems have silver linings these days.

P&G has been unable to package enough Prilosec to keep up with strong demand since it introduced the over-the-counter heartburn drug last fall.

And this fall, it's placed Pampers diapers on "allocation," meaning it's reducing shipments to U.S. retailers until its plants can make enough to fill shipment orders that have grown 9 percent for the last six months, compared to the same period last year.

P&G is still filling more than 95 percent of retailer orders, a spokeswoman said.

But those problems are few and far between, chairman and chief executive A.G. Lafley told shareholders today after reviewing a year when Procter broke $50 billion in sales for the first time and earned profits of nearly $6.5 billion.

In the last three years, P&G has doubled its stock value and added the sales equivalent of companies like Nike Inc. and Sun Microsystems Inc., he said.

"While this performance is a good start, we know it's just a start," Lafley said. "It's the long term that counts."

The company's two-hour annual meeting featured the usual gathering of shareholder activists and retirees from Greater Cincinnati and Northern Kentucky, filling Procter & Gamble Hall at the Aronoff Center for the Arts.

Shareholders Jack and Mary Strong of White Oak attended and said they were happy with P&G's financial results and its continued contributions to this region.

"We're very proud of the company," said Jack Strong, who said at least eight of his relatives have worked for P&G at one time or another. "And we're happy that it's a pillar of Cincinnati."

In formal voting, owners of about 34 percent of total shares voted for a resolution calling for annual election of the board of directors, defeating the binding proposal. Owners of 51 percent of those shares actually voting approved the measure.

Shareholder gadfly Evelyn Davis had pushed the change, and argued after the vote that P&G's board should approve it anyway. But the directors opposed the measure coming in, arguing that the company's current staggered three-year board terms were better.

And shareholders also overwhelmingly defeated a resolution from animal-rights group People for the Ethical Treatment of Animals urging P&G's Iams pet-food unit to end all laboratory animal testing. Iams announced last week it was pulling tests out of contract laboratories and university labs during the next two years, a measure PETA had recommended.

"P&G should make Iams move out of the laboratory completely, because it's the right thing to do," PETA's Allison Ezell said.

Lafley was ready with a video of outside groups praising Iams, and said PETA's goals are admirable.

"While this is a goal we share, it's not technically feasible," he said.

E-mail cpeale@enquirer.com