EX-99.B 5 deutschebankslides.htm DEUTSCHE BANK CONFERENCE SLIDES deutschebankslides.htm
Exhibit 99.b
 
 

 
 

The Procter & Gamble Company: Reg G Reconciliation of Non-GAAP measures
 
In accordance with the SEC’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings call and slides with the reconciliation to the most closely related GAAP measure.
 
Organic Sales Growth:
Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons.  We believe this provides investors with a more complete understanding of underlying sales trends by providing sales growth on a consistent basis.  Organic sales is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.  The reconciliation of reported sales growth to organic sales is as follows:
 
Total P&G  
Net Sales Growth
  
Foreign Exchange Impact
  
Acquisition/ Divestiture Impact*
  
Organic Sales Growth
AMJ 09
-11%
  
9%
  
1%
  
-1%
JAS 09
-6%
  
7%
  
1%
  
2%
OND 09
6%
  
-2%
  
1%
  
5%
JFM 10
7%
  
-3%
  
0%
  
4%
AMJ 10
5%
  
-1%
  
0%
  
4%
JAS 10
2%
  
3%
  
-1%
  
4%
OND 10
2%
  
2%
  
-1%
  
3%
JFM 11
5%
  
-1%
  
0%
  
4%
AMJ 11
10%
  
-5%
  
0%
  
5%
JAS 11
9%
  
-5%
  
0%
  
4%
OND 11
4%
  
0%
  
0%
  
4%
JFM 12
2%
  
1%
  
0%
  
3%
Average–OND 09-JFM 12
5%
  
-1%
  
0%
  
4%
AMJ 12 (Estimate)
-2% to -1%
  
4%
  
0%
  
2% to 3%
Average–FY 10-FY 12 (est.)
4%
  
0%
  
0%
  
4%
Total Developing
Average–AMJ 11-JFM 12
14%
  
-2%
  
0%
  
12%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core EPS:  This is a measure of the Company’s diluted net earnings per share from continuing operations excluding certain items that are not judged to be part of the Company’s sustainable results or trends.  This includes impairment charges in FY 2012 for goodwill and indefinite lived intangible assets, charges in FY 2013 and FY 2012 related to incremental restructuring charges due to increased focus on productivity and cost savings, and charges in FY 2012 related to European legal matters.  We believe the Core EPS measure provides an important perspective of underlying business trends and results and provides a more comparable measure of year-on-year earnings per share growth.  Core EPS is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.  The tables below provide a reconciliation of diluted net earnings per share to Core EPS:
 
AMJ 12 (Est.)
  
AMJ 11
Diluted Net Earnings Per Share
$1.17 to $1.26
  
$0.84
Gain from snacks divestiture
($0.47) to ($0.50)
    
Snacks results of operations – Discontinued Operations
($0.02)
  
($0.02)
       
Diluted Net Earnings Per Share–Continuing Operations
 
$0.68 to $0.74
 
  
$0.82
Incremental Restructuring
$0.07 to $0.05
  
-
Core EPS
$0.75 to $0.79
  
$0.82
Core EPS Growth
-9% to -4%
    
 
 
 
 
 
FY 2013 (Est.)
    
Diluted Net EPS Growth–Continuing Operations
20%
    
Impairment charges
-16%
    
Incremental restructuring
1%
    
Charges for European legal matters
-1%
    
Rounding
-1%
    
Core EPS Growth
 
3%
    
 
Note – All reconciling items are presented net of tax.  Tax effects are calculated consistent with the nature of the underlying transaction.  The charge for the significant settlement from U.S. tax litigation is tax expense.
 
 
Core Operating Profit Growth:
This is a measure of the Company’s operating profit growth adjusted for the current year impairment charges for goodwill and indefinite lived intangible assets, current year charges related to incremental restructuring charges due to increased focus on productivity and cost savings, and charges in current and prior year related to the European legal matters:
 
 
JFM 12
  
OND 11
  
JAS 11
  
Operating Profit Growth
-11%
  
-36%
  
-4%
  
Impairment charges
1%
  
37%
  
0%
  
Charges for European legal matters
0%
  
-6%
  
0%
  
Incremental restructuring
12%
  
1%
  
0%
  
Core Operating Profit Growth
2%
  
-4%
  
-4%
  
 
Adjusted Free Cash Flow:  Adjusted free cash flow is defined as operating cash flow less capital spending and the after-tax impacts of the global pharmaceuticals divestitures (including Actonel in Japan).  We view adjusted free cash flow as an important measure because it is one factor in determining the amount of cash available for dividends and discretionary investment.  Adjusted free cash flow is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.  The reconciliation of adjusted free cash flow is provided below (amounts in millions).
 
Adjusted Free Cash Flow Productivity:  Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the gains of certain divestitures (Folgers and Pharmaceuticals).  Given the size of these gains and our view that they are not part of our sustainable business, we have excluded the gains from our calculation.  The Company’s long-term target is to generate free cash productivity at or above 90 percent of net earnings.  Adjusted free cash flow productivity is also one of the measures used to evaluate senior management.  We believe this provides a better perspective of our underlying liquidity trends.  The reconciliation of adjusted free cash flow productivity is provided below (amounts in millions):
 
 
 
Operating Cash Flow
Capital Spending
Tax Payment on Divestitures
Adjusted Free Cash Flow
Net Earnings
Divestiture Gain
Net Earnings excluding Divestiture Gain
Adjusted Free Cash Flow Productivity
FY ‘06
$11,372
($2,667)
  
$8,705
$8,684
  
$8,684
100%
FY ‘07
$13,410
($2,945)
  
$10,465
$10,340
  
$10,340
101%
FY ‘08
$15,008
($3,046)
  
$11,962
$12,075
  
$12,075
99%
FY ‘09
$14,983
($3,238)
  
$11,745
$13,522
$2,011
$11,511
102%
FY ‘10
$16,131
($3,067)
$980
$14,044
$12,846
$1,585
$11,261
125%
FY ‘11
$13,330
($3,306)
  
$10,024
$11,927
  
$11,927
84%