EX-99 3 slides.htm INFORMATIONAL SLIDES slides.htm
 
EXHIBIT 99
 
 

 
 
 
 

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 script for the earnings call and the preceding slides with the reconciliation to the most closely related GAAP measure.  The measures provided are as follows:
1.  
Organic Sales Growth – pages 1 and 2
2.  
Core EPS – pages 2 through 4
3.  
Core Operating Margin – pages 4 and 5
4.  
Core Operating Profit Growth – pages 5 and 6
5.  
Core Effective Tax Rate – page 6
6.  
Free Cash Flow – page 6
Note—where indicated, 1H means “first half” and 2H means “second half”.
 
1. 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
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%
Average–OND 09-OND 11
5%
  
-1%
  
0%
  
4%
JFM 12 (Estimate)
0% to 2%
  
3%
  
0%
  
3% to 5%
AMJ 12 (Estimate)
-1% to 2%
  
5% to 4%
  
0%
  
4% to 6%
1H FY 2011
2%
  
2%
  
0%
  
4%
2H FY 2011
7%
  
-3%
  
0%
  
4%
1H FY 2012
6%
  
-3%
  
1%
  
4%
2H FY 2012 (Estimate)
0% to 2%
  
4% to 3%
  
0%
  
4% to 5%
FY 2009
-3%
  
4%
  
1%
  
2%
FY 2010
3%
  
1%
  
-1%
  
3%
FY 2011
5%
  
0%
  
-1%
  
4%
FY 2012 (Estimate)
3% to 4%
  
1%
  
0%
  
4% to 5%
               
               
               
OND 2011
Net Sales Growth
  
Foreign Exchange Impact
  
Acquisition/ Divestiture Impact*
  
Organic Sales Growth
    
Beauty
1%
  
-1%
  
2%
  
2%
    
Grooming
1%
  
0%
  
1%
  
2%
    
Health Care
1%
  
0%
  
0%
  
1%
    
Snacks and Pet Care
3%
  
0%
  
0%
  
3%
    
Fabric Care and Home Care
5%
  
0%
  
0%
  
5%
    
Baby Care and Family Care
6%
  
0%
  
0%
  
6%
    
Total P&G
4%
  
0%
  
0%
  
4%
    
                   
*Acquisition/Divestiture Impact includes rounding impacts necessary to reconcile net sales to organic sales.
 
2. 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 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, a significant benefit in FY 2011 from the settlement of U.S. tax litigation primarily related to the valuation of technology donations, charges in FY’s 2012, 2011 and 2010 related to European legal matters, a FY 2010 charge related to a tax provision for retiree healthcare subsidy payments in the U.S. healthcare reform legislation, incremental restructuring charges in FY 2009 to offset the dilutive impact of the Folgers divestiture, and significant adjustments to tax reserves in FY 2008.  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:
 
Fiscal Year Data:
 
      
FY 2011
  
FY 2010
  
FY 2009
  
FY 2008
Diluted Net Earnings Per Share - Continuing Operations
      
$3.93
  
$3.53
  
$3.39
  
$3.40
Settlement from U.S. Tax Litigation
      
($0.08)
  
-
  
-
  
-
Charges for European Legal Matters
      
$0.10
  
$0.09
  
-
  
-
Charge for Taxation of Retiree Healthcare Subsidy
      
-
  
$0.05
  
-
  
-
Incremental Folgers-related Restructuring Charges
      
-
  
-
  
$0.09
  
-
Significant Adjustments to Tax Reserves
      
-
  
-
  
-
  
($0.14)
Rounding Impacts
              
($0.01)
  
-
Core EPS
 
      
$3.95
 
  
$3.67
 
  
$3.47
 
  
$3.26
 
Core EPS Growth
      
8%
  
6%
  
6%
    
 
 
Quarter / Period Data:  
OND 11
  
OND 10
  
OND 09
  
Diluted Net Earnings Per Share-Continuing Operations
            
$0.57
$1.11
  
$1.01
  
Impairment charges
$0.50
  
-
  
-
  
Charges for European legal matters
$0.02
  
$0.10
  
$0.09
  
Settlement from U.S. tax litigation
-
  
($0.08)
  
-
  
Incremental restructuring
$0.01
  
 -
  
 -
  
Core EPS
$1.10
  
$1.13
  
$1.10
  
Core EPS Growth
-3%
  
3%
      
             
             
             
 
JFM
11
  
JFM
10
  
Diluted Net Earnings Per Share – Continuing Operations
$0.96
  
$0.83
  
    Charge for Taxation of Retiree Healthcare Subsidy
-
  
$0.05
  
    Rounding Impacts
-
  
$0.01
  
Core EPS
$0.96
  
$0.89
  
Core EPS Growth
8%
      
 
 
 
 
1H FY
2012
  
1H FY
2011
  
1H FY
2010
Diluted Net Earnings Per Share-Continuing Operations
$1.60
  
$2.13
  
$1.98
Impairment charges
$0.50
  
-
  
-
Charges for European legal matters
$0.02
  
$0.10
  
$0.09
Settlement for U.S. Tax litigation
-
  
($0.08)
  
-
Incremental restructuring
$0.01
  
 -
  
 -
Core EPS
$2.13
  
$2.15
  
$2.07
Core EPS Growth
-1%
  
4%
    
 
 
 
JFM 12 (Est.)
  
JFM 11
Diluted Net Earnings Per Share
$0.81 to $0.87
  
$0.96
  Incremental Restructuring
$0.10
  
-
Core EPS
$0.91 to $0.97
  
$0.96
Core EPS Growth
-5% to 1%
    
 
 
 
AMJ 12 (Est.)
  
AMJ 11
  
Diluted Net Earnings Per Share
$1.44 to $1.61
  
$0.84
  
  One-time gain from snacks divestiture
($0.55) to ($0.65)
  
-
  
  Incremental restructuring
$0.07 to $0.04
  
-
  
Core EPS
$0.96 to $1.00
  
$0.84
  
Core EPS Growth
14% to 19%
      

 
 
 

 
 
2H FY 2012 (Estimate)
  
2H FY 2011
  
2H FY 2010
Diluted Net Earnings Per Share-Continuing Operations
$2.25 to $2.48
  
$1.80
  
$1.54
One-time gain from snacks divestiture
($0.55) to ($0.65)
  
-
  
-
Charge for taxation of retiree healthcare subsidy
-
  
-
  
$0.05
Incremental restructuring
$0.17 to $0.14
  
-
  
-
Rounding impacts
 -
  
 -
  
$0.01
Core EPS
$1.87 to $1.97
  
$1.80
  
$1.60
Core EPS Growth
4% to 9%
  
13%
    
 
 
 
 
FY 2012 (Est.)
  
FY 2011
  
Diluted Net Earnings Per Share
$3.85 to $4.08
  
$3.93
  
  One-time gain from snacks divestiture
($0.55) to ($0.65)
      
  Impairment charges
$0.50
  
-
  
  Charges for European legal matters
$0.02
  
$0.10
  
  Settlement from U.S. tax litigation
-
  
($0.08)
  
  Incremental restructuring
$0.18 to $0.15
  
-
  
Core EPS
$4.00 to $4.10
  
$3.95
  
Core EPS Growth
1% to 4%
      
 
 
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.
 
 
 
 
 
3. Core Operating Margin:
This is a measure of the Company’s operating margin 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:
 
 
OND 11
  
OND 10
Operating Margin
12.4%
  
20.0%
Impairment charges
7.0%
  
-
Charges for European legal matters
0.3%
  
1.4%
Incremental restructuring
0.1%
  
-
Core Operating Margin
19.8%
  
21.4%
Basis point change
-160 bps
    
       
 
 
  2H FY 2012 (Estimate)    2H FY 2011 
Operating Margin
 17.0% to 18.3%      17.2%
  Charges for European legal matters -      0.0%
   Incremental restructuring 1.7% to 1.4%    - 
       
Core Operating Margin  18.7% to 19.7%   17.2%
Basis point change 150 to 250    
 
 
 
 




 
 
 

4. 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:
 

 
OND 11
  
JAS 11
  
AMJ 11
  
JFM 11
Operating Profit Growth
-36%
  
-4%
  
11%
  
-5%
   
Impairment charges
36%
  
-
  
-
  
-
Charges for European legal matters
-6%
  
-
  
-
  
-
Incremental restructuring
1%
  
-
  
-
  
-
Rounding
1%
  
-
  
-
  
-
Core Operating Profit Growth
-4%
  
-4%
  
11%
  
-5%
   



 
2H FY 2012 (Est.)
  
1H FY 2012
  
2H FY 2011
  
1H FY 2011
Operating Profit Growth
0% to 7%
  
-19%
  
2%
  
-4%
   
Impairment charges
-
  
18%
  
-
  
-
Charges for European legal matters
-
  
-3%
  
-
  
-
Incremental restructuring
10% to 8%
  
-
  
-
  
-
Rounding
-
  
-
  
-
  
1%
Core Operating Profit Growth
10% to 15%
  
-4%
  
2%
  
-3%
   

 
 
 
 
 
AMJ 12 (Estimate)
  
 
 
 
JFM 12 (Estimate)
Operating Profit Growth
11% to 19%
  
-8% to -2%
 
Impairment charges
-
  
-
Charges for European legal matters
-
  
-
Incremental restructuring
8% to 5%
  
10%
Core Operating Profit Growth
19% to 24%
  
2% to 8%

 

5. Core Effective Tax Rate:
This is a measure of the Company’s effective tax rate adjusted for the non-core adjustments described above.  The table below provides a reconciliation of the effective tax rate to the Core tax rate:
     
OND 2011
  
Effective Tax Rate
    
36.7%
  
Tax impact of impairment charges
    
(11.7%)
  
Tax impact of European legal matters
    
(0.4%)
  
Tax impact of incremental restructuring
    
0.2%
  
Rounding
    
0.1%
  
Core Effective Tax Rate
 
    
24.9%
 
  
 
 
6. Free Cash Flow:
Free cash flow is defined as operating cash flow less capital spending.  We view free cash flow as an important measure because it is one factor in determining the amount of cash available for dividends and discretionary investment.  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 free cash flow is provided below (amounts in millions):
 
 
Operating Cash Flow
Capital Spending
Free Cash Flow
Oct-Dec ‘11
$3,328
($947)
$2,381