The Procter & Gamble Company (PG) 10-Q 29 Oct 09 2010 Q1 Quarterly report Financial data

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Millions, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008
Net Sales	$19,807	$20,983	[1]
Cost of products sold	9,398	10,558	[1]
Selling, general and administrative expense	5,961	6,039	[1]
Operating Income	4,448	4,386	[1]
Interest expense	287	339	[1]
Other non-operating income, net	23	280	[1]
Earnings from Continuing Operations Before Income Taxes	4,184	4,327	[1]
Income taxes	1,157	1,212	[1]
Net Earnings from Continuing Operations	3,027	3,115	[1]
Net Earnings from Discontinued Operations	280	233	[1]
Net Earnings	$3,307	$3,348	[1]
Per Common Share
Basic net earnings from continuing operations	1.02	1.02	[1]
Basic net earnings from discontinued operations	0.09	0.08	[1]
Basic net earnings	1.11	1.1	[1]
Diluted net earnings from continuing operations	0.97	0.96	[1]
Diluted net earnings from discontinued operations	0.09	0.07	[1]
Diluted net earnings	1.06	1.03	[1]
Dividends	0.44	0.4	[1]
Diluted Weighted Average Common Shares Outstanding	3109.6	3239.5	[1]
[1]Certain amounts for prior periods were reclassified to conform with the fiscal 2010 presentation

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Millions	Sep. 30, 2009	Jun. 30, 2009
CURRENT ASSETS
Cash and cash equivalents	$6,294	$4,781	[1]
Accounts receivable	6,239	5,836	[1]
Inventories
Materials and supplies	1,699	1,557	[1]
Work in process	657	672	[1]
Finished goods	4,694	4,651	[1]
Total inventories	7,050	6,880	[1]
Deferred income taxes	1,254	1,209	[1]
Prepaid expenses and other current assets	2,691	3,199	[1]
Assets held for sale	989	0	[1]
TOTAL CURRENT ASSETS	24,517	21,905	[1]
PROPERTY, PLANT AND EQUIPMENT
Buildings	6,795	6,724	[1]
Machinery and equipment	29,618	29,042	[1]
Land	881	885	[1]
Total property, plant and equipment	37,294	36,651	[1]
Accumulated depreciation	(17,703)	(17,189)	[1]
NET PROPERTY, PLANT AND EQUIPMENT	19,591	19,462	[1]
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill	57,011	56,512	[1]
Trademarks and other intangible assets, net	32,686	32,606	[1]
NET GOODWILL AND OTHER INTANGIBLE ASSETS	89,697	89,118	[1]
OTHER NON-CURRENT ASSETS	4,576	4,348	[1]
TOTAL ASSETS	138,381	134,833	[1]
CURRENT LIABILITIES
Accounts payable	5,581	5,980	[1]
Accrued and other liabilities	9,610	8,601	[1]
Debt due within one year	12,957	16,320	[1]
Liabilities held for sale	526	0	[1]
TOTAL CURRENT LIABILITIES	28,674	30,901	[1]
LONG-TERM DEBT	22,439	20,652	[1]
DEFERRED INCOME TAXES	10,917	10,752	[1]
OTHER NON-CURRENT LIABILITIES	9,324	9,146	[1]
TOTAL LIABILITIES	71,354	71,451	[1]
SHAREHOLDERS' EQUITY
Preferred stock	1,308	1,324	[1]
Common stock - shares issued - 30-Sep 4,007.4 30-Jun 4,007.3	4,007	4,007	[1]
Additional paid-in capital	61,256	61,118	[1]
Reserve for ESOP debt retirement	(1,344)	(1,340)	[1]
Accumulated other comprehensive income (loss)	(1,963)	(3,358)	[1]
Treasury stock	(55,837)	(55,961)	[1]
Retained earnings	59,287	57,309	[1]
Noncontrolling interest	313	283	[1]
TOTAL SHAREHOLDERS' EQUITY	67,027	63,382	[1]
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$138,381	$134,833	[1]
[1]Certain amounts for prior periods were reclassified to conform with the fiscal 2010 presentation

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
Share data in Millions	Sep. 30, 2009	Jun. 30, 2009
Common stock, shares issued	4007.4	4007.3	[1]
[1]Certain amounts for prior periods were reclassified to conform with the fiscal 2010 presentation

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Millions	3 Months Ended Sep. 30, 2009		3 Months Ended Sep. 30, 2008
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$4,781	[1]	$3,313	[1]
OPERATING ACTIVITIES
Net earnings	3,307		3,348	[1]
Depreciation and amortization	771		810	[1]
Share-based compensation expense	99		126	[1]
Deferred income taxes	(29)		247	[1]
Gain on sale of businesses	(199)		(317)	[1]
Changes in:
Accounts receivable	(513)		(725)	[1]
Inventories	(96)		(833)	[1]
Accounts payable, accrued and other liabilities	818		398	[1]
Other operating assets and liabilities	398		384	[1]
Other	(1)		6	[1]
TOTAL OPERATING ACTIVITIES	4,555		3,444	[1]
INVESTING ACTIVITIES
Capital expenditures	(552)		(699)	[1]
Proceeds from asset sales	209		545	[1]
Acquisitions, net of cash acquired	(19)		(292)	[1]
Change in investments	(16)		34	[1]
TOTAL INVESTING ACTIVITIES	(378)		(412)	[1]
FINANCING ACTIVITIES
Dividends to shareholders	(1,336)		(1,254)	[1]
Change in short-term debt	1,914		3,436	[1]
Additions to long-term debt	1,496		878	[1]
Reductions of long-term debt	(4,986)		(1,287)	[1]
Treasury stock purchases	(8)		(3,911)	[1]
Impact of stock options and other	117		405	[1]
TOTAL FINANCING ACTIVITIES	(2,803)		(1,733)	[1]
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	139		(110)	[1]
CHANGE IN CASH AND CASH EQUIVALENTS	1,513		1,189	[1]
CASH AND CASH EQUIVALENTS, END OF PERIOD	$6,294		$4,502	[1]
[1]Certain amounts for prior periods were reclassified to conform with the fiscal 2010 presentation

1.Organization, Consolidation a

1.Organization, Consolidation and Presentation of Financial Statements Disclosure
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
1.Organization, Consolidation and Presentation of Financial Statements Disclosure	1. These statements should be read in conjunction with the Companys Annual Report on Form 10-K for the fiscal year ended June30, 2009. The results of operations for the three-month period ended September30, 2009 are not necessarily indicative of annual results. For the three months ended September30, 2009, the Company has evaluated subsequent events for potential recognition and disclosure through October29, 2009, the date of financial statement issuance.

2.Comprehensive Income

2.Comprehensive Income
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
2.Comprehensive Income	2. Comprehensive IncomeTotal comprehensive income is comprised primarily of net earnings, net currency translation gains and losses, impacts of net investment and cash flow hedges, net unrealized gains and losses on investment securities and defined benefit and other retiree benefit plan activities. Total comprehensive income (loss) for the three months ended September30, 2009 and 2008 was $4,702 million and $(252) million, respectively.

3.Segment Information

3.Segment Information
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
3.Segment Information	3. Segment Information Effective July1, 2009, we implemented a number of changes to the organization structure of the Beauty GBU, which resulted in changes to the components of our reportable segment structure. Female blades and razors were formerly included in the Grooming reportable segment and are now included in the Beauty reportable segment. Certain male-focused brands and businesses, such as Old Spice and Gillette personal care, moved from the Beauty reportable segment to the Grooming reportable segment. In addition, the Beauty GBU was renamed the Beauty and Grooming GBU. These changes have been reflected in our segment reporting for all periods presented. Following is a summary of segment results. Three Months Ended September30 Amounts in millions NetSales Earningsfrom Continuing Operations Before Income Taxes NetEarnings from Continuing Operations Beauty and Grooming GBU Beauty 2009 4,921 $ 1,027 $ 777 2008 5,181 1,018 788 Grooming 2009 1,858 489 351 2008 2,090 610 443 Health and Well-Being GBU Health Care 2009 2,979 830 550 2008 3,101 757 503 Snacks and Pet Care 2009 755 113 74 2008 807 90 55 Household Care GBU Fabric Care and Home Care 2009 6,130 1,510 1,009 2008 6,483 1,261 826 Baby Care and Family Care 2009 3,589 885 557 2008 3,772 807 514 Corporate 2009 (425 ) (670 ) (291 ) 2008 (451 ) (216 ) (14 ) Total 2009 19,807 4,184 3,027 2008 20,983 4,327 3,115

4.Goodwill and Other Intangible

4.Goodwill and Other Intangible Assets
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
4.Goodwill and Other Intangible Assets	4. Goodwill and Other Intangible Assets Goodwill as of September30, 2009 is allocated by reportable segment and global business unit as follows (amounts in millions): ThreeMonthsEnded September30, 2009 BEAUTY GROOMING GBU Beauty, beginning of year $ 18,668 Acquisitions and divestitures 23 Translation and other 329 Goodwill, September30, 2009 19,020 Grooming, beginning of year 21,391 Acquisitions and divestitures (16 ) Translation and other 262 Goodwill, September30, 2009 21,637 HEALTH WELL-BEING GBU Health Care, beginning of year 8,404 Acquisitions and divestitures (4 ) Reclassification to held for sale (1) (246 ) Translation and other 71 Goodwill, September30, 2009 8,225 Snacks and Pet Care, beginning of year 2,055 Acquisitions and divestitures Translation and other 5 Goodwill, September30, 2009 2,060 HOUSEHOLD CARE GBU Fabric Care and Home Care, beginning of year 4,408 Acquisitions and divestitures (3 ) Translation and other 56 Goodwill, September30, 2009 4,461 Baby Care and Family Care, beginning of year 1,586 Acquisitions and divestitures (1 ) Translation and other 23 Goodwill, September30, 2009 1,608 GOODWILL, beginning of year 56,512 Acquisitions and divestitures (1 ) Reclassification to held for sale (1) (246 ) Translation and other 746 Goodwill, September30, 2009 $ 57,011 (1) See Note 10 for further details on goodwill reclassification to held for sale. The increase in goodwill from June30, 2009 is primarily due to currency translation, partially offset by the reclassification of goodwill related to the pharmaceuticals business to assets held for sale. Identifiable intangible assets as of September30, 2009 are comprised of (amounts in millions): GrossCarrying Amount Accumulated Amortization Amortizable intangible assets with determinable lives $ 8,686 $ 3,255 Intangible assets with indefinite lives 27,255 Total identifiable intangible assets $ 35,941 $ 3,255 Amortizable intangible assets consist principally of brands, patents, technology and customer relationships. The non-amortizable intangible assets consist primarily of brands. The amortization of intangible assets for the three months ended September30, 2009, and 2008 was $145 million and $153 million, respectively.

5.Disclosure of Compensation Re

5.Disclosure of Compensation Related Costs, Share-based Payments
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
5.Disclosure of Compensation Related Costs, Share-based Payments	5. Pursuant to applicable accounting guidance for share-based payments, companies must recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. Total share-based compensation for the three months ended September30, 2009 and 2008 are summarized in the following table (amounts in millions): ThreeMonthsEnded September30 2009 2008 Share-Based Compensation Stock options $ 93 $ 107 Other share-based awards 6 19 Total share-based compensation $ 99 $ 126 Assumptions utilized in the model are evaluated and revised, as necessary, to reflect market conditions and experience.

6.Postretirement Benefits

6.Postretirement Benefits
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
6.Postretirement Benefits	6. Postretirement BenefitsThe Company offers various postretirement benefits to its employees. The components of net periodic benefit cost are as follows: Amounts in millions Pension Benefits OtherRetireeBenefits ThreeMonthsEnded September30 ThreeMonthsEnded September30 2009 2008 2009 2008 Service cost $ 55 $ 59 $ 26 $ 23 Interest cost 147 152 63 62 Expected return on plan assets (111 ) (132 ) (107 ) (111 ) Amortization of deferred amounts 4 4 (5 ) (6 ) Recognized net actuarial loss 23 8 4 1 Gross benefit cost (credit) 118 91 (19 ) (31 ) Dividends on ESOP preferred stock (28 ) (26 ) Net periodic benefit cost (credit) $ 118 $ 91 $ (47 ) $ (57 ) For the year ending June30, 2010, the expected return on plan assets is 7.1% and 9.3% for pension and other retiree benefit plans, respectively.

7.Risk Management Activities an

7.Risk Management Activities and Fair Value Measurements
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
7.Risk Management Activities and Fair Value Measurements	7. Risk Management Activities and Fair Value Measurements As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. We evaluate exposures on a centralized basis to take advantage of natural exposure netting and correlation. To the extent we choose to manage volatility associated with the net exposures, we enter into various financial transactions which we account for using the applicable accounting guidance for derivative instruments and hedging activities. These financial transactions are governed by our policies covering acceptable counterparty exposure, instrument types and other hedging practices. At inception, we formally designate and document qualifying instruments as hedges of underlying exposures. We formally assess, both at inception and at least quarterly, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair value or cash flows of the related underlying exposure. Fluctuations in the value of these instruments generally are offset by changes in the fair value or cash flows of the underlying exposures being hedged. This offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument. The ineffective portion of a change in the fair value of a qualifying instrument is immediately recognized in earnings. The amount of ineffectiveness recognized is immaterial for all periods presented. For additional details on the Companys risk management activities, refer to the Companys annual financial statements and footnotes in the Companys Annual Report on Form 10-K for the fiscal year ended June30, 2009. Fair Value Hierarchy Accounting guidance on fair value measurement for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entitys own assumptions or external inputs from inactive markets. In valuing assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. We calculate the fair value of our Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. The fair value of our Level 3 instruments is calculated as the net present value of expected cash flows based on externally provided inputs. These calculations take into consideration the credit risk of both the Company and our counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. The following table sets forth the Companys financial assets and liabilities as of September30 and June30, 2009 that are measured at fair val

8.New Accounting Pronouncements

8.New Accounting Pronouncements and Policies
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
8.New Accounting Pronouncements and Policies	8. New Accounting Pronouncements and Policies In December2007, the Financial Accounting Standards Board (FASB) issued new accounting guidance on business combinations. The new guidance revises the method of accounting for a number of aspects of business combinations including acquisition costs, contingencies (including contingent assets, contingent liabilities and contingent purchase price), and post-acquisition exit activities of acquired businesses. The Company adopted the new guidance beginning July1, 2009, and the adoption of the new guidance did not have a material effect on our financial position, results of operations or cash flows. In December 2007, the FASB also issued new accounting guidance on noncontrolling interests in consolidated financial statements. The new accounting guidance requires that a noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary, and requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. The Company retrospectively adopted the presentation and disclosure requirements of the new guidance on July1, 2009. The adoption of the new guidance did not have a material effect on our financial position, results of operations or cash flows. Noncontrolling interests of $283 million at June30, 2009 were reclassified from liabilities to shareholders equity in the Consolidated Balance Sheet. Net expense for income attributable to the noncontrolling interest totaling $28 million and $21 million for the three months ended September30, 2009 and 2008, respectively, are not presented separately in the Consolidated Statements of Earnings due to immateriality, but are reflected within other non-operating income, net. Net earnings represents net income attributable to the Companys common shareholders. No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on the Consolidated Financial Statements.

9.Commitments and Contingencies

9.Commitments and Contingencies
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
9.Commitments and Contingencies	9. Commitments and Contingencies Litigation We are subject to various legal proceedings and claims arising out of our business which cover a wide range of matters such as governmental regulations, antitrust and trade regulations, product liability, patent and trademark matters, income taxes and other actions. As previously disclosed, the Company is subject to a variety of investigations into potential competition law violations in Europe, as detailed in Part 2, Item1, Legal Proceedings of this 10-Q. We believe these matters involve a number of other consumer products companies and/or retail customers. The Companys policy is to comply with all laws and regulations, including all antitrust and competition laws, and to cooperate with investigations by relevant regulatory authorities, which the Company is doing. Competition and antitrust law inquiries often continue for several years and, if violations are found, can result in substantial fines. In other industries, fines have amounted to hundreds of millions of dollars. At this point, no significant formal claims have been made against the Company or any of our subsidiaries in connection with any of the above inquiries. In response to the actions of the European Commission and national authorities, the Company launched its own internal investigations into potential violations of competition laws. The Company has identified violations in certain European countries and appropriate actions have been taken. It is still too early for us to reasonably estimate the total amount of fines to which the Company will be subject as a result of these competition law issues. However, the ultimate resolution of these matters will likely result in fines or other costs that could materially impact our income statement and cash flows in the period in which they are accrued and paid, respectively. As these matters evolve, the Company will recognize the appropriate reserves. With respect to other litigation and claims, while considerable uncertainty exists, in the opinion of management and our counsel, the ultimate resolution of the various lawsuits and claims will not materially affect our financial position, results of operations or cash flows. We are also subject to contingencies pursuant to environmental laws and regulations that in the future may require us to take action to correct the effects on the environment of prior manufacturing and waste disposal practices. Based on currently available information, we do not believe the ultimate resolution of environmental remediation will have a material adverse effect on our financial position, results of operations or cash flows. Income Tax Uncertainties PG is present in over 150 taxable jurisdictions, and at any point in time has 50-60 audits underway at various stages of completion. We have tax years open ranging from 1997 and forward. We are generally not able to reliably estimate the ultimate settlement amounts or timing until the close of the audit. However, we evaluate our tax positions and establish liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite our beli

10.Discontinued Operations

10.Discontinued Operations
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
10.Discontinued Operations	10. Discontinued Operations In August 2009, the Company announced an agreement to sell our global pharmaceuticals business to Warner Chilcott plc (Warner Chilcott) for $3.1 billion of cash. Under the terms of the agreement, Warner Chilcott will acquire our portfolio of branded pharmaceutical products, our prescription drug product pipeline and manufacturing facilities in Puerto Rico and Germany.In addition, the majority of the 2,300 employees working on the pharmaceuticals business are expected to transfer to Warner Chilcott.The Company expects the transaction to close by the end of the 2009 calendar year, pending necessary regulatory approvals. The pharmaceuticals business had historically been part of the Companys Health Care reportable segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of the pharmaceuticals business are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Additionally, the assets and liabilities of the pharmaceuticals business at September30, 2009 are presented as held for sale in the Consolidated Balance Sheet. In November 2008, the Company completed the divestiture of our coffee business through the merger of its Folgers coffee subsidiary into The J.M. Smucker Company (Smucker) in an all-stock reverse Morris Trust transaction. In connection with the merger, 38.7million shares of common stock of the Company were tendered by shareholders and exchanged for all shares of Folgers common stock, resulting in an increase of treasury stock of $2,466 million. Pursuant to the merger, a Smucker subsidiary merged with and into Folgers and Folgers became a wholly owned subsidiary of Smucker. The Company recorded an after-tax gain on the transaction of $2,011 million, which is included in net earnings from discontinued operations in the Consolidated Statement of Earnings for the year ended June30, 2009. The coffee business had historically been part of the Companys Snacks, Coffee and Pet Care reportable segment, as well as the coffee portion of our away-from-home business, which is included in the Fabric Care and Home Care reportable segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of Folgers are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Following is selected financial information included in net earnings from discontinued operations for the pharmaceuticals and coffee businesses: Three months ended September30 2009 2008 Amounts in millions Pharmaceuticals Coffee Total Pharmaceuticals Coffee Total Net sales $ 555 $ $ 555 $ 599 $ 445 $ 1,044 Earnings from discontinued operations 430 430 240 116 356 Income tax expense (150 ) (150 ) (80 ) (43 ) (123 ) Net earnin

11.Reclassification

11.Reclassification
	3 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
11.Reclassification	11. Reclassification The Company has reclassified certain amounts in the prior period Consolidated Balance Sheet and Consolidated Statement of Earnings in accordance with our July1, 2009 retrospective adoption of new accounting guidance on noncontrolling interests in consolidated financial statements. See Note 8 for further details. The Company has reclassified certain amounts in the prior period Consolidated Statement of Cash Flows to be consistent with the current period presentation. Realized gains and losses from non-qualifying derivative instruments used to hedge currency exposures resulting from intercompany financing transactions were reclassified from operating activities to financing activities, which is consistent with the use of the instruments and their related cash flows.

Document Information

Document Information
	3 Months Ended Sep. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
	3 Months Ended Sep. 30, 2009
Entity [Text Block]
Trading Symbol	PG
Entity Registrant Name	PROCTER & GAMBLE CO
Entity Central Index Key	0000080424
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	2,921,734,338