Attached files
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| 8-K - Q1 FY 2014 EARNINGS SLIDES - PROCTER & GAMBLE Co | q1fy2014earningsslides.htm |
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 Procter & Gamble's October 25, 2013 earnings call and associated slides with the reconciliation to the most closely related GAAP measure. The measures provided are as follows:
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1.
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Organic Sales Growth – page 1
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2.
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Core EPS – pages 2 through 3
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3.
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Currency-neutral Core EPS – page 3
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4.
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Core Operating Profit Margin – page 4
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5.
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Core Gross Margin – page 4
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6.
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Core Selling, General & Administrative Expenses (SG&A) as a % of Net Sales – page 4
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7.
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Free Cash Flow – page 5
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8.
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Free Cash Flow Productivity – page 5
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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:
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Total P&G
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Net Sales Growth
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Foreign Exchange
Impact
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Acquisition/ Divestiture
Impact*
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Organic Sales Growth
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JAS 2012
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-4%
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6%
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0%
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2%
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OND 2012
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2%
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1%
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0%
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3%
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JFM 2013
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2%
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1%
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0%
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3%
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AMJ 2013
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2%
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2%
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0%
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4%
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FY 2014 (Estimate)
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1% to 2%
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2%
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0%
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3% to 4%
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JAS 2013
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Net Sales Growth
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Foreign Exchange
Impact
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Acquisition/ Divestiture Impact*
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Organic Sales Growth
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Beauty
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-1%
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2%
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0%
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1%
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Grooming
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-3%
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2%
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2%
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1%
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Health Care
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-1%
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1%
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0%
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0%
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Fabric Care and Home Care
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3%
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3%
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0%
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6%
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Baby, Feminine and Family Care
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5%
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1%
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0%
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6%
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Total P&G
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2%
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2%
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0%
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4%
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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 holding gain on the buyout of our Iberian joint venture in FY 2013, charges related to incremental restructuring due to increased focus on productivity and cost savings in FYs 2014, 2013 and 2012, charge from the balance sheet impact of the Venezuela devaluation in FY 2013, charges related to European legal matters in FY’s 2013, 2012, 2011 and 2010, impairment charges for goodwill and indefinite lived intangible assets in FY 2013 and 2012. 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:
Quarter / Period Data:
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JAS 13
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JAS 12
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Diluted Net Earnings Per Share
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$1.04
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$0.96
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Charges for European legal matters
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-
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$0.01
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Incremental restructuring
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$0.02
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$0.09
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Rounding impacts
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($0.01)
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-
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Core EPS
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$1.05
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$1.06
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Core EPS Growth
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-1%
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AMJ 13
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AMJ 12
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Diluted Net Earnings Per Share-Continuing Operations
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$0.64
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$0.74
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Charges for European legal matters
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$0.04
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-
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Impairment charges
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$0.10
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-
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Incremental restructuring
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$0.02
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$0.08
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Rounding impacts
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($0.01)
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-
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Core EPS
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$0.79
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$0.82
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Core EPS Growth
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-4%
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JFM 13
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JFM 12
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Diluted Net Earnings Per Share
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$0.88
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$0.82
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Snacks results of operations – Discontinued Operations
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-
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$(0.01)
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Diluted Net Earnings Per Share-Continuing Operations
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$0.88
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$0.81
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Venezuela balance sheet devaluation impacts
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$0.08
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-
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Impairment charges
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-
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$0.01
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Incremental restructuring
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$0.03
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$0.12
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Core EPS
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$0.99
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$0.94
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Core EPS Growth
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5%
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OND 12
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OND 11
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Diluted Net Earnings Per Share-Continuing Operations
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$1.39
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$0.56
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Impairment charges
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-
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$0.50
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Charges for European legal matters
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-
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$0.02
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Gain on buyout of Iberian JV
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($0.21)
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-
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Incremental restructuring
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$0.05
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$0.01
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Rounding
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($0.01)
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-
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Core EPS
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$1.22
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$1.09
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Core EPS Growth
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12%
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JAS 12
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JAS 11
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Diluted Net Earnings Per Share-Continuing Operations
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$0.96
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$1.01
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Incremental restructuring
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$0.09
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-
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Charges for European Legal Matters
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$0.01
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-
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Core EPS
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$1.06
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$1.01
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Core EPS Growth
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5%
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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. Currency-neutral Core EPS: This is a measure of the Company’s Core EPS excluding the impact of foreign exchange. We believe the currency-neutral Core EPS measure provides a more comparable view of year-on-year earnings per share growth.
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JAS 13
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JAS 12
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Diluted Net Earnings Per Share
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$1.04
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$0.96
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Charges for European legal matters
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-
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$0.01
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Incremental restructuring
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$0.02
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$0.09
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Foreign exchange impact
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$0.09
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-
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Rounding impacts
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($0.01)
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-
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Currency-neutral Core EPS
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$1.14
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$1.06
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Currency-neutral Core EPS Growth
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8%
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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.
4. Core Operating Profit Margin: This is a measure of the Company’s Operating Margin adjusted for the current and prior year charges related to incremental restructuring due to increased focus on productivity and cost savings and the prior year charges for European legal matters:
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JAS 13
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JAS 12
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Operating Profit Margin
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19.6%
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19.1%
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Incremental restructuring
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0.3%
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1.4%
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Charges for European legal matters
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-
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0.1%
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Core Operating Profit Margin
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19.9%
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20.6%
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Basis point change
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-70
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5. Core Gross Margin:
This is a measure of the Company’s gross margin adjusted for the current year charges related to incremental restructuring due to increased focus on productivity and cost savings:
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JAS 13
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JAS 12
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Gross Margin
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49.0%
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50.1%
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Incremental restructuring
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0.3%
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0.5%
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Core Gross Margin
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49.3%
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50.6%
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Basis point change
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-130
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6. Core Selling, General & Administrative Expenses (SG&A) as a % of Net Sales:
This is a measure of the Company’s SG&A as a % of Net Sales adjusted for the current and prior year charges related to incremental restructuring due to increased focus on productivity and cost savings and the prior year charges for European legal matters:
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JAS 13
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JAS 12
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SG&A as a % Net Sales
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29.4%
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31.0%
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Incremental restructuring
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-
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(0.9%)
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Charges for European legal matters
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-
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(0.1%)
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Core SG&A as a % Net Sales
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29.4%
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30.0%
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Basis point change
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-60
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7. 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):
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Operating Cash Flow
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Capital Spending
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Free Cash Flow
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JAS 2013
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$2,044
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($725)
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$1,319
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8. Free Cash Flow Productivity:
Free cash flow productivity is defined as the ratio of free cash flow to net earnings. The Company’s long-term target is to generate annual free cash flow at or above 90 percent of net earnings. We view free cash flow productivity as an important measure because it is a factor in determining the amount of cash available for dividends and discretionary investment. Free cash flow productivity is also a measure used to evaluate senior management and is a factor in determining their at-risk compensation. The reconciliation of free cash flow productivity is provided below (amounts in millions):
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Free Cash Flow
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Net Earnings
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Free Cash Flow Productivity
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JAS 2013
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$1,319
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$3,057
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43%
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