Attached files
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| 8-K - OND 2013 EARNINGS RELEASE SLIDES - PROCTER & GAMBLE Co | ond2013earningsreleaseslides.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 January 25, 2014 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 4
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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 Effective Tax Rate – page 4
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6.
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Core Selling, General & Administrative Expenses (SG&A) as a % of Net Sales – page 5
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7.
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Free Cash Flow – 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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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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JAS 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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Developing Markets
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OND 2013
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2%
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5%
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1%
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8%
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October – December (OND) 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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-2%
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2%
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0%
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0%
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Grooming
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0%
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3%
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0%
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3%
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Health Care
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4%
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1%
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0%
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5%
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Fabric Care and Home Care
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1%
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3%
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0%
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4%
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Baby, Feminine and Family Care
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1%
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2%
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0%
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3%
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Total P&G
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0%
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3%
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0%
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3%
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*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 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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OND 13
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OND 12
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Diluted Net Earnings Per Share
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$1.18
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$1.39
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Gain on buyout of Iberian JV
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-
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($0.21)
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Incremental restructuring
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$0.03
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$0.05
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Rounding impacts
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-
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($0.01)
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Core EPS
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$1.21
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$1.22
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Core EPS Growth
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-1%
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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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Fiscal Year:
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FY 14 (Estimate)
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Diluted Net Earnings Per Share Increase
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7% to 9%
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Non-core restructuring
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(2%)
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Core EPS Growth
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5% to 7%
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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.
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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OND 13
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Diluted Net Earnings Per Share Decline
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-15%
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Gain on buyout of Iberian joint venture of $0.21
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15%
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Incremental restructuring of ($0.02)
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-1%
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Core EPS Growth
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-1%
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Foreign exchange impact of $0.11
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9%
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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.
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:
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OND 13
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OND 12
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Operating Profit Margin
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20.4%
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20.3%
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Incremental restructuring
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0.4%
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0.7%
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Rounding
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0.1%
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-
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Core Operating Profit Margin
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20.9%
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21.0%
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Basis point change
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-10
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5. Core Effective Tax Rate:
This is a measure of the Company’s effective tax rate adjusted for current and prior year charges for incremental restructuring and the prior year holding gain on the buyout of our Iberian joint venture partner. The table below provides a reconciliation of the effective tax rate to the Core effective tax rate:
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OND 13
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OND 12
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Effective Tax Rate
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21.6%
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21.9%
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Tax impact of incremental restructuring
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(0.1%)
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(0.3%)
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Tax impact of gain on buyout of Iberian JV
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-
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2.8%
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Core Effective Tax Rate
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21.5%
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24.4%
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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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OND 13
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OND 12
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SG&A as a percentage of sales
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29.6%
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30.6%
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Incremental restructuring
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(0.2%)
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(0.5%)
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Rounding impacts
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-
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0.1%
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Core SG&A as a percentage of sales
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29.4%
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30.2%
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Basis point change
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-80
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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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OND 2013
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$3,299
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($938)
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$2,361
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