FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Ohio
|
|
31-0411980
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification Number)
|
One Procter & Gamble Plaza, Cincinnati, Ohio
|
|
45202
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
Three Months Ended September 30
|
||||||
Amounts in millions except per share amounts
|
2013
|
|
2012
|
||||
NET SALES
|
$
|
21,205
|
|
|
$
|
20,739
|
|
Cost of products sold
|
10,810
|
|
|
10,350
|
|
||
Selling, general and administrative expense
|
6,244
|
|
|
6,438
|
|
||
OPERATING INCOME
|
4,151
|
|
|
3,951
|
|
||
Interest expense
|
165
|
|
|
172
|
|
||
Interest income
|
21
|
|
|
19
|
|
||
Other non-operating income
|
5
|
|
|
28
|
|
||
EARNINGS BEFORE INCOME TAXES
|
4,012
|
|
|
3,826
|
|
||
Income taxes
|
955
|
|
|
973
|
|
||
NET EARNINGS
|
3,057
|
|
|
2,853
|
|
||
Less: Net earnings attributable to noncontrolling interests
|
30
|
|
|
39
|
|
||
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,027
|
|
|
$
|
2,814
|
|
|
|
|
|
|
|
||
BASIC NET EARNINGS PER COMMON SHARE
(1)
|
|
|
|
||||
Basic net earnings per common share
|
$
|
1.09
|
|
|
$
|
1.00
|
|
Diluted net earnings per common share
|
1.04
|
|
|
0.96
|
|
||
Dividends per common share
|
0.602
|
|
|
0.562
|
|
||
|
|
|
|
||||
Diluted Weighted Average Common Shares Outstanding
|
2,924.3
|
|
|
2,931.7
|
|
|
Three Months Ended September 30
|
||||||
Amounts in millions
|
2013
|
|
2012
|
||||
NET EARNINGS
|
$
|
3,057
|
|
|
$
|
2,853
|
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
|
|
|
|
||||
Financial statement translation
|
1,049
|
|
|
1,411
|
|
||
Unrealized gains/(losses) on cash flow hedges
|
(239
|
)
|
|
(230
|
)
|
||
Unrealized gains/(losses) on investment securities
|
14
|
|
|
—
|
|
||
Defined benefit retirement plans
|
(56
|
)
|
|
(27
|
)
|
||
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX
|
768
|
|
|
1,154
|
|
||
TOTAL COMPREHENSIVE INCOME
|
3,825
|
|
|
4,007
|
|
||
Less: Total comprehensive income attributable to noncontrolling interests
|
35
|
|
|
48
|
|
||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,790
|
|
|
$
|
3,959
|
|
|
Three Months Ended September 30
|
||||||
Amounts in millions
|
2013
|
|
2012
|
||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
$
|
5,947
|
|
|
$
|
4,436
|
|
OPERATING ACTIVITIES
|
|
|
|
||||
Net earnings
|
3,057
|
|
|
2,853
|
|
||
Depreciation and amortization
|
771
|
|
|
710
|
|
||
Share-based compensation expense
|
84
|
|
|
79
|
|
||
Deferred income taxes
|
(11
|
)
|
|
(18
|
)
|
||
Gain on purchase/sale of businesses
|
(2
|
)
|
|
(17
|
)
|
||
Changes in:
|
|
|
|
||||
Accounts receivable
|
(3
|
)
|
|
(795
|
)
|
||
Inventories
|
(452
|
)
|
|
(502
|
)
|
||
Accounts payable, accrued and other liabilities
|
(809
|
)
|
|
64
|
|
||
Other operating assets and liabilities
|
(731
|
)
|
|
397
|
|
||
Other
|
140
|
|
|
(1
|
)
|
||
TOTAL OPERATING ACTIVITIES
|
2,044
|
|
|
2,770
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures
|
(725
|
)
|
|
(805
|
)
|
||
Proceeds from asset sales
|
2
|
|
|
66
|
|
||
Acquisitions, net of cash acquired
|
1
|
|
|
12
|
|
||
Change in other investments
|
(124
|
)
|
|
(12
|
)
|
||
TOTAL INVESTING ACTIVITIES
|
(846
|
)
|
|
(739
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Dividends to shareholders
|
(1,708
|
)
|
|
(1,605
|
)
|
||
Change in short-term debt
|
1,862
|
|
|
1,033
|
|
||
Additions to long-term debt
|
1,073
|
|
|
2,225
|
|
||
Reductions of long-term debt
|
—
|
|
|
(1,251
|
)
|
||
Treasury stock purchases
|
(2,502
|
)
|
|
(2,584
|
)
|
||
Impact of stock options and other
|
304
|
|
|
951
|
|
||
TOTAL FINANCING ACTIVITIES
|
(971
|
)
|
|
(1,231
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(52
|
)
|
|
66
|
|
||
CHANGE IN CASH AND CASH EQUIVALENTS
|
175
|
|
|
866
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
6,122
|
|
|
$
|
5,302
|
|
|
|
|
Three Months Ended September 30
|
||||||||||
|
|
|
Net Sales
|
|
Earnings Before Income Taxes
|
|
Net Earnings
|
||||||
Beauty
|
2013
|
|
$
|
4,903
|
|
|
$
|
909
|
|
|
$
|
690
|
|
|
2012
|
|
4,940
|
|
|
852
|
|
|
658
|
|
|||
Grooming
|
2013
|
|
1,956
|
|
|
601
|
|
|
453
|
|
|||
|
2012
|
|
2,007
|
|
|
634
|
|
|
466
|
|
|||
Health Care
|
2013
|
|
2,306
|
|
|
398
|
|
|
267
|
|
|||
|
2012
|
|
2,322
|
|
|
486
|
|
|
321
|
|
|||
Fabric Care and Home Care
|
2013
|
|
6,700
|
|
|
1,298
|
|
|
857
|
|
|||
|
2012
|
|
6,503
|
|
|
1,327
|
|
|
877
|
|
|||
Baby, Feminine and Family Care
|
2013
|
|
5,503
|
|
|
1,121
|
|
|
725
|
|
|||
|
2012
|
|
5,248
|
|
|
1,123
|
|
|
724
|
|
|||
Corporate
|
2013
|
|
(163
|
)
|
|
(315
|
)
|
|
65
|
|
|||
|
2012
|
|
(281
|
)
|
|
(596
|
)
|
|
(193
|
)
|
|||
Total
|
2013
|
|
$
|
21,205
|
|
|
$
|
4,012
|
|
|
$
|
3,057
|
|
|
2012
|
|
20,739
|
|
|
3,826
|
|
|
2,853
|
|
|
Beauty
|
Grooming
|
Health Care
|
Fabric Care and Home Care
|
Baby, Feminine and Family Care
|
Corporate
|
Total Company
|
||||||||||||||
GOODWILL at June 30, 2013
|
$
|
16,663
|
|
$
|
20,617
|
|
$
|
8,318
|
|
$
|
4,453
|
|
$
|
4,828
|
|
$
|
309
|
|
$
|
55,188
|
|
Translation and other
|
263
|
|
245
|
|
76
|
|
43
|
|
59
|
|
—
|
|
686
|
|
|||||||
GOODWILL at September 30, 2013
|
$
|
16,926
|
|
$
|
20,862
|
|
$
|
8,394
|
|
$
|
4,496
|
|
$
|
4,887
|
|
$
|
309
|
|
$
|
55,874
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||
Intangible assets with determinable lives
|
$
|
9,819
|
|
|
$
|
5,096
|
|
Intangible assets with indefinite lives
|
26,992
|
|
|
—
|
|
||
Total identifiable intangible assets
|
$
|
36,811
|
|
|
$
|
5,096
|
|
|
Three Months Ended September 30
|
||||||
|
2013
|
|
2012
|
||||
Share-Based Compensation
|
|
|
|
||||
Stock options
|
$
|
59
|
|
|
$
|
54
|
|
Other share-based awards
|
25
|
|
|
25
|
|
||
Total share-based compensation
|
$
|
84
|
|
|
$
|
79
|
|
|
Pension Benefits
|
|
Other Retiree Benefits
|
||||||||||||
|
Three Months Ended September 30
|
|
Three Months Ended September 30
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Service cost
|
$
|
73
|
|
|
$
|
74
|
|
|
$
|
37
|
|
|
$
|
47
|
|
Interest cost
|
143
|
|
|
140
|
|
|
64
|
|
|
64
|
|
||||
Expected return on plan assets
|
(170
|
)
|
|
(148
|
)
|
|
(96
|
)
|
|
(95
|
)
|
||||
Prior service cost / (credit) amortization
|
6
|
|
|
3
|
|
|
(5
|
)
|
|
(5
|
)
|
||||
Net actuarial loss amortization
|
52
|
|
|
53
|
|
|
29
|
|
|
50
|
|
||||
Gross benefit cost
|
104
|
|
|
122
|
|
|
29
|
|
|
61
|
|
||||
Dividends on ESOP preferred stock
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(17
|
)
|
||||
Net periodic benefit cost
|
$
|
104
|
|
|
$
|
122
|
|
|
$
|
13
|
|
|
$
|
44
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||||||||||
|
September 30, 2013
|
|
June 30, 2013
|
|
September 30, 2013
|
|
June 30, 2013
|
|
September 30, 2013
|
|
June 30, 2013
|
|
September 30, 2013
|
|
June 30, 2013
|
||||||||||||||||
Assets recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,580
|
|
|
$
|
1,571
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,580
|
|
|
$
|
1,571
|
|
Other investments
|
31
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|
55
|
|
|
47
|
|
||||||||
Derivatives relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency hedges
|
—
|
|
|
—
|
|
|
164
|
|
|
168
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|
168
|
|
||||||||
Other foreign currency instruments
(1)
|
—
|
|
|
—
|
|
|
35
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
19
|
|
||||||||
Interest rates
|
—
|
|
|
—
|
|
|
167
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|
191
|
|
||||||||
Net investment hedges
|
—
|
|
|
—
|
|
|
224
|
|
|
233
|
|
|
—
|
|
|
—
|
|
|
224
|
|
|
233
|
|
||||||||
Total assets recorded at fair value
(2)
|
31
|
|
|
23
|
|
|
2,170
|
|
|
2,182
|
|
|
24
|
|
|
24
|
|
|
2,225
|
|
|
2,229
|
|
||||||||
Liabilities recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivatives relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other foreign currency instruments
(1)
|
—
|
|
|
—
|
|
|
37
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
90
|
|
||||||||
Interest rates
|
—
|
|
|
—
|
|
|
64
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
59
|
|
||||||||
Net investment hedges
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||||
Liabilities recorded at fair value
(3)
|
—
|
|
|
—
|
|
|
102
|
|
|
149
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|
149
|
|
||||||||
Liabilities not recorded at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term debt
(4)
|
23,865
|
|
|
22,671
|
|
|
3,092
|
|
|
3,022
|
|
|
—
|
|
|
—
|
|
|
26,957
|
|
|
25,693
|
|
||||||||
Total liabilities recorded and not recorded at fair value
|
$
|
23,865
|
|
|
$
|
22,671
|
|
|
$
|
3,194
|
|
|
$
|
3,171
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,059
|
|
|
$
|
25,842
|
|
(1)
|
Other foreign currency instruments are comprised of foreign currency financial instruments that do not qualify as hedges.
|
(2)
|
All derivative assets are presented in prepaid expenses and other current assets and other noncurrent assets. Investment securities are presented in available-for-sale investment securities and other noncurrent assets. The U.S government securities are included in other noncurrent assets in our Consolidated Balance Sheet at June 30, 2013. The amortized cost of the U.S. government securities was
$1,604
as of September 30, 2013 and June 30, 2013. All U.S. government securities have contractual maturities between one and five years. Fair values are generally estimated based upon quoted market prices for similar instruments.
|
(3)
|
All liabilities are presented in accrued and other liabilities or other noncurrent liabilities.
|
(4)
|
Long-term debt includes the current portion (
$2,064
and
$4,540
as of September 30, 2013 and June 30, 2013, respectively) of debt instruments. Long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes. Fair values are generally estimated based on quoted market prices for identical or similar instruments.
|
|
Notional Amount
|
|
Fair Value Asset/(Liability)
|
||||
|
September 30, 2013
|
|
June 30, 2013
|
|
September 30, 2013
|
|
June 30, 2013
|
Derivatives in Cash Flow Hedging Relationships
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$951
|
|
$951
|
|
$164
|
|
$168
|
Derivatives in Fair Value Hedging Relationships
|
|
|
|
|
|
|
|
Interest rate contracts
|
$10,226
|
|
$9,117
|
|
$103
|
|
$132
|
Derivatives in Net Investment Hedging Relationships
|
|
|
|
|
|
|
|
Net investment hedges
|
$1,303
|
|
$1,303
|
|
$223
|
|
$233
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$6,496
|
|
$7,080
|
|
$(2)
|
|
$(71)
|
|
Amount of Gain (Loss) Recognized in Accumulated OCI on Derivatives (Effective Portion)
|
||||||
|
September 30, 2013
|
|
June 30, 2013
|
||||
Derivatives in Cash Flow Hedging Relationships
|
|
|
|
||||
Interest rate contracts
|
$
|
6
|
|
|
$
|
7
|
|
Foreign currency contracts
|
17
|
|
|
14
|
|
||
Total
|
$
|
23
|
|
|
$
|
21
|
|
Derivatives in Net Investment Hedging Relationships
|
|
|
|
||||
Net investment hedges
|
$
|
139
|
|
|
$
|
145
|
|
|
Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
(1)
|
||||||
|
Three Months Ended September 30
|
||||||
|
2013
|
|
2012
|
||||
Derivatives in Cash Flow Hedging Relationships
|
|
|
|
||||
Interest rate contracts
|
$
|
2
|
|
|
$
|
2
|
|
Foreign currency contracts
|
(2
|
)
|
|
(18
|
)
|
||
Total
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
|
|
|
||||
|
Amount of Gain/(Loss) Recognized in Income
|
||||||
|
Three Months Ended September 30
|
||||||
|
2013
|
|
2012
|
||||
Derivatives in Fair Value Hedging Relationships
(2)
|
|
|
|
||||
Interest rate contracts
|
$
|
(29
|
)
|
|
$
|
40
|
|
Debt
|
29
|
|
|
(38
|
)
|
||
Total
|
—
|
|
|
2
|
|
||
Derivatives Not Designated as Hedging Instruments
(3)
|
|
|
|
||||
Foreign currency contracts
(4)
|
109
|
|
|
279
|
|
||
Commodity contracts
|
—
|
|
|
2
|
|
||
Total
|
$
|
109
|
|
|
$
|
281
|
|
(1)
|
The gain or loss on the effective portion of cash flow hedging relationships is reclassified from AOCI into net income in the same period during which the related item affects earnings. Such amounts are included in the Consolidated Statements of Earnings as follows: interest rate contracts in interest expense, foreign currency contracts in selling, general and administrative expense (SG&A) and interest expense and commodity contracts in cost of products sold.
|
(2)
|
The gain or loss on the ineffective portion of interest rate contracts and net investment hedges, if any, is included in the Consolidated Statements of Earnings in interest expense.
|
(3)
|
The gain or loss on contracts not designated as hedging instruments is included in the Consolidated Statements of Earnings as follows: foreign currency contracts in SG&A and commodity contracts in cost of products sold.
|
(4)
|
The gain or loss on non-qualifying foreign currency contracts substantially offsets the foreign currency mark-to-market impact of the related exposure.
|
Changes in Accumulated Other Comprehensive Income / (Loss) by Component
(1)
|
||||||||||||||||
|
Hedges
|
Investment Securities
|
Pension and Other Retiree Benefits
|
Financial Statement Translation
|
Total
|
|||||||||||
Balance at June 30, 2013
|
$
|
(3,529
|
)
|
$
|
(27
|
)
|
$
|
(4,296
|
)
|
$
|
353
|
|
$
|
(7,499
|
)
|
|
OCI before reclassifications
|
(240
|
)
|
14
|
|
(114
|
)
|
1,049
|
|
709
|
|
||||||
Amounts reclassified out of AOCI
|
1
|
|
—
|
|
58
|
|
—
|
|
59
|
|
||||||
Net current-period OCI
|
(239
|
)
|
14
|
|
(56
|
)
|
1,049
|
|
768
|
|
||||||
Balance at September 30, 2013
|
$
|
(3,768
|
)
|
$
|
(13
|
)
|
$
|
(4,352
|
)
|
$
|
1,402
|
|
$
|
(6,731
|
)
|
|
|
|
For the Three Months Ended September 30, 2013
|
|
|
||||||||||||||
|
Reserve June 30, 2013
|
|
Charges
|
|
Cash Spent
|
|
Charges Against Assets
|
|
Reserve September 30, 2013
|
||||||||||
Separations
|
$
|
296
|
|
|
$
|
53
|
|
|
$
|
(37
|
)
|
|
$
|
—
|
|
|
$
|
312
|
|
Asset-Related Costs
|
—
|
|
|
53
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|||||
Other Costs
|
27
|
|
|
23
|
|
|
(30
|
)
|
|
—
|
|
|
20
|
|
|||||
Total
|
323
|
|
|
129
|
|
|
(67
|
)
|
|
(53
|
)
|
|
332
|
|
|
Three Months Ended September 30
|
||
|
2013
|
||
Beauty
|
$
|
5
|
|
Grooming
|
5
|
|
|
Health Care
|
2
|
|
|
Fabric Care & Home Care
|
18
|
|
|
Baby, Feminine and Family Care
|
56
|
|
|
Corporate
(1)
|
43
|
|
|
Total Company
|
$
|
129
|
|
•
|
Overview
|
•
|
Summary of Results
|
•
|
Economic Conditions, Challenges and Risks
|
•
|
Results of Operations –
Three
Months Ended
September 30, 2013
|
•
|
Business Segment Discussion –
Three
Months Ended
September 30, 2013
|
•
|
Financial Condition
|
•
|
Reconciliation of Non-GAAP Measures
|
|
Three Months Ended September 30, 2013
|
||
|
Net Sales
|
|
Net Earnings
|
Beauty
|
23%
|
|
23%
|
Grooming
|
9%
|
|
15%
|
Health Care
|
11%
|
|
9%
|
Fabric Care and Home Care
|
31%
|
|
29%
|
Baby, Feminine and Family Care
|
26%
|
|
24%
|
Total
|
100%
|
|
100%
|
•
|
Net sales increased 2% versus the previous year to $21.2 billion. Organic sales, which exclude the impacts of acquisitions, divestitures and foreign exchange, were up 4%.
|
•
|
Unit volume increased 4%. Volume grew mid-single digits for Fabric Care and Home Care and Baby, Feminine and Family Care. Volume increased low single digits for Beauty. Volume declined low single digits for Grooming and Health Care.
|
•
|
Net earnings attributable to Procter & Gamble were $3.0 billion, an increase of $213 million, or 8% versus the prior year period. This increase was primarily driven by a $204 million after tax reduction in restructuring charges.
|
•
|
Diluted net earnings per share from continuing operations increased 8% to $1.04.
|
•
|
Core net earnings per share, which excludes incremental restructuring charges and base period legal charges, decreased 1% to $1.05.
|
•
|
Operating cash flow was $2.0 billion. Free cash flow, which is operating cash flow less capital expenditures, was $1.3 billion. Free cash flow productivity, which is the ratio of free cash flow to net earnings, was 43%.
|
|
Three Months Ended September 30
|
|||||||||
|
2013
|
|
2012
|
|
% CHG
|
|||||
NET SALES
|
$
|
21,205
|
|
|
$
|
20,739
|
|
|
2
|
%
|
COST OF PRODUCTS SOLD
|
10,810
|
|
|
10,350
|
|
|
4
|
%
|
||
GROSS PROFIT
|
10,395
|
|
|
10,389
|
|
|
—
|
%
|
||
SELLING GENERAL & ADMINISTRATIVE EXPENSE
|
6,244
|
|
|
6,438
|
|
|
(3
|
)%
|
||
OPERATING INCOME
|
4,151
|
|
|
3,951
|
|
|
5
|
%
|
||
INTEREST EXPENSE
|
165
|
|
|
172
|
|
|
(4
|
)%
|
||
INTEREST INCOME
|
21
|
|
|
19
|
|
|
11
|
%
|
||
OTHER NON-OPERATING INCOME/(EXPENSE), NET
|
5
|
|
|
28
|
|
|
(82
|
)%
|
||
EARNINGS BEFORE INCOME TAXES
|
4,012
|
|
|
3,826
|
|
|
5
|
%
|
||
INCOME TAXES
|
955
|
|
|
973
|
|
|
(2
|
)%
|
||
NET EARNINGS
|
3,057
|
|
|
2,853
|
|
|
7
|
%
|
||
LESS: NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
30
|
|
|
39
|
|
|
(23
|
)%
|
||
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,027
|
|
|
$
|
2,814
|
|
|
8
|
%
|
EFFECTIVE TAX RATE
|
23.8
|
%
|
|
25.4
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
PER COMMON SHARE
(1)
:
|
|
|
|
|
|
|||||
BASIC NET EARNINGS
|
$1.09
|
|
$1.00
|
|
9
|
%
|
||||
DILUTED NET EARNINGS
|
$1.04
|
|
$0.96
|
|
8
|
%
|
||||
DIVIDENDS
|
$0.602
|
|
$0.562
|
|
7
|
%
|
||||
|
|
|
|
|
|
|||||
AVERAGE DILUTED SHARES OUTSTANDING
|
2,924.3
|
|
|
2,931.7
|
|
|
|
|||
(1)
Basic net earnings per share and diluted net earnings per share are calculated on net earnings attributable to Procter & Gamble
|
||||||||||
|
|
|
|
|
|
|||||
COMPARISONS AS A % OF NET SALES
|
|
|
|
|
Basis Pt Chg
|
|||||
GROSS MARGIN
|
49.0
|
%
|
|
50.1
|
%
|
|
(110
|
)
|
||
SELLING, GENERAL & ADMINISTRATIVE EXPENSE
|
29.4
|
%
|
|
31.0
|
%
|
|
(160
|
)
|
||
OPERATING MARGIN
|
19.6
|
%
|
|
19.1
|
%
|
|
50
|
|
||
EARNINGS BEFORE INCOME TAXES
|
18.9
|
%
|
|
18.4
|
%
|
|
50
|
|
||
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
|
14.3
|
%
|
|
13.6
|
%
|
|
70
|
|
|
Net Sales Change Drivers 2013 vs. 2012 (Three Months Ended September 30)
|
|||||||||||||||||||
|
Volume with
Acquisitions
& Divestitures
|
|
Volume
Excluding
Acquisitions
& Divestitures
|
|
Foreign
Exchange
|
|
Price
|
|
Mix
|
|
Other*
|
|
Net Sales
Growth
|
|||||||
Beauty
|
2
|
%
|
|
2
|
%
|
|
-2
|
%
|
|
0
|
%
|
|
-1
|
%
|
|
0
|
%
|
|
-1
|
%
|
Grooming
|
-1
|
%
|
|
0
|
%
|
|
-2
|
%
|
|
1
|
%
|
|
0
|
%
|
|
-1
|
%
|
|
-3
|
%
|
Health Care
|
-1
|
%
|
|
-1
|
%
|
|
-1
|
%
|
|
2
|
%
|
|
-1
|
%
|
|
0
|
%
|
|
-1
|
%
|
Fabric Care and Home Care
|
6
|
%
|
|
6
|
%
|
|
-3
|
%
|
|
-1
|
%
|
|
1
|
%
|
|
0
|
%
|
|
3
|
%
|
Baby, Feminine and Family Care
|
6
|
%
|
|
6
|
%
|
|
-1
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
5
|
%
|
TOTAL COMPANY
|
4
|
%
|
|
4
|
%
|
|
-2
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
2
|
%
|
|
Three Months Ended September 30, 2013
|
|||||||||||||||||
|
Net Sales
|
|
% Change Versus Year Ago
|
|
Earnings Before Income Taxes
|
|
% Change Versus Year Ago
|
|
Net Earnings
|
|
% Change Versus Year Ago
|
|||||||
Beauty
|
$
|
4,903
|
|
|
(1
|
)%
|
|
909
|
|
|
7
|
%
|
|
690
|
|
|
5
|
%
|
Grooming
|
1,956
|
|
|
(3
|
)%
|
|
601
|
|
|
(5
|
)%
|
|
453
|
|
|
(3
|
)%
|
|
Health Care
|
2,306
|
|
|
(1
|
)%
|
|
398
|
|
|
(18
|
)%
|
|
267
|
|
|
(17
|
)%
|
|
Fabric Care and Home Care
|
6,700
|
|
|
3
|
%
|
|
1,298
|
|
|
(2
|
)%
|
|
857
|
|
|
(2
|
)%
|
|
Baby, Feminine and Family Care
|
5,503
|
|
|
5
|
%
|
|
1,121
|
|
|
—
|
%
|
|
725
|
|
|
—
|
%
|
|
Corporate
|
(163
|
)
|
|
N/A
|
|
|
(315
|
)
|
|
N/A
|
|
|
65
|
|
|
N/A
|
|
|
Total Company
|
21,205
|
|
|
2
|
%
|
|
4,012
|
|
|
5
|
%
|
|
3,057
|
|
|
7
|
%
|
July 2013 - September 2013
|
Net Sales Growth
|
|
Foreign Exchange Impact
|
|
Acquisition/ Divestiture Impact*
|
|
Organic Sales Growth
|
||||
Beauty
|
(1
|
)%
|
|
2
|
%
|
|
—
|
%
|
|
1
|
%
|
Grooming
|
(3
|
)%
|
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
Health Care
|
(1
|
)%
|
|
1
|
%
|
|
—
|
%
|
|
—
|
%
|
Fabric Care and Home Care
|
3
|
%
|
|
3
|
%
|
|
—
|
%
|
|
6
|
%
|
Baby, Feminine and Family Care
|
5
|
%
|
|
1
|
%
|
|
—
|
%
|
|
6
|
%
|
Total P&G
|
2
|
%
|
|
2
|
%
|
|
—
|
%
|
|
4
|
%
|
Three Months Ended September 30
|
2013
|
|
2012
|
||||
Diluted Net Earnings Per Share
|
$
|
1.04
|
|
|
$
|
0.96
|
|
Incremental Restructuring Charges
|
0.02
|
|
|
0.09
|
|
||
Charges for Pending European Legal Matters
|
—
|
|
|
0.01
|
|
||
Rounding impacts
|
(0.01
|
)
|
|
—
|
|
||
CORE EPS
|
$
|
1.05
|
|
|
$
|
1.06
|
|
Core EPS Growth
|
(1
|
)%
|
|
|
|
Operating Cash Flow
|
|
Capital Spending
|
|
Free Cash Flow
|
|
Net Earnings
|
|
Free Cash Flow
Productivity |
||||
Jul - Sept '13
|
$
|
2,044
|
|
|
$
|
(725
|
)
|
|
1,319
|
|
$3,057
|
|
43%
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
•
|
compliance with U.S. laws affecting operations outside of the United States, such as the Foreign Corrupt Practices Act;
|
•
|
compliance with a variety of local regulations and laws;
|
•
|
changes in tax laws and the interpretation of those laws;
|
•
|
changes in exchange controls and other limits on our ability to repatriate earnings from overseas;
|
•
|
discriminatory or conflicting fiscal policies;
|
•
|
difficulties enforcing intellectual property and contractual rights in certain jurisdictions;
|
•
|
greater risk of uncollectible accounts and longer collection cycles;
|
•
|
effective and immediate implementation of control environment processes across our diverse operations and employee base; and
|
•
|
imposition of increased or new tariffs, quotas, trade barriers or similar restrictions on our sales outside the United States.
|
•
|
ordering and managing materials from suppliers;
|
•
|
converting materials to finished products;
|
•
|
shipping products to customers;
|
•
|
marketing and selling products to consumers;
|
•
|
collecting and storing customer, consumer, employee, investor and other stakeholder information and personal data;
|
•
|
processing transactions;
|
•
|
summarizing and reporting results of operations;
|
•
|
hosting, processing and sharing confidential and proprietary research, business plans and financial information;
|
•
|
complying with regulatory, legal or tax requirements;
|
•
|
providing data security; and
|
•
|
handling other processes necessary to manage our business.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(3)
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under our Share Repurchase Program ($ in billions)
(3)
|
07/01/2013 - 07/31/2013
|
9,599,266
|
|
$79.78
|
|
6,244,521
|
|
(3)
|
08/01/2013 - 08/31/2013
|
15,508,772
|
|
$80.60
|
|
15,508,772
|
|
(3)
|
09/01/2013 - 09/30/2013
|
9,541,199
|
|
$78.61
|
|
9,541,199
|
|
(3)
|
(1)
|
The total number of shares purchased was 34,649,237 for the quarter. This includes 3,354,745 shares acquired by the Profit Sharing Trust. All transactions were made in the open market with large financial institutions. This table excludes shares withheld from employees to satisfy minimum tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless exercises through an independent third party and does not repurchase stock in connection with cashless exercises.
|
(2)
|
Average price paid per share is calculated on a settlement basis and excludes commission.
|
(3)
|
On August 1, 2013, the Company stated that fiscal year 2013-14 share repurchases to reduce Company shares outstanding are estimated to be $5 billion to $7 billion, notwithstanding any purchases under the Company's compensation and benefit plans. Purchases may be made in the open market and/or private transactions and purchases may be increased, decreased or discontinued at any time without prior notice. The share repurchases are authorized pursuant to a resolution issued by the Company's Board of Directors and is expected to be financed by a combination of operating cash flows and issuance of long-term and short-term debt.
|
Item 6.
|
Exhibits
|
(1)
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
|
|
|
|
|
|
|
|
|
|
THE PROCTER & GAMBLE COMPANY
|
|
|
|
||
October 25, 2013
|
|
|
|
/s/ VALARIE L. SHEPPARD
|
Date
|
|
|
|
(Valarie L. Sheppard)
|
|
|
|
|
Senior Vice President, Comptroller and Treasurer
|
|
|
|
|
Exhibit
|
|
|
|
|
|
||
3-1
|
|
|
Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 11, 2011) (Incorporated by reference to Exhibit (3-1) of the Company's Form 10-Q for the quarter ended September 30, 2011)
|
|
|
|
|
3-2
|
|
|
Regulations (as amended by shareholders at the annual meeting on October 8, 2013)
|
|
|
|
|
10-1
|
|
|
Summary of additional personal benefits available to certain officers and non-employee directors
|
|
|
|
|
11
|
|
|
Computation of Earnings per Share
|
|
|
|
|
12
|
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
|
||
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer
|
|
|
||
31.2
|
|
|
Rule 13a-14(a)/15d-14(a) Certification – Chief Financial Officer
|
|
|
||
32.1
|
|
|
Section 1350 Certifications – Chief Executive Officer
|
|
|
||
32.2
|
|
|
Section 1350 Certifications – Chief Financial Officer
|
|
|
||
101.INS
(1)
|
|
|
XBRL Instance Document
|
|
|
||
101.SCH
(1)
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
||
101.CAL
(1)
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
||
101.DEF
(1)
|
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
|
||
101.LAB
(1)
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
||
101.PRE
(1)
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1)
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
Three Months Ended
September 30
|
||||||
Amounts in millions except per share amounts
|
2013
|
|
2012
|
||||
BASIC NET EARNINGS PER SHARE
|
|
|
|
||||
Net earnings
|
$
|
3,057
|
|
|
$
|
2,853
|
|
Net earnings attributable to noncontrolling interests
|
$
|
(30
|
)
|
|
$
|
(39
|
)
|
Net earnings attributable to Procter & Gamble
|
$
|
3,027
|
|
|
$
|
2,814
|
|
Preferred dividends, net of tax benefit
|
$
|
(58
|
)
|
|
$
|
(57
|
)
|
Net earnings attributable to Procter & Gamble available to common shareholders
|
$
|
2,969
|
|
|
$
|
2,757
|
|
|
|
|
|
||||
Basic weighted average common shares outstanding
|
2,735.2
|
|
|
2,748.6
|
|
||
|
|
|
|
||||
Basic net earnings per common share
|
$1.09
|
|
$1.00
|
||||
|
|
|
|
||||
DILUTED NET EARNINGS PER SHARE
|
|
|
|
||||
Net earnings attributable to Procter & Gamble
|
$
|
3,027
|
|
|
$
|
2,814
|
|
|
|
|
|
||||
Basic weighted average common shares outstanding
|
2,735.2
|
|
|
2,748.6
|
|
||
Add potential effect of:
|
|
|
|
||||
Conversion of preferred shares
(1)
|
113.4
|
|
|
120.0
|
|
||
Exercise of stock options and other unvested equity awards
(2)
|
75.7
|
|
|
63.1
|
|
||
Diluted weighted average common shares outstanding
|
2,924.3
|
|
|
2,931.7
|
|
||
|
|
|
|
||||
Diluted net earnings per common share
|
$
|
1.04
|
|
|
$
|
0.96
|
|
|
Years Ended June 30
|
|
Three Months Ended September 30
|
||||||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2013
|
|
2012
|
||||||||||||||
EARNINGS, AS DEFINED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Earnings from operations before income taxes after eliminating undistributed earnings of equity method investees
|
$
|
14,934
|
|
|
$
|
12,792
|
|
|
$
|
15,021
|
|
|
$
|
14,881
|
|
|
$
|
14,275
|
|
|
$
|
3,979
|
|
|
$
|
3,793
|
|
Fixed charges (excluding capitalized interest)
|
899
|
|
|
1,000
|
|
|
1,052
|
|
|
1,167
|
|
|
1,576
|
|
|
218
|
|
|
230
|
|
|||||||
TOTAL EARNINGS, AS DEFINED
|
$
|
15,833
|
|
|
$
|
13,792
|
|
|
$
|
16,073
|
|
|
$
|
16,048
|
|
|
$
|
15,851
|
|
|
$
|
4,197
|
|
|
$
|
4,023
|
|
FIXED CHARGES, AS DEFINED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense (including capitalized interest)
|
$
|
754
|
|
|
$
|
844
|
|
|
$
|
888
|
|
|
$
|
1,014
|
|
|
$
|
1,431
|
|
|
$
|
185
|
|
|
$
|
192
|
|
1/3 of rental expense
|
171
|
|
|
176
|
|
|
170
|
|
|
176
|
|
|
177
|
|
|
42
|
|
|
43
|
|
|||||||
TOTAL FIXED CHARGES, AS DEFINED
|
$
|
925
|
|
|
$
|
1,020
|
|
|
$
|
1,058
|
|
|
$
|
1,190
|
|
|
l,608
|
|
|
$
|
227
|
|
|
$
|
235
|
|
|
RATIO OF EARNINGS TO FIXED CHARGES
|
17.1x
|
|
|
13.5x
|
|
|
15.2x
|
|
|
13.5x
|
|
|
9.9x
|
|
|
18.5x
|
|
|
17.1x
|
|
(1)
|
I have reviewed this quarterly report on Form 10-Q of The Procter & Gamble Company;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ A.G. LAFLEY
|
(A.G. Lafley)
|
Chairman of the Board, President and
Chief Executive Officer
|
|
October 25, 2013
|
Date
|
(1)
|
I have reviewed this quarterly report on Form 10-Q of The Procter & Gamble Company;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JON R. MOELLER
|
(Jon R. Moeller)
|
Chief Financial Officer
|
|
October 25, 2013
|
Date
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended
September 30, 2013
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in that Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company.
|
/s/ A.G. LAFLEY
|
(A.G. Lafley)
|
Chairman of the Board, President and
Chief Executive Officer
|
|
October 25, 2013
|
Date
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended
September 30, 2013
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in that Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company.
|
/s/ JON R. MOELLER
|
(Jon R. Moeller)
|
Chief Financial Officer
|
|
October 25, 2013
|
Date
|