01—Abstract
Summary
Summary of the 8-K filed March 14, 2005. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble (PG) filed an 8-K on March 14, 2005, to disclose a reclassification of certain investments in auction rate securities.
Previously reported as cash and cash equivalents, these securities will now be classified as current investment securities. The company states this change reflects evolving accounting interpretations and is not material to its financial condition or cash flows, nor does it impact total assets or operating cash flows. The reclassification does not alter the company's Consolidated Statements of Earnings.
02—Key points
Key Highlights
- Reclassification of auction rate securities from cash and cash equivalents to current investment securities.
- Company asserts the reclassification is not material to financial condition or cash flows.
- The change has no impact on total assets or operating cash flows.
- No revision or restatement of the Company's Consolidated Statements of Earnings.
- Provides updated financial statements (Exhibit 99-1) and quarterly report items (Exhibits 99-2 and 99-3) reflecting this change.
- Auction rate securities have short reset dates (<= 90 days) but longer maturities (> 90 days).
03—Questions
Frequently Asked Questions
What is the primary reason for this 8-K filing?
The primary reason for this filing is to reclassify investments in auction rate securities from 'cash and cash equivalents' to 'current investment securities' on the Consolidated Balance Sheets and Consolidated Statements of Cash Flows.
Does this reclassification affect Procter & Gamble's reported earnings?
No, the company explicitly states that this reclassification has no effect on the amounts of total current assets, total assets, or operating cash flows, and in no way revises or restates the Company's Consolidated Statements of Earnings.
What are auction rate securities and why were they reclassified?
Auction rate securities are investments with interest rates that reset frequently (every 90 days or less) but have maturity dates longer than 90 days. The reclassification reflects converging interpretations of accounting treatment for such securities.
Are there any financial implications for investors due to this change?
The company states the change is not material to its financial condition and cash flows. While the classification of assets has changed, the overall financial picture and earnings remain unaffected by this specific reclassification.
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