01—Abstract
Summary
Summary of the 8-K filed June 11, 2014. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble (PG) filed an 8-K on June 10, 2014, to disclose significant changes in its financial reporting.
The company announced its intent to exit the pet care business, agreeing to sell its North American and other pet care operations to Mars, Inc. for $2.9 billiona. As a result, the results of the pet care business are being reported as discontinued operations, excluded from continuing operations and segment results from April 2014 onwards. Additionally, PG has revised its management accounting for unconsolidated investees, impacting segment reporting.
While these changes affect how segment earnings are presented, the company states they will not impact overall net earnings for the segments or the total company. This filing provides revised historical segment earnings and consolidated statements of earnings for various periods to reflect these adjustments, ensuring greater transparency for investors regarding the company's ongoing business focus and financial performance.
02—Key points
Key Highlights
- Procter & Gamble is exiting its pet care business, selling North American and other operations to Mars, Inc. for $2.9 billion cash.
- Pet care business results will be classified as discontinued operations, removed from continuing operations and segment reporting starting April 2014.
- Revised historical segment earnings and consolidated statements of earnings are provided for multiple periods (Q3 FY13-Q1 FY14, FY13).
- A change in management accounting for unconsolidated investees will alter segment reporting presentation but not affect total company net earnings.
- The pet care business was previously part of the Health Care reportable segment.
- The sale to Mars is expected to close in the first half of fiscal year 2015, pending regulatory approvals.
- The company is pursuing separate plans for its pet care business in European Union markets.
03—Questions
Frequently Asked Questions
What is the main reason for this 8-K filing?
This 8-K filing is primarily to inform investors about two key financial reporting changes: Procter & Gamble's decision to exit its pet care business and a change in how it accounts for unconsolidated investees, which affects segment reporting. Revised historical financial data is provided to reflect these changes.
How will the exit from the pet care business impact PG's reported financials?
The results of the pet care business will be reported as discontinued operations, meaning they will be excluded from the company's continuing operations and segment results from April 2014 onwards. This will allow investors to better focus on the performance of the ongoing business segments.
Will the changes in segment reporting affect the company's overall net earnings?
No, the company explicitly states that the changes in management accounting for unconsolidated investees, which impact segment reporting, will not affect the net earnings of the segments or the total company. The primary financial impact investors will see relates to the reclassification of the pet care business as discontinued operations.
What is the financial impact of the pet care business sale?
Procter & Gamble has an agreement to sell its pet care operations in North America and other selected countries to Mars, Incorporated for $2.9 billion in cash. The pet care business results will be presented as discontinued operations going forward until the sale is completed, expected in the first half of fiscal year 2015.
04—Continue