01—Abstract
Summary
Summary of the 8-K filed September 8, 2015. Cited figures are marked; the original filing is the authoritative source.
The Procter & Gamble Company (P&G) filed this Form 8-K on September 8, 2015, to disclose revised historical segment and consolidated earnings information.
This revision is primarily due to the company's strategic decision to exit certain Beauty businesses, including salon professional hair care, fine fragrances, cosmetics, and retail hair colorants, along with select hairstyling brands. Effective July 1, 2015, the results of these divested businesses are being reported as discontinued operations. The filing also details P&G's July 2015 announcement of a definitive agreement with Coty, Inc. to divest these beauty categories and brands.
The transaction is expected to be completed by the end of calendar year 2016 and may take the form of a Reverse Morris Trust split-off. This strategic shift aims to streamline P&G's portfolio, allowing the company to focus on its core, higher-margin businesses. Investors should note that financial results presented in this filing reflect these changes, with the divested businesses excluded from continuing operations and segment results starting from fiscal year 2015-2016.
02—Key points
Key Highlights
- P&G is reclassifying certain Beauty businesses (salon professional, fine fragrances, cosmetics, retail hair colorants, and select hairstyling brands) as discontinued operations, effective July 1, 2015.
- The company announced a definitive agreement with Coty, Inc. on July 9, 2015, to divest these Beauty businesses.
- The divestiture is expected to be completed by the end of calendar year 2016, with a preferred transaction structure being a Reverse Morris Trust split-off.
- Revised historical segment and consolidated earnings information for fiscal periods ending June 30, 2015, and prior quarters are provided, reflecting the discontinued operations treatment.
- The results of the divested businesses will be excluded from continuing operations and segment results beginning in fiscal year 2015-2016.
- Balance sheet positions for the affected businesses will be presented as 'held for sale' starting September 30, 2015.
- The filing provides revised financial data, including net sales, earnings before income taxes, and net earnings, allowing for a clearer view of P&G's core continuing operations.
03—Questions
Frequently Asked Questions
Why is P&G reclassifying its Beauty businesses as discontinued operations?
P&G is reclassifying these businesses as part of a strategic decision to exit certain Beauty categories to focus on its core, more profitable brands. The company has entered into an agreement to divest these businesses, and accounting rules require them to be reported as discontinued operations once a sale is probable and imminent.
What specific businesses are being divested?
The divested businesses include global salon professional hair care and color, retail hair color, cosmetics, and fine fragrance categories, along with select hairstyling brands. These were historically part of P&G's Beauty, Hair and Personal Care segment.
What is a Reverse Morris Trust split-off transaction?
A Reverse Morris Trust split-off is a complex transaction where P&G could spin off the divested businesses into a new, independent company, and then allow P&G shareholders to exchange their P&G shares for shares in the new company. This structure can offer tax advantages and allows P&G to shed the business while potentially offering shareholder value.
How will this affect P&G's reported financial results going forward?
Beginning in fiscal year 2015-2016, the results from these divested Beauty businesses will no longer be included in P&G's 'continuing operations' or 'segment results.' Financial statements will reflect this change, providing a clearer picture of the performance of P&G's ongoing core businesses. The financial tables in this filing provide revised historical data to reflect this reclassification.
04—Continue