· 1 CORPORATE FINANCIAL REPORTING 12 – Financial Reporting of Owners’ Equity Long-Lived Assets

2 S TOCKHOLDERS’ E QUITY THE PROCTER & GAMBLE COMPANY CONSOLIDATED BALANCE SHEETS (Amounts in millions; June 30) SHAREHOLDERS’ EQUITY Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) 1,234 1,277 Common stock, stated value $1 per share (10,000 shares authorized; shares issued: ,007.9, ,007.6): 4,009 4,008 Additional paid-in capital 62,405 61,697 Reserve for ESOP debt retirement ( 1,357) ( 1,350) Accumulated other comprehensive income/(loss) ( 2,054) ( 7,822) Treasury stock, at cost (shares held: ,242.2, ,154.1) (67,278) (61,309) Retained earnings 70,682 64,614 Noncontrolling interest TOTAL SHAREHOLDERS’ EQUITY 68,001 61,439

· 3 S TOCKHOLDERS’ E QUITY Notice: - what P&G discloses about stock, - many companies combine the par value of common stock with APIC even though they have separate accounts, and - it has preferred stock, very few companies do.

· 4 S TOCKHOLDERS’ E QUITY OUTLINE Common stock Preferred stock Dividends Treasury stock Note: much governed by state laws

· 5 S TOCKHOLDERS’ E QUITY COMMON STOCK Usually considered the “real” owners of the corporation. Common stock may have par value, stated value or no-par, no-stated value, depending on the rules of the state of incorporation. Par/stated value are really meaningless.

· 6 S TOCKHOLDERS’ E QUITY DIVIDENDS Several types of dividends: Cash dividends Property dividends Stock dividends

· 7 S TOCKHOLDERS’ E QUITY DIVIDENDS – Property Dividends FASB believes property dividends should be valued at fair value.

· 8 S TOCKHOLDERS’ E QUITY PREFERRED STOCK Cross between debt and common stock - a clever financing gimmick. Called “preferred” because it has some features that common doesn’t.

· 9 S TOCKHOLDERS’ E QUITY PREFERRED STOCK COMMON FEATURES Some features of preferred stock: Rarely gets to vote Stated dividend rate Preference as to dividends Cumulative Participating Liquidation Convertible into common stock

· 10 S TOCKHOLDERS’ E QUITY Treasury Stock Cost method Par value method Donated to the company

· 11 S TOCKHOLDERS’ E QUITY QUESTIONS?