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

2. 2 S TOCKHOLDERS’ E QUITY THE PROCTER & GAMBLE COMPANY CONSOLIDATED BALANCE SHEETS (Amounts in millions; June 30) 2011 2010 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: 2011- 4,007.9, 2010 - 4,007.6): 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: 2011 - 1,242.2, 2010 - 1,154.1) (67,278) (61,309) Retained earnings 70,682 64,614 Noncontrolling interest 361 324 TOTAL SHAREHOLDERS’ EQUITY 68,001 61,439

3. · 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. · 4 S TOCKHOLDERS’ E QUITY OUTLINE Common stock Preferred stock Dividends Treasury stock Note: much governed by state laws

5. · 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. · 6 S TOCKHOLDERS’ E QUITY DIVIDENDS Several types of dividends: Cash dividends Property dividends Stock dividends

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

8. · 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. · 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. · 10 S TOCKHOLDERS’ E QUITY Treasury Stock Cost method Par value method Donated to the company

11. · 11 S TOCKHOLDERS’ E QUITY QUESTIONS?