8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act Of 1934

Date of Report (Date of earliest event reported) February 23, 2006

THE PROCTER & GAMBLE COMPANY

(Exact name of registrant as specified in its charter)

Ohio
  (State or other jurisdiction
of incorporation) 1-434
  (Commission
File Number) 31-0411980
  (IRS Employer
Identification No.)

One Procter & Gamble Plaza, Cincinnati, Ohio
  (Address of principal executive offices) 45202
  (Zip Code)

Registrant’s telephone number, including area code (513) 983-1100

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 7.01 REGULATION FD DISCLOSURE

     On February 23, 2006, The Procter & Gamble Company (the “Company”) provided a presentation at the Consumer Analyst Group of New York 2006 Conference, which was previously announced and webcast. Certain presentation materials concerning the Gillette integration and Company financial measures are attached hereto as Exhibit 99.1 and the accompanying reconciliation pursuant to Regulation G is attached hereto as Exhibit 99.2. The Company is furnishing this 8-K pursuant to Item 7.01, “Regulation FD Disclosure”.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

THE PROCTER & GAMBLE COMPANY


BY:           /S/ STEVEN W. JEMISON          
Steven W. Jemison, Secretary and
Associate General Counsel
 

February 23, 2006

EXHIBITS

99.1      Certain presentation materials selected from the Analyst Meeting held on February 23, 2006

99.2      Reconciliation

EX-99.1

EXHIBIT 99.1
 

1
 

CAGNY Conference February 23, 2006 1

2
 

Forward Looking Statement 2 All statements, other than statements of historical fact included in this release, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this release, there are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) the ability to achieve business plans, including with respect to lower income consumers and growing existing sales and volume profitably despite high levels of competitive activity, especially with respect to the product categories and geographical markets (including developing markets) in which the Company has chosen to focus; (2) the ability to successfully execute, manage and integrate key acquisitions and mergers, including (i) the Domination and Profit Transfer Agreement with Wella, and (ii) the Company's merger with The Gillette Company, and to achieve the cost and growth synergies in accordance with the stated goals of the Gillette transaction; (3) the ability to manage and maintain key customer relationships; (4) the ability to maintain key manufacturing and supply sources (including sole supplier and plant manufacturing sources); (5) the ability to successfully manage regulatory, tax and legal matters (including product liability, patent, and other intellectual property matters), and to resolve pending matters within current estimates; (6) the ability to successfully implement, achieve and sustain cost improvement plans in manufacturing and overhead areas, including the Company's outsourcing projects; (7) the ability to successfully manage currency (including currency issues in volatile countries), debt (including debt related to the Company's announced plan to repurchase shares of the Company's stock), interest rate and certain commodity cost exposures; (8) the ability to manage the continued global political and/or economic uncertainty and disruptions, especially in the Company's significant geographical markets, as well as any political and/or economic uncertainty and disruptions due to terrorist activities; (9) the ability to successfully manage competitive factors, including prices, promotional incentives and trade terms for products; (10) the ability to obtain patents and respond to technological advances attained by competitors and patents granted to competitors; (11) the ability to successfully manage increases in the prices of raw materials used to make the Company's products; (12) the ability to stay close to consumers in an era of increased media fragmentation; and (13) the ability to stay on the leading edge of innovation. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our most recent 10-K, 10-Q and 8-K reports.

3
 

Regulation G Disclosure For full reconciliation, visit: www.pg.com/investors 3

4
 

High Quality Earnings Growth P&G base business tracking to ~10% Op. Income Growth and 10%+ EPS Growth Q1 '03 Q2 '03 East 0.113 0.12 0.089 0.103 1H FY'05 2H FY'05 1H FY'06 2H FY'06- E Operating Income ex. Gillette Impacts

5
 

5 FY'02 FY'03 FY'04 FY'05 FY '06-E 1.55 1.51 1.19 0.94 0.9 Strong Cash Results Target 90%+ *Calculation: (Operating Cash Flow - Capital Spending)/ Net Earnings Free Cash Flow Productivity*

6
 

1 2 3 East 14 50 36 1 2 3 East 14 50 36 Better Business Mix Driving Growth FY '98 36% Health & Beauty Care Balance of Company 51% FY '06 +15% pts $ Sales 6

7
 

Integration Update Good progress on revenue and cost synergies On track with integration On track with financial targets

8
 

Growth Synergies $4-5 billion of value 3 yr. goal - $750 MM Achieved 1st quarter revenue synergies

9
 

4/06 7/06 10/06 10/05 1/06 Complete staffing decisions. All employees know their future in combined company Right Guard Divestiture Sales organization finalizes Go-To-Market Reinvention - including new "integrated" trade terms 1st wave of systems integration: 15% to 25% 2nd wave of systems integration: 70% to 80% Complete integration of order, shipping, billing systems enabling completion of sales force integration with single order pad Integration of legacy trade funds systems Consolidation of physical distribution network Bulk of plant systems integration begins and continues thru 2009 Revenue synergies (Co-marketing, Distribution Build, In-Store, Gillette/Venus Adjacencies) Fusion Launch Purchases synergies (Media, Marketing , Direct Materials, Indirect Business Costs Gillette Integration Milestones 3rd wave of systems integration: 85% to 95% Go To Market reinvention implementation Complete integration of corporate staff functions 1/07 & Beyond 9

10
 

EPS Impact on P&G Cents per Share Impact FY05/06 FY06/07 FY07/08 Initial EPS dilution guidance - Current FY '06 estimate Of Which, One time Items Dilution excl. One time Items (20-26) (19-23) (9-11) (10-12) (12-18) (3-7) (9-11) ~Neutral (1-3) Accretive 10

11
 

EPS Impact on P&G Cents per Share Impact FY05/06 FY06/07 FY07/08 Initial EPS dilution guidance - Updated FY '06 Non-cash charges Dilution excl. non-cash charges (20-26) (19-23) (8-10) (11-13) (12-18) (7-9) (5-9) ~Neutral (6-8) +6-8 11

12
 

Upside to Sustainable Growth Model through the End of the Decade Upside Sales Growth Base Organic: +3% to +5% Gillette acceleration: +1% Tack-on acquisition: +1% All-in sales growth: +5% to +7% 2010 Operating Margin of about 24% * * Adjusted for expensing of stock options 1 Double Digit EPS Growth

EX-99.2

Exhibit 99.2

Non-GAAP Financial Measures

The preceding presentation includes the disclosure of non-GAAP financial measures. In accordance with the SEC’s Regulation G, the following provides definitions of the non-GAAP measures used in the presentation and the reconciliation to the most closely related GAAP measure.

Sales Growth Excluding Foreign Exchange. Sales Growth Excluding Foreign Exchange is a measure of the company’s net sales growth versus prior year excluding the impact of year-on-year changes in exchange rates.

													First Half
	FY02			FY03			FY04			FY05			FY06
Reported Sales Growth		3	%		8	%		19	%		10	%		17	%
Less: FX Impact		1	%		-2	%		-4	%		-2	%		0	%
Sales Growth Excluding Foreign Exchange		4	%		6	%		15	%		8	%		17	%

Note: Sales percentages are approximations based on quantitative formulas consistently applied.

Gillette Constant Dollar Sales Growth. This measure is equivalent to “Sales Growth Excluding Foreign Exchange” (above) and is a measure that was used by Gillette before the acquisition. It is used in this presentation to maintain consistency in terminology for the Gillette business with pre-acquisition terminology.

	Blades & Razors									Duracell & Braun
	CY 04			CY 05			Oct-Dec 05			CY 04			CY 05			Oct-Dec 05
Reported Sales Growth		12	%		9	%		6	%		12	%		9	%		6	%
Less: FX Impact		-5	%		-2	%		2	%		-5	%		-2	%		2	%
Constant Dollar Sales Growth		7	%		7	%		8	%		7	%		7	%		8	%

Note: Sales percentages are approximations based on quantitative formulas consistently applied.

Organic Sales Growth. Organic sales growth measures sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. The Company believes this provides investors with a more complete understanding of underlying results and trends by providing sales on a consistent basis. For example, this measure excludes the impact of the Gillette acquisition on sales growth in FY06.

													First Half
	FY02			FY03			FY04			FY 05			FY06
Reported Sales Growth		3	%		8	%		19	%		10	%		17	%
Less: Acquisitions & Divestitures Impact		-3	%		0	%		-7	%		0	%		-10	%
Less: FX Impact		1	%		-2	%		-4	%		-2	%		0	%
Organic Sales (Ex: A&D, FX)		1	%		6	%		8	%		8	%		7	%

Note: Sales percentages are approximations based on quantitative formulas consistently applied.

Base Organic Sales Growth. This measure is defined as sales growth excluding the impact of acquisitions, divestitures, and foreign exchange on the Company’s pre-Gillette businesses. This measure was developed to differentiate between organic sales growth stemming from the Company’s pre-Gillette businesses and growth due to the addition of Gillette.

P&G Base Business Operating Income Growth. This measure is defined as the Company’s Operating Margin excluding the impacts of the Gillette acquisition. The Company believes this provides investors with an important perspective given the significant impact that the Gillette acquisition has on operating income. The table below provides a reconciliation of reported Operating Income growth to Operating Income excluding Gillette Impacts growth:

	First Half
	FY 06
Operating Income Growth		20	%
Gillette Impact on Operating Income Growth		11% - 12	%
Operating Income Growth Excluding Gillette Impacts		8% - 9	%

Core Diluted Net Earnings Per Share Growth. Core diluted net earnings per share referenced in this presentation exclude restructuring charges from reported diluted net earnings per share. The table below provides a reconciliation of reported diluted net earnings per share to core diluted net earnings per share:

													First Half
	FY02			FY03			FY04			FY 05			FY06
Diluted Net Earnings Per Share	$	1.54		$	1.85		$	2.32		$	2.66		$	1.48
Percent Change v. Year Ago		50	%		20	%		25	%		15	%		4	%
Core Diluted Net Earnings Per Share	$	1.80		$	2.04		$	2.32		$	2.66		$	1.48
Percent Change v. Year Ago		10	%		13	%		14	%		15	%		4	%

The restructuring program began in 1999 as part of the Company’s Organization 2005 initiative and was substantially completed at the end of fiscal year 2003. Restructuring program charges include separation related costs, asset write-downs, accelerated depreciation and other costs directly associated with the Company’s reorganization. Restructuring program charges are not included in business segment results, but instead are reported in corporate. The Company believes investors gain additional perspective of underlying business trends and results by providing a measure of earnings excluding restructuring program charges — particularly now that the program is substantially completed. This is consistent with the Company’s business segment reporting and internal management goal-setting, and is a factor used in determining at-risk compensation levels. A historical reconciliation of reported-to-core financials during the Organization 2005 initiative is available on the Company’s website at www.pg.com/investor. Going forward, the Company will continue to conduct projects consistent with the focus of productivity improvement and margin expansion. Beginning with fiscal year 2005, charges associated with these future projects will be absorbed in normal operating costs.

Earnings Per Share Excluding Gillette Dilution. This measure is used to gain a better understanding of the EPS trend of the Company excluding the impact of the Gillette acquisition. The Company believes this provides investors with an important perspective given the significant impact that the Gillette acquisition has on reported earnings. The table below provides a reconciliation of reported Diluted Net Earnings Per Share to EPS excluding Gillette Dilution:

	First Half
	FY 06
Diluted Net Earnings Per Share Growth		4	%
Gillette Impact on EPS Growth		5% - 6	%
EPS Excluding Gillette Dilution Growth		9% - 10	%

EBIT Growth Excluding Purchase Accounting Charges and non-recurring base period items. This is a measure of Gillette GBU EBIT year-on-year growth excluding the impact of purchase accounting adjustments related to the Gillette acquisition and excluding the impact of non-recurring charges in the Gillette base period. The Company believes this measure provides important perspective for comparing post-acquisition results with pre-acquisition results for the Gillette GBU.

	October - December 05
	Blades &			Duracell &
	Razors			Braun
Reported EBIT Growth		11	%		46	%
Impact of Purchase Accounting Adjustments		+35	%		+25	%
Impact of Non-Recurring Base Period Items		-15	%		-31	%
EBIT Excl. Purchase Accounting Adj. and Non-Recurring Base Period Expenses		31	%		40	%

Free Cash Flow Productivity. Free cash flow productivity is defined as the ratio of free cash flow to net earnings. The Company’s long-term target is to generate free cash at or above 90 percent of net earnings. Free cash flow is also one of the measures used to evaluate senior management. The reconciliation of free cash flow and free cash flow productivity is provided below:

	FY 02			FY 03			FY 04			FY 05
Operating Cash Flow	$	7,740		$	8,702		$	9,355		$	8,679
Capital Spending		-$1,679			-$1,482			-$2,024			-$2,181
Free Cash Flow	$	6,061		$	7,220		$	7,331		$	6,498
Net Earnings	$	3,910		$	4,788		$	6,156		$	6,923
Free Cash Flow Productivity		155	%		151	%		119	%		94	%