P&G 2009 Annual Report – AnnualReports.com - Procter & Gamble

Notes to Consolidated Financial Statements The Procter & Gamble Company 71
NOTE 12
DISCONTINUED OPERATIONS
In November 2008, the Company completed the divestiture of our
Coffee business through the merger of its Folgers coffee subsidiary into
The J.M. Smucker Company (Smucker) in an all-stock reverse Morris
Trust transaction. In connection with the merger, 38.7 million shares
of common stock of the Company were tendered by shareholders and
exchanged for all shares of Folgers common stock, resulting in an
increase of treasury stock of $2,466. Pursuant to the merger, a Smucker
subsidiary merged with and into Folgers and Folgers became a wholly
owned subsidiary of Smucker. The Company recorded an after-tax
gain on the transaction of $2,011, which is included in Net Earnings
from Discontinued Operations in the Consolidated Statement of
Earnings for the year ended June 30, 2009.
The Coffee business had historically been part of the Company’s Snacks,
Coffee and Pet Care reportable segment, as well as the coffee portion
of our away-from-home business which is included in the Fabric Care
NOTE 13
QUARTERLY RESULTS (UNAUDITED)
and Home Care reportable segment. In accordance with the applicable
accounting guidance for the impairment or disposal of long-lived
assets, the results of Folgers are presented as discontinued operations
and, as such, have been excluded from both continuing operations and
segment results for all years presented. Following is selected financial
information included in Net Earnings from Discontinued Operations
for the Coffee business:
Years Ended June 30 2009 2008 2007
Net Sales $ 668 $1,754 $1,644
Earnings from discontinued
operation 212 446 447
Income tax expense (80) (169) (170)
Gain on sale of discontinued
operation 1,896 — —
Deferred tax benefit on sale 115 — —
Net earnings from discontinued
operations 2,143 277 277
Quarters Ended Sept 30 Dec 31 Mar 31 Jun 30 Total Year
NET SALES 2008–2009 $21,582 $20,368 $18,417 $18,662 $79,029
2007–2008 19,799 21,038 20,026 20,885 81,748
OPERATING INCOME 2008–2009 4,569 4,251 3,730 3,573 16,123
2007–2008 4,298 4,590 4,013 3,736 16,637
GROSS MARGIN 2008–2009 50.8% 51.6% 50.3% 50.3% 50.8%
2007–2008 53.2% 52.3% 51.7% 49.4% 51.6%
NET EARNINGS:
Earnings from continuing operations 2008 –2009 $ 3,275 $ 2,962 $ 2,585 $ 2,471 $11,293
2007–2008 3,004 3,194 2,650 2,950 11,798
Earnings from discontinued operations 2008–2009 73 2,042 28 — 2,143
2007–2008 75 76 60 66 277
Net earnings 2008–2009 3,348 5,004 2,613 2,471 13,436
2007–2008 3,079 3,270 2,710 3,016 12,075
DILUTED NET EARNINGS PER COMMON SHARE:
Earnings from continuing operations 2008–2009 $ 1.01 $ 0.94 $ 0.83 $ 0.80 $ 3.58
2007–2008 0.90 0.96 0.80 0.90 3.56
Earnings from discontinued operations 2008–2009 0.02 0.64 0.01 — 0.68
2007–2008 0.02 0.02 0.02 0.02 0.08
Diluted net earnings per common share 2008–2009 1.03 1.58 0.84 0.80 4.26
2007–2008 0.92 0.98 0.82 0.92 3.64
Amounts in millions of dollars except per share amounts or as otherwise specified.