Procter & Gamble Co. (PG) | Analysis of Income Taxes

• Income Tax Expense (Benefit)
• Effective Income Tax Rate (EITR)
• Deferred Tax Assets (Liabilities), Net

Income Tax Expense (Benefit)

Procter & Gamble Co., income tax expense (benefit), continuing operations

USD $ in millions

	12 months ended	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
	U.S. federal	1,809	2,154	1,867	1,016	2,667	1,961
	International	1,188	1,616	1,316	1,546	1,325	1,702
	U.S. state and local	266	295	253	227	125	178
	Current tax expense	3,263	4,065	3,436	2,789	4,117	3,841
	U.S. federal	205	253	577	1,267	231	226
	International and other	(76)	(217)	19	(53)	22	(338)
	Deferred tax expense	129	36	596	1,214	253	(112)
	Tax expense	3,392	4,101	4,032	4,003	4,370	3,729

Source: Based on data from Procter & Gamble Co. Annual Reports

Item	Description	The company
Current tax expense	The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations.	Procter & Gamble Co.'s current tax expense increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
Deferred tax expense	The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations.	Procter & Gamble Co.'s deferred tax expense declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
Tax expense	The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy.	Procter & Gamble Co.'s tax expense increased from 2009 to 2010 but then declined significantly from 2010 to 2011.

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Effective Income Tax Rate (EITR)

Procter & Gamble Co., effective income tax rate (EITR) reconciliation

		Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
	U.S. federal statutory income tax rate	35.00%	35.00%	35.00%	35.00%	35.00%	35.00%
	Country mix impacts of foreign operations	-8.00%	-7.50%	-6.90%	-6.60%	-4.30%	-3.60%
	Changes in uncertain tax positions	-3.50%	-0.40%	-1.20%	-3.10%	-0.30%	-1.50%
	Patient Protection and Affordable Care Act	–%	1.00%	–%	–%	–%	–%
	Other	-1.20%	-0.80%	-0.60%	-0.40%	-0.70%	0.10%
	Effective income tax rate	22.30%	27.30%	26.30%	24.90%	29.70%	30.00%

Source: Based on data from Procter & Gamble Co. Annual Reports

Item	Description	The company
Effective income tax rate	A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations.	Procter & Gamble Co.'s effective income tax rate increased from 2009 to 2010 but then declined significantly from 2010 to 2011.

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Deferred Tax Assets (Liabilities), Net

Procter & Gamble Co., deferred tax assets (liabilities), net

USD $ in millions

		Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
	Pension and postretirement benefits	1,406	1,717	1,395	633	560	547
	Stock-based compensation	1,284	1,257	1,182	1,082	1,132	1,063
	Loss and other carryforwards	874	595	439	482	439	615
	Goodwill and other intangible assets	298	312	331	267	249	19
	Accrued marketing and promotion	217	216	167	125	161	183
	Accrued Gillette exit costs	–	–	–	–	138	173
	Fixed assets	111	102	114	100	85	87
	Unrealized loss on financial and foreign exchange transactions	770	88	577	1,274	723	507
	Accrued interest and taxes	28	88	120	123	–	–
	Inventory	52	35	97	114	95	–
	Other	834	773	900	1,350	1,164	1,244
	Deferred tax assets, gross	5,874	5,183	5,322	5,550	4,746	4,438
	Valuation allowances	(293)	(120)	(104)	(173)	(190)	(398)
	Deferred tax assets, net	5,581	5,063	5,218	5,377	4,556	4,040
	Goodwill and other intangible assets	(12,206)	(11,760)	(11,922)	(12,371)	(12,102)	(12,036)
	Fixed assets	(1,742)	(1,642)	(1,654)	(1,847)	(1,884)	(1,861)
	Other	(211)	(269)	(146)	(151)	(132)	(436)
	Deferred tax liabilities	(14,159)	(13,671)	(13,722)	(14,369)	(14,118)	(14,333)
	Deferred tax assets (liabilities), net	(8,578)	(8,608)	(8,504)	(8,992)	(9,562)	(10,293)

Source: Based on data from Procter & Gamble Co. Annual Reports

Item	Description	The company
Deferred tax assets, gross	The sum of the tax effects as of the balance sheet date of the amounts of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws (before the valuation allowance, if any, to reduce such sum amount to net realizable value). Includes any tax benefit realized in deferred tax assets for significant impacts of tax planning strategies.	Procter & Gamble Co.'s deferred tax assets, gross declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Deferred tax assets, net	The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value.	Procter & Gamble Co.'s deferred tax assets, net declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Deferred tax assets (liabilities), net	For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods.	Procter & Gamble Co.'s deferred tax assets (liabilities), net declined from 2009 to 2010 but then slightly increased from 2010 to 2011.

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