Deutsche Bank Conference. Paris June 19 th, 2008.

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1 Deutsche Bank Conference Paris June 19 th, 2008.

1 Clayt Daley Vice Chairman and Chief Financial Officer Agenda 2 Business update Hot topics Key focus areas Q&A s Sustainable Growth Model Through FY 2010 3 Organic

2 1 Clayt Daley Vice Chairman and Chief Financial Officer Agenda 2 Business update Hot topics Key focus areas Q&A s Sustainable Growth Model Through FY Organic Sales Growth +4% to +6% Op. Margin Expansion +50 to +75 bps/year (on average) 90%+ Free Cash Flow Productivity Double Digit EPS Growth Shareholder Value Creation Page 1

3 Strong Sales Growth 4 Organic Target: +4% to +6% thru FY % 18% 15% 12% 9% 6% 3% 0% FY '03 FY '04 FY '05 FY '06 FY '07 FY '08 YTD Total sales growth Organic (excludes foreign exchange, acquisition & divestiture impacts) Grooming Health & Well Being 5 Beauty Baby Care & Family Care Snacks, Coffee & Pet Fabric Care & Home Care Strong Brand Portfolio 6 Fusion became to be 24th Billion $ Brand in May 08. Organic volume up in 18 categories representing >90% of sales (Q3 08) 6 Page 2

Balanced Market Portfolio 7 ~40% of sales from U.S.

developing markets Reliable EPS Growth 8 EPS* $4.

4 Balanced Market Portfolio 7 ~40% of sales from U.S. ~32% from other developed markets (Western Europe, Canada, Japan, South Korea) ~28% from developing markets Reliable EPS Growth 8 EPS* $4.00 Annual EPS Growth Target: 10%+ 5 year EPS CAGR ( 03 08E) = 13%* $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08E * Excludes Organization 2005 restructuring charges in FY 03 Delivering Gillette Commitments 9 Over-deliver top end of $1bn to $1.2bn cost synergies On-track to deliver ~$750MM revenue synergies Accretive to EPS in fiscal year 2008 Page 3

EPS Impact on P&G FY 08 Consensus = $3.50 10 $3.04 $2.64 $2.53 P&G EPS pre-gillette (10%+ CAGR) P&G EPS w/ Gillette P&G Est.

1, 2005) FY '05 FY '06 FY '07 FY '08 Free Cash Flow, $Bn Cash Productivity Ahead of Target $10 $8 $6 $4 $2 Free Cash Flow Productivity

5 EPS Impact on P&G FY 08 Consensus = $ $3.04 $2.64 $2.53 P&G EPS pre-gillette (10%+ CAGR) P&G EPS w/ Gillette P&G Est. EPS w/ Gillette at time of closing (Oct. 1, 2005) FY '05 FY '06 FY '07 FY '08 Free Cash Flow, $Bn Cash Productivity Ahead of Target $10 $8 $6 $4 $2 Free Cash Flow Productivity Target: 90%+ of Net Earnings 151% 119% 94% 100% 101% $0 FY '03 FY '04 FY '05 FY '06 FY '07 Increasing Dividends 12 $1.50 $1.25 Dividends per Share (fiscal years, split adjusted) $1.00 $0.75 $0.50 $0.25 $ Page 4

FY 08 Est. Dividends = FY 08 Est. Repurchases = $4.5bn - $4.6bn $8.0bn - $10.

6 Share Repurchase 13 Significant increase in share repurchase plan $24 to $30 billion over three years Maintained AA- rating prudent decision given interest rate and debt market uncertainties Cash Returned to Shareholders 14 FY 08 Est. Dividends = FY 08 Est. Repurchases = $4.5bn - $4.6bn $8.0bn - $10.0bn Cash Returned to Shareholders = $12.5bn - $14.6bn Market Cap = ~$205bn Cash Yield to Shareholders = 6% - 7% The Health of the Consumer 15 Page 5

7 16 Solid Global Consumer Markets Market Growth Rates U.S. 2% - 3% 17 Solid Global Consumer Markets Market Growth Rates U.S. 2% - 3% Western Europe flat Developing Markets 7% - 9% Total World 3% - 4% Multi-tiered Portfolio North America Deodorants Skin Care Detergents Bath Tissue Toothpaste Price Tiers Category Page 6

8 Multi-tiered Portfolio RUSSIA Hair Care Diapers Fem Care Laundry Toothpaste Price Tiers I II III IV V Categories Commodity & Energy Cost Pressure $2,500 Commodity Cost Impact, $MM 20 $2,000 $1,500 $1,000 $500 $0 FY '05 FY '06 FY '07 FY '08e FY '09e Commodity & Energy Cost Pressure $90B 21 2% of Sales $2B FY '09e Page 7

9 22 What She Gets VALUE = Equity/Price What She Pays Designed to Grow Growth Productivity 23 Innovation Disciplined Productivity Improvement 24 Sales/Employee up 3.5X Net Earnings/Employee up 8X Page 8

26 HOG: Half (of sales growth) ZOG: Zero NOG:

10 Productivity +6% Annual Growth (P5Y) Opportunity to Accelerate Key elements: Net sales Costs-of-goods-sold Overhead 25 Productivity Overhead Reduction HOG/ZOG/NOG 26 HOG: Half (of sales growth) ZOG: Zero NOG: Negative Designed to Grow Growth Productivity 27 Innovation Page 9

11 Innovation Balanced Mix 28 Commercial Sustaining Disruptive Innovation Open Innovation ~50% of initiatives have external partner Connect & Develop Innovation Using our internal expertise across our portfolio 30 Page 10

12 Innovation 31 Innovation in WE 32 Innovation Gillette Innovation 33 Page 11

34 Designed to Grow Innovation and Productivity Forward Looking Statement 35 All statements, other than statements of historical fact included in these presentations, are forward-looking statements,

13 34 Designed to Grow Innovation and Productivity Forward Looking Statement 35 All statements, other than statements of historical fact included in these presentations, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of Such statements are based on financial data, market assumptions and business plans available only as of the time the statements are made, which may become out of date or incomplete. We assume no obligation to update any forward-looking statement as a result of new information, future events or other factors. Forward-looking statements are inherently uncertain, and investors must recognize that events could differ significantly from our expectations. 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 these transactions; (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 intellectual property matters as well as those related to the integration of Gillette and its subsidiaries), 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, interest rate and commodity cost exposures; (8) the ability to manage 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; (13) the ability to stay on the leading edge of innovation and maintain a positive reputation on our brands; and (14) the ability to successfully separate the company's coffee business. 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. Page 12

14 Non-GAAP Financial Measures The accompanying 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. 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. The reconciliation of reported sales growth to organic sales growth for the total company: FY 03 FY 04 FY 05 FY 06 FY 07 FYTD 08 Reported Sales Growth 8% 19% 10% 20% 12% 9% Less: Acquisitions & Divestitures Impact 0% -7% 0% -14% -5% +1% Less: FX Impact -2% -4% -2% +1% -2% -5% Organic Sales (Ex: A&D, FX) 6% 8% 8% 7% 5% 5% Q4 07 Q1 08 Q2 08 Q3 08 Reported Sales Growth 8% 8% 9% 9% Less: Acquisitions & Divestitures Impact 0% 0% +1% +1% Less: FX Impact -2% -3% -5% -5% Organic Sales (Ex: A&D, FX) 5% 5% 5% 5% In the accompanying presentation, the company refers to average annual organic sales growth since the beginning of the decade (fiscal ). And over the past 5 years ( ) The reconciliation of average reported sales growth to average annual organic sales growth for fiscal and for fiscal ! Total P&G Average Annual Reported Net Sales Growth 12% 14% Less: Average Annual Foreign Exchange & Acquisition/Divestiture Impact -6% -7% Average Annual Organic Sales Growth 6% 7% Note: Sales percentages are approximations based on quantitative formulas consistently applied. Earnings Per Share Excluding O-2005 Restructuring Charges. This is a measure of the company s earnings per share excluding the impact of restructuring charges related to the Organization 2005 program. Management believes this measure provides an important perspective of underlying business trends and results and provides a more comparable measure of year-on-year earnings per share growth. 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 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 table below provides a reconciliation of reported diluted net earnings per share to core earnings per share for fiscal 2003: FY 03 Diluted Net Earnings Per Share $1.70 Less: Organization 2005 Restructuring Charges $0.19 EPS Excluding O-2005 Restructuring Charges $1.89 Free Cash Flow Productivity. Free cash flow productivity is defined as the ratio of free cash flow to net earnings. The Company s longterm 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 03 FY 04 FY 05 FY 06 FY 07 FYTD 08 Operating Cash Flow $8,702 $9,355 $8,679 $11,375 $13,435 $11,718 Capital Spending -$1,482 -$2,024 -$2,181 -$2,667 -$2,945 -$1,852 Free Cash Flow $7,220 $7,331 $6,498 $8,708 $10,490 $9,866 Net Earnings $4,788 $6,156 $6,923 $8,684 $10,340 $9,059 Free Cash Flow Productivity 151% 119% 94% 100% 101% 109% Page 13

Deutsche Bank Conference. Paris June 11th, 2007

Deutsche Bank Conference. Paris June 11th, 2007 Deutsche Bank Conference Paris June 11th, 2007 John P. Goodwin Treasurer The Procter & Gamble Company 1 Agenda 2 Business update Zoom on CEEMEA (Central & Eastern Europe, Middle East and Africa) Q&A 2