January 20, 2011

Eq uity Research Procter & Gamble Co. PG: Initiated Coverage With Outperform Rating, $70-73 Valuation Outperform D&E Opportunities Should Drive Top-Line, Op Mgn, And EPS Growth

• Summary: We have initiated coverage of PG with an Outperform rating on the Sector: Household and Personal Care shares and a $70-73 valuation range. Our rating within our Market Weight Products Household and Personal Care sector rating is based on (1) P&G's industry- Market Weight leading research and development (R&D) investments, (2) penetration acceleration in developing and emerging (D&E) markets (i.e., more relative runway versus competitors), and (3) leveraging of both scale and financial Initiation of Coverage strength to increase earnings. Near-term gross margin will likely be restrained by rising input costs. Long-term gross or operating margin expansion will likely 2010A 2011E 2012E be driven by ongoing cost-saving initiatives, improving business and product EPS Curr. Prior Curr. Prior mix, and leveraging of distribution expansion. P&G's portfolio provides a Q1 (Sep.) $0.97 $1.02 A NC$1.13NE competitive advantage with (1) broad exposure to fast-growing categories, Q2 (Dec.) 1.10 1.10 NE 1.20 NE (2) strong margin from scale in market-leading brands, and (3) efficiency Q3 (Mar.) 0.89 1.00 NE 1.11 NE entering D&E markets. P&G will likely continue to make small to midsize Q4 (June) 0.71 0.86 NE 0.95 NE accretive acquisitions. Current valuations on our 2012 estimates are 31% and FY $3.67 $3.98 NE $4.39 NE CY $3.72 $4.19 $4.61 27% below and above the low end of historical P/E and enterprise value (EV)-to- FY P/E 17.8x 16.4x 14.9x EBITDA ranges. Our range reflects the collective lower third of historical Rev. (MM) $78,938 $81,873 $85,446 forward P/E and EV-to-EBITDA ranges. We believe strong free cash flow, a Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters NA = Not Available, NC = No Change, NE = No Estimate, NM = Not Meaningful strong balance sheet, prudent capital deployment, and a 2.9% dividend yield V = Volatile, = Company is on the Priority Stock List should provide downside risk support to the stock. We believe PG will outperform the sector and the S&P 500 on a total return basis.

• FY2011E And FY2012E Key Assumptions. Our FY2011 and FY2012 EPS Ticker PG estimates of $3.98 and $4.39 are based upon 4.0% and 4.4% organic revenue Price (01/20/2011) $65.35 growth, and modest operating margin improvement. 52-Week Range: $39-66

• Upcoming Catalysts. These include (1) January 27, 2011, FQ2 2011 earnings, Shares Outstanding: (MM) 3,025.6 and (2) CY2011 new product announcements. Relative returns versus the S&P Market Cap.: (MM) $199,084.0 500 are best during the August through October period, with the best returns S&P 500: 1,280.26 occurring in September. The stock tends to underperform the market early in the Avg. Daily Vol.: 10,803,200 calendar year, with the worst returns usually occurring in April. Dividend/Yield: $1.93/2.9% LT Debt: (MM) $32,976.0

LT Debt/Total Cap.: 34.3% Valuation Range: $70.00 to $73.00 ROE: 18.0% Our valuation range represents 15.2-15.8x P/E, 10.9-11.3x EV-to-EBITDA, and 3-5 Yr. Est. Growth Rate: 10.0% 6.6%-6.4% free cash flow yield to our CY2012 EPS, EBITDA and free cash flow per CY 2011 Est. P/E-to-Growth: 1.6x share estimates of $4.61, $7.72, and $4.64, respectively. Risks to our range include Last Reporting Date: 10/27/2010 (1) prolonged global economic downturn, (2) foreign exchange fluctuations, (3) an Before Open increase in taxes on international profits, (4) aggressive competitive discounting, Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters (5) loss of a major customer (Wal-Mart, Target), (6) significant input cost inflation,

(7) integration risk and dilution related to future acquisitions, and (8) European antitrust issues. Timothy Conder, CPA, Senior Analyst Investment Thesis: (314) 955-5743 A diversified portfolio, deep management team, industry-leading R&D investments, [email protected] developing and emerging markets prospects, and opportunities to leverage scale Joe Lachky, Associate Analyst (314) 955-2061 and financial strength provide P&G with a competitive advantage over competitors. [email protected] Valuations should expand to the collective lower third of historical ranges given Michael K. Walsh, CFA, CPA, Associate Analyst accelerating top-line and EPS growth rates and near-term risks from commodity (314) 955-6277 prices and foreign exchange. [email protected]

Please see page 38 for rating definitions, important disclosures and required analyst certifications

Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision.

PG010611-084724

WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Company Description Procter & Gamble Co., based in Cincinnati, Ohio, is the largest global manufacturer and marketer of consumer packaged goods. The company produces a very diverse set of products in the Beauty, Grooming, Health Care, Snacks and Pet Care, Fabric Care and Home Care, and Baby Care and Family Care segments. The brand portfolio is extremely deep with 50 "leadership brands," including 23 billion-dollar brands. Key brand names include Crest toothpaste, Duracell batteries, Gillette razors, Olay skin care, Pampers diapers, Pantene hair care, and Tide laundry detergent. Products are sold in over 180 countries primarily through mass merchandisers, grocery stores, club stores, drug stores, and high-frequency stores (neighborhood stores in developing markets). See www.pg.com.

Investment Thesis And Valuation We have initiated coverage of Procter & Gamble with an Outperform rating on the shares and a $70-73 valuation range. Procter & Gamble is the largest global manufacturer and marketer of consumer packaged goods with a diversified portfolio of well-known brands (Crest, Duracell, Gillette, Olay, Pampers, Pantene, and Tide) and a deep management team. P&G’s sales are primarily concentrated in the fabric care and home care segment (29.6% of net sales) and the beauty segment (24.3% of net sales), but the company also has exposure in baby care, family care, health care, grooming, snacks, and pet care categories. Among the major industry players, P&G has a large and growing footprint in the high-growth developing and emerging markets (33% of net sales). We believe organic sales growth will return to mid-single digits and EPS should accelerate to low-double-digit rates over the next few years, driven by a multi-tiered growth strategy and cost- saving initiatives, coupled with ongoing share repurchases. We believe P&G’s organic sales and earnings growth should accelerate driven by (1) new products from industry-leading R&D investments, (2) penetration accelerating in developing and emerging markets (i.e., more relative runway versus the company’s largest competitors), and (3) leveraging both scale and financial strength (i.e., margin, balance sheet, cash flow) to increase earnings. Near-term gross and operating margin expansion will likely be driven by ongoing cost- saving initiatives, at least partially offset by input cost and foreign exchange headwinds. Long-term margin growth will likely be driven by simplification of businesses and processes, improving business and product mix, and leveraging of distribution expansion. We believe P&G’s diversified product portfolio provides a competitive advantage given (1) high relative exposure to fast-growing product categories, (2) strong margin from scale in market-leading brands, and (3) efficiency entering developing and emerging markets with fast purchase cycle products (i.e., detergents, baby care, and feminine care) to quickly build scale. We believe the stock will outperform the sector and the S&P 500 on a total return basis. Valuations are currently 31% and 27% below and above the low end of historical forward P/E and EV-to- EBITDA ranges, respectively, on our 2012 estimates. Strong free cash flow, a high-grade balance sheet, prudent excess capital deployment (likely further dividend increases, share repurchases, and small to midsize accretive acquisitions), and the current 2.9% dividend yield all should provide downside risk support to the stock. Upcoming data points include (1) updated FY2011 guidance concurrent with FQ2 2011 earnings, and (2) CY2011 new product announcements. Our valuation range represents 15.2-15.8x P/E, 10.9-11.3x EV-to-EBITDA, and 6.4-6.6% free cash flow yield to our CY2012 EPS, EBITDA and free cash flow/share estimates of $4.61, $7.72, and $4.64, respectively. Since 1991 (excluding the aberrational years of 1997-2000), P&G’s historical forward valuation ranges are 15.6-20.0x P/E, 9.6-12.0x EV-to-EBITDA, and a 4.8-6.4% free cash flow yield. We believe multiples should expand to the approximate the collective lower third of historical ranges given (1) lower-than-historical, but accelerating, top-line and EPS growth rates, and (2) near-term risks to estimates from input costs and foreign exchange. Investment Risks ƒ A prolonged U.S. or worldwide economic downturn from current levels ƒ Foreign exchange swings given that 62% of revenue is international ƒ An increase in taxes on international profit ƒ Aggressive competitive conditions necessitating discounting and promotions ƒ Loss of a major customer (Wal-Mart, Target) ƒ Significant input cost inflation ƒ Integration risks and potential dilution related to future acquisitions ƒ Industrywide European antitrust issues

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Summary Overview Procter & Gamble is the largest global manufacturer and marketer of consumer packaged goods. Through successful R&D and marketing, the company has created an unmatched brand portfolio, with market-leading brands spanning multiple product categories and price tiers. The portfolio includes 50 “leadership brands,” constituting 90% of the company’s revenue and operating profit. These consist of 23 billion-dollar brands, which include Crest, Duracell, Gillette, Olay, Pampers, Pantene, and Tide. Procter & Gamble has structured its organization into three global business units (GBU): beauty and grooming (33.8% of FY2010 and an estimated 34.1% of FY2011 net sales), health and well-being (18.2% of FY2010 and an estimated 18.1% of FY2011 net sales), and household care (48.0% of FY2010 and an estimated 47.8% of FY2011 net sales), which are supported by the company’s global operations, global business services, and corporate functions operations. The company has six reportable segments within the GBU structure: ƒ Beauty and grooming GBU: beauty, grooming ƒ Health and well-being GBU: health care, snacks and health care ƒ Household care GBU: fabric care and home care, baby care, and family care Procter & Gamble’s largest product categories are laundry (approximately 17% of net sales), located in the fabric care and home care segment, and diapers (approximately 11% of net sales), found in the baby care and family care segment. Procter & Gamble is also well regarded for its deep and experienced management team. Senior management is relatively new to its positions, with the CEO and CFO both assuming their current positions in 2009 and all vice chairmen-level executives elected to officer positions in the 2007-08 period, although all have significant experience with the company. P&G is best known for its strong track record of results, driven by (1) new products and (2) successful integration of multiple acquisitions. Current major investor concerns affecting both the company and the industry include the following: ƒ Consumer destocking, ƒ Consumer trade-down (i.e., negative mix), ƒ Increased trade spending, ƒ Input costs, ƒ Foreign exchange, and ƒ Pricing

Please see our industry report dated January 20, 2011, for a detailed discussion of these issues and a broad industry overview. In our opinion, not all of these issues are material fundamental concerns. We believe the bottom-line impact of the collective remaining items can be more than offset by positive growth prospects from (1) new products from industry-leading R&D investments, (2) penetration accelerating in D&E markets (i.e., more relative runway versus the company’s largest competitors), and (3) leveraging both scale and financial strength (i.e., margin, balance sheet, cash flow) to increase earnings. Finally, in addition to CY2011 new product introductions providing upcoming potential catalysts, P&G will likely continue to make small to midsize accretive acquisitions, based on its company strategy. Investor Concerns And Outlook Several issues include (1) consumer destocking, (2) consumer trade-down (i.e., negative mix), (3) increased trade spending, (4) input costs, (5) foreign exchange, and (6) pricing have posed headwinds for companies in the Household Products and Personal Care industry over the past 12-18 months and remain of concern. Consumer Destocking We believe destocking for consumer staples will be at worst a non-issue by early CY2011 (if not already completed). Therefore, this should no longer be a factor for the volume component of sales assuming all other factors (i.e., trade spending, new products, etc.) remain equal.

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Consumer Trade-Down While consumers remain very price conscious, we believe the trade-down dynamic has largely run its course (i.e., those that will trade-down already have), absent another leg down in the global economy. With the outlook for developed economies to remain in a period of below-trend cyclical growth and relatively high unemployment, the primary question that remains, in our view, is, how long will the new period of “value consciousness” in consumer staples last before a new material trade-up cycle begins and to what degree, if any, has a structural shift occurred? ƒ We believe the timing of a new trade-up cycle emerging will be elongated as consumers continue to look for savings in consumer staples. ƒ We also believe there has been some, but yet unquantifiable, structural shift toward value.

However, we do not believe there has been a permanent fundamental change in consumer behavior, as evidenced by successful recent new premium products introduced by the company and competitors (i.e., consumers still pay a premium for clear value provided). The success of recent new premium products like the Fusion ProGlide razor lends credence to this conclusion. However, management has also seen strong growth in value products in developed markets, including growth in basics offerings (i.e., Bounty Basic and Charmin Basic), and the retail hair and skin business growing faster than Salon Professional and Prestige. While historically focusing primarily on developing premium products, management has also shifted its innovation focus in part to developing new products in mid-tier or value tiers to benefit from the trade-down dynamic. As mid-tier value products become a larger part of Procter & Gamble’s product portfolio, it will likely have an ongoing negative sales mix impact (due to a lower price per unit). Over the long term, P&G’s growing emerging market presence provides an opportunity as consumers trade upward and expand per-capita consumption. This could provide continued growth even in the absence of market-share gains. Trade Spending To drive limited revenue growth in a soft economy, competitors (especially those producing premium products) focused on maintaining market share and preventing consumers from trading downward. This was largely approached through increased trade spending (i.e., temporary price reductions as manufacturers attempt to adjust to competitive pricing actions without officially reducing list prices), which reduced manufacturers’ gross-to-net sales. Procter & Gamble is the market leader in most categories in which it competes and, as such, generally leads the market with pricing actions. In addition, the company’s brands in developed markets are weighted toward premium products and the company has a high exposure to categories most affected by trade spending. Recent pricing pressure has been greatest in diapers and laundry (P&G’s two largest categories), categories in which competitors did not follow pricing movements (i.e., batteries), and in geographies where foreign exchange increased, then reversed. Trade spending is not a significant part of management’s overall strategy, although management has recently utilized promotional spending to generate trial on new products, i.e., the “Have You Tried This Yet?” campaign. Management has said that it would like to see low levels of promotional spending, preferring that consumers see the very best price every day. Over time, we expect P&G and other manufacturers to ease promotions and build brand awareness through more traditional means. Given (1) the limited incremental benefit of further trade spending on volume, and (2) considering rising input costs (see subsequent discussion), we believe manufacturer trade spending will continue to abate sequentially, as it appears as if the most aggressive trade spending-related pricing actions (CQ2 2010) are now behind the industry. The larger question, in our view, is if the consumer has become conditioned to promotional pricing and will continue to buy when price increases return or promotions abate. Input Costs Procter & Gamble spends approximately $24 billion annually (a FY2009 statistic) on materials, its largest cost bucket. The company has broad exposure across many commodities, including natural gas, oil derivatives, agriculture-based materials, specialty chemicals, metals, and packaging materials (see appendix for charts of some key commodities). Given the wide range of products Procter & Gamble produces, its overall commodity exposure is better diversified than its competitors’.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Commodity price changes generally flow through the income statement on an average 3+ month lag, depending on the product. For example, changes in pulp prices flow through at a faster rate (approximately three months) than resins (approximately nine months). The company also actively buys raw materials to sell to suppliers because of the scale it is able to achieve. Given Procter & Gamble’s size and wide range of uses for raw materials across multiple product lines, management is able to demand a better price than individual third-party vendors might be able to negotiate. Management’s priority is to enter into long- term contracts focusing on supply availability versus price. Procter & Gamble does not hedge commodity exposure as its broad commodity requirements, coupled with the company viewing commodities, foreign exchange, labor, and logistics net exposure, collectively tends to provide an operational hedge. Foreign Exchange Foreign exchange is an important factor in net sales and earnings growth. Although the company does not specifically break out its foreign exchange exposure, we believe the company’s largest currency exposures correspond closely with its net geographic sales exposure: the euro, the Canadian dollar, the Japanese yen, the Pound Sterling, and the Mexican peso. The Chinese Yuan and the Russian ruble are also important currencies. Management expects foreign exchange to be a 1-2% headwind to net sales in FY2011 and a 2% headwind in FQ2 2011. The company does not hedge its foreign currency exposure. Exhibit 1.

PG Revenue by Currency FY 2010

Other U.S. 30.0% Dollar Mex. Peso 38.0% 3.0%

Pound 3.5% Yen 4.0% Can. Euro Dollar 17.5% 4.0% Source: Company reports and Wells Fargo Securities, LLC estimates

Procter & Gamble manages its businesses independent of foreign exchange considerations, focusing instead on organic growth. The functional currencies of foreign subsidiaries are the local currency. From a cost standpoint, management examines the benefits of local sourcing of materials and labor, versus an out-of- country sourcing and distribution model, using local sourcing to hedge foreign exchange exposure from the revenue side. Management tends to view its foreign currency exposure on a companywide basis, generally describing and managing foreign exchange fluctuations in a global context within a collective bucket that includes other input (e.g., commodities, labor, and logistical) costs. Even though major developing economies in China and India have some measure of foreign exchange controls, Venezuela has been a particular country to closely monitor, due to the extreme measures taken by the government to tightly control all aspects of the economy. Beginning January 1, 2010, Venezuela was designated a highly inflationary economy under U.S. GAAP. This requires companies with Venezuelan subsidiaries to use the U.S. dollar as their functional currency. Quarterly (1) changes in non-dollar monetary assets and liabilities of these subsidiaries, and (2) transactional foreign exchange gains and losses are required to be reflected in the income statement. January 8, 2010, Venezuela devalued the Bolivar versus the U.S. dollar, instituting a tiered official exchange rate of 2.6 (versus the prior, 2.15) for essential imported goods (i.e., food, medicine, and capital investments), and 4.3 for non-essential imported goods, including Venezuelan subsidiary dividend repatriations. It should be noted that many imported household and personal care products qualify as essential imported goods. The government limits the amount of foreign exchange available at the official rates. Outside of the official exchange rate, Bolivars were able to be exchanged at a parallel rate (a rate less favorable than the official government rate) via securities transactions executed by brokerages.

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

In May 2010, the Venezuelan government further tightened exchange controls by (1) making the Central Bank of Venezuela the only legal intermediary through which parallel securities transactions could be executed, and (2) effectively put the government in control of the parallel exchange rate by limiting the notional transactions available at the parallel rate. During CQ2 2010, the parallel rate approximated 8.2 Bolivars to the U.S. dollar (Source: Bloomberg) prior to the May exchange control measures and approximated 5.3 Bolivars per U.S. dollar on June 30, 2010. On January 1, 2011, Venezuela devalued the Bolivar for essential imported goods to 4.3 from 2.6, effectively setting the official exchange rate for all imported goods (essential and non-essential) at 4.3 Bolivars per U.S. dollar. In late December 2010, the parallel rate approximated 5.3 Bolivars per U.S. dollar (Source: Bloomberg). Procter & Gamble has been able to offset the revenue impact from the currency devaluation as approximately 50% of goods sold in Venezuela are locally produced (however, the company does import raw materials and packing materials, most of which are contracted in U.S. dollars). We note that local production does introduce the risk of nationalization (we believe the risk is low at this point) and the risk of supply interruptions (e.g., water, electricity, and labor). Management remains proactive in repatriating Bolivars when available, while maintaining enough currency to run its business. The political and business climate remains shaky and it is uncertain how long it will take to return sales and profit to prior levels. Management believes the true exchange rate economics for the subsidiary are at a blended rate between the official and parallel rates. Following the January 2010 devaluation, Procter & Gamble began using the 4.3 rate to reflect financial results in Venezuela (both income from subsidiary and translation of the balance sheet), with the exception of $260 million of its $490 million monetary balance re-measured at the higher parallel rate at September 30, 2010. Changing the exchange rate to 4.3 from 2.15 had the effect of lowering net sales by approximately 1% and EPS by approximately $0.08 in FY2010. We expect foreign exchange from Venezuela to negatively affect net sales in FH1 2011, at least until the 2010 currency devaluation annualizes. Management expects an $0.08 negative impact to EPS in FY2011 from Venezuela (similar to FY2010). We do not expect the January 1, 2011, devaluation to be a headwind to net sales. However, there will likely be continued profitability pressures for Procter & Gamble to the extent the subsidiary imported goods at the prior 2.6 rate and dependant on the ability of the subsidiary to raise local prices to maintain margin. When examining the accounting of companies with net monetary assets located in Venezuela, we believe investors should assume (1) all planned settlements of U.S. dollar-denominated liabilities by Venezuelan subsidiaries are done at the parallel rate and (2) that remaining net monetary assets of Venezuelan subsidiaries are valued at the official rate (assuming these net monetary assets will be repatriated). Clearly investors must monitor (1) availability of foreign exchange at the official rate and (2) the spread between the official and parallel rates. As the government effectively controls both the official and parallel rates, we believe the more conservative approach would be to value all net monetary assets of Venezuelan subsidiaries at the parallel rate. Pricing While we believe consumer trade-down and trade-related spending has stabilized, when coupled with a likely sub-par and elongated economic recovery, the ability for the HPC industry to take pricing as an offset to input cost pressures is likely to be very gradual. We believe the key to near- and long-term pricing power remains actual or perceived innovation, as price increases are most easily accepted by consumers (and retailers) when matched with new product introductions. While trade spending fluctuations are generally temporary, list pricing changes are more permanent in nature. Procter & Gamble was most aggressive with list price adjustments in the quarter ended December 2009, lowering prices for the Duracell, Cheer, and Tide (large sizes) brands, and making adjustments for products in the Central & Eastern Europe, Middle East & Africa (CEEMEA) region. In FY2011, pricing should turn positive as these changes are annualized. Management prefers to match price increases in conjunction with introduction of new premium innovation and occasionally prices to offset foreign currency pressures. Management expects pricing to be neutral to slightly positive for FY2011, with pricing likely to be negative in FH1 and turn positive in FH2 as the company annualizes many of the strategic adjustments made in fall 2009. In Procter & Gamble’s segment reporting, the “price” impact to sales includes both list price changes and trade spending (promotions).

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Key Growth Drivers As industry volume and trade spending normalize, organic sales growth for Procter & Gamble outside of category performance will likely be driven by (1) new products, (2) geographic white-space expansion, (3) incremental international distribution penetration, (4) developing and emerging market development, and (5) entering and creating new categories. These top-line drivers should allow for further mix and volume margin leverage. Finally, while we do not factor this into our estimates, it is possible that Procter & Gamble could make an acquisition, boosting sales. Sales Drivers As can be inferred from the prior discussion on consumer trade-down and trade spending, organic industry sales growth is likely to be more gradual versus historical levels. Volume should be approaching/at a new equilibrium base from which to grow on a normalized basis, as we believe consumer destocking and trade- down is largely behind the industry. From a pricing perspective, trade spending intensity appears to have peaked in CQ2 2010 and is sequentially easing to what we expect will be stabilization in calendar Q4 2010. We believe this pricing component will be a modest positive in CY2011 given easy 2010 comparisons. The degree of pricing ability to offset rising input costs is less certain in CY2011, but should be a modest contributor to revenue in CY2012 as economic activity and employment gradually improve. This leaves mix as the largest variable to sales. Specific Procter & Gamble volume, price, mix, and other, and resultant organic growth comparisons are as follows: Exhibit 2. PG Yr/Yr Comparisons

Volume Q1 Q2 Q3 Q4 FY 2010 -2.0% 5.0% 7.0% 8.0% 4.0% 2011E 7.0% 5.3% 4.5% 4.6% 5.4% 2012E 4.2% 4.5% 4.5% 4.5% 4.4% 2013E 3.8% 4.0% 4.2% 4.0% 4.0%

Price 2010 3.0% 1.0% -1.0% -1.0% 1.0% 2011E -1.0% -0.9% 0.1% 0.3% -0.4% 2012E 1.0% 1.0% 1.0% 1.0% 1.0% 2013E 1.3% 1.3% 1.3% 1.3% 1.3%

Mix/Other 2010 1.0% -2.0% -2.0% -3.0% -1.0% 2011E -2.0% -1.0% -0.5% -0.6% -1.0% 2012E -1.0% -1.0% -1.0% -1.0% -1.0% 2013E -0.8% -0.8% -0.8% -0.8% -0.8%

Organic Growth 2010 2.0% 4.0% 4.0% 4.0% 4.0% 2011E 4.0% 3.3% 4.2% 4.4% 4.0% 2012E 4.1% 4.5% 4.5% 4.5% 4.4% 2013E 4.3% 4.5% 4.7% 4.6% 4.5%

Source: Company reports and Wells Fargo Securities, LLC estimates Note: Volume excludes the impact of acquisitions/divestitures Note: Q111 is a reported result

Net sales for Procter & Gamble grew 1.6% yr/yr in FQ1 2011, with organic sales increasing 4%. Organic sales were made up of (1) a 7% increase in volume (excluding acquisitions and divestitures), (2) a 1% headwind from price, and (3) a 2% negative impact from mix and other. In FQ1 2011, Procter & Gamble saw 6-8% organic sales growth in developing markets, compared to 1% organic sales growth in developed markets. Management believes organic sales growth of 4-6% is achievable in FY2011, in line with the company’s long-term guidance. However, market growth is the biggest uncertainty for sales, particularly domestically. In FQ1 2011, domestic market growth was only 1% (and slowing sequentially), and if it stayed at that level for the full-year, sales would be at the low end of guidance, all things equal. FQ2 2011 organic growth is expected to be up 3-5%, with strong volume momentum continuing, partially offset by mix and pricing. Volume trends have been extremely strong for Procter & Gamble, improving sequentially in every quarter of FY2010, up 8% in FQ4 2010, the strongest volume growth in 22 quarters. While volume moderated slightly sequentially, to up 7% in FQ1 2011, it was the first time in five years that P&G has had volume growth above 7%

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT for three consecutive quarters. In FQ1 2011, organic volume in developed markets grew 4%, and developing markets grew 12%. Volume increased in all major geographic regions, 16 of the top 17 countries, five of six business segments, and 20 of 23 billion-dollar brands. Volume improvements will likely moderate as comparisons are getting tougher. This may be partially offset by continued volume growth from innovation, as manufacturing was initially constrained on some new products (i.e., Fusion ProGlide). Pricing has stabilized the past few quarters, declining 1% in every quarter since FQ3 2010. In FQ1 2011, management attributed falling prices to earlier price reductions to improve consumer value that have not yet annualized, partially offset by increases taken in developing regions to offset currency devaluations. Pricing will likely begin to be a small positive contributor to sales once price adjustments annualize beginning in FQ3 2011. Mix had an increasingly negative impact to organic sales as FY2010 progressed, though it slightly eased sequentially in FQ1 2011, to a 2% yr/yr headwind from a 3% yr/yr headwind in FQ4 2010. FQ1 2011 negative mix was made up of 1% negative impact from geographic mix and a 0.5% negative impact from both product and price-tier mix. Geographic mix becomes a headwind for P&G when sales growth in developing markets is greater than in developed markets, causing lower average selling prices for the firm. This will likely continue as developing markets continue to outperform and as Procter & Gamble expands distribution in emerging markets. Product mix can be a headwind if growth is faster in categories with lower prices per unit. Finally, price-tier mix should continue be a headwind as the company introduces more mid-tier or value products. In addition, price-tier mix can shift as consumers trade up or down to different priced products within categories. Historically, mix has been approximately a 1% headwind to net sales. New Products With the probability of an elongated period before a new material consumer trade-up cycle emerges in developed economies, the key to near- and long-term pricing power remains actual or perceived innovation as price increases are most easily accepted by consumers (and retailers) when matched with new product introductions. Manufacturers will likely find the most success with new products that have an easily communicated value-add for the consumer focused in niche categories. Procter & Gamble has a remarkable track record of product innovation, driven by the company’s successful research & development efforts and supported by significant advertising spending. Despite the recession, the company continued to develop innovative products across all levels of the price spectrum. The most important recent introductions were Crest 3D White, the Pantene restage, Pampers Dry Max, Gillette Fusion ProGlide razors and ProSeries Skin and Shave Care, and Tide with Acti-Lift. All of these major introductions took place in FQ3 2010 and FQ4 2010, meaning there will likely be a carryover impact to FY2011 results as more consumers try and repurchase the new products and the company expands distribution to existing markets. Management appears to have worked through some initial manufacturing constraints on some new products (i.e., Fusion ProGlide), which should provide ongoing volume momentum. Management has already announced a few upcoming product introductions for the United States, including a powder formula upgrade and compaction in February and Secret Natural Mineral Collection in March. We expect additional new products to be announced for CY2011, but until then, management’s attention will likely be focused on increasing market share and distribution for products already launched. In addition to developing new premium products, management has increasingly focused on developing products for mid-tier or value price levels. Examples include Pampers Simply Dry, Simply Venus Disposables, Always Simply Fits, and Bounty and Charmin Basics. Procter & Gamble has also introduced a number of value products in India, including Tide Naturals and Gillette Guard. We expect additional mid-tier or value innovations as the domestic consumer remains very price sensitive and the company continues to tailor products for developing markets at lower price points. Exhibit 3. PG New Product Introductions New Mid-Tier or Value Geographic Date Product Segment Geographic Area Product Innovation Expansion 2009 Feb Oral-B Toothpaste Health & Well-Being Benelux X 2009 Always Simply Fits Health & Well-Being X X 2009 Ariel Professional Household Care Turkey and Hungary X 2009 Bounce Dryer Bar Household Care X 2009 Crest and Oral-B Pro-Health Toothpaste Health & Well-Being Mexico X 2009 Febreze Air Effects Household Care Japan X 2009 Gillette Mach 3 Beauty & Grooming Developing Markets X X 2009 h&s Hair & Scalp Beauty & Grooming Japan X 2009 Olay Men's Solutions Beauty & Grooming China X 2009 Olay Natural White Household Care India and ASEAN X 2009 Olay Pro-X Beauty & Grooming Greater China X 2009 Oral-B Pro-Suade Health & Well Being Brazil (Pharmacy) X 2009 Pampers Simply Dry Household Care X X 2009 Pampers Sleep and Play Household Care X X 2009 Tide Stain Release Household Care U.S. X Aug Crest Pro-Health Health & Well-Being China X 2H09 Ariel/Dash Stain Remover Household Care Germany, Austria, Switzerland, Italy, X and Spain Nov Tide Naturals Household Care India X X

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Exhibit 3. - continued PG New Product Introductions New Mid-Tier or Value Geographic Date Product Segment Geographic Area Product Innovation Expansion 2010 FY10 Olay Household Care 15 New Countries X Feb Ariel with Actilift Household Care U.K., France, Germany, Spain, Italy, X Greece, Portugal, Austria, Switzerland, Sweden, Finland, and Denmark Feb Bounty Improvements (Bounty Basic, Bounty Napkins, Household Care U.S. and Canada X and Bounty Huge Roll) Feb Bounty Improvements (Bounty Extra Soft) Household Care Canada X Feb Fekkai Advanced Beauty & Grooming U.S. X Feb Olay Professional Pro-X Intensive Wrinkle Protocol Beauty & Grooming North America and Greater China X

Feb Pampers Underjams Household Care Western Europe X Feb Pringles Multigrain Health & Well-Being U.S. X Feb Simply Venus Disposables Beauty & Grooming U.S. X X Feb Venus New Products (Embrace Disposables, Embrace, Beauty & Grooming U.S. X Satin Care Shave Gel Reformulation, Satin Care In- Shower Moisturizer, Bikini Trimmer)

Mar Crest 3D White Health & Well-Being North America X Mar Crest Pro-Health Sensitive Shield (Toothpaste, Crest Health & Well-Being U.S. X Glide Pro-Health Floss for Sensitive Gums, and Oral-B CrossAction Pro-Health Gentle Clean Brush)

Mar Naturella Health & Well-Being Greater China X Mar Olay Pro-X Beauty & Grooming Australia and New Zealand X Mar Pampers Swaddlers and Cruisers with Dry Max Household Care North America X Apr Ariel/Dash Stain Remover Household Care Belgium and Netherlands X Apr Bounty Improvements (Bounty Extra Soft) Household Care U.S. X Apr Bounty Improvements (Bounty) Household Care U.S. and Canada X Apr Blend-A-Med Pro-Expert Health & Well-Being Poland X Spring h&s Hair & Scalp Beauty & Grooming China and Taiwan X Late May Pantene Restage Beauty & Grooming U.S. X Mid-Jun Pampers Active Fit and New Baby with Dry Max Household Care U.K., Belgium, and Netherlands X Jun Gillette Fusion ProGlide Razors Beauty & Grooming North America X Jun Gillette Fusion ProSeries Skin and Shave Care Beauty & Grooming North America X Jun Pro-Expert All In One Toothpastes and Toothbrushes Health & Well-Being CEEMEA X (Sold Under the Blend-A-Med, Ipana, Crest, and Oral-B Brands) 2010 Oral-B Pro-Suade Health & Well-Being Additional Brazilian Retail Outlets X 2010 Ariel/Dash Stain Remover Household Care Other Western European Countries X

Mid-Jul Charmin Improvements Household Care U.S. and Canada X Mid-Jul Pampers with Dry Max Household Care Germany, Austria, and Switzerland X

Jul Charmin Basic Household Care Canada X Jul Swiffer Fully Assembled Product Line-Up Household Care North America X Jul Tide Plus (Base Tide Restage) Household Care India X Jul Tide with Acti-Lift Household Care U.S. and Canada X Jul Ultra Downy April Fresh Household Care U.S. and Canada X Jul Ultra Downy Sun Blossom Household Care U.S. and Canada X Summer Pringles Multigrain Health & Well-Being Western Europe X Mid-Aug Gain Dishwashing Liquid Household Care U.S. X X Mid-Aug Pampers with Dry Max Household Care France and Nordic Countries X Mid-Aug Crest & Oral-B Pro-Health For Me Health & Well-Being U.S. X Aug Eukanuba Relaunch Health & Well-Being North America X Aug Febreze Air Effects Household Care Brazil, Costa Rica, Guatemala, and X Suriname Aug Febreze Set 'n Refresh Household Care North America and Japan X Q310 Pantene Restage Beauty & Grooming Asia X Q310 Crest 3D White Health & Well-Being Europe X Q310 Naturella Health & Well-Being Brazil X Q310 Fairy Dish Care Household Care Turkey, Egypt, and Morocco X Q310 Swiffer Household Care Israel X Late Aug Crest Clinical (Crest Pro-Health Clinical Gum Protection Health & Well-Being U.S. X Toothpaste, Crest Sensitivity Clinical Sensitivity Relief Toothpaste, and Oral-B Glide Pro-Health Clinical Protection Floss) Aug/Sep Febreze Set & Refresh Household Care Seven Countries in Latin America, X including Brazil, Columbia, and Peru

Mid-Sep Gucci Guilty for Women Beauty & Grooming Global X Sep Eukanuba Relaunch Health & Well-Being Europe X Sep Febreze Air Effects Household Care Columbia, Venezuela, and Peru X Sep Pampers Premium Care with Dry Max Household Care Several Countries in CEEMEA, X including Russia, Romania, and the Arabian Peninsula Sep Vizir + Lenor Scent Touch Household Care Poland X Sep Tide + Lenor Scent Touch Household Care Balkan region X Oct Braun Multiquick 7 Cordless Beauty & Grooming Western Europe, CEEMEA, Australia, X ASEAN, India, Japan, and Korea

Oct Gillette Guard Beauty & Grooming India X X Oct Lenor Household Care Israel X Oct Wella Kolestint Beauty & Grooming India X Oct Tide Professional Whiteness Enhancer Household Care X Fall Head & Shoulders Beauty & Grooming Brazil X Fall Lenor New Concentrate Household Care Western Europe X Nov Crest Pro-Health Complete Rinse Health & Well-Being U.S. X Nov Olay Beauty & Grooming Brazil X Dec Crest 3D White 2 Hour Express Whitestrips Health & Well-Being U.S. X Dec Nice 'n Easy Color Blend Foam Beauty & Grooming U.K. X Dec Olay Professional Pro-X Advanced Cleansing System Beauty & Grooming U.S. and Canada X

Dec Pampers Dry Max Household Care Expanded to 50 Countries X FY11 Always Health & Well-Being Several Countries in Africa Including X Kenya FY11 Olay Beauty & Grooming 15 New Markets X FY11 Tide Naturals Household Care Expand to Twice the Number of X Outlets in India

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Exhibit 3. - continued PG Upcoming New Product Introductions New Mid-Tier or Value Geographic Date Product Segment Geographic Area Product Innovation Expansion 2011 Feb Powder Laundry Compaction Household Care U.S., Canada, and Puerto Rico X Feb Tide and Gain Powder Formula Upgrades Household Care U.S. X Feb Ultra Era Powder Detergent Household Care U.S. X X Mar Secret Natural Mineral Collection Beauty & Grooming U.S. X 2012 Mar Pantene Restage Beauty & Grooming Expand to All Major Markets by March X 2012 Apr Gillette Fusion Pro-Glide Beauty & Grooming Expand to Over 40 Countries X Sep Olay Beauty & Grooming Expand to 100 Markets X Source: Company reports and Wells Fargo Securities, LLC Note: Date reflects calendar year, unless otherwise indicated

Geographic White-Space Expansion Geographic white-space expansion can drive incremental growth by expanding the number of product categories sold within countries where Procter & Gamble already has a presence. Currently, Procter & Gamble competes in 38 product categories, the products of which are sold in more than 180 countries. Looking at Procter & Gamble’s top 50 countries, the company is present in only 50% of possible category or country combinations, an average of 19 product categories in each country. For example, Procter & Gamble competes in only 15 product categories in China, versus 35 categories in the United States. In addition, Procter & Gamble generally competes in five separate price tiers per category, with distribution through up to seven separate retail channels. In the top 50 countries, P&G is present in only 34% of possible categories, country, and price-tier, and 39% of possible categories, country, and channel combinations. By FY2015-16, management plans on entering an additional 250 categories per country (up 25%), 750 categories per country, per price-tier (up 20%), and 950 categories per country, per channel (up 40%) combinations. These plans would raise the average number of categories in which the company competes to 24 from 19 in its top 50 countries. Introducing existing products to new markets, or filling “geographic white-space,” is one of the biggest growth and margin expansion opportunities for Procter & Gamble. Management has already announced a number expansion plans, including doubling the number of outlets selling Tide Naturals in India by the end of FY2011 and expanding Olay to 100 markets over the next two years, eventually aligning distribution with the Pantene franchise. Pampers Dry Max is already shipping to more than 50 countries and growing, the Pantene restage is expected to be completed in all major markets over the next 12-18 months, and Fusion ProGlide distribution is expected to expand to more than 40 countries in the next two years. Distribution Relative to major competitors, Procter & Gamble has a significant international presence in the Household and Personal Care industry. The company also has a large and growing footprint of sales from emerging markets, with more relative runway compared to its close competitors in the industry. We believe Procter & Gamble has the opportunity to increase distribution both domestically and internationally. Exhibit 4. International Sales (% of total sales)

Colgate-Palmolive Co. 76.2% Procter & Gamble Co. 62.0% Clorox Co. 21.1% Church & Dwight Co. 19.0% Source: Company reports Note: Figures based on last reported fiscal year

Domestically, consumers have shifted their buying patterns toward the club channel, mass merchants, and dollar stores as they seek out low unit or absolute prices. We believe management will focus on increasing distribution in these faster-growing channels and look to expand to all possible domestic category per channel combinations. We believe that Procter & Gamble will not only continue to gain shelf space through the introduction of new products, but should benefit as retailers consolidate among major manufacturers. Wal- Mart/Sam’s Club represents approximately 16% of Procter & Gamble’s total revenue. Internationally, viewing revenue geographically helps illustrate Procter & Gamble’s growth opportunities.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Exhibit 5. Procter & Gamble Historical Geographic Sales

($ millions) Annual Geographic Net Sales

Geographic Net Sales 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 United States $20,334 $21,198 $21,853 $23,688 $25,342 $29,462 $31,946 $31,314 $29,600 $30,000 Canada 1,322 1,698 1,568 2,016 1,894 2,602 3,233 3,020 2,611 3,154 North America 21,656 22,896 23,421 25,704 27,236 32,064 35,179 34,334 32,211 33,154 Western Europe 7,632 9,108 12,338 13,618 15,691 17,589 19,620 16,106 16,577 Japan 1,607 2,169 2,570 2,837 2,729 3,059 2,452 3,068 3,158 Other Asia 7,669 8,683 Asia 10,737 11,841 Mexico 2,301 2,368 Other Latin America 4,602 4,736 Latin America 6,902 7,104 CEEMEA 10,737 10,262 Total Latin America/CEEMEA 8,034 8,675 10,795 13,050 17,738 20,649 25,342 17,640 17,366 International 17,719 17,273 19,952 25,704 29,505 36,158 41,297 47,414 44,483 45,784 Net Sales $39,375 $40,169 $43,373 $51,407 $56,741 $68,222 $76,476 $81,748 $76,694 $78,938

Percentage Change United States 1.5% 4.2% 3.1% 8.4% 7.0% 16.3% 8.4% -2.0% -5.5% 1.4% Canada -13.9% 28.4% -7.6% 28.5% -6.0% 37.4% 24.2% -6.6% -13.5% 20.8% North America 0.4% 5.7% 2.3% 9.7% 6.0% 17.7% 9.7% -2.4% -6.2% 2.9% Western Europe 19.3% 35.5% 10.4% 15.2% 12.1% 11.5% -17.9% 2.9% Japan 35.0% 18.5% 10.4% -3.8% 12.1% -19.8% 25.1% 2.9% Other Asia 13.2% Asia 10.3% Mexico 2.9% Other Latin America 2.9% Latin America 2.9% CEEMEA -4.4% Total Latin America/CEEMEA 8.0% 24.4% 20.9% 35.9% 16.4% 22.7% -30.4% -1.5% International -3.6% -2.5% 15.5% 28.8% 14.8% 22.5% 14.2% 14.8% -6.2% 2.9% Net Sales -1.4% 2.0% 8.0% 18.5% 10.4% 20.2% 12.1% 6.9% -6.2% 2.9%

Percent of Net Sales United States 51.6% 52.8% 50.4% 46.1% 44.7% 43.2% 41.8% 38.3% 38.6% 38.0% Canada 3.4% 4.2% 3.6% 3.9% 3.3% 3.8% 4.2% 3.7% 3.4% 4.0% North America 55.0% 57.0% 54.0% 50.0% 48.0% 47.0% 46.0% 42.0% 42.0% 42.0% Western Europe 19.0% 21.0% 24.0% 24.0% 23.0% 23.0% 24.0% 21.0% 21.0% Japan 4.0% 5.0% 5.0% 5.0% 4.0% 4.0% 3.0% 4.0% 4.0% Other Asia 10.0% 11.0% Asia 14.0% 15.0% Mexico 3.0% 3.0% Other Latin America 6.0% 6.0% Latin America 9.0% 9.0% CEEMEA 14.0% 13.0% Total Latin America/CEEMEA 20.0% 20.0% 21.0% 23.0% 26.0% 27.0% 31.0% 23.0% 22.0% International 45.0% 43.0% 46.0% 50.0% 52.0% 53.0% 54.0% 58.0% 58.0% 58.0% Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Source: Company reports and Wells Fargo Securities, LLC Note: CEEMEA includes Central and Eastern Europe, the Middle East, and Africa Note: Prior to 2008, the Japan segment includes Korea Note: Prior to 2009, the Latin America/CEEMEA segment was named Developing Markets and includes Greater China, ASEAN, Australasia, India, and Korea Note: 2008 and 2009 results restated to reflect Folgers as discontinued operations as Folgers was sold in Q209 Note: 2009 results restated to reflect the global pharmaceuticals business as discontinued operations as the business was sold in Q210

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Internationally, management has divided its worldwide operations into five geographic units: North America, 42% of FY2010 sales; Western Europe, 21%; Asia, 15%; Latin America, 9%; and CEEMEA, 13%. Procter & Gamble’s products are sold in more than 180 countries worldwide, with on-the-ground operations in 80 countries through its Market Development Organization. Over the past ten years (FY2001-10), revenue in the United States has increased 47.5%, while international revenue (including Canada) has increased 157.0%, although growth rates are likely affected by acquisitions and divestitures during that time frame. International revenue (including Canada) now represents 62.0% of revenue, versus 48.4% a decade ago. International sales likely will continue to outpace domestic revenue, due to higher growth rates of developing economies and as the company expands in emerging markets to achieve its goal of serving 5 billion consumers by 2015. Given Procter & Gamble’s growing developing and emerging market presence, international distribution gains should largely be achieved through (1) entering new markets, likely working with local companies and distributors; (2) expanding penetration with large retailers and neighborhood stores to effectively gain share of the 35% controlled by local manufacturers in developing and emerging markets; and (3) expanding product selection (geographic white-space expansion) in existing countries. Procter & Gamble has a growing exposure to developing and emerging (D&E) markets, deriving approximately 33.0% of sales from those countries (defined as all markets outside North America, i.e., the United States and Canada, Western Europe, and Japan). Management expects revenue from D&E markets to grow to nearly 50% of sales by FY2020. Given that exposure to D&E markets is currently smaller than for other close competitors (i.e., Unilever, Colgate, and Henkel), we believe this allows for the company a greater relative runway to increase D&E revenue. Sales in D&E markets totaled $26.0 billion in FY2010, up 2.9% from $25.3 billion in FY2009. According to Procter & Gamble, the company had a 19% share as of FY 2009 in D&E markets on an aggregate basis and is growing steadily by about half a share point per year. Growth rates are significantly stronger in D&E markets, with organic market growth 6-8% in D&E markets, compared to organic market growth of 1% in developed markets in FQ1 2011. Management’s strategy is to continue to increase D&E market sales by (1) increasing penetration, (2) migrating consumers up the product scale, (3) increasing market share, and (4) enlarging markets. Exhibit 6. Developing & Emerging Mkt Sales (% of total sales)

Colgate-Palmolive Co. ~45.0% Procter & Gamble Co. 33.0% Clorox Co. ~16.0% Church & Dwight Co. <5.0%

Source: Company reports Note: Developing & Emerging markets represents countries other than U.S., Canada, Western Europe, and Japan Note: Figures based on last reported fiscal year

Retailers in D&E markets are generally dominated by small neighborhood stores, or high frequency stores, which would be Procter & Gamble’s single largest customer if they were a single retailer. Large mass merchandisers continue to expand into higher growth and less developed regions, which should also benefit the company (e.g., Wal-Mart’s recent proposed offer to buy Massmart Holdings, Ltd. in Africa) given strong relationships with these retailers. Generally, when entering a new market, Procter & Gamble works with local wholesalers, while the company builds infrastructure and relationships with governments, retail trade, and distributors. Detergents, baby care, and feminine care are normally among the first products sold as the fast purchase cycle of these products helps drive volume and scale. While well-capitalized competitors already have established businesses in many D&E markets, we believe Procter & Gamble will likely first take market share from smaller local brands. Procter & Gamble is investing aggressively in D&E markets. The company has grown appreciably in India, while competing against well-established competitors, achieving No. 1 market share in several categories. Business has also benefitted by a number of new products developed specifically for Indian consumers, including Tide Naturals and Gillette Guard. P&G expanded distribution of a number of its brands into Brazil over the past two years, including Oral-B, Pantene, Gillette, Naturella, Head & Shoulders, and Olay. China also represents a major opportunity as the company currently has distribution reaching only one- half to two-thirds of potential consumers.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Developing And Emerging Market Growth We believe there are also opportunities for Procter & Gamble to benefit from market growth and increases in per-capita spending in D&E markets, even in the absence of market-share gains. For example, the size of the Chinese diaper market has grown to $2.2 billion from $200 million when P&G entered in 2000. Despite significant growth, consumption of diapers in China and India is one-third and one-thirtieth of consumption levels in Brazil, with diaper use indexes of 20 and 2, respectively. Simply raising consumption of diapers in China and India to Brazil’s level represents a $2.5 billion opportunity for P&G. Per capita consumption levels for consumers in emerging markets are well below those in developed markets. Currently, Procter & Gamble generates approximately $11.50 of annual sales per capita worldwide. In the United States, annual per capita sales approximate $96, while P&G annual sales per capita in D&E markets range from approximately $3.00 in China to $0.70 in India. Management believes there is at least a $60 billion opportunity if consumers in four large D&E markets (i.e., China, Indonesia, Sub-Saharan Africa, and India) raise consumption levels in line with levels seen in Mexico today (approximately $20 annual per capita spending). Finally, we have included charts from Euromonitor, which show current geographic market annual per capita consumption levels in some key categories. While growth will likely evolve over multiple decades and the company should face increasing competition for these consumers, we believe P&G is positioned to capture significant growth from D&E markets. Exhibit 7. Growing Markets Growth Opportunities Diaper Use Index P&G Per Capita Spending ($ US) 100 index = 4 diapers / day $96 for children 24 months or less 125 $2.5 Billion $66 Sales Opportunity > $60 Billion $41 Sales Opportunity 60 $20

U.S. UK Germany Mexico China Indonesia Sub- India Sahara U.S. Brazil China India Source: P&G Company Reports Africa Source: P&G Company Reports Detergents Shampoos Per Capita Consumption (US $) | 2010 Per Capita Consumption (US $) | 2010 $23.4 $19.9 $11.3 $15.7 $9.8

$6.6

$3.9 $2.3 $1.6 $1.9 $1.9 $0.5

India Indonesia China Brazil Germany U.S. India Indonesia China U.S. Brazil Germany

Source: Euromonitor Source: Euromonitor Skin Care Per Capita Consumption (US $) | 2010 $55.4

$32.0

$21.3

$6.6 $0.6 $2.0

India Indonesia China Brazil U.S. Germany

Source: Euromonitor

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

New Categories Management is developing plans to enter new categories wherein P&G does not compete, which could provide incremental sales opportunities. Some recent examples include Tide Dry Cleaners and Mr. Clean Car Washes. Also, the company is working to create completely new categories, as it has done in the past with Crest Whitestrips, Febreze, and Swiffer. Margin With likely mid-single-digit net sales growth for Procter & Gamble, margin improvement is an important factor to achieve management’s long-term goal of high-single-digit to low-double- digit EPS growth. Procter & Gamble has seen only nominal gross margin improvement over the past several years, growing to 52.0% in FY2010 from 50.9% in FY 2005, although trends in gross margin over time are hard to decipher with the recent divestitures of Folgers and the global pharmaceutical business. Procter & Gamble’s gross margin has consistently been among the highest in the industry. Exhibit 8.

Household & Personal Care Industry Fiscal-Year Gross Margin 55.0%

50.0%

45.0%

40.0%

35.0% 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E Source: Company reports and Wells Fargo Securities, LLC estimates CHD CLX Note: Adjusted to exclude restructuring charges and other one-time items Note: CL gross margin is adjusted to include shipping and handling costs CL PG

We believe Procter & Gamble will likely continue to increase its gross margin over the next several years, led by (1) ongoing internal cost-saving initiatives, (2) improving business and product mix, (3) manufacturing leveraging of distribution expansion, and (4) compaction. Collectively, these benefits will likely be tempered by increases in input costs and foreign exchange. Procter & Gamble does not publish gross margin targets, although management believes both gross margin and operating margin should improve in FY2011. Management thinks specific gross margin targets can create poor performance over time and instead maintains the goal of driving shareholder value. Scale is the most important factor to improving margin; therefore, the company has a strategic advantage versus competitors given its size. Due to scale advantages, the company’s billion dollar brands have higher margin, on average, than other products. Higher margin also tends to be correlated with vertically tiered portfolios. By expanding its portfolio to encompass products ranging from value to premium, the company can reach more customers, building scale. It also provides management the flexibility for innovation-driven pricing at the premium end of the product spectrum. Geographically, after-tax emerging market margin is comparable to (and in some cases, higher than) developed market margin. While operating margin is worse for emerging markets, lower tax rates in emerging markets improve after-tax returns. For example, Procter & Gamble’s business in China has higher margin than both Western Europe and the company average. While expansion into developing markets may be a near-term headwind to operating margin expansion, market penetration and category expansion should drive scale, which should moderate the impact of these headwinds over time. Longer term, emerging market gross and operating margin should benefit as consumers increase per-capita spending and trade up to more expensive products.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Ongoing Cost Initiatives Restructuring programs and associated cost savings will likely be a major factor in the degree of margin improvement achieved by Procter & Gamble. Historically, the company utilized periodic restructuring programs, approximately every five years. Management found that this encouraged a “black hole” approach by managers, causing them to delay costs and postpone savings. In addition, management found one-time restructuring programs to be extremely disruptive, difficult to manage, and not long-term focused. Management now budgets ongoing annual restructuring investments, which have totaled more than $3 billion in the past six years. Although programs are generally undertaken at the brand level, some costs may be allocated at the corporate level for very expensive programs. Spending was elevated the past two years as management was focused on removing stranded overhead from the Folgers and global pharmaceutical divestitures, but has now returned to a more normalized level. In FY2011, management expects to spend $300-400 million on restructuring projects. Procter & Gamble’s gross margin currently trails top competitors’ for a number of product categories, despite the company’s scale advantages. Margin improvements will likely be driven by reductions in both cost of goods sold and the overhead portion of selling, general, and administrative expenses (which excludes advertising and R&D). Management’s goal is to have the top gross margin in 20 benchmark categories and reduce SG&A overhead to below that of competitors. Management believes there is an opportunity for 350-450 bps of operating margin improvement in total. Management plans on using a portion of the savings to drive top-line growth through innovation and geographic expansion. In FQ1 2011, Procter & Gamble had more than 200 bps in savings from these initiatives, including 150 bps of cost savings in cost of goods sold and 60 bps of savings in SG&A expenses. Long-term savings will likely lean more toward cost of goods sold versus SG&A expenses and should generally approximate 100-200 bps in savings per year (excluding restructuring charges). Management has outlined the following spending buckets in an effort to outline its framework for approaching potential cost savings. Exhibit 9. PG Annual Spending (FY 2009) (in billions)

Materials $24 Manufacturing & Logistics $13 Overhead $12 Advertising $8 Source: Company reports

Organizational excellence initiatives are focused in four general areas: (1) simplify the business, (2) simplify processes, (3) productivity via technology, and (4) cost breakthroughs. Procter & Gamble continues to execute initiatives to simplify its business by creating standard manufacturing platforms and reducing the number of brands, stock-keeping units (SKU), formulas, materials, and suppliers. Specific projects and potential annual savings detailed by management include the following: ƒ Reduce the number of manufacturing platforms to 150 from 300, a $500 million opportunity ƒ Reduce the number of brands in the portfolio (targeting the 150 brands that are not considered leadership brands) ƒ Remove half the number of small SKUs (currently 50,000 SKUs, but more than 40% contribute less than 1% of volume), a $200 million opportunity ƒ Reduce the number of formulas and package specifications by more than 20% (currently more than 16,000 formulas and 140,000 material and package specifications), a $100 million opportunity ƒ Standardize the color library (reduce plastic colors to 1,500 from 4,000 and paint ink colors to 200 from 10,000), a $60 million opportunity ƒ Reduce the number of suppliers to less than 50,000 from 75,000 Other initiatives focus on efforts to simplify processes. Specific projects and potential annual savings detailed by management include the following: ƒ Centralize production and distribution planning to five regional centers from more than 300 locations, a $160 million opportunity ƒ Simplify packaging development ($5 billion spent on packaging materials and $250 million on development costs annually) by reducing costs, time, and capacity ƒ Target 50% bigger, better, and faster initiatives, 50% fewer smaller initiatives, and 50% capacity released for big initiatives ƒ Simplify internal planning and forecasting planning, a $20 million opportunity

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Management is utilizing technology to drive productivity. Efforts in this area include (1) utilizing real-time business intelligence, (2) building capabilities to enhance relationships with consumers, (3) increasing speed to shelf, and (4) standardizing data flow to drive employee productivity. Examples include using virtual shelving to reduce product mock-ups and video conferencing (saving $50 million in travel costs annually). The final set of initiatives is driven by cost breakthroughs. Specific projects and potential annual savings detailed by management include the following: ƒ “Control tower” transportation management, a $200 million opportunity ƒ Utilize alternate modes of transportation (increase rail shipments to 30% from less than 10%) ƒ Develop alternate materials by working with suppliers (i.e., a new polymer developed for laundry powder saved $40 million annually) ƒ Develop alternative packaging (i.e., renewable resources) ƒ Improve employee productivity Business And Product Mix Management should also achieve gross margin improvement through a gradual shift in business mix. Procter & Gamble should see margin improvement as it prioritizes its investments toward higher-margin businesses and a product mix shift as consumers begin to trade up to higher-margin premium products. All things equal, margin should also improve as the company continues to introduce new products, as new products are generally accretive to gross margin. Distribution Leverage Additional penetration of international markets should drive manufacturing volume leverage accretion to gross margin. Clearly this will likely be a more gradual but both immediate- and long-term contributor to gross margin expansion. As management focuses on increasing international operations and filling geographic white-space, we expect gross margin to converge upward for lower-margin regions, driven by operational scale and improving product mix. Compaction Laundry compaction should provide additional opportunities for cost savings. Procter & Gamble is introducing a 33% compaction across all powder laundry detergent brands in North America beginning in February 2011, which will likely be expanded to other global markets. Powder detergent is a shrinking segment of the laundry market, representing approximately 40% of the U.S. market and more than 50% of the global market. Another wave of liquid laundry compaction would likely provide a more significant benefit to margin, although it may not provide the same degree it did in past cycles, due to the law of diminishing returns. We believe compaction will continue to evolve across products slowly, as manufacturers attempt to ensure that they hold shelf space, but ultimately, the resultant cost savings benefit to manufacturer and retailer margin should continue to drive ongoing rounds of compaction. M&A Strategic acquisitions have been identified by management as a high priority. Since Procter & Gamble’s acquisition of Gillette in October 2005, Procter & Gamble has made only small acquisitions, with the largest being Ambi-Pur in July 2010 and management has indicated that it favors small acquisitions. While we do not think management is fundamentally opposed to large acquisitions, we believe they are a low probability. In addition, we believe there are simply not many sizeable acquisition candidates left that would not raise anti- trust issues. When looking to acquire a company, management has outlined the following requirements: ŀ Enhance top-line growth ŀ Enhance company margin ŀ Global business, or has the ability to globalize ŀ Adjacent to current segments (not outside the company’s core competencies) In addition, the acquisition must be available for purchase (Procter & Gamble does not make hostile acquisitions), able to clear anti-trust regulators, and financially viable. When examining valuation, management typically uses a simple net present value (NPV) calculation based on long-term cash flow into perpetuity. The company is generally very conservative with top-line growth projections (viewed as the biggest unknown). Once the acquisition is made, P&G has a strong record of driving out costs, due to experience integrating numerous prior acquisitions, along with leveraging the company’s scale. Management has a wish list and is ready if the right acquisition appears. Competition for viable acquisition candidates is generally from three sources: (1) other companies in the industry, (2) pharmaceutical companies looking for consumer exposure, and (3) private equity firms looking to put capital to work in stable, growing free cash flow sectors. In addition, pharmaceutical companies have been more active in the space.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Procter & Gamble has been active recently making divestitures, highlighted by the divestitures of Folgers and its global pharmaceutical business. We believe future divestitures will continue to be made on a periodic basis, in businesses that are lower-growth, lower-margin, and outside the company’s core categories. Pringles seems to be a brand that could potentially be divested as it is the last remaining food brand owned by P&G. However, we believe any deal would have to compensate the company for what (1) would likely be a large tax impact from a sale, and (2) we believe are above food industry operating margin. Exhibit 10. Acquisitions Price (in millions) Date Company CashOtherTotal Notes Segment Jun-04 China Joint Venture $1,850 $1,850 Acquired the remaining 20% stake in the China joint venture from its partner, Hutchison Whampoa China Ltd Jun-04 Wella AG $1,110 $1,110 Entered into a Domination and Profit Transfer Agreement in which the Beauty Care Company is entitled to exercise full operating control and receive 100% of the future earnings of Wella. 2004 Pharmaceutical business in Spain Acquired a pharmaceutical business in Spain Health, Baby & Family Care 2004 Fabric and home care business in Acquired a fabric and home care business in Europe Health, Baby & Family Europe Care 2005 Glad joint venture Increased ownership in the Glad joint venture with The Clorox Company Household Care

Oct-05 Gillette $53,430 $53,430 Acquired Gillette, which markets consumer products such as Gillette razors Various and blades including the Mach3 and Venus brands, Duracel batteries, Oral- B manual and power toothbrushes, and Braun shavers and small appliances. Q106 Wella AG $0 $0 During Q106, a portion of the remaining shares were tendered, resulting Beauty Care in a $944 million reduction in our liability under the Domination Agreement and ownership of 96.9% of all Wella outstanding shares

2006 Minor acquistions Several minor acquisitions in fabric care, health care, and Duracell Various 2006 Licensing agreements Licensing agreements with Dolce & Gabbana and Gucci 2007 Minor acquistions Several minor acquisitions, primarily in Beauty and Health Care Beauty and Health Q408 Frederic Fekkai Acquired Frederic Fekkai, a premium hair care brand Beauty & Grooming Q109 Nioxin Acquired Nioxin, a leader in the scalp care professional hair care market Beauty & Grooming

Q210 MDVIP Acquired MDVIP, a physicians' network focused on preventative medicine Health & Well-Being

May-10 Natura Pet Products, Inc. On 05.05.10, agreed to acquire Natura Pet Products, Inc., a privately-held Health & Well-Being pet food business based in Davis, CA. Natura's brands include Innova, Evo, California Natural, Healthwise, Mother Nature and Karma. These brands are sold in a limited number of pet specialty stores and through veterinarians, mainly in the United States and Canada. Terms of the deal were not disclosed. Jul-10 Ambi Pur $470 $470 In July 2010, the Company acquired Ambi Pur, a leading global air care Household Care brand with a presence in 80 countries, as well as several toilet care products with a strong presence in Western Europe and Asia from the Sara Lee Corporation for 320 million euro, or $470 million. The Ambi Pur brand generated annual sales of approximately 260 million euro and estimated operating income of 24 million euro for the year ending June 2009, using an exchange rate of 1.37 dollars per euro.

Divestitures Price (in millions) Date Company CashOtherTotal Notes Segment Q105 Juice business Health, Baby & Family Divested its juice business including the Sunny Delight and Punica brands Care to J.W. Childs Associates, L.P., a Boston-based private equity firm. Gain on divestiture was $0.03 or $83.0 million after-tax. Q206 SpinBrush Divestiture Divested the SpinBrush battery toothbrush business to Church & Dwight Beauty & Health Care Co., Inc. as part of the regulatory approval process with the European Commission as part of the Gillette acquisition 2006 Rembrandt and Right Guard brands Various Divested Rembrandt, a Gillette oral care product line, and Right Guard and other Gillette deodorant brands as part of the regulatory review process with the FTC as part of the Gillette acquisition 2006 Korea Paper Business Divested its Korea paper business Household Care Q107 Pert and Sure Sold Pert business in North America and Sure Beauty & Health Care 2007 Nonstrategic Beauty brands Divested several nonstrategic minor Beauty brands Beauty and Health Q108 Adult incontinence business in Japan Sold its adult incontinence business in Japan Health & Well-Being

Q208 Western European Family Care Divested its Western European Family Care business Household Care business Q109 ThermaCare, Dantrium, and Dryel Divested the ThermaCare, Dantrium, and Dryel brands Various Nov-08 Folgers $2,466 $2,466 Divested the Coffee business into the J.M. Smucker Company in an all- Health & Well-Being stock reverse Morris Trust transaction. Q209 Noxzema and Western European Tissue Sold the Noxzema and Western European Tissue businesses Various

2009 Infusium Sold the Infusium brand Beauty & Grooming Q110 Actonel in Japan Sold the Actonel business in Japan Health & Well-Being Oct-09 Global Pharmaceuticals business $2,800 $2,800 Sold the global pharmaceuticals business to Warner Chilcott plc including Health & Well-Being the portfolio of branded parmeceutical products including Asacol HD, Actonal, and Enablex, the perscription drug product pipeline and manufacturing facilities in Puerto Rico and Germany, and the majority of the 2,300 employees were transferred Source: Company reports and Wells Fargo Securities, LLC Note: Date reflects fiscal year , unless otherwise indicated

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Procter & Gamble -- Business Overview Business Segments Procter & Gamble has structured its organization into three global business units (GBU): beauty and grooming (33.8% of FY2010 and an estimated 34.1% of FY2011 net sales), health and well-being (18.2% of FY2010 and an estimated 18.1% of FY2011 net sales), and household care (48.0% of FY2010 and an estimated 47.8% of FY2011 net sales), which are supported by the company’s global operations, global business services, and corporate functions operations. The company has six reportable segments within the GBU structure: ƒ Beauty and grooming GBU: beauty, grooming ƒ Health and well-being GBU: health care and snacks ƒ Household Care GBU: fabric and home care, baby care, and family care Procter & Gamble’s largest product categories are laundry (approximately 17% of net sales), located in the fabric care and home care segment and diapers (approximately 11% of net sales), found in the baby and family care segment. Brands Household and Personal Care companies differentiate their products through the strength of their brands. Strong brands are built over many years through quality, innovation, and developing brand loyalty by word of mouth and advertising. Strong brands command a wide base of distribution, which, in turn, drives gains in market share and shelf space. There is no other consumer products company that owns a stable of brands as strong or as deep as Procter & Gamble. Procter & Gamble has 23 billion-dollar brands. The most recent addition was Ace, which crossed the threshold in FY2009. As of FY2009, 12 of the billion dollar-brands were the No. 1 global market-share leaders of their categories, with the majority of the balance No. 2. From FY2000 to FY2009, the company’s billion-dollar brands grew at an average rate of 11% per year, stronger than total company revenue growth. In addition, Procter & Gamble has 27 other brands with revenue of approximately $500 million to $1 billion (although revenue may occasionally fluctuate below this threshold, primarily due to currency). In FY2010, these 50 “leadership brands” contributed 90% of the company’s sales and operating profit. While the number of leadership brands far outnumbers that of other competitors, management’s priority remains the strength of its brands, as opposed to the number of brands. In general, Procter & Gamble’s products are positioned in the super-premium, premium, mid-tier, and value price ranges. The company does not generally compete in the low-tier economy price range. The company’s brand portfolio is more heavily weighted toward fast-growing personal care categories than its major competitors. Although P&G does also have exposure to slower-growing home care categories, we believe the company’s scale provides it with industry-leading margin for those products. The product portfolio also allows P&G to enter developing and emerging markets with fast purchase cycle products (i.e., detergents, baby care, and feminine care) to quickly build scale. We believe Procter & Gamble’s has the most broadly diversified product portfolio, which is a strategic advantage over global competitors.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Exhibit 11. Reporting Segments Business Units Categories Adjacencies Brands International 6163874 Brands Household Care Baby & Family Care Baby Care Diapers Diapers Business Units: 5 Baby Wipes Baby Wipes Luvs** Dodot Categories: 12 Childrens' Personal Pampers* Adjacencies: 18 Care Family Care Tissues Tissues Puffs** Toilet Paper Toilet Paper Charmin* Paper Towels Paper Towels Bounty* Fabric & Home Care Fabric Care Additives Additives Tide* Ace* Bleach Ace* Fabric Enhancers Fabric Enhancers Bounce** Fairy Downy* Gala Febreze Lenor Gain* Laundry Laundry Cheer Ace* Dreft Laundry Ariel* Era Alomatik Gain* Bold** Ivory Snow Bonux Tide* Dash** Daz Fab Myth Rindex Salvo Sarasa Tempo Vizir Home Care Air Care Air Care Febreze** Ambi Pur Dish Care Hand Dish Wash Dawn* Dreft Dish Gain* Fairy Ivory Joy Auto Dish Wash Cascade** Fairy Surface Care Cleaning Systems Hard Surface Wipes Swiffer**

Hard Surface Sprays Mr. Clean** Ace* Mr. Proper Viakal Batteries Batteries Alkaline Batteries Duracell* Rechargable Batteries Health & Well- Health Care Feminine Care Feminine Care Wipes Ausonia Being Liners Always* Naturella Business Units: 5 Pads Whisper Categories: 11 Adjacencies: 20 Tampons Tampax** Discreet Evax Naturella Incontinence Incontinence Linidor Oral Care Toothbrush Power Toothbrush Oral-B* Manual Toothbrush Crest* Oral-B* Toothpaste Toothpaste Crest* Fluocaril Oral-B* Other Oral Care Oral Rinse Crest* Scope Floss Crest* Oral-B* Dentures Fixodent** Whitening Crest* Personal Health Gastrointestinal Gastrointestinal Align Care Metamucil Pepto-Bismol Prilosec OTC** Respiratory Respiratory Vicks** Water Filtration Water Filtration PUR Rapid Diagnostics Rapid Diagnostics

Snacks & Pet Care Snacks Snacks Snacks Pringles* Pet Care Pet Care Dog Food Eukanuba** Cat Food Iams* Pet Supplements Natura Pet Products

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Exhibit 11. - continued Beauty & Beauty Retail Hair Care Hair Care Shampoo Anna Sui Grooming Aussie Business Units: 6 Conditioner Head & Shoulders* Rejoice** Categories: 15 Adjacencies: 36 Herbal Essences** Pantene* Hair Styling Hair Styling Aussie Herbal Essences** Pantene* Hair Color Color Herbal Essences** Natural Instincts Nice 'n Easy** Prestige Products Prestige Products Premium Cosmetics

Fragrances Burberry Bruno Banani Fragrances Christina Aguilera Mexx Perfumes Dolce & Gabbana** Rochas Dunhill Fragrances Escada Fragrances Ghost Gucci Fragrances HUGO BOSS** Lacoste Fragrances Naomi Campbell Puma Valentino Premium Skin Care DDF SK-II** SK-II** Salon Professional Salon Professional Professional Shampoo Fekkai Halo Professional Nioxin Conditioner Londa Professional Sebastian Professional Professional Hair Vidal Salssoon Styling Wella* Professional Color Fekkai Londa Professional Halo Sebastian Professional Vidal Sassoon Wella* Female Beauty Skin Care Cleansers Anna Sui Camay Ivory Olay* Safeguard** Zest Moisturizers Anna Sui Olay* Pharmacy Hair Channel Skin Cosmetics Cosmetics - Lips Anna Sui Cosmetics - Eyes CoverGirl** Ellen Betrix Cosmetics - Face Max Factor** Antiperspirant & Female Antiperspirant Secret** Infasil Deoodorant & Deodorant Female Personal Female Personal Cleansing Cleansing Female Shave Female Disposable Venus** Prestobarba/Blue** Care Razors Female Premium Blades & Razors Venus** Female Shave Prep Grooming Male Grooming Male Blades & Male Disposable Gillette* Prestobarba/Blue** Razors Razors Male Premium Blades Fusion* & Razors MACH3* Male Personal Male Antiperspirant & Gillette* Infasil Care Deodorant Old Spice** Male Skin Care Fusion* Gillette* Old Spice** Male Personal Gillette* Cleansing Old Spice** Male Hair Care Gillette* Male Fragrances Old Spice** Male Shave Prep Fusion* Gillette* Appliances Beauty Female Electrical Hair Electronics Removal Male Dry Shavers Braun*

Hair Care Appliances Home Small Coffee & Hot Appliances Beverage Makers Braun* Hand Held Appliances Source: Company reports and Wells Fargo Securities, LLC Note: * Denotes a Billion Dollar brand Note: ** Denotes a Leadership brand

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Market Share Procter & Gamble holds the largest market share of the global household and personal care market. Exhibit 12. PG Global Market Share (FY 2009) Market Size Segment (in billions) Market Share Rank

Household Care $200 20% #1 Beauty & Grooming $300 13% #1 Consumer Healthcare $240 5% #2 Source: Company reports

Exhibit 13. PG Global Market Share (FY 2010) Market Size Business Unit (in billions) Market Share Rank

Household Care Fabric Care $74 29% #1 Home Care $40 18% #2 Baby Care $36 34% #1 Family Care (1) $19 31% #1 Batteries $16 26% #1 Source: Company reports (1) Includes only North America and Mexico

Exhibit 14. PG Global Market Share (FY 2010) Market Size Business Unit (in billions) Market Share Rank

Health Care Oral Care $32 22% #2 Feminine Care $19 34% #1 Personal Health Care $41 6% #2 Source: Company reports

Procter & Gamble has approximately 20% market share in markets in which it competes today. Management expects to increase market share 10-20 bps annually in FY2011 and onward, with market-share gains contributing 0.5-1.0% in incremental annual sales growth. Market-share gains have accelerated in recent quarters and are broad-based, with share growth seen in all geographic regions in the latest quarter. In FQ1 2011, Procter & Gamble held or grew market share in 13 of its 17 top countries and 17 of its 23 billion-dollar brands, and saw share growth in 60% of its brand portfolio. Private label goods are competitors to Procter & Gamble, although they command only a small percentage of the market. According to the company’s stats, branded products account for 88% of the sales in the categories in which Procter & Gamble competes. Geographically, the private label business is most developed in Western Europe. Private label goods did experience an uptick in demand during the recession; however, share gains have eroded as the recession ended and consumers returned to branded goods. Private label market share was flat to down globally in FQ1 2011. Approximately 50% of Procter & Gamble’s domestic sales are tracked by Nielsen. Sales And Earnings Seasonality Since FY2007, Procter & Gamble’s segment sales and earnings appear to be slightly skewed toward FH1, perhaps reflecting slight holiday seasonality. Segment earnings before taxes demonstrate a similar seasonal pattern over the FY2007-FY2010 periods. Although none of the company’s segments are highly seasonal, certain products are seasonal in nature, including batteries (fabric care and home care), appliances (grooming), and prestige fragrances (beauty), where sales are typically higher in the fall due to the holidays. In addition, anticipation or occurrence of natural disasters, such as hurricanes, can drive unusually high demand for batteries.

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Exhibit 15. Seasonality of Sales: Avg. 2007-2010

Segment Q1 Q2 Q3 Q4 Beauty and Grooming GBU Beauty 25.1% 26.2% 23.9% 24.8% Grooming 25.4% 26.9% 23.0% 24.6% Health and Well-Being GBU Health Care 25.7% 26.0% 24.4% 23.9% Snacks and Pet Care 24.2% 26.1% 24.3% 25.4%

Household Care GBU Fabric Care and Home Care 25.9% 25.7% 24.0% 24.5% Baby Care and Family Care 25.0% 24.8% 25.3% 24.9% Total Business Segments 25.4% 25.9% 24.2% 24.6% Corporate 29.8% 18.3% 27.7% 24.3% Total Company 25.3% 26.0% 24.1% 24.6%

Seasonality of EBT: Avg. 2007-2010

Segment Q1 Q2 Q3 Q4 Beauty and Grooming GBU Beauty 26.5% 30.6% 22.0% 20.9% Grooming 27.7% 28.3% 22.2% 21.7% Health and Well-Being GBU Health Care 27.2% 27.7% 24.2% 20.9% Snacks and Pet Care 21.3% 27.7% 24.4% 26.6% Household Care GBU Fabric Care and Home Care 27.5% 25.6% 23.2% 23.7% Baby Care and Family Care 26.7% 25.0% 26.4% 21.9% Total Business Segments 26.9% 27.4% 23.6% 22.1% Corporate 20.9% 23.0% 22.9% 33.2% Total Company 27.7% 28.0% 23.7% 20.6%

Source: Company reports and Wells Fargo Securities, LLC estimates Note: 2008 and 2009 results restated to reflect Folgers as discontinued operations as Folgers was sold in Q209 Note: Effective 09.01.09, the Company implemented changes to the organization structure of the Beauty GBU. Results prior to FY 2009 do not reflect these changes. Note: 2009 results restated to reflect the global pharmaceuticals business as discontinued operations as the business was sold in Q210

Advertising And R&D Procter & Gamble is the largest corporate advertiser, spending $8.6 billion (10.9% of sales) on advertising in FY2010. Advertising spending has been relatively consistent over the past ten years, fluctuating between approximately 10% and 11% of sales. Beginning in 2003, the company noticeably increased its marketing to the high end of its historical range, where it has remained, with the exception of FY2009 (low media rates and favorable foreign exchange). Procter & Gamble does not break out advertising spending on a quarterly basis, but it is likely that the FY2010 increase was to support the strong slate of new products in FH2 2010. Management expects advertising to increase in line with sales in FY2011. R&D spending has fallen consistently to 2.5% of sales since FY2001 from a rate of 4.5% of sales, although part of this decline was likely affected by the sale of the global pharmaceutical business. We are not particularly concerned with the declining level of spending as a percentage of sales, as the company spends more as a percentage of sales than those in the industry and many times, its close competitors in nominal terms. The lower level of R&D spending as a percentage of sales is also likely due in part to improved productivity (same innovation for less dollars) and the expanded use of outside partnerships (goal to source 50% of ideas externally). Finally, the number and quality of recent new product introductions continue to be strong, which we expect to continue to be the case.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Procter & Gamble’s global research & development footprint has historically been located in developed markets (in 27 technical centers worldwide). Management has recently undertaken a project to shift its footprint to better match expected growth in D&E markets, planning on doubling its presence in the coming years. This should allow the organization to be closer to D&E market consumers and harvest highly talented local graduates. Exhibit 16. Procter & Gamble Historical Advertising And SG&A Expense

($ millions) Annual Selling, General and Administrative Expense

SG&A Expense 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net Sales $39,375 $40,169 $43,373 $51,407 $56,741 $68,222 $76,476 $81,748 $76,694 $78,938 SG&A Expense Advertising 3,729 3,782 4,487 5,466 5,929 7,122 7,937 8,583 7,519 8,576 Research and Development 1,769 1,601 1,665 1,802 1,940 2,075 2,112 2,212 1,864 1,950 Other SG&A 6,090 6,669 6,857 9,614 10,531 12,651 14,291 14,780 13,247 14,193 Total SG&A Expense $11,588 $12,052 $13,009 $16,882 $18,400 $21,848 $24,340 $25,575 $22,630 $24,719

Percent Change Net Sales -1.4% 2.0% 8.0% 18.5% 10.4% 20.2% 12.1% 6.9% -6.2% 2.9% SG&A Expense Advertising -4.5% 1.4% 18.6% 21.8% 8.5% 20.1% 11.4% 8.1% -12.4% 14.1% Research and Development -6.8% -9.5% 4.0% 8.2% 7.7% 7.0% 1.8% 4.7% -15.7% 4.6% Other SG&A -4.3% 9.5% 2.8% 40.2% 9.5% 20.1% 13.0% 3.4% -10.4% 7.1% Total SG&A Expense -4.8% 4.0% 7.9% 29.8% 9.0% 18.7% 11.4% 5.1% -11.5% 9.2%

Percent of Sales SG&A Expense Advertising 9.5% 9.4% 10.3% 10.6% 10.4% 10.4% 10.4% 10.5% 9.8% 10.9% Research and Development 4.5% 4.0%3.8%3.5%3.4%3.0%2.8%2.7%2.4%2.5% Other SG&A 15.5% 16.6% 15.8% 18.7% 18.6% 18.5% 18.7% 18.1% 17.3% 18.0% Total SG&A Expense 29.4% 30.0% 30.0% 32.8% 32.4% 32.0% 31.8% 31.3% 29.5% 31.3%

Source: Company reports and Wells Fargo Securities, LLC estimates Note: 2008 and 2009 results restated to reflect Folgers as discontinued operations as Folgers was sold in Q209 Note: 2009 results restated to reflect the global pharmaceuticals business as discontinued operations as the business was sold in Q210

Manufacturing Procter & Gamble has a significant global manufacturing presence, with the vast majority of manufacturing done in-house and only a minimal amount contracted to third parties. The company has 19 new factories under construction, with about five starting up and five on the drawing board. As with other companies in the industry, the decision to own local country manufacturing or import from other regions is driven by the financial trade-off between local manufacturing costs (i.e., labor, input, and foreign exchange) and geo- political risks, versus incurring transportation and duty costs once a given level of scale is achieved. Corporate Strategy Procter & Gamble’s Bob McDonald issued his purpose-inspired growth strategy shortly after taking over as CEO in 2009. Tied closely to the new growth strategy, the company’s purpose is simply stated: “We will grow by touching and improving the lives of more consumers in more parts of the world more completely.” To achieve growth, management plans to create new opportunities through the following: ŀ Growing core businesses ŀ Winning with underserved and unserved consumers, and ŀ Developing faster-growing, structurally attractive businesses with global leadership potential Besides focusing on organically growing the core business (leadership brands) and expanding to underserved markets, management is trying to capitalize on opportunities in faster-growing businesses in which it already competes. Management’s stated goal is to continue to shift P&G’s business portfolio toward the beauty and health market segments and several household care categories. We expect the majority of the company’s acquisitions and capital investment to take place in these areas. In line with the company’s new purpose, CEO McDonald has stated the goal of serving 5 billion consumers by 2015. In FY2010, management stated it had reached an additional 200 million consumers, bringing the total served to 4.2 billion. To reach new underserved consumers, the company plans to implement the following: ŀ Innovate its product portfolio vertically up and down value tiers, focused specifically on serving price- conscious consumers with mid-tier and value-tier alternatives ŀ Introduce the existing product portfolio into new geographic markets, increasing its presence in developing markets, and ŀ Broaden brands and enter adjacent categories, building scale, reducing costs, and profitably building market share

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

One of the company’s central goals is to reach new consumers in fast-growing emerging markets, where consumers are underserved and the company can leverage its existing product portfolio, along with new lower- priced products to gain penetration and benefit from consumer trade-up as emerging market economies evolve. Capital Structure And Deployment Procter & Gamble has historically employed a conservative capital structure, which has resulted in a high grade credit rating (currently AA3 from Moody’s and AA- from S&P). The company generated more than $13.0 billion in free cash flow in FY2010, or 16.5% of sales. The large nominal amount of free cash gives management exceptional flexibility to operate its business and return excess cash to shareholders. Within that context, management has outlined the following priorities for uses of free cash: ŀ Funding the business ŀ Dividends ŀ Strategic acquisitions ŀ Share repurchase Funding the business is the highest priority and management intends to keep capital expenditure at or below 4% of sales. The dividend has been increased for 53 consecutive years, and we imagine that the current management team does not intend to break that streak. Over that time, the average annual increase was 9.5%, although we are mindful that management also views a payout ratio above 50% as high. Acquisitions are the next priority, although management currently favors small acquisitions over large ones. We expect acquisitions and capital investments to be focused in the beauty and health market segments and select household care categories. Remaining funds have historically been returned to shareholders through share repurchases, with the company repurchasing approximately $42.4 billion in stock between FY2005 and FY2010. Exhibit 17. PG Share Repurchases Period Shares Price per Share Total Cost Q105 - - - Q205 - - - Q305 29.739 $53.09 $1,579 Q405 26.373 $54.71 $1,443 Q106 100.442 $55.26 $5,550 Q206 61.007 $56.57 $3,451 Q306 26.324 $58.75 $1,546 Q406 108.840 $57.23 $6,229 Q107 4.875 $56.43 $275 Q207 - - - Q307 - - - Q407 - - - Q108 40.329 $64.03 $2,582 Q208 39.912 $71.77 $2,864 Q308 37.310 $67.87 $2,532 Q408 29.705 $67.54 $2,006 Q109 58.865 $66.26 $3,900 Q209 20.568 $64.48 $1,326 Q309 19.037 $58.80 $1,119 Q409 - - - Q110 - - - Q210 22.778 $61.65 $1,404 Q310 31.935 $62.62 $2,000 Q410 41.811 $61.85 $2,586 Q111 49.817 $60.28 $3,003 Source: Company Reports and Wells Fargo Securities, LLC Note: In millions, except per share data

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Guidance Procter & Gamble has outlined long-term annual diluted EPS growth of high single to low double digits, assuming a normalized commodity and foreign exchange environment. To achieve this growth, management expects to realize the following annual objectives: ƒ Organic sales growth of 4-6% ƒ Free cash flow productivity (operating cash flow less capital expenditure, divided by net earnings) of 90% or greater ƒ Capital spending at or below 4% of net sales Long-term organic sales growth is expected to be 4-6%, which is made up of 3-4% market growth, plus 1-2% of share growth. The 3-4% market growth outlook assumption is the biggest swing variable and management plans to continue to monitor and update long-term assumptions accordingly. Market growth rates will likely be lower than historical due to depressed growth in developed markets, with expected organic growth in the developed markets (i.e., United States and Western Europe) of 1-2%, versus historical rates of growth above 3%. Share growth guidance includes 0.5-1.0% (potentially more in some years) of growth from portfolio, adjacencies, and regimens (innovation) and 0.5%-1.0% from market growth (10-20 bps per year in global market-share gains). In FY2011, management expects diluted EPS of $3.91-4.01, up 7-9% yr/yr over FY2010 core EPS of $3.67. Yr/yr EPS growth rates will likely be heavily influenced by prior-year trends in commodity costs, foreign exchange rates, and marketing spending. Other elements of management’s FY2011 outlook include the following: ƒ Organic sales growth of 4-6% ƒ Sales growth of 3-5% ƒ Advertising increasing in line with sales ƒ Gross margin and operating margin improvement ƒ Tax rate of 27-28%, excluding any one-time items ƒ Capital spending approximately 4% of sales ƒ Share repurchases of $6-8 billion Management’s organic sales growth target of 4-6% includes estimated market growth of 3-4%. Market growth is expected to be weighted toward developing markets, which are expected to grow 6-8%, versus 1-2% in developing markets. Mix is expected to continue to have a negative impact on sales growth, due to faster growth in developing markets. Management expects pricing to be neutral to slightly positive in FY2011. Pricing will likely be negative in FH1 2011, turning positive in FH2 once yr/yr adjustments have been annualized. The company plans to continue to monitor and adjust price gaps, depending on competitive actions, and expects modest changes in promotional spending. Management expects foreign exchange to be a 1-2% headwind to sales, partially offset by a neutral to 1% benefit from the net impact of acquisitions and divestitures, arriving at the 3-5% net sales growth estimate. Management has seen a moderating foreign exchange headwind, offset by an increase in commodity costs. In FQ2 2011, management estimates diluted EPS of $1.05-1.11, down 5% to up 1% yr/yr, versus core EPS of $1.10. Core EPS is expected to be down yr/yr, due to difficult base period comparisons, driven primarily by higher commodity costs and marketing spending as a percentage of sales. Organic sales are estimated to grow 3-5%, with strong volume momentum partially offset by mix and pricing. Net sales are expected to increase 2-4%, with a 2% negative impact from foreign exchange expected to be partially offset by a 1% positive impact from acquisitions and divestitures.

Estimates Our FY2011 and FY2012 revenue estimates are in line with the consensus, but slightly below estimates in FY2013, driven by 4.0%, 4.4%, and 4.5% organic sales growth. Our organic growth estimates are slightly below the midpoint of long-term guidance, due to expected slow category growth, while EPS estimates should return to low-double-digit growth, supported by modest margin improvements and share repurchases. Our EPS estimates are virtually in line with consensus estimates for both FY2011 and FY2012, but slightly above estimates in FY2013. We believe the Street may not be factoring in as much operating margin expansion or share repurchases in FY2013.

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Exhibit 18. ($ millions) Procter & Gamble Co. (PG) Revenue Estimates (in millions) Q211 2011 2012 2013 Our Est Street Street RangeOur EstStreetStreet RangeOur EstStreetStreet RangeOur EstStreetStreet Range $21,686 $21,569 $21,111-$21,729 $81,873 $82,122 $81,032-$83,139 $85,446 $85,728 $84,007-$87,470 $89,321 $91,119 $89,309-$92,140 Source: First Call and Wells Fargo Securities, LLC estimates

Exhibit 19. Procter & Gamble Co. (PG) EPS Estimates Q211 2011 2012 2013 Our Est Street Street RangeOur EstStreetStreet RangeOur EstStreetStreet RangeOur EstStreetStreet Range $1.10 $1.10 $1.07-$1.12 $3.98 $3.98 $3.95-$4.03 $4.39 $4.37 $4.28-$4.45 $4.85 $4.79 $4.70-$4.87 Source: First Call and Wells Fargo Securities, LLC estimates

FQ2 2011E. Our EPS estimate of $1.10, which incorporates our estimate of 3.3% organic sales growth. FY2011E. Our $3.98 EPS estimate is based upon 4.0% organic revenue growth, made up of 5% volume growth (excluding acquisitions and divestitures), no impact from pricing, and a 1% negative impact from mix or other. We estimate foreign exchange to be a 1% headwind to sales, offset by a 1% volume benefit from acquisitions. Total net sales growth is estimated to be 3.7%. We estimate that sales growth will be strongest in the grooming, health care, beauty, and fabric care and home care segments (up 6%, 5%, 4%, and 4%, respectively), and weaker in the baby care and family care and snacks and pet care segments (up 3% and down 3%). We believe gross margin will decline 26 bps as higher yr/yr input costs more than offset cost savings from restructuring initiatives. We believe operating margin will increase 24 bps as selling and administrative expenses (30.8% of sales) fall due to leverage and overhead savings. We estimate that Procter & Gamble will repurchase $7.1 billion in stock. FY2012E. Our $4.39 EPS estimate is based upon 4.4% organic revenue growth, made up of 4% volume growth (excluding acquisitions and divestitures), a 1% impact from pricing, and a 1% negative impact from mix and other. We estimate foreign exchange and acquisitions and divestitures will be neutral to sales. Total net sales growth is estimated to be 4.4%. We estimate sales growth will be strongest in the beauty, grooming, and fabric care and home care segments (up 5% each), and weaker in the health care, baby care and family care, and snacks and pet care segments (up 4%, 4%, and 3%). We believe gross margin will expand 25 bps, driven by cost savings from restructuring initiatives. We believe operating margin will increase 21 bps as selling and administrative expenses (30.9% of sales) increase slightly as a percentage of sales. We estimate Procter & Gamble will repurchase $9.1 billion in stock. FY2013E. Our $4.85 EPS estimate is based upon 4.5% organic revenue growth, made up of 4% volume growth (excluding acquisitions and divestitures), a 1% impact from pricing, and a 1% negative impact from mix and other. We estimate foreign exchange and acquisitions and divestitures will be neutral to sales. Total net sales growth is estimated to be 4.5%. We estimate sales growth will be strongest in the beauty, grooming, health care, and baby care and family care segments (up 5% each), and weaker in the fabric care and home care and snacks and pet care segments (up 4% and 3%). We believe gross margin will expand 25 bps, driven by cost savings from restructuring initiatives. We believe operating margin will increase 17 bps as selling and administrative expenses (30.9% of sales) increase slightly as a percentage of sales. We estimate Procter & Gamble will repurchase $9.2 billion in stock. Stock Performance Seasonality Median stock performance since 1986 is strongly weighted toward CH2. Relative returns versus the S&P 500 are best during the August through October period, with the best returns occurring in September. The stock tends to underperform the market early in the calendar year, with the worst returns usually occurring in April.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Exhibit 20.

Procter & Gamble Co. Median Monthly Return 4%

3%

2%

1%

0%

-1% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: FactSet and Wells Fargo Securities, LLC Note: Since Jan 1986

Procter & Gamble Co. Median Monthly Return vs S&P 500 4%

3%

2%

1%

0%

-1%

-2% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: FactSet and Wells Fargo Securities, LLC Note: Since Jan 1986

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Models

Procter & Gamble Co. (Dollars in millions, except per share data) Segment Net Sales Updated: 01.19.11 Wells Fargo Securities, LLC

Annual Segment Net Sales

Segment Net Sales 2005 2006 2007 2008 2009 FY10 FY11E FY12E FY13E Beauty and Grooming GBU Beauty $15,909 $16,687 $17,889 $19,515 $18,924 $19,491 $20,275 $21,247 $22,258 Grooming 10 5,114 7,437 8,254 7,408 7,631 8,047 8,430 8,830 Health and Well-Being GBU Health Care 9,880 11,831 13,381 14,578 11,288 11,493 11,941 12,453 13,013 Snacks and Pet Care 4,314 4,383 4,537 3,204 3,114 3,135 3,112 3,213 3,309 Household Care GBU Fabric Care and Home Care 15,796 18,918 21,469 23,714 23,186 23,805 24,684 25,807 26,871 Baby Care and Family Care 11,652 11,972 12,726 13,898 14,103 14,736 15,067 15,676 16,459 Total Business Segments 57,561 68,905 77,439 83,163 78,023 80,291 83,125 86,826 90,741 Corporate (820) (683) (963) (1,415) (1,329) (1,353) (1,252) (1,380) (1,420) Total Company $56,741 $68,222 $76,476 $81,748 $76,694 $78,938 $81,873 $85,446 $89,321

Percentage Change Beauty and Grooming GBU Beauty 4.9% 7.2% 9.1% -3.0% 3.0% 4.0% 4.8% 4.8% Grooming 51040.0% 45.4% 11.0% -10.2% 3.0% 5.5% 4.8% 4.7% Health and Well-Being GBU Health Care 19.7% 13.1% 8.9% -22.6% 1.8% 3.9% 4.3% 4.5% Snacks and Pet Care 1.6% 3.5% -29.4% -2.8% 0.7% -0.7% 3.3% 3.0% Household Care GBU Fabric Care and Home Care 19.8% 13.5% 10.5% -2.2% 2.7% 3.7% 4.5% 4.1% Baby Care and Family Care 2.7% 6.3% 9.2% 1.5% 4.5% 2.2% 4.0% 5.0% Total Business Segments 19.7% 12.4% 7.4% -6.2% 2.9% 3.5% 4.5% 4.5% Corporate -16.7% 41.0% 46.9% -6.1% 1.8% -7.5% 10.2% 2.9% Total Company 20.2% 12.1% 6.9% -6.2% 2.9% 3.7% 4.4% 4.5% Beauty and Grooming GBU Beauty Volume w/ Acquisitions/Divestitures 4% 2% -2% 3% 5% 5% 4% Volume w/o Acquisitions/Divestitures 4% 3% -2% 4% 5% 5% 4% Foreign Exchange 3% 6% -4% 0% 0% 0% 0% Price -1% 0% 2% 1% 1% 1% 2% Mix/Other 1% 1% 0% -1% -1% -1% -1% Net Sales Growth 4.9% 7.2% 9.1% -3.0% 3.0% 4.0% 4.8% 4.8% Organic Sales Growth 4% 4% 0% 4% 4% 5% 5% Grooming Volume w/ Acquisitions/Divestitures 36% 5% -5% 1% 6% 4% 4% Volume w/o Acquisitions/Divestitures 2% 6% -5% 1% 6% 4% 4% Foreign Exchange 4% 7% -6% 0% -1% 0% 0% Price 2% 2% 4% 4% 1% 2% 2% Mix/Other 3% -3% -2% -2% 0% -1% -1% Net Sales Growth 51040.0% 45.4% 11.0% -10.2% 3.0% 5.5% 4.8% 4.7% Organic Sales Growth 7% 5% -3% 3% 6% 5% 5% Health and Well-Being GBU Health Care Volume w/ Acquisitions/Divestitures 8% 4% -3% 3% 6% 5% 5% Volume w/o Acquisitions/Divestitures 5% 4% -3% 3% 6% 5% 5% Foreign Exchange 2% 5% -5% 0% -1% 0% 0% Price 2% 1% 3% 1% -1% 1% 1% Mix/Other 1% -1% -2% -2% 0% -1% -1% Net Sales Growth 19.7% 13.1% 8.9% -22.6% 1.8% 3.9% 4.3% 4.5% Organic Sales Growth 8% 4% -2% 2% 5% 4% 5% Snacks and Pet Care Volume w/ Acquisitions/Divestitures 0% 3% -6% -2% 2% 3% 3% Volume w/o Acquisitions/Divestitures 0% 3% -6% -2% -1% 3% 3% Foreign Exchange 2% 4% -4% 1% 0% 0% 0% Price 1% 1% 9% 3% -1% 1% 2% Mix/Other 1% -1% -2% -1% -1% -1% -1% Net Sales Growth 1.6% 3.5% -29.4% -2.8% 0.7% -0.7% 3.3% 3.0% Organic Sales Growth 2% 3% 1% 0% -3% 3% 3% Household Care GBU Fabric Care and Home Care Volume w/ Acquisitions/Divestitures 10% 6% -3% 6% 7% 5% 4% Volume w/o Acquisitions/Divestitures 7% 6% -3% 6% 6% 5% 4% Foreign Exchange 3% 5% -5% -1% -1% 0% 0% Price 0% 1% 6% -1% -1% 1% 1% Mix/Other 0% -1% 0% -1% -2% -1% -1% Net Sales Growth 19.8% 13.5% 10.5% -2.2% 2.7% 3.7% 4.5% 4.1% Organic Sales Growth 7% 6% 3% 4% 4% 5% 4% Baby Care and Family Care Volume w/ Acquisitions/Divestitures 5% 4% 1% 7% 6% 4% 4% Volume w/o Acquisitions/Divestitures 5% 8% 2% 7% 6% 4% 4% Foreign Exchange 2% 4% -4% -1% -1% 0% 0% Price 0% 1% 5% 0% -1% 1% 2% Mix/Other -1% 0% -1% -2% -1% -1% 0% Net Sales Growth 2.7% 6.3% 9.2% 1.5% 4.5% 2.2% 4.0% 5.0% Organic Sales Growth 4% 9% 6% 5% 3% 4% 5% Corporate -16.7% 41.0% 46.9% -6.1% 1.8% -7.5% 10.2% 2.9% Total Company Volume w/ Acquisitions/Divestitures 9% 4% -3% 4% 6% 4% 4% Volume w/o Acquisitions/Divestitures 5% 5% -2% 4% 5% 4% 4% Foreign Exchange 2% 5% -4% -1% -1% 0% 0% Price 1% 1% 5% 1% 0% 1% 1% Mix/Other 0% -1% -1% -1% -1% -1% -1% Net Sales Growth 20.2% 12.1% 6.9% -6.2% 2.9% 3.7% 4.4% 4.5% Organic Sales Growth 6% 5% 2% 4% 4% 4% 5%

Percent of Annual Net Sales Beauty and Grooming GBU Beauty 27.6% 24.2% 23.1% 23.5% 24.3% 24.3% 24.4% 24.5% 24.5% Grooming 0.0% 7.4% 9.6% 9.9% 9.5% 9.5% 9.7% 9.7% 9.7% Health and Well-Being GBU Health Care 17.2% 17.2% 17.3% 17.5% 14.5% 14.3% 14.4% 14.3% 14.3% Snacks and Pet Care 7.5% 6.4% 5.9% 3.9% 4.0% 3.9% 3.7% 3.7% 3.6% Household Care GBU Fabric Care and Home Care 27.4% 27.5% 27.7% 28.5% 29.7% 29.6% 29.7% 29.7% 29.6% Baby Care and Family Care 20.2% 17.4% 16.4% 16.7% 18.1% 18.4% 18.1% 18.1% 18.1% Total Business Segments 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Source: Company reports and Wells Fargo Securities, LLC estimates Note: Effective 07.01.07, segments restructured to combine Gillette GBU into the Beauty and Household Care GBUs Note: 2008 and 2009 results restated to reflect Folgers as discontinued operations as Folgers was sold in Q209. Highlighted percent change data may not be accurate given restatements. Note: Effective 09.01.09, the Company implemented changes to the organization structure of the Beauty GBU. Results prior to FY 2009 do not reflect these changes. Note: 2009 results restated to reflect the global pharmaceuticals business as discontinued operations as the business was sold in Q210. Highlighted percent change data may not be accurate given restatements.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Procter & Gamble Co. (Dollars in millions, except per share data) Segment Margin Updated: 01.19.11 Wells Fargo Securities, LLC

Annual Segment Earnings Before Taxes

Segment EBT 2005 2006 2007 2008 2009 FY10 FY11E FY12E FY13E Beauty and Grooming GBU Beauty $3,051 $3,262 $3,440 $3,528 $3,558 $3,648 $4,008 $4,287 $4,545 Grooming 4 1,176 1,895 2,299 1,900 2,007 2,202 2,334 2,489 Health and Well-Being GBU Health Care 2,132 2,785 3,365 3,746 2,786 2,809 2,854 3,059 3,246 Snacks and Pet Care 714 627 759 409 388 499 418 442 470 Household Care GBU Fabric Care and Home Care 3,186 3,905 4,650 5,060 4,663 5,076 5,161 5,539 5,889 Baby Care and Family Care 1,924 2,071 2,291 2,700 2,827 3,270 3,265 3,448 3,690 Total Business Segments 11,011 13,826 16,400 17,742 16,122 17,309 17,907 19,108 20,328 Corporate (1,030) (1,413) (1,690) (2,110) (1,709) (2,262) (1,584) (1,848) (2,200) Total Company $9,981 $12,413 $14,710 $15,632 $14,413 $15,047 $16,323 $17,261 $18,128

Segment EBT Margin Beauty and Grooming GBU Beauty 19.2% 19.5% 19.2% 18.1% 18.8% 18.7% 19.8% 20.2% 20.4% Grooming 40.0% 23.0% 25.5% 27.9% 25.6% 26.3% 27.4% 27.7% 28.2% Health and Well-Being GBU Health Care 21.6% 23.5% 25.1% 25.7% 24.7% 24.4% 23.9% 24.6% 24.9% Snacks and Pet Care 16.6% 14.3% 16.7% 12.8% 12.5% 15.9% 13.4% 13.7% 14.2% Household Care GBU Fabric Care and Home Care 20.2% 20.6% 21.7% 21.3% 20.1% 21.3% 20.9% 21.5% 21.9% Baby Care and Family Care 16.5% 17.3% 18.0% 19.4% 20.0% 22.2% 21.7% 22.0% 22.4% Total Business Segments 19.1% 20.1% 21.2% 21.3% 20.7% 21.6% 21.5% 22.0% 22.4% Corporate 125.6% 206.9% 175.5% 149.1% 128.6% 167.2% 126.5% 133.9% 154.9% Total Company 17.6% 18.2% 19.2% 19.1% 18.8% 19.1% 19.9% 20.2% 20.3%

Percent of Annual EBT Beauty and Grooming GBU Beauty 27.7% 23.6% 21.0% 19.9% 22.1% 21.1% 22.4% 22.4% 22.4% Grooming 0.0% 8.5% 11.6% 13.0% 11.8% 11.6% 12.3% 12.2% 12.2% Health and Well-Being GBU Health Care 19.4% 20.1% 20.5% 21.1% 17.3% 16.2% 15.9% 16.0% 16.0% Snacks and Pet Care 6.5% 4.5% 4.6% 2.3% 2.4% 2.9% 2.3% 2.3% 2.3% Household Care GBU Fabric Care and Home Care 28.9% 28.2% 28.4% 28.5% 28.9% 29.3% 28.8% 29.0% 29.0% Baby Care and Family Care 17.5% 15.0% 14.0% 15.2% 17.5% 18.9% 18.2% 18.0% 18.2% Total Business Segments 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Source: Company reports and Wells Fargo Securities, LLC estimates Note: Effective 07.01.07, segments restructured to combine Gillette GBU into the Beauty and Household Care GBUs Note: 2008 and 2009 results restated to reflect Folgers as discontinued operations as Folgers was sold in Q209 Note: Effective 09.01.09, the Company implemented changes to the organization structure of the Beauty GBU. Results prior to FY 2009 do not reflect these changes. Note: 2009 results restated to reflect the global pharmaceuticals business as discontinued operations as the business was sold in Q210

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

4.0 4.8 5.0 5.4 5.0 5.0 5.0 7.5 10.4 10.4 13.3 10.2 10.2 Change 4.85 4.85 2.28 (974) $ $ $ $8.11 $8.11 (4,931) 46,627 19,002 2013E (42,694) (27,625) $13,197 $13,197 3.8 4.5 4.9 5.4 5.8 5.7 5.7 3.4 7.9 9.4 9.4 10.3 10.3 Change 4.39 4.39 2.12 (859) $ $ $ $7.36 $7.36 (4,697) 44,391 18,032 (41,055) (26,359) $12,564 $12,564 2012E 4.3 2.1 3.2 4.9 8.5 8.5 9.1 7.4 7.4 -9.8 -9.8 12.5 -12.2 Change 3.98 3.98 1.97 (831) $ $ $ $6.73 $6.73 (4,441) 42,331 17,104 (39,542) (25,227) $11,881 $11,881 2011E 7.9 9.2 6.0 8.4 8.4 9.9 5.8 7.0 7.0 -2.0 -2.0 -2.0 -30.3 %%%% -107.1 49 -275.0 88 79.6 100 13.6 Change (28) 3.67 3.67 1.80 $ $ $ 3.39 3.39 1.64 $ $ $ 3.42 3.42 1.45 $ $ $ Annual Income Statement 3.04 3.04 1.28 $ $ $ 00000 0 0 0 in Q210 2.64 2.64 1.15 $ $ $ 2.53 2.53 1.03 $ $ $ 000 0 0 0 0000 0 0 0 0 0 0 0 0 0 0 2.20 2.20 0.93 $ $ $ 1.85 2.04 0.82 $ $ $ 69 4 0 0 0 0 0 0 0 0 0 0 1.54 1.80 0.76 $ $ $ (15) (12) (9) (4) (1) 1.11 1.64 0.70 (131) (583) (519) (374) (794) (603) (561) (629) (834) (1,119) (1,304) (1,467) (1,358) (946) $ $ $ (1,136) (508) (381) (2,086) (2,283) (2,557) (2,749) (3,058) (3,729) (4,370) (4,293) (3,733) (3,949) 13.38% 13.43%37.86%19.34% 13.53% 39.24% 19.98% 12.21% 38.24% 20.34% 11.68% 35.79% 18.84% 37.76% 8.81% 17.75% 21.34% 7.56% 12.89% 15.95% 10.69% 8.04% 16.61% 11.57% 7.66% 16.04% 11.02% 18.23% 8.65% 12.63% 18.97% 9.03% 13.24% 20.03% 9.36% 13.71% 21.73% 14.76% 9.92% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (20,966) (20,481) (21,760) (25,143) (27,872) (33,125) (36,686) (39,536) (38,690) (37,919) (11,588) (12,052) (13,009) (16,882) (18,400) (21,848) (24,340) (25,575) (22,630) (24,719) x

(%) (Dollars in millions, except per share data) vg. Shares Outstanding - Basicvg. Shares Outstanding - Diluted 2,601 2,811 = Assets) (Sales/Avg. Turnover sset 2,595 2,810 2,593 2,803 2,580 2,799 2,516 2,737 1.15x 3,055 3,286 1.07x 3,159 1.03x 3,399 1.02x 3,081 3,317 0.96x 2,952 3,154 0.69x 2,901 3,099 0.56x -1.7 -1.7 0.58x 2,787 2,982 0.55x -3.9 -3.8 2,673 0.60x 2,860 -4.1 -4.1 2,543 2,721 -4.8 0.62x -4.8 0.64x 0.67x Procter & Gamble Co. Co. Gamble & Procter Statement Income Updated: 01.19.11 LLC Securities, Fargo Wells A A A Cost of Products Sold (%)(%) Expense Administrative and General Selling, (%) Expense Interest (%) Rate Tax Effective (%) Margin Gross (%) Margin Operating 29.43(%) Margin EBITDA (%) Margin Pretax 30.00Net (%)Margin Return on Sales (Net Income/Sales) x 29.99Return on Assets Avg. 32.84 53.25 32.43 50.99 31.13 2.02 32.02 11.68% 50.17 31.10 12.56% 17.32 1.50 31.83 46.75 48.91 13.18% 23.09 30.88 19.01 49.01 1.29 49.12 17.02 11.97% 31.29 23.22 30.87 19.84 12.20% 49.83 11.68 48.55 18.28 1.22 29.51 23.76 12.73% 30.64 18.25 51.09 12.56 19.09 47.97 1.47 21.62 13.52% 30.04 31.31 18.45 50.88 17.32 13.18 21.77 13.87% 48.36 1.64 29.71 19.42 51.45 17.59 11.97 13.93% 23.27 50.45 27.47 1.71 18.20 20.20 12.20 52.03 30.81 14.41% 24.30 48.04 12.73 25.90 19.23 20.35 1.79 51.64 24.22 13.52 25.77 19.12 20.05 49.55 14.51% 1.77 30.85 24.06 13.87 18.79 20.65 48.30 51.96 1.20 24.59 13.93 19.42 27.21 14.70% 30.93 14.41 20.89 48.05 51.70 24.50 1.01 14.77% 19.94 27.21 47.80 14.51 21.10 51.95 24.63 1.01 27.20 20.20 21.27 14.70 52.20 24.72 1.09 20.30 14.77 Financial (Avg. Assets/Avg.Leverage Equity) =Return on Equity (%)Avg. Invested Capital Return(%) on Avg. estimates LLC Securities, Fargo Wells and reports Company Source: Note: 2008 and 2009 results restated to reflect Folgers as discontinued operations as Folgers soldwas in Q209 2.83xNote: 2009 results restated to reflect the global pharmaceuticals business as discontinued operations as the business soldwas 2.92x 2.83x 2.93x 3.23x 2.42x 2.11x 2.07x 2.09x 2.11x 2.10x 2.14x 2.19x Net SalesSales Net - Restructuring for Provision Cost of Products Sold COPS - Restructuring for Provision MarginGross MR&A - Restructuring for Provision Profit Operating $39,375 $40,169 17,142 $43,373 19,249 $51,407 4,971 $56,741 21,236 6,678 $68,222 26,264 7,853 $76,476 28,869 9,382 $81,748 35,097 10,469 $76,694 39,790 13,249 $78,938 42,212 15,450 2.9 38,004 $81,873 16,637 41,019 3.7 15,374 $85,446 16,300 4.4 $89,321 4.5 Selling, General and Administrative Expense Administrative and General Selling, Expense Interest Taxes Income Before Earnings Taxes Income Taxes Income - Restructuring for Provision Net Earnings from Discontinued OperationsNet EarningsESOP of Funding on Impact Dividend Preferred Diluted Net EarningsDiluted - EPS 375 4,851 0 252 6,383 213 0 7,530 8,905 0 0 $3,125 9,981 $3,140 $4,340 12,413 $4,352 0 0 $5,177 14,710 $5,186 $6,152 $6,156 0 15,632 0 $6,922 $6,923 14,413 $8,684 $8,684 0 0 $10,340 15,326 $10,340 $11,616 6.3 $11,616 0 $13,436 0 16,323 $13,436 $13,167 $13,167 6.5 277 0 17,261 2,756 5.7 0 1,790 18,128 5.0 0 0 0 0 0 0 Core EPS - Diluted Dividends Other Non-Operating Income, Net Income, Non-Operating Other 674 308 238 152 346 283 564 462 397 EBITDADiluted - EBITDA/Share Core EBITDA - DilutedCore EBITDA/Share $2.58 $3.23 $2.98 $3.32 $3.41 7,242 $3.68 9,092 $3.97 8,371 $3.97 9,329 $4.51 9,556 10,307 $4.51 $4.83 11,115 11,115 $4.83 12,353 12,353 $5.47 15,876 $5.47 15,876 $5.97 18,580 18,580 $5.97 19,803 $5.85 19,803 $5.85 18,456 $6.26 18,456 $6.26 19,408 19,408 5.2 5.2 20,060 20,060 3.4 3.4 21,047 21,047 4.9 4.9 22,077 22,077 4.9 4.9

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT 5 2.1 3.6 2.8 1.1 -2.9 -0.7 -0.4 -0.7 Change 3,308 -20.5 8,387 4.6 ($8.38) $ $ $21.99 59,846 $21,694 $29,799 $72,650 2013E $132,496 $132,496 0.7 4.5 2.7 1.1 -3.4 -1.1 -2.1 -1.1 Change 4,160 -22.3 8,020 4.5 ($8.08) $ $ $21.55 61,625 $21,783 $28,998 $71,849 $133,474 $133,474 2012E 8.0 3.9 5.3 5.3 6.5 -1.0 18.5 16.3 Change 5,353 85.9 7,675 5.8 ($7.73) $ $ $21.40 63,825 $22,260 $28,247 $71,098 $134,923 $134,923 2011E -1.4 -4.3 -3.1 -4.9 -4.9 -6.6 -14.3 -21.4 %%%% Change 604 -10.1 $ 2,879 -39.8 7,251 21.3 1,6924,088 8.7 -12.1 $ $ $ $ 672 $ 4,781 5,980 1,557 4,651 $ $ $ $ 765 $ 3,313 6,775 2,262 5,389 $ $ $ $ Annual Balance Sheet 444 $ 5,354 5,710 1,590 4,785 $ $ $ $ 623 $ 6,693 4,910 1,537 4,131 $ $ $ $ 350 $ 6,389 3,802 1,424 3,232 $ $ $ $ 340 $ 4,232 3,617 1,191 2,869 ($2.04) ($2.08) ($7.95) ($6.89) ($7.30) ($8.16) ($7.81) $ $ $ $ 291 $ 5,428 2,795 1,095 2,254 $ $ $ $ 323 $ 3,427 2,205 1,031 2,102 $ $ $ $ 373 $ 2,306 2,075 1,096 1,915 $ $ 12,010 13,706$ 16,186$ 18,190 18,475 62,908 66,760 69,784 63,382 61,439 $34,387 $40,776 $43,706 $57,048 $61,527 $135,695 $138,014 $143,992 $134,833 $128,172 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (Dollars in millions, except per share data) y y ccounts Receivable ccounts Payable ccounts Liabilities Other and ccrued 2,931 3,090 3,038 5,538 4,062 6,768 4,185 7,391 5,725 10,243Receivable ccounts 6,629 9,796Payable ccounts Liabilities Other and ccrued 6,761 12,947 12,968 5,836 11,099 5,335 7.4% 14.1% -8.6 8,601 7.7% 16.8% 5.3% 5,647 8,559 17.0% 7.0%/PTurnover 5.5% 5.8 -0.5vg. Days Receivables 19.9%vg. Days Inventory 7.9%vg. Days Payables 6.4% 5,901 9,060 17.3% 7.4% 4.5 7.0% 5.8 19.0% 6,171 8.4% 6.7% 9,466 17.0% 4.6 4.5 8.7% 7.2% 27.07 13.6% 9,900 59.84 9.74 8.3% 37.48 27.36 7.5% 11.2% 4.6 60.95 38.00 25.78 9.60 7.6% 10.8% 8.3% 59.51 41.58 25.21 8.78 6.8% 7.8% 58.36 45.18 26.53 8.08 11.1% 9.2% 61.59 47.54 26.51 7.68 6.9% 62.24 46.21 29.48 11.1% 7.90 9.4% 65.22 52.08 29.89 6.9% 7.01 70.33 11.1% 55.39 29.98 6.59 9.4% 72.15 62.65 25.83 6.9% 63.84 5.83 64.52 9.4% 5.66 24.48 61.36 67.98 5.37 24.66 62.82 69.24 24.66 5.27 63.15 69.59 5.24 Investment SecuritiesInvestment 212 196 784 1,660 1,744 1,133 0 0 0 0 0 0 0 Work in Process in Work Book Value/ShareTangible Book Value/ShareSales: of Percent $1.32 $4.27 $0.10 $4.88 $0.96 $5.78 $6.50 $6.75 $19.14 $19.64 $21.04 $20.10 $19.82 Finished Products Finished Tot. Liab. & Shr. Equit Analysis Inventory Materials and Supplies InventoriesDeferred Income Taxes AssetsCurrent Other and Expenses Prepaid Total Current AssetsNet Equip., and Plant, Prop., Intangible Assets and Other Goodwill Assets Other Non-Current 1,659Total Assets 1,476Debt Due Within One YearTotal Current Liabilities 1,487 8,300 DebtLong-Term 13,095Deferred Income Taxes 397 13,430Liabilities Other Non-Current $10,889 1,803Total Liabilities 13,349 Equit 3,384Shareholders' $12,166 2,103 13,507 521 1,924 13,104 $15,220 3,456 23,900 1,831 14,108 $17,115 843 2,876 $34,387 2,233 24,163 3,640 $9,846 1,875 $20,329 14,332 $40,776 3,502 3,731 1,845 958 $12,704 89,027 4,400 $24,329 $43,706 1,925 18,770 894 $12,358 9,792 2,088 2,172 1,081 $57,048 4,013 90,178 5,006 $24,031 2,703 $22,147Inventories 19,540 $22,377 1,077 11,201 AssetsCurrent Other and Expenses $61,527Prepaid 2,291 8,287 $24,515 94,000 $25,039 1,611 $27,070 3,199 6,291 20,640 $135,695 11,475 3,569 1,396 11,441 $21,905 $27,520 2,808Liquidity/Solvency: $19,985 89,118 $138,014 4.2% 12,554 1,727 3,194 6,819 19,462 1,349 $38,858 4,265 $18,782 $30,717 $143,992 3,230 2,128 85,648 -0.2 12,887 $43,052 3.7% 19,244 2,012 8,416 1,896 $134,833 $30,958 4,837 -3.9 12,039 4,472 35,976 $72,787 3,381 -1.1 $128,172 3.4% 12,354 $30,901 6,880 1,209 86,890 4,348 13,084 $71,254 5.8 20,330 23,375 5,147 3.5% $24,282 12,015 1.5 6,384 $74,208 5.6 16,320 990 8.6% 3,533 4,498 23,581 7,864 3.4% -7.2 11,805 84,738 -18.1 $71,451 20,605 4.5 3.4 8.6% 20,652 8,472 -2.5 9,146 10,752 $66,733 6,911 4.2% 3,694 1.4 -48.1 82,640 968 Inventory 5,442 Products/Total Finished 8.4% 21,360 21,000 8.3 4.6 10,189estimates LLC 10,902Securities, Fargo Wells and reports Company Source: -2. 11,512 21.0 -2.2 4.6% 3.4 1.9 8.6% 11.4 1.4 35.9 7,222 6,348 21,464 4.9% 968 10,678 8.8% 4.5 10,709 11,512 16.6 56.6% 0.5 0.0 4.8 7,553 -1.8 4.2% 7,163 0.0 9.2% 60.8% 21,464 11,512 968 4.6 10,678 12.8 10,709 4.0% 61.9% 8.9% 0.0 0.0 0.0 0.0 0.0 21,464 10,678 65.2% 10,709 10.3% 0.0 0.0 64.6% 0.0 4.1% 9.0% 65.7% 8.1% 70.2% 4.1% 64.0% 8.4% 67.6% 4.1% 64.0% 8.5% 8.5% Procter & Gamble Co. Co. Gamble & Procter Balance Sheet Updated: 01.19.11 LLC Securities, Fargo Wells Cash and Cash Equivalents A A A A A A Current RatioQuick RatioCash Collection Cycle TTMCoverage Interest EBITDA Debt/TTM Total Leverage: LT Debt/Total CapitalCapital Debt/Total Total Asset Efficiency: Receivables Turnover TurnoverInventory A A 49.43A 11.45A 1.32 1.11 50.30 0.76 15.47 1.60 50.0% 40.7% 0.96 43.72 18.37 0.69 52.1% 39.1% 1.32 1.23 17.67 38.39 13.48 0.94 45.7% 38.5% 6.10 1.88 14.81 0.77 40.57 13.34 53.4% 32.2% 0.57 5.99 1.97 14.16 14.19 0.81 42.54 56.8% 30.1% 0.61 6.13 14.48 14.25 37.7% 2.40 35.6% 42.62 1.22 0.90 13.76 6.25 34.7% 22.9% 13.50 44.82 1.91 0.78 13.77 0.56 5.93 34.4% 22.2% 13.59 39.47 1.85 0.79 12.38 36.8% 20.6% 0.52 5.86 20.52 25.14 2.00 0.71 32.7% 12.21 23.4% 0.49 5.60 1.54 0.77 12.18 24.15 0.51 17.86 5.19 34.1% 22.2% 14.13 5.06 1.64 0.79 24.50 18.24 0.54 5.72 34.9% 22.7% 14.91 22.67 1.57 18.23 0.75 35.5% 23.1% 0.50 5.95 14.80 1.49 0.73 0.47 14.80 5.81 5.78

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

5.5 4.4 2.3 0.9 9.4 5.5 9.7 4.1 1.4 -22.3 -20.5 -28.6 Change 4,160 $4.89 $6.17 ($852) (3,470) (5,796) (9,180) 13,197 5.0 16,790 $ $3,308 ($3,470) $ $ $13,320 ($14,172) 2013E 1.6 3.9 2.3 9.0 8.4 4.5 -9.8 85.9 28.7 47.9 -22.3 -148.2 Change 00 00 00 00 5,353 $4.47 $5.62 (3,290) (5,664) (9,100) 12,564 5.7 16,080 $4,160 $ ($1,193) ($3,290) $ $ $12,790 ($13,983) 2012E 5.6 1.4 0.1 -3.7 -5.9 -2.2 85.9 17.8 -39.8 -45.2 511.1 -230.1 Change 200 101 0 0 2,879 2,412 0 0 $5.19 $4.10 (3,239) (7,073) (5,536) $5,353 11,881 -9.8 15,476 $ $2,474 ($3,648) ($9,455) $ $ $12,237 2011E 7.7 8.2 9.6 -5.3 -5.7 44.3 11.3 13.3 59.6 -39.8 -74.6 %% % % -229.6 Change (235) (133) (173) (25) 2,213 270 36 38 4,781 (4,716) (17) 13,167 -2.0 16,072 $ ($1,902) $ $ 166 (284) (122) 3,313 2,339 (2,420) (1,798) 13,436 14,919 $ $1,468 $ $ (50) 5,354 11,616 15,008 $ $ $ Annual Cash Flow Statement 253 1,214 596 36 48 0 0 (492) (381) (368) (425) (398) 6,693 9,006 2,650 10,340 13,410 $ (13,171) (4,659) ($1,339) ($2,041) $ $ (75) (153) (284) (2,377) (2,670) 171 884 673 237 187 344 (112) 8,684 6,389 (8,624) $ 11,372 $ $ 6,923 8,679 4,232 (1,329) (344) (1,547) (1,591) (364) $ $ $ $2,157 $304 (46) (61) 342 564 (874) (100) 6,156 9,355 5,428 4,911 2,016 $ $ $ ($1,196) 37 (67) 5,186 8,702 2,799 (2,052) $ $ $ ($5,097) ($361) ($4,125) ($10,575) ($12,453) ($14,844) ($10,814) ($17,255) 17 387 389 467 101 227 113 7 719 332 30 $197 1,394 4,352 7,742 2,199 $ $ $ (7) (433) (56) 141 237 267 562 521 1,319 1,499 1,867 681 721 5.9 758 5.1 781 3.0 804 3.0 (102) (174) (138) (5,471) (61) (7,476) (572) $891 $600 $2,629 3,140 5,804 1,415 (2,486) (1,679) (1,482) (2,024) (2,181) (2,667) (2,945) (3,046) (3,238) (3,067) (1,092) (1,250) (568) (1,236) (4,070) (5,026) (16,830) (5,578) (10,047) (6,370) (6,004) (1,943) (2,095) (2,246) (2,539) (2,731) (3,703) (4,209) (4,655) (5,044) (5,458) $ $ $ 105.7% 139.3% 139.2% 119.1% 93.9% 100.2% 101.2% 103.0% 86.9% 98.8% 103.0% 101.8% 100.9% ($1,843) ($7,356) ($1,363) ($10,144) ($2,336) ($730) ($2,483) ($2,549) ($2,353) ($597) ($3,014) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 r uivalents y q (Dollars in millions, except per share data) share except per millions, (Dollars in e in Cash & e E in & Cash Cash Flow Cash Cash Flow Cash g Diluted - Flow/Shr. Cash $2.06 $2.76 $3.10 $3.34 $3.17 $3.46 $3.95 $4.52 $4.73 $5.19 g g g r cquisitions, Net of Cash Acquired vg. Shares Outstanding - Diluted 2,811 2,810 2,803 2,799 2,737 3,286 3,399 3,317 3,154 3,099 -1.7 2,982 -3.8 2,860 -4.1 2,721 -4.8 Gain on Sale of BusinessesChange in Working CapitalSales Asset from Proceeds 0 669 841 0 788 1,220 227 0 406 143 0 230 0 517 882 281 928 1,087 3,068 14 0 0 Depreciation and AmortizationExpense Compensation Share-Based Deferred Income Taxes Othe 0 2,271Capital Expenditures 1,693 0 1,703 559 1,733 491 1,884 524 2,627 585 3,130 3,166 668 3,082 555 3,108 516 0.8 2,956 453 -12.2 -4.9 452 3,015 -0.3 2.0 3,075 465 2.0 3.0 479 3.0 Cash & Equiv. End $2,306 $2,799 $5,428 $4,232 $6,389 $6,693 $5,354 $3,313 $4,781 $2,879 Net Earnings Financin Change in Short-Term Debt Change in Long-Term Debt StockTreasury Purchases Othe and Options Stock of Impact 1,130 1,229 170 775 1,095 17,263 Free Cash Flow Productivit Flow Cash Free Percent of Sales: of Percent Cash & Equiv. Beg. Operating Cash Flow Dividends to Shareholders Free Cash FlowFree Flow/Shr. Cash Free - Diluted $1.18 $2.16 $3,318 $2.58 $6,063 $7,220 $2.62 $7,331 $2.37 $6,498 $2.65 $8,705 $3.08 $10,465 $3.61 $11,962 $11,681 $3.70 $13,005 $4.20 Procter & Gamble Co. Co. Gamble & Procter Cash Flow Statement Updated: 01.19.11 LLC Securities, Fargo Wells A A Capital Expenditures Cash FlowFree estimates LLC Securities, Wells Fargo and reports Company Source: 6.3% 8.4% 4.2% 15.1% 3.4% 16.6% 3.9% 14.3% 3.8% 11.5% 3.9% 12.8% 13.7% 3.9% 14.6% 3.7% 15.2% 4.2% 16.5% 3.9% 14.9% 4.0% 15.0% 3.9% 14.9% 3.9% Change in Investments Investin Operatin Effect of Exchange Rates Exchange of Effect Net Chan

32

WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT Yield Range (%) Range Yield Relative EV/EBITDA Relative to Historical Range Average P/E Range (X) Range P/E (X) Range P/E (X) Range (%) Yield FCF 20.28 16.05 1.12 1.22 12.84 10.45 6.89% 5.38% 2.82% 2.22% Procter & Gamble Co. Gamble & Procter One Year Forward Valuation History Valuation Forward Year One 0.270.290.330.38 19.740.43 18.39 15.980.48 17.02 14.140.54 20.85 13.500.61 22.80 14.130.67 30.89 1.18 16.300.73 31.35 1.22 19.180.79 37.63 1.33 21.54 1.080.87 35.08 1.38 26.69 1.040.98 21.18 1.35 15.63 1.171.09 22.20 1.39 14.50 1.271.21 20.86 1.28 10.42 17.35 1.231.36 22.16 1.44 9.45 16.61 1.171.55 21.23 1.02 8.66 8.99 18.88 1.201.72 19.96 0.74 11.09 7.47 18.19 1.251.89 21.90 1.05 11.57 7.29 16.27 0.56 20.62 1.26 16.18 7.75 6.00% 17.60 0.74 17.07 1.39 15.39 8.39 15.25 1.25 15.60 10.34 1.47 4.91% 4.85% 20.45 11.81 1.41 10.81 1.19 3.00% 19.49 3.77% 8.00% 14.05 1.36 14.89 0.91 12.83 2.38% 4.66% 2.59% 1.41 0.85 5.42% 3.20% 13.27 9.35 1.14 1.26 2.92% 3.34% 2.04% 2.10% 13.04 9.21 1.99% 0.84 10.57 1.15 2.93% 2.25% 12.80 2.24% 2.80% 1.40% 1.25 10.62 11.42 2.32% 6.51% 2.41% 1.60% 1.48 11.08 1.90% 2.07% 13.31 9.23% 1.29 10.02 2.90% 1.72% 1.86% 6.42% 14.72 1.29% 11.15 6.32% 1.63% 6.54% 14.28 1.28% 5.02% 12.15 5.08% 11.62 2.77% 1.16% 5.21% 11.04 5.19% 11.11 2.82% 4.33% 1.23% 6.86% 2.34% 8.46 4.45% 10.15 1.93% 5.23% 2.46% 5.59% 1.83% 2.23% 8.23% 4.20% 1.96% 2.37% 8.91% 1.90% 6.09% 7.19% 2.58% 2.03% 6.16% 2.57% 6.48% 2.10% 3.13% 2.06% 4.29% 2.32% 3.47% 2.97% 3.12% $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0.40 0.68 0.56 0.38 1.21 0.93 0.83 0.66 0.92 1.72 2.58 2.38 2.60 2.48 2.66 3.62 3.16 4.52 3.91 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ % of implied '12 low% of implied '12 high -8.4% 6.3% 52.9% 70.0% 128.8% 109.6% 1.40 1.50 1.72 1.95 2.17 2.52 2.75 3.28 3.07 3.27 3.55 3.85 4.25 4.70 5.14 5.67 5.97 6.24 6.31 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0.65 0.71 0.80 0.95 1.07 1.22 1.35 1.51 1.54 1.69 1.93 2.13 2.40 2.59 2.81 3.24 3.43 3.60 3.72 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 9.50 18.21 14.51 0.99 1.07 4.18% 3.33% 2.83% 2.25% $ 11.28 11.31 12.81 15.16 19.84 25.91 32.56 41.00 26.38 27.98 37.04 39.79 48.89 51.16 52.75 60.42 54.92 43.93 58.92 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Price Range Price Share Per 11.92 13.94 14.72 16.16 22.38 27.75 41.72 47.41 57.81 59.19 40.86 47.38 49.97 57.40 59.70 64.73 75.18 74.26 63.48 65.38 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1991 (Dec) High Low Earnings EBITDA FCF Dividends High Low High Low High Low High Low High Low 2011E2012E $65.94 $65.94 $63.40 $63.40 $4.19 $4.61 $7.04 $7.72 $4.24 $4.64 $2.04 $2.20 aluation on '12 Ests.aluation on '12 Ests. $70.00 $73.00 15.19x 15.84x 10.87x 11.28x 6.64% 6.36% 3.14% 3.01% Note: Per share figures are adjusted to display calendar-year results Note: Earnings and EBITDA per share exclude discontinued operations, one-time items, and restructuring charges Note: Results restated beginning in 2008 for Folgers divestiture and in 2009 for global pharmeceuticals divestiture Note: Relative P/E is to the S&P 500 Note: 2011 and 2012 high/low prices are 2011 YTD V V Average '91-'10 (exc'l '97-'00)Average '01-'10 19.99 15.57 1.17 1.19 11.99 9.60 6.23% 4.81% 2.80% 2.17% Source: Company reports and Wells Fargo Securities, LLC estimates WellsLLC Securities, and Fargo reports Company Source:

33

WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Appendix – Commodity Charts

Fuel

Natural Gas (NYM $/btu) Low Sulfur No 2 Diesel Fuel (Gulf Coast $/gal) $14 $5 Quarter Average Quarter Average $12 Q409: $4.927 Q410: $3.978 Q409: $1.947 Q410: $2.337 Q309: $3.441 Q310: $4.235 $4 Q309: $1.757 Q310: $2.030 Q209: $3.811 Q210: $4.353 $10 Q209: $1.534 Q210: $2.098 Q109: $4.469 Q110: $4.999 Q109: $1.293 Q110: $2.043 $3 $8

$6 $2

$4 $1 $2

$0 $0 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: FactSet and Wells Fargo Securities, LLC Source: FactSet and Wells Fargo Securities, LLC Jet Fuel Kerosene (Gulf Coast $/gal) $5 Quarter Average Q409: $1.969 Q410: $2.344 $4 Q309: $1.781 Q310: $2.072 Q209: $1.555 Q210: $2.122 Q109: $1.331 Q110: $2.054 $3

$2

$1

$0 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: FactSet and Wells Fargo Securities, LLC

Resins

High Density Polyethylene (North America $/lb) Linear Low Density Polyethylene (North America $/lb) $1.10 $1.10 Quarter Average Quarter Average Q409: $0.72 Q410: $0.84 Q309: $0.64 Q310: $0.73 $1.00 $1.00 Q309: $0.69 Q310: $0.78 Q209: $0.60 Q210: $0.79 Q209: $0.65 Q210: $0.84 Q109: $0.57 Q110: $0.78 $0.90 Q109: $0.60 Q110: $0.83 $0.90 Q408: $0.63 Q409: $0.67

$0.80 $0.80

$0.70 $0.70

$0.60 $0.60

$0.50 $0.50 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: CMAI and Wells Fargo Securities, LLC Source: CMAI and Wells Fargo Securities, LLC Note: Represents Blow Molding North American Delivered contract Note: Represents Butene, Film North American Delivered contract Low Density Polyethylene (North America $/lb) PET (North America $/lb) $1.10 $1.10 Quarter Average Quarter Average Q409: $0.75 Q410: $0.93 Q409: $0.75 Q410: $0.87 $1.00 $1.00 Q309: $0.72 Q310: $0.87 Q309: $0.77 Q310: $0.77 Q209: $0.68 Q210: $0.89 Q209: $0.73 Q210: $0.81 $0.90 Q109: $0.65 Q110: $0.86 $0.90 Q109: $0.67 Q110: $0.80

$0.80 $0.80

$0.70 $0.70

$0.60 $0.60

$0.50 $0.50 Jul-10 Jul-10 Jul-09 Jul-09 Jul-08 Jul-08 Jul-07 Jul-07 Jul-06 Jul-06 Oct-10 Oct-10 Oct-09 Jan-10 Oct-09 Jan-10 Oct-08 Jan-09 Oct-08 Jan-09 Oct-07 Jan-08 Oct-07 Jan-08 Oct-06 Jan-07 Oct-06 Jan-07 Jan-06 Jan-06 Apr-10 Apr-10 Apr-09 Apr-09 Apr-08 Apr-08 Apr-07 Apr-07 Apr-06 Apr-06 Source: CMAI and Wells Fargo Securities, LLC Source: CMAI and Wells Fargo Securities, LLC Note: Represents GP, Film North American Delivered contract Note: Represents Small/Large Buyer North American Delivered contract Polypropylene (North America $/lb) Polystyrene (North America $/lb) $1.40 $1.60 Quarter Average Quarter Average Q409: $0.75 Q410: $0.84 Q409: $0.97 Q410: $0.92 $1.20 Q309: $0.73 Q310: $0.83 $1.40 Q309: $0.96 Q310: $0.87 Q209: $0.59 Q210: $0.90 Q209: $0.84 Q210: $1.05 Q109: $0.52 Q110: $0.88 Q109: $0.77 Q110: $1.11 $1.00 $1.20

$0.80 $1.00

$0.60 $0.80

$0.40 $0.60 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: CMAI and Wells Fargo Securities, LLC Source: CMAI and Wells Fargo Securities, LLC Note: Represents GP Homopolymer North American Delivered contract Note: Represents General Purpose North American Delivered contract

34

WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

Pulp & Packaging

Northern Bleached Softwood Kraft Pulp Index (FOEX PIX $/ton) Bleached Hardwood Kraft Pulp Index (FOEX PIX $/ton) $1,100 $1,050 Quarter Average Quarter Average Q409: $670 Q410: $865 Q409: $773.7 Q410: $957.2 $1,000 $950 Q309: $551 Q310: $891 Q309: $682.7 Q310: $960.3 Q209: $492 Q210: $870 Q209: $605.5 Q210: $946.5 Q109: $534 Q110: $750 $900 Q109: $603.1 Q110: $849.6 $850

$800 $750

$700 $650

$600 $550

$500 $450 Jul-06 Jul-06 Jul-07 Jul-07 Jul-08 Jul-08 Jul-09 Jul-09 Jul-10 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-06 Jan-07 Oct-07 Jan-08 Oct-07 Jan-08 Oct-08 Jan-09 Oct-08 Jan-09 Oct-09 Jan-10 Oct-09 Jan-10 Oct-10 Jan-11 Oct-10 Jan-11 Apr-06 Apr-06 Apr-07 Apr-07 Apr-08 Apr-08 Apr-09 Apr-09 Apr-10 Apr-10 Source: Bloomberg and Wells Fargo Securities, LLC Source: Bloomberg and Wells Fargo Securities, LLC Paperboard Index (BLS PPI Index) $270 Quarter Average Q409: 198.6 Q410: 233.7 $250 Q309: 202.4 Q310: 235.5 Q209: 206.7 Q210: 225.0 Q109: 220.9 Q110: 207.0 $230

$210

$190

$170 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: Bureau of Labor Statistics and Wells Fargo Securities, LLC

Agricultural Commodities

Soybean Oil (Cen ILL $/lb) Crude Palm Oil (FOB Malaysia $/lb) $0.80 $0.80 Quarter Average Quarter Average $0.70 Q409: $0.36 Q410: $0.48 $0.70 Q409: $0.31 Q410: $0.48 Q309: $0.32 Q310: $0.37 Q309: $0.29 Q310: $0.38 $0.60 $0.60 Q209: $0.35 Q210: $0.36 Q209: $0.33 Q210: $0.35 $0.50 Q109: $0.30 Q110: $0.35 $0.50 Q109: $0.24 Q110: $0.35

$0.40 $0.40

$0.30 $0.30

$0.20 $0.20

$0.10 $0.10

$0.00 $0.00 Jul-06 Jul-06 Jul-07 Jul-07 Jul-08 Jul-08 Jul-09 Jul-09 Jul-10 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-06 Jan-07 Oct-07 Jan-08 Oct-07 Jan-08 Oct-08 Jan-09 Oct-08 Jan-09 Oct-09 Jan-10 Oct-09 Jan-10 Oct-10 Jan-11 Oct-10 Jan-11 Apr-06 Apr-06 Apr-07 Apr-07 Apr-08 Apr-08 Apr-09 Apr-09 Apr-10 Apr-10 Source: FactSet and Wells Fargo Securities, LLC Source: Bloomberg and Wells Fargo Securities, LLC Crude Coconut Oil (FOB Philippines $/lb) Tallow USDA Steer Offal Byproduct Packer Bleachable ($/lb) $1.00 $0.60 Quarter Average Quarter Average Q409: $0.25 Q410: $0.38 Q409: $0.31 Q410: $0.69 $0.50 $0.80 Q309: $0.30 Q310: $0.50 Q309: $0.28 Q310: $0.31 Q209: $0.33 Q210: $0.41 Q209: $0.24 Q210: $0.32 Q109: $0.29 Q110: $0.36 $0.40 Q109: $0.18 Q110: $0.28 $0.60 $0.30 $0.40 $0.20

$0.20 $0.10

$0.00 $0.00 Jul-06 Jul-06 Jul-07 Jul-07 Jul-08 Jul-08 Jul-09 Jul-09 Jul-10 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-06 Jan-07 Oct-07 Jan-08 Oct-07 Jan-08 Oct-08 Jan-09 Oct-08 Jan-09 Oct-09 Jan-10 Oct-09 Jan-10 Oct-10 Jan-11 Oct-10 Jan-11 Apr-06 Apr-06 Apr-07 Apr-07 Apr-08 Apr-08 Apr-09 Apr-09 Apr-10 Apr-10 Source: FactSet and Wells Fargo Securities, LLC Source: Bloomberg and Wells Fargo Securities, LLC

35

WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Specialty Chemicals

Phosphates Index (BLS PPI Index) Sodium Carbonate and Sulfate Index (BLS PPI Index) $600 $220 Quarter Average Quarter Average Q409: 162.6 Q410: 241.1 $200 Q409: 169.7 Q410: 158.3 $500 Q309: 155.2 Q310: 220.8 Q309: 173.0 Q310: 161.2 Q209: 201.0 Q210: 223.2 Q209: 179.3 Q210: 159.6 $180 Q109: 262.7 Q110: 201.3 Q109: 177.2 Q110: 165.0 $400 $160 $300 $140

$200 $120

$100 $100 Jul-06 Jul-06 Jul-07 Jul-07 Jul-08 Jul-08 Jul-09 Jul-09 Jul-10 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-06 Jan-07 Oct-07 Jan-08 Oct-07 Jan-08 Oct-08 Jan-09 Oct-08 Jan-09 Oct-09 Jan-10 Oct-09 Jan-10 Oct-10 Oct-10 Apr-06 Apr-06 Apr-07 Apr-07 Apr-08 Apr-08 Apr-09 Apr-09 Apr-10 Apr-10 Source: Bureau of Labor Statistics and Wells Fargo Securities, LLC Source: Bureau of Labor Statistics and Wells Fargo Securities, LLC

Metals

Copper (LME $/t) Nickel (LME $/t) $12,000 Quarter Average $60,000 Quarter Average Q409: $6,645 Q410: $8,660 Q409: $17,572 Q410: $23,615 Q309: $5,856 Q310: $7,249 $10,000 $50,000 Q309: $17,664 Q310: $21,205 Q209: $4,664 Q210: $7,036 Q209: $12,907 Q210: $22,503 Q109: $3,440 Q110: $7,242 $8,000 $40,000 Q109: $10,461 Q110: $20,091

$6,000 $30,000

$4,000 $20,000

$2,000 $10,000

$0 $0 Jul-06 Jul-06 Jul-07 Jul-07 Jul-08 Jul-08 Jul-09 Jul-09 Jul-10 Jul-10 Jan-06 Jan-06 Oct-06 Jan-07 Oct-06 Jan-07 Oct-07 Jan-08 Oct-07 Jan-08 Oct-08 Jan-09 Oct-08 Jan-09 Oct-09 Jan-10 Oct-09 Jan-10 Oct-10 Jan-11 Oct-10 Jan-11 Apr-06 Apr-06 Apr-07 Apr-07 Apr-08 Apr-08 Apr-09 Apr-09 Apr-10 Apr-10 Source: FactSet and Wells Fargo Securities, LLC Source: FactSet and Wells Fargo Securities, LLC Zinc (LME $/t) $5,000 Quarter Average Q409: $2,215 Q410: $2,317 $4,000 Q309: $1,759 Q310: $2,015 Q209: $1,472 Q210: $2,029 Q109: $1,175 Q110: $2,286 $3,000

$2,000

$1,000

$0 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Source: FactSet and Wells Fargo Securities, LLC

Appendix – Foreign Exchange

U.S. Dollars per Euro U.S. Dollars per Canadian Dollar $1.750 $1.200 01.12.11: $1.3062 01.12.11: $1.0147

$1.650 Quart er Average Quart er Average $1.100 Q409: $1.476 Q410: $1.359 Q409: $0.947 Q410: $0.987 Q309: $0.911 Q210: $0.962 $1.550 Q309: $1.430 Q310: $1.292 Q209: $0.858 Q210: $0.973 Q209: $1.363 Q210: $1.274 $1.000 Q109: $1.305 Q110: $1.383 Q109: $0.803 Q110: $0.961 $1.450 $0.900 $1.350

$0.800 $1.250

$1.150 $0.700 Jun-09 Oct-09 Jun-10 Oct-10 Jun-09 Oct-09 Jun-10 Oct-10 Feb-09 Apr-09 Feb-10 Apr-10 Feb-09 Apr-09 Feb-10 Apr-10 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Source: FactSet and Wells Fargo Securities, LLC Source: FactSet and Wells Fargo Securities, LLC

36

WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

U.S. Dollars per Japanese Yen U.S. Dollars per British Pound

$0.0140 01.12.11: $0.0120 $1.950 01.12.11: $1.5698

Quart er Average $1.850 Quart er Average $0.0130 Q409: $0.0111 Q410: $0.0121 Q409: $1.633 Q410: $1.581 Q309: $0.0107 Q310: $0.0117 Q309: $1.640 Q310: $1.551 Q209: $0.0103 Q210: $0.0109 $1.750 Q209: $1.551 Q210: $1.491 $0.0120 Q109: $0.0107 Q110: $0.0110 Q109: $1.437 Q110: $1.559 $1.650 $0.0110 $1.550 $0.0100 $1.450

$0.0090 $1.350 Jun-09 Oct-09 Jun-10 Oct-10 Jun-09 Oct-09 Jun-10 Oct-10 Feb-09 Apr-09 Feb-10 Apr-10 Feb-09 Apr-09 Feb-10 Apr-10 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Source: FactSet and Wells Fargo Securities, LLC Source: FactSet and Wells Fargo Securities, LLC

U.S. Dollars per Mexican Peso U.S. Dollars per Chinese Yuan Renminbi

$0.110 $0.1520 01.12.11: $0.1514 01.12.11: $0.0829

Quart er Average Quart er Average $0.100 $0.1500 Q409: $0.1465 Q410: $0.1502 Q409: $0.077 Q410: $0.081 Q309: $0.1464 Q310: $0.1477 Q309: $0.075 Q310: $0.078 Q209: $0.1464 Q210: $0.1465 Q209: $0.075 Q210: $0.080 $0.090 $0.1480 Q109: $0.1463 Q110: $0.1465 Q109: $0.070 Q110: $0.078

$0.080 $0.1460

$0.070 $0.1440

$0.060 $0.1420 Jun-09 Oct-09 Jun-10 Oct-10 Jun-09 Oct-09 Jun-10 Oct-10 Feb-09 Apr-09 Feb-10 Apr-10 Feb-09 Apr-09 Feb-10 Apr-10 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Source: FactSet and Wells Fargo Securities, LLC Source: FactSet and Wells Fargo Securities, LLC

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WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

Required Disclosures

Procter & Gamble Co. (PG) 3-yr. Price Performance

$83.00 $81.00 $79.00 $77.00 $75.00 $73.00 $71.00 $69.00 $67.00 $65.00 $63.00 $61.00 $59.00 $57.00 $55.00 $53.00 $51.00 $49.00 $47.00 $45.00 Security Price $43.00 $41.00 $39.00 4/7/08 5/5/08 4/6/09 5/4/09 6/2/08 2/9/09 3/9/09 6/1/09 2/8/10 3/8/10 4/5/10 5/3/10 1/14/08 8/25/08 9/22/08 1/12/09 6/28/10 7/26/10 2/11/08 3/10/08 6/30/08 7/28/08 6/29/09 7/27/09 8/24/09 9/21/09 1/11/10 5/31/10 8/23/10 9/20/10 1/10/11 10/20/08 11/16/09 12/14/09 11/15/10 11/17/08 12/15/08 10/19/09 10/18/10 12/13/10 Date

Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($) 1/14/2008 Gere 1/14/2008 NA 1 77.00 79.00 70.29 z 1/31/2008 65.52 1 75.00 77.00 65.42 z 8/6/2008 67.97 1 73.00 75.00 67.77 z 9/3/2008 71.03 1 75.00 77.00 71.42 z 10/27/2008 58.87 1 63.00 65.00 57.37 z 10/29/2008 60.99 1 65.00 68.00 60.99 z 11/11/2008 64.45 1 68.00 70.00 63.82 z 12/11/2008 58.58 1 67.00 69.00 58.58 2/2/2009 Hausner ‹ 2/2/2009 53.05 SR NE NE 53.05

Source: Wells Fargo Securities, LLC estimates and Reuters data

Symbol Key Rating Code Key d Rating Downgrade ‹ Initiation, Resumption, Drop or Suspend 1 Outperform/Buy SR Suspended c Rating Upgrade „ Analyst Change 2 Market Perform/Hold NR Not Rated z Valuation Range Change ˆ Split Adjustment 3 Underperform/Sell NE No Estimate

Additional Information Available Upon Request

I certify that: 1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed; and 2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this research report.

ƒ Wells Fargo Securities, LLC maintains a market in the common stock of Procter & Gamble Co. ƒ Wells Fargo Securities, LLC or its affiliates may have a significant financial interest in Procter & Gamble Co.

PG: Risks to our range include (1) prolonged global economic downturn, (2) foreign exchange fluctuations, (3) an increase in taxes on international profits, (4) aggressive competitive discounting, (5) loss of a major customer (Wal-Mart, Target), (6) significant input cost inflation, (7) integration risk/dilution related to future acquisitions, and (8) European antitrust issues.

Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions. Wells Fargo Securities, LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm, which includes, but is not limited to investment banking revenue.

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WELLS FARGO SECURITIES, LLC Procter & Gamble Co. EQUITY RESEARCH DEPARTMENT

STOCK RATING 1=Outperform: The stock appears attractively valued, and we believe the stock's total return will exceed that of the market over the next 12 months. BUY 2=Market Perform: The stock appears appropriately valued, and we believe the stock's total return will be in line with the market over the next 12 months. HOLD 3=Underperform: The stock appears overvalued, and we believe the stock's total return will be below the market over the next 12 months. SELL

SECTOR RATING O=Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. M=Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. U=Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months.

VOLATILITY RATING V = A stock is defined as volatile if the stock price has fluctuated by +/-20% or greater in at least 8 of the past 24 months or if the analyst expects significant volatility. All IPO stocks are automatically rated volatile within the first 24 months of trading.

As of: January 20, 2011 44% of companies covered by Wells Fargo Securities, LLC Wells Fargo Securities, LLC has provided investment banking Equity Research are rated Outperform. services for 42% of its Equity Research Outperform-rated companies. 53% of companies covered by Wells Fargo Securities, LLC Wells Fargo Securities, LLC has provided investment banking Equity Research are rated Market Perform. services for 47% of its Equity Research Market Perform-rated companies. 3% of companies covered by Wells Fargo Securities, LLC Wells Fargo Securities, LLC has provided investment banking Equity Research are rated Underperform. services for 43% of its Equity Research Underperform-rated companies.

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39

WELLS FARGO SECURITIES, LLC Household and Personal Care Products EQUITY RESEARCH DEPARTMENT

About Wells Fargo Securities, LLC Wells Fargo Securities, LLC is a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Wells Fargo Securities, LLC, to be reliable, but Wells Fargo Securities, LLC, does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Wells Fargo Securities, LLC, at this time, and are subject to change without notice. For the purposes of the U.K. Financial Services Authority's rules, this report constitutes impartial investment research. Each of Wells Fargo Securities, LLC, and Wells Fargo Securities International Limited is a separate legal entity and distinct from affiliated banks. Copyright © 2011 Wells Fargo Securities, LLC.

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

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WELLS FARGO SECURITIES, LLC EQUITY RESEARCH DEPARTMENT

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ONSUMER EALTH ARE EAL STATE AMING ODGING C H C R E , G & L Food Biotechnology Gaming Eric Serotta, CFA (212) 214-8035 Brian Abrahams, M.D. (212) 214-8060 Carlo Santarelli (212) 214-5029 Dennis Geiger (212) 214-5028 Matthew J. Andrews (617) 603-4218 Kelly Knybel (212) 214-8065 Homebuilding/Building Products Healthcare Facilities Healthcare/Manufactured Housing & Self Storage Carl Reichardt (415) 396-3054 Gary Lieberman, CFA (212) 214-8013 Todd Stender (212) 214-8067 Adam Rudiger, CFA (415) 396-3194 Ryan Halsted (212) 214-8022 Philip DeFelice, CFA (443) 263-6442 Leisure Managed Care Lodging/Multifamily & Retail Timothy Conder, CPA (314) 955-5743 Peter Costa (617) 603-4222 Jeffrey J. Donnelly, CFA (617) 603-4262 Joe Lachky (314) 955-2061 Medical Technology Dori Kesten (617) 603-4233 Michael Walsh, CFA, CPA (314) 955-6277 Larry Biegelsen (212) 214-8015 Robert LaQuaglia, CFA, CMT (617) 603-4263 Restaurants Narendra Nayak (212) 214-8038 Office/Industrial & Infrastructure Jeffrey F. Omohundro, CFA (804) 697-7354 Lei Huang (212) 214-8039 Brendan Maiorana, CFA (443) 263-6516 Katie H. Willett (804) 697-7356 Brian Kennedy (212) 214-8027 Young Ku, CFA (443) 263-6564 Jason Belcher (804) 697-7352 Pharma Services Retail Hardlines Greg T. Bolan (615) 525-2418 Matt Nemer (415) 396-3938 Tim Evans (615) 525-2426 Trisha Dill, CFA (312)-920-3594 Pharmaceuticals Specialty Retailing Michael K. Tong, CFA, PhD (212) 214-8020 Evren Kopelman, CFA (212) 214-8024 Brian E. Jeep (212) 214-8069 Maren Kasper (212) 214-5016 David Gu (212) 214-8057

TECHNOLOGY & SERVICES Data Networking & Wireline Equipment Jess Lubert, CFA (212) 214-5013 ENERGY Michael Kerlan (212) 214-8052 Alternative Energy Information Technology (IT) Services Sam Dubinsky (212) 214-5043 Edward S. Caso, Jr., CFA (443) 263-6524 Exploration & Production INDUSTRIAL Suman Kaba (443) 263-6540 David R. Tameron (303) 863-6891 Richard Eskelsen (410) 625-6381 Gord0n Douthat (303) 863-6920 Aerospace & Defense Eric Boyer (443) 263-6559 Trevor Seelye (303) 863-6880 Sam J. Pearlstein (212) 214-5054 Gary S. Liebowitz, CFA (212) 214-5055 Semiconductors/Computer Hardware Michael A. Hall, CFA (303) 863-6894 Michael D. Conlon (212) 214-5056 David Wong, CFA, PhD (212) 214-5007 Midstream Energy/Master Limited Partnerships Amit Chanda (314) 955-3326 Michael Blum (212) 214-5037 Automotive/Industrial and Electrical Products Rich Kwas, CFA (410) 625-6370 Software Sharon Lui, CPA (212) 214-5035 David H. Lim (443) 263-6565 Philip Rueppel (617) 603-4260 Eric Shiu (212) 214-5038 Priya Parasuraman (617) 603-4269 Praneeth Satish (212) 214-8056 Diversified Industrials Allison Poliniak-Cusic, CFA (212) 214-5062 Technology Hays Mabry (212) 214-8021 Jason Maynard (310) 597-4081 Ronald Londe (314) 955-3829 Machinery Karen Russillo (415) 396-3505 Andrew Casey (617) 603-4265 Jeff Morgan, CFA (314) 955-6558 Aron Honig (212) 214-8029 Justin Ward (617) 603-4268 Utilities Sara Magers, CFA (617) 603-4270 Transaction Processing Michael Bolte (212) 214-8061 Timothy Willi (314) 955-4404 Jonathan Lefebvre (212) 214-8026 Ocean Shipping Robert Hammel (314) 955-4638 Michael Webber, CFA (212) 214-8019 Neil Kalton, CFA (314) 955-5239 Daniel Moisio (314) 955-0646 Sarah Akers, CFA (314) 955-6209 Ross Briggs (212) 214-8040 Jonathan Reeder (314) 955-2462 Transportation Oilfield Services and Drilling Anthony P. Gallo, CFA (410) 625-6319 Matthew D. Conlan, CFA (212) 214-5044 Michael Busche (443) 263-6579 Christopher W. Wicklund (212) 214-8028 Tom Curran, CFA (212) 214-5048

EQUITY STRATEGY FINANCIAL SERVICES Equity Strategy Gina Martin Adams, CFA, CMT (212) 214-8043 Insurance Howard Park (212) 214-8063 John Hall (212) 214-8032 MEDIA & TELECOMMUNICATIONS Sean R. Dargan (212) 214-8023 Broadcasting & Cable Vincent Caintic, CFA (212) 214-8034 Marci Ryvicker, CFA, CPA (212) 214-5010 Elyse Greenspan, CFA (212) 214-8031 Timothy Schlock, CFA, CPA (212) 214-5011 Susan Ross (212) 214-8030 Stephen Bisson (212) 214-8033 Specialty Finance Interactive Entertainment James P. Shanahan (314) 955-1026 Jess Lubert, CFA (212) 214-5013 Christopher Harris, CFA (443) 263-6513 Michael Kerlan (212) 214-8052 Nathan Burk, CFA (314) 955-2083 Telecommunication Services - Wireless/Wireline U.S. Banks Jennifer M. Fritzsche (312) 920-3548 RETAIL RESEARCH MARKETING Matt Burnell (212) 214-5030 Gray Powell, CFA (212) 214-8048 Retail Research Marketing Herman Chan (212) 214-8037 Andrew Spinola (212) 214-5012 Colleen Hansen (410) 625-6378

January 14, 2011