LONDON -- Right now I'm trawling through the FTSE 100 and double-checking for blue chips that may be flattering their profits.

You see, many companies these days report "underlying" earnings, which are calculated by excluding costs the firm deems to be "exceptional." Trouble is, some companies are more cavalier than others when it comes to sweeping awkward expenses away from the headline figures.

Today I'm looking at Diageo (LSE: DGE.L) (NYSE: DEO) to see if its reported earnings have been distorted significantly by exceptional, one-off, or unusual items. I've extracted the following statistics courtesy of S&P Capital IQ:

Year to June 30






Profit before unusual items (million pounds)






Restructuring charges (million pounds)






Gain on sale of assets (million pounds)






Asset writedowns (million pounds)






Other unusual items (million pounds)






While annual figures can provide some insight into how a business has performed, I reckon looking back over several years provides a better view of possible problems in relation to one-off costs.

So between 2008 and 2012, my stats tell me Diageo reported cumulative profits before exceptional items and tax of 12,346 million pounds. However, aggregate exceptional costs came to 596 million pounds -- equivalent to just 5% of cumulative "underlying" profits.

A quick glance at the above table suggests Diageo shareholders shouldn't need a stiff drink when it comes to worrying about one-off items (unless they want one, of course). Five percent of underlying profits is a very low percentage compared to most of the other companies we have looked at recently.

It's not surprising to see some restructuring charges, though, as Diageo has been reasonably acquisitive down the years. Nevertheless, it's an area investors should keep an eye on in future, especially should the rate or size of Diageo's acquisitions increase. The other notable one-off item came in 2011, and mainly related to duty settlements in Turkey and Thailand.

Somebody who always studies earnings numbers in detail is Neil Woodford, the U.K.'s leading equity income fund manager. Woodford's portfolios thrashed the FTSE 100 during the 15 years to 2011 and this exclusive Motley Fool report -- which can be downloaded free today -- reviews his favorite blue-chip shares for 2013 and beyond.

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