-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, O9L2cc1m8XJWWrcfqsKlJcFDcl8VvL9aijEnQlVRcn5hJlglsks1EE8VDGRYkMXX pNn7jw955jyeH0kIUQ+jZw== 0000080424-95-000009.txt : 19950512 0000080424-95-000009.hdr.sgml : 19950512 ACCESSION NUMBER: 0000080424-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: CSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROCTER & GAMBLE CO CENTRAL INDEX KEY: 0000080424 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] IRS NUMBER: 310411980 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00434 FILM NUMBER: 95536717 BUSINESS ADDRESS: STREET 1: ONE PROCTER & GAMBLE PLZ CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5139831100 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1995 Commission file number 1-434 THE PROCTER & GAMBLE COMPANY (Exact name of registrant as specified in its charter) Ohio 31-0411980 (State of incorporation) (I.R.S. Employer Identification No.) One Procter & Gamble Plaza, Cincinnati, Ohio 45202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (513) 983-1100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . There were 687,372,624 shares of Common Stock outstanding as of April 21, 1995. -1- PART I. FINANCIAL INFORMATION THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS Millions of Dollars
Three Months Ended Nine Months Ended March 31 March 31 1995 1994 1995 1994 -------- -------- -------- --------- NET SALES $8,312 $7,441 $24,940 $22,793 Cost of products sold 4,879 4,208 14,307 12,830 Marketing, administrative, and other operating expenses 2,376 2,310 7,132 6,932 -------- -------- -------- --------- OPERATING INCOME 1,057 923 3,501 3,031 Interest expense 124 119 368 367 Other income/(expense), net 5 (78) 200 121 -------- -------- -------- --------- EARNINGS BEFORE INCOME TAXES 938 726 3,333 2,785 Income taxes 307 244 1,160 980 -------- -------- -------- --------- NET EARNINGS $ 631 $ 482 $ 2,173 $ 1,805 ======== ======== ======== ========= PER COMMON SHARE: Net earnings $ .88 $ .66 $ 3.06 $ 2.53 Net earnings assuming full dilution $ .81 $ .64 $ 2.85 $ 2.38 Dividends per common share $ .35 $. 31 $ 1.05 $ .93 AVERAGE COMMON SHARES OUTSTANDING (in millions) 685.7 682.7 Includes $77 million ($50 million after-tax) charge related to the Japan earthquake and $157 million ($102 million after-tax) charge related to two interest rate swaps in 1995 and 1994, respectively.
-2- THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET Millions of Dollars
March 31 June 30 ASSETS 1995 1994 --------- ---------- CURRENT ASSETS Cash and cash equivalents $ 2,258 $ 2,373 Marketable securities 109 283 Accounts receivable, less allowance for doubtful accounts 3,479 3,115 Inventories Raw materials and supplies 1,209 1,087 Work in process 228 213 Finished products 1,914 1,577 Deferred income taxes 813 716 Prepaid expenses and other current assets 1,085 624 ---------- ---------- 11,095 9,988 ---------- ---------- PROPERTY, PLANT, AND EQUIPMENT 16,995 15,896 LESS ACCUMULATED DEPRECIATION 6,387 5,872 ---------- ---------- 10,608 10,024 ---------- ---------- GOODWILL AND OTHER INTANGIBLE ASSETS 4,362 3,754 OTHER ASSETS 1,734 1,769 ---------- ---------- TOTAL $ 27,799 $ 25,535 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accruals $ 7,430 $ 6,665 Debt due within one year 1,061 1,375 ---------- ---------- 8,491 8,040 ---------- ---------- LONG-TERM DEBT 5,157 4,980 OTHER LIABILITIES 3,260 3,336 DEFERRED INCOME TAXES 572 347 SHAREHOLDERS' EQUITY Preferred stock 1,919 1,942 Common stock-shares outstanding-Mar. 31 687,222,409 687 684 -June 30 684,348,359 Additional paid-in capital 663 560 Currency translation adjustments (74) (63) Reserve for ESOP debt retirement (1,734) (1,787) Retained earnings 8,858 7,496 ---------- ---------- 10,319 8,832 ---------- ---------- TOTAL $ 27,799 $ 25,535 ========== ==========
-3- THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of Dollars Nine Months Ended March 31 1995 1994 -------- -------- Cash and Cash Equivalents, beginning of year $2,373 $2,322 OPERATING ACTIVITIES Net earnings 2,173 1,805 Depreciation, depletion and amortization 914 842 Deferred income taxes 192 115 Increase in accounts receivable (176) (150) Increase in inventories (312) (71) Change in payables and accrued liabilities 240 (186) Decrease in other liabilities (436) (116) Other (75) 81 -------- -------- 2,520 2,320 -------- -------- INVESTING ACTIVITIES Capital expenditures (1,325) (1,189) Proceeds from asset sales and retirements 292 52 Acquisitions (631) (228) Marketable securities 174 (130) -------- -------- (1,490) (1,495) -------- -------- FINANCING ACTIVITIES Dividends to shareholders (797) (711) Additions to short-term debt (175) 160 Additions to long-term debt 328 419 Reduction of long-term debt (563) (583) Proceeds from stock options 52 37 Purchase of treasury shares (15) (9) -------- -------- (1,170) (687) EFFECT OF EXCHANGE RATES ON CASH AND -------- -------- CASH EQUIVALENTS 25 (36) -------- -------- INCREASE IN CASH AND CASH EQUIVALENTS (115) 102 -------- -------- Cash and Cash Equivalents, end of period $2,258 $2,424 ======== ======== SUPPLEMENTAL DISCLOSURE Non-cash transactions Liabilities assumed in acquisitions 512 34 Reduction in employee stock ownership plan debt, guaranteed by the Company 53 49 Conversion of preferred to common stock 24 20 The interim financial statements are unaudited, but in the opinion of the Company include all adjustments, consisting only of normal recurring items, necessary for a fair presentation of the data.
-4- MANAGEMENT'S DISCUSSION AND ANALYSIS Worldwide net earnings for the quarter ending March 31, 1995 were $631 million, 31% above the same quarter in the prior year, including a $50 million charge for incremental costs associated with the January earthquake in Japan. Net earnings for the same period of the prior fiscal year were $482 million, including a $102 million charge related to two interest rate swap contracts. Excluding the unusual items in both years, net earnings were $681 million, a 17% increase over the third quarter of the prior year, and earnings per share were $.95, also a 17% increase. Worldwide net sales for the quarter increased 12% over the same quarter of the prior year to $8,312 million. Strong unit volume growth continued, with a worldwide increase of 12% over the same quarter a year ago. Acquisitions contributed approximately 2% to the unit volume growth rate. Year-to-date results reflect strong unit volume growth and cost containment efforts, despite upward pressure on raw material prices. Worldwide net earnings for the first nine months of the fiscal year were $2,173 million compared to $1,805 million in the prior year, a 20% increase, including the cost associated with the Japan earthquake and the $102 million charge related to two interest rate contracts, in the respective periods. Excluding the unusual items in both years, earnings and earnings per share increased 17% for the July-March period to $2,223 million and $3.13 per share, respectively. UNITED STATES - ------------- The United States achieved 10% sales growth in the quarter on a 9% unit volume increase, which is the largest year-to-year increase in unit volume in six years. Excellent unit volume growth was achieved by all sectors, with double-digit volume increases in the Health Care and Beauty Care businesses. The Diaper category unit volume continued to show a year-to-year volume decline in the current quarter, although volume increased over the prior quarter following the introduction of a new product and price reductions. In addition, competitive activity in the Shortenings & Oils and Hard Surface Cleaners categories negatively impacted unit volume growth. Strong growth in the Laundry, Fabric Conditioners and Tissue/Towel categories more than offset those impacts. Positive product mix impacts offset the effect of competitive pricing in several categories, primarily diapers. United States net earnings increased 8% in the third quarter. The benefit of cost containment efforts was impacted by higher raw material prices, primarily pulp, and continued research and development investment, primarily in pharmaceuticals. Selling price increases on tissue and towel products have recently been announced in response to increased pulp prices. Year-to-date earnings in the United States have increased 9% over the first nine months of the prior year. The earnings increase reflects a 7% increase in sales on a 6% unit volume increase. The benefits of continued cost containment efforts have been reduced by increased raw material prices. Unit volume growth increased across all sectors year to date, led by double-digit growth in the Beauty Care business. -5- INTERNATIONAL - ------------ International volume increased 14% over the same quarter of the prior year. Continued competitive pricing in a number of markets limited sales growth to 11%. International earnings increased 23% for the quarter, reflecting aggressive cost reduction efforts. The impact of favorable exchange rates in Central Europe and Japan has offset the Mexican peso devaluation resulting in a small net positive impact on International sales and earnings. Europe continued to post strong net earnings gains, as unit volume growth of 15% and lower costs offset the impact of reduced pricing. The European Laundry business remains strong, supplemented by continued growth in the Health Care and Beauty Care businesses. The European Paper business continued to grow, with strength in both diapers and feminine hygiene products. The balance of International achieved 14% unit volume growth. Solid quarterly net earnings growth for this segment is attributable to aggressive cost increase recovery in Latin America. Unit volume in Japan was up, despite the temporary shut down of the Akashi paper plant due to the January earthquake. The impact of the delays is not expected to materially impact future results. For the first nine months of the fiscal year, International earnings have increased 22% over the prior period. Year-to-date sales growth of 9% was driven by 15% unit volume growth, reflecting continued competitive pricing in a number of markets. Unit volume growth and cost containment efforts continue to drive earnings growth in substantially all regions. On a year-to-date basis, countervailing exchange rate changes resulted in an immaterial impact on International earnings. OTHER INCOME/(EXPENSE) - NET - ------------------------- As discussed previously, the third quarter and year-to-date amounts of other income/(expense) - net include unusual items in both years. The current periods reflect a $77 million pre-tax charge for incremental costs associated with the January earthquake in Japan. This charge reflects the cost of employee assistance, cleanup and repair of facilities, and non-recurring expenses directly associated with the earthquake. The prior year periods include a $157 million pre-tax charge related to two interest rate swap contracts. RISK MANAGEMENT ACTIVITIES - ------------------------ In response to currency exchange rate movements during the quarter, the Company expanded certain of its risk management activities. Certain foreign subsidiaries increased transactional hedging activities performed locally to manage the exposure related to commercial transactions and intercompany receivables and payables. Generally, any change in the market value of the financial instrument is offset by a corresponding change in the hedged exposure. In addition, the Company purchased additional foreign currency put options as a hedge against the effect of exchange rate fluctuations on income. These contracts give the Company the right, but not the obligation, to sell foreign currencies, primarily European currencies and the yen, in exchange for U.S. dollars at predetermined exchange rates. Those purchased options that do not qualify for hedge accounting are carried on a current market value basis. -6- RESTRUCTURING RESERVE STATUS - ------------------------- In the year ending June 30, 1993, a pre-tax reserve of $2,402 million was established to cover a worldwide restructuring effort to consolidate manufacturing systems and reduce overhead costs. The primary elements of this reserve were costs related to fixed asset disposals and separation-related costs (86% of the total). The following information relates to the June 1993 reserve (in millions of dollars pre-tax):
Original Balance July-March Balance Reserve 6/30/94 Charges 3/31/95 -------- ------- ---------- ------- Separation-related costs $ 965 $ 596 $ 162 $ 434 Desposals of Fixed Assets 1,109 960 272 688 Other 328 227 (16) 243 ------ ------ ------ ------ $2,402 $1,783 $ 418 $1,365 Includes separation allowances and related benefits, out placement services, and personnel relocation costs. Includes closing, environmental remediation and contract termination costs for sites shut down or divested, offset by proceeds from asset sales. No cost element within this category exceeds 5% of the total reserve. The negative amount of charges represents proceeds received on asset sales, primarily during the third quarter.
Execution of the restructuring program continues to be on track, and the cost of completing it is expected to approximate the original estimates. As anticipated, charges for the disposal of fixed assets will lag behind spending for separation-related programs. We have announced more than half of the sites and production modules to be closed in order to provide advance notice to employees. Benefits continue to be obtained from the restructuring program. We estimate that incremental savings of almost $70 million after tax were achieved in the January-March quarter, bringing cumulative restructuring savings to approximately three-quarters of the $500 million after-tax objective established in June 1993. These amounts reflect estimated gross savings, which may be offset to some degree by other actions, such as lower pricing or increased research and development spending. -7- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (11) Computation of Earnings Per Share (12) Computation of Ratio of Earnings to Fixed Charges (27) Financial Data Schedule (b) An 8-K Report containing an exhibit under Item 7 entitled "Press Release Issued by Registrant on January 26, 1995" was filed on January 26, 1995. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. THE PROCTER & GAMBLE COMPANY /s/E. H. EATON - ------------------------------ E. H. Eaton Vice President and Comptroller (Principal Accounting Officer) Date: May 10, 1995 -8- EXHIBIT INDEX Exhibit No. Page No. (11) Computation of Earnings per Share 10 (12) Computation of Ratio of Earnings to Fixed Charges 11 (27) Financial Data Schedule 12 -9- EX-11 2 EXHIBIT (11) THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES ============================================= COMPUTATION OF EARNINGS PER SHARE --------------------------------- Dollars and Share Amounts in Millions
Three Months Ended Nine Months Ended March 31 March 31 ------------------ ----------------- NET EARNINGS PER SHARE 1995 1994 1995 1994 - ---------------------- -------- -------- -------- -------- Net earnings $ 631 $ 482 $2,173 $1,805 Deduct preferred stock dividends 26 26 77 76 -------- -------- -------- -------- Net earnings applicable to common stock $ 605 $ 456 $2,096 $1,729 - --------------------------------------- ======== ======== ======== ======== Average number of common shares outstanding 685.7 682.7 685.7 682.7 Per Share - --------- Net Earnings per share $ .88 $ .66 $3.06 $ 2.53 ======== ======== ======== ======== NET EARNINGS PER SHARE ASSUMING FULL DILUTION - ------------------------------- Net Earnings $ 631 $ 482 $2,173 $1,805 Deduct differential -- preferred vs. common dividends 11 13 34 39 -------- -------- -------- -------- Net earnings/(loss) applicable to common stock $ 620 $ 469 $2,139 $1,766 - ---------------------------------------------- ======== ======== ======== ======== Average number of common shares outstanding 685.7 682.7 685.7 682.7 Add potential effect of: Exercise of options 11.4 6.1 11.4 6.1 Conversion of preferred stock 52.9 54.1 52.9 54.1 -------- -------- -------- -------- Average number of common shares outstanding, assuming full dilution 750.0 742.9 750.0 742.9 ======== ======== ======== ======== Per share assuming full dilution - -------------------------------- Net earnings per share assuming full dilution $ .81 $ .64 $2.85 $ 2.38 ======== ======== ======== ========
-10- EX-12 3 EXHIBIT (12) THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES ============================================= COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ------------------------------------------------- Millions of Dollars
Nine Months Years Ended June 30 Ended Mar. 31 ------------------------------------------------ ------------------- 1990 1991 1992 1993 1994 1994 1995 --------- --------- --------- --------- --------- --------- --------- EARNINGS AS DEFINED - ------------------- Earnings from operations before income taxes after eliminating undistributed earnings of 20% to 50% owned affiliates $2,401 $2,652 $2,870 $ 294 $3,307 $2,761 $3,357 Fixed charges excluding capitalized interest 480 435 584 631 569 430 438 -------- -------- -------- -------- -------- -------- -------- TOTAL EARNINGS, AS DEFINED $2,881 $3,087 $3,454 $ 925 $3,876 $3,191 $3,795 ======== ======== ======== ======== ======== ======== ======== FIXED CHARGES, AS DEFINED - ------------------------- Interest expense $ 442 $ 395 $ 510 $ 552 $ 482 $ 367 $ 368 1/3 of rental expense 38 40 74 79 87 63 70 -------- -------- -------- -------- -------- -------- -------- 480 435 584 631 569 430 438 Capitalized interest 3 17 25 25 19 15 8 -------- -------- -------- -------- -------- -------- -------- TOTAL FIXED CHARGES, AS DEFINED $ 483 $ 452 $ 609 $ 656 $ 588 $ 445 $ 446 ======== ======== ======== ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES 6.0 6.8 5.7 1.4 6.6 7.2 8.5
-11- EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000080424 THE PROCTER & GAMBLE COMPANY 1,000,000 U.S. DOLLARS 9-MOS JUN-30-1995 JUL-01-1994 MAR-31-1995 1 2,258 109 3,479 0 3,351 11,095 16,995 6,387 27,799 8,491 5,157 687 0 1,919 7,713 27,799 24,940 24,940 14,307 7,132 0 0 368 3,333 1,160 2,173 0 0 0 2,173 3.06 2.85
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