-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VvfX1MaLcawZN4zZsk2tX0uixjKlveW2vxDzeadnSlrLmXyLREQARdFaybIm7x9I v0YMbrA7KyjhbFgloe25Kg== 0000080424-95-000029.txt : 19951119 0000080424-95-000029.hdr.sgml : 19951119 ACCESSION NUMBER: 0000080424-95-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590051 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 September 30, 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 686,325,234 shares of Common Stock outstanding as of October 20, 1995. -1- PART I. FINANCIAL INFORMATION THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS
Millions of Dollars Three Months Ended September 30 1995 1994 ---- ---- NET SALES $9,027 $8,177 Cost of products sold 5,211 4,636 Marketing, research and administrative expenses 2,381 2,271 ------ ------ OPERATING INCOME 1,435 1,270 Interest expense 123 119 Other income, net 62 85 ------ ------ EARNINGS BEFORE INCOME TAXES 1,374 1,236 Income taxes 478 444 ------ ------ NET EARNINGS $ 896 $ 792 ====== ====== PER COMMON SHARE: Net earnings $ 1.27 $ 1.12 Net earnings assuming full dilution $ 1.18 $ 1.05 Dividends per common share $ .40 $ .35 AVERAGE COMMON SHARES OUTSTANDING (in millions) 686.6 684.7
Certain reclassifications of prior year's amounts have been made to conform with the current year presentation. Costs related to research and development are now reported as an element of marketing, research and administrative expenses. Costs related to delivery of finished product are included in cost of products sold. Net sales include revenues from other operating arrangements, such as joint ventures. -2- THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
Millions of Dollars September 30 June 30 ASSETS 1995 1995 CURRENT ASSETS --------- --------- Cash and cash equivalents $ 1,589 $ 2,028 Investment securities 404 150 Accounts receivable 3,977 3,562 Inventories Raw materials and supplies 1,358 1,315 Work in process 275 247 Finished products 1,951 1,891 Deferred income taxes 785 804 Prepaid expenses and other current assets 1,047 845 --------- --------- 11,386 10,842 --------- --------- PROPERTY, PLANT, AND EQUIPMENT 17,661 17,739 LESS ACCUMULATED DEPRECIATION 6,815 6,713 --------- --------- 10,846 11,026 --------- --------- GOODWILL AND OTHER INTANGIBLE ASSETS 4,448 4,572 OTHER ASSETS 1,687 1,685 --------- --------- TOTAL $28,367 $28,125 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accruals $ 7,496 $ 7,678 Debt due within one year 1,197 970 --------- --------- 8,693 8,648 --------- --------- LONG-TERM DEBT 5,018 5,161 OTHER LIABILITIES 3,047 3,196 DEFERRED INCOME TAXES 585 531 SHAREHOLDERS' EQUITY Preferred stock 1,906 1,913 Common stock-shares outstanding-Sept. 30 686,599,982 687 687 -June 30 686,574,055 Additional paid-in capital 734 693 Currency translation adjustments (94) 65 Reserve for ESOP debt retirement (1,705) (1,734) Retained earnings 9,496 8,965 --------- --------- 11,024 10,589 --------- --------- TOTAL $28,367 $28,125 ========= =========
-3- THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of Dollars Three Months Ended September 30 1995 1994 -------- -------- Cash and Cash Equivalents, beginning of year $2,028 $2,373 OPERATING ACTIVITIES Net earnings 896 792 Depreciation, depletion and amortization 323 304 Deferred income taxes 89 65 Increase in accounts receivable (448) (360) Increase in inventories (184) (80) Change in payables and accrued liabilities (50) 240 Decrease in other liabilities (72) (124) Other (217) (246) -------- -------- 337 591 INVESTING ACTIVITIES -------- -------- Capital expenditures (435) (345) Proceeds from asset sales and retirements 68 150 Acquisitions (71) (607) Investment securities (252) 137 -------- -------- (690) (665) -------- -------- FINANCING ACTIVITIES Dividends to shareholders (301) (265) Additions to short-term debt 484 360 Additions to long-term debt 33 230 Reduction of long-term debt (242) (232) Proceeds from stock options 15 10 Purchase of treasury shares (65) (2) -------- -------- (76) 101 -------- -------- EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (10) 29 -------- -------- CHANGE IN CASH AND CASH EQUIVALENTS (439) 56 -------- -------- Cash and Cash Equivalents, end of period $1,589 $2,429 ======== ======== SUPPLEMENTAL DISCLOSURE Non-cash transactions: Liabilities assumed in acquisitions -- 140 Reduction in employee stock ownership plan debt, guaranteed by the Company 29 26 Conversion of preferred to common stock 7 10 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 Results of Operations - ------------------------------- Worldwide net earnings for the quarter ending September 30, 1995 were $896 million or $1.27 per share. This represents a 13% increase over the same quarter of the prior year, when net earnings were $792 million or $1.12 per share. Worldwide net sales for the quarter were $9,027 million, a 10% increase from the prior year's $8,177 million. The sales increase reflects record shipments and unit volume growth of 9%. The effects of stronger European and Asian currencies on both sales and earnings were offset by the weaker Mexican peso. Gross margin was 42.3% for the current quarter versus 43.3% for the first quarter of the prior year. Gross margin for the prior fiscal year was 41.5%. These margin trends reflect higher raw material costs, primarily pulp. Operating margin for the quarter improved to 15.9%, compared to 15.5% for the same quarter of the prior year, as continued focus on cost control largely offset the effects of higher raw material prices and increased research and development costs. North America - ------------- Net sales for the North American region increased 7% on a 6% unit volume increase. Earnings for the region increased 8%, as cost control actions largely offset increased raw material prices, primarily pulp, and continued investment in the health care business. The unit volume gains were driven by the Food and Beverage business which contributed nearly half of the region's unit volume growth. Solid progress in all categories of the Paper business also contributed to the unit volume growth, although related earnings were negatively affected by higher pulp prices that were not fully recovered through pricing. The Laundry and Cleaning business contributed approximately 25% of the region's unit volume growth. Beauty Care unit volume achieved solid growth, driven by hair care. Health Care unit volume declined slightly due to softness in the respiratory category. Europe, Middle East and Africa - ------------------------------ First quarter sales for the Europe, Middle East and Africa region increased 16%. Unit volume was up 12%, led by gains in Eastern Europe. The region's earnings grew 20% over the same quarter last year. Favorable exchange rates added 6% to sales, more than offsetting product mix impacts. Broad-based unit volume gains across the region's businesses drove the earnings growth, complemented by continuing cost control actions. Asia - ---- Asia maintained its strong growth rate with a 22% increase in unit volume, led by China. The region delivered 12% sales and 9% earnings growth over the same quarter of the prior year. Favorable exchange rates increased sales by 6%, helping to mitigate the effects of lower pricing and product mix. Double-digit unit volume growth was achieved by the region's key businesses, with Laundry and Cleaning continuing to lead the growth. The results of the region reflect the continuing investment in this fast-growing market. -5- Latin America - ------------- Latin America delivered unit volume growth of 6%, despite a 3% decline in Mexico. Sales for the region were down 4%, as favorable pricing helped lessen the effect of unfavorable exchange rates. Earnings for the region were down 7%, primarily due to the continuing effects of the Mexican Peso devaluation. Excluding Mexico, net earnings for the region increased over the same quarter of the prior year. Unit volume growth in the region was led by the Paper business, driven by the success of Pampers Uni. Restructuring Reserve Status - ---------------------------- In the year ending June 30, 1993, a 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-September Balance Reserve 6/30/95 Charges 9/30/95 -------- ------- -------------- ------- Separation-related costs $ 965 $ 369 $ 37 $ 332 Disposals of Fixed Assets 1,109 597 33 564 Other 328 194 5 189 ------ ----- ---- ------ $2,402 $1,160 $ 75 $1,085 ====== ====== ==== ====== 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.
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. About two-thirds of the sites and production modules to be closed have been announced in order to provide advance notice to employees. Benefits continue to be obtained from the restructuring program. Incremental savings of almost $30 million after-tax are estimated for the July-September quarter, bringing cumulative restructuring savings to approximately 90% of the $500 million after-tax objective established in June 1993. Based on current projections, the Company believes cumulative restructuring savings ultimately will exceed the original estimate by approximately 20%. For this purpose, restructuring savings are estimated gross savings, which have been offset to some degree by lower pricing and other actions to build the business. -6- PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders: At the Company's 1995 Annual Meeting of Shareholders held on October 10, 1995, the following actions were taken: The following Directors were elected for terms of office expiring in 1998:
Votes For Votes Abstentions* Broker Withheld Non-Votes* Joseph T. Gorman 622,853,407 5,331,925 N/A N/A Jerry R. Junkins 622,803,505 5,381,827 N/A N/A Lynn M. Martin 622,379,700 5,805,632 N/A N/A John E. Pepper 622,525,218 5,660,114 N/A N/A Ralph Snyderman 622,788,631 5,396,701 N/A N/A Robert D. Storey 622,643,306 5,542,026 N/A N/A * Pursuant to the terms of the Notice of Annual Meeting and Proxy Statement, proxies received were voted, unless authority was withheld, in favor of the election of the six nominees named.
A proposal by the Board of Directors to ratify the appointment of Deloitte & Touche LLP as the Company's independent auditors to conduct the annual audit of the financial statements of the Company and its subsidiaries for the fiscal year ending June 30, 1996, was approved by the shareholders. The shareholders cast 622,175,988 votes in favor of this proposal and 3,590,759 votes against. There were 2,418,585 abstentions. A proposal by the Board of Directors to ratify an amendment to The Procter & Gamble 1993 Non-Employee Directors' Stock Plan was approved by the shareholders. The shareholders cast 575,752,396 votes in favor of this proposal and 52,432,936 against. Pursuant to the terms of the Notice of Annual Meeting and Proxy Statement, abstentions were treated as votes against this proposal. A shareholder resolution proposed by Evelyn Y. Davis was defeated by the shareholders. The proposal sought to reinstate the system of electing all Directors annually, in place of the system of classifying Directors into three classes with overlapping three-year terms which was approved by the shareholders in 1985. The Board opposed the resolution. The shareholders cast 158,229,332 votes in favor of the resolution and 393,147,816 against. There were 10,674,673 abstentions and 66,133,511 broker non-votes. A shareholder resolution proposed by The New York City Employees' Retirement System was defeated by the shareholders. The proposal requested the Company to endorse the CERES Principles as a commitment to be publicly accountable for its environmental impact. The Board opposed the resolution. The shareholders cast 47,248,737 votes in favor of the resolution and 477,709,200 against. There were 37,093,883 abstentions and 66,133,512 broker non-votes. -7- A shareholder resolution proposed by Rabbi Benno M. Wallach, D.D. was defeated by the shareholders. The proposal recommended that the Board present at least two candidates for each available opening on the Board of Directors. The Board opposed the resolution. The shareholders cast 39,745,602 votes in favor of the resolution and 512,908,012 against. There were 9,402,107 abstentions and 66,129,611 broker non-votes. A shareholder resolution proposed by Madeline H. Wallach was defeated by the shareholders. The proposal recommended that the Board eliminate the Executive Incentive Compensation system. The Board opposed the resolution. The shareholders cast 57,385,587 votes in favor of the resolution and 490,078,337 against. There were 14,262,117 abstentions and 66,459,291 broker non-votes. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (3-1) Amended Articles of Incorporation (Incorporated by reference to Exhibit (3-1) of the Company's Annual Report on Form 10-K for the year ended June 30, 1993). (3-2) Regulations (Incorporated by reference to Exhibit (3-2) of the Company's Annual Report on Form 10-K for the year ended June 30, 1993). (11) Computation of Earnings per Share (12) Computation of Ratio of Earnings to Fixed Charges (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended September 30, 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: November 13, 1995 -8- EXHIBIT INDEX Exhibit No. Page No. (3-1) Amended Articles of Incorporation (Incorporated by reference to Exhibit (3-1) of the Company's Annual Report on Form 10-K for the year ended June 30, 1993). (3-2) Regulations (Incorporated by reference to Exhibit (3-2) of the Company's Annual Report on Form 10-K for the year ended June 30, 1993). (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 September 30 NET EARNINGS PER SHARE 1995 1994 - ---------------------- ------ ------ Net earnings $ 896 $ 792 Deduct preferred stock dividends 26 26 ------ ------ Net earnings applicable to common stock $ 870 $ 766 - --------------------------------------- ====== ====== Average number of common shares outstanding 686.6 684.7 Per Share - --------- Net earnings per share $ 1.27 $ 1.12 ====== ====== NET EARNINGS PER SHARE ASSUMING FULL DILUTION - ------------------------------- Net earnings $ 896 $ 792 Deduct differential -- preferred vs. common dividends 10 11 ------ ------ Net earnings applicable to common stock $ 886 $ 781 - --------------------------------------- ====== ====== Average number of common shares outstanding 686.6 684.7 Add potential effect of: Exercise of options 9.2 6.5 Conversion of preferred stock 52.2 53.2 ------ ------ Average number of common shares outstanding, assuming full dilution 748.0 744.4 ====== ====== Per share assuming full dilution - -------------------------------- Net earnings per share assuming full dilution $ 1.18 $ 1.05 ====== ======
-10- EX-12 3 EXHIBIT (12) THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES ============================================= COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ------------------------------------------------- Millions of Dollars
Three Months Years Ended June 30 Ended Sept. 30 ------------------------------------------------- -------------- 1991 1992 1993 1994 1995 1994 1995 ------ ------ ------ ------ ------ ------ ------ EARNINGS AS DEFINED - ------------------- Earnings from operations before income taxes after eliminating undistributed earnings of 20% to 50% owned affiliates $2,652 $2,870 $ 294 $3,307 $4,022 $1,239 $1,246 Fixed charges excluding capitalized interest 435 584 631 569 571 142 145 ------ ------ ------ ------ ------ ------ ------ TOTAL EARNINGS, AS DEFINED $3,087 $3,454 $ 925 $3,876 $4,593 $1,381 $1,391 ====== ====== ====== ====== ====== ====== ====== FIXED CHARGES, AS DEFINED - ------------------------- Interest expense $ 395 $ 510 $ 552 $ 482 $ 488 $ 119 $ 123 1/3 of rental expense 40 74 79 87 83 23 22 ------ ------ ------ ------ ------ ------ ------- 435 584 631 569 571 142 145 Capitalized interest 17 25 25 19 23 3 1 ------ ------ ------ ------ ------ ------ ------- TOTAL FIXED CHARGES, AS DEFINED $ 452 $ 609 $ 656 $ 588 $ 594 $ 145 $ 146 ====== ====== ====== ====== ====== ====== ====== RATIO OF EARNINGS TO FIXED CHARGES 6.8 5.7 1.4 6.6 7.7 9.5 9.5
-11- EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000080424 THE PROCTER & GAMBLE COMPANY 1,000,000 U.S. DOLLARS 3-MOS JUN-30-1996 JUL-01-1995 SEP-30-1995 1 1,589 404 3,977 0 3,584 11,386 17,661 6,815 28,367 8,693 5,018 687 0 1,906 8,431 28,367 9,027 9,027 5,211 2,381 0 0 123 1,374 478 896 0 0 0 896 1.27 1.18
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