-----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, AQa5F3qvjTDu/0hSdzoohzELMDS7uAK+LugY9hGjnswbSwlXmEvIzxwkZZ2wjQnw twQsI+wn1UYJgxfRpSUstg== 0000080424-96-000043.txt : 19961115 0000080424-96-000043.hdr.sgml : 19961115 ACCESSION NUMBER: 0000080424-96-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96660446 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 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1996 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 681,966,608 shares of Common Stock outstanding as of October 18, 1996. PART I. FINANCIAL INFORMATION Item 1. Financial Statements The Consolidated Statements of Earnings of The Procter & Gamble Company and subsidiaries for the three months ended September 30, 1996 and 1995, the Consolidated Balance Sheets as of September 30, 1996 and June 30, 1996, and the Consolidated Statements of Cash Flows for the three months ended September 30, 1996 and 1995 follow. In the opinion of management, these unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim period reported. However, such financial statements may not be necessarily indicative of annual results. Certain reclassifications of prior year's amounts have been made to conform with the current year's presentation. THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Amounts in Millions Except Per Share Amounts Three Months Ended September 30 1996 1995 -------- -------- NET SALES $8,903 $9,027 Cost of products sold 5,002 5,211 Marketing, research, and administrative expenses 2,354 2,381 -------- -------- OPERATING INCOME 1,547 1,435 Interest expense 112 123 Other income, net 56 62 -------- -------- EARNINGS BEFORE INCOME TAXES 1,491 1,374 Income taxes 512 478 -------- -------- NET EARNINGS $ 979 $ 896 ======== ======== NET EARNINGS PER COMMON SHARE $ 1.39 $ 1.27 FULLY DILUTED NET EARNINGS PER COMMON SHARE $ 1.30 $ 1.18 DIVIDENDS PER COMMON SHARE $ .45 $ .40 AVERAGE COMMON SHARES OUTSTANDING 683.8 686.6
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts in Millions September 30 June 30 ASSETS 1996 1996 --------- --------- CURRENT ASSETS Cash and cash equivalents $ 2,595 $ 2,074 Investment securities 462 446 Accounts receivable 2,848 2,841 Inventories Materials and supplies 1,247 1,254 Work in process 247 210 Finished goods 1,739 1,666 Deferred income taxes 774 598 Prepaid expenses and other current assets 1,348 1,718 ---------- ---------- TOTAL CURRENT ASSETS 11,260 10,807 ---------- ---------- PROPERTY, PLANT, AND EQUIPMENT 18,392 18,112 LESS ACCUMULATED DEPRECIATION 7,216 6,994 ---------- ---------- TOTAL PROPERTY, PLANT, AND EQUIPMENT 11,176 11,118 ---------- ---------- GOODWILL AND OTHER INTANGIBLE ASSETS 4,231 4,281 OTHER NON-CURRENT ASSETS 1,497 1,524 ---------- ---------- TOTAL ASSETS $28,164 $27,730 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accruals $ 6,867 $ 6,709 Debt due within one year 1,101 1,116 ---------- ---------- TOTAL CURRENT LIABILITIES 7,968 7,825 ---------- ---------- LONG-TERM DEBT 4,629 4,670 DEFERRED INCOME TAXES 663 638 OTHER NON-CURRENT LIABILITIES 2,892 2,875 SHAREHOLDERS' EQUITY Preferred stock 1,879 1,886 Common stock-shares outstanding-Sept. 30 681.9 682 686 -June 30 685.6 Additional paid-in capital 918 862 Currency translation adjustments (430) (418) Reserve for ESOP debt retirement (1,645) (1,676) Retained earnings 10,608 10,382 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 12,012 11,722 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $28,164 $27,730 ========== ==========
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Millions Three Months Ended September 30 1996 1995 -------- -------- CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $2,074 $2,028 OPERATING ACTIVITIES Net earnings 979 896 Depreciation and amortization 329 323 Deferred income taxes (109) 89 Increase in accounts receivable (8) (443) Increase in inventories (111) (184) Decrease in accounts payable (566) (513) Change in other operating assets and liabilities 904 157 Other 25 12 -------- -------- TOTAL OPERATING ACTIVITIES 1,443 337 -------- -------- INVESTING ACTIVITIES Capital expenditures (400) (435) Proceeds from asset sales 239 68 Acquisitions (10) (71) Change in investment securities 5 (252) -------- -------- TOTAL INVESTING ACTIVITIES (166) (690) -------- -------- FINANCING ACTIVITIES Dividends to shareholders (334) (301) Change in short-term debt (9) 484 Additions to long-term debt 11 33 Reduction of long-term debt (16) (242) Proceeds from stock options 21 15 Treasury purchases (424) (65) -------- -------- TOTAL FINANCING ACTIVITIES (751) (76) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (5) (10) -------- -------- CHANGE IN CASH AND CASH EQUIVALENTS 521 (439) -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $2,595 $1,589 ======== ========
Item 2. Management's Discussion and Analysis Results of Operations -- First Quarter Fiscal 1997 Compared with First Quarter Fiscal 1996 Worldwide net earnings for the first quarter of fiscal year 1997 were $979 million or $1.39 per share. This represents a 9% increase over prior year first quarter earnings of $896 million or $1.27 per share. Sales for the quarter were $8.9 billion, down 1% compared to prior year first quarter sales of $9.0 billion. Worldwide unit volume grew 1% from the first quarter a year ago. The difference between the sales and unit volume trends was largely due to weaker currencies. Excluding the effect of unfavorable exchange rates, particularly in Japan and Germany, sales increased consistent with unit volume growth. The company's results were affected by competitive pressures in Japan and difficult economic conditions in Latin America. In addition, the further roll-out of the Efficient Consumer Response program (ECR) within Europe and Asia impacted results. Specifically, the initial roll-out resulted in a reduction of trade inventories, slowing growth in the affected markets. When implemented several years ago in the United States, this program resulted in negative short-term business effects, but yielded stronger consumer loyalty and improved profit margins longer term. Gross margin was 43.8% for the current quarter, compared to 42.3% in the first quarter of the prior year and 41.2% for the full fiscal year ended June 30, 1996. Operating margin was 17.4% compared with 15.9% in the prior first quarter and 13.6% for the prior fiscal year, reflecting continued improvement in gross margin, efforts to improve efficiencies, and simplify operations, resulting in lower costs. North America - ------------------ Net sales for the North America region increased 1% compared with the same quarter a year ago, on a 2% unit volume increase. The sales and volume growth in the quarter was affected by capacity constraints on certain key categories, such as tissue and towel. Earnings for the region grew 9%, reflecting broad-based margin growth from improved pricing and costs. The region's unit volume growth was led by the laundry and cleaning business, with particularly strong growth in the laundry and fabric conditioners categories. The paper business increased unit volume over a strong base period, despite capacity constraints in the tissue and towel category, where volume declined slightly due to reduced merchandising efforts pending planned capacity additions. This impact was offset primarily by the effect of acquisitions, as well as growth in the diapers and feminine hygiene categories. Importantly, earnings in this business led the region's growth, with improved pricing actions. The beauty care business also increased unit volume on the strength of the hair care category, as well as excellent growth in deodorants. Food and beverage increased unit volume, when adjusted for the effect of acquisitions and divestitures, as strength in the peanut butter and snack categories was moderated by softness in baking mixes and shortening and oils. Unit volume in the health care business was about flat, excluding the prior year divestiture of the Company's share of a joint venture. Oral care volume was up, but the effect was more than offset by the decline in respiratory care volume. The health care business also impacted the region's earnings growth, reflecting the volume softness in certain categories, as well as the increased investment to reestablish oral care growth. Europe, Middle East and Africa - ------------------------------------- Sales in Europe, Middle East and Africa declined 1%, as unfavorable exchange rates, which reduced sales by 2%, combined with lower pricing related to ECR. Unit volume increased 5%, to a new record level. Net earnings increased 13% over the first quarter of last year, reflecting the solid volume progress and the margin improvement impact of lower costs. Central and Eastern Europe led the region's unit volume growth, increasing shipments by nearly 50%, primarily on the strength of the laundry and cleaning business. The Middle East and Africa region also had double-digit unit volume growth, while the remainder of the region was fairly flat, due to the impacts of expanding ECR. Asia - ----- First quarter results of the Asia region were impacted by the competitive environment in Japan and exchange rate effects. Sales declined 14%, including 9% related to unfavorable exchange rate movements. Unit volume was down 9%, largely due to the Japan situation and the impact of ECR-related trade inventory reductions. Additionally, China's unit volume growth was below recent levels, as trade inventories were adjusted in response to price increases taken earlier in the quarter. The Company's market share position remains strong, and unit volume in China is expected to rebound in the second quarter. Net earnings in Asia were down 10%, consistent with the sales trend in region. Latin America - ----------------- Sales in Latin America were down 1% in the first quarter, as pricing policies designed to address inflation and devaluation trends helped offset volume softness. Unit volume in the quarter was down 6%, reflecting declining markets due to slow economic recovery in key markets. Net earnings increased 11% on improved margins, largely reflecting the pricing actions. RESTRUCTURING RESERVE STATUS - ------------------------------------- In the year ended June 30, 1993, a reserve of $2.4 billion 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 separations. The balance of the reserve at September 30, 1996 was $610 million, with approximately half of the balance representing planned fixed asset disposals, all of which have been announced. The restructuring program is expected to be substantially completed during the current fiscal year. Based on current management estimates, the cost of the program is expected to approximate the original estimate, although certain immaterial reclassifications have been made within the elements of the reserve. PART II. OTHER INFORMATION Item 1. Legal Proceedings As first reported in the Company's Annual Report on Form 10-K for the period ended June 30, 1993, the Company agreed to participate in the Toxic Substances Control Act ("TSCA") Section 8(e) Compliance Audit Program of the United States Environmental Protection Agency ("EPA"). As a participant, the Company agreed to audit its files for materials which under current EPA guidelines would be subject to notification under Section 8(e) of TSCA and to pay stipulated penalties for each report submitted under this program. Pursuant to a Consent Order dated October 3, 1996, the Company paid a $1,000,000 civil penalty to settle this matter. Item 4. Submission of Matters to a Vote of Security Holders: At the Company's 1996 Annual Meeting of Shareholders held on October 8, 1996, the following actions were taken: The following Directors were elected for terms of office expiring in 1999: Votes Broker Votes For Withheld Abstentions* Non-Votes* - -------------------------------------------------------------------------- Donald R. Beall 615,643,696 8,090,616 N/A N/A Gordon F. Brunner 614,726,954 9,007,358 N/A N/A Richard B. Cheney 615,218,839 8,515,473 N/A N/A Harald Einsmann 614,933,806 8,800,506 N/A N/A Durk I. Jager 613,506,451 10,227,861 N/A N/A Charles R. Lee 615,788,146 7,946,166 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, 1997, was approved by the shareholders. The shareholders cast 617,921,161 votes in favor of this proposal and 3,355,861 votes against. There were 2,457,290 abstentions. 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 168,678,826 votes in favor of the resolution and 372,169,835 against. There were 8,923,917 abstentions and 73,961,734 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, 1996. 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 8, 1996 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 EX-11 2 EXHIBIT (11) THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES ================================================ Computation of Earnings Per Share --------------------------------------------
Amounts in Millions Except Per Share Amounts Three Months Ended September 30 1996 1995 ------- ------- NET EARNINGS PER SHARE - ---------------------- Net earnings $ 979 $ 896 Deduct preferred stock dividends 26 26 -------- -------- Net earnings applicable to common stock $ 953 $ 870 - --------------------------------------- ======== ======== Average number of common shares outstanding 683.8 686.6 Per Share - --------- Net earnings per share $ 1.39 $ 1.27 ======== ======== NET EARNINGS PER SHARE ASSUMING FULL DILUTION - ------------------------------- Net earnings $ 979 $ 896 Deduct differential -- preferred vs. common dividends 8 10 -------- -------- Net earnings applicable to common stock $ 971 $ 886 - --------------------------------------- ======== ======== Average number of common shares outstanding 683.8 686.6 Add potential effect of: Exercise of options 10.3 9.2 Conversion of preferred stock 51.2 52.2 -------- -------- Average number of common shares outstanding, assuming full dilution 745.3 748.0 ======== ======== Per share assuming full dilution - -------------------------------- Net earnings per share assuming full dilution $ 1.30 $ 1.18 ======== ========
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 ---------------------------------------------- -------------- 1992 1993 1994 1995 1996 1995 1996 ------ ------ ------ ------ ------ ------ ------ EARNINGS AS DEFINED - ------------------- Earnings from operations before income taxes after eliminating undistributed earnings of equity method investees $2,870 $ 294 $3,307 $4,022 $4,695 $1,246 $1,486 Fixed charges, excluding capitalized interest 584 631 569 571 576 145 136 ------ ------- ------ ------ ------ ------ ------ TOTAL EARNINGS, AS DEFINED $3,454 $ 925 $3,876 $4,593 $5,271 $1,391 $1,622 ====== ======= ====== ====== ====== ====== ====== FIXED CHARGES, AS DEFINED - ------------------------- Interest expense (including capitalized interest) $ 535 $ 577 $ 501 $ 511 $ 493 $ 124 $ 112 1/3 of rental expense 74 79 87 83 92 22 24 ------ ------- ------ ------ ------ ------ ------ TOTAL FIXED CHARGES, AS DEFINED $ 609 $ 656 $ 588 $ 594 $ 585 $ 146 $ 136 ====== ======= ====== ====== ====== ====== ====== RATIO OF EARNINGS TO FIXED CHARGES 5.7 1.4 6.6 7.7 9.0 9.5 11.9
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, 1996 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-30-1997 JUL-01-1996 SEP-30-1996 1 2,595 462 2,848 0 3,233 11,260 18,392 7,216 28,164 7,968 4,629 0 1,879 682 9,441 28,164 8,903 8,903 5,002 2,354 0 0 112 1,491 512 979 0 0 0 979 1.39 1.30
-----END PRIVACY-ENHANCED MESSAGE-----