-----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, KPJ7rwLG+NRW8rYS0Wsg0hCTmdimGqm6b6N/c2vjxtrqlR0viX8ipQlj847xJfAm 7Us+UXqYabhtw/odbAJBqg== 0000080424-97-000075.txt : 19971117 0000080424-97-000075.hdr.sgml : 19971117 ACCESSION NUMBER: 0000080424-97-000075 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 001-00434 FILM NUMBER: 97719523 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, 1997 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 1,343,992,178 shares of Common Stock outstanding as of October 24, 1997. 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, 1997 and 1996, the Consolidated Balance Sheets as of September 30, 1997 and June 30, 1997, and the Consolidated Statements of Cash Flows for the three months ended September 30, 1997 and 1996 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 1997 1996 ---- ---- NET SALES $9,355 $8,903 Cost of products sold 5,208 5,050 Marketing, research, and administrative expenses 2,408 2,306 ------ ------ OPERATING INCOME 1,739 1,547 Interest expense 121 112 Other income, net 51 56 ------ ------ EARNINGS BEFORE INCOME TAXES 1,669 1,491 Income taxes 582 512 ------ ------ NET EARNINGS $1,087 $ 979 ====== ====== NET EARNINGS PER COMMON SHARE $ .79 $ .70 FULLY DILUTED NET EARNINGS PER COMMON SHARE $ .73 $ .65 DIVIDENDS PER COMMON SHARE $ .253 $ .225 AVERAGE COMMON SHARES OUTSTANDING 1,348.3 1,367.6
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts in Millions September 30 June 30 ASSETS 1997 1997 ------------ ------- CURRENT ASSETS Cash and cash equivalents $ 2,059 $ 2,350 Investment securities 599 760 Accounts receivable 2,917 2,738 Inventories Materials and supplies 1,188 1,131 Work in process 291 228 Finished goods 1,854 1,728 Deferred income taxes 630 661 Prepaid expenses and other current assets 1,369 1,190 ------- ------- TOTAL CURRENT ASSETS 10,907 10,786 ------- ------- PROPERTY, PLANT, AND EQUIPMENT 19,102 18,625 LESS ACCUMULATED DEPRECIATION 7,681 7,249 ------- ------- TOTAL PROPERTY, PLANT, AND EQUIPMENT 11,421 11,376 ------- ------- GOODWILL AND OTHER INTANGIBLE ASSETS 5,777 3,949 OTHER NON-CURRENT ASSETS 1,527 1,433 ------- ------- TOTAL ASSETS $29,632 $27,544 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accruals $ 7,193 $ 6,949 Debt due within one year 2,629 849 ------- ------- TOTAL CURRENT LIABILITIES 9,822 7,798 ------- ------- LONG-TERM DEBT 4,143 4,143 DEFERRED INCOME TAXES 536 559 OTHER NON-CURRENT LIABILITIES 3,022 2,998 SHAREHOLDERS' EQUITY Preferred stock 1,848 1,859 Common stock-shares outstanding-Sept. 30 1,345.1 1,345 1,351 -June 30 1,350.8 Additional paid-in capital 620 559 Currency translation adjustments (991) (819) Reserve for ESOP debt retirement (1,612) (1,634) Retained earnings 10,899 10,730 ------- ------- TOTAL SHAREHOLDERS' EQUITY 12,109 12,046 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $29,632 $27,544 ======= =======
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Millions Three Months Ended September 30 1997 1996 -------- -------- CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $2,350 $2,074 OPERATING ACTIVITIES Net earnings 1,087 979 Depreciation and amortization 388 329 Deferred income taxes (1) (109) Changes in: Accounts receivable (98) (8) Inventories (246) (111) Accounts payable and accruals 179 162 Other operating assets and liabilities (140) 176 Other 3 25 -------- -------- TOTAL OPERATING ACTIVITIES 1,172 1,443 -------- -------- INVESTING ACTIVITIES Capital expenditures (543) (400) Proceeds from asset sales 128 239 Acquisitions (1,956) (10) Change in investment securities 163 5 -------- -------- TOTAL INVESTING ACTIVITIES (2,208) (166) -------- -------- FINANCING ACTIVITIES Dividends to shareholders (367) (334) Change in short-term debt 1,731 (9) Additions to long-term debt 2 11 Reduction of long-term debt (52) (16) Proceeds from stock options 21 21 Treasury purchases (557) (424) -------- -------- TOTAL FINANCING ACTIVITIES 778 (751) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (33) (5) -------- -------- CHANGE IN CASH AND CASH EQUIVALENTS (291) 521 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $2,059 $2,595 ======== ========
Item 2. Management's Discussion and Analysis RESULTS OF OPERATIONS -- FIRST QUARTER FISCAL 1997 COMPARED WITH FIRST QUARTER FISCAL 1996 Net earnings for the July-September quarter were $ .79 per share, a 13 percent increase over the same quarter of the prior year. Worldwide net earnings for the quarter were $1,085 million, an 11 percent increase. The differential between the earnings per share and net earnings increases was primarily due to the company's stock repurchase program. Worldwide net sales for the quarter were $9.4 billion, a five percent increase over the same quarter of the prior year, on eight percent unit volume growth. The difference between the sales and volume growth rates was largely due to weaker currencies in Western Europe and Asia. Net acquisitions and divestitures, led by the July 1997 addition of Tambrands, contributed one percent to the unit volume growth rate. The Company's ongoing program of simplification and standardization did not have a significant impact on earnings in the current quarter. This program includes re-engineering of the manufacturing and distribution processes, organization design projects, consolidation of selected manufacturing facilities, simplified product line-ups and sales of non-strategic brands. Gross margin was 44.3 percent for the quarter compared to 43.3 percent in the same quarter of the prior year and 42.7 percent for the full fiscal year ended June 30, 1997. The key driver of the margin improvement has been a continuation of the effective focus on cost control through simplification and standardization efforts throughout the company. Operating margin was 18.6 percent for the quarter compared to 17.4 percent in the same quarter year ago and 15.3 percent for the prior fiscal year. This improvement was a reflection of the higher volumes and gross margins, partially offset by higher costs related to marketing, research, and administrative activities. NORTH AMERICA - ------------- Net sales for the North America region were up six percent, on equal volume growth. Net earnings grew five percent as the impact of volume growth was partially offset by increased spending on new product initiatives and provisions for simplification and standardization projects. The region's six percent unit volume growth was broad based with contributions from all segments and was led by the laundry, tissue and towel, and snacks categories. The tissue and towel and snacks growth was achieved behind increases in productive capacity. The laundry category continued strong shipments behind product initiatives. Feminine protection also achieved significant growth driven primarily by the acquired Tambrands business. Unit volume growth within the Beauty Care segment was achieved behind new product initiatives in hair care and deodorants. Health Care achieved unit volume increase in both over the counter medicines and pharmaceuticals, while continuing to invest in new brand development. EUROPE, MIDDLE EAST, AND AFRICA - ------------------------------- Net sales in Europe, Middle East, and Africa were flat on a 10 percent unit volume increase, as the favorable impact of volume growth was offset by unfavorable exchange rates, primarily in Germany, France and Italy. The region's net earnings grew six percent as the favorable impacts of volume and higher gross margins were partially offset by higher new brand initiative spending and unfavorable exchange rates. The region's unit volume growth was led by continued double digit growth in Central and Eastern Europe and the Middle East and Africa. Western Europe also achieved solid unit volume growth led by continued growth in laundry and the addition of Tambrands. ASIA - ---- Net sales in Asia grew four percent for the quarter on unit volume growth of eight percent, as pricing actions in China and other southeast Asia countries were offset by weaker currencies throughout the region. The region's net earnings increased 35 percent as the favorable impacts of volume growth and pricing were partially offset by increased spending on product initiatives and unfavorable exchange rates. Asia unit volume growth was led by double digit growth in China, the Philippines and Indonesia. Importantly, Japan's volume increased behind new brand initiatives, despite the continuing weakness in consumer demand in the overall market. LATIN AMERICA - ------------- Net sales in Latin America were up 15 percent driven by improved pricing in key countries. Net earnings increased 112 percent, which included the gain on the sale of a non-strategic brand. Unit volume for the region was up four percent, driven by double digit gains in Brazil, which benefited from an acquisition in the laundry category, and Venezuela. Mexico's unit volume was down, primarily due to the divestiture of the non-strategic brand. PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds: (a) On October 15, 1997, the Company amended its Amended Articles of Incorporation (see 8-K filed October 15, 1997) to increase the number of authorized shares of Common Stock from 2,000,000,000 to 5,000,000,000. (b) On October 15, 1997, the Company amended its Amended Articles of Incorporation to change the dividend rate for its Series A ESOP Convertible Class A Preferred Stock (the "Series A Preferred Stock"), so that such dividend rate would equal the higher of the existing dividend rate on the Series A Preferred Stock or the then current dividend on the Company's Common Stock. This change will result in the conversion of Series A Preferred Stock gradually into shares of Common Stock, rather than being converted all at once at such time as the dividend rate on the Common Stock exceeds the dividend rate on the Series A Preferred Stock. A corresponding change was made to the dividend rate on the Series B ESOP Convertible Class A Preferred Stock. Item 4. Submission of Matters to a Vote of Security Holders: At the Company's 1997 Annual Meeting of Shareholders held on October 14, 1997, the following actions were taken: The following Directors were elected for terms of office expiring in 2000:
Authority Broker Votes For Withheld Abstentions Non-Votes ---------------------------------------------------------- Edwin L. Artzt 583,421,618 11,351,066 N/A N/A Norman R. Augustine 589,931,064 4,841,620 N/A N/A Richard J. Ferris 589,587,874 5,184,810 N/A N/A John C. Sawhill 589,832,186 4,940,498 N/A N/A John F. Smith, Jr. 589,829,996 4,942,688 N/A N/A Marina v.N. Whitman 589,562,509 5,210,175 N/A N/A Pursuant to the terms of the Notice of Annual Meeting and Proxy Statements, 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, 1998, was approved by the shareholders. The shareholders cast 590,205,490 votes in favor of this proposal and 1,965,859 votes against. There were 2,601,335 abstentions. A proposal by the Board of Directors to amend the Amended Articles of Incorporation to increase the authorized shares of Common Stock was approved by the shareholders. The shareholders cast 498,186,203 votes in favor of this proposal and 93,528,199 votes against. There were 3,058,282 abstentions. A proposal by the Board of Directors to amend the Amended Articles of Incorporation to revise the terms of the Preferred Stock was approved by the shareholders. The shareholders cast votes as follows:
Common and Common Stock Series B Preferred Preferred Stock Stock ------------------------------------------------------- Votes for 521,018,896 472,145,951 18,211,999 Votes Against 8,359,304 7,577,820 397,676 Abstentions 6,025,605 5,318,910 412,743 Broker Non-Votes 59,368,879 59,368,879 0
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 168,409,296 votes in favor of the resolution and 348,606,400 against. There were 18,353,911 abstentions and 59,403,077 broker non-votes. A shareholder resolution proposed by the Sisters of the Holy Names of Washington, in conjunction with six co-sponsoring religious organizations, was defeated by the shareholders. The proposal requested the Company to report on the steps it would take to eliminate the use of chlorine in paper and pulp products. The Board opposed the resolution. The shareholders cast 28,902,894 votes in favor of the resolution and 472,117,965 against. There were 34,376,907 abstentions and 59,374,918 broker non-votes. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (3-1) Amended Articles of Incorporation (Incorporated by reference to the Company's 8-K filed on October 15, 1997). (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 The Company filed Current Reports on Form 8-K containing information pursuant to Item 9 entitled "Sales of Equity Securities Pursuant to Regulations," dated September 11, September 29, October 27, October 30, November 5 and November 10, 1997. Also the Company filed a Current Report on Form 8-K pursuant to Item 5 entitled "Other Events" and Item 7 "Financial Statements and Exhibits" dated October 15, 1997 containing the Amended Articles of Incorporation. 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/D. R. WALKER - -------------------------------------- D. R. Walker Vice President and Comptroller (Principal Accounting Officer) Date: November 13, 1997 EXHIBIT INDEX Exhibit No. Page No. (3-1) Amended Articles of Incorporation (Incorporated by reference to the Company's 8-K filed on October 15, 1997). (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 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 1997 1996 -------- -------- NET EARNINGS PER SHARE - ---------------------- Net earnings $1,087 $ 979 Deduct preferred stock dividends 26 26 -------- -------- Net earnings applicable to common stock $1,061 $ 953 - --------------------------------------- ======== ======== Average number of common shares outstanding 1,348.3 1,367.6 Per Share - --------- Net earnings per share $ .79 $ .70 ======== ======== NET EARNINGS PER SHARE ASSUMING FULL DILUTION - ------------------------------- Net earnings $1,087 $ 979 Deduct differential -- preferred vs. common dividends 7 8 -------- -------- Net earnings applicable to common stock $1,080 $ 971 - --------------------------------------- ======== ======== Average number of common shares outstanding 1,348.3 1,367.6 Add potential effect of: Exercise of options 25.0 20.6 Conversion of preferred stock 100.6 102.4 -------- -------- Average number of common shares outstanding, assuming full dilution 1,473.9 1,490.6 ======== ======== Per share assuming full dilution - -------------------------------- Net earnings per share assuming full dilution $ .73 $ .65 ======== ========
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 ------------------------------------------------- --------------- 1993 1994 1995 1996 1997 1996 1997 ---- ---- ---- ---- ---- ---- ---- EARNINGS AS DEFINED - ------------------- Earnings from operations before income taxes after eliminating undistributed earnings of equity method investees $ 294 $3,307 $4,022 $4,695 $5,274 $1,486 $1,676 Fixed charges, excluding capitalized interest 631 569 571 576 534 136 146 ------- ------ ------ ------ ------ ------ ------ TOTAL EARNINGS, AS DEFINED $ 925 $3,876 $4,593 $5,271 $5,808 $1,622 $1,822 ======= ====== ====== ====== ====== ====== ====== FIXED CHARGES, AS DEFINED - ------------------------- Interest expense (including capitalized interest) $ 577 $ 501 $ 511 $ 493 $ 457 $ 112 $ 121 1/3 of rental expense 79 87 83 92 77 24 25 ------- ------ ------ ------ ------ ------ ------ TOTAL FIXED CHARGES, AS DEFINED $ 656 $ 588 $ 594 $ 585 $ 534 $ 136 $ 146 ======= ====== ====== ====== ====== ====== ====== RATIO OF EARNINGS TO FIXED CHARGES 1.4 6.6 7.7 9.0 10.9 11.9 12.5
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, 1997 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-30-1998 JUL-1-1997 SEP-30-1997 1 2,059 599 2,990 (73) 3,336 10,907 19,102 7,681 29,632 9,822 4,143 0 1,848 1,345 8,916 29,632 9,355 9,355 5,208 2,408 0 0 121 1,669 583 1,087 0 0 0 1,087 .79 .73
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