-----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, AVUHtrsvAobZKzp6WZQA9EPE/Q9uKS97/one2MH24y4OROoPbGPoTa1oyqQ8GkgU dBNMDm69m/iBsn52Oh9glA== 0000080424-96-000003.txt : 19960216 0000080424-96-000003.hdr.sgml : 19960216 ACCESSION NUMBER: 0000080424-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 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: 96516526 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 December 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 686,413,929 shares of Common Stock outstanding as of January 19, 1996. -1- PART I. FINANCIAL INFORMATION THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS
Millions of Dollars Except Per Share Amounts Three Months Ended Six Months Ended December 31 December 31 1995 1994 1995 1994 ------- ------- -------- -------- NET SALES $9,090 $8,485 $18,117 $16,662 Cost of products sold 5,265 4,840 10,476 9,476 Marketing, research, and administrative expenses 2,473 2,437 4,854 4,708 -------- -------- -------- -------- OPERATING INCOME 1,352 1,208 2,787 2,478 Interest expense 123 125 246 244 Other income, net 52 76 114 161 -------- -------- -------- -------- EARNINGS BEFORE INCOME TAXES 1,281 1,159 2,655 2,395 Income taxes 445 409 923 853 -------- -------- -------- -------- NET EARNINGS $ 836 $ 750 $ 1,732 $ 1,542 ======== ======== ======== ======== PER COMMON SHARE: Net earnings $ 1.18 $ 1.06 $ 2.45 $ 2.18 Net earnings assuming full dilution $ 1.11 $ .99 $ 2.29 $ 2.04 Dividends $ .40 $ .35 $ .80 $ .70 AVERAGE COMMON SHARES OUTSTANDING 686.5 685.2
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 December 31 June 30 ASSETS 1995 1995 --------- --------- CURRENT ASSETS Cash and cash equivalents $ 1,668 $ 2,028 Investment securities 448 150 Accounts receivable 3,899 3,562 Inventories Raw materials and supplies 1,417 1,315 Work in process 271 247 Finished products 1,857 1,891 Deferred income taxes 790 804 Prepaid expenses and other current assets 1,093 845 --------- --------- 11,443 10,842 --------- --------- PROPERTY, PLANT, AND EQUIPMENT 17,913 17,739 LESS ACCUMULATED DEPRECIATION 6,953 6,713 --------- --------- 10,960 11,026 --------- --------- GOODWILL AND OTHER INTANGIBLE ASSETS 4,304 4,572 OTHER ASSETS 1,508 1,685 --------- --------- TOTAL $28,215 $28,125 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accruals $ 6,860 $ 7,678 Debt due within one year 1,418 970 --------- --------- 8,278 8,648 --------- --------- LONG-TERM DEBT 4,978 5,161 OTHER LIABILITIES 2,958 3,196 DEFERRED INCOME TAXES 617 531 SHAREHOLDERS' EQUITY Preferred stock 1,901 1,913 Common stock-shares outstanding-Dec. 31 686,027,828 686 687 -June 30 686,574,055 Additional paid-in capital 763 693 Currency translation adjustments (181) 65 Reserve for ESOP debt retirement (1,705) (1,734) Retained earnings 9,920 8,965 --------- --------- 11,384 10,589 --------- --------- TOTAL $28,215 $28,125 ========= =========
-3- THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of Dollars Six Months Ended December 31 1995 1994 -------- -------- Cash and Cash Equivalents, beginning of year $2,028 $2,373 OPERATING ACTIVITIES Net earnings 1,732 1,542 Depreciation, depletion and amortization 651 603 Deferred income taxes 164 155 Increase in accounts receivable (452) (447) Increase in inventories (190) (109) Change in payables and accrued liabilities (549) 36 Decrease in other liabilities (175) (308) Other (56) (202) -------- -------- 1,125 1,270 -------- -------- INVESTING ACTIVITIES Capital expenditures (992) (866) Proceeds from asset sales and retirements 239 158 Acquisitions (147) (616) Change in investment securities (300) 106 -------- -------- (1,200) (1,218) -------- -------- FINANCING ACTIVITIES Dividends to shareholders (601) (531) Additions to short-term debt 848 260 Additions to long-term debt 64 328 Reduction of long-term debt (419) (312) Proceeds from stock options 32 28 Purchase of treasury shares (175) (9) -------- -------- (251) (236) EFFECT OF EXCHANGE RATE CHANGES ON CASH -------- -------- AND CASH EQUIVALENTS (34) (5) -------- -------- DECREASE IN CASH AND CASH EQUIVALENTS (360) (189) -------- -------- Cash and Cash Equivalents, end of period $1,668 $2,184 ======== ======== SUPPLEMENTAL DISCLOSURE Non-cash transactions: Liabilities assumed in acquisitions 12 449 Reduction in employee stock ownership plan debt, guaranteed by the Company 29 26 Conversion of preferred to common stock 12 16 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 December 31, 1995 were $836 million, an 11% increase over the same quarter of the prior year net earnings of $750 million. Earnings per share for the quarter were $1.18 compared to $1.06 per share in the second quarter of the prior year, also an 11% increase. Worldwide net sales were $9,090 million, representing an increase of 7% over the same quarter of the prior year, on 8% unit volume growth. For the first six months of the fiscal year, worldwide net earnings were $1,732 million or $2.45 per share, an increase of 12% over the same period of the prior year. Worldwide net sales increased 9% to $18,117 million, on comparable unit volume growth. Gross margin was 42.1% for the current quarter versus 43.0% for the same quarter of the prior year. Raw material prices, primarily pulp, continued to affect margin trends. As a comparison, the prior full fiscal year gross margin was 41.5%. Operating margin for the quarter was 14.9%, an improvement over 14.2% for the same quarter of the prior year. The improvement reflects the effect of continued cost control efforts. NORTH AMERICA Net sales and unit volume for the North American region grew 7% over the same quarter of the prior year. Earnings for the region increased 9%. The Laundry & Cleaning business led the region's growth, propelled by a significant unit volume increase. The Paper business also contributed to the unit volume growth, with particular strength in the tissue and towel and diaper categories. Margins continued to be affected by an increase in pulp prices over same quarter prior year. The Beauty Care and Food & Beverage businesses maintained strong unit volume growth, with double-digit growth in the hair care, coffee, juice and personal cleansing categories. The results of the Health Care business were affected by heavy competitive activity in the oral care and gastro-intestinal categories, which has hampered unit volume growth. For the July-December period, the North American region had unit volume and sales growth of 7%. Net earnings increased 8% over the prior year. EUROPE Second quarter sales for the Europe, Middle East and Africa region increased 11% over the same quarter of the prior year. The increase was led by a 7% unit volume growth, complemented by favorable pricing and exchange rates. Central and Eastern Europe achieved volume growth of over 50% with increased expansion into these markets, contributing nearly half of the region's unit volume growth. Net earnings for the region were up 26%, as incremental restructuring savings and on-going cost control benefits were realized. A simplification of trade terms has recently been announced, which could negatively affect growth trends in the short-term. This move to value pricing eliminates inefficient promotion costs by rolling them into lower list prices. When implemented in the United States, this change led to improved results. Europe experienced 9% unit volume growth for the July-December period with a 14% increase in sales. Net earnings increased 23% over the same period of the prior year. -5- ASIA Asia achieved unit volume growth of 16%, led primarily by record shipments in China. Sales for the region increased 6%, with a 7% net earnings increase. Unfavorable exchange rates, lower pricing and product mix limited the sales and earnings growth relative to the increased unit volume. Laundry and Beauty Care continued to lead growth within the region, experiencing double-digit volume increases. For the first six months of the fiscal year, Asia had a 19% increase in unit volume and 9% sales growth. Net earnings increased by 8% over the prior period. LATIN AMERICA Despite continuing economic difficulties in Latin America, the region delivered 8% unit volume growth in the quarter. Exchange effects, combined with higher costs, resulted in a sales and net earnings decline of 4% and 1%, respectively. Significant unit volume growth in Brazil and Venezuela compensated for flat unit volume in Mexico. Excluding Mexico, net earnings for the region increased by 22%. For the July-December period, unit volume for the region grew 7%. Sales and net earnings both declined 4% from the prior year period. 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-Dec. Balance Reserve 6/30/95 Charges 12/31/95 --------- --------- ---------- --------- Separation-related costs $ 965 $ 369 $ 57 $ 312 Disposals of Fixed Assets 1,109 597 84 513 Other 328 194 5 189 -------- -------- ------ -------- $ 2,402 $ 1,160 $ 146 $ 1,014 ======== ======== ====== ======== 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.
-6- 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. Over 80% 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 approximately $25 million after-tax are estimated for the October-December quarter, bringing cumulative restructuring savings near the $500 million after-tax objective established in June 1993. Based on current projections, the Company believes cumulative restructuring savings ultimately may exceed the original estimate by approximately 20%. Restructuring savings are estimated gross savings, which have been offset to some degree by lower pricing and other actions to build the business. PART II. OTHER INFORMATION 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 December 31, 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: February 13, 1996 -7- 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 9 (12) Computation of Ratio of Earnings to Fixed Charges 10 (27) Financial Data Schedule 11 -8- 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 Six Months Ended December 31 December 31 ---------------------- --------------------- NET EARNINGS PER SHARE 1995 1994 1995 1994 - ---------------------- -------- -------- -------- -------- Net earnings $ 836 $ 750 $1,732 $1,542 Deduct preferred stock dividends 26 26 52 51 -------- -------- -------- -------- Net earnings applicable to common stock $ 810 $ 724 $1,680 $1,491 - --------------------------------------- ======== ======== ======== ======== Average number of common shares outstanding 686.5 685.2 686.5 685.2 Per Share - ------------ Net earnings per share $ 1.18 $ 1.06 $ 2.45 $ 2.18 ======== ======== ======== ======== NET EARNINGS PER SHARE ASSUMING FULL DILUTION - ------------------------------- Net earnings $ 836 $ 750 $1,732 $1,542 Deduct differential -- preferred vs. common dividends 10 11 20 23 -------- -------- -------- -------- Net earnings applicable to common stock $ 826 $ 739 $1,712 $1,519 - --------------------------------------- ======== ======== ======== ======== Average number of common shares outstanding 686.5 685.2 686.5 685.2 Add potential effect of: Exercise of options 9.4 7.4 9.4 7.4 Conversion of preferred stock 52.1 53.0 52.1 53.0 -------- -------- -------- -------- Average number of common shares outstanding, assuming full dilution 748.0 745.6 748.0 745.6 ======== ======== ======== ======== Per share assuming full dilution - -------------------------------- Net earnings per share assuming full dilution 1.11 $ .99 2.29 $ 2.04 ======== ======== ======== ========
-9- EX-12 3 EXHIBIT (12) THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES ============================================= COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ------------------------------------------------- Millions of Dollars
Six Months Years Ended June 30 Ended Dec. 31 -------------------------------------------------- --------------- 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 $2,414 $2,663 Fixed charges excluding capitalized interest 435 584 631 569 571 291 268 ------ ------ ------ ------ ------ ------ ------ TOTAL EARNINGS, AS DEFINED $3,087 $3,454 $ 925 $3,876 $4,593 $2,705 $2,931 ====== ====== ====== ====== ====== ====== ====== FIXED CHARGES, AS DEFINED - ------------------------- Interest expense $ 395 $ 510 $ 552 $ 482 $ 488 $ 244 $ 246 1/3 of rental expense 40 74 79 87 83 47 22 ------ ------ ------ ------ ------ ------ ------ 435 584 631 569 571 291 268 Capitalized interest 17 25 25 19 23 5 1 ------ ------ ------ ------ ------ ------ ------ TOTAL FIXED CHARGES, AS DEFINED $ 452 $ 609 $ 656 $ 588 $ 594 $ 296 $ 269 ====== ====== ====== ====== ====== ====== ====== RATIO OF EARNINGS TO FIXED CHARGES 6.8 5.7 1.4 6.6 7.7 9.1 10.9
-10- EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED DECEMBER 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 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 1 1,668 448 3,899 0 3,545 11,443 17,913 6,953 28,215 8,278 4,978 0 1,901 686 8,797 28,215 18,117 18,117 10,476 4,854 0 0 246 2,655 923 1,732 0 0 0 1,732 2.45 2.29
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