-----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, OhOYxggA5nd/6Ix+OT2XEacoFf+EazS01lzXAhOvfJ97agcGBxgumK6mABqiAaMy TvqZHJ1V/J9ZVeSDv1quvQ== 0000080424-97-000006.txt : 19970221 0000080424-97-000006.hdr.sgml : 19970221 ACCESSION NUMBER: 0000080424-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970211 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: 97523688 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, 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 679,464,805 shares of Common Stock outstanding as of January 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 and six months ended December 31, 1996 and 1995, the Consolidated Balance Sheets as of December 31, 1996 and June 30, 1996, and the Consolidated Statements of Cash Flows for the six months ended December 31, 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 STATEMENT OF EARNINGS
Millions of Dollars Except Per Share Amounts Three Months Ended Six Months Ended December 31 December 31 1996 1995 1996 1995 ------- ------- -------- -------- NET SALES $9,142 $9,090 $18,045 $18,117 Cost of products sold 5,068 5,265 10,070 10,476 Marketing, research, and administrative expenses 2,553 2,473 4,907 4,854 -------- -------- --------- --------- OPERATING INCOME 1,521 1,352 3,068 2,787 Interest expense 134 123 246 246 Other income, net 45 52 101 114 -------- -------- --------- --------- EARNINGS BEFORE INCOME TAXES 1,432 1,281 2,923 2,655 Income taxes 488 445 1,000 923 -------- -------- --------- --------- NET EARNINGS $ 944 $ 836 1,923 $ 1,732 ======== ======== ========= ========= PER COMMON SHARE: Net earnings $ 1.35 $ 1.18 $ 2.74 $ 2.45 Net earnings assuming full dilution $ 1.26 $ 1.11 $ 2.56 $ 2.29 Dividends $ .45 $ .40 $ .90 $ .80 AVERAGE COMMON SHARES OUTSTANDING 682.2 686.5
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
Amounts in Millions December 31 June 30 1996 1996 ASSETS --------- --------- CURRENT ASSETS Cash and cash equivalents $ 2,189 $ 2,074 Investment securities 532 446 Accounts receivable 2,928 2,841 Inventories Materials and supplies 1,257 1,254 Work in process 279 210 Finished products 1,691 1,666 Deferred income taxes 764 598 Prepaid expenses and other current assets 1,481 1,718 --------- --------- TOTAL CURRENT ASSETS 11,121 10,807 --------- --------- PROPERTY, PLANT, AND EQUIPMENT 18,641 18,112 LESS ACCUMULATED DEPRECIATION 7,371 6,994 --------- --------- TOTAL PROPERTY, PLANT, AND EQUIPMENT 11,270 11,118 --------- --------- GOODWILL AND OTHER INTANGIBLE ASSETS 4,203 4,281 OTHER NON-CURRENT ASSETS 1,526 1,524 --------- --------- TOTAL ASSETS $28,120 $27,730 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accruals $ 6,846 $ 6,709 Debt due within one year 1,118 1,116 --------- --------- TOTAL CURRENT LIABILITIES 7,964 7,825 --------- --------- LONG-TERM DEBT 4,283 4,670 DEFERRED INCOME TAXES 698 638 OTHER NON-CURRENT LIABILITIES 2,864 2,875 SHAREHOLDERS' EQUITY Preferred stock 1,874 1,886 Common stock-shares outstanding-Dec. 31 679.5 680 686 -June 30 685.6 Additional paid-in capital 968 862 Currency translation adjustments (436) (418) Reserve for ESOP debt retirement (1,645) (1,676) Retained earnings 10,870 10,382 --------- --------- TOTAL SHAREHOLDERS' EQUITY 12,311 11,722 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $28,120 $27,730 ========= =========
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Amounts in Millions Six Months Ended December 31 1996 1995 -------- -------- CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $2,074 $2,028 OPERATING ACTIVITIES Net earnings 1,923 1,732 Depreciation, depletion and amortization 667 651 Deferred income taxes (89) 164 Increase in accounts receivable (83) (421) Increase in inventories (102) (190) Change in accounts payable and accruals 222 (549) Change in other operating assets and liabilities 74 (531) Other 10 269 -------- -------- TOTAL OPERATING ACTIVITIES 2,622 1,125 -------- -------- INVESTING ACTIVITIES Capital expenditures (847) (992) Proceeds from asset sales and retirements 268 239 Acquisitions (121) (147) Change in investment securities (82) (300) -------- -------- TOTAL INVESTING ACTIVITIES (782) (1,200) -------- -------- FINANCING ACTIVITIES Dividends to shareholders (667) (601) Additions to short-term debt 23 848 Additions to long-term debt 8 64 Reduction of long-term debt (350) (419) Proceeds from stock options 50 32 Purchase of treasury shares (776) (175) -------- -------- TOTAL FINANCING ACTIVITIES (1,712) (251) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (13) (34) -------- -------- CHANGE IN CASH AND CASH EQUIVALENTS 115 (360) -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $2,189 $1,668 ======== ========
Item 2. Management Discussion and Analysis Results of Operations - --------------------- Worldwide net earnings for the second quarter of fiscal year 1997 were $944 million, a 13% increase over the same quarter of the prior year. Earnings per share for the quarter were $1.35 per share, a 14% increase over the same quarter of last year. The difference between the net earnings and earnings per share increases was primarily due to the company's stock repurchase program. Net sales for the quarter were $9.14 billion, up 1% compared to prior year second quarter sales of $9.09 billion. Worldwide unit volume grew 2% from the second quarter a year ago. The difference between the sales and unit volume trends was largely due to weaker currencies in Europe and Asia, primarily Germany and Japan. For the first six months of the fiscal year, worldwide net earnings were $1.92 billion, an 11% increase over the prior year. Earnings per share were $2.74 per share, a 12% increase over the prior year. Worldwide unit volume for the first six months was up 2% over the prior year, while net sales were stable, primarily reflecting unfavorable exchange rates. The company's results were impacted by competitive pressures in Japan and difficult economic conditions in Latin America. In addition, the continued roll-out of the Efficient Consumer Response program (ECR) within Europe and Asia has impacted results. Specifically, as ECR is rolled out in new markets, trade inventories are reduced, which negatively impacts short-term growth rate trends. 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 44.6% for the current quarter, compared to 42.1% in the second quarter of the prior year and 41.2% for the full fiscal year ended June 30, 1996. The key driver of the gross margin improvement has been lower commodity prices, primarily pulp which declined in the latter part of the prior year, and cost reduction programs throughout the company. Operating margin was 16.6% compared to 14.9% in the prior second quarter and 13.6% for the prior fiscal year, reflecting the higher gross margins, partially offset by increased costs related to marketing, research and administrative activities. North America - ------------- Net sales for the North America region increased 3% compared with the same quarter a year ago, on a 5% unit volume increase. The net sales and unit volume progress was achieved despite capacity constraints in certain key categories, particularly tissue and towel. Net earnings for the region increased 15%, benefiting from lower commodity prices and cost reductions. The region's volume growth was led by the laundry and cleaning business, specifically, strong growth in the laundry and fabric softener categories. Food and beverage also posted strong volume growth on the strength of the snacks category, which is benefiting from increased capacity, and the coffee category. The paper business also increased total unit volume, despite continued capacity constraints in the tissue and towel categories, due to growth generated from feminine hygiene products. The paper business led the region's earnings growth, primarily due to lower pulp prices, which declined in the latter part of the prior year. Beauty Care increased volumes, led by strong growth in the hair care and deodorants categories. Excluding the impacts of the prior year divestiture of the Company's share of a joint venture, unit volume in the health care business increased modestly due to increased volume in oral care. Importantly, despite the modest unit volume growth, health care's earnings showed significant improvement due to increased licensing activity. For the first six months of the fiscal year, the North American region had net sales and unit volume growth of 2% and 3%, respectively. Net earnings increased 12% over the same period in the prior year. Europe, Middle East and Africa - ------------------------------ Net sales in Europe, Middle East and Africa for the second quarter were stable, as unfavorable exchange rates and lower pricing offset a 4% increase in volume. Net earnings for the quarter grew 24% compared to the same period a year ago, reflecting the margin improvement impact of lower costs, led by pulp. Central and Eastern Europe led the region's volume growth, increasing shipments by nearly 40%, with strong gains in most core segments. Middle East and Africa also had double-digit volume growth. Western Europe's unit volume declined slightly. For the July-December period, the region's net sales declined 1%. Unit volume and net earnings increased 4% and 17% respectively, for the same period. Asia - ---- Second quarter operations in Asia continue to be impacted by the competitive environment in Japan, the impact of the ECR roll-out and exchange rate effects. Sales for the region declined 8% compared to the same quarter of the prior year on a unit volume decline of 7%. Importantly, China's unit volume growth improved over the first quarter. A 5% decline in the region's sales attributable to unfavorable exchange rates was offset by more favorable pricing. Net earnings in Asia for the second quarter increased 12% on improved margins. Net sales and unit volume for the July-December period declined 10% and 8%, respectively. Net earnings increased 2% over the same period in the prior year. Latin America - ------------- Net sales in Latin America increased 3% in the second quarter, despite a 3% decline in volume, due to pricing designed to address inflation and devaluation, particularly in Mexico. The unit volume decline was caused by the continued economic difficulties and slow economic recovery in certain key markets. Net earnings for the region increased 35% on improved margins, reflecting both pricing and cost reductions from standardization and simplification efforts. For the July-December period, net sales and net earnings were up 1% and 24%, respectively. Unit volume was down 5% compared to the same period in the prior year. 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 December 31, 1996 was approximately $490 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. 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 The Company filed Current Reports on Form 8-K containing information pursuant to Item 9 entitled "Sales of Equity Securities Pursuant to Regulations," dated November 18, 1996, December 3, 1996, December 16, 1996, December 20, 1996, January 7, 1997, January 17, 1997 and January 28, 1997 and an Amended Current Report on Form 8-K containing information pursuant to Item 9 entitled "Sales of Equity Securities Pursuant to Regulations," dated December 3, 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 E. H. EATON - -------------------------------------- E. H. Eaton Vice President and Comptroller (Principal Accounting Officer) Date: February 11, 1997 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 (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 Six Months Ended December 31 December 31 ------------------ ---------------- 1996 1995 1996 1995 -------- -------- -------- -------- NET EARNINGS PER SHARE - ---------------------- Net earnings $ 944 $ 836 $1,923 $1,732 Deduct preferred stock dividends 26 26 52 52 -------- -------- -------- -------- Net earnings applicable to common stock $ 918 $ 810 $1,871 $1,680 - --------------------------------------- ======== ======== ======== ======== Average number of common shares outstanding 682.2 686.5 682.2 686.5 Per Share - --------- Net earnings per share $ 1.35 $ 1.18 $ 2.74 $ 2.45 ======== ======== ======== ======== NET EARNINGS PER SHARE ASSUMING FULL DILUTION - ------------------------------- Net earnings $ 944 $ 836 $1,923 $1,732 Deduct differential -- preferred vs. common dividends 8 10 16 20 -------- -------- -------- -------- Net earnings applicable to common stock $ 936 $ 826 $1,907 $1,712 - --------------------------------------- ======== ======== ======== ======== Average number of common shares outstanding 682.2 686.5 682.2 686.5 Add potential effect of: Exercise of options 10.9 9.4 10.9 9.4 Conversion of preferred stock 51.2 52.1 51.2 52.1 -------- -------- -------- -------- Average number of common shares outstanding, assuming full dilution 744.3 748.0 744.3 748.0 ======== ======== ======== ======== Per share assuming full dilution - -------------------------------- Net earnings per share assuming full dilution 1.26 1.11 2.56 2.29 ======== ======== ======== ========
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 -------------------------------------------------- ----------------- 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 $2,663 $2,937 Fixed charges excluding capitalized interest 584 631 569 571 576 268 294 ------ ------ ------ ------ ------ ------ ------ TOTAL EARNINGS, AS DEFINED $3,454 $ 925 $3,876 $4,593 $5,271 $2,931 $3,231 ====== ====== ====== ====== ====== ====== ====== FIXED CHARGES, AS DEFINED - -------------------------------------------- Interest expense (including capitalized interest) $ 535 $ 577 $ 501 $ 511 $ 493 $ 247 $ 246 1/3 of rental expense 74 79 87 83 92 22 48 ------ ------ ------ ------ ------ ------ ------ TOTAL FIXED CHARGES, AS DEFINED $ 609 $ 656 $ 588 $ 594 $ 585 $ 269 $ 294 ====== ====== ====== ====== ====== ====== ====== RATIO OF EARNINGS TO FIXED CHARGES 5.7 1.4 6.6 7.7 9.0 10.9 11.0
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, 1996 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-30-1997 JUL-1-1996 DEC-31-1996 1 2,189 532 2,928 0 3,227 11,121 18,641 7,371 28,120 7,964 4,283 0 1,874 680 9,757 28,120 18,045 18,045 10,070 4,907 0 0 246 2,923 1,000 1,923 0 0 0 1,923 2.74 1.56
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