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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 March 31, 1994 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 683,912,211 shares of Common Stock outstanding as of April 22,
1994.
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PART I. FINANCIAL INFORMATION
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
Millions of Dollars Except Per Share Amounts
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1994 1993 1994 1993
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET SALES $7,441 $7,350 $22,793 $23,068
Cost of products sold 4,208 4,348 12,830 13,263
Marketing, administrative, and
other operating expenses 2,310 2,235 6,932 7,101
Provision for restructuring -- -- -- 303
------ ------ ------- -------
OPERATING INCOME 923 767 3,031 2,401
Interest expense 119 130 367 402
Other income/(expense), net (78)* 110 121* 287
------ ------ ------- -------
EARNINGS BEFORE INCOME TAXES & PRIOR
YEARS' EFFECT OF ACCOUNTING CHANGES 726 747 2,785 2,286
Income taxes 244 245 980 798
------ ------ ------- -------
NET EARNINGS BEFORE PRIOR YEARS' EFFECT
OF ACCOUNTING CHANGES 482 502 1,805 1,488
Prior years' effect of accounting changes,
net of tax -- -- -- (925)
------ ------ ------- -------
NET EARNINGS $ 482 $ 502 $ 1,805 $ 563
====== ====== ======= =======
PER COMMON SHARE:
Net earnings before prior years' effect
of accounting changes $ .66 $ .70 $ 2.53 $ 2.08
Prior years' effect of accounting changes,
net of tax -- -- -- (1.36)
------ ------ ------- ------
Net earnings $ .66 $ .70 $ 2.53 $ .72
Net earnings assuming full dilution $ .64 $ .66 $ 2.38 $ .71
Dividends per Common Share $ .31 $ .275 $ .93 $ .825
AVERAGE COMMON SHARES OUTSTANDING (in millions) 682.7 680.0
<FN>
* Includes $157 million ($102 million after-tax) charge for the close-out
of two interest rate swaps.
NOTE: 1993 has been restated to include prior years' effect of two
accounting changes amounting to $(925) and the then current
year's effects of $(14) for the third quarter and $(49) for
the nine months.
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
Millions of Dollars
<CAPTION>
March 31 June 30
ASSETS 1994 1993
-------- -------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,424 $ 2,322
Accounts receivable, less allowance for
doubtful accounts 3,238 3,111
Inventories
Raw materials and supplies 1,087 1,154
Work in process 332 196
Finished products 1,536 1,553
Deferred income taxes 634 740
Prepaid expenses and other current assets 1,261 899
------- -------
10,512 9,975
------- -------
PROPERTY, PLANT, AND EQUIPMENT 15,517 14,877
LESS ACCUMULATED DEPRECIATION 5,811 5,392
------- -------
9,706 9,485
------- -------
GOODWILL AND OTHER INTANGIBLE ASSETS 3,782 3,762
OTHER ASSETS 1,718 1,713
------- -------
TOTAL $25,718 $24,935
======= =======
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accruals $ 6,274 $ 6,475
Debt due within one year 1,812 1,812
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8,086 8,287
------- -------
LONG-TERM DEBT 5,139 5,174
OTHER LIABILITIES 3,733 3,850
DEFERRED INCOME TAXES 179 183
SHAREHOLDERS' EQUITY
Preferred stock 1,949 1,969
Common stock-shares outstanding
-Mar. 31 683,813,511 684 682
-June 30 681,754,226
Additional paid-in capital 541 477
Currency translation adjustments (139) (99)
Reserve for ESOP debt retirement (1,787) (1,836)
Retained earnings 7,333 6,248
------- -------
8,581 7,441
------- -------
TOTAL $25,718 $24,935
======= =======
<FN>
June 30, 1993 amounts were derived from audited Financial Statements.
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of Dollars
<CAPTION>
Nine Months Ended March 31
1994 1993
<S> <C> <C>
Cash and Cash Equivalents, beginning of year $2,322 $1,776
------ ------
OPERATING ACTIVITIES
Net earnings before prior years' effect of
accounting changes 1,805 1,488
Provision for Restructuring -- 303
Depreciation, depletion and amortization 842 819
Deferred income taxes 115 (65)
Change in accounts receivable (150) 54
Change in inventories (71) 40
Decrease in payables and accrued liabilities (186) (524)
Change in Other Liabilities (116) 55
Other 81 8
------ ------
2,320 2,178
------ ------
INVESTING ACTIVITIES
Capital expenditures (1,189) (1,292)
Proceeds from asset sales and retirements 52 723
Acquisitions (228) (106)
Marketable Securities (130) --
------ ------
(1,495) (675)
------ ------
FINANCING ACTIVITIES
Dividends to shareholders (711) (634)
Additions to short-term debt 160 376
Additions to long-term debt 419 719
Reduction of long-term debt (583) (912)
Proceeds from Stock Options 37 62
Purchase of treasury shares (9) (49)
------ ------
(687) (438)
EFFECT OF EXCHANGE RATES ON CASH AND ------ ------
CASH EQUIVALENTS (36) (99)
------ ------
INCREASE IN CASH AND CASH EQUIVALENTS 102 966
------ ------
Cash and Cash Equivalents, end of period $2,424 $2,742
====== ======
SUPPLEMENTAL DISCLOSURE
Non-cash transactions
Liabilities assumed in acquisitions $ 34 $ 61
Reduction in employee stock ownership
plan debt, guaranteed by the Company $ 49 $ 46
Conversion of preferred to common stock 20 10
<FN>
Note: 1993 has been restated for retroactive adoption of accounting
change related to postretirement benefits and income tax
accounting.
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Net earnings for the January-March quarter were $482 million, including a
onetime charge of $102 million for the interest rate swaps announced in
April. Excluding this charge, earnings increased 16% over earnings from
the same period last year. Earnings per share excluding this onetime item
were $.81, also up 16% from last year. The earnings improvement was
largely due to lower costs and a 6% increase in worldwide unit volume.
The $102 million after-tax charge was to close out the written option
portion of two leveraged interest rate swaps, thus eliminating future
market volatility.
A comprehensive review of all financial derivative contracts has been
performed, and all outstanding derivative contracts are within our overall
operating and financing policies. Based on this review, certain other
derivative instruments are now being carried at market value for accounting
purposes. The effect of this reclassification was not material to the
results of the quarter.
Net sales for January-March were up 1% from the same period last year.
Sales were adversely affected by exchange rates and would have been up 3%
at constant rates.
For the July-March period, net earnings were $1,907 million excluding the
$102 million charge for the interest rate swaps. This represents a 13%
increase from $1,688 million in the year ago period, excluding the prior
years' effect of accounting changes and a restructuring provision.
Comparable earnings per share were $2.68 per share, up 13% from $2.37 per
share a year ago. Net sales for the first nine months of the fiscal year
decreased 1% from the same period in the previous year. Excluding the
impact of exchange rates, net sales would have been up 3% from last year.
This was a strong quarter for the Company. Pre-tax operating profit was up
20% versus January-March a year ago. This improvement reflects the benefit
of cost reduction programs, along with solid unit volume gains in the U.S.
and continued double-digit volume growth in International operations.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Computation of Earnings Per Share
(12) Computation of Ratio of Earnings to Fixed Charges
(b) No reports on Form 8-K have been filed during the quarter ended March
31, 1994.
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
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E. H. Eaton
Vice President and Comptroller
(Principal Accounting Officer)
Date: May 12, 1994
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EXHIBIT INDEX
Exhibit No. Page No.
(11) Computation of Earnings per Share 8
(12) Computation of Ratio of Earnings to Fixed Charges 9
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EXHIBIT (11)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
Computation of Earnings Per Share
---------------------------------------------
Dollars and Share Amounts in Millions
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
------------------ -----------------
<S> <C> <C> <C> <C>
NET EARNINGS PER SHARE 1994 1993 1994 1993
- - ---------------------- ------ ------ ------ ------
Net Earnings $ 482 $ 502 $1,805 $ 563
Deduct preferred stock dividends 26 24 76 73
------ ------ ------ ------
Net Earnings Applicable to Common Stock 456 478 1,729 490
- - --------------------------------------- ====== ====== ====== ======
Average number of common shares outstanding 682.7 680.0 682.7 680.0
Per Share
- - ---------
Net earnings before prior years' effect
of accounting changes $ .66 $ .70 $ 2.53 $ 2.08
Prior years' effect of accounting changes -- -- -- (1.36)
------ ------ ------ ------
Net Earnings per share $ .66 $ .70 $ 2.53 $ .72
====== ====== ====== ======
NET EARNINGS PER SHARE ASSUMING
FULL DILUTION
- - -------------------------------
Net Earnings $ 482 $ 502 $1,805 $ 563
Deduct differential -- preferred
vs. common dividends 13 14 39 43
------ ------ ------ ------
Net Earnings/(Loss) Applicable to Common Stock $ 469 $ 488 $1,766 $ 520
- - ---------------------------------------------- ====== ====== ====== ======
Average number of common shares outstanding 682.7 680.0 682.7 680.0
Add potential effect of:
Exercise of options 6.1 7.1 6.1 7.1
Conversion of preferred stock 54.1 54.8 54.1 54.8
------ ------ ------ ------
Average number of common shares
outstanding, assuming full dilution 742.9 741.9 742.9 741.9
====== ====== ====== ======
Per Share Assuming full dilution
- - -----------------------------------------
Net earnings before prior years' effect
of accounting changes $ .64 $ .66 $ 2.38 $ 1.95
Prior years' effect of accounting changes -- -- -- (1.24)
------ ------ ------ ------
Net Earnings $ .64 $ .66 $ 2.38 $ .71
====== ====== ====== ======
<FN>
NOTE: 1993 has been restated to reflect the retroactive adoption of accounting
changes related to postretirement benefits and income tax accounting.
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EXHIBIT (12)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
Millions of Dollars
<CAPTION>
Nine Months
Years Ended June 30 Ended Mar. 31
-------------------------------------- ---------------
1989 1990 1991 1992 1993 1993 1994
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED
- - -------------------
Earnings from operations before income taxes
after eliminating undistributed earnings
of 20% to 50% owned affiliates $1,929 $2,401 $2,652 $2,870 $ 294 $2,272 $2,761
Fixed charges excluding capitalized interest 425 480 435 584 631 462 430
------ ------ ------ ------ ------ ------ ------
TOTAL EARNINGS, AS DEFINED $2,354 $2,881 $3,087 $3,454 $ 925 $2,734 $3,191
====== ====== ====== ====== ====== ====== ======
FIXED CHARGES, AS DEFINED
- - -------------------------
Interest expense $ 391 $ 442 $ 395 $ 510 $ 552 $ 402 $ 367
1/3 of rental expense 34 38 40 74 79 60 63
------ ------ ------ ------ ------ ------ ------
425 480 435 584 631 462 430
Capitalized interest 7 3 17 25 25 18 15
------ ------ ------ ------ ------ ------ ------
TOTAL FIXED CHARGES, AS DEFINED $ 432 $ 483 $ 452 $ 609 $ 656 $ 480 $ 445
====== ====== ====== ====== ====== ====== ======
RATIO OF EARNINGS TO FIXED CHARGES 5.4 6.0 6.8 5.7 1.4 5.7 7.2
<FN>
NOTE: The nine month period ended March 31, 1993 has been restated to
reflect the retroactive adoption of accounting change related to
postretirement benefits.
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