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, 1993
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 683,303,526 shares of Common Stock outstanding as of January 21,
1993.
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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 Six Months Ended
December 31 December 31
1993 1992 1993 1992
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET SALES $7,788 $7,839 $15,352 $15,718
Cost of products sold 4,394 4,493 8,622 8,915
Marketing, administrative, and
other expenses 2,371 2,432 4,622 4,866
Provision for restructuring -- -- -- 303
------ ------ ------ ------
OPERATING INCOME 1,023 914 2,108 1,634
Interest and other income 105 99 199 177
Interest expense 123 131 248 272
------ ------ ------ ------
EARNINGS BEFORE INCOME TAXES
& PRIOR YEARS' EFFECT OF
ACCOUNTING CHANGES 1,005 882 2,059 1,539
Income Taxes 352 306 736 553
------ ------ ------ ------
NET EARNINGS BEFORE PRIOR YEARS'
EFFECT OF ACCOUNTING CHANGES 653 576 1,323 986
Prior years' effect of accounting
changes, net of tax -- -- -- (925)
------ ------ ------ ------
NET EARNINGS $ 653 $ 576 $ 1,323 $ 61
====== ====== ====== ======
PER COMMON SHARE:
Net earnings before prior years'
effect of accounting changes $ .92 $ .81 $ 1.87 $ 1.38
Prior years' effect of accounting
changes, net of tax -- -- -- (1.36)
------ ------ ------ ------
Net Earnings $ .92 $ .81 $ 1.87 $ .02
Net Earnings assuming full
dilution $ .85 $ .76 $ 1.74 $ .05
Dividends per Common Share $ .31 $ .275 $ .62 $ .55
AVERAGE COMMON SHARES OUTSTANDING
(in millions) 682.3 679.6
<FN>
NOTE: 1992 has been restated to include prior years' effects of
postretirement benefits and income tax accounting changes amounting
to $(925) and current year's accounting change effects of $(14) for
the second quarter and $(35) for the six months. The 100% juice
divestiture reserve of $303, (or $200 after-tax and $.29 per
share), established in September 1992 and included in cost of
products sold, is now identified separately as a provision for
restructuring.
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
Millions of Dollars
<CAPTION>
December 31 June 30
ASSETS 1993 1993
<S> <C> <C>
CURRENT ASSETS ---------- ----------
Cash and cash equivalents $ 2,412 $ 2,322
Accounts receivable, less allowance for
doubtful accounts 3,335 3,111
Inventories
Raw materials and supplies 1,118 1,154
Work in process 213 196
Finished products 1,583 1,553
Deferred income taxes 642 740
Prepaid expenses and other current assets 1,301 899
---------- ----------
10,604 9,975
---------- ----------
PROPERTY, PLANT, AND EQUIPMENT 15,089 14,877
LESS ACCUMULATED DEPRECIATION 5,600 5,392
---------- ----------
9,489 9,485
---------- ----------
GOODWILL AND OTHER INTANGIBLE ASSETS 3,731 3,762
OTHER ASSETS 1,719 1,713
---------- ----------
TOTAL $ 25,543 $ 24,935
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accruals $ 6,237 $ 6,475
Debt due within one year 1,851 1,812
---------- ----------
8,088 8,287
---------- ----------
LONG-TERM DEBT 5,293 5,174
OTHER LIABILITIES 3,743 3,850
DEFERRED INCOME TAXES 152 183
SHAREHOLDERS' EQUITY
Preferred stock 1,959 1,969
Common stock-shares outstanding
- Dec. 31 682,996,927 683 682
- June 30 681,754,226
Additional paid-in capital 517 477
Currency translation adjustments (172) (99)
Reserve for ESOP debt retirement (1,812) (1,836)
Retained earnings 7,092 6,248
---------- ----------
8,267 7,441
---------- ----------
TOTAL $ 25,543 $ 24,935
========== ==========
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of Dollars
<CAPTION> Six Months Ended December 31
1993 1992
<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 1,323 986
Provision for Restructuring -- 303
Depreciation, depletion and amortization 557 562
Deferred income taxes 68 (104)
Increase in accounts receivable (293) (135)
Increase in inventories (50) (45)
Decrease in payables and accrued liabilities (129) (831)
Change in Other Liabilities (84) 23
Other (72) (51)
------- -------
1,320 708
------- -------
INVESTING ACTIVITIES
Capital expenditures (760) (731)
Proceeds from asset sales and retirements 38 636
Acquisitions (170) (11)
Marketable Securities (120) --
------- -------
(1,012) (106)
------- -------
FINANCING ACTIVITIES
Dividends to shareholders (474) (422)
Additions to short-term debt 357 733
Additions to long-term debt 413 368
Reduction of long-term debt (500) (800)
Proceeds from Stock Options 22 50
Purchase of treasury shares (6) (42)
------- -------
(188) (113)
EFFECT OF EXCHANGE RATES ON CASH AND ------- -------
CASH EQUIVALENTS (30) (70)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 90 419
------- -------
Cash and Cash Equivalents, end of period $2,412 $2,195
======= =======
SUPPLEMENTAL DISCLOSURE
Non-cash transactions
Liabilities assumed in acquisitions $ 11 $ 48
Reduction in employee stock ownership
plan debt, guaranteed by the Company $ 24 $ 22
Conversion of preferred to common stock 11 7
<FN>
Note: 1992 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 October-December quarter increased 13% from the same
quarter in the previous year. Earnings per share were up 14% from the
previous year.
Unit volume growth and lower costs were the major factors contributing to the
increase in earnings. Unit volume was up 6%, excluding the discontinued pulp
and juice operations. Less favorable exchange rates limited earnings growth.
On a constant exchange rate basis, net earnings would have been up 17% from a
year ago.
Worldwide net sales for October-December decreased 1% from the same quarter
last year. The decline reflects adverse foreign exchange rates. Excluding
this effect, sales would have been up 3%.
For July-December, net earnings and earnings per share were up 12% from the
same six months in the previous year, excluding the prior years' effect of
accounting changes and a restructuring provision. Net sales were down 2%.
Excluding the impact of exchange rates, earnings would have increased 17% and
sales would have been up 3% from a year ago.
The U.S. consumer businesses continued to deliver strong unit volume gains
during October-December, including record shipments in December.
International achieved double-digit volume growth, despite difficult economic
conditions in many major markets. Volume growth was particularly strong in
the Far East, Latin America and Eastern Europe. Both the U.S. and
International businesses showed good earnings growth, due in part to the
restructuring program which is just beginning to contribute to earnings
progress.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) The Procter & Gamble 1993 Non-Employee Directors' Stock Plan
(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
December 31, 1993.
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 8, 1994
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EXHIBIT INDEX
Exhibit No. Page No.
(10) The Procter & Gamble 1993 Non-Employee
Directors' Stock Plan 7
(11) Computation of Earnings per Share 10
(12) Computation of Ratio of Earnings to Fixed
Charges 11
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EXHIBIT (10)
THE PROCTER & GAMBLE 1993 NON-EMPLOYEE DIRECTORS'
STOCK PLAN
ARTICLE A -- Purpose.
The purpose of The Procter & Gamble 1993 Non-Employee Directors' Stock
Plan (hereinafter referred to as the "Plan") is to strengthen the alignment
of interests between non-employee directors (hereinafter referred to as
"Participants") and the shareholders of The Procter & Gamble Company
(hereinafter referred to as the "Company") through the increased ownership of
shares of the Company's Common Stock. This will be accomplished by
allowing Participants to elect voluntarily to convert a portion or all of
their fees for services as a director into Common Stock.
ARTICLE B -- Administration.
1. The Plan shall be administered by the Compensation Committee
(hereinafter referred to as the "Committee") of the Board of Directors of the
Company (hereinafter referred to as the "Board"), or such other committee as
may be designated by the Board. The Committee shall consist of not less than
three (3) members of the Board who are neither officers nor employees, or
members of the Board who are "disinterested persons" as defined in Rule 16b-3
under the Securities Exchange Act of 1934, as amended (hereinafter referred
to as the "1934 Act"), or any successor rule or definition adopted by the
Securities and Exchange Commission, to be appointed by the Board from time to
time and to serve at the discretion of the Board.
2. It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments
or otherwise as it deems necessary or appropriate. A decision by a majority
of the Committee shall govern all actions of the Committee.
3. Subject to the express provisions of this Plan, the Committee shall
have authority to allow Participants the right to elect to receive fees for
services as a director in either cash or an equivalent amount of whole shares
of Common Stock of the Company, or partly in cash and partly in whole shares
of the Common Stock of the Company, subject to such conditions or
restrictions, if any, as the Committee may determine. The Committee also has
the authority to make all other determinations it deems necessary or
advisable for administering this Plan.
4. The Committee may establish from time to time such regulations,
provisions, and procedures within the terms of this Plan as, in its opinion,
may be advisable in the administration of this Plan.
5. The Committee may designate the Secretary of the Company or other
employees of the Company to assist the Committee in the administration of
this Plan and may grant authority to such persons to execute documents on
behalf of the Committee.
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ARTICLE C -- Participation.
Participation in the Plan shall be limited to all non-employee Directors
of the Company.
ARTICLE D -- Limitation on Number of Shares for the Plan.
1. The total number of shares of Common Stock of the Company that may
be awarded each year shall not exceed 25,000 shares.
2. Shares transferred or reserved for purposes of the Plan will be
subject to appropriate adjustment in the event of future stock splits, stock
dividends or other changes in capitalization; following any such change, the
term "Common Stock" or "shares of Common Stock" of the Company, as used in
the Plan, shall be deemed to refer to such class of shares or other
securities as may be applicable.
ARTICLE E -- Shares Subject to Use Under the Plan.
Shares of Common Stock to be awarded under the terms of this Plan shall
be treasury shares.
ARTICLE F -- Transfer of Shares.
1. The Committee may transfer Common Stock of the Company under the
Plan subject to such conditions or restrictions, if any, as the Committee may
determine. The conditions and restrictions may vary from time to time and
may be set forth in agreements between the Company and the Participant or in
the awards of stock to them, all as the Committee determines.
2. The shares awarded shall be valued at the average of the high and
low quotations for Common Stock of the Company on the New York Stock Exchange
on the day of the transfer to a Participant. All shares awarded shall be
full shares, rounded up to the nearest whole share.
ARTICLE G -- Additional Provisions.
1. The Board may, at any time, repeal this Plan or may amend it from
time to time except that no such amendment may amend this paragraph, increase
the annual aggregate number of shares subject to this Plan, or alter the
persons eligible to participate in this Plan. The Participants and the
Company shall be bound by any such amendments as of their effective dates,
but if any outstanding awards are affected, notice thereof shall be given to
the holders of such awards and such amendments shall not be applicable to
such holder without his or her written consent. If this Plan is repealed in
its entirety, all theretofore awarded shares subject to conditions or
restrictions transferred pursuant to this Plan shall continue to be subject
to such conditions or restrictions.
2. Every recipient of shares pursuant to this Plan shall be bound by
the terms and provisions of this Plan and of the transfer of shares agreement
referable thereto, and the acceptance of any transfer of shares pursuant to
this Plan shall constitute a binding agreement between the recipient and the
Company.
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ARTICLE H -- Duration of Plan.
This Plan shall become effective as of January 1, 1994 subject to
ratification before December 31, 1994 by the affirmative vote of the holders
of a majority of the Common Stock of the Company present, or represented, and
entitled to vote at a meeting duly held. Any shares awarded prior to
approval of the Plan by the shareholders must be restricted until such
approval is obtained and shall be subject to immediate forfeiture in the
event such approval is not obtained in which case the Participants would
receive the fees they would have received for their services as Directors
since January 1, 1994 plus interest computed as of the end of each month at
the prime rate then in effect at Morgan Guaranty Trust Company of New York.
This Plan will terminate on December 31, 2003 unless a different termination
date is fixed by the shareholders or by action of the Board but no such
termination shall affect the prior rights under this Plan of the Company or
of anyone to whom shares have been transferred prior to such termination.
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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 Six Months Ended
December 31 December 31
------------------ ----------------
<S> <C> <C> <C> <C>
NET EARNINGS PER SHARE 1993 1992 1993 1992
- ------------------------------------ ------ ----- ------ -----
Net Earnings $ 653 $ 576 $1,323 $ 61
Deduct preferred stock dividends 26 24 50 48
----- ----- ----- -----
Net Earnings Applicable to Common Stock 627 552 1,273 13
- --------------------------------------- ===== ===== ===== =====
Average number of common shares
outstanding 682.3 679.6 682.3 679.6
Per Share
- ---------
Net earnings before prior years'
effect of accounting changes $ .92 $ .81 $ 1.87 $ 1.38
Prior years' effect of accounting
changes -- -- -- (1.36)
----- ----- ------ ------
Net Earnings per share $ .92 $ .81 $ 1.87 $ .02
===== ===== ====== ======
NET EARNINGS PER SHARE ASSUMING
FULL DILUTION
- -------------------------------
Net Earnings $ 653 $ 576 $1,323 $ 61
Deduct differential -- preferred
vs. common dividends 13 14 26 29
----- ----- ------ ------
Net Earnings/(Loss) Applicable to
Common Stock $ 640 $ 562 $1,297 $ 32
- --------------------------------- ===== ===== ====== ======
Average number of common shares
outstanding 682.3 679.6 682.3 679.6
Add potential effect of:
Exercise of options 7.2 8.0 7.2 8.0
Conversion of preferred stock 54.2 54.9 54.2 54.9
----- ----- ----- -----
Average number of common shares
outstanding, assuming full dilution 743.7 742.5 743.7 742.5
===== ===== ===== =====
Per Share Assuming full dilution
- -----------------------------------------
Net earnings before prior years' effect
of accounting changes $ .85 $ .76 $ 1.74 $ 1.29
Prior years' effect of accounting
changes -- -- -- (1.24)
----- ----- ------ -----
Net Earnings $ .85 $ .76 $ 1.74 $ .05
===== ===== ====== ======
<FN>
NOTE: 1992 has been restated to reflect the retroactive adoption of accounting
changes related to postretirement benefits and income tax accounting.
</TABLE>
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EXHIBIT (12)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
Millions of Dollars
<CAPTION>
Six Months
Years Ended June 30 Ended Dec. 31
----------------------------------- -------------
1989 1990 1991 1992 1993 1992 1993
------ ------ ------ ------ ------ ------ ------
<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 $1,545 $2,043
Fixed charges excluding capitalized interest 425 480 435 584 631 312 290
------ ------ ------ ------ ------ ------ ------
TOTAL EARNINGS, AS DEFINED $2,354 $2,881 $3,087 $3,454 $ 925 $1,857 $2,333
====== ====== ====== ====== ====== ====== ======
FIXED CHARGES, AS DEFINED
- -------------------------
Interest expense $ 391 $ 442 $ 395 $ 510 $ 552 $ 272 $ 248
1/3 of rental expense 34 38 40 74 79 40 42
------ ------ ------ ------ ------ ------ ------
425 480 435 584 631 312 290
Capitalized interest 7 3 17 25 25 11 10
------ ------ ------ ------ ------ ------ ------
TOTAL FIXED CHARGES, AS DEFINED $ 432 $ 483 $ 452 $ 609 $ 656 $ 323 $ 300
====== ====== ====== ====== ====== ====== ======
RATIO OF EARNINGS TO FIXED CHARGES 5.4 6.0 6.8 5.7 1.4 5.7 7.8
<FN>
NOTE: The six month period ended December 31, 1992 has been restated to reflect
adoption of accounting change related to postretirement benefits.
</TABLE>
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