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, 1998 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 1,326,834,609 shares of Common Stock outstanding as of October 23,
1998.
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, 1998 and 1997, the
Consolidated Balance Sheets as of September 30, 1998 and June 30, 1998, and the
Consolidated Statements of Cash Flows for the three months ended September 30,
1998 and 1997 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
periods 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
<TABLE>
<CAPTION>
Amounts in Millions Except Per Share Amounts
Three Months Ended
September 30
1998 1997
------- --------
<S> <C> <C>
NET SALES $ 9,510 $ 9,355
Cost of Products sold 5,182 5,208
Marketing, research, and administrative expenses 2,454 2,408
------- -------
OPERATING INCOME 1,874 1,739
Interest Expense 157 121
Other Income, net 50 51
------- -------
EARNINGS BEFORE INCOME TAXES 1,767 1,669
Income Taxes 600 582
------- -------
NET EARNINGS $ 1,167 $ 1,087
======= =======
PER COMMON SHARE:
Basic net earnings $ 0.86 $ 0.79
Diluted net earnings $ 0.80 $ 0.73
Dividends $ 0.285 $ 0.253
AVERAGE COMMON SHARES OUTSTANDING 1,332.4 1,348.3
</TABLE>
-2-
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Amounts in Millions
September 30 June 30
1998 1998
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,540 $ 1,549
Investment securities 778 857
Accounts receivable 2,950 2,781
Inventories
Materials and supplies 1,210 1,225
Work in process 373 343
Finished products 1,934 1,716
Deferred income taxes 733 595
Prepaid expenses and other current assets 1,798 1,511
------------ ----------
TOTAL CURRENT ASSETS 12,316 10,577
PROPERTY, PLANT AND EQUIPMENT 20,661 20,152
LESS ACCUMULATED DEPRECIATION 8,317 7,972
------------ ----------
TOTAL PROPERTY, PLANT AND EQUIPMENT 12,344 12,180
GOODWILL AND OTHER INTANGIBLE ASSETS 7,038 7,011
OTHER NON-CURRENT ASSETS 1,171 1,198
------------ ----------
TOTAL ASSETS $ 32,869 $ 30,966
============ ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 7,194 $ 6,969
Debt due within one year 3,277 2,281
------------ ----------
TOTAL CURRENT LIABILITIES 10,471 9,250
LONG-TERM DEBT 6,354 5,765
DEFERRED INCOME TAXES 655 428
OTHER NON-CURRENT LIABILITIES 3,315 3,287
------------ ----------
TOTAL LIABILITIES 20,795 18,730
SHAREHOLDERS' EQUITY
Preferred stock 1,810 1,821
Common stock-shares outstanding - Sep 30 1,325.9 1,326
June 30 1,337.4 1,337
Additional paid-in capital 980 907
Reserve for ESOP debt retirement (1,611) (1,616)
Accumulated Comprehensive Income (1,270) (1,357)
Retained earnings 10,839 11,144
------------ ----------
TOTAL SHAREHOLDERS' EQUITY 12,074 12,236
------------ ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 32,869 $ 30,966
============ ==========
</TABLE>
-3-
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Millions of Dollars Three Months Ended
September 30
1998 1997
------- -------
<S> <C> <C>
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 1,549 $ 2,350
OPERATING ACTIVITIES
Net earnings 1,167 1,087
Depreciation and amortization 399 388
Deferred income taxes 81 (1)
Change in:
Accounts receivable (140) (98)
Inventories (189) (246)
Accounts Payables and Accruals 138 179
Other Operating Assets & Liabilities (270) (140)
Other 5 3
------- -------
TOTAL OPERATING ACTIVITIES 1,191 1,172
------- -------
INVESTING ACTIVITIES
Capital expenditures (440) (543)
Proceeds from asset sales and retirements 137 128
Acquisitions 0 (1,956)
Change in investment securities 70 163
------- -------
TOTAL INVESTING ACTIVITIES (233) (2,208)
------- -------
FINANCING ACTIVITIES
Dividends to shareholders (406) (367)
Change in short-term debt 841 1,731
Additions to long-term debt 765 2
Reduction of long-term debt (105) (52)
Proceeds from stock options 28 21
Purchase of treasury shares (1,078) (557)
------- -------
TOTAL FINANCING ACTIVITIES 45 778
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (12) (33)
------- -------
CHANGE IN CASH AND CASH EQUIVALENTS 991 (291)
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,540 $ 2,059
======= =======
</TABLE>
-4-
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amounts in Millions
1. Summary of Significant Accounting Policies - Accounting Changes - During
the quarter ended September 30, 1998, the Company adopted SOP 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use". This statement revises the accounting for softwre
development costs and requires the capitalization of certain costs which
the Company has historically expensed. The adoption of this statement did
not have a material impact on the Company's financial position, results of
operations or cash flows.
2. Comprehensive Income - Total comprehensive income is comprised primarily of
net earnings, net currency translation gains and losses, and net unrealized
gains and losses on securities. Total comprehensive income for the three
months ended September 30, 1998 and 1997 was $1,254 and $915, respectively.
3. Segment Information
<TABLE>
<CAPTION>
For the three Europe,
months ended North Middle East Latin
September 30 America and Africa Asia America Corporate Total
------- ----------- ---- ------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Net Sales
1998 4,752 3,121 810 674 153 9,510
1997 4,682 2,998 876 596 203 9,355
Earnings Before Income Taxes
1998 1,181 527 140 95 (176) 1,767
1997 1,058 477 127 80 (73) 1,669
Net Earnings
1998 747 347 95 74 (96) 1,167
1997 671 320 86 61 (51) 1,087
</TABLE>
-5-
Item 2. Management Discussion and Analysis
RESULTS OF OPERATIONS
- ---------------------
Basic net earnings for the July-September quarter of fiscal year 1999 were $ .86
per share, a nine percent increase over the same quarter of the prior year.
Worldwide net earnings for the quarter were $1.17 billion, a seven percent
increase. The difference between the earnings per share and the net earnings
increases was primarily due to the Company's share repurchase program.
Worldwide net sales for the quarter were $9.5 billion, a two percent increase
over the same quarter of the prior year. Weaker currencies, primarily in Asia
and Latin America, reduced sales by three percent. Unit volume was flat, with
the difference in sales and volume growth caused primarily by price increases
and favorable product mix.
Gross margin was 45.5 percent for the current quarter compared to 44.3 percent
in the same quarter of the prior year and 43.3 percent for the full fiscal year
ended June 30, 1998. Gross margin was positively impacted this quarter by
improved pricing, product mix, and lower manufacturing expenses.
Operating margin was 19.7 percent for the quarter compared to 18.6 percent in
the same quarter a year ago and 16.3 percent for the prior fiscal year, largely
reflecting the improvement in gross margin.
NORTH AMERICA
- -------------
Net sales in North America were up one percent versus the same quarter in the
prior year on a one percent unit volume decline. Sales growth was driven by
improved pricing in laundry and cleaning and paper products. The region achieved
an 11 percent net earnings increase due primarily to improved pricing in
laundry and paper products.
The decline in volume was due to the prior year divestiture of Duncan Hines and
increased competition in the hair care and oral care markets. Importantly, the
laundry & cleaning business benefited from strength in fabric care behind the
launch of Febreze, and the paper business achieved gains behind growth in
diapers. In addition, excluding the impact of the divestiture of Duncan Hines,
food & beverage unit volume grew behind a broad recovery in coffee driven by
lower commodity costs.
-6-
EUROPE, MIDDLE EAST, AND AFRICA
- -------------------------------
Net sales for Europe, Middle East, and Africa increased four percent on a two
percent decline in unit volume. Sales outpaced volume behind increased pricing,
primarily in laundry and paper products. The region's net earnings grew eight
percent, primarily behind pricing-driven improvements in gross margins and cost
reduction efforts.
The region's unit volume was negatively impacted by Central and Eastern Europe,
as a result of the economic crisis in Russia. Volumes were also soft in laundry
& cleaning, due to increased competitive initiatives. Food & beverage achieved
strong volume gains behind the strength of Pringles in Western Europe and the
launch of Sunny Delight in the United Kingdom. The paper products business was
up slightly behind continued growth in Bounty and Baby Wipes.
ASIA
- ----
Net sales in Asia fell seven percent versus the same quarter of the prior year,
on two percent unit volume growth, due to the effects of unfavorable exchange
rates. Net earnings increased 11 percent versus the same quarter last year, as
improved pricing, cost reduction and the favorable settlement of a patent
litigation dispute offset the continuing impact of economic difficulties in the
region.
The region grew volume behind the prior year acquisition of the Ssangyong Paper
Company in Korea and improvement in the base business in Japan, which advanced
despite the country's economic difficulties, and increased market share behind
product initiatives, primarily in beauty care and laundry and cleaning. Volume
continues to be ngatively impacted by the recession and lower consumption in
much of the region.
LATIN AMERICA
- -------------
Latin America net sales were up 13 percent, on 15 percent unit volume growth, as
increased pricing largely offset the effects of unfavorable exchange rates.
Earnings for the region were up 21 percent, reflecting effective balance sheet
management in the face of the peso devaluation in Mexico
Unit volume growth for the quarter was led by Mexico, which benefited from the
prior year acquisition of the Loreto y Pena paper business and growth in its
base business. Importantly, the region's laundry and cleaning business
strengthened behind accelerated product innovation.
-7-
FINANCIAL CONDITION
- -------------------
Total debt increased $1.6 billion since June 30, 1998. The incremental debt was
used to finance working capital, ongoing operations and the previously announced
accelerated share repurchase program.
In September, 1998, the Company announced plans for Organization 2005, a
realignment of the organizational structure, work processes, and culture to
accelerate growth and innovation. Details regarding the nature, timing, and
implications related to the design change are currently being determined.
Financial impacts are not yet known.
-8-
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
At the Company's Special Meeting of Shareholders held on October 13, 1998, the
following action was taken:
A proposal by the Board of Directors to amend the Company's Regulations to allow
the location of the Annual Meeting of Shareholders to be held at a location
other than the principal office of the Company. The shareholders cast
1,100,073,509 votes in favor of this proposal and 65,335,705 votes against.
There were 9,757,738 abstentions.
At the Company's 1998 Annual Meeting of Shareholders held on October 13, 1998,
the following actions were taken:
The following Directors were elected for terms of office expiring in 2001:
VOTES FOR VOTES WITHHELD ABSTENTIONS* BROKER
NON-VOTES*
------------- -------------- ----------- ---------
Joseph T. Gorman 1,156,054,167 13,521,723 N/A N/A
Lynn M. Martin 1,154,893,570 14,682,320 N/A N/A
John E. Pepper 1,155,631,102 13,944,788 N/A N/A
Ralph Snyderman 1,156,286,884 13,289,006 N/A N/A
Robert D. Storey 1,152,276,365 17,299,525 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 five 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, 1999, was approved by the shareholders. The shareholders cast
1,159,979,878 votes in favor of this proposal and 6,045,514 votes against. There
were 3,550,498 abstentions.
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 364,480,347
votes in favor of the resolution and 636,041,628 against. There were 11,654,229
abstentions and 157,399,686 broker non-votes.
A shareholder resolution proposed by the Sisters of the Holy Names of
Washington, in conjunction with ten co-sponsoring 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 85,092,309 votes in favor of
the resolution and 904,058,153 against. There were 23,025,342 absentions and
157,400,086 broker non-votes.
-9-
A shareholder resolution proposed by In Defense of Animals was defeated by the
shareholders. The proposal requested the Company stop immediately all animal
tests not explicitly required by law for over-the-counter cosmetics and
non-medical household products. The Board opposed the resolution. The
shareholders cast 38,817,612 votes in favor of the resolution and 927,020,632
against. There were 46,337,959 absentions and 157,399,686 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
(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 no Current Reports on Form 8-K during the quarter ended
September 30, 1998 and through the date of this report.
-10-
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
D. R. WALKER
- --------------------------------------
D. R. Walker
Vice President and Comptroller
(Principal Accounting Officer)
Date: November 5, 1998
-11-
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 13
(11) Computation of Earnings per Share 20
(12) Computation of Ratio of Earnings to Fixed Charges 21
(27) Financial Data Schedule 22
-12-
EXHIBIT (3-2)
The Procter & Gamble Company
Regulations
-----------
ARTICLE I
Seal
SECTION 1. Form. The seal of the Company shall have upon it the name and
words, "The Procter & Gamble Company. Incorporated 1905," arranged in a circle
with the trademark of the Company, to wit, a crescent and thirteen stars within
the space thus enclosed.
ARTICLE II
Shareholders
SECTION 1. Place of Meeting. Meetings of shareholders shall be held in
Cincinnati, Hamilton County, Ohio, but the shareholders or the Board of
Directors shall have authority to provide for the holding of meetings of
shareholders elsewhere within or without the State of Ohio, except the annual
meeting, or a meeting to elect Directors.
SECTION 2. Annual Meeting. The annual meeting of the shareholders shall be
held on the second Tuesday of October in each year, at which time there shall be
elected in accordance with the laws of the State of Ohio and ARTICLE III of
these Regulations, a Board of Directors. Reports of officers, committees and
Directors shall be received and considered at such meeting.
SECTION 3. Special Meetings. Special meetings of the shareholders may be
called and held as provided by law.
SECTION 4. Notice of Meetings. A notice, as required by law, of each
regular or special meeting of shareholders shall be given in writing by the
President or a Vice-President, or the Secretary, or an Assistant Secretary, not
less than ten (10) days before the meeting.
SECTION 5. Quorum. The shareholders present in person or by proxy at any
meeting shall constitute a quorum unless a larger proportion is required to take
the action stated in the notice of the meeting, in which case, to constitute a
quorum, there shall be present in person or by proxy the holders of record of
shares entitling them to exercise the voting power required by the Articles of
the Company to take the action stated.
SECTION 6. Organization. The Chairman of the Board shall preside at all
meetings of the shareholders, but in his absence the Board of Directors may
appoint any officer to act as presiding officer at the meeting. The Secretary of
the Company shall act as Secretary of all meetings of the shareholders, but in
his absence the presiding officer may appoint any person to act as Secretary of
the meeting.
SECTION 7. Order of Business. At all shareholders' meetings the order of
business shall be as follows:
1. Reading minutes of previous meeting and acting thereon.
2. Report of Directors or committees.
3. Reports of officers.
4. Election of Directors.
5. New or miscellaneous business.
ARTICLE III
Board of Directors
SECTION 1. Number. The Board of Directors shall be composed of seventeen
(17) persons unless this number is changed by: (1) the shareholders by the
affirmative vote of the holders of shares of the Company entitling them to
exercise at least eighty percent (80%) of the voting power of the Company voting
as a single class at a meeting of shareholders called for the purpose of
electing Directors or (2) the affirmative vote of at least two-thirds (2/3) of
the whole authorized number of Directors. The Directors may increase the number
to not more than nineteen (19) persons and may decrease the number to not less
than fifteen (15) persons. Any Director's office created by the Directors by
reason of an increase in their number may be filled by action of a majority of
the Directors in office.
SECTION 2. Election and Term. Except as otherwise provided by law, the
Articles of the Company or these Regulations, Directors shall be elected at the
annual meeting of shareholders to serve until the end of the term to which they
are elected and until their successors are elected and qualify. The number of
Directors of the Company shall be fixed from time to time in accordance with
these Regulations and may be increased or decreased as herein provided. The
Board of Directors shall be divided into three classes, as nearly equal in
number as the then total number of Directors constituting the whole Board
permits, it not being required that each class have the same number of members
if such is mathematically impossible, with the term of office of one class
expiring each year. At the annual meeting of shareholders in 1985, Directors of
the first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, Directors of the second class shall be elected to
hold office for a term expiring at the second succeeding annual meeting and
Directors of the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Thereafter, at each annual meeting of
shareholders the successors to the class of Directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting after such election. In the event of an increase in
the number of Directors of the Company, the additional Director or Directors
shall be so classified that all classes of Directors shall be as nearly equal as
may be possible. In the event of any decrease in the number of Directors of the
Company, all classes of Directors shall be decreased as nearly as may be
possible.
SECTION 3. Removal, Vacancies. Directors may be removed from office, as
provided by law, by the vote of the holders of at least eighty percent (80%) of
the voting power of the Company, voting as a single class, entitling them to
elect Directors in place of those to be removed. Vacancies in the Board of
Directors for any unexpired term shall be filled by the remaining Directors,
though less than a majority of the whole authorized number of Directors, by the
vote of a majority of their number.
SECTION 4. Meetings. Unless otherwise determined by the Board of
Directors, the Board shall meet once a month, except the month of August, at
such times and places, either within or without the State of Ohio, as may be
determined by the Board. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board, the President, any other
officer who is a member of the Board or by the majority of the Board.
SECTION 5. Notice of Meetings. The Board shall decide what notice, if any,
shall be given and the length of time prior to the meeting that such notice
shall be given of all meetings. Any meeting at which all of the Directors are
present shall be a valid meeting whether notice thereof was given or not, and
any business may be transacted at such a meeting.
SECTION 6. Quorum. A majority of the Board of Directors shall constitute a
quorum for the transaction of business, and if at any meeting of the Board there
be less than a quorum present, a majority of those present may adjourn the
meeting from time to time.
SECTION 7. Compensation of Directors and Members of the Executive
Committee. The Board of Directors is authorized to fix, from time to time, their
own compensation for attendance at the meetings of the Board, and the
compensation of members of the Executive Committee for attendance at meetings of
such Committee, which may include expenses of attendance when meetings are not
held at the place of residence of any attending Director or member.
SECTION 8. Indemnification of Directors and Officers. The Company shall
indemnify each present and future Director and officer, his heirs, executors and
administrators against all costs, expenses (including attorneys' fees),
judgments, and liabilities, reasonably incurred by or imposed on him in
connection with or arising out of any claim or any action, suit or proceeding,
civil or criminal, in which he may be or become involved by reason of his being
or having been a Director or officer of the Company, or of any of its subsidiary
companies, or of any other company in which he served or serves as a Director or
officer at the request of the Company, irrespective of whether or not he
continues to be a Director or an officer at the time he incurs or becomes
subjected to such costs, expenses (including attorneys' fees), judgments, and
liabilities; but such indemnification shall not be operative with respect to any
matter as to which in any such action, suit or proceeding he shall have been
finally adjudged to have been derelict in the performance of his duties as such
Directors or officer. Such indemnification shall apply when the adjudication in
such action, suit or proceeding is otherwise than on the merits and also shall
apply when the adjudication in such action, suit or proceeding is otherwise than
on the merits and also shall apply when a settlement or compromise is effected,
but in such cases indemnification shall be made only if the Board of Directors
of the Company, acting at a meeting at which a majority of the quorum of the
Board is unaffected by self interest, shall find that such Director or officer
has not been derelict in the performance of his duty as such Director or officer
with respect to the matter involved, and shall adopt a resolution to that effect
and in cases of settlement or compromise shall also approve the same; in cases
of settlement or compromise such indemnification shall not include reimbursement
of any amounts which by the terms of the settlement or compromise are paid or
payable to the Company itself by the Director or officer (or in the case of a
Director or officer of a subsidiary or another company in which such Director or
officer is serving at the request of the Company any amounts paid or payable by
such Director or officer to such company). If the Board of Directors as herein
provided refuses or fails to act or is unable to act due to the self interest of
some or all of its members, the Company at its expense shall obtain the opinion
of counsel and indemnification shall be had only if it is the opinion of such
counsel that the Director or officer has not been derelict in the performance of
his duties as such Director or officer with respect to the matter involved.
The right of indemnification provided for in this section shall not be
exclusive of other rights to which any Director or officer may be entitled as a
matter of law and such rights, if any, shall also inure to the benefit of the
heirs, executors or administrators of any such Director or officer.
ARTICLE IV
Executive Committee
SECTION 1. Executive Committee. The Board of Directors may, by resolution,
designate not less than three (3) of its number to constitute an Executive
Committee, but may repeal said resolution and dispense with said Committee at
any time.
SECTION 2. Powers of Executive Committee. The Executive Committee shall
have charge of the management of the business and affairs of the Company in the
interim between meetings of the Directors, and generally shall have all of the
authority of the Board in the transaction of such business of the Company as in
the judgment of the Committee may require action before the next regular meeting
of the Board.
SECTION 3. Limitation of Powers of Executive Committee. The Board of
Directors shall have authority to limit or qualify the powers of the Executive
Committee at any time, and may rescind any action of the Executive Committee to
the extent that no rights of third persons shall have intervened.
SECTION 4. Record of Executive Committee. The Executive Committee shall
keep a record of its proceedings and make a report of its acts and transactions
to the Board of Directors, all of which shall form part of the records of the
Company.
ARTICLE V
Officers
SECTION 1. Number. The officers of the Company shall be a Chairman of the
Board, a President, one or more Vice-Presidents, a Secretary, one or more
Assistant Secretarys, a Treasurer, one or more Assistant Treasurers, and a
Comptroller. Any two or more of the offices may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required to be executed, acknowledged or verified
by two or more officers.
SECTION 2. Other Officers. The Board of Directors is authorized in its
discretion to provide for such other officers and agents as it shall deem
necessary from time to time and may dispense with any offices and agencies at
any time except those required by law.
SECTION 3. Election, Term and Removal. At the first meeting of the Board
of Directors after their election annually, the Board shall select all officers
of the Company. All officers of the Company shall hold their offices during the
pleasure of the Board, or until their successor or successors are elected and
qualified, and the Board may remove or suspend any officer at any time, without
notice, by the affirmative vote of a majority of the entire Board.
SECTION 4. Vacancies and Absence. If any office shall become vacant by
reason of the death, resignation, disqualification or removal of the incumbent
thereof, or other cause the Board of Directors may elect a successor to hold
office for the unexpired term in respect to which such vacancy occurred or was
created. In case of the absence of any officer of the Company or for any reason
that the Board of Directors may determine as sufficient, the said Board may
delegate the powers and duties of such officer to any other officer, or to any
Director, except where otherwise provided by these Regulations or by statute,
for the time being.
ARTICLE VI
Duties of Officers
SECTION 1. Chairman of the Board. The Chairman of the Board of Directors
shall preside at all meetings of the Board, appoint all special or other
committees (unless otherwise ordered by the Board), shall confer with and advise
all other officers of the Company, and shall perform such other duties as may be
delegated to him by the Board or the officer designated as Chief Executive.
SECTION 2. President. The President shall perform such duties and have
such responsibilities as may be delegated or assigned to him by the Board or the
officer designated as Chief Executive.
SECTION 3. Chief Executive. The Board of Directors shall designate either
the Chairman of the Board or the President to be the Chief Executive of the
Company. The officer so designated shall be responsible for the supervision,
general control and management of all the Company's business and affairs,
subject only to the authority of the Board of Directors. He shall make periodic
reports to the Board of Directors, making such recommendations as he thinks
proper, and shall bring before the Board of Directors such information as may be
required relating to the Company's business and affairs. The Board of Directors
may designate one of the officers of the Company who is a Director to perform
the duties and have the powers of the officer who is the Chief Executive in his
absence, and during his absence the officer so designated shall be authorized to
exercise all of his responsibilities.
SECTION 4. Other Officers. All other officers shall perform such duties
and have such responsibilities as may be delegated or assigned to them by the
Board of Directors or the officer designated as Chief Executive.
SECTION 5. Bonds of Officers. The Board of Directors or the Executive
Committee shall determine which officers of the Company shall give bond, and the
amount thereof, the expense to be paid by the Company.
ARTICLE VII
Certificates for Shares of Stock
SECTION 1. Mutilated and Lost Certificates. If any certificate for shares
of the Company become worn, defaced or mutilated, the Board of Directors upon
production or surrender thereof may order the same cancelled, and a new
certificate issued in lieu thereof. If any certificate for shares be lost or
destroyed, a new certificate may be issued upon such terms and under such
regulations as may be adopted by the Board of Directors.
ARTICLE VIII
General Welfare
SECTION 1. Policy. It is declared to be the policy of the Company to
recognize that its interests and those of its employees are inseparable, and are
best developed and maintained by the adoption of such measures as will assure
the employees of the Company of this fact. To this end the Board of Directors is
authorized, in its discretion, to inaugurate and maintain a profit-sharing or
other similar plan, an adequate pension and benefit plan, and to grant to the
employees such voice in the conduct of the business as may seem to the Board to
be right and proper.
SECTION 2. Stock Ownership by Employees. The Board of Directors is
authorized to devise and carry into effect such plans as it may deem advisable,
to assist the employees to become shareholders of the Company by the purchase of
its shares.
ARTICLE IX
Amendments
SECTION 1. Amendments. These Regulations or any of them, may be altered,
amended, added to or repealed as provided by law, except that ARTICLE III,
Sections 1, 2, 3 and 8 and this ARTICLE IX may only be altered, amended, added
to or repealed at a meeting held for such purpose (1) prior to the date of the
annual meeting in 1990, by the affirmative vote of the holders of at least
eighty percent (80%) of the outstanding shares of capital stock of the Company
entitled to vote thereon, considered for purposes of this Section 1 as one
class; (2) from the date of the annual meeting in 1990 to and including the date
of the annual meeting in 2000, by the affirmative vote of the holders of at
least a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon, considered for purposes of this Section 1 as one
class, provided that during such period said vote may be increased at any time
to the affirmative vote of at least eighty percent (80%) of the outstanding
shares of capital stock of the Company by a resolution adopted by at least
two-thirds (2/3) of the members of the whole Board of Directors; and (3) after
the date of the annual meeting in 2000, by the affirmative vote of the holders
of at least a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon, considered for the purposes of this Section 1 as one
class.
ARTICLE X
Assent of Shareholders
SECTION 1. Effect. Any person becoming a shareholder in this Company shall
be deemed to assent to these Regulations, and any alterations, amendments, or
additions thereto, lawfully adopted, and shall designate to the Secretary or
appointed Transfer Agents of the Company, the address to which he desires that
the notices herein required to be given may be sent, and all notices mailed to
such address with postage prepaid, shall be considered as duly given at the date
of mailing, provided, however, that in the event that any shareholder shall have
failed to so designate an address to which notices shall be sent, then said
notices shall be sent to any address where the Secretary believes he may be
reached, otherwise to "General Delivery, Cincinnati, Ohio." The mailing of any
notice to "General Delivery, Cincinnati, Ohio," shall be conclusive that the
Secretary knows of no address where he believes said shareholder may be reached.
EXHIBIT (11)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
================================================
Computation of Earnings Per Share
--------------------------------------------
Amounts in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
Three Months Ended
September 30
1998 1997
-------- --------
<S> <C> <C>
BASIC NET EARNINGS PER SHARE
- ----------------------------
Net earnings $ 1,167 $ 1,087
Deduct preferred stock dividends 25 26
-------- --------
Net earnings applicable to common stock $ 1,142 $ 1,061
======== ========
Average number of common shares outstanding 1,332.4 1,348.3
======== ========
Basic net earnings per share $ 0.86 $ 0.79
======== ========
DILUTED NET EARNINGS PER SHARE
- ------------------------------
Net earnings $ 1,167 $ 1,087
Deduct differential - preferred
vs. common dividends 5 7
-------- --------
Net earnings applicable to common stock $ 1,162 $ 1,080
======== ========
Average number of common shares outstanding 1,332.4 1,348.3
Add potential effect of:
Exercise of options 24.0 25.0
Conversion of preferred stock 98.1 100.6
-------- --------
Average number of common shares
outstanding, assuming dilution 1,454.5 1,473.9
======== ========
Diluted earnings per share $ 0.80 $ 0.73
======== ========
</TABLE>
EXHIBIT (12)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
Millions of Dollars
<TABLE>
<CAPTION>
Three Months Ended
Years Ended June 30 September 30
-----------------------------------------------------------------------
1994 1995 1996 1997 1998 1997 1998
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED
- -------------------
Earnings from operations before income taxes
after eliminating undistributed earnings
of equity method investees $3,307 $4,022 $4,695 $5,274 $5,704 $1,821 $1,676
Fixed charges, excluding capitalized interest 569 571 576 534 639 146 181
------ ------ ------ ------ ------ ------ ------
TOTAL EARNINGS, AS DEFINED $3,876 $4,593 $5,271 $5,808 $6,343 $1,967 $1,857
====== ====== ====== ====== ====== ====== ======
FIXED CHARGES, AS DEFINED
- -------------------------
Interest expense including capitalized interest $ 501 $ 511 $ 493 $ 457 $ 548 $ 121 $ 157
1/3 of rental expense 87 83 92 77 91 25 24
------ ------ ------ ------ ------ ------ ------
TOTAL FIXED CHARGES AS DEFINED $ 588 $ 594 $ 585 $ 534 $ 639 $ 146 $ 181
====== ====== ====== ====== ====== ====== ======
RATIO OF EARNINGS TO FIXED CHARGES 6.6 7.7 9.0 10.9 9.9 13.5 10.3
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000080424
<NAME> THE PROCTER & GAMBLE COMPANY
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 2,540
<SECURITIES> 778
<RECEIVABLES> 2,950
<ALLOWANCES> 0
<INVENTORY> 3,517
<CURRENT-ASSETS> 12,316
<PP&E> 20,661
<DEPRECIATION> 8,317
<TOTAL-ASSETS> 32,869
<CURRENT-LIABILITIES> 10,471
<BONDS> 6,354
0
1,810
<COMMON> 1,326
<OTHER-SE> 8,938
<TOTAL-LIABILITY-AND-EQUITY> 32,869
<SALES> 9,510
<TOTAL-REVENUES> 9,510
<CGS> 5,182
<TOTAL-COSTS> 2,454
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157
<INCOME-PRETAX> 1,767
<INCOME-TAX> 600
<INCOME-CONTINUING> 1,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,167
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0.80
</TABLE>
