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EXHIBIT
FOR IMMEDIATE RELEASE
P&G MEETS FIRST QUARTER EXPECTATIONS
CINCINNATI, Oct. 31, 2000 - The Procter & Gamble Company reported net
earnings of $1.16 billion or $0.82 per share for the quarter ended September 30,
2000. Results include an $85 million after-tax charge related to the
Organization 2005 restructuring program. Core net earnings, which exclude the
Organization 2005 charges, were $1.24 billion for the quarter. Core net earnings
per share were equal to the prior year at $0.88. Sales grew one percent,
consistent with unit volume, reaching $9.97 billion. Excluding currency effects,
primarily from the euro, sales grew four percent.
Earnings results were influenced by significant commodity-related cost
increases and negative exchange impacts, which more than offset the benefits of
pricing and a focus on growth of premium-priced products.
"We've delivered on expectations this quarter and are focused on
continuing to improve our results and meeting expectations as the year unfolds,"
said P&G Chief Executive, A.G. Lafley. "We have a clear game plan to do this:
lead innovation, build big brands and leverage global scale to create leadership
market shares and total shareholder return."
FABRIC AND HOME CARE: Unit volume was flat, as gains in North America laundry
ahead of the price increase, were offset by softness in Western Europe. Net
sales declined three percent to $3.08 billion, primarily reflecting a three
percent unfavorable foreign exchange impact, driven by Western European
currencies. Net earnings were $498 million, up three percent. Earnings progress
was due to lower costs in developing markets, minor brand divestitures and lower
taxes. Comparisons were impacted by strong results in the prior year, when
significant initiative activity, including sell-in of Swiffer(R) and Dryel(R),
fueled eight percent sales and 10 percent earnings growth. The business
continued to invest in new initiatives in the current quarter, with recent
launches of Downy Wrinkle Releaser(R) and Tide Tablets(R) in North America.
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PAPER: Unit volume was up one percent behind improved performance in diapers,
notably in Latin America, and growth in Western Europe and China. Net sales also
increased one percent to $3.04 billion, as pricing mitigated a four percent
unfavorable exchange impact. Volume and sales growth reflected the successful
introductions of new products in baby care and feminine care. Net earnings
declined four percent to $329 million as progress in marketing, research and
administrative spending was offset by unfavorable exchange rates. Significant
commodity-related cost increases were countered by pricing actions, primarily in
tissues/towel and feminine care.
BEAUTY CARE: Unit volume was flat versus year-ago as strong growth in hair care
was offset by significant competitive activity in personal cleansing and
deodorants in North America, and by Western Europe business softness. Net sales
grew two percent to $1.87 billion, including a three percent unfavorable
exchange impact. Sales were ahead of volume due to pricing and the continued
focus on high-performance, premium-priced initiatives. Net earnings were $267
million, a 19 percent increase, reflecting the benefit of improved pricing,
lower taxes and comparison to a weak year-ago base period.
HEALTH CARE: Double-digit volume and sales growth in health care was led by
continued outstanding progress on Iams(R) pet health and nutrition business
which was acquired in September 1999. Unit volume climbed 34 percent versus the
prior year and sales grew 24 percent to $990 million, including a two percent
negative impact from weaker currencies. Net earnings were $81 million, an 11
percent decline, as growth from acquisitions was outweighed by last year's high
level of licensing and divestiture activity. Base business net earnings grew by
double-digits, excluding the impacts of acquisitions, divestitures and licensing
activities.
FOOD AND BEVERAGE: Unit volume and sales declined 11 percent and 13 percent
respectively, reflecting softness in both the snacks and beverage businesses.
Pringles(R) volume was down in part due to trade inventory builds in advance of
an announced June price increase. The beverage business declined as a result of
a heavy competitive climate in juice. Net sales were $1.05 billion, including a
two percent negative impact from currency rate changes. Net earnings decreased
29 percent to $75 million, due to lower volume.
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SECOND QUARTER: The company confirmed its prior guidance of core earnings per
share growth in the mid-single-digits, or a range of $0.91 to $0.93 per share.
October-December sales, excluding the impact of foreign exchange, are expected
to be up slightly with volume down in the low-single-digits. The second quarter
results will benefit from the company's ongoing minor brand divestiture program,
including the divestiture of Clearasil. These results are against a particularly
strong year-ago base period, where volume increased six percent and core
earnings grew 11 percent, driven by a strong, new brand launch program.
This news release contains forward-looking statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995. In addition to
the risks and uncertainties noted in this news release, there are certain
factors that could cause results to differ materially from those anticipated by
some of the statements made. These include achievement of the business unit
volume and income growth projections, the achievement of the company's cost
containment goals, and the timely divestiture of assets within the company's
ongoing minor brand divestiture program, as well as factors listed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the company's most recently filed Forms 10-K and 8-Ks.
Procter & Gamble markets approximately 300 brands to nearly five
billion consumers in over 140 countries. These brands include Tide(R), Ariel(R),
Crest(R), Pantene Pro-V(R), Always(R), Whisper(R), Pringles(R), Pampers(R),
Olay(R), Iams(R) and Vicks(R). Based in Cincinnati, Ohio, USA, P&G has
on-the-ground operations in over 70 countries and employs more than 110,000
people worldwide.
# # #
Worldwide Website: http://www.pg.com
P&G CONTACTS
Wendy J. Jacques (513) 983-3889
Linda L. Ulrey (513) 983-8975
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P&G will web cast its conference call on Tuesday, October 31, 2000, at
10:30 a.m. to review its first quarter 2000/01 results. The call will last
approximately one hour. You may receive the web cast by going to our web site
at:
http://www.pg.com/investor
Check the Corporate Information section of the investor site to view the web
cast.
We suggest you check in at least ten minutes in advance of the start
time to complete the brief registration process and ensure you are set up to
receive the web cast.
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Millions of Dollars (except per share amounts) WITHOUT O-2005 RESTRUCTURING CHARGES
------------------------------------
2000/01 1999/00 % CHANGE 2000/01 1999/00 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $9,969 $9,919 1% $9,969 $9,919 1%
Cost of products sold 5,307 5,206 2% 5,244 5,101 3%
------ ------ ------ ------
GROSS MARGIN 4,662 4,713 (1%) 4,725 4,818 (2%)
Marketing, research and administrative exp 2,883 2,866 1% 2,841 2,811 1%
------ ------ ------ ------
OPERATING INCOME 1,779 1,847 (4%) 1,884 2,007 (6%)
Interest Expense 179 147 179 147
Other income/(expense), net 103 45 105 45
------ ------ ------ ------
EARNINGS BEFORE INCOME TAXES 1,703 1,745 (2%) 1,810 1,905 (5%)
Income taxes 548 598 570 638
------ ------ ------ ------
NET EARNINGS $1,155 $1,147 1% $1,240 $1,267 (2%)
====== ====== ====== ======
PER COMMON SHARE:
Basic net earnings $ 0.86 $ 0.85 1% $ 0.93 $ 0.94 (1%)
Diluted net earnings $ 0.82 $ 0.80 3% $ 0.88 $ 0.88 0%
Average diluted shares outstanding - diluted 1,410.8 1,435.2 1,410.8 1,435.2
</TABLE>
<TABLE>
<CAPTION>
% %
---------------- Basis Point ------------------ Basis Point
of Net Sales Change of Net Sales Change
---------------- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Gross Margin 46.8% 47.5% (70) 47.4% 48.6% (120)
Operating Margin 17.8% 18.6% (80) 18.9% 20.2% (130)
</TABLE>
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
CONSOLIDATED EARNINGS INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30
-----------------------------------------------------------------------------
% Change % Change % Change
Versus Earnings Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fabric and Home Care $3,075 -3% $736 -5% $498 3%
Paper 3,039 1% 513 -11% 329 -4%
Beauty Care 1,865 2% 384 8% 267 19%
Health Care 990 24% 117 -20% 81 -11%
Food and Beverage 1,053 -13% 122 -28% 75 -29%
-----------------------------------------------------------------------------
Total Business Segments 10,022 0% 1,872 -7% 1,250 0%
Corporate (excluding O-2005 costs) (53) n/a (62) n/a (10) n/a
-----------------------------------------------------------------------------
Total Company - Core 9,969 1% 1,810 -5% 1,240 -2%
Organization 2005 Costs n/a n/a (107) n/a (85) n/a
-----------------------------------------------------------------------------
Total Company - Reported 9,969 1% 1,703 -2% 1,155 1%
</TABLE>
JULY-SEPTEMBER NET SALES INFORMATION
(PERCENT CHANGE VS. YEAR AGO) *
<TABLE>
<CAPTION>
Volume
-------------------------------
With Without
Acquisitions/ Acquisitions/ Total Total Impact
Divestitures Divestitures FX Price Mix Impact Ex-FX
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fabric and Home Care 0 0 -3 0 0 -3 0
Tissues and Towel 0 -1 -1 +8 +2 +9 +10
Baby Care +5 +5 -5 -1 -2 -3 +2
Feminine Care -1 -1 -5 +4 +1 -1 +4
Subtotal Paper +1 +1 -4 +3 +1 +1 +5
Beauty Care 0 0 -3 +4 +1 +2 +5
Health Care +34 +7 -2 +2 -10 +24 +26
Food and Beverage -11 -11 -2 -1 +1 -13 -11
Total Company +1% -1% -3% +2% +1% +1% +4%
</TABLE>
* These sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
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