FOR IMMEDIATE RELEASE
---------------------
P&G EARNINGS GROWTH EXCEEDS EXPECTATIONS
----------------------------------------
TOP LINE GROWTH AND MARGIN IMPROVEMENT DRIVE EARNINGS AND CASH FLOW PRODUCTIVITY
CINCINNATI, July 31, 2003 - The Procter & Gamble Company (NYSE:PG)
announced today strong growth for the April - June quarter and the fiscal year
ended June 30, 2003, exceeding expectations. The company delivered excellent top
line growth behind strong volume. In addition, the company achieved excellent
cash flow productivity for the fiscal year behind higher earnings, lower capital
spending and working capital improvements.
"This year's results demonstrate broad-based business strength," said
Chairman of the Board, President and Chief Executive A. G. Lafley. "Our organic
growth is robust. Our share progress is strong. Our disciplined focus on core
strategies and leveraging P&G's organizational strengths in branding, innovation
and scale continue to yield benefits. We are confident we have the strategies to
sustain P&G growth."
For the quarter ended June 30, 2003, unit volume grew five percent over
the prior year behind another quarter of double-digit growth in the health care
business and continued strong results in Asia and Central and Eastern Europe.
Organic unit volume, which excludes acquisitions and divestitures, increased six
percent.
Net sales were $10.92 billion. Excluding restructuring impacts in the
prior period, sales were up eight percent versus year-ago. Sales include a
positive four percent impact from foreign exchange, partially offset by pricing
and promotion investments to stimulate growth and remain competitive in key
categories. Organic sales, which exclude foreign exchange and the impact of
acquisitions and divestitures, were up five percent.
- More -
Net earnings for the quarter were up five percent versus year-ago to
$955 million, or $0.68 per share. Results include $261 million of after tax
restructuring program charges related to the company's multi-year initiative to
streamline its operations and business portfolio. Net earnings in the year-ago
quarter were $910 million, or $0.64 per share, including $175 million after tax
restructuring charges. Restructuring program charges include separation-related
costs, asset write-downs, accelerated depreciation and other costs directly
related to the company's reorganization. Core net earnings, which exclude
restructuring charges, grew 12 percent to $1.22 billion for the quarter. On a
per share basis, core net earnings grew 13 percent to $0.87.
All references to "core" financial measures contained in this news
release exclude restructuring charges. A quantitative reconciliation of each of
these measures to the most comparable GAAP measure can be found in the chart
attached to this release. The company believes investors gain additional
perspective of underlying business trends and results by providing a measure of
earnings excluding restructuring charges. The current restructuring program
began in 1999 as part of the company's Organization 2005 initiative, and was
substantially completed at the end of fiscal year 2003. The company will
discontinue reporting core earnings in fiscal year 2004, concurrent with the
substantial completion of the program. Going forward, the company will continue
to conduct projects consistent with the focus of continued productivity
improvement and margin expansion. Charges associated with these future projects
will be absorbed in normal operating costs.
For the fiscal year, unit volume grew eight percent behind double-digit
volume growth in beauty care and health care. Net sales were $43.38 billion, up
eight percent, which includes a positive two percent foreign exchange impact.
Sales were impacted by two percent due to pricing actions to improve consumer
value, which were primarily funded through lower material costs. Fiscal year
reported net earnings were $5.19 billion, an increase of 19 percent versus the
prior year, or $3.69 per share. Net earnings include restructuring charges of
$538 million. Core net earnings, which exclude restructuring charges, were $5.72
billion, up 13 percent. Core net earnings per share were $4.08, an increase of
14 percent versus the prior year.
KEY FINANCIAL HIGHLIGHTS FOR THE QUARTER AND FISCAL YEAR
- --------------------------------------------------------
o The company's operating cash flow for the fiscal year was $8.70 billion, a
12 percent increase versus year-ago. Operating cash flow less capital
spending, or free cash flow, was a record $7.22 billion for the year, a 19
percent increase over the prior year. The majority of the year-over-year
improvement is driven by the earnings increase, with lower capital spending
also contributing.
o Gross margin for the quarter was 47.2 percent, an improvement of 100 basis
points versus year-ago. Gross margin includes $168 million of before tax
restructuring charges in the quarter, versus $183 million of before tax
charges in the prior year quarter. Lower restructuring charges account for
40 basis points of the gross margin improvement, with the remaining
improvement driven by lower product costs, partially offset by pricing to
improve the consumer value equation.
For the fiscal year, gross margin was 49.0 percent, an improvement of 120
basis points. Restructuring charges in gross margin during 2003 were $377
million compared to $439 million in 2002. Lower restructuring charges
accounted for 40 basis points of the total gross margin improvement. The
remainder was driven by scale efficiencies due to volume growth, base
business savings, product mix and lower material costs.
o For the April to June quarter, Marketing, Research, Administration and
Other Costs (MRA&O) as a percent of sales increased 120 basis points to
33.7 percent driven by higher restructuring charges and marketing
investments. Restructuring charges included in MRA&O were $213 million
before tax in the current quarter and $85 million before tax in the same
quarter year-ago. Higher restructuring charges account for 110 basis points
of the increase in MRA&O as a percent of sales. The increase in
restructuring reflects separation charges from the organizational
streamlining under the restructuring program. MRA&O increases also reflect
marketing investments in support of product launches.
For the fiscal year, MRA&O was 30.9 percent of sales, an improvement of 30
basis points versus year-ago. This includes restructuring charges of $374
million before tax in fiscal year 2003 and $519 million in fiscal year
2002. The improvement in MRA&O as a percent of sales was driven by lower
restructuring charges, as lower overhead was offset by marketing
investments behind new product initiatives and base business support.
o In June, the company announced it secured 79.17% of the total registered
share capital and 84.9% of the value of outstanding shares of Wella AG.
Wella is a leading beauty care company selling products in more than 150
countries. Wella's three divisions include professional hair care, retail
hair care, and cosmetics and fragrances. We anticipate closing on the
purchase of shares in September 2003.
o The company announced an 11 percent increase to the annual dividend rate of
its common stock and Series A ESOP Convertible Preferred Stock, from $1.64
to $1.82, reflecting the 48th consecutive fiscal year increase.
BUSINESS SEGMENT DISCUSSION
- ---------------------------
The following provides additional perspective on the company's quarterly
and fiscal year results by business segment.
o For the quarter, fabric and home care delivered strong volume growth, up
eight percent, driven by Tide(R) and new product launches, including
Swiffer Duster(R) in North America and Bold(R) in Japan. Net sales
increased 11 percent to $3.26 billion, including a positive impact of three
percent of foreign exchange, primarily from the euro. On the quarter,
earnings grew six percent to $499 million and lagged sales growth, as
volume and cost savings were reinvested in marketing to support product
launches.
Fabric and home care delivered strong top line and bottom line results for
the fiscal year. Volume was up nine percent driven by global strength of
Tide. Net sales grew eight percent to $12.56 billion, including a positive
foreign exchange impact of one percent, offset by mix impacts from growth
in mid-tier brands and developing markets. Pricing actions reduced sales by
one percent behind actions to strengthen in-store presence and
merchandising activities. Earnings grew 12 percent to $2.06 billion driven
by top line growth, as well as lower material costs and manufacturing
efficiencies, partially offset by marketing investments behind initiatives,
including Tide with Bleach(R), Bold in Japan, Mr. Proper(R), Gain Fabric
Enhancer(R) and the repositioning of Cheer(R) in North America.
o During the April - June quarter, beauty care delivered strong results with
double-digit sales and earnings progress. Volume was up six percent on
strength in feminine care, behind the global Always(R) business and
Naturella(R) in Mexico; skin care, driven by the Olay Regenerist(R) launch;
and excellent results in hair care led by strength in Asia and global Head
& Shoulders Ultimate Clean(R). Pantene(R), Pert(R), and Herbal Essences(R)
also posted solid volume growth. Sales were $3.07 billion, up 10 percent,
including positive foreign exchange impacts of four percent. Beauty care
earnings increased 39 percent, to $466 million, behind volume, savings from
the restructuring program and Clairol integration, and lower material
costs.
Fiscal year 2003 was another strong year for beauty care. Volume was up 15
percent, including seven percent for the impact of acquisitions and
divestitures. Growth was broad-based across all key brands and geographies.
Sales grew to $12.22 billion, up 14 percent, including a positive three
percent impact for foreign exchange partially offset by a two percent
impact from pricing, as the company repositioned Pert, Daily Defense(R),
Renewal 5X(R) and Clairol Ultress(R) to mid-tier price points. Mix also
negatively impacted sales by two percent. Earnings grew 23 percent to $1.98
billion behind strong volume and significant manufacturing savings and
overhead reductions due, in part, to the efficiency improvements behind the
Clairol integration.
o Baby and family care delivered solid results this quarter with strong
volume and earnings growth. Unit volume increased six percent behind global
strength in baby care, driven primarily by double-digit growth in Western
Europe and Asia diapers. Family care volume also increased, driven by solid
results in North America and Western Europe. Net sales increased nine
percent to $2.51 billion, as a positive five percent foreign exchange
impact and positive one percent mix from premium tier diapers were
partially offset by pricing investments made in response to competitive
actions. Earnings increased 15 percent to $165 million, reflecting
continued strong volume driven by initiatives and targeted investments in
pricing and marketing, funded by operating cost savings.
For the fiscal year, baby and family care volume increased seven percent
with strong growth in Pampers(R) behind the Baby Stages of Development(R)
initiative and Charmin(R) in North America and Western Europe. Net sales
increased eight percent to $9.93 billion, including a positive three
percent impact from foreign exchange and positive one percent impact from
mix behind strength in premium tier diapers. Sales were reduced by three
percent from pricing investments across the business, including temporary
pricing adjustments in North America and Western Europe to match
competitive shelf prices and merchandising levels, funded by lower
structural costs. Earnings were up 20 percent to $882 million behind volume
growth, restructuring cost savings and excellent base business
manufacturing cost savings.
o Health care achieved another strong quarter with double-digit volume, sales
and earnings growth. Unit volume increased 18 percent driven by increases
in oral care, behind Crest Whitestrips(R)and Crest Night Effect(R),
pharmaceuticals and personal health care. Sales increased to $1.39 billion,
an increase of 12 percent, with positive foreign exchange of three percent
offset by pricing investments of three percent, primarily on Crest
Whitestrips in response to a competitive entry. Sales for the April to June
quarter also reflect a negative mix impact of six percent driven primarily
by a higher percentage of Actonel(R)shipments to support the global
Once-a-week dosage launch through our alliance agreement. Negative mix was
also driven by the impact of the rapid growth of Crest(R)toothpaste in
developing markets. Earnings for the quarter were up 29 percent to $110
million driven by increased volume and overhead cost efficiencies,
partially offset by marketing investments behind new product launches in
oral care, personal health care and continued support of Iams Daily Dental
Care(R).
On the fiscal year, health care delivered another year of strong top and
bottom line growth. Volume was up 18 percent, driven by solid results in
pharmaceuticals, behind Actonel, and oral care, behind Crest Whitestrips.
Sales were $5.80 billion, up 16 percent, including a positive two percent
foreign exchange impact offset by a negative two percent impact from mix
and a negative two percent pricing impact behind competitive adjustments to
Crest Whitestrips. Earnings were up 35 percent to $706 million behind
volume growth in high-margin products, partially offset by increased
marketing spending behind product launches.
o Snacks and beverages results for the quarter were negatively affected by
the business interruption due to the tornado damage at the Jackson, Tenn.
manufacturing facility. Volume for the business unit was down nine percent,
with snacks down 15 percent. Volume was also lower in the coffee category
due to trade inventory adjustments and in the juice category. Sales were
down six percent to $779 million behind lower volume and pricing
investments of two percent in response to competitive promotional spending
in the coffee category, partially offset by positive foreign exchange of
four percent and mix of one percent. Earnings for the quarter were down 20
percent to $55 million, driven by the impact of the business interruption
caused by the tornado and by lower volume.
On the fiscal year, snacks and beverages unit volume was down two percent.
Volume was down in juice, and snacks was down due to the impact of the
tornado. Net sales were flat versus the previous year at $3.24 billion as
positive foreign exchange of three percent and product mix of one percent
were partially offset by pricing investments in the coffee business.
Despite the impact of the tornado, net earnings for the year were up one
percent to $306 million, as a combination of restructuring and base
business savings offset lower volume.
QUARTERLY AND FISCAL YEAR GUIDANCE
- ----------------------------------
For fiscal year 2003/2004, volume, excluding the impact of acquisitions
and divestitures, is expected to increase five to seven percent. Sales growth,
excluding the impacts of foreign exchange, is expected to increase toward the
top end of our long-term range of four to six percent. At current rates, foreign
exchange is expected to have a positive impact on sales of one to two percent.
Earnings per share is expected to grow double-digits, in line with the company's
long-term objective and the current consensus estimate.
For the July - September quarter, volume is projected to increase by
five to seven percent. Sales are expected to grow in the mid- to high-single
digits, with foreign exchange impacting sales by a positive two to three
percent. Additionally, the company is comfortable with the current consensus
earnings per share estimate.
FORWARD-LOOKING STATEMENTS
- --------------------------
All statements, other than statements of historical fact included in
this release, are 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 release, there are certain factors that could cause
actual results to differ materially from those anticipated by some of the
statements made. These include: (1) the achievement of expected cost and tax
savings associated with changes in the company's organization structure; (2) the
ability to achieve business plans, including growing volume profitably, despite
high levels of competitive activity, especially with respect to the product
categories and geographical markets in which the company has chosen to focus;
(3) the ability to manage and maintain key customer relationships; (4) the
achievement of growth in significant developing markets such as China, Turkey,
Mexico, the Southern Cone of Latin America, the countries of Central and Eastern
Europe and the countries of Southeast Asia; (5) the ability to successfully
manage regulatory, tax and legal matters, including resolution of pending
matters within current estimates; (6) the ability to successfully implement,
achieve and sustain cost improvement plans in manufacturing and overhead areas;
(7) the ability to successfully manage currency (including currency issues in
Latin America), interest rate and certain commodity cost exposures; (8) the
ability to manage the continued political and/or economic uncertainty in Latin
America (including Venezuela) and war in the Middle East, as well as any
political and/or economic uncertainty due to terrorist activities or war
(including Korea); and (9) the successful acquisition, transition, integration,
and operation of the Wella business. If the company's assumptions and estimates
are incorrect or do not come to fruition, or if the company does not achieve all
of these key factors, then the company's actual results might differ materially
from the forward-looking statements made herein. For additional information
concerning factors that could cause actual results to materially differ from
those projected herein, please refer to our most recent 10-K, 10-Q and 8-K
reports.
ABOUT PROCTER & GAMBLE
- ----------------------
Two billion times a day, P&G brands touch the lives of people around
the world. Some of the nearly 300 P&G brands consumers know and use with
confidence in over 160 countries around the world include: Pampers(R), Tide(R),
Ariel(R), Always(R), Whisper(R), Pantene(R), Bounty(R), Pringles(R), Folgers(R),
Charmin(R), Downy(R), Lenor(R), Iams(R), Crest(R), Actonel(R), Olay(R) and
Clairol Nice `n Easy(R). The P&G community consists of nearly 102,000 employees
working in almost 80 countries worldwide. Please visit WWW.PG.COM for the latest
news and in-depth information about P&G and its brands.
# # #
P&G CONTACTS:
- ------------
MEDIA
- -----
P&G Corporate Media Center:
US media call: +1-(866) PROCTER (1-866-776-2837)
Media outside the US call: +1-(513) 945-9087
INVESTOR RELATIONS
- ------------------
John P. Goodwin - (513) 983-2414
P&G will webcast its conference call on Thurs., July 31, 2003, at 8:30
a.m. ET to review its fourth quarter 2002/03 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/investors
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 webcast.
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
Three Months Ended June 30, 2003
-----------------------------------------------------------------
% Change Earnings % Change % Change
Versus Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
-----------------------------------------------------------------
FABRIC AND HOME CARE $ 3,265 11% $ 751 9% $ 499 6%
BABY AND FAMILY CARE 2,508 9% 271 0% 165 15%
BEAUTY CARE 3,075 10% 679 35% 466 39%
HEALTH CARE 1,391 12% 158 19% 110 29%
SNACKS AND BEVERAGES 779 -6% 83 -25% 55 -20%
-----------------------------------------------------------------
TOTAL BUSINESS SEGMENT 11,018 9% 1,942 14% 1,295 17%
CORPORATE (excluding restructuring costs) (98) n/a (204) n/a (79) n/a
-----------------------------------------------------------------
TOTAL COMPANY - CORE 10,920 8% 1,738 11% 1,216 12%
RESTRUCTURING COSTS 0 n/a (381) n/a (261) n/a
-----------------------------------------------------------------
TOTAL COMPANY - REPORTED $ 10,920 7% $ 1,357 5% $ 955 5%
=================================================================
Twelve Months Ended June 30, 2003
-----------------------------------------------------------------
% Change Earnings % Change % Change
Versus Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
-----------------------------------------------------------------
FABRIC AND HOME CARE $ 12,560 8% $ 3,080 13% $ 2,059 12%
BABY AND FAMILY CARE 9,933 8% 1,448 14% 882 20%
BEAUTY CARE 12,221 14% 2,899 23% 1,984 23%
HEALTH CARE 5,796 16% 1,034 30% 706 35%
SNACKS AND BEVERAGES 3,238 0% 460 -3% 306 1%
-----------------------------------------------------------------
TOTAL BUSINESS SEGMENT 43,748 10% 8,921 17% 5,937 19%
CORPORATE (excluding restructuring costs) (375) n/a (640) n/a (213) n/a
-----------------------------------------------------------------
TOTAL COMPANY - CORE 43,373 8% 8,281 13% 5,724 13%
RESTRUCTURING COSTS 4 n/a (751) n/a (538) n/a
-----------------------------------------------------------------
TOTAL COMPANY - REPORTED $ 43,377 8% $ 7,530 18% $ 5,186 19%
=================================================================
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
APRIL-JUNE NET SALES INFORMATION
(Percent Change vs. Year Ago) **
Volume
------------------------
With Without
Acquisition Acquisitions/ Total Total Impact
Divestiture Divestitures FX Price Mix/Other Impact Ex-FX
---------------------------------------------------------------------------------
FABRIC AND HOME CARE 8% 8% 3% 0% 0% 11% 8%
BABY AND FAMILY CARE 6% 6% 5% -3% 1% 9% 4%
BEAUTY CARE 6% 7% 4% 0% 0% 10% 6%
HEALTH CARE 18% 18% 3% -3% -6% 12% 9%
SNACKS AND BEVERAGES -9% -9% 4% -2% 1% -6% -10%
TOTAL COMPANY (CORE) 5% 6% 4% -1% 0% 8% 4%
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
JULY-JUNE NET SALES INFORMATION
(Percent Change vs. Year Ago) **
Volume
------------------------
With Without
Acquisition Acquisitions/ Total Total Impact
Divestiture Divestitures FX Price Mix/Other Impact Ex-FX
---------------------------------------------------------------------------------
FABRIC AND HOME CARE 9% 9% 1% -1% -1% 8% 7%
BABY AND FAMILY CARE 7% 7% 3% -3% 1% 8% 5%
BEAUTY CARE 15% 8% 3% -2% -2% 14% 11%
HEALTH CARE 18% 18% 2% -2% -2% 16% 14%
SNACKS AND BEVERAGES -2% -2% 3% -2% 1% 0% -3%
TOTAL COMPANY (CORE) 8% 8% 2% -2% 0% 8% 6%
** These sales percentage changes are approximations based on quantitative formulas that are consistently applied.
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions)
Consolidated Cash Flows Information
--------------------------------
Twelve Months Ended June 30
--------------------------------
2003 2002
--------------------------------
OPERATING ACTIVITIES
NET EARNINGS $ 5,186 $ 4,352
DEPRECIATION AND AMORTIZATION 1,703 1,693
DEFERRED INCOME TAXES 63 389
CHANGES IN:
ACCOUNTS RECEIVABLE 163 96
INVENTORIES (56) 159
ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES 936 684
OTHER OPERATING ASSETS & LIABILITIES 178 (98)
OTHER 527 467
------- -------
TOTAL OPERATING ACTIVITIES 8,700 7,742
------- -------
CAPITAL EXPENDITURES (1,482) (1,679)
------- -------
FREE CASH FLOW BEFORE DIVIDENDS $ 7,218 $ 6,063
======= =======
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions)
Consolidated Balance Sheet Information
June 30, 2003 June 30, 2002
------------- -------------
CASH AND CASH EQUIVALENTS $ 5,912 $ 3,427
INVESTMENTS SECURITIES 300 196
ACCOUNTS RECEIVABLE 3,038 3,090
TOTAL INVENTORIES 3,640 3,456
OTHER 2,330 1,997
------- -------
TOTAL CURRENT ASSETS 15,220 12,166
NET PROPERTY, PLANT AND EQUIPMENT 13,104 13,349
NET GOODWILL AND OTHER INTANGIBLE ASSETS 13,507 13,430
OTHER NON-CURRENT ASSETS 1,875 1,831
------- -------
TOTAL ASSETS $43,706 $40,776
======= =======
ACCOUNTS PAYABLE $ 2,795 $ 2,205
ACCRUED AND OTHER LIABILITIES 5,512 5,330
TAXES PAYABLE 1,879 1,438
DEBT DUE WITHIN ONE YEAR 2,172 3,731
------- -------
TOTAL CURRENT LIABILITIES 12,358 12,704
LONG-TERM DEBT 11,475 11,201
OTHER 3,687 3,165
------- -------
TOTAL LIABILITIES 27,520 27,070
------- -------
------- -------
TOTAL SHAREHOLDERS' EQUITY 16,186 13,706
------- -------
------- -------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $43,706 $40,776
======= =======
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
AMJ QUARTER
------------
W/O Restructuring Chgs
AMJ 03 AMJ 02 % CHG AMJ 03 AMJ 02 % CHG
------ ------ ----- ------ ------ -----
NET SALES $ 10,920 $ 10,169 7 % $ 10,920 $ 10,153 8 %
COST OF PRODUCTS SOLD 5,768 5,469 5 % 5,600 5,270 6 %
-------- -------- -------- --------
GROSS MARGIN 5,152 4,700 10 % 5,320 4,883 9 %
MARKETING, RESEARCH, ADMINISTRATIVE & OTHER 3,683 3,302 12 % 3,470 3,217 8 %
-------- -------- -------- --------
OPERATING INCOME 1,469 1,398 5 % 1,850 1,666 11 %
TOTAL INTEREST EXPENSE 136 150 136 150
OTHER NON-OPERATING INCOME, NET 24 46 24 46
-------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES 1,357 1,294 5 % 1,738 1,562 11 %
INCOME TAXES 402 384 522 477
NET EARNINGS 955 910 5 % 1,216 1,085 12 %
======== ======== ======== ========
EFFECTIVE TAX RATE 29.6 % 29.7 % 30.0 % 30.5 %
PER COMMON SHARE:
BASIC NET EARNINGS $ 0.71 $ 0.68 4 % $ 0.92 $ 0.81 14 %
DILUTED NET EARNINGS $ 0.68 $ 0.64 6 % $ 0.87 $ 0.77 13 %
DIVIDENDS $ 0.41 $ 0.38 $ 0.41 $ 0.38
AVERAGE DILUTED SHARES OUTSTANDING 1,399.6 1,412.1 1,399.6 1,412.1
Basis Pt Basis Pt
COMPARISONS AS A % OF NET SALES Chg Chg
COST OF PRODUCTS SOLD 52.8 % 53.8 % 51.3 % 51.9 %
GROSS MARGIN 47.2 % 46.2 % 100 48.7 % 48.1 % 60
MARKETING, RESEARCH, ADMINISTRATIVE & OTHER 33.7 % 32.5 % 31.8 % 31.7 %
OPERATING MARGIN 13.5 % 13.7 % (20) 16.9 % 16.4 % 50
EARNINGS BEFORE INCOME TAXES 12.4 % 12.7 % 15.9 % 15.4 %
NET EARNINGS 8.7 % 8.9 % 11.1 % 10.7 %
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
FYTD
W/O Restructuring Chgs
6/30/03 6/30/02 % CHG 6/30/03 6/30/02 % CHG
------- ------- ----- ------- ------- -----
NET SALES $ 43,377 $ 40,238 8 % $ 43,373 $ 40,169 8 %
COST OF PRODUCTS SOLD 22,141 20,989 5 % 21,760 20,481 6 %
-------- -------- -------- --------
GROSS MARGIN 21,236 19,249 10 % 21,613 19,688 10 %
MARKETING, RESEARCH, ADMINISTRATIVE & OTHER 13,383 12,571 6 % 13,009 12,052 8 %
-------- -------- -------- --------
OPERATING INCOME 7,853 6,678 18 % 8,604 7,636 13 %
TOTAL INTEREST EXPENSE 561 603 561 603
OTHER NON-OPERATING INCOME, NET 238 308 238 308
-------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES 7,530 6,383 18 % 8,281 7,341 13 %
INCOME TAXES 2,344 2,031 2,557 2,283
NET EARNINGS 5,186 4,352 19 % 5,724 5,058 13 %
======== ======== ======== ========
EFFECTIVE TAX RATE 31.1 % 31.8 % 30.9 % 31.1 %
PER COMMON SHARE:
BASIC NET EARNINGS $ 3.90 $ 3.26 20 % $ 4.32 $ 3.80 14 %
DILUTED NET EARNINGS $ 3.69 $ 3.09 19 % $ 4.08 $ 3.59 14 %
DIVIDENDS $ 1.64 $ 1.52 $ 1.64 $ 1.52
AVERAGE DILUTED SHARES OUTSTANDING 1,401.3 1,404.9 1,401.3 1,404.9
Basis Pt Basis Pt
COMPARISONS AS A % OF NET SALES Chg Chg
COST OF PRODUCTS SOLD 51.0 % 52.2 % 50.2 % 51.0 %
GROSS MARGIN 49.0 % 47.8 % 120 49.8 % 49.0 % 80
MARKETING, RESEARCH, ADMINISTRATIVE & OTHER 30.9 % 31.2 % 30.0 % 30.0 %
OPERATING MARGIN 18.1 % 16.6 % 150 19.8 % 19.0 % 80
EARNINGS BEFORE INCOME TAXES 17.4 % 15.9 % 19.1 % 18.3 %
NET EARNINGS 12.0 % 10.8 % 13.2 % 12.6 %