Exhibit 13
----------
Annual Report to Shareholders. (Pages 1-5, 18-37, and 40)
TO OUR SHAREHOLDERS
PROCTER & GAMBLE'S CONTINUED FOCUS ON
DELIVERING CONSUMER VALUE LED TO
ACCELERATED GROWTH IN 1994/95.
Good value is the foundation of our business. It builds consumer loyalty to
P&G brands - and brand loyalty builds market leadership. That's why value
is a permanent, fundamental strategy at Procter & Gamble.
Our commitment to the essentials of good value has never been
stronger. We are providing superior products at a competitive price, and
we're doing that by staying focused on the basics: continuous product
innovation and relentless cost control.
As a result of this focus, 1994/95 was an extraordinary year for the
Company and its shareholders. Net earnings for fiscal year 1994/95 achieved
a record level of $2.6 billion, with earnings per share of $3.71, up 20%
versus year ago.
HIGHLIGHTS OF THE YEAR<F1>
- NET EARNINGS were $2.7 billion, up 17%, over earnings of $2.3 billion
in 1993/94. This compares with an average annual earnings growth rate of
10% over the previous five years.
- EARNINGS PER SHARE were $3.78, up 17%.
- AFTER-TAX PROFIT MARGIN was 8.1%. This is the highest level in 45
years.
- UNIT VOLUME grew 10%. This compares to average annual volume growth of
6% over the previous five years.
- NET SALES of $33.4 billion were up 10%.
- CASH FLOW from operations was $3.6 billion. Over the past five years,
cash flow has increased at an average annual rate of 15%.
- DIVIDENDS INCREASED 13% to $1.40 per share. Beginning with the August
1995 dividend, the annual dividend rate will be raised an additional 14% to
$1.60 per share, marking the 40th consecutive year of increased dividend
payments.
- RETURN ON EQUITY was 23.4% - the highest level in 45 years.
<F1>These highlights exclude the following unusual items: the $50 million
charge against 1994/95 net earnings to cover costs associated with the
Kobe, Japan earthquake, and the $102 million charge against 1993/94 net
earnings related to two interest rate swaps.
(Picture of John Pepper, Chairman of the Board and Chief Executive; Ed
Artzt, Chairman of the Executive Committee of the Board; and Durk
Jager, President and Chief Operating Officer.)
1
BROAD-BASED GROWTH ACROSS THE REGIONS
- NORTH AMERICA - the United States and Canada - is in good shape. Unit
volume for the region increased 6%.
The principal contributors to U.S. volume growth were Laundry, Hair
Care and Tissue and Towel. In Laundry, the Company's new color protection
technology helped Tide
(Caption in second paragraph stating "1994/95 WAS AN EXTRAORDINARY YEAR
FOR THE COMPANY AND ITS SHAREHOLDERS.")
and Cheer build P&G's total U.S. Laundry volume to a record level.
Hair Care volume in the U.S. was up 11% behind strong consumer
acceptance of Pantene Pro-V and new products, packages and marketing
programs on Vidal Sassoon, Pert Plus and Head & Shoulders shampoos. And the
Tissue and Towel businesses grew behind Bounty's Extra Durable and Fun
Prints and Charmin Ultra.
Canada's volume grew 6%, tracking closely with performance in the U.S.
The greatest volume gains came from Tide laundry detergent and Pantene Pro-
V. The first time introductions of Bounty towels and Folgers coffee are off
to a strong start.
(Picture of P&G Products - Pantene Pro-V, Ariel, Pampers Uni and Tide)
- EUROPE, MIDDLE EAST AND AFRICA recorded strong growth, with unit
volume up 15%.
Europe, like the U.S., experienced strong market share growth in
Laundry Detergents, Paper and Hair Care. The top brand performers included
Ariel Futur, a new compact, high performance laundry detergent.
Pampers also had an excellent year in Europe, reaching an all-time
high share despite the introduction of new competitive brands. Alldays
Pantyliners strengthened Always' leadership across the entire region.
Pantene Pro-V led the continued growth of the European Hair Care business.
Eastern Europe was a dynamic area of growth for the Company,
increasing share in all core categories. The most significant gains were in
Laundry, Hair Care, Feminine Protection and Diapers.
- ASIA recorded 24% volume growth led by excellent progress in China and
India.
China remained the fastest-growing business in Asia, with China's
largest gains in Hair Care and Laundry. Rejoice shampoo increased its
market leadership and, supported by the national expansion of Tide and
Ariel, P&G's Laundry detergent volume tripled in the last year.
In India, the success of Ariel Supersoaker was an important
contributor to P&G's growing business in this huge market.
1995 has been a tremendously challenging year for P&G's
2
Japanese organization, which managed to build the business despite the
ravaging effects of the Kobe earthquake.
Our Japan Technical Center and Headquarters on Kobe Island was
damaged, manufacturing lines at our Akashi paper plant were disrupted and
many retailers and distributors shut down.
Our Japanese organization overcame these obstacles, returning the
Akashi plant to full production within a month after the earthquake,
working with distributors and retailers to restore distribution, and moving
back into the Japan Technical Center in June. Even in the midst of this
recovery effort, Japan increased volume 7% for the fiscal year - an
achievement that is a real tribute to the dedication and capability
(Caption in second paragraph stating "AS THIS YEAR'S BROAD-BASED GROWTH
DEMONSTRATES, P&G'S VALUE STRATEGIES ARE WORKING.")
of the men and women of our Japanese organization.
- Latin America had a very good year, despite the difficulties of the
Mexican peso crisis. Unit volume was up 6% with especially strong increases
in Brazil, Peru and Argentina.
In Brazil, Pampers Uni - P&G's economy-priced diaper - scored a solid
success with consumers. Two years ago, prior to the introduction of Uni,
P&G's diaper share in Brazil was 13%. Since then, Pampers' share has
tripled, retaining the number one position in a market that has grown five-
fold.
Results in Mexico were good, particularly in the face of the nearly
50% devaluation of the peso and the resulting impact on the Mexican
economy.
P&G's business could have been severely affected by the financial
effect of this situation and the associated decline in consumer purchasing
power. But our Mexican organization worked side-by-side with government
officials, suppliers and customers to navigate their way through the
crisis. As a result of their outstanding work, the Mexican business fully
offset the earnings impact of the peso devaluation.
VALUE STRATEGIES ARE WORKING
As this year's broad-based growth demonstrates, P&G's value strategies are
working.
We are building consumer loyalty to our brands throughout the world
with superior products at competitive prices. The resulting growth in our
business is contributing directly to better value for our shareholders. In
fact, total shareholder return, which averaged 17% over the
3
(Caption at top of page stating "VOLUME GROWTH, DELIVERED BY INNOVATION
AND LOWER PRICES, IS AN IMPORTANT CONTRIBUTOR TO HIGHER EARNINGS.")
previous five years, was 38% in 1994/95.
The key to maintaining our current level of growth is to stay focused
on delivering better value. First and foremost, this means continuously
innovating to provide superior products. Ariel Futur, Pantene Pro-V and
carezyme color protection technology are good examples.
Competitive prices are also critical. This is true in every part of
the world - in developing and developed markets alike.
- ON A WORLDWIDE BASIS, WE HAVE REDUCED PRICES on many of our products
while also building margins and improving overall product performance.
Since 1992/93, list prices (excluding coffee) have declined $1 billion.
This price reduction largely reflects the move to value pricing, as we
have eliminated inefficient promotion costs by rolling them into lower list
prices. Through this structural change, we have been able to significantly
reduce the net price consumers pay for our products.
In addition to price reductions on established brands, we are also
introducing economy-priced brands in markets where consumer purchasing
power is most restricted. Pampers Uni in Latin America is a good example,
and there are others.
In Eastern Europe, the Company's Feminine Protection business in
Poland is up six-fold behind the introduction of Always Classic, a lower-
priced feminine protection pad. And in India, we've tripled our Bar Soap
volume with new Camay Popular - an economy-priced version of Camay.
Whether we're reducing prices on established brands or introducing
new, economy-priced products, the strategy is the same: to offer superior
performance at a competitive price. And the strategy is working: in
1994/95, nearly three-fourths of P&G's global categories worldwide
maintained or grew market share.
BETTER VALUE FOR CONSUMERS - AND HIGHER EARNINGS FOR P&G
Volume growth, driven by innovation and lower prices, is an important
contributor to higher earnings. An essential element of this has been sharp
cost control throughout the organization - which we have pursued
aggressively for the past several years.
For example, Product Supply - P&G's purchasing, engineering,
manufacturing and distribution organizations - has led a breakthrough
effort to reduce the total delivered costs of our products. Their goal,
established in 1991, was to hold these costs flat on a per case basis for
four years.
They have exceeded this goal, not only offsetting inflation and the
cost of product improvements, but actually reducing costs by over $1 per
case, versus the 1990/91 base. This equates to approximately $1.6 billion
in savings, further enhancing our ability to price competitively while
building margins.
- THE WORLDWIDE PLANT CONSOLIDATION AND ORGANIZATION RESTRUCTURING
announced in 1993 has also contributed to effective cost control. We
committed to save at least $500 million after tax per year by 1995/96. We
have already achieved $400 million or 80% of that total in less than two
years.
As with total delivered cost reductions, these savings have allowed us
to price competitively, to increase research and development spending, and
to improve profit margins.
In short, P&G brands are a better value for consumers and are more
profitable at the same time. As a result, P&G has
4
delivered volume and earnings growth well above historical averages and the
highest profit margins in 45 years.
P&G PEOPLE DELIVER ACCELERATED GROWTH
As always, the Company's ability to deliver this kind of breakthrough
performance comes from the strength and commitment of our people.
The quality and depth of the men and women building our business today
are unprecedented. We can see this strength in the way our Company
responded to extraordinary challenges in 1994/95 - recovering from the
earthquake in Japan, responding to the peso crisis in Mexico, and winning
against fierce competition in every part of the world.
We are stronger today than we've ever been and we are well positioned
to build on this strength in the years ahead.
Respectfully,
/s/EDWIN L. ARTZT
Edwin L. Artzt
Chairman of the Executive Committee of the Board
(Retired Chairman of the Board and Chief Executive - July 1, 1995)
/s/JOHN E. PEPPER
John E. Pepper
Chairman of the Board and Chief Executive
/s/DURK I. JAGER
Durk I. Jager
President and Chief Operating Officer
August 10, 1995
MANAGEMENT CHANGES
On July 1, 1995, Edwin L. Artzt retired as chairman of the board and chief
executive after more than 41 years of service with Procter & Gamble. John
E. Pepper assumed responsibility as chairman of the board and chief
executive and Durk I. Jager assumed the newly created position of president
and chief operating officer.
"We have top-flight people to step up and sustain the momentum of this
business," said Artzt. "John Pepper, along with Durk Jager and the newly
appointed team under both of them, will provide strong leadership for the
Company into the 21st century."
Mr. Artzt continues to serve as a director of the Company and,
effective July 1, became chairman of the board's Executive Committee,
succeeding John G. Smale, who retired from the board.
"John Smale served Procter & Gamble with great distinction for more
than 42 years," said Artzt. "He is an extraordinary leader who has guided
the company's rapid growth and globalization. We will miss his involvement
in the business."
5
FINANCIAL REVIEW
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS: 1995 COMPARED TO 1994
Worldwide net earnings were $2,645 million, a 20% increase over year ago,
including a $50 million after-tax charge for incremental costs associated
with the January earthquake in Japan. Net earnings for the prior year were
$2,211 million, including a $102 million after-tax charge related to two
interest rate swap contracts. Excluding the unusual items in both periods,
net earnings increased 17%.
(Bar graph showing Net Earnings (Billions of Dollars) and Net Margin.
1991 Net Earnings $1.773 billion and Net Margin 6.6%; 1992 Net Earnings
$1.872 billion and Net Margin 6.4%; 1993<F1> Net Earnings $2.015 billion
and Net Margin 6.6%; 1994 Net Earnings $2.211 billion and Net Margin
7.3%; and 1995 Net Earnings $2.645 billion and Net Margin 7.9%.)
<F1> Excluding the effect of restructuring ($1,746 million) and the
prior years' effect of accounting changes ($925 million).
Worldwide net sales for the year increased 10% to $33,434 million.
This sales increase reflects year-to-year unit volume growth of 10%, with
acquisitions contributing approximately 2%. More favorable foreign exchange
rates positively impacted net sales by 2%, but the effect was offset by
lower pricing in certain markets.
Years Ended June 30, 1995 1994 1993<F1>
--------------------------------------------------------
Gross Margin 41.3% 42.7% 41.9%
Marketing, Administration
and Other/Sales 28.8% 30.9% 31.5%
Operating Margin 12.5% 11.8% 10.4%
Net Earnings Margin 7.9% 7.3% 6.6%
<F1> Excluding the effect of restructuring and prior years' effect of
accounting changes.
The decline in gross margin from 42.7% to 41.3% is primarily due to
higher green coffee bean costs, net of related pricing. Increased research
and development costs and higher raw material prices, most importantly
pulp, more than offset the incremental benefits of restructuring activities
and other cost reduction programs. The Company's margin trends are also
affected by pricing policies. Since fiscal year 1993, the Company's value
pricing initiative has reduced list prices by approximately $1 billion
(excluding coffee).
Marketing, administrative and other expenses were 28.8% of sales, down
from 30.9% in the prior year. This reflects the benefit of continued cost
control efforts, as well as an incremental benefit from restructuring
actions.
(Bar graph showing Sales (Billions of Dollars), Operating Income
(Billions of Dollars) and Operating Margin. 1993<F1> Sales $30.4
billion, Operating Income $3.2 billion and Operating Margin 10.4%; 1994
Sales $30.3 billion, Operating Income $3.6 billion and Operating Margin
11.8%; and 1995 Sales $33.4 billion, Operating Income $4.2 billion and
Operating Margin 12.5%.)
<F1> Excluding the effect of restructuring ($2,705 million pre-tax)
18
The Procter & Gamble Company and Subsidiaries
Consolidated Operating Results - Net Sales
-----------------------------------------------------
(Millions of Dollars) 1995 1994 1993
-----------------------------------------------------
North America $16,213 $15,147 $15,100
Europe, Middle East
and Africa 11,019 9,739 10,336
Asia 3,619 3,134 2,775
Latin America 2,184 2,256 1,990
Corporate 399 20 232
-----------------------------------------------------
Total 33,434 30,296 30,433
Consolidated Operating Results - Net Earnings
-----------------------------------------------------
(Millions of Dollars) 1995 1994 1993
-----------------------------------------------------
North America $1,871 $1,710 $1,500
Europe, Middle East
and Africa 687 563 494
Asia 203 145 161
Latin America 215 145 107
Corporate (331) (352) (247)
-----------------------------------------------------
Total 2,645 2,211 2,015<F1>
<F1> Excludes a charge for restructuring: North America - $1,223; Europe,
Middle East and Africa - $342; Asia - $53; Latin America - $50; and
Corporate - $78; Total - $1,746 and prior years' effect of accounting
changes of $925.
Other income of $309 million includes a $77 million pre-tax charge
related to the Kobe Japan earthquake. The prior year amount of $248 million
contains a $157 million pre-tax charge related to two interest rate swap
contracts.
Net earnings margin increased from 7.3% in 1994 to 7.9% in 1995,
including the effect of unusual items in both years, reflecting continued
emphasis on cost control and volume growth.
The following discussion of segment results reflects the new segment
presentation included in Note 12 to the Consolidated Financial Statements.
NORTH AMERICA
Net sales for the North American region, which includes the United States
and Canada, increased 7% to $16,213 million on 6% unit volume growth.
The Paper segment led the unit volume growth, with double digit gains
in the Tissue and Towel category. This growth was partly offset by a year-
to-year volume decline in Diapers. Fourth quarter results indicated modest
Diaper volume recovery, reflecting new initiatives. The Laundry and
Cleaning and Beauty Care segments also experienced unit volume growth above
the region average. The gains were driven by the Laundry and Hair Care
categories. Unit volume growth in the Food and Beverage segment was
hampered by the continued effect on coffee of the crop freezes in Brazil.
Unit volume growth in the Snacks and Juice categories mitigated this
impact. Unit volume in the Health Care segment, which represents
approximately 5% of the North American volume, increased 1% year-to-year.
North American net earnings increased 9% to $1,871 million, reflecting
volume growth and continued cost control benefits. The net profit margin
was 11.5% compared to 11.3% in the prior year. Most segments experienced
double-digit net earnings growth, led by the Beauty Care segment. The net
earnings of the Paper segment were negatively impacted by higher pulp
prices and lower pricing on diapers. The Health Care segment results were
affected by continued investment in research and development and reduced
pricing.
EUROPE, MIDDLE EAST AND AFRICA
The Europe, Middle East and Africa region sales were $11,019 million, a 13%
increase.
Unit volume grew 15% during the year, including 5% due to
acquisitions. The Laundry and Cleaning segment led the unit volume growth.
Favorable exchange rate effects increased sales by 6%, but this was offset
by lower pricing in certain markets.
Net earnings increased 22% to $687 million. This reflects a net profit
margin of 6.2% compared to 5.8% in the prior year. This growth is due to
continued cost control efforts, incremental benefits associated with
restructuring actions, and favorable product mix effects.
ASIA
Net sales for Asia were $3,619 million, up 15%. Unit volume grew 24%.
Favorable foreign exchange rate movements had a positive 7% impact on
sales,
19
MANAGEMENT'S DISCUSSION AND ANALYSIS
although lower pricing and mix effects limited sales growth. Double digit
unit volume growth was achieved in all business segments, led by Laundry
and Cleaning. The Beauty Care segment also experienced significant unit
volume gains, on the strength of the Hair Care category.
Net earnings in Asia increased 40% to $203 million. Net profit margins
have grown from 4.6% in the prior year to 5.6% in 1995. This increase
results from strong unit volume growth, combined with continued emphasis on
cost control. The Hair Care and Feminine Protection categories continue to
drive the region's growth and profitability.
LATIN AMERICA
Unit volume in Latin America grew 6%. Unfavorable foreign exchange rate
impacts more than offset the effect of positive pricing actions and volume
growth, resulting in a 3% sales decline to $2,184 million. The Paper
segment led the unit volume increase, importantly in the Diaper category,
reflecting the introduction of Pampers Uni.
Net earnings for the region were $215 million, a 48% increase from the
prior year. This earnings growth was achieved despite difficult economic
conditions in Mexico and Venezuela and is primarily attributable to
aggressive cost increase recovery. In addition, risk management activities
neutralized the effect of foreign exchange rate changes. The net profit
margin increased to 9.8% from 6.4%. Significant net earnings growth was
achieved in the Diaper and Hair Care categories.
CORPORATE
Corporate items include interest income and expense, segment eliminations,
and other general corporate income and expense.
WORLDWIDE BUSINESS SEGMENTS
The following table supplements the information provided in Note 12,
Segment Information, to provide 1995 unit volume growth for the Company's
business segments.
UNIT VOLUME GROWTH IN 1995
Laundry and Cleaning 7%
Paper 18%
Beauty Care 12%
Food and Beverage 7%
Health Care 3%
FINANCIAL CONDITION: JUNE 30, 1995
COMPARED TO JUNE 30, 1994
Cash flow from operations was $3,568 million in 1995, continuing to provide
the primary source of funds to finance operating needs and capital
expenditures. Cash and cash equivalents declined $345 million, primarily
due to increased capital spending. Debt repayments, net of additions, were
$490 million, and dividends of $1,062 million were paid. Cash outflows for
acquisitions, net of proceeds from asset sales, were $313.
(Bar graph showing CUMULATIVE OPERATING CASH FLOWS (Billions of
Dollars). 1991 - $2.0 billion; 1992 - $5.0 billion; 1993 - $8.4
billion; 1994 - $12.0 billion; and 1995 $15.6 billion.)
During the year, the Company initiated a share repurchase program to
mitigate the dilutive impact of management compensation programs. Under the
repurchase program, the Company is authorized to purchase up to 5 million
shares annually. During the current year, purchases were $114 million.
20
The Company has additional sources of liquidity available. During the
year, the Company filed a shelf registration statement for $500 million of
debt securities and warrants. Securities pursuant to this registration
statement may be offered as determined appropriate in light of market
conditions. In addition, the Company has the ability to issue commercial
paper at favorable rates if necessary to meet short-term liquidity needs.
Capital expenditures were $2,146 million in 1995, compared to $1,841
million in 1994. Capital expenditures are expected to remain at about this
level in 1996.
Dividends of $1.40 per share were paid in the current year, up from
$1.24 per share in the prior year. For the coming year, the annual dividend
rate will increase to $1.60 per share. This will mark the 40th consecutive
year of increased common share dividend payments.
The Company has announced a program to divest certain minor, non-
strategic brands over the coming year in order to focus organizational
resources on the Company's core businesses. These brands account for less
than one-half of one percent of the Company's annual sales. This program is
not expected to have a material effect on the Company's results of
operations, financial condition, or cash flows.
RESTRUCTURING RESERVE STATUS
In 1993, the restructuring provision includes a reserve of $2,402 million
to cover a worldwide restructuring effort to consolidate manufacturing
systems and reduce overhead costs. The primary elements of this reserve
were costs related to fixed asset disposals and separation-related costs
(86% of the total).
Original Balance Balance
(Millions of Dollars) Reserve 6/30/94 Charges 6/30/95
Separation-
related costs<F1> $ 965 $ 596 $ 227 $ 369
Disposals of
Fixed Assets 1,109 960 363 597
Other<F2> 328 227 33 194
-------------------------------------------------------------------
2,402 1,783 623 1,160
<F1>Includes separation allowances and related benefits, out placement
services, and personnel relocation costs.
<F2>Includes closing, environmental remediation and contract termination
costs for sites shut down or divested, offset by proceeds from asset
sales. No cost element within this category exceeds 5% of the total
reserve.
Execution of the restructuring program continues to be on track. The
cost of completing the program is expected to approximate the original
estimate. As anticipated, charges for the disposal of fixed assets will lag
behind spending for separation-related programs. About two-thirds of the
sites and production modules to be closed have been announced in order to
provide advance notice to employees.
Benefits continue to be realized from the restructuring program.
Fiscal year 1995 incremental savings are estimated at $240 million after-
tax, bringing cumulative restructuring savings to approximately 80% of the
$500 million after-tax objective established in June 1993. These amounts
reflect estimated gross savings, which have been offset to some degree by
lower pricing and other actions to build the business.
RESULTS OF OPERATIONS: 1994 COMPARED TO 1993
Worldwide net earnings in 1994 were $2,211 million, including a $102
million after-tax charge related to two interest rate swap contracts. In
the previous year, an after-tax loss of $656 million was recorded due to
two unusual items: restructuring reserves totaling $1,746 million after-tax
and the prior years' effects of two accounting changes amounting to $925
million. Excluding these unusual items in both years, net earnings would
have been $2,313 million in 1994, up 15% over earnings of $2,015 million in
the previous year.
Net sales were $30,296 million, about even with sales of $30,433
million in the previous year. The growth in unit volume increased net sales
by 5%, but was offset by less favorable foreign exchange rates, 4%, and the
divestiture of the pulp and 100% juice businesses and lower selling prices,
1%.
Gross margin was 42.7%, which compares with 41.9% for the preceding
year. Restructuring savings contributed to this increase, as plant sourcing
savings from lower depreciation and enrollment reductions began to be
realized.
Marketing, administrative and other operating expenses were 30.9% of
sales, down from 31.5% in the previous year which can be ascribed entirely
to
21
MANAGEMENT'S DISCUSSION AND ANALYSIS
restructuring savings, primarily from enrollment reductions.
Interest expense decreased $70 million from the previous year due to
lower borrowing rates and lower debt outstanding. Other income decreased
$197 million from the prior year, reflecting the $157 million loss on two
interest swaps in 1994 and $41 million one-time profit in 1993 from the
sale of businesses.
The effective tax rate was 33.9% for 1994, which compares with 22.9%
for 1993. The 1993 restructuring reserve reduced pre-tax earnings
significantly and accentuated the percent impact of certain cost elements
not tax affected at the 34% U.S. statutory rate. Excluding the
restructuring reserve, the 1993 effective tax rate would have been 34.0%.
In the following year-to-year comparison of segment results, 1993
earnings have been adjusted upward to exclude the impact of restructuring
reserves.
NORTH AMERICA
Net sales and unit volume for the region were flat from year-to-year,
reflecting the divestiture of the pulp and 100% juice businesses and, to a
lesser degree, lower pricing. Excluding the impact on sales of the
businesses divested, unit volume growth was offset by pricing actions.
North American after-tax earnings were $1,710 million, up 14% versus
the previous year. Net profit margins improved to a record 11.3%, with
restructuring benefits and other cost improvements contributing to the
increase over the previous year's 9.9% margin. Such restructuring benefits
provided the ability to neutralize the short-term impact of the Company's
value pricing initiative.
EUROPE, MIDDLE EAST AND AFRICA
Net sales for Europe, Middle East and Africa were $9,739 million, a decline
of 6% due to unfavorable exchange rate movements. Unit volume increased 6%.
Net earnings increased 14% to $563 million.
ASIA
Sales in Asia grew 13% to $3,134 million. Unit volume increased 20%. Net
earnings for the segment were $145 million, a decline of 10%, reflecting
the increased investment committed to new business initiatives.
LATIN AMERICA
Latin American unit volume increased 10% as sales grew to $2,256 million, a
13% increase. Net earnings increased 36% to $145 million, reflecting
aggressive cost cutting efforts.
FINANCIAL CONDITION: JUNE 30, 1994
COMPARED TO JUNE 30, 1993
Cash and cash equivalents totaled $2,373 million, an increase of $51
million from the previous year. Cash flow from operating activities reached
a record $3,649 million up $311 million over the previous year, despite the
negative cash impact of executing the projects contained in the 1993
restructuring reserves. Charges in 1994 to the restructuring reserve
established in June 1993 totaled $600 million of which $360 million
impacted cash, primarily due to separation costs. Increased earnings and
continuing reductions in working capital were key factors in offsetting
these charges.
Total debt excluding exchange effects decreased $664 million from the
previous year-end, reflecting reductions in both short term and long term
debt.
Regarding investing activities, capital expenditures were $1,841
million and $1,911 million for 1994 and 1993, respectively.
Dividends of $1.24 per common share were paid during the past year, up
from $1.10 and $1.025 per share in the previous two years. In July 1994,
the Company announced a 13% increase in the annual rate from $1.24 to $1.40
per common share, effective with the quarterly dividend paid in mid-August
to shareholders of record on July 22, 1994.
22
FINANCIAL STATEMENTS
RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Company management is responsible for the preparation, accuracy and
integrity of the financial statements and other financial information
included in this Annual Report. This responsibility includes preparing the
statements in accordance with generally accepted accounting principles and
necessarily includes estimates that are based on management's best
judgments.
To help insure the accuracy and integrity of Company financial data,
management maintains internal controls which are designed to provide
reasonable assurance that transactions are executed as authorized and
accurately recorded and that assets are properly safeguarded. These
controls are monitored by an extensive and ongoing program of internal
audits. It is essential for all Company employees to conduct their business
affairs in keeping with the highest ethical standards as outlined in our
code of conduct, "P&G, Your Personal Responsibility." Careful selection of
employees, and appropriate divisions of responsibility, also help us to
achieve our control objectives.
The financial statements have been audited by the Company's
independent public accountants, Deloitte & Touche LLP. Their report is also
shown on this page.
The Board of Directors, acting through its Audit Committee composed
entirely of outside directors, oversees the adequacy of the Company's
control environment. The Audit Committee meets periodically with
representatives of Deloitte & Touche LLP, and internal financial
management to review accounting, control, auditing and financial reporting
matters. The independent auditors and the internal auditors also have full
and free access to meet privately with the Committee.
/S/JOHN E. PEPPER /S/ERIK G. NELSON
John E. Pepper Erik G. Nelson
Chairman of the Board Chief Financial Officer
and Chief Executive
---------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
DELOITTE & 250 East Fifth Street
TOUCHE LLP Cincinnati, Ohio 45202
To the Board of Directors and Shareholders of The Procter & Gamble Company:
We have audited the accompanying consolidated balance sheets of The Procter
& Gamble Company and subsidiaries as of June 30, 1995 and 1994 and the
related consolidated statements of earnings, retained earnings, and cash
flows for each of the three years in the period ended June 30, 1995. These
financial statements are the responsibility of the companies' management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the companies
at June 30, 1995 and 1994 and the results of their operations and their
cash flows for each of the three years in the period ended June 30, 1995,
in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, effective July 1,
1992, the Company changed its methods of accounting for other post
retirement benefits and income taxes.
/S/DELOITTE & TOUCHE LLP
August 10, 1995
23
The Procter & Gamble Company and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
Years Ended June 30 (Millions of Dollars Except Per Share Amounts) 1995 1994 1993
--------------------------------------------------------------------------------------------------
NET SALES $33,434 $30,296 $30,433
Cost of products sold 19,623 17,355 17,683
Marketing, administrative, and other operating expenses 9,632 9,361 9,589
Provision for restructuring -- -- 2,705
--------------------------------------------------------------------------------------------------
OPERATING INCOME 4,179 3,580 456
Interest expense 488 482 552
Other income, net 309 248 445
--------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES & PRIOR YEARS'
EFFECT OF ACCOUNTING CHANGES 4,000 3,346 349
Income taxes 1,355 1,135 80
--------------------------------------------------------------------------------------------------
NET EARNINGS BEFORE PRIOR YEARS' EFFECT OF
ACCOUNTING CHANGES 2,645 2,211 269
Prior years' effect of accounting changes -- -- (925)
---------------------------------------------------------------------------------------------------
NET EARNINGS/(LOSS) $ 2,645 $ 2,211 $ (656)
---------------------------------------------------------------------------------------------------
PER COMMON SHARE:
NET EARNINGS BEFORE PRIOR YEARS' EFFECT OF
ACCOUNTING CHANGES $ 3.71 $ 3.09 $ 0.25
Prior years' effect of accounting changes -- -- $ (1.36)
NET EARNINGS/(LOSS) $ 3.71 $ 3.09 $ (1.11)
NET EARNINGS/(LOSS) ASSUMING FULL DILUTION $ 3.48 $ 2.91 $ (0.96)
DIVIDENDS $ 1.40 $ 1.24 $ 1.10
AVERAGE SHARES OUTSTANDING (IN MILLIONS) 686.0 683.1 680.4
--------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
Years Ended June 30 (Millions of Dollars) 1995 1994 1993
BALANCE AT BEGINNING OF YEAR $7,496 $6,248 $7,810
Net earnings/(loss) 2,645 2,211 (656)
Dividends to shareholders
Common (960) (847) (748)
Preferred, net of related tax benefit (102) (102) (102)
Excess of cost over the stated value of treasury shares (114) (14) (56)
--------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $8,965 $7,496 $6,248
--------------------------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
24
The Procter & Gamble Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
June 30 (Millions of Dollars) 1995 1994
---------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,028 $ 2,373
Investment securities 150 283
Accounts receivable 3,562 3,115
Inventories 3,453 2,877
Deferred income taxes 804 716
Prepaid expenses and other current assets 845 624
---------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 10,842 9,988
PROPERTY, PLANT, AND EQUIPMENT 11,026 10,024
GOODWILL AND OTHER INTANGIBLE ASSETS 4,572 3,754
OTHER ASSETS 1,685 1,769
---------------------------------------------------------------------------------
TOTAL ASSETS $28,125 $25,535
---------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 2,891 $ 2,604
Accounts payable - other 725 660
Accrued liabilities 3,494 2,961
Taxes payable 568 440
Debt due within one year 970 1,375
---------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 8,648 8,040
LONG-TERM DEBT 5,161 4,980
OTHER LIABILITIES 3,196 3,336
DEFERRED INCOME TAXES 531 347
---------------------------------------------------------------------------------
TOTAL LIABILITIES 17,536 16,703
---------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock 1,913 1,942
Common stock - shares outstanding: 1995 - 686,574,055;
1994 - 684,348,359 687 684
Additional paid-in capital 693 560
Currency translation adjustments 65 (63)
Reserve for employee stock ownership plan debt retirement (1,734) (1,787)
Retained earnings 8,965 7,496
---------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 10,589 8,832
---------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $28,125 $25,535
---------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
25
The Procter & Gamble Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended June 30 (Millions of Dollars) 1995 1994 1993
---------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 2,373 $ 2,322 $ 1,776
---------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings before prior years' effect of accounting changes 2,645 2,211 269
Provision for restructuring -- -- 2,705
Depreciation and amortization 1,253 1,134 1,140
Deferred income taxes 181 196 (1,065)
Change in accounts receivable (225) 40 (9)
Change in inventories (401) 25 97
Increase in payables and accrued liabilities 435 98 55
Change in other liabilities (157) (353) 67
Other (163) 298 79
---------------------------------------------------------------------------------------------------
TOTAL OPERATING ACTIVITIES 3,568 3,649 3,338
---------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (2,146) (1,841) (1,911)
Proceeds from asset sales 310 105 725
Acquisitions (623) (295) (138)
Change in investment securities 96 23 (306)
---------------------------------------------------------------------------------------------------
TOTAL INVESTING ACTIVITIES (2,363) (2,008) (1,630)
---------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Dividends to shareholders (1,062) (949) (850)
Reduction of short-term debt (429) (281) (277)
Additions to long-term debt 449 414 1,001
Reduction of long-term debt (510) (797) (939)
Proceeds from stock options 66 36 77
Purchase of treasury shares (114) (14) (55)
---------------------------------------------------------------------------------------------------
TOTAL FINANCING ACTIVITIES (1,600) (1,591) (1,043)
---------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 50 1 (119)
---------------------------------------------------------------------------------------------------
CHANGE IN CASH AND CASH EQUIVALENTS (345) 51 546
---------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,028 $ 2,373 $ 2,322
---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE
Cash payments for:
Interest, net of amount capitalized $ 444 $ 487 $ 592
Income taxes 1,047 1,225 1,035
Non-cash transactions:
Reductions in employee stock ownership plan debt
guaranteed by the Company 53 49 46
Liabilities assumed in acquisitions 575 65 83
Conversion of preferred to common shares 29 27 20
---------------------------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
26
The Procter & Gamble Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars except per share amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The consolidated financial statements include The
Procter & Gamble Company and its controlled subsidiaries (the Company).
Investments in companies that are at least 20% to 50% owned and over which
the Company exerts significant influence but does not control the financial
and operating decisions are accounted for by the equity method. These
investments are managed as integral parts of the Company's segment
operations; accordingly, the Company's share of their results is included
in net sales and in earnings for the related segments.
ACCOUNTING CHANGES: Effective July 1, 1992, the Company adopted Statement
of Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other than Pensions. This Statement requires
accrual of postretirement health care and life insurance benefits during an
employee's years of active service rather than on the previous pay-as-you-
go basis during the retirement years.
Effective July 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. This Statement
requires that deferred taxes reflect the impact of temporary differences
between the amounts of assets and liabilities recognized for financial
reporting purposes and amounts recognized for tax purposes, using currently
enacted tax laws and rates.
CURRENCY TRANSLATION: For most subsidiaries outside the U.S., the local
currency is the functional currency and translation adjustments are
accumulated in a separate component of shareholders' equity. For
subsidiaries whose economic environment is highly inflationary, the U.S.
dollar is the functional currency, and gains or losses that result from
remeasurement are included in earnings. In addition, transactional foreign
currency impacts are included in earnings. The losses included in net
earnings were $38 in 1995, $27 in 1994, and $42 in 1993.
CASH EQUIVALENTS: Highly liquid investments with maturities of three months
or less when purchased are considered to be cash equivalents.
DERIVATIVE INSTRUMENTS: The Company enters into derivative instruments to
manage exposure to fluctuations in interest rates, foreign exchange rates,
and certain raw material prices.
The interest rate differential on interest rate swap contracts used to
hedge underlying debt obligations is reflected as an adjustment to interest
expense over the life of the swaps. Written options are marked-to-market on
a current basis through income.
Gains and losses related to qualifying hedges of foreign currency firm
commitments or anticipated transactions are recognized in income when the
hedged transaction occurs. Gains or losses on currency swaps or foreign
currency denominated debt that qualify as hedges of net assets in foreign
subsidiaries are offset against the translation reflected in shareholders'
equity. Other foreign exchange contracts are marked-to-market on a current
basis through income.
Commodity instruments are accounted for as hedges, with any realized
gains or losses included in inventory, to the extent they are designated
and are effective as hedges of anticipated commodity purchases.
INVENTORY VALUATION: Inventories are valued at cost, which is not in excess
of current market. Cost is primarily determined by the average cost method,
with a lesser portion determined by the last-in, first-out method. The
replacement cost of LIFO inventories exceeds carrying value by
approximately $225.
GOODWILL AND OTHER INTANGIBLE ASSETS: The cost of intangible assets is
amortized, principally on a straight-line basis, over the estimated periods
benefited (not exceeding 40 years). The average remaining life is 33 years.
The realizability of goodwill and other intangibles is evaluated
periodically as events or circumstances indicate a possible inability to
recover their carrying amount. Such evaluation is based on various
analyses, including cash flow and profitability projections that
incorporate the impact on existing
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars except per share amounts)
Company businesses. The analyses necessarily involve significant management
judgment to evaluate the capacity of an acquired business to perform within
projections. Historically, the Company has generated sufficient returns
from acquired businesses to recover the cost of the intangible assets.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded
at cost reduced by accumulated depreciation. Depreciation expense is
provided based on historical cost and estimated useful lives. The Company
uses the straight-line method for calculating depreciation.
OTHER OPERATING EXPENSES: Research and development costs are charged to
earnings as incurred and were $1,257 in 1995, $1,059 in 1994 and $956 in
1993. Advertising costs are charged to earnings as incurred and amounted to
$3,284 in 1995, $2,996 in 1994, and $2,973 in 1993.
NET EARNINGS PER COMMON SHARE: Net earnings less preferred dividends (net
of related tax benefits) are divided by the average number of common shares
outstanding during the year to derive net earnings per common share. Fully
diluted earnings per share are calculated using the treasury stock method
to give effect to stock options and convertible preferred stock and include
an adjustment for preferred stock dividend requirements.
RECLASSIFICATIONS: Certain reclassifications of prior years' amounts have
been made to conform with the current year presentation.
2. PROVISION FOR RESTRUCTURING
Restructuring provisions totaling $2,705, which reduced after-tax earnings
by $1,746 or $2.57 per share, were established in fiscal 1993. A charge of
$2,402 covered a worldwide restructuring effort to consolidate
manufacturing systems and reduce overhead costs, and a $303 charge related
to the divestiture of the 100% juice business.
The restructuring provisions were determined based on estimates
prepared at the time the restructuring actions were approved by management
and the Board of Directors. The cost of completing the restructuring
programs is expected to approximate the original estimates.
3. ACQUISITIONS
In the first quarter of fiscal year 1995, the Company completed the
purchase acquisition of the European tissue business of Vereinigte
Papierwerke Schickedanz AG and the prestige fragrance business of Giorgio
Beverly Hills, Inc. These acquisitions had an aggregate purchase price of
$598. Other acquisitions accounted for as purchases totaled $25, $295, and
$138 in 1995, 1994 and 1993, respectively.
4. BALANCE SHEET INFORMATION
June 30 1995 1994
-------------------------------------------------------------------
INVENTORIES
Raw materials $ 1,315 $ 1,087
Work in process 247 213
Finished products 1,891 1,577
--------------------------------------------------------------------
3,453 2,877
PROPERTY, PLANT AND EQUIPMENT
Buildings 3,364 3,027
Machinery and equipment 13,734 12,249
Land 641 620
--------------------------------------------------------------------
17,739 15,896
Less accumulated depreciation 6,713 5,872
--------------------------------------------------------------------
11,026 10,024
GOODWILL AND OTHER
INTANGIBLE ASSETS
Goodwill 4,474 3,564
Trademarks and other
intangible assets 1,008 946
--------------------------------------------------------------------
5,482 4,510
Less accumulated amortization 910 756
--------------------------------------------------------------------
4,572 3,754
ACCRUED LIABILITIES
Marketing expenses 1,135 842
Compensation expenses 419 393
Restructuring reserves 828 870
Other 1,112 856
--------------------------------------------------------------------
3,494 2,961
OTHER LIABILITIES
Postretirement benefits 1,402 1,432
Restructuring reserves 466 1,035
Pension benefits 777 495
Other 551 374
--------------------------------------------------------------------
3,196 3,336
28
The Procter & Gamble Company and Subsidiaries
5. LONG-TERM DEBT
The following presents the carrying value of outstanding long-term debt,
including ESOP debt guaranteed by the Company:
June 30 1995 1994
------------------------------------------------------------------
6.85% notes due 1997 $ 200 $ 200
9 1/2% notes due 1998 200 200
8% notes due 2003 200 200
8% notes due 2024 200 --
8.7% notes due 2001 175 175
7 3/8% debentures due 2023 175 175
10 7/8% Canadian dollar
bonds due 2001 146 145
5.2% notes due 1995 150 150
9 5/8% notes due 2001 150 150
8 1/2% notes due 2009 149 149
7.1% notes due 1994 -- 200
6 1/4% notes due 1995 -- 200
Commercial paper 922 765
9.36% ESOP debentures due 2021 1,000 1,000
8.12%-8.33% serial ESOP notes,
due 1995-2004 734 787
Other 1,254 978
-------------------------------------------------------------------
5,655 5,474
Less current portion (494) (494)
-------------------------------------------------------------------
Total long-term debt 5,161 4,980
The following payments are required during the next five fiscal years:
1996 - $494; 1997 - $552; 1998 - $365; 1999 - $335 and 2000 - $273.
The fair value of the underlying long-term debt, excluding the current
portion, was $5,662 and $5,205 at June 30, 1995 and 1994, respectively. At
June 30, 1995 and 1994, the weighted average interest rate of short-term
borrowings was 9.5% and 6.5%, respectively. The increase in 1995 is the
result of more short-term borrowings in developing countries and reduced
short-term borrowings in the United States. Certain commercial paper
balances have been classified as long term debt based on the Company's
intent and ability to renew the obligations on a long-term basis. The
Company has entered into derivatives that convert these commercial paper
obligations into fixed-rate obligations.
6. RISK MANAGEMENT ACTIVITIES
The Company is exposed to market risk from changes in interest rates,
currency exchange rates, and certain commodity prices. To manage the
volatility relating to these exposures, the Company enters into various
derivative transactions pursuant to the Company's policies in areas such as
counterparty exposure and hedging practices. Positions are monitored using
techniques such as market value and sensitivity analyses. The Company does
not hold or issue derivative financial instruments for trading purposes and
is not a party to leveraged instruments.
INTEREST RATE MANAGEMENT
The Company's policy is to manage interest cost using a mix of fixed and
variable rate debt. To manage this mix in a cost efficient manner, the
Company enters into interest rate swaps, in which the Company agrees to
exchange, at specified intervals, the difference between fixed and variable
interest amounts calculated by reference to an agreed-upon notional
principal amount.
The following table presents information for outstanding interest rate
swaps.
1995 1994
------------- --------------
1995- Beyond 1994- Beyond
June 30 2000 2000 1999 1999
------------------------------------------------------------------
Pay Fixed:
Notional amount $845 $914 $593 $881
Weighted average
receive rate 4.9% 5.8% 5.4% 6.2%
Weighted average
pay rate 5.9% 7.0% 6.1% 7.8%
Pay Variable:
Notional amount $535 $171 $504 $171
Weighted average
receive rate 6.3% 9.3% 6.2% 9.2%
Weighted average
pay rate 6.8% 7.7% 5.7% 6.0%
Options and warrants may also be used to manage the Company's overall
risk profile. The notional amounts of such instruments have declined to
$300 at June 30, 1995 from $1,394 at June 30, 1994,
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars except per share amounts)
reflecting actions by management to reduce the exposure to written options.
The following table presents information for all interest rate
instruments. The notional amount does not necessarily represent amounts
exchanged by the parties and, therefore, is not a direct measure of the
exposure of the Company through its use of derivatives. The fair value
approximates the cost to settle the outstanding contracts. The carrying
value includes the net amount due to counterparties under swap contracts,
currency translation associated with currency interest rate swaps, and any
marked-to-market value of instruments. The effect of a weaker dollar
represents the majority of the fair values and carrying values presented
below. Because the currency interest rate swaps are designated as a hedge
of the Company's related foreign net asset exposures, the currency effects
are reflected in the currency translation adjustment section of
shareholders' equity, offsetting a portion of the translation of the net
assets.
June 30 1995 1994
-------------------------------------------
Notional amount $2,765 $3,543
Fair value-Loss 373 239
Carrying value 298 193
Unrecognized Loss 75 46
Although derivatives are an integral part of the Company's interest
rate management, their incremental effect on interest expense for 1995 and
1994 was insignificant.
Based on the Company's overall variable rate
exposure at June 30, 1995, including interest rate instruments, a 300 basis
point interest rate change would not have a material effect on earnings.
CURRENCY RATE MANAGEMENT
The primary purpose of the Company's foreign currency hedging activities is
to protect against the volatility associated with local currency purchase
transactions. Corporate policy prescribes the range of hedging activity
into which the subsidiary operations may enter. To execute this policy, the
Company primarily utilizes forward exchange contracts and options with
durations of generally less than 12 months. Because of the decentralized
management of these activities, the incremental impact is not determinable.
However, any change in the fair value of the instruments generally is
offset by a corresponding change in the related exposure.
In addition, the Company enters into foreign currency swaps to hedge
intercompany financing transactions and purchases foreign currency options
to hedge against the effect of exchange rate fluctuations on royalties and
foreign source income.
Currency instruments outstanding at June 30 are as follows:
Notional Carrying Fair
June 30 Amount Value Value
---------------------------------------------------------
1995
Forward Contracts $3,423 $ (8) $(20)
Purchased Options 2,419 61 38
Currency Swaps 863 (140) (140)
1994
Forward Contracts $1,873 $ (10) $ (3)
Purchased Options 1,138 10 14
Currency Swaps 646 (62) (62)
The aggregate notional amount of currency instruments outstanding at
June 30, 1995 increased over the prior year primarily due to expanded risk
management activities in response to exchange rate movements during the
third quarter. The impact of a weaker dollar at year end also increased the
notional value of instruments in dollars. The major currency exposures
hedged by the Company at June 30, 1995 include the German mark ($2,465
notional amount), U.S. dollar ($824 notional amount), British pound
sterling ($811 notional amount), Belgian franc ($631 notional amount), and
French franc ($535 notional amount).
Currency exposure related to the net assets of subsidiaries is managed
primarily through local currency financing and foreign currency denominated
financing instruments entered into by the parent company. At June 30, 1995,
the Company's total foreign net assets were $7,263. Of this, approximately
20% is denominated in the German mark. The Japanese yen,
30
The Procter & Gamble Company and Subsidiaries
Canadian dollar, British pound, Italian lira, and Mexican peso each
represent between approximately 5% and 10% of the total. No other
individual country represents more than 5% of the total. The Company has
designated $1,386 of foreign currency instruments as hedges of its net
asset exposure in certain foreign subsidiaries. These hedges offset $115 of
translation effects reflected in shareholders' equity for the year ended
June 30, 1995.
COMMODITY PRICE MANAGEMENT
Because market prices of certain raw materials depend on a number of
unpredictable factors, such as weather, the Company's policy is to manage
the resulting volatility using commodities contracts. At June 30, 1995 and
1994, the Company had commodities contracts outstanding, with a fair value
of $(5) and $11, respectively.
7. FINANCIAL INSTRUMENTS
Financial instruments include cash equivalents, investment securities, risk
management instruments, and certain other assets and liabilities.
INVESTMENTS
Pursuant to FASB Statement No. 115, the Company has classified its readily
marketable debt and equity securities, the majority of which are current
assets, as available for sale. The fair value of $241 approximates the
original cost.
CREDIT RISK
Credit risk arising from the inability of a counterparty to meet the terms
of the Company's financial instruments contracts is generally limited to
the amounts, if any, by which the counterparties' obligations exceed the
obligations of the Company. It is the Company's policy to only enter into
financial instruments with a diversity of creditworthy counterparties.
Therefore, the Company does not expect to incur significant credit losses
on financial instruments.
MARKET VALUATION METHODS
The estimated fair values of financial instruments, including risk
management instruments, have been determined using available market
information and valuation methodologies, primarily discounted cash flow
analysis. Such estimates require considerable judgment in interpreting
market data, and changes in assumptions or estimation methods may
significantly affect the fair value estimates. The carrying value of
financial instruments, excluding risk management instruments which are
discussed in Note 6, approximates fair value at June 30, 1995 and 1994.
8. SHAREHOLDERS' EQUITY
(Share Amounts in Thousands)
PREFERRED STOCK
The Company has 600,000 shares of authorized Class A preferred stock
(Series A and Series B), with a stated value of $1 per share.
Series A shares are held by the Employee Stock Ownership Plan. Each
issued share has a liquidation value equal to the issue price of $27.50 per
share. The shares are convertible at the option of the holder into one
share of the Company's common stock.
June 30 1995 1994 1993
---------------------------------------------------------
Series A:
Outstanding, June 30 33,218 34,269 35,246
Converted to common
shares and retired 1,051 977 626
---------------------------------------------------------
There were 19,142 shares of series B shares outstanding for all
periods, held by the Employee Stock Ownership Plan. Each share has a
liquidation value equal to the issuance price of $52.24 per share and is
convertible at the option of the holder into one share of the Company's
common stock.
At June 30, 1995 there were 200,000 shares of authorized and unissued
Class B preferred stock (nonvoting) with a stated value of $1 per share.
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars except per share amounts)
COMMON STOCK
The Company has authorized 2,000,000 shares of common stock with a stated
value of $1 per share. Changes in outstanding shares were as follows:
1995 1994 1993
---------------------------------------------------------------
Shares outstanding,
July 1 684,348 681,754 678,794
Purchased for
treasury (1,708) (255) (1,401)
Issued for
employee plans 3,934 2,849 4,361
---------------------------------------------------------------
Shares outstanding,
June 30 686,574 684,348 681,754
Treasury shares were 54,829, 54,501, and 55,521 at June 30, 1995, 1994
and 1993, respectively.
Under the Company's stock option plans, options have been granted to
key employees and directors to purchase common shares of the Company within
a ten-year term at the market value on the dates of the grants. Stock
option activity was as follows:
1995 1994 1993
--------------------------------------------------------------
OPTIONS
Outstanding, July 1 30,556 28,497 27,822
Granted 3,926 3,880 4,279
Exercised (2,639) (1,673) (3,380)
Canceled (151) (148) (224)
--------------------------------------------------------------
Outstanding,
June 30 31,692 30,556 28,497
Exercisable,
June 30 27,777 26,685 24,255
Available For Grant 9,755 6,418 3,095
AVERAGE PRICE
Outstanding,
June 30 42.72 38.23 34.73
Granted 66.21 56.81 51.56
Exercised 25.18 21.35 21.08
-------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL
Increases in additional paid-in capital resulted from the conversion of
preferred shares, and the excess amount realized over the stated value of
common shares issued pursuant to stock option and remuneration plans. This
amounted to $133, $83 and $112 for the years ended June 30, 1995, 1994 and
1993, respectively.
CURRENCY TRANSLATION ADJUSTMENTS
Amounts credited/(charged) to shareholders' equity were $128, $36 and
($211) during the years ended June 30, 1995, 1994 and 1993, including tax
effects of $73, $30 and ($1).
9. RETIREMENT PLANS
The Company maintains defined contribution profit sharing plans which
provide retirement benefits to a significant number of employees. These are
funded through the Procter & Gamble Profit Sharing Trust and Employee Stock
Ownership Plan and by cash contributions from the Company.
The Procter & Gamble PST and ESOP is the largest plan and covers most
employees in the United States. Annual credits to participants' accounts
are based on individual base salaries and years of service. The total
credited to all accounts does not exceed 15% of salaries and wages of
participants. Within this plan, a leveraged employee stock ownership trust
borrowed $1,000 in 1989 and the Company has guaranteed this debt. The
proceeds were used to buy Series A ESOP Convertible Class A Preferred Stock
and shares are allocated each year to individual accounts.
Amounts credited to these plans were:
Years Ended June 30 1995 1994 1993
------------------------------------------------------------
Preferred shares of P&G stock
allocated at market value $155 $117 $111
Profit sharing expense
(cash contributions) 112 157 167
------------------------------------------------------------
Benefits earned by
participants 267 274 278
Principal and interest payments of $117 on the borrowed funds are paid
each fiscal year by the trust from dividends on preferred shares and cash
payments as follows:
32
The Procter & Gamble Company and Subsidiaries
Preferred Company Total Debt
Years Ended June 30 Dividends Payment Service
---------------------------------------------------------------------------
1995
Principal $53 $-- $ 53
Interest 16 48 64
---------------------------------------------------------------------------
Total 69 48 117
1994
Principal $49 $-- $ 49
Interest 22 46 68
---------------------------------------------------------------------------
Total 71 46 117
1993
Principal $46 $-- $ 46
Interest 26 45 71
---------------------------------------------------------------------------
Total 72 45 117
PENSION PLANS
Other employees, primarily outside the U.S., are covered by local pension
or retirement plans.
OBLIGATIONS AND ASSETS
June 30 1995 1994
---------------------------------------------------------------
Vested benefit obligation $ 1,250 $ 979
Non-vested benefit obligation 178 146
Accumulated benefit obligation 1,428 1,125
Effect of projected salaries 375 363
---------------------------------------------------------------
Projected benefit obligation 1,803 1,488
Plan assets at market value (890) (806)
---------------------------------------------------------------
Unfunded pension benefit obligation 913 682
Unrecognized:
Net transition obligation (37) (30)
Prior service cost (45) (45)
Net losses (30) (90)
---------------------------------------------------------------
Accrued pension costs 801 517
Funded plan assets are held in restricted trusts or foundations that
are segregated from the assets of the Company. The assets are in stocks,
bonds, insurance contracts and other investments within the limits
prescribed by local laws, and in line with local investment practices for
pension and retirement plans. Funding policies vary by country and consider
such factors as actuarial reports, tax regulations and local practices. In
the U.S., plan assets exceeded the projected benefit obligation by $21 in
1995 and $2 in 1994.
PENSION EXPENSE
Years Ended June 30 1995 1994 1993
-------------------------------------------------------------------
Benefits earned during the year $ 89 $ 84 $ 66
Interest on projected
benefit obligation 116 97 86
Actual return on plan assets (74) (63) (71)
Net amortization and other 10 3 15
-------------------------------------------------------------------
Pension expense 141 121 96
The actuarial assumptions vary by country and consider such factors as
economic conditions and nature of plan assets. The following table presents
a summary of assumptions reflecting an average for the Company:
ASSUMPTIONS
Years Ended June 30 1995 1994 1993
-------------------------------------------------------------------
Long-term rate of return
on plan assets 9% 9% 9%
Increase in compensation 6% 6% 6%
Discount rate 7% 7.4% 8%
-------------------------------------------------------------------
OTHER RETIREE BENEFITS
The Company provides certain health care and life insurance benefits for
substantially all domestic employees who become eligible for these benefits
when they meet minimum age and service requirements. Generally, the health
care plans require contributions from retirees and pay a stated percentage
of expenses reduced by deductibles and other coverages. Retiree
contributions change annually in line with medical cost trends.
In fiscal year 1991, the Procter & Gamble PST and ESOP borrowed $1,000
which the Company has guaranteed and is reflected as debt on the Company's
balance sheet. The proceeds were used to buy shares of Series B ESOP
Convertible Class A Preferred Stock for the purpose of partially funding
retiree medical benefits. The fair values of the shares at June 30, 1995
and 1994 were $1,376 and $1,022. There were also other employee benefit
trust assets of $65 and $40 on June 30, 1995 and 1994. Interest payments on
the loan amounted to $94 for each of the years ended 1995, 1994 and 1993,
with $79 funded each year by preferred stock dividends and the remainder by
Company
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars except per share amounts)
cash payments. The preferred stock dividends were considered a reduction of
benefit expense.
Effective July 1, 1992, the Company implemented SFAS No. 106. The
effect of the accounting change on prior years, or accumulated benefit
obligation, was $1,422, or $900 after tax, at July 1, 1992.
ACCUMULATED BENEFIT OBLIGATION AND NET LIABILITY
June 30 1995 1994
-------------------------------------------------------------------
Retirees $ 611 $ 512
Employees eligible to retire 133 126
Other active employees 681 603
-------------------------------------------------------------------
Accumulated benefit
obligation 1,425 1,241
Unrecognized gain/(loss) 458 293
Plan assets at market value (440) (61)
-------------------------------------------------------------------
Net liability 1,443 1,473
BENEFIT EXPENSE
Years Ended June 30 1995 1994 1993
-------------------------------------------------------------------
Benefits earned during
the year $ 43 $ 60 $ 59
Interest on accumulated
benefit obligation 98 116 113
Actual return on plan assets (364) (21) --
Net amortization and other 241 (79) (90)
-------------------------------------------------------------------
Sub-total 18 76 82
Dividends on plan's
preferred stock (79) (79) (79)
-------------------------------------------------------------------
Benefit expense (61) (3) 3
ASSUMPTIONS
Years Ended June 30 1995 1994 1993
-------------------------------------------------------------------
Discount rate 7.5% 8% 8%
Long term rate of return
on plan assets 9% 9% 9%
Initial health care cost
trend rate* 10.5% 11% 12.7%
--------------------------------------------------------------------
* Assumed for 1995 and 1994 to decline gradually to 5% in 2006 and
thereafter. Assumed for 1993 to decline gradually to 6% in 2008 and
thereafter.
The pre-tax effect of a 1% increase in the assumed health care cost
trend rate would increase the accumulated benefit obligations at June 30,
1995 and 1994 by approximately $200 and $185, along with increases of $24
and $33 in the 1995 and 1994 annual costs.
10. INCOME TAXES
Effective July 1, 1992, the Company adopted SFAS No. 109, Accounting for
Income Taxes. The cumulative effect of the accounting change in prior years
was $25 of added tax expense.
EARNINGS BEFORE INCOME TAXES
Years Ended June 30 1995 1994 1993
--------------------------------------------------------------------
United States $2,683 $2,216 $ 318
Foreign 1,317 1,130 31
--------------------------------------------------------------------
Total 4,000 3,346 349
INCOME TAX PROVISIONS
Years Ended June 30 1995 1994 1993
--------------------------------------------------------------------
Current tax expense
U.S. Federal $ 718 $ 574 $ 635
Foreign 399 298 432
U.S. State & Local 57 67 78
--------------------------------------------------------------------
1,174 939 1,145
Deferred tax expense
U.S. Federal 124 118 (489)
Foreign & Other 57 78 (576)
--------------------------------------------------------------------
181 196 (1,065)
Total provision for
income taxes 1,355 1,135 80
Taxes credited to Shareholders' Equity for the years ended June 30,
1995 and 1994 were $144 and $91. Taxes generally are provided currently on
undistributed earnings of foreign subsidiaries, except when those earnings
are considered to be reinvested indefinitely ($3,047 at June 30, 1995).
The effective income tax rates, excluding prior years' effect of
accounting changes were 33.9%, 33.9% and 22.9% in 1995, 1994 and 1993
compared to the U.S. statutory rate of 35% for 1995 and 1994, and 34% for
1993. In 1993, the effective rate was increased 4.2% by state and local
taxes and 5.1% by goodwill and other acquisition effects, and decreased
15.0% by the impact of international rates and credits.
34
The Procter & Gamble Company and Subsidiaries
DEFERRED INCOME TAX ASSETS AND LIABILITIES
June 30 1995 1994
------------------------------------------------------------------
Current deferred tax assets:
Restructuring reserve $ 293 $ 274
Other 511 442
------------------------------------------------------------------
Total current deferred tax assets 804 716
------------------------------------------------------------------
Non-current deferred tax assets:
Restructuring reserve $ 170 $ 364
Postretirement benefits 550 540
Loss carryforwards 276 282
------------------------------------------------------------------
996 1,186
Valuation allowance (263) (262)
------------------------------------------------------------------
733 924
Non-current deferred tax liabilities:
Depreciation (1,164) (1,173)
Other (100) (98)
------------------------------------------------------------------
(1,264) (1,271)
------------------------------------------------------------------
Net non-current deferred income taxes (531) (347)
11. COMMITMENTS AND
CONTINGENCIES
The Company has various purchase commitments for materials, supplies and
items of permanent investment incidental to the ordinary conduct of
business. In the aggregate, such commitments are not at prices in excess of
current market.
The Company is subject to various lawsuits and claims with respect to
matters such as governmental regulations, income taxes and other actions
arising out of the normal course of business. While the effect on future
financial results is not subject to reasonable estimation because
considerable uncertainty exists, in the opinion of management and Company
counsel, the ultimate liabilities resulting from such claims will not
materially affect the consolidated financial position, results of
operations, or cash flows of the Company.
The Company is also subject to contingencies pursuant to environmental
laws and regulations that in the future may require the Company to take
action to correct the effects on the environment of prior manufacturing and
disposal practices. Accrued environmental liabilities for remediation and
closure costs at June 30, 1995 were $113 and, in management's opinion, such
accruals are appropriate based on existing facts and circumstances. Under
the most adverse circumstances, however, this potential liability could be
higher. In the event that future remediation expenditures are in excess of
the amounts accrued, management does not anticipate that they will have a
material adverse effect on the consolidated financial position, results of
operations, or cash flows of the Company. Current year expenditures were
not material.
12. SEGMENT INFORMATION
The Company has changed its segments for financial reporting purposes. All
prior year amounts have been restated to reflect the following changes.
Geographic segments are now aligned into four regions: North America -
including the United States and Canada; Europe - including Europe, Middle
East and Africa; Asia; and Latin America.
Business segments now are aligned as follows:
Laundry and Cleaning - laundry, dishcare, hard surface cleaners and fabric
conditioners. Representative brands include Ariel, Tide, Cascade, Dawn, Mr.
Proper, Downy.
Paper - tissue/towel, feminine protection, and diapers. Representative
brands include Bounty, Charmin, Always, Whisper, Pampers.
Beauty Care - hair care, deodorants, personal cleansing, skin care and
cosmetics and fragrances. Representative brands include Pantene, Vidal
Sassoon, Secret, Safeguard, Olay, Cover Girl.
Food and Beverage - coffee, peanut butter, juice, snacks, shortening and
oil, baking mixes and commercial services. Representative brands include
Folgers, Jif, Sunny Delight, Pringles, Crisco, Duncan Hines.
Health Care - oral care, gastro-intestinal, respiratory care, analgesics
and pharmaceuticals. Representative brands include Crest, Scope, Metamucil,
Vicks, Aleve.
The Company's operations are characterized by interrelated raw
materials and manufacturing facilities and centralized research and staff
functions. Accordingly, separate profit determination by segment is
dependent upon assumptions regarding allocations.
35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars except per share amounts)
Corporate items include interest income and expense, segment
eliminations, and other general corporate income and expense. Corporate
assets consist primarily of cash and cash equivalents.
GEOGRAPHIC SEGMENTS
Europe,
Middle East
North America and Africa Asia Latin America Corporate Total
---------------------------------------------------------------------------------------------------------------------------------
Net Sales 1995 $16,213 $11,019 $3,619 $2,184 $ 399 $33,434
1994 15,147 9,739 3,134 2,256 20 30,296
1993 15,100 10,336 2,775 1,990 232 30,433
---------------------------------------------------------------------------------------------------------------------------------
Net Earnings Before 1995 1,871 687 203 215 (331) 2,645
Prior Years' Effect of 1994 1,710 563 145 145 (352) 2,211
Accounting Changes 1993<F1> 1,500 494 161 107 (247) 2,015
---------------------------------------------------------------------------------------------------------------------------------
Identifiable Assets 1995 11,375 7,446 3,311 1,305 4,688 28,125
1994 10,699 5,576 2,690 1,302 5,268 25,535
1993 10,809 5,486 2,375 1,067 5,198 24,935
---------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Excludes an after-tax charge for restructuring: North America - $1,223,
Europe, Middle East and Africa - $342, Asia - $53, Latin America - $50, and
Corporate - $78. Total - $1,746.
</FN>
BUSINESS SEGMENTS
Laundry and Beauty Food and Health
Cleaning Paper Care Beverage Care Corporate Total
----------------------------------------------------------------------------------------------------------------------------------
Net Sales 1995 $10,224 $9,291 $6,507 $3,988 $3,025 $ 399 $33,434
1994 9,838 8,282 5,912 3,261 2,983 20 30,296
1993 10,013 8,307 5,562 3,343 2,976 232 30,433
----------------------------------------------------------------------------------------------------------------------------------
Earnings Before 1995 1,695 1,131 736 513 360 (435) 4,000
Income Taxes and 1994 1,485 1,085 578 361 358 (521) 3,346
Accounting Changes 1993<F1> 1,404 952 357 240 402 (301) 3,054
----------------------------------------------------------------------------------------------------------------------------------
Identifiable Assets 1995 5,375 7,082 5,511 2,148 3,321 4,688 28,125
1994 4,777 5,521 4,936 2,049 2,984 5,268 25,535
1993 4,453 5,274 5,045 2,190 2,775 5,198 24,935
----------------------------------------------------------------------------------------------------------------------------------
Capital 1995 608 731 341 150 295 21 2,146
Expenditures 1994 590 663 247 136 182 23 1,841
1993 575 741 238 110 176 71 1,911
----------------------------------------------------------------------------------------------------------------------------------
Depreciation 1995 279 500 189 108 144 33 1,253
and 1994 252 435 177 113 131 26 1,134
Amortization 1993 235 403 189 144 110 59 1,140
<FN>
<F1>Excludes a pre-tax charge for restructuring: Laundry and Cleaning -
$559, Paper - $626, Beauty Care - $614, Food and Beverage - $450, Health
Care - $333, and Corporate - $123. Total - $2,705.
</FN>
(Pie graph showing 1995 Net Sales by Business Segment. Laundry and
Cleaning 31%; Paper 28%; Beauty Care 19%; Food and Beverage 12%;
Health Care 9%; and Corporate 1%.)
36
The Procter & Gamble Company and Subsidiaries
13. QUARTERLY RESULTS (UNAUDITED)
-------------------------------------------------------------------------------------------------
Quarters Ended
---------------------------------------
Total
Sept. 30 Dec. 31 Mar. 31 Jun. 30 Year
-------------------------------------------------------------------------------------------------
Net sales 1994-95 $8,161 $8,467 $8,312 $8,494 $33,434
1993-94 7,564 7,788 7,441 7,503 30,296
-------------------------------------------------------------------------------------------------
Operating income 1994-95 1,254 1,190 1,057 678 4,179
1993-94 1,085 1,023 923 549 3,580
-------------------------------------------------------------------------------------------------
Net earnings 1994-95 792 750 631 472 2,645
1993-94 670 653 482 406 2,211
-------------------------------------------------------------------------------------------------
Net earnings 1994-95 1.12 1.06 .88 .65 3.71
per common share 1993-94 .95 .92 .66 .56 3.09
-------------------------------------------------------------------------------------------------
Fully diluted net earnings 1994-95 1.05 .99 .81 .63 3.48
per common share 1993-94 .89 .85 .64 .53 2.91
--------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Dollars in Millions Except Per Share Amounts) 1995 1994 1993<F1><F2> 1992 1991
--------------------------------------------------------------------------------------------------------
Net Sales 33,434 30,296 30,433 29,362 27,026
Operating Income 4,179 3,580 456 2,867 2,702
Net Earnings/(Loss) 2,645 2,211 (656) 1,872 1,773
Net Earnings/(Loss) per Common Share 3.71 3.09 (1.11) 2.62 2.46
Dividend per Common Share 1.40 1.24 1.10 1.025 .975
Research and Development Expense 1,257 1,059 956 861 786
Advertising Expense 3,284 2,996 2,973 2,693 2,511
Total Assets 28,125 25,535 24,935 24,025 20,468
Long-term Debt 5,161 4,980 5,174 5,223 4,111
Net Earnings Margin 7.9% 7.3% -- 6.4% 6.6%
Cash Flow from Operations 3,568 3,649 3,338 3,025 2,009
Employees 99,200 96,500 103,500 106,000 94,000
--------------------------------------------------------------------------------------------------------
<FN>
<F1>Operating income includes a pre-tax charge totaling $2,705 for
restructuring
<F2>Net earnings and per share earnings include an after-tax charge total
$1,746 or $2.57 per share for restructuring and an after-tax charge of
$925 or $1.36 per share for the prior years' effect of accounting
changes
</FN>
37
The Procter & Gamble Company and Subsidiaries
SHAREHOLDER INFORMATION
COMMON STOCK PRICE RANGE AND DIVIDENDS
Price Range Dividends
--------------------------------------------------------------- ----------------------
1994-95 1993-94 1994-95 1993-94
--------------------------------------------------------------- ----------------------
Quarter Ended High Low High Low
--------------------------------------------------------------- ----------------------
September 30 $60.88 $53.13 $53.63 $45.25 $.35 $.31
December 31 64.63 58.25 58.88 46.88 .35 .31
March 31 70.38 60.63 60.00 51.25 .35 .31
June 30 74.25 65.88 58.63 51.75 .35 . 31
SHAREHOLDER RECORDS
Shareholder records are maintained by the Company. Questions concerning
shareholder accounts, stock transfer or name changes should be directed to
the Shareholder Services Department address shown at right or by calling
1-800-742-6253.
Stock certificates are valuable and should be safeguarded since replacement
takes time and requires a service charge to the shareholder. If a stock
certificate is lost, stolen or destroyed, notify the Shareholder Services
Department promptly.
Please also notify Shareholder Services in writing of any address change.
This will help prevent returned dividend checks and other financial
mailings.
DUPLICATE MAILINGS
Financial reports must be mailed for each separate account unless you
instruct us otherwise. If you wish to help us reduce costs by discontinuing
multiple mailings to your address, please contact Shareholder Services.
SHAREHOLDER INVESTMENT PROGRAM
This programs allows participants to reinvest their dividends and make
optional cash purchases of Procter & Gamble Common Stock directly through
the Program. For a copy of the prospectus, please contact Shareholder
Services.
DIRECT DEPOSIT OF DIVIDENDS
Shareholders of record may have their dividends electronically deposited
into their bank account. If you are interested in this service, please
contact Shareholder Services.
SHAREHOLDERS' MEETING
The next annual meeting of the shareholders will be held on Tuesday,
October 10, 1995, at the Company's General Offices, Two Procter & Gamble
Plaza, Cincinnati, OH 45202.
CORPORATE HEADQUARTERS
The Procter & Gamble Company
P.O. Box 599
Cincinnati, Ohio 45201-0599
TRANSFER AGENT/SHAREHOLDER SERVICES
The Procter & Gamble Company
Shareholder Services Department
P.O. Box 5572
Cincinnati, Ohio 45201-5572
REGISTRAR
PNC Bank, Ohio, N.A.
P.O. Box 1198
Cincinnati, Ohio 45201-1198
EXCHANGE LISTING
New York, Cincinnati, Amsterdam, Paris, Basle, Geneva, Lausanne, Zurich,
Frankfurt, Antwerp, Brussels, Tokyo.
SHAREHOLDERS OF COMMON STOCK
There were 193,066 Common Stock shareholders of record, including
participants in the Shareholder Investment Program, as of July 21, 1995.
FORM 10-K
Beginning in October 1995, shareholders may obtain a copy of the Company's
1995 report to the Securities and Exchange Commission on Form 10-K by
sending a request to Mr. Robert J. Thompson, Manager, Shareholder Services,
at the above Shareholder Services address.
COMPANY INFORMATION
Copies of P&G's global Environmental Report, corporate contributions and
diversity program reports, corporate brochure and fact sheets are available
by writing to Corporate Communications at the Corporate headquarters
address above.
This report printed on recycled paper made from 50% recycled fiber
including 10% post-consumer waste.
40