What were the main drivers of the sales growth this quarter?

Sales growth was primarily driven by a 10% increase in unit volume, led by double-digit growth in the Health and Beauty Care businesses, and strong progress in Fabric and Home Care. However, this was partially offset by a 3% negative impact from pricing/mix and a 3% negative impact from foreign exchange.

How did the acquisition of Clairol impact the financial results?

The acquisition of Clairol, completed in November 2001, contributed significantly to the Beauty Care segment, driving an 18% increase in net sales and a 28% increase in unit volume for the segment. The integration of Clairol also led to increased marketing investments and administrative costs within the Beauty Care segment.

What is the impact of the restructuring charges on the company's earnings?

The company recorded a $147 million after-tax restructuring charge ($191 million before tax) in the current quarter, related to streamlining operations and business portfolio. While this charge reduced reported net earnings, the company also highlights 'core net earnings,' which exclude these charges, showing a stronger year-over-year comparison. Excluding these charges, core EPS grew from $0.75 to $0.84.

How has the company's cash flow position changed?

Cash generated from operating activities was strong, totaling $5.4 billion for the nine months ended March 31, 2002, a significant increase of $1.6 billion from the prior year. This improvement reflects both earnings growth and a non-recurring shift in payment timing for certain operating accruals. Capital expenditures were also significantly lower than the prior year.

PG 10-Q Quarterly Report Q3 FY2002 — Revenue, Net Income, EPS

Summary

Procter & Gamble reported strong financial results for the third quarter of fiscal year 2002, with net sales increasing by 4% to $9.9 billion and net earnings rising to $1.039 billion, or $0.74 per diluted share. This represents a significant improvement from the prior year's quarter, with diluted EPS growing from $0.63 to $0.74. The company's performance was driven by robust unit volume growth across its key segments, particularly Health Care and Beauty Care, the latter benefiting from the recent acquisition of Clairol. Despite a negative impact from pricing and foreign exchange, underlying operational strength is evident. Operationally, the company demonstrated improved margins, with gross margin increasing to 48.8% and operating margin to 16.7%. This margin expansion is attributed to successful restructuring actions, lower material costs, and a favorable portfolio mix. While the company incurred restructuring charges of $147 million after tax in the current quarter, it also benefited from the accounting change that discontinued amortization of goodwill and certain intangibles. The acquisition of Clairol for approximately $5 billion in cash, financed through debt, is a significant strategic move expected to provide synergies and expand the company's presence in the hair coloring market.

Key Highlights

1Net sales increased 4% year-over-year to $9.9 billion for the third quarter.
2Diluted earnings per share (EPS) grew to $0.74 from $0.63 in the prior year's quarter, a 17.5% increase.
3The company incurred a $147 million after-tax restructuring charge in the current quarter, compared to $113 million in the prior year.
4Gross margin improved to 48.8% from 45.6% in the prior year's quarter, reflecting efficiency gains and cost reductions.
5Operating income saw a substantial increase to $1.654 billion from $1.302 billion, boosting operating margin.
6The acquisition of the Clairol business for approximately $5 billion was completed in November 2001, significantly impacting the Beauty Care segment.
7Cash flow from operations was strong at $5.4 billion for the nine months ended March 31, 2002, up significantly from the prior year.

PROCTER & GAMBLE Co Quarterly Report for Q3 Ended Mar 31, 2002

Summary

Key Highlights

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