How did the acquisition of Gillette impact the company's financial results this quarter?

The acquisition of The Gillette Company, completed on October 1, 2005, significantly contributed to Procter & Gamble's results. It drove a substantial increase in net sales, up 21% to $17.25 billion for the quarter. While Gillette's brands boosted sales and gross margins due to their favorable profile, the acquisition also brought about $150 million in acquisition-related expenses in SG&A for the quarter, including increased amortization of revalued intangible assets. Diluted EPS was estimated to have $0.07-$0.08 of dilution from the acquisition.

What is the company's performance trend in terms of organic growth?

Procter & Gamble demonstrated solid organic sales growth of 6% for the three months ended March 31, 2006, and 7% for the nine months ended March 31, 2006. This indicates that the underlying business, excluding the impact of acquisitions, divestitures, and foreign exchange, is performing well across various segments and regions, with particular strength noted in developing markets.

How is the company managing commodity cost pressures?

The company faced increased commodity costs which had a negative impact on gross margin. However, these pressures were largely offset by a combination of factors including scale leverage from volume growth, pricing initiatives, cost savings projects, and the favorable product mix, particularly from the inclusion of Gillette's higher-margin products. Gross margin expanded by 110 basis points in the quarter.

What is the status of the share repurchase program?

As of March 31, 2006, the company had repurchased $15.8 billion of its common stock under the announced $20 billion share buyback program. This program, primarily initiated in conjunction with the Gillette acquisition and financed by debt, is expected to be completed by mid-calendar 2006, reflecting a continued focus on returning capital to shareholders.

PG 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

Procter & Gamble's (PG) Q3 2006 filing for the period ending March 31, 2006, showcases robust performance driven significantly by the recent acquisition of The Gillette Company. Net sales for the quarter surged by 21% to $17.25 billion, with organic sales growth of 6% indicating strong underlying business momentum. Diluted earnings per share also saw a healthy increase of 7% to $0.63. The company highlighted significant gross margin expansion, a result of scale leverage, pricing initiatives, and the favorable margin profile of the acquired Gillette brands, which more than offset rising commodity costs. Operationally, the integration of Gillette appears to be progressing, contributing positively to both sales and earnings, although acquisition-related expenses and amortization of revalued intangible assets did introduce some short-term dilution. The company continued its substantial share repurchase program, underscoring a commitment to returning capital to shareholders. Management's commentary emphasizes broad-based growth across segments and regions, with particular strength noted in developing markets, signaling a well-diversified and resilient business model despite some currency headwinds.

Key Highlights

1Net sales increased 21% to $17.25 billion for the three months ended March 31, 2006, boosted by the inclusion of Gillette's results and organic growth.
2Diluted earnings per share (EPS) rose 7% to $0.63 for the quarter, demonstrating improved profitability.
3Gross margin expanded by 110 basis points to 51.7%, driven by scale leverage, pricing, cost savings, and the favorable mix from the Gillette acquisition, which more than offset commodity cost increases.
4Selling, general, and administrative (SG&A) expenses as a percentage of sales decreased by 60 basis points, indicating effective cost management and leverage from sales growth.
5The company repurchased $15.8 billion of its stock under a $20 billion buyback program as of March 31, 2006, demonstrating a commitment to shareholder returns.
6Organic sales grew 6% for the quarter, reflecting underlying business strength across segments and geographies, with notable growth in developing markets.
7The integration of Gillette is progressing, with its businesses contributing positively to sales and earnings, although acquisition-related expenses and amortization impacted reported figures.

PROCTER & GAMBLE Co Quarterly Report for Q3 Ended Mar 31, 2006

Summary

Key Highlights

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