01—Abstract
Summary
Summary of the 8-K filed September 5, 2002. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble filed this Form 8-K on September 5, 2002 under Regulation FD to disclose an updated sales and earnings per share growth outlook for the September 2002 quarter (its first fiscal quarter of fiscal 2003).
The company is raising its guidance, citing strong volume performance. Volume is now expected to grow double digits, helped by the Clairol acquisition, strength in the health care business, and continued growth in developing markets. Excluding acquisitions and divestitures, volume growth is forecast in the high single digits.
On the top line, sales excluding foreign exchange are expected to grow in the high single digit percent range, with a slightly positive currency effect at current rates. Core earnings per share, which exclude restructuring charges, are now expected to grow in the mid-teens. Operating margins are expected to improve year over year, but gross margin gains are expected to be largely offset by higher marketing, research, administrative, and other spending.
The company reaffirmed its fiscal 2003 outlook: core EPS growth at its long-term double-digit target and sales growth of 4 to 6 percent excluding foreign exchange, with minimal currency impact for the full year. For investors, the key takeaway is an upward revision to near-term results, driven mainly by volume, while full-year expectations are unchanged. The filing is a voluntary guidance update rather than a financial statement release, so the figures are management forecasts, not reported results.
02—Key points
Key Highlights
- P&G raised its September 2002 quarter guidance for both sales and core EPS growth, citing strong volume performance.
- Volume growth is expected to be double digits, including acquisitions; excluding acquisitions and divestitures, it is forecast in the high single digits.
- Core EPS (excluding restructuring charges) is expected to grow in the mid-teens percent range for the quarter.
- Sales excluding foreign exchange are expected to grow in the high single digit percent range, with a slightly positive FX impact at current rates.
- Operating margins are expected to be higher year over year, but gross margin gains will be largely offset by increased marketing, R&D, and administrative spending.
- Fiscal 2003 guidance is unchanged: core EPS growth at the long-term double-digit target and 4–6% sales growth excluding FX.
- Growth drivers cited include the Clairol acquisition, the health care business unit, and developing markets.
03—Questions
Frequently Asked Questions
Why did P&G raise its guidance for the September 2002 quarter?
The company attributed the revision to strong volume performance, including contributions from the Clairol acquisition, the health care business unit, and continued strength in developing markets.
Did P&G change its full-year fiscal 2003 outlook?
No. The company said its fiscal 2003 guidance remains unchanged, with core EPS expected to grow at its long-term double-digit target and sales (excluding FX) expected to grow 4 to 6 percent.
What does 'core earnings per share' mean in this filing?
Core EPS excludes restructuring charges. The guidance calls for core EPS growth in the mid-teens percent range for the September 2002 quarter.
Why isn't higher gross margin flowing through to operating margins?
Per the release, gross margin improvements are expected to be largely offset by increased spending on marketing, research, administration, and other areas, so operating margin gains are expected to be modest even though they are higher than the prior-year quarter.
Why was this 8-K filed?
P&G filed the 8-K under SEC Regulation FD, which requires that material information disclosed to investors be made broadly available. The company issued the guidance update as a public news release and filed it with the SEC.
04—Continue