P&G To Sustain 4-6% Topline And Double-Digit Eps Growth Without Restructuring Savings

NEW YORK, Dec. 12, 2002 - A.G. Lafley, chairman, president and chief executive of The Procter & Gamble Company, outlined for securities analysts today the company's plan to sustain four to six percent sales growth and double-digit earnings per share growth - long-term - without the restructuring savings from which it has benefited since 1999.

Additionally, the company announced its intention to end its current restructuring program and return to a single-number reporting system by July 2003 - a year earlier than previously announced.

"P&G can sustain growth without special restructuring charges by staying focused on the strategic choices that got us back on track, continuing to build core strengths, and making systemic changes to further leverage strategies and strengths," said Lafley.

Lafley said the strategic choices the company has made over the last two-and-a-half years have worked well. As a result, the company will continue to focus on:

Core categories (laundry, hair care, diapers and feminine protection) Leading, billion-dollar brands Big, developed markets Key developing markets Winning with leading retail customers Driving higher-growth, higher-margin businesses.

"The choices are working, yet there's still plenty of upside potential here," said Lafley.

P&G Will Continue to Leverage Core Strengths

Lafley said that the company will continue to leverage its core strengths: branding, innovation and global scale.

"We are a company of brands, and we continue to find ways to develop existing franchises and create new ones," said Lafley. "Crest® has moved from cavity prevention to oral care and Pampers® has evolved from diapers to baby care and development."

Lafley reiterated that innovation remains P&G's lifeblood. The company is complementing its own capability with a global network of innovation partners.

P&G is Changing as it Grows

"In many ways, P&G is a different company than we were three years ago," said Lafley. "We put on a new set of lenses to help us look at the world through the eyes of consumers, customers and shareholders. We are sharply focused on consumer value and on winning the first (in-store) and second (at home) moments of truth."

Today, P&G has a substantially new leadership team with broad business experience. P&G is more externally focused and better organized to leverage global scale and local knowledge with its Global Business Units and local Market Development Organizations; more flexible and collaborative internally; more focused on commercializing innovation successfully; and more focused on financial discipline to deliver stronger total shareholder return.

P&G Strengthens Financial Discipline

"Heightened focus and priority on cash flow is driving breakthrough results," said Clayton C. Daley, Jr., P&G's chief financial officer. The company's latest forecasts indicate capital spending for the 2002-2003 fiscal year to be at or below 4.5 percent of sales for the second year in a row. The company announced it is raising its long-term target for free cash flow generation (operating cash flow minus capital spending) as a percentage of earnings. The previous objective was 75 percent of earnings delivered as free cash flow. Based on progress in the last two years and plans the company has in place, it is resetting the long-term objective to 90 percent free cash flow productivity.

P&G is Delivering on Commitments

"Eighteen months ago, I set the expectation that P&G would achieve sequential topline and core EPS progress in 2002," Lafley told the analysts. "I'm pleased we've been able to deliver on those commitments. This is the performance you expect of us, and we expect of ourselves." Those results include:

Steady volume growth with each of the last three quarters up double digits; up seven percent on average, excluding acquisitions and divestitures. Steady sales growth, up nearly five percent on average over the past 18 months excluding foreign exchange. An average increase of 12 percent on core EPS over the last six quarters. $9.2 billion in free cash flow, over the past six quarters, nearly twice the cash needed to acquire Clairol.

In conclusion, Lafley said, "Over the past three years, we have focused on consistent, predictable, sustainable growth. We are now back on track and have every intention of staying there."

Forward Looking Statement

All statements, other than statements of historical fact included in this news release, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this news release, there are certain factors that could cause results to differ materially from those anticipated by some of the statements made. These include the achievement of the business unit volume and income growth projections, the successful achievement of the company's cost containment goals, the continued political and/or economic uncertainty in Latin America and the Middle East, any political and/or economic uncertainty due to terrorist activities, the ability to successfully manage and maintain key customer relationships, the stability of material costs as well as factors listed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the company's most recently filed Forms 10-K and 8-Ks.

About Procter & Gamble

P&G is celebrating 165 years of providing trusted quality brands that make every day better for the world's consumers. We market nearly 300 brands - including Pampers®, Tide®, Ariel®, Always®, Whisper®, Pantene®, Bounty®, Pringles®, Folgers®, Charmin®, Downy®, Lenor®, Iams®, Crest®, Actonel®, Olay® and Clairol Nice 'n Easy® - in more than 160 countries around the world. The P&G community consists of nearly 102,000 employees working in almost 80 countries worldwide. Please visit www.pg.com for the latest news and in-depth information about P&G and its brands.