P&G Delivers Second Quarter EPS and Organic Sales in Line with Ex...(s which exclude the impacts of acquisiti...),Health

-- Operating margin declined 90 basis points for the quarter on a commodity cost driven decline in gross margin and incremental restructuring charges related to the Folgers transaction.

Key Financial Highlights

Net sales for the quarter decreased three percent to $20.4 billion. Unfavorable foreign exchange reduced net sales by five percent as the U.S. dollar appreciated versus the euro, British pound and Canadian dollar. Volume declined three percent for the quarter driven primarily by trade inventory reductions and consumption declines. Price increases added four percent and product mix added one percent to net sales. Organic sales increased two percent for the quarter led by the Baby Care and Family Care segment and the Snacks and Pet Care segment.

Net earnings increased 53 percent for the quarter to $5.0 billion and diluted net earnings per share increased 61 percent to $1.58. Net earnings from continuing operations declined seven percent to $3.0 billion due to lower net sales and operating margin. Net earnings from discontinued operations were $2.0 billion for the quarter consisting primarily of the gain from the Folgers transaction completed in the quarter. Net sales and earnings of the Folgers business, which was divested on November 8, 2008, have been removed from continuing operations and are now reported as discontinued operations in current and prior period results.

Operating margin was down 90 basis points for the quarter primarily due to higher commodity costs and Folgers-related restructuring charges. Gross margin declined by 70 basis points to 51.6 percent as higher commodity and energy costs of about 300 basis points were largely offset by the impact of price increases and manufacturing cost savings. Selling, general and administrativ
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