P&G Reports $0.98 EPS, Up 17%, on 9% Sales Growth; Announces Plan to Create Stand-Alone Coff...(European Family Care divestiture and for...),Health

percent. Baby Care volume increased double-digits behind strong

results in developed regions on Baby Dry, Swaddlers and Luvs and

continued successful expansion of Pampers in developing regions.

Family Care organic volume was up mid-single digits behind strong

results on both Charmin and Bounty. Net earnings in Baby Care and

Family Care were up 23 percent to $418 million as sales growth and

lower manufacturing and overhead costs as a percent of net sales more

than offset higher commodity costs.

Fiscal Year and January - March Quarter Guidance

For the 2008 fiscal year, the company expects organic sales to grow four to six percent, in-line with its long-term target range. The combination of pricing and product mix is expected to have a neutral to positive one percent impact on sales growth. Foreign exchange is expected to have a positive impact of about four percent. The net impact of acquisitions and divestitures is estimated to have a negative one percent impact on sales growth. Total sales are expected to increase seven to nine percent. This is an increase of one percent versus the company's previous guidance range due to the increased foreign exchange outlook.

The company now expects earnings per share to be in the range of $3.46 to $3.50, up 14 to 15 percent versus the prior year. This is an improvement versus the company's prior guidance range of $3.46 to $3.49 due to the strong results in the October-December quarter. Operating margins are expected to improve by 20 to 50-basis points driven by lower overhead costs as a percent of sales. The tax rate for fiscal year 2008 is expected to be at or slightly below 28%.

For the January-March quarter, organic sales are expected to grow four to six percent. The combination of pricing and product mix is expected to be about neutral to sales growth. Foreign
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