SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED] for the fiscal year ended June 30, 1996, or
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] for the transition period from
________________ to ______________________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below: The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan, The Procter & Gamble Company,
Two Procter & Gamble Plaza, Cincinnati, Ohio 45202.
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: The Procter & Gamble
Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202.
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance With
the Financial Reporting Requirements of ERISA
THE PROCTER & GAMBLE
PROFIT SHARING TRUST AND
EMPLOYEE STOCK OWNERSHIP
PLAN
Financial Statements for the Years Ended
June 30, 1996 and 1995 and Supplemental
Schedules for the Year Ended June 30, 1996
and Independent Auditors' Report
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits, June 30, 1996 and
1995
Statements of Changes in Net Assets Available for Benefits for the
Years Ended June 30, 1996 and 1995
Notes to Financial Statements for the Years Ended June 30, 1996 and
1995
SUPPLEMENTAL SCHEDULES:
Assets Held for Investment, Item 27a of Form 5500, June 30, 1996
Reportable Transactions, Item 27d of Form 5500, for the Year Ended
June 30, 1996
SCHEDULES OMITTED - The following schedules were omitted because of
the absence of conditions under which they are required:
Assets Acquired and Disposed Within the Plan Year
Party-In-Interest Transactions
Obligations In Default
Leases In Default
Deloitte & Touche LLP
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Logo
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250 East Fifth Street Telephone: (513) 784-7100
P.O. Box 5340
Cincinnati, Ohio 45201-5340
INDEPENDENT AUDITORS' REPORT
The Policy Committee of The Procter & Gamble Profit Sharing Trust and Employee
Stock Ownership Plan and The Trustees of The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan
(Plan) as of June 30, 1996 and 1995, and the related statements of changes in
net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at June 30, 1996 and
1995, and the changes in net assets available for benefits for the years then
ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in the audit of
the basic 1996 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic 1996 financial
statements taken as a whole.
/s/DELOITTE & TOUCHE LLP
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Deloitte & Touche LLP
August 27, 1996
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Deloitte Touche
Tohmatsu
International
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THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
JUNE 30, 1996 AND 1995
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Short-term investments, plus accrued interest $ 83,737,641 $ 88,380,316
Money market and bond funds 72,928,751 60,254,276
The Procter & Gamble Company common stock -
68,724,786 shares (cost, $2,034,232,861) at June 30, 1996;
74,509,806 shares (cost, $2,045,084,651) at June 30, 1995; 6,228,183,731 5,355,394,513
The Procter & Gamble Company ESOP Convertible
Class A Preferred Stock:
Series A - 32,281,484 shares (cost, $887,743,005) at June 30,
1996; 33,217,629 shares (cost $913,487,034) at June 30, 1995; 2,925,509,488 2,387,517,084
Series B - 19,102,420 shares (cost $997,910,639) at June 30,
1996; 19,142,418 shares (cost, $1,000,000,000)
at June 30, 1995 1,731,156,813 1,375,861,294
Deferred annuities 124,704,573 145,743,057
Loans to participants 60,008,227 62,194,640
--------------- --------------
Total investments 11,226,229,224 9,475,345,180
--------------- --------------
ACCOUNTS RECEIVABLE:
Contributions from The Procter & Gamble Company 55,374,034 93,272,906
Dividends receivable (preferred stock) 12,358,000 12,459,561
--------------- --------------
Total accounts receivable 67,732,034 105,732,467
--------------- --------------
Total assets 11,293,961,258 9,581,077,647
--------------- --------------
LIABILITIES:
Interest payable on notes and debentures 64,898,573 67,129,607
Notes payable (Series A Preferred Stock) 675,938,329 733,772,665
Debentures (Series B Preferred Stock) 1,000,000,000 1,000,000,000
--------------- --------------
Total liabilities 1,740,836,902 1,800,902,272
--------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,553,124,356 $7,780,175,375
=============== ==============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
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<CAPTION>
1996 1995
<S> <C> <C>
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $2,322,663,295 $2,429,770,440
Dividends 261,399,548 257,962,417
Interest on investments 20,632,035 25,111,506
Interest on loans to participants 4,878,056 4,416,876
-------------- --------------
Investment income 2,609,572,934 2,717,261,239
Contributions by The Procter & Gamble Company
(Net of forfeitures of $507,739 in 1996 and
$1,346,050 in 1995) 119,424,034 155,335,906
-------------- --------------
Total additions, net 2,728,996,968 2,872,597,145
-------------- --------------
DEDUCTIONS:
Distributions to participants:
The Procter & Gamble Company common stock -
7,031,426 shares (cost, $192,490,376) in 1996;
10,105,531 shares (cost, $259,149,667) in 1995 (573,629,592) (634,989,401)
Cash (224,252,475) (262,054,480)
Money bond funds (1,503,861) (7,703,646)
Deferred annuities (139,810) (371,355)
Interest expense (153,106,015) (157,515,601)
-------------- --------------
Total deductions (952,631,753) (1,062,634,483)
-------------- --------------
TRANSFERS TO OTHER TRUSTS - Transfer to
The Procter & Gamble Retiree Benefit Trust (3,416,234)
-------------- --------------
NET INCREASE IN NET ASSETS 1,772,948,981 1,809,962,662
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 7,780,175,375 5,970,212,713
-------------- --------------
End of year $9,553,124,356 $7,780,175,375
============== ==============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
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1. PLAN DESCRIPTION
GENERAL - The Procter & Gamble Profit Sharing Trust and Employee Stock
Ownership Plan (PST or Plan) is a defined contribution plan covering
substantially all domestic employees of The Procter & Gamble Company
and certain of its subsidiaries (Company). The Plan is comprised of
three trusts - the Long-Term Incentive Trust (LIT), the Retirement
Distribution Trust (RDT) and the Employee Stock Ownership Trust (ESOT).
These financial statements relate to the LIT, the RDT, and the ESOT.
The Plan is funded through contributions by the Company. It is subject
to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA). The Plan document should be referred to for the complete
text of the Plan agreement.
The ESOT was established by resolution of the Board of Directors of the
Company on January 10, 1989. During March 1989, the ESOT borrowed
$1,000,000,000 (see Note 8) and, with the proceeds from such
borrowings, purchased 9,090,909 shares of The Procter & Gamble Company
Series A ESOP Convertible Class A Preferred Stock (Series A Preferred
Stock) (see Note 5). The number of shares initially issued increased to
36,363,636 as a result of the two-for-one stock splits effective
October 20, 1989 and May 15, 1992. These shares are utilized to fund a
portion of the Company's annual profit sharing contribution to the
Plan.
In May 1990 the Company's Board of Directors authorized an amendment to
the Plan to establish a separate account in accordance with Section
401(h) of the Internal Revenue Code to fund a portion of the Company's
postretirement obligation for retired Plan participants satisfying
certain requirements specified in the Plan agreement. This amendment
became effective July 1, 1990. During November 1990, the ESOT borrowed
$1,000,000,000 (see Note 9) and with the proceeds from such borrowings,
purchased 9,571,209 shares of The Procter & Gamble Company Series B
ESOP Convertible Class A Preferred Stock (Series B Preferred Stock)
(see Note 6). The number of outstanding shares increased to 19,142,418
as a result of the two-for-one stock split effective May 15, 1992. In
June 1993 these shares were exchanged for an equal number of shares
with identical terms, except for amended restrictions on transfer (see
Note 6). These shares are only available to fund postretirement
benefits and may not be used for profit sharing purposes.
At June 30, 1996 and 1995, the net assets available to the ESOT to
satisfy a portion of the postretirement benefits were $731,750,642 and
$375,785,856, respectively. The related postretirement obligations are
not a component of this Plan's obligations but are included in the
financial statements of a separate health and welfare plan sponsored by
the Company.
<TABLE>
The balances in the investments and liabilities held in the ESOT related
Series A and B Preferred Stock are summarized as follows for the years ended
June 30, 1996 and 1995.
<CAPTION>
June 30, 1996
----------------------------------------------------
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
Short-term investments, plus accrued interest $ 16,443,897 $ 40,062,829 $ 56,506,726
Series A Preferred Stock 2,925,509,488 2,925,509,488
Series B Preferred Stock 1,731,156,813 1,731,156,813
-------------- -------------- --------------
Total investments 2,941,953,385 1,771,219,642 4,713,173,027
Dividends receivable 5,027,000 7,331,000 12,358,000
-------------- -------------- --------------
Total assets 2,946,980,385 1,778,550,642 4,725,531,027
-------------- -------------- --------------
Interest payable on notes and debentures (18,098,573) (46,800,000) (64,898,573)
Notes payable (Series A Preferred Stock) (675,938,329) (675,938,329)
Debentures (Series B Preferred Stock) (1,000,000,000) (1,000,000,000)
-------------- -------------- --------------
Total liabilities (694,036,902) (1,046,800,000) (1,740,836,902)
-------------- -------------- --------------
ESOT net assets available for benefits $2,252,943,483 $ 731,750,642 $2,984,694,125
============== ============== ==============
<CAPTION>
June 30, 1995
---------------------------------------------------
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
Short-term investments, plus accrued interest $ 17,489,777 $ 39,438,001 $ 56,927,778
Series A Preferred Stock 2,387,517,084 2,387,517,084
Series B Preferred Stock 1,375,861,294 1,375,861,294
-------------- -------------- --------------
Total investments 2,405,006,861 1,415,299,295 3,820,306,156
Dividends receivable 5,173,000 7,286,561 12,459,561
-------------- -------------- --------------
Total assets 2,410,179,861 1,422,585,856 3,832,765,717
-------------- -------------- --------------
Interest payable on notes and debentures (20,329,607) (46,800,000) (67,129,607)
Notes payable (Series A Preferred Stock) (733,772,665) (733,772,665)
Debentures (Series B Preferred Stock) (1,000,000,000) (1,000,000,000)
-------------- -------------- --------------
Total liabilities (754,102,272) (1,046,800,000) (1,800,902,272)
-------------- -------------- --------------
ESOT net assets available for benefits $1,656,077,589 $ 375,785,856 $2,031,863,445
============== ============== ==============
</TABLE>
<TABLE>
The activity in the investments and activity held in the ESOT related to Series
A and B Preferred Stock are summarized as follows for the years ended June 30,
1996 and 1995.
<CAPTION>
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
ESOT net assets for benefits at June 30, 1994 $1,044,522,564 $ 21,535,090 $1,066,057,654
Net appreciation in fair value of investments 624,058,417 354,059,295 978,117,712
Interest on investments and dividends 68,850,328 79,878,471 148,728,799
Contributions by The Procter & Gamble Company 48,150,000 13,913,000 62,063,000
Interest expense (63,915,601) (93,600,000) (157,515,601)
Distributions to participants - cash (342,838) (342,838)
Net transfers among trusts (65,245,281) (65,245,281)
-------------- ------------ --------------
ESOT net assets available for benefits June 30, 1995 1,656,077,589 375,785,856 2,031,863,445
Net appreciation in fair value of investments 614,960,783 359,488,100 974,448,883
Interest on investments and dividends 66,918,930 79,812,920 146,731,850
Contributions by The Procter & Gamble Company 50,370,000 13,680,000 64,050,000
Interest expense (59,506,015) (93,600,000) (153,106,015)
Distributions to participants - cash (363,438) (363,438)
Net transfers among trusts (75,514,366) (3,416,234) (78,930,600)
-------------- ------------ --------------
ESOT net assets available for benefits June 30, 1996 $2,252,943,483 $731,750,642 $2,984,694,125
============== ============ ==============
</TABLE>
PARTICIPANT ACCOUNTS AND INVESTMENT OPTIONS - Each participant's
account is credited with the allocation of Company contributions (see
Note 10) and Plan earnings. All such participant accounts are
maintained in the RDT and LIT. Allocations are based on participant
base earnings and credit service years. The benefit to which a
participant is entitled is the vested benefit that can be provided from
the participant's account.
Vested participants may allocate the portion of the annual contribution
received in cash between the money market and bond funds and common
stock of the Company. In addition, certain participants retain
investments in group deferred annuities; however, contributions and
transfers to this fund are no longer permitted. Common stock dividends
received by vested participants may be held or liquidated at the
participant's discretion with the proceeds used to purchase investments
in the money market and money bond funds. Participants receive
dividends on common stock held in cash.
COMMON STOCK FUND - A fund investing in shares of Company common stock.
DEFERRED ANNUITIES FUND - A fund investing in guaranteed investment
contracts (Contracts) with Aetna Capital Management, Inc., The
Prudential Asset Management Company, Metropolitan Life Insurance
Company and Travelers Insurance. These Contracts bear interest at rates
ranging from 8.08% to 9.95% with various maturity dates from September
30, 1995 through December 31, 1999.
MONEY MARKET FUND AND MONEY BOND FUND AND SHORT-TERM INVESTMENTS -
Funds investing in commercial paper, short-term U.S. Government
securities and various short-term bank funds.
<TABLE>
The activity and balances in the investment funds held in the RDT and LIT are
summarized as follows for the years ended June 30, 1996 and 1995
<CAPTION>
Money Market Fund
Common Deferred Money Bond Fund
Stock Loan Annuities Short-term
Fund Fund Fund Investments Total
<S> <C> <C> <C> <C> <C>
RDT and LIT investment balances at
June 30, 1994 $4,381,495,198 $59,912,330 $199,367,770 $123,888,445 $4,764,663,743
Investment income 1,562,408,756 4,416,876 15,461,746 8,127,349 1,590,414,727
Contributions by The Procter &
Gamble Company (2,788,876) 2,788,877 139,491,316 139,491,317
Distributions to participants (634,989,401) (4,923,443) (371,355) (264,491,845) (904,776,044)
Net interfund transfers (15,976,445) (68,715,104) 84,691,549
Net transfers between trusts 65,245,281 65,245,281
-------------- ----------- ------------ ------------ --------------
RDT and LIT investment balances
at June 30, 1995 5,355,394,513 62,194,640 145,743,057 91,706,814 5,655,039,024
Investment income 1,464,342,092 4,878,056 11,660,160 7,511,893 1,488,392,201
Contributions by The Procter &
Gamble Company 1,921,661 (1,921,661) 93,272,906 93,272,906
Distributions to participants (573,629,592) (5,142,808) (139,810) (220,250,090) (799,162,300)
Net interfund transfers (98,775,543) (32,558,834) 131,334,377
Net transfers between trusts 78,930,600 (3,416,234) 75,514,366
-------------- ----------- ------------ ------------ --------------
RDT and LIT investment balances
at June 30, 1996 $6,228,183,731 $60,008,227 $124,704,573 $100,159,666 $6,513,056,197
============== =========== ============ ============ ==============
</TABLE>
VESTING - Vesting in participant accounts is based on years of service.
A participant is fully vested after five years of service.
PAYMENTS OF BENEFITS - On termination of service, a vested participant
may elect to receive (1) all cash, securities and annuities in his or
her account, or (2) an annuity purchased for the value of his or her
account. In addition to the above alternatives, a retiring vested
participant may also elect to receive annual distribution of cash and
securities in his or her account on a pro-rata basis not to exceed the
lesser of 15 years or the participant's life expectancy.
PLAN TERMINATION - Although it has not expressed any intent to do so,
the Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan termination, participants
will become fully vested and the net assets of the Plan will be
distributed to the participants in an order of priority determined in
accordance with ERISA and its applicable regulations and the Plan
document.
LOAN PROVISION - The Plan allows participants to borrow funds from
their accounts in certain circumstances up to maximum amounts specified
in the Plan agreement. Loans are repayable through payroll deductions
of principal and interest over a maximum term of 54 months (114 months
if the loan is to purchase a primary residence).
FORFEITURES - Participants who terminate service prior to vesting
forfeit their account balance. The Company applies forfeited amounts
against the annual contribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements are prepared on the
accrual basis of accounting and the Plan's net assets and transactions
are recorded at fair value. Fair value of the Company's common stock is
determined by composite trading prices on the New York Stock Exchange.
The Company's common stock, included in the Plan's statements of net
assets, is recorded at $90.625 and $71.875 per share as of June 30,
1996 and 1995, respectively. Fair value of Series A and Series B
Preferred Stock is determined as the greater of the approximate fair
value of the Company's common stock as defined in the Plan agreement or
$27.50 (Series A) and $52.24 (Series B) per share (see Notes 5 and 6).
The Series A and Series B Preferred Stock, included in the Plan's
statement of net assets, is recorded at $90.625 and $71.875 per share
as of June 30, 1996 and 1995, respectively. Deferred annuities are
recorded at contract value, which approximates fair value, except for
certain individual deferred annuities (see Note 7) recorded at cost as
the insurance companies are unable to provide fair values. Other
investments are valued at cost which approximates fair value. Loans to
participants are valued at the unpaid principal balance. The cost of
securities sold, transferred or distributed is determined by the
weighted average cost of securities allocated to the participant's
account.
EXPENSES OF THE PLAN - All administrative expenses of the Plan are paid
by the Company.
3. INCOME TAX STATUS
The Company has received a determination letter from the Internal
Revenue Service (IRS) stating that the Plan, as amended, is a qualified
employer's trust under Sections 401(a), 401(h) and 409 of the Internal
Revenue Code and, as such, is exempt from federal income taxes under
Section 501(a). The Plan participants are not taxed on the income and
contributions made to their accounts, pursuant to the provisions of
Section 402(a) of the Internal Revenue Code, until such time as the
participant or the participant's beneficiary receives distributions
from the Plan.
4. PARTY-IN-INTEREST INVESTMENTS AND TRANSACTIONS
The Company is a party-in-interest, as defined by ERISA. There were
no prohibited party-in-interest investments or transactions during the
years ended June 30, 1996 and 1995.
5. SERIES A PREFERRED STOCK
CONVERSION, DISTRIBUTION AND LIQUIDATION RIGHTS - The Series A
Preferred Stock is convertible by the holder (Plan trustee) at the rate
of one share of the Company's common stock for each share of Series A
Preferred Stock subject to the conditions described herein.
Additionally, in order to make a distribution to a participant, the
Series A Preferred Stock can be "put" to the Company at its liquidation
value plus accrued dividends. Hence, upon distribution, participants
will receive $27.50 per Series A Preferred Share, or one share of the
Company's common stock, whichever has a higher value. All participants
must receive distributions of cash or common stock must upon
termination. RDT participants age 55 to 59 may also elect to convert up
to 25% of their Series A Preferred Shares to alternative investments
which are held by the RDT. This conversion option increases to 50% at
age 60. The fair value of the Company's common stock as of June 30,
1996 and 1995 was $90.625 and $71.875, respectively, per share. During
1996 and 1995, respectively, 936,145 and 1,051,719 Series A Preferred
Shares were converted into common shares and the former preferred
shares were retired.
ELIGIBILITY - All participants are eligible for allocation of Series A
Preferred Stock.
DIVIDEND RIGHTS - Annual dividends of $2.03 per share are paid
quarterly at $0.5075 per share. In the event that dividends have not
been paid when due, payment or declaration of dividends on securities
subordinated to the Series A Preferred Stock generally is not
permitted.
CALL PROVISIONS - The Series A Preferred Stock was generally
noncallable for a period of five years ending March 3, 1994. It may
be called at certain premium amounts as described in the Company's
amended articles of incorporation.
VOTING RIGHTS - Each share is entitled to a number of votes equal to
the number of shares of the Company's common stock into which it is
convertible.
RESTRICTIONS ON TRANSFER - The ESOT or another employee benefit plan
of the Company are the only permissible holders of the Series A
Preferred Stock. Upon transfer to any other holder, shares
automatically convert to shares of the Company's common stock.
ALLOCATION OF SHARES TO PARTICIPANT ACCOUNTS - Shares of the Series A
Preferred Stock are released for allocation to participant accounts in
accordance with the Plan agreement as the borrowings are repaid (see
Note 8). In 1996 and 1995, 2,424,242 Series A Preferred Shares valued
at $220,662,619 and $172,807,081, respectively, were released for
allocation to participant accounts of which $199,615,223 and
$155,259,509, respectively, was used to fund a portion of the annual
profit sharing contribution. At June 30, 1996 and 1995, respectively,
19,393,942 and 21,818,184 Series A Preferred Shares were unallocated.
6. SERIES B PREFERRED STOCK
CONVERSION, DISTRIBUTION AND LIQUIDATION RIGHTS - The Series B
Preferred Stock is convertible at any time by the holder (Plan trustee)
at the rate of one share of the Company's common stock for each share
of Series B Preferred Stock. Additionally, in order to make a
distribution to a participant for retiree medical expenses, the Series
B Preferred Stock can be "put" to the Company at its liquidation price
plus accrued dividends. Hence, upon distribution, participants will
receive $52.24 per Series B Preferred Share, or one share of the
Company's common stock, whichever has a higher value. The fair value of
the Company's common stock as of June 30, 1996 and 1995 was $90.625 and
$71.875, respectively, per shares. During 1996, 39,998 shares of
Series B Preferred Stock were converted to common stock and the former
preferred shares were retired for retiree medical expenses. The
proceeds from the conversion of shares were transferred to The Procter
& Gamble Retiree Benefit Trust to fund postretirement benefits. In
1995, there were no conversions of Series B Preferred Stock for retiree
medical expenses.
ELIGIBILITY - Active participants who are eligible to retire from the
Company and all participants who have retired under the terms of the
PST are eligible for allocation of Series B Preferred Stock.
DIVIDEND RIGHTS - Annual dividends of $4.12 per share are paid
quarterly at $1.03 per share. In the event that dividends have not
been paid when due, payment or declaration of dividends on securities
subordinated to the Series B Preferred Stock generally is not
permitted.
CALL PROVISIONS - The Series B Preferred Stock is generally noncallable
for a period of five years ending November 27, 1995 and, after that
time, may be called at certain premium amounts as described in the
Company's amended articles of incorporation.
VOTING RIGHTS - Each share is entitled to a number of votes equal to
the number of shares of the Company's common stock into which it is
convertible.
RESTRICTIONS ON TRANSFER - Effective June 29, 1993, all shares of the
Series B Preferred Stock were exchanged for an equal number of shares
of Series B Preferred Stock with amended restrictions on transfer.
Terms were amended to lift the transfer restrictions and to provide the
Company with the right of first refusal on the purchase of Series B
Preferred Stock. In prior years, the ESOT or another employee benefit
plan of the Company were the only permissible holders of the Series B
Preferred Stock. Upon transfer to any other holder, shares
automatically converted to shares of the Company's common stock.
ALLOCATION OF SHARES TO PARTICIPANT ACCOUNTS - Shares of the Series B
Preferred Stock will be released for straight line allocation to
participant retiree health care fund accounts in accordance with the
Plan agreement as interest and/or principal are paid (see Note 9). In
1996 and 1995, 543,296 Series B Preferred shares valued at $49,058,057
and $38,415,591, respectively, were released for allocation to
participant accounts. At June 30, 1996 and 1995, respectively,
16,385,192 and 16,928,488 Series B Preferred shares were unallocated.
7. DEFERRED ANNUITIES
Deferred annuities are recorded at contract value, which approximates
fair value, except for certain individual deferred annuities recorded
at cost as the insurance companies are unable to provide fair values.
Deferred annuities owned by the Plan at June 30 are comprised of the
following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Group deferred annuities (at contract value) $124,588,522 $145,487,196
Individual deferred annuities (at cost) 116,051 255,861
------------ ------------
Total $124,704,573 $145,743,057
============ ============
</TABLE>
8. NOTES PAYABLE
<TABLE>
Notes payable consist of the following at June 30:
<CAPTION>
INTEREST
RATES SERIES MATURITY DATE 1996 1995
<S> <C> <C> <C> <C> <C>
8.08% Series F September 3, 1994
8.08% Series F March 3, 1995
8.12% Series G September 3, 1995 $ 28,341,829
8.12% Series G March 3, 1996 29,492,507
8.14% Series H September 3, 1996 $ 30,689,903 30,689,903
8.14% Series H March 3, 1997 31,938,982 31,938,982
8.17% Series I September 3, 1997 33,238,898 33,238,898
8.17% Series I March 3, 1998 34,596,707 34,596,707
8.17% Series J September 3, 1998 36,009,983 36,009,983
8.17% Series J March 3, 1999 37,480,991 37,480,991
8.33% Series K September 3, 1999 39,012,089 39,012,089
8.33% Series K March 3, 2000 40,636,943 40,636,943
8.33% Series K September 3, 2000 42,329,471 42,329,471
8.33% Series K March 3, 2001 44,092,494 44,092,494
8.33% Series K September 3, 2001 45,928,946 45,928,946
8.33% Series K March 3, 2002 47,841,887 47,841,887
8.33% Series K September 3, 2002 49,834,501 49,834,501
8.33% Series K March 3, 2003 51,910,108 51,910,108
8.33% Series K September 3, 2003 54,072,164 54,072,164
8.33% Series K March 3, 2004 56,324,262 56,324,262
------------ ------------
Total $675,938,329 $733,772,665
============ ============
</TABLE>
These notes are guaranteed by the Company. Repayment of principal and
interest is to be funded through annual contributions by the Company
and dividends received on the Series A Preferred Stock. Interest on
the notes is payable semiannually on September 3 and March 3.
9. DEBENTURES
The debentures bear interest at a rate of 9.36% and are due on January
1, 2021. Mandatory sinking fund payments are required beginning July 1,
2006 and are payable semiannually thereafter. Interest is payable
semiannually on July 1 and January 1. The debentures are guaranteed by
the Company. Repayment of principal and interest is to be funded
through annual contributions by the Company and dividends received on
the Series B Preferred Stock.
10. COMPANY CONTRIBUTION
Annual credits to participants' accounts are based on individual base
salary and years of service. The total credited to all accounts does
not exceed 15% of total salaries and wages of Plan participants or
reduce consolidated net profit for such Plan year below $30 million,
both as defined in the Plan agreement. The Company's contribution is
reduced by the value of Series A Preferred Shares released and
available for allocation to ESOT participant accounts in accordance
with terms specified in the Plan agreement (see Note 5). The Company
also funds a portion of principal and interest payments on the notes
payable and debentures through contributions to the ESOT (see Notes 8
and 9).
<TABLE>
Company contributions to the Plan for the years ended June 30 are as
follows:
<CAPTION>
1996 1995
<S> <C> <C>
Contribution for Annual Fund Credit $ 55,374,034 $ 93,272,906
Contribution for debt service 64,050,000 62,063,000
------------ ------------
Total $119,424,034 $155,335,906
============ ============
</TABLE>
11. INVESTMENTS
<TABLE>
The Plan's investments (at fair value) consist of the following at
June 30. Investments that represent five percent or more of the Plan's
net assets are separately identified.
<CAPTION>
1996 1995
<S> <C> <C>
Common stock:
The Procter & Gamble Company -
68,724,786 shares at June 30, 1996;
74,509,806 shares at June 30, 1995 $ 6,228,183,731 $5,355,394,513
Preferred stocks:
The Procter & Gamble Company ESOP
Convertible Class A:
Series A - 32,281,484 shares at
June 30, 1996; 33,217,629 shares
at June 30, 1995 2,925,509,488 2,387,517,084
Series B - 19,102,420 shares at
June 30, 1996; 19,142,418 shares
at June 30, 1995 1,731,156,813 1,375,861,294
Deferred annuities 124,704,573 145,743,057
Short-term investments
plus accrued interest 83,737,641 88,380,316
Money market and bond funds 72,928,751 60,254,276
Loans to participants 60,008,227 62,194,640
--------------- --------------
Total $11,226,229,224 $9,475,345,180
=============== ==============
</TABLE>
12. SUBSEQUENT EVENTS
The Plan began paying quarterly dividends earned on the shares of PST
common stock within a participant's account directly to the participant
commencing on July 1, 1996 (automatic dividends). The amount of
automatic dividends paid to a participant is subject to IRS
limitations. A portion of a participant's pre-tax compensation is
deferred and contributed to their PST account to offset the automatic
dividends (automatic salary contribution). All automatic salary
contributions to the PST will be invested in Company common stock,
unless otherwise directed by the participant. The participant is fully
vested in the automatic salary contribution balance in their PST
account regardless of years of service. In addition, a participant may
choose to receive some or all of the quarterly dividends earned on the
shares of PST common stock within their account in cash.
Also effective on July 1, 1996, the Plan merged the LIT and RDT into
one trust - the Retirement Trust. The Plan still maintains the separate
trust for the ESOT. Also, retired or terminated employees may maintain
their accounts within the PST until reaching the federal mandatory
distribution age (70 1/2).
* * * * * *
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
ASSETS HELD FOR INVESTMENT
ITEM 27a of FORM 5500
JUNE 30, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FAIR
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS:
Wachovia Bank Authorized Demand Notes, 5.4% $ 9,603,820 $ 9,603,820
AT&T/Lucent Technologies Inc. Promissory Note, Zero Coupon, due September 3, 1996 245,000 245,000
AT&T Company Promissory Note, Zero Coupon, due July 1, 1996 5,042,000 5,042,000
Sheffield Receivable Corporation Promissory Note, Zero Coupon, due July 1, 1996 5,980,000 5,980,000
Sigma Finance Inc. Promissory Note, Zero Coupon, due July 1, 1996 13,791,000 13,791,000
Kingdom of Sweden Promissory Note, Zero Coupon, due July 1, 1996 15,000,000 15,000,000
West Baton Rouge Parish LA Industrial
District 3 Revenue Promissory Note, 5.44%, due September 3, 1996 16,370,000 16,370,000
U.S. Treasury Bills Due March 6, 1997 2,889,780 2,889,780
U.S. Treasury Bills Due April 3, 1997 2,876,790 2,876,790
U.S. Treasury Bills Due May 1, 1997 2,863,140 2,863,140
U.S. Treasury Bills Due May 29, 1996 2,850,090 2,850,090
Commercial Paper (Various companies) Interest rates ranging from 4.83% to 5.36%, dated
November 20, 1995 through June 21, 1996, due
July 1, 1996 through August 23, 1996 6,226,021 6,226,021
-------------- --------------
Total short-term investments $ 83,737,641 $ 83,737,641
============== ==============
THE PROCTER & GAMBLE CO. COMMON STOCK, NO PAR VALUE $2,034,232,861 $6,228,183,731
============== ==============
THE PROCTER & GAMBLE CO. SERIES A ESOP CONVERTIBLE CLASS A
PREFERRED STOCK, NO PAR VALUE $ 887,743,005 $2,925,509,488
============== ==============
THE PROCTER & GAMBLE CO. SERIES B ESOP CONVERTIBLE CLASS A
PREFERRED STOCK, NO PAR VALUE $ 997,910,639 $1,731,156,813
============== ==============
VARIOUS INSURANCE COMPANIES Deferred Annuities $ 124,704,573 $ 124,704,573
============== ==============
MONEY MARKET AND BOND FUNDS:
Wachovia Bank Money Market Fund $ 60,543,000 $ 60,543,000
JP Morgan Money Bond Fund 9,726,372 9,726,372
Merrill Lynch Government Series Bond Fund 2,659,379 2,659,379
-------------- --------------
$ 72,928,751 $ 72,928,751
Total money market and bond funds ============== ==============
LOANS TO PARTICIPANTS Various participants, interest rates ranging
from 6.5% to 11%, various maturities
through January 31, 2006 $ - $ 60,008,227
============== ==============
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
REPORTABLE TRANSACTIONS
ITEM 27d OF FORM 5500
FOR THE YEAR ENDED JUNE 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COST OF NET
DESCRIPTION OF ASSET PURCHASES (A) SALES SALES GAIN (LOSS)
<S> <C> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS:
None
SERIES TRANSACTIONS (B):
Wachovia Bank Diversified
Trust Fund $471,937,296 (148) $468,248,907 (126) $468,248,907 0
<FN>
NOTES:
(A) The market value of all assets acquired at the time of acquisition is equal
to the purchase price.
(B) The numbers in parentheses represent the number of transactions.
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
TRUSTEES (OR OTHER PERSONS WHO ADMINISTER THE EMPLOYEE BENEFIT PLAN) HAVE DULY
CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO
DULY AUTHORIZED.
The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan
/s/J. G. LEONE
Date: December 12, 1996 ---------------------------------------
J. G. Leone
Member, Policy Committee
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche
DELOITTE &
TOUCHE LLP
- ------------------- ------------------------------------------------------
250 East Fifth Street Telephone: (513) 784-7100
P.O. Box 5340
Cincinnati, Ohio 45201-5340
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement
No. 33-49081 of The Procter & Gamble Company on Form S-8 of our report dated
August 27, 1996 appearing in this Annual Report on Form 11-K of The Procter &
Gamble Profit Sharing Trust and Employee Stock Ownership Plan for the year
ended June 30, 1996.
/s/DELOITTE & TOUCHE LLP
- --------------------------
Deloitte & Touche LLP
Cincinnati, Ohio
December 12, 1996
