<PAGE>
Rule No. 424(b)(5)
Registration No.: 33-55471
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 4, 1996
$300,000,000
THE PROCTER & GAMBLE COMPANY
6.45% DEBENTURES DUE JANUARY 15, 2026
----------------
Interest on the Debentures is payable on January 15 and July 15 of each
year, commencing July 15, 1996. The Debentures are redeemable, in whole or in
part, at the option of the Company at any time at the redemption price equal
to the greater of (i) 100% of the principal amount of such Debentures or (ii)
as determined by an Independent Investment Banker (as defined herein), the sum
of the present values of the remaining scheduled payments of principal and
interest thereon discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate (as defined herein), plus, in each case, accrued interest thereon to the
date of redemption. The Debentures will be represented by one or more global
Debentures registered in the name of the nominee of The Depository Trust
Company ("DTC"). Beneficial interests in the global Debentures will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC and its participants. Except as described herein, Debentures in definitive
form will not be issued. The Debentures will be issued only in denominations
of $1,000 and integral multiples thereof. The Debentures will trade in DTC's
Same-Day Funds Settlement System until maturity, and secondary market trading
activity for the Debentures will therefore settle in immediately available
funds. All payments of principal and interest will be made by the Company in
immediately available funds. See "Description of Debentures--Same-Day
Settlement and Payment".
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Debenture...................... 99.893% 0.875% 99.018%
Total.............................. $299,679,000 $2,625,000 $297,054,000
</TABLE>
- --------
(1) Plus accrued interest, if any, from January 10, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $372,600 payable by the Company.
----------------
The Debentures offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Debentures will be ready for delivery in book-entry form only through the
facilities of DTC in New York, New York, on or about January 10, 1996, against
payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
----------------
The date of this Prospectus Supplement is January 4, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED JUNE 30, SEPTEMBER 30,
-------------------- ------------------
1994 1995 1994 1995
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1).......................... 6.6 7.7 9.5 9.5
</TABLE>
- --------
(1) Earnings used to compute this ratio are earnings before income taxes and
before fixed charges (excluding interest capitalized during the period)
and after deducting undistributed earnings of equity method investees.
Fixed charges consist of interest, whether expensed or capitalized,
amortization of debt discount and expense, and one-third of all rent
expense (considered representative of the interest factor).
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures offered
hereby (referred to in the accompanying Prospectus as the "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made.
Certain defined terms in the Indenture are capitalized herein. Whenever a
defined term is referred to and not herein defined, the definition thereof is
contained in the Indenture.
GENERAL
The Debentures offered hereby will be limited to $300,000,000 aggregate
principal amount and will be issued under the Indenture. The Debentures will
mature on January 15, 2026. The Debentures will bear interest from January 10,
1996 at the rate per annum shown on the front cover of this Prospectus
Supplement payable semiannually on January 15 and July 15 of each year and at
maturity (each such date is herein called an "Interest Payment Date"),
commencing July 15, 1996, to the person in whose name the Debenture (or one or
more predecessor Debentures) is registered at the close of business on the
January 1 or July 1, as the case may be, next preceding such Interest Payment
Date.
The Debentures are not entitled to any sinking fund. The Debentures are
subject to defeasance and covenant defeasance as described under "Description
of Debt Securities--Defeasance" in the accompanying Prospectus.
The Debentures will be issued only in registered, book-entry form, in
denominations of $1,000 and any integral multiple thereof.
In the case where any Interest Payment Date or the maturity date of the
Debentures does not fall on a Business Day, payment of interest or principal
otherwise payable on such day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect
S-2
<PAGE>
as if made on such interest Payment Date or the maturity date of the
Debentures, as the case may be, and no interest shall accrue for the period
from and after such Interest Payment Date or maturity date. The term "Business
Day" shall mean any day other than a Saturday or Sunday or a day on which
banking institutions in New York City are authorized or obligated by law or
executive order to close.
OPTIONAL REDEMPTION
The Debentures will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (i) 100% of
the principal amount of such Debentures or (ii) as determined by an
Independent Investment Banker, the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate, plus, in each case, accrued
interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Debentures to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Debentures. "Independent Investment Banker" means
one of the Reference Treasury Dealers appointed by the Trustee after
consultation with the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Treasury Reference Dealer at 5:00 p.m. on the third Business Day preceding
such redemption date.
"Reference Treasury Dealer" means each of Goldman, Sachs & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc. and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Debentures to be
redeemed.
Unless the Company defaults in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Debentures or
portions thereof called for redemption.
S-3
<PAGE>
BOOK-ENTRY SYSTEM
Upon issuance, the Debentures will be represented by one or more global
securities (the "Book-Entry Debentures"). Each global security representing
the Book-Entry Debentures will be deposited with, or on behalf of, DTC, as
Depository (the "Depository"), and registered in the name of a nominee of the
Depository. Book-Entry Debentures will not be exchangeable at the option of
the Holder for certificated Debentures and, except under the circumstances
described below, will not otherwise be issuable in definitive form.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depository was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depository's participants include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depository. Access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
Upon issuance of the Book-Entry Debentures, the Depository will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Debentures represented by such Book-Entry Debentures to the
accounts of institutions that have accounts with the Depository or its nominee
("participants"). The accounts to be credited shall be designated by the
Underwriters. Ownership of beneficial interests in the Book-Entry Debentures
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Book-Entry Debentures
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depository or its nominee (with respect to
participants' interests) for such Book-Entry Debentures or by participants or
persons that hold through participants. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to transfer
beneficial interests in the Book-Entry Debentures.
So long as the Depository, or its nominee, is the registered owner of the
Book-Entry Debentures, the Depository or such nominee, as the case may be,
will be considered the sole owner or holder of the Book-Entry Debentures for
all purposes under the Indenture. Except as set forth below, owners of
beneficial interests in such Book-Entry Debentures will not be entitled to
have the Debentures represented by such Book-Entry Debentures registered in
their names, will not receive or be entitled to receive physical delivery of
Debentures in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Principal and interest payments on Book-Entry Debentures registered in the
name of or held by the Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the registered owner or
holder of the Book-Entry Debentures. Neither the Company, the Trustee nor any
paying agent for such Book-Entry Debentures will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in Book-Entry Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depository, upon receipt of any payments of
principal or interest in respect of the Book-Entry Debentures, will credit
immediately the accounts of the related participants
S-4
<PAGE>
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Book-Entry Debentures as shown on
the records of the Depository. The Company also expects that payments by
participants to owners of beneficial interests in such Book-Entry Debentures
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name", and will be the
responsibility of such participants.
Unless and until it is exchanged, in whole or in part, for Debentures in
definitive form in accordance with the terms of the Debentures, the Book-Entry
Debentures may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee
to a successor of the Depository or a nominee of such successor. If the
Depository is at any time unwilling or unable to continue as depository or if
at any time the Depository ceases to be a clearing agency registered under the
Exchange Act, and a successor Depository is not appointed by the Company
within 90 days, the Company will issue Debentures in definitive registered
form in exchange for the Book-Entry Debentures. In addition, the Company may
at any time and in its sole discretion determine not to have any Debentures
represented by one or more Book-Entry Debentures and, in such event, will
issue Debentures in definitive registered form in exchange for all Book-Entry
Debentures. Further, if an event of default, or an event which, with the
giving of notice or lapse of time, or both, would constitute an event of
default under the Indenture occurs and is continuing with respect to the
Debentures, or if the Company so specifies with respect to the Debentures, the
Depository may exchange the Book-Entry Debentures for Debentures in definitive
registered form. In any such instance, an owner of a beneficial interest in a
Book-Entry Debenture will be entitled to physical delivery in definitive form
of Debentures represented by such Book-Entry Debenture in principal amount
equal to such beneficial interest and to have such Debentures registered in
its name.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be
made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Debentures will trade in the Depository's same-day funds settlement system
until maturity, and secondary market trading activity in the Debentures will
therefore be required by the Depository to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Debentures.
S-5
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amount of the Debentures set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER DEBENTURES
----------- ------------
<S> <C>
Goldman, Sachs & Co. .......................................... $100,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................... 100,000,000
J.P. Morgan Securities Inc. ................................... 100,000,000
------------
Total......................................................... $300,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the Pricing
Agreement, the Underwriters are committed to take and pay for all of the
Debentures, if any are taken.
The Underwriters propose to offer the Debentures in part directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus Supplement and in part to certain securities dealers at such
price less a concession of 0.50% of the principal amount of the Debentures.
The Underwriters may allow, and such dealers may reallow, a concession not to
exceed 0.25% of the principal amount of the Debentures to certain brokers and
dealers. After the Debentures are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that the Underwriters
intend to make a market in the Debentures but are not obligated to do so and
may discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Debentures.
Settlement for the Debentures will be made in immediately available funds,
and all secondary trading in the Debentures will settle in immediately
available funds. See "Description of Debentures--Same-Day Settlement and
Payment".
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
S-6
<PAGE>
THE PROCTER & GAMBLE COMPANY
DEBT SECURITIES AND WARRANTS
-----------
The Company may from time to time offer Debt Securities consisting of
debentures, notes and/or other unsecured evidences of indebtedness in one or
more series and Warrants to purchase Debt Securities or to buy and sell
government debt securities, foreign currencies, currency units or units of a
currency index or currency basket, units of a stock index or stock basket or a
commodity or a commodity index from which the Company will receive proceeds of
up to an aggregate of $525,000,000 (or the equivalent in foreign currency or
currency units). The Debt Securities and Warrants may be offered independently
or together for sale directly to purchasers or through dealers, underwriters or
agents to be designated. The Debt Securities and Warrants will be offered to
the public on terms determined by market conditions. The Debt Securities and
Warrants may be sold for U.S. dollars, foreign currency or currency units and
the principal of and any premium and interest on the Debt Securities may
likewise be payable in U.S. dollars or, at the option of the Company if so
specified in the applicable Prospectus Supplement, in any other foreign
currency or currency units, including composite currencies such as the European
Currency Unit.
The specific designation, aggregate principal amount, purchase price,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, if any, any listing on a securities exchange and other specific terms
not set forth herein of the Debt Securities in respect of which this Prospectus
is being delivered, the duration, purchase price, exercise price, detachability
and any other specific terms not set forth herein of any Warrants in respect of
which this Prospectus is being delivered, and the names of any underwriters,
dealers or agents, and the other terms and manner of the sale and distribution
of such Debt Securities and Warrants, are set forth in the accompanying
Prospectus Supplement ("Prospectus Supplement"). See "Description of Debt
Securities", "Description of Warrants" and "Plan of Distribution".
As used from time to time herein, the term "Securities" means the Debt
Securities and the Warrants.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is January 4, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048; and Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such materials can be obtained by mail from the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, reports, proxy statements and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, and the
offices of the Cincinnati Stock Exchange, 400 S. LaSalle Street, 5th Floor,
Chicago, Illinois 60605.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-434) pursuant
to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995 (which incorporates by reference portions of the Company's
definitive Proxy Statement dated September 1, 1995 for the Company's Annual
Meeting of Stockholders held on October 10, 1995 and portions of its 1995
Annual Report to Stockholders for the year ended June 30, 1995).
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.
3. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of the Registration Statement or this Prospectus to
the extent that a statement contained herein, in a Prospectus Supplement or
in any other document subsequently filed with the Commission which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of such person, a copy of any
or all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to Linda D.
Rohrer, Assistant Secretary, The Procter & Gamble Company, at One Procter &
Gamble Plaza, Cincinnati, Ohio 45202, telephone: (513) 983-8697.
2
<PAGE>
THE COMPANY
The Procter & Gamble Company (the "Company") was incorporated in Ohio in
1905, having been built from a business founded in 1837 by William Procter and
James Gamble. Today, the Company manufactures and markets a broad range of
consumer products in many countries throughout the world. Unless the context
otherwise requires, all references to the Company are to The Procter & Gamble
Company and its consolidated subsidiaries.
The Company's operations fall within five business segments: Laundry and
Cleaning, Paper, Beauty Care, Food and Beverage and Health Care:
. The Laundry and Cleaning segment includes laundry, dishcare, hard surface
cleaners and fabric conditioners. Representative brands include Ariel,
Tide, Cascade, Dawn, Mr. Proper, Downy.
. The Paper segment includes tissue/towel, feminine protection, and
diapers. Representative brands include Bounty, Charmin, Always, Whisper,
Pampers.
. The Beauty Care segment includes hair care, deodorants, personal
cleansing, skin care and cosmetics and fragrances. Representative brands
include Pantene, Vidal Sassoon, Secret, Safeguard, Olay, Cover Girl.
. The Food and Beverage segment includes, coffee, peanut butter, juice,
snacks, shortening and oil, baking mixes and commercial services.
Representative brands include Folgers, Jif, Sunny Delight, Pringles,
Crisco, Duncan Hines.
. The Health Care segment includes oral care, gastro-intestinal,
respiratory care, analgesics and pharmaceuticals. Representative brands
include Crest, Scope, Metamucil, Vicks, Aleve.
The Laundry category and Diaper category constitute 21% and 13% of
consolidated 1995 sales, respectively.
In the United States, the Company owned and operated manufacturing
facilities at 39 locations in 20 states as of June 30, 1995. In addition, it
owned and operated 90 manufacturing facilities in 42 other countries as of
such date. Laundry and Cleaning products were produced at 37 of these
locations; Paper products at 35, Health Care products at 30, Beauty Care
products at 47; and Food and Beverage products at 16.
The Company's principal executive offices are located at One Procter &
Gamble Plaza, Cincinnati, Ohio 45202, and its telephone number is (513) 983-
1100.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds from the issuance of the Debt Securities and Warrants offered
hereby will be used for general corporate purposes.
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary financial information for the years ended June 30,
1995 and 1994 has been derived from the Company's consolidated financial
statements contained in its Annual Report on Form 10-K for the fiscal year
ended June 30, 1995. See "Incorporation of Certain Documents by Reference".
The summary financial information for the years ended June 30, 1991, 1992 and
1993 has been derived from the Company's consolidated financial statements
contained in its Annual Reports to Shareholders for the years 1992 and 1993.
Per share amounts and number of shares have been adjusted for the two-for-one
stock split of the Company's common stock, effective May 15, 1992.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales..................... $27,026 $29,362 $30,433 $30,296 $33,434
Cost of products sold......... 16,081 17,324 17,683 17,355 19,632
Earnings before income taxes
and prior years' effect of
accounting changes........... 2,687 2,885 349 3,346 4,000
Income taxes.................. 914 1,013 80 1,135 1,355
Net earnings/(loss)(1)........ 1,773 1,872 (656) 2,211 2,645
Net earnings/(loss) per common
share(1)..................... $ 2.46 $ 2.62 $ (1.11) $ 3.09 $ 3.71
Net earnings/(loss) per common
share assuming full
dilution(1).................. $ 2.31 $ 2.45 $ (.96) $ 2.91 $ 3.48
Average shares outstanding (in
millions).................... 689.5 677.4 680.4 683.1 686.0
Ratio of earnings to fixed
charges(2)................... 6.8 5.7 1.4 6.6 7.7
FINANCIAL POSITION
(AT PERIOD END):
Working capital............... $ 1,702 $ 1,724 $ 1,688 $ 1,948 $ 2,194
Total assets.................. 20,468 24,025 24,935 25,535 28,125
Long-term debt................ 4,111 5,223 5,174 4,980 5,161
Shareholders' equity.......... 7,736 9,071 7,441 8,832 10,589
</TABLE>
- --------
(1)In 1993, net earnings and per share earnings include an after-tax charge of
$1,746 or $2.57 per share for restructuring and an after-tax charge of $925
or $1.36 per share for the prior years' effect of accounting changes.
(2)Earnings used to compute this ratio are earnings before income taxes and
before fixed charges (excluding interest capitalized during the period) and
after deducting undistributed earnings of equity method investees. Fixed
charges consist of interest, whether expensed or capitalized, amortization
of debt discount and expense, and one-third of all rent expense (considered
representative of the interest factor).
RESULTS OF OPERATIONS: YEAR ENDED JUNE 30, 1995 COMPARED TO THE YEAR ENDED
JUNE 30, 1994
Worldwide net earnings were $2,645 million, a 20% increase over a year ago,
including a $50 million after-tax charge for incremental costs associated with
the January earthquake in Japan. Net earnings for the prior year were $2,211
million, including a $102 million after-tax charge related to two interest
rate swap contracts. Excluding the unusual items in both periods, net earnings
increased 17%.
Worldwide net sales for the year increased 10% to $33,434 million. This
sales increase reflects year-to-year unit volume growth of 10%, with
acquisitions contributing approximately 2%. More
4
<PAGE>
favorable foreign exchange rates positively impacted net sales by 2%, but the
effect was offset by lower pricing in certain markets.
Gross margin declined from 42.7% in 1994 to 41.3% in 1995 primarily due to
higher green coffee bean costs, net of related pricing. Increased research and
development costs and higher raw material prices, most importantly pulp, more
than offset the incremental benefits of restructuring activities and other
cost reduction programs. The Company's margin trends are also affected by
pricing policies. Since fiscal year 1993, the Company's value pricing
initiative has reduced list prices by approximately $1 billion (excluding
coffee).
Marketing, administrative and other expenses were 28.8% of sales, down from
30.9% in the prior year. This reflects the benefit of continued cost control
efforts, as well as an incremental benefit from restructuring actions.
Other income of $309 million includes a $77 million pre-tax charge related
to the Kobe, Japan earthquake. The prior year amount of $248 million contains
a $157 million pre-tax charge related to two interest rate swap contracts.
Net earnings margin increased from 7.3% in 1994 to 7.9% in 1995, including
the effect of unusual items in both years, reflecting continued emphasis on
cost control and volume growth.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating
to such Offered Debt Securities.
The Offered Debt Securities are to be issued under an Indenture, dated as of
September 28, 1992 (the "Indenture"), between the Company and The First
National Bank of Chicago, as Trustee (the "Trustee"), a copy of which
Indenture is filed as an exhibit to the Registration Statement. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
provisions of the Indenture, including the definitions therein of certain
terms. Wherever particular provisions or defined terms of the Indenture are
referred to, such provisions or defined terms are incorporated herein by
reference. Certain defined terms in the Indenture are capitalized herein.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and provides that Debt Securities may be issued thereunder
from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to the Offered Debt
Securities for the following terms, where applicable, of the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the date
5
<PAGE>
or dates on which the Offered Debt Securities will mature; (4) the rate or
rates (which may be fixed or variable) at which the Offered Debt Securities
will bear interest, if any, and the date or dates from which such interest
will accrue; (5) the dates on which such interest, if any, will be payable and
the Regular Record Dates for such Interest Payment Dates; (6) any mandatory or
optional sinking fund or analogous provisions; (7) the price at which, the
periods within which, and the terms and conditions upon which the Offered Debt
Securities may, pursuant to any optional or mandatory redemption provisions,
be redeemed at the option of the Company; (8) the terms and conditions upon
which the Offered Debt Securities may be repayable prior to final maturity at
the option of the holder thereof (which option may be conditional); (9) the
portion of the principal amount of the Offered Debt Securities, if other than
the principal amount thereof, payable upon acceleration of maturity thereof;
(10) the right of the Company to defease the Offered Debt Securities or
certain restrictive covenants and certain Events of Default under the
Indenture; (11) if other than in United States dollars, the currency or
currencies, including composite currencies, of payment of principal of and
premium, if any, and interest on the Offered Debt Securities (and federal
income tax consequences and other special considerations applicable to any
such Offered Debt Securities denominated in a currency or currencies other
than United States dollars); (12) any index used to determine the amount of
payments of principal of and premium, if any, and interest, if any, on the
Offered Debt Securities; (13) if the Offered Debt Securities will be issuable
only in the form of a Global Security as described under "Book-Entry Debt
Securities", the Depository or its nominee with respect to the Offered Debt
Securities and the circumstances under which the Global Security may be
registered for transfer or exchange in the name of a Person other than the
Depository or its nominee; and (14) any other terms of the Offered Debt
Securities. (Section 301)
Unless otherwise indicated in the Prospectus Supplement relating to Offered
Debt Securities, principal of and premium, if any, and interest, if any, on
the Debt Securities will be payable, and the Debt Securities will be
exchangeable and transfers thereof will be registrable, at the office of the
Trustee at 14 Wall Street, 8th Floor, New York, New York 10005, provided that,
at the option of the Company, payment of interest may be made by: (1) wire
transfer on the date of payment in immediately available federal funds or next
day funds to an account specified by written notice to the Trustee from any
Holder of Debt Securities; (2) any similar manner that such Holder may
designate in writing to the Trustee; or (3) by check mailed to the address of
the Person entitled thereto as it appears in the Security Register. (Sections
301, 305 and 1002) Any payment of principal and premium, if any, and interest,
if any, required to be made on an Interest Payment Date, Redemption Date or at
Maturity which is not a Business Day need not be made on such day, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the Interest Payment Date, Redemption Date or at Maturity, as the case
may be, and no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Maturity. (Section 113)
Unless otherwise indicated in the Prospectus Supplement relating to Offered
Debt Securities, the Debt Securities will be issued only in fully registered
form, without coupons, in denominations of $1,000 or any integral multiple
thereof. (Section 302) No service charge will be made for any transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from their stated
principal amount. In addition, under Treasury Regulations it is possible that
Debt Securities which are offered and sold at their stated principal amount
would, under certain circumstances, be treated as issued at an original issue
discount for federal income tax purposes, and special rules may apply to Debt
Securities and Warrants which are considered to be issued as "investment
units". Federal income tax consequences and other special considerations
applicable to any such Original Issue Discount Securities (or other Debt
Securities treated as issued at an original issue discount) and to "investment
units" will be described
6
<PAGE>
in the Prospectus Supplement relating thereto. "Original Issue Discount
Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of
Default and the continuation thereof. (Section 101)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depository or its nominee
identified in the Prospectus Supplement relating to the Offered Debt
Securities. In such a case, one or more Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of Outstanding Debt Securities of the series to be
represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in definitive registered
form, a Global Security may not be registered for transfer or exchange except
as a whole by the Depository for such Global Security to a nominee of such
Depository and except in the circumstances described in the Prospectus
Supplement relating to the Offered Debt Securities. (Sections 204 and 305)
RESTRICTIVE COVENANTS
RESTRICTIONS ON SECURED DEBT
If the Company or any Domestic Subsidiary shall incur, assume or guarantee
any Debt secured by a Mortgage on any Principal Domestic Manufacturing
Property or on any shares of stock or debt of any Domestic Subsidiary, the
Company will secure, or cause such Domestic Subsidiary to secure, the Debt
Securities then outstanding equally and ratably with (or prior to) such Debt,
unless after giving effect thereto the aggregate amount of all such Debt so
secured, together with all Attributable Debt in respect of sale and leaseback
transactions involving Principal Domestic Manufacturing Properties, would not
exceed 5% of the Consolidated Net Tangible Assets of the Company and its
consolidated subsidiaries. The restriction will not apply to, and there shall
be excluded in computing secured Debt for the purpose of such restriction,
Debt secured by (a) Mortgages on property of, or on any shares of stock or
debt of, any corporation existing at the time such corporation becomes a
Domestic Subsidiary, (b) Mortgages in favor of the Company or a Domestic
Subsidiary, (c) Mortgages in favor of U.S. governmental bodies to secure
progress or advance payments, (d) Mortgages on property, shares of stock or
debt existing at the time of acquisition thereof (including acquisition
through merger or consolidation), purchase money Mortgages and construction
cost Mortgages and (e) any extension, renewal or refunding of any Mortgage
referred to in the foregoing clauses (a) through (d), inclusive. (Section
1004) The Indenture does not restrict the incurrence of unsecured debt by the
Company or its subsidiaries.
RESTRICTIONS ON SALES AND LEASEBACKS
Neither the Company nor any Domestic Subsidiary may enter into any sale and
leaseback transaction involving any Principal Domestic Manufacturing Property,
the completion of construction and commencement of full operation of which has
occurred more than 120 days prior thereto, unless (a) the Company or such
Domestic Subsidiary could incur a lien on such property under the restrictions
described above under "Restrictions on Secured Debt" in an amount equal to the
Attributable Debt with respect to the sale and leaseback transaction without
equally and ratably securing the Debt Securities then outstanding or (b) the
Company, within 120 days, applies to the retirement of its Funded Debt an
amount not less than the greater of (i) the net proceeds of the sale of the
Principal Domestic Manufacturing Property leased pursuant to such arrangement
or (ii) the fair value of the Principal Domestic Manufacturing Property so
leased (subject to credits for certain voluntary retirements of Funded Debt).
This restriction will not apply to any sale and leaseback transaction (a)
between the Company and a Domestic Subsidiary or between Domestic Subsidiaries
or (b) involving the taking back of a lease for a period of less than three
years. (Section 1005)
7
<PAGE>
CERTAIN DEFINITIONS
The term "Attributable Debt" means the total net amount of rent (discounted
at 10% per annum compounded annually) required to be paid during the remaining
term of any lease. (Section 101)
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities and (b) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other
like intangibles, all as set forth on the most recent balance sheet of the
Company and its consolidated subsidiaries and computed in accordance with
generally accepted accounting principles. (Section 101)
The term "Domestic Subsidiary" means a subsidiary of the Company except a
subsidiary which neither transacts any substantial portion of its business nor
regularly maintains any substantial portion of its fixed assets within the
United States or which is engaged primarily in financing the operations of the
Company and its subsidiaries outside the United States. (Section 101)
The term "Funded Debt" means Debt having a maturity of, or by its terms
extendible or renewable for, a period of more than 12 months after the date of
determination of the amount thereof.
The term "Principal Domestic Manufacturing Property" means any facility
(together with the land on which it is erected and fixtures comprising a part
thereof) used primarily for manufacturing or processing, located in the United
States, owned or leased by the Company or a subsidiary of the Company and
having a gross book value in excess of 3/4 of 1% of Consolidated Net Tangible
Assets, other than any such facility or portion thereof (i) which is a
pollution control or other facility financed by obligations issued by a State
or local governmental unit pursuant to Section 103(b)(4)(E), 103(b)(4)(F) or
103(b)(6) of the Internal Revenue Code of 1954, or any successor provision
thereof, or (ii) which, in the opinion of the Board of Directors of the
Company, is not of material importance to the total business conducted by the
Company and its subsidiaries as an entirety. (Section 101)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to Debt
Securities of any series: (a) failure to pay principal of or premium, if any,
on any Debt Security of that series when due; (b) failure to pay any interest
on any Debt Security of that series when due, continued for 30 days; (c)
failure to deposit any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the Indenture
solely for the benefit of a series of Debt Securities other than that series),
continued for 90 days after written notice as provided in the Indenture; (e)
certain events in bankruptcy, insolvency or reorganization; and (f) any other
Event of Default provided with respect to Debt Securities of that series.
(Section 501)
If an Event of Default with respect to Outstanding Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that
series may declare the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Debt
Securities of that series to be due and payable immediately. At any time after
a declaration of acceleration with respect to Debt Securities of any series
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority in principal amount of the Outstanding
Debt Securities of that series may, under certain circumstances, rescind and
annul such acceleration. (Section 502) For information as to waiver of
defaults, see "Modification and Waiver".
Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to
8
<PAGE>
acceleration of the Maturity of a portion of the principal amount of such
Original Issue Discount Securities upon the occurrence of an Event of Default
and the continuation thereof.
The Indenture provides that the Trustee will be under no obligation, subject
to the duty of the Trustee during default to act with the required standard of
care, to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603) Subject to such
provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities of any series will have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, with respect to the Debt Securities of that series.
(Section 512)
The Company will furnish to the Trustee annually a certificate as to
compliance by the Company with all conditions and covenants under the
Indenture. (Section 1007)
DEFEASANCE
The Prospectus Supplement will state if any defeasance provision will apply
to the Offered Debt Securities.
DEFEASANCE AND DISCHARGE
The Indenture provides that, if applicable, the Company will be discharged
from any and all obligations in respect of the Debt Securities of any series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, to maintain paying agencies and to hold monies for
payment in trust) upon the deposit with the Trustee, in trust, of money and/or
U.S. Government Obligations (as defined) which through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of and premium, if any, and
each installment of interest on the Debt Securities of such series on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and the Debt Securities of such series. Such a trust may only be established
if, among other things, (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that Holders
of the Debt Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred, and (ii) the Company has
delivered to the Trustee an Opinion of Counsel (who may be an employee of or
counsel for the Company) to the effect that the Debt Securities of such
series, if then listed on the New York Stock Exchange, Inc., will not be
delisted as a result of such deposit, defeasance and discharge. (Section 403)
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT
The Indenture provides that, if applicable, the Company may omit to comply
with certain restrictive covenants in Sections 1004 (Limitation on Liens) and
1005 (Limitation on Sales and Leasebacks), and Section 501(4) (described in
clause (d) under "Events of Default") with respect to Sections 1004 and 1005
shall not be deemed to be an Event of Default under the Indenture and the Debt
Securities of any series, upon the deposit with the Trustee, in trust, of
money and/or U.S. Government Obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of and premium, if any, and
each installment of interest on the Debt Securities of such series on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and the Debt Securities of such series. The obligations of the Company under
the Indenture and the Debt Securities of such series other than with respect
to
9
<PAGE>
the covenants referred to above and the Events of Default other than the Event
of Default referred to above shall remain in full force and effect. Such a
trust may only be established if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel (who may be an employee of or
counsel for the Company) to the effect that (i) the Holders of the Debt
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance of certain
covenants and Events of Default and will be subject to federal income tax on
the same amount and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred, and (ii) the
Debt Securities of such series, if then listed on the New York Stock Exchange,
Inc., will not be delisted as a result of such deposit and defeasance.
(Section 1006)
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture with respect to the Debt Securities of any
series as described above and the Debt Securities of such series are declared
due and payable because of the occurrence of any Event of Default other than
the Event of Default described in clause (d) under "Events of Default", the
amount of money and U.S. Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Debt Securities of such series at
the time of their Stated Maturity but may not be sufficient to pay amounts due
on the Debt Securities of such series at the time of the acceleration
resulting from such Event of Default. However, the Company shall remain liable
for such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of 66 2/3% in principal amount of
the Outstanding Debt Securities of each series affected by such modification
or amendment; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security, (b) reduce the
principal amount of, or the premium, if any, or interest, if any, on, any Debt
Security, (c) reduce the amount of principal of an Original Issue Discount
Security payable upon acceleration of the Maturity thereof, (d) change the
place or currency of payment of principal of, or premium, if any, or interest,
if any, on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, or (f)
reduce the percentage in principal amount of Outstanding Debt Securities of
any series, the consent of the Holders of which is required for modification
or amendment of the Indenture or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults. (Section 902)
The Holders of 66 2/3% in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities
of that series waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1008)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities
of that series waive any past default under the Indenture with respect to that
series, except a default in the payment of the principal of or premium, if
any, or interest on any Debt Security of that series or in respect of a
provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of that series
affected. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate or merge with or into, or transfer or lease its
assets as an entirety to, any Person, provided that (i) the Person (if other
than the Company) formed by such consolidation or into which the
10
<PAGE>
Company is merged or which acquires or leases the assets of the Company
substantially as an entirety is organized and existing under the laws of any
United States jurisdiction and assumes the Company's obligations on the Debt
Securities and under the Indenture, (ii) after giving effect to such
transaction no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing (provided that a transaction will only be deemed to be in violation
of this condition (ii) as to any series of Debt Securities as to which such
Event of Default or such event shall have occurred and be continuing), and
(iii) certain other conditions are met. (Article Eight)
REGARDING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture. The
First National Bank of Chicago is also a depositary of the Company and has
performed other services for the Company and its subsidiaries in the normal
course of its business.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus
Supplement may relate. The particular terms of the Warrants offered by any
Prospectus Supplement (the "Offered Warrants") and the extent, if any, to
which such general provisions may apply to the Warrants so offered will be
described in the Prospectus Supplement relating to such Offered Warrants.
The Company may issue Warrants for the purchase of Debt Securities, Warrants
to buy or sell debt securities of or guaranteed by the United States
("Government Debt Securities"), Warrants to buy or sell foreign currencies,
currency units or units of a currency index or currency basket, Warrants to
buy or sell units of a stock index or stock basket and Warrants to buy and
sell a commodity or a commodity index. Warrants may be issued independently or
together with any Debt Securities offered by any Prospectus Supplement and may
be attached to or separate from such Debt Securities. The Warrants will be
settled either through physical delivery or through payment of a cash
settlement value as set forth herein and in any applicable Prospectus
Supplement. The Offered Warrants will be issued under a Warrant Agreement to
be entered into between the Company and a bank or trust company, as Warrant
Agent, all as set forth in the Prospectus Supplement relating to the
particular issue of Warrants. The Warrant Agent will act solely as an agent of
the Company in connection with the Warrant Certificates and will not assume
any obligation or relationship of agency or trust for or with any holders of
Warrant Certificates or beneficial owners of Warrants. The following summaries
of certain provisions of the forms of Warrant Agreement do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to the provisions of the forms of Warrant Agreement (including the forms of
Warrant Certificates), copies of which are filed as an exhibit to the
Registration Statement.
GENERAL
The Prospectus Supplement will describe the following terms of the Offered
Warrants (to the extent such terms are applicable to such Warrants): (i) the
offering price; (ii) the currency, currency unit, currency index or currency
basket based on or relating to currencies (including ECU) for which Warrants
may be purchased; (iii) the date on which the right to exercise the Warrants
shall commence and the date on which such right shall expire; (iv) whether the
Warrant Certificates will be issuable in definitive registered form or global
form or both; (v) federal income tax consequences; (vi) whether the Warrant is
for Debt Securities, Government Debt Securities, currencies, currency units,
currency indices or currency baskets, stock indices, stock baskets,
commodities, commodity indices or such other index or reference as therein
described; and (vii) any other terms of the Warrants, including any terms
which may be required or advisable under United States laws or regulations.
11
<PAGE>
If the Offered Warrants are to purchase Debt Securities, the Prospectus
Supplement will also describe (a) the designation, aggregate principal amount,
currency, currency unit or currency basket of denomination and other terms of
the Debt Securities purchasable upon exercise of the Offered Warrants; (b) the
designation and terms of the Debt Securities with which the Offered Warrants
are issued and the number of Offered Warrants issued with each such Debt
Security; (c) the date on and after which the Offered Warrants and the related
Debt Securities will be separately transferable; and (d) the principal amount
of Debt Securities purchasable upon exercise of one Offered Warrant and the
price at which and currency, currency unit or currency basket in which such
principal amount of Debt Securities may be purchased upon such exercise.
If the Offered Warrants are to buy or sell Government Debt Securities or a
foreign currency, currency unit, currency index or currency basket, such
Offered Warrants will be listed on a national securities exchange and the
Prospectus Supplement will describe the amount and designation of the
Government Debt Securities or currency, currency unit, currency index or
currency basket, as the case may be, subject to each Offered Warrant, whether
such Offered Warrants provide for cash settlement or delivery of the
Government Debt Securities or foreign currency, currency unit, units of the
currency index or currency basket upon exercise, and the national securities
exchange on which the Offered Warrants will be listed.
If the Offered Warrants are Offered Warrants on a stock index or a stock
basket, such Offered Warrants will provide for payment of an amount in cash
determined by reference to increases or decreases in such stock index or stock
basket and will be listed on a national securities exchange, and the
Prospectus Supplement will describe the terms of the Offered Warrants, the
stock index or stock basket covered by the Offered Warrants and the market to
which such stock index or stock basket relates, and the national securities
exchange on which the Offered Warrants will be listed.
If the Offered Warrants are Offered Warrants on a commodity or commodity
index, such Offered Warrants will provide for cash settlement or delivery of
the particular commodity or commodities and such Offered Warrants will be
listed on a national securities exchange. The Prospectus Supplement will
describe the terms of the Offered Warrants, the commodity or commodity index
covered by the Offered Warrants and the market, if any, to which such
commodity or commodity index relates and the national securities exchange on
which the Offered Warrants will be listed.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, may (if in registered form) be presented for
registration of transfer, and may be exercised at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus
Supplement. Warrants to buy or sell Government Debt Securities or a foreign
currency, currency unit, currency index or currency basket, and Warrants on
stock indices or stock baskets or on commodities or commodity indices, may be
issued in the form of a single Global Warrant Certificate, registered in the
name of the nominee of the depository of the Warrants, or may initially be
issued in the form of definitive certificates that may be exchanged, on a
fixed date, or on a date or dates selected by the Company, for interests in a
Global Warrant Certificate, as set forth in the applicable Prospectus
Supplement. Prior to the exercise of their Warrants, holders of Warrants to
purchase Debt Securities will not have any of the rights of holders of the
Debt Securities purchasable upon such exercise, including the right to receive
payments of principal of, premium, if any, or interest, if any, on the Debt
Securities purchasable upon such exercise or to enforce covenants in the
Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Debt Securities or buy or sell such amount of Government Debt Securities or of
a currency, currency unit, currency index or currency basket, stock index or
stock basket, commodity or commodities at such exercise price, or receive such
settlement value in respect of such amount of Government Debt Securities or of
a
12
<PAGE>
currency, currency unit, currency index or currency basket, stock index or
stock basket, commodity or commodity index, as shall in each case be set forth
in or calculable from, the Prospectus Supplement relating to the Warrants or
as otherwise set forth in the Prospectus Supplement. Warrants may be exercised
at any time up to 3:00 P.M. New York time on the date set forth in the
Prospectus Supplement relating to such Warrants or as may be otherwise set
forth in the Prospectus Supplement. After such time on that date (or such
later date to which such date may be extended by the Company), unexercised
Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the Warrant Certificate evidencing such
Warrants properly completed and duly executed and of payment as provided in
the Prospectus Supplement of the amount required to purchase the Debt
Securities, or (except in the case of Warrants providing for cash settlement)
payment for or delivery of the Government Debt Securities or currency,
currency unit, currency index, currency basket, stock index, stock basket,
commodity or commodities index as the case may be, purchased or sold upon such
exercise. Warrants will be deemed to have been exercised upon receipt of such
Warrant Certificate and any such payment, if applicable, at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement and the Company will, as soon as practicable thereafter,
issue and deliver the Debt Securities purchasable upon such exercise, or buy
or sell such Government Debt Securities or currency, currency unit, currency
index or currency basket, stock index or stock basket, commodity or
commodities or pay the settlement value in respect of such Warrants. If fewer
than all of the Warrants represented by such Warrant Certificate are
exercised, a new Warrant Certificate will be issued for the remaining amount
of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities and Warrants to or through
underwriters, and also may sell Debt Securities and Warrants directly to other
purchasers or through agents. Such underwriters may also act as agents.
The distribution of the Debt Securities and Warrants, if any, may be
effected from time to time in one or more transactions at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices.
In connection with the sale of Debt Securities and Warrants, if any,
underwriters may receive compensation from the Company or from purchasers of
Debt Securities and Warrants, if any, for whom they may act as agents, in the
form of discounts, concessions or commissions. Underwriters may sell Debt
Securities and Warrants, if any, to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities and Warrants, if any, may be deemed to be
underwriters, and any discounts or commissions received by them from the
Company and any profit on the resale of Debt Securities and Warrants, if any,
by them may be deemed to be underwriting discounts and commissions, under the
Securities Act of 1933, as amended (the "Act"). Any such underwriter or agent
will be identified, and any such compensation received from the Company will
be described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities and Warrants, if
any, may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Act.
13
<PAGE>
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Debt Securities and Warrants, if any, from
the Company pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all
cases such institutions must be approved by the Company. The obligations of
any purchaser under any such contract will be subject to the condition that
the purchase of the Offered Debt Securities and Offered Warrants, if any,
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement relating to Offered
Debt Securities and Offered Warrants, if any, the validity of Offered Debt
Securities and Offered Warrants, if any, will be passed upon for the Company
by Chris B. Walther, Esq., Counsel, The Procter & Gamble Company, One Procter
& Gamble Plaza, Cincinnati, Ohio 45202, and for the underwriters or agents, as
the case may be, by Fried, Frank, Harris, Shriver & Jacobson (a partnership
including professional corporations), One New York Plaza, New York, New York
10004. Mr. Walther may rely as to matters of New York law upon the opinion of
Fried, Frank, Harris, Shriver & Jacobson, and Fried, Frank, Harris, Shriver &
Jacobson may rely as to matters of Ohio law upon the opinion of Mr. Walther.
Fried, Frank, Harris, Shriver & Jacobson from time to time perform legal
services for the Company.
EXPERTS
The consolidated financial statements and financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K have been audited by Deloitte & Touche llp, independent auditors,
as stated in their reports, which are incorporated herein by reference, and
have been so incorporated in reliance upon such reports given upon the
authority of that firm as experts in auditing and accounting.
14
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Ratio of Earnings to Fixed Charges............................ S-2
Description of Debentures.................................................. S-2
Underwriting............................................................... S-6
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Company................................................................. 3
Use of Proceeds............................................................. 3
Summary Financial Information............................................... 4
Description of Debt Securities.............................................. 5
Description of Warrants..................................................... 11
Plan of Distribution........................................................ 13
Legal Opinions.............................................................. 14
Experts..................................................................... 14
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$300,000,000
THE PROCTER & GAMBLE COMPANY
6.45% DEBENTURES DUE JANUARY 15, 2026
-----------
LOGO
-----------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
