THE PROCTER & GAMBLE COMPANY
AND SUBSIDIARIES
====================
ANNUAL REPORT ON FORM 10-K
TO THE
SECURITIES AND EXCHANGE COMMISSION
FOR THE
YEAR ENDED JUNE 30, 1996
******************************************
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
-------------------------------------------------
ANNUAL REPORT ON FORM 10-K PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996 Commission File No. 1-434
--------------------------------------------------------
THE PROCTER & GAMBLE COMPANY One
Procter & Gamble Plaza, Cincinnati, Ohio 45202
Telephone (513) 983-1100
IRS Employer Identification No. 31-0411980
State of Incorporation: Ohio
--------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each Exchange on which registered
- ------------------------------- -----------------------------------------
Common Stock, without Par Value New York, Cincinnati, Amsterdam, Paris,
Basle, Geneva, Lausanne, Zurich,
Frankfurt, Antwerp, Brussels, Tokyo
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
-----------
There were 684,717,750 shares of Common Stock outstanding as of August 9, 1996.
The aggregate market value of the voting stock held by non-affiliates amounted
to $65 billion on August 9, 1996.
Documents Incorporated By Reference
------------------------------------
Portions of the Annual Report to Shareholders for the fiscal year ended June 30,
1996 are incorporated by reference into Part I and Part II of this report.
Portions of the Proxy Statement for the 1996 Annual Meeting of Shareholders are
incorporated by reference into Part III of this report.
PART I
------
Item 1. Business.
---------
General Development of Business
-------------------------------
The Procter & Gamble 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 indicates otherwise, the term the "Company" as used
herein refers to The Procter & Gamble Company (the registrant) and its
subsidiaries.
Additional information required by this item is incorporated herein by
reference to the Letter to Shareholders, which appears on pages 1-4, and
Building Leadership Brands, which appears on pages 5-15 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Financial Information About Industry Segments
---------------------------------------------
The Company's products fall into five business segments: Laundry and
Cleaning, Paper, Beauty Care, Food and Beverage, and Health Care.
Additional information required by this item is incorporated herein by
reference to Note 11 Segment Information, which appears on pages 40 and 41, and
Financial Review, which appears on pages 20-27 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Narrative Description of Business
---------------------------------
The Company's business, represented by the aggregate of its Laundry and
Cleaning, Paper, Beauty Care, Food and Beverage, and Health Care segments, is
essentially homogeneous. For the most part, the factors necessary for an
understanding of these five segments are essentially identical. The markets in
which the Company's products are sold are highly competitive. The products of
the Company's business segments compete with many large and small companies, and
there is no dominant competitor or competitors. Advertising is used in
conjunction with an extensive sales force because the Company believes this
combination provides the most efficient method of marketing these types of
products. Product quality, performance, value and packaging are also important
competitive factors. Most of the Company's products in each of its segments are
distributed through grocery stores and other retail outlets.
The Laundry category and Diaper category constitute approximately 21%
and 13% of consolidated fiscal 1996 sales, respectively. These categories
constituted approximately the same percentages of consolidated sales in the
preceding two fiscal years. The creation of new products and the development of
new performance benefits for consumers on the Company's existing products are
vital ingredients in its continuing progress in the highly competitive markets
in which it does business. Basic research and product development activities
continued to carry a high priority during the past fiscal year. While many of
the benefits from these efforts will not be realized until future years, the
Company believes these activities demonstrate its commitment to future growth.
The Company has registered trademarks and owns or has licenses under
patents which are used in connection with its business in all segments. Some of
these patents or licenses cover significant product formulation and processing
of the Company's products. The trade names of all major products in each segment
are registered trademarks. In part, the Company's success can be attributed to
the existence of these trademarks, patents and licenses.
Most of the raw materials used by the Company are purchased from
others. Additionally, some raw materials, primarily chemicals, are produced by
the Company for further use in the manufacturing process. The Company purchases
and produces a substantial variety of raw materials, no one of which is material
to the Company's business taken as a whole.
Expenditures in fiscal year 1996 for compliance with Federal, State and
local environmental laws and regulations were not materially different from such
expenditures in the prior year, and no material increase is expected in fiscal
year 1997.
Operations outside the United States are generally characterized by the
same conditions discussed in the description of the business above and may also
be affected by additional elements including changing currency values and
different rates of inflation and economic growth. The effect of these additional
elements is less significant in the Food and Beverage segment than in the
Company's other business segments.
The Company has approximately 103,000 employees.
The Company provides an Employee Stock Ownership Plan ("ESOP") which is
part of The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership
Plan. Convertible preferred stock of the Company and other assets owned by the
ESOP are held through a trust (the "ESOP Trust"). The ESOP Trust has issued
certain debt securities to the public. The Company has guaranteed payment of
principal and interest on these debt securities. Holders of these debt
securities have no recourse against the assets of the ESOP Trust except with
respect to cash contributions made by the Company to the ESOP Trust, and
earnings attributable to such contributions. Such cash contributions are made by
the Company only to the extent that dividends on the convertible preferred stock
are inadequate to fund repayment of the debt securities. Any such contributions
and subsequent payments to holders are made on a same-day basis and such
contributions would therefore not be held by the ESOP Trust unless there was a
default in payment on the debt securities by the ESOP Trust after having
received such contributions from the Company. Such a default is not likely to
occur and therefore there is little likelihood that there would be assets
available to satisfy the claims of any holders of the debt securities. A summary
description of the liabilities of the ESOP Trust and of the dividends paid by
the Company on the convertible preferred stock and cash payments from the
Company to the ESOP Trust for the three years ended June 30, 1996 are
incorporated by reference to Note 7 Postretirement Benefits and Note 8 Employee
Stock Ownership Plan, which appear on pages 38-39 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Additional information required by this item is incorporated herein by
reference to Note 11 Segment Information, which appears on pages 40 and 41, the
Financial Highlights, which appear on page 42, and Financial Review, which
appears on pages 20-27 of the Annual Report to Shareholders for the fiscal year
ended June 30, 1996.
Financial Information About Foreign and Domestic Operations
-----------------------------------------------------------
The information required by this item is incorporated herein by
reference to Note 11 Segment Information, which appears on pages 40 and 41, and
Financial Review, which appears on pages 20-27 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Item 2. Properties.
-----------
In the United States, the Company owns and operates manufacturing
facilities at 36 locations in 20 states. In addition, it owns and operates 90
manufacturing facilities in 43 other countries. Laundry and Cleaning products
are produced at 40 of these locations; Paper products at 39; Health Care
products at 30; Beauty Care products at 52; and Food and Beverage products at
12. Management believes that the Company's production facilities are adequate to
support the business efficiently and that the properties and equipment have been
well maintained.
Item 3. Legal Proceedings.
------------------
The Company is involved in clean-up efforts at off-site Superfund
locations, many of which are in the preliminary stages of investigation. The
amount accrued at June 30, 1996 representing the Company's probable future costs
that can be reasonably estimated was $10 million.
The Company is also involved in certain other environmental
proceedings. No such proceeding is expected to result in material monetary or
other sanctions being imposed by any governmental entity, or in other material
liabilities. However, the Company has agreed to participate in the Toxic
Substances Control Act ("TSCA") Section 8(e) Compliance Audit Program of the
United States Environmental Protection Agency ("EPA"). As a participant, the
Company has agreed to audit its files for materials which under current EPA
guidelines would be subject to notification under Section 8(e) of TSCA and to
pay stipulated penalties for each report submitted under this program. It is
anticipated that the Company's liability under the Program will be $1,000,000.
No administrative proceeding is pending; however the Company anticipates being
required to enter an Administrative Order on Consent pursuant to this Program in
late calendar year 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Not applicable.
Executive Officers of the Registrant
------------------------------------
The names, ages and positions held by the executive officers of the
Company on August 9, 1996 are:
Elected to
Present
Name Position Age Position
- ------------------ ------------------------------- --- ----------
John E. Pepper Chairman of the Board and 58 1995
Chief Executive.
Director since June 12, 1984.
Durk I. Jager President and Chief Operating 53 1995
Officer.
Director since December 12, 1989.
Wolfgang C. Berndt Executive Vice President. 53 1995
Harald Einsmann Executive Vice President. 62 1995
Director since June 10, 1991.
Alan G. Lafley Executive Vice President. 49 1995
Jorge P. Montoya Executive Vice President. 50 1995
Benjamin L. Bethell Senior Vice President. 56 1991
Robert T. Blanchard Group Vice President. 51 1991
Gordon F. Brunner Senior Vice President. 57 1987
Director since March 1, 1991.
Bruce L. Byrnes Group Vice President. 48 1991
R. Kerry Clark Group Vice President. 44 1995
Larry G. Dare Group Vice President. 56 1990
Stephen P. Donovan, Jr. Group Vice President. 55 1986
Todd A. Garrett Group Vice President. 54 1995
Jacobus Groot Group Vice President. 45 1995
James J. Johnson Senior Vice President 49 1992
and General Counsel.
Jeffrey D. Jones Group Vice President. 43 1992
Mark D. Ketchum Group Vice President. 46 1996
Fuad O. Kuraytim Group Vice President. 55 1995
Gary T. Martin Senior Vice President. 51 1991
Claude L. Meyer Group Vice President. 53 1995
Lawrence D. Milligan Senior Vice President. 60 1990
Erik G. Nelson Senior Vice President. 56 1993
John O'Keeffe Group Vice President. 46 1995
Herbert Schmitz Group Vice President. 59 1995
Robert L. Wehling Senior Vice President. 57 1994
Edwin H. Eaton, Jr. Vice President and Comptroller. 57 1987
All of the above Executive officers are members of the Executive Committee of
The Procter & Gamble Company and have been employed by the Company over five
years.
PART II
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Item 5. Market for the Common Stock and Related Stockholder Matters
-----------------------------------------------------------
The information required by this item is incorporated by reference to
the Shareholder Information, which appears on page 43 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Item 6. Selected Financial Data
-----------------------
The information required by this item is incorporated by reference to
the Financial Highlights, which appear on page 42 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
-----------------------------------------------------------------------
The information required by this item is incorporated by reference to
Financial Review, which appears on pages 20-27, Note 10 Commitments and
Contingencies, which appears on page 40, and Note 11 Segment Information, which
appears on pages 40 and 41 of the Annual Report to Shareholders for the fiscal
year ended June 30, 1996.
Item 8. Financial Statements and Supplemental Data
------------------------------------------
The financial statements and supplemental data are incorporated by
reference to pages 28-42 of the Annual Report to Shareholders for the fiscal
year ended June 30, 1996.
Item 9. Disagreements on Accounting and Financial Disclosure
----------------------------------------------------
Not applicable.
PART III
--------
Item 10. Directors and Executive Officers
--------------------------------
The information required by this item is incorporated by reference to
pages 3-7 and 21 of the proxy statement filed since the close of the fiscal year
ended June 30, 1996, pursuant to Regulation 14A which involved the election of
directors. Pursuant to Item 401(b) of Regulation S-K, Executive Officers of the
Registrant are reported in Part I of this report.
Item 11. Executive Compensation
----------------------
The information required by this item is incorporated by reference to
pages 9-16 of the proxy statement filed since the close of the fiscal year ended
June 30, 1996, pursuant to Regulation 14A which involved the election of
directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information required by this item is incorporated by reference to
pages 18-20 of the proxy statement filed since the close of the fiscal year
ended June 30, 1996, pursuant to Regulation 14A which involved the election of
directors.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information required by this item is incorporated by reference to
page 21 of the proxy statement filed since the close of the fiscal year ended
June 30, 1996, pursuant to Regulation 14A which involved the election of
directors.
PART IV
------------
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
-----------------------------------------------------------------
A. 1. Financial Statements:
The following consolidated financial statements of The
Procter & Gamble Company and subsidiaries and the report
of independent accountants are incorporated by reference
in Part II, Item 8.
- Report of independent accountants
- Consolidated statements of earnings -- for years
ended June 30, 1996, 1995 and 1994
- Consolidated balance sheets -- as of June 30, 1996
and 1995
- Consolidated statements of shareholders' equity --
for years ended June 30, 1996, 1995 and 1994
- Consolidated statements of cash flows -- for years
ended June 30, 1996, 1995 and 1994
- Notes to consolidated financial statements
2. Financial Statement Schedules:
These schedules are omitted because of the absence of the
conditions under which they are required or because the
information is set forth in the financial statements or
notes thereto.
3. Exhibits:
Exhibit (3-1) -- Amended Articles of Incorporation
(Incorporated by reference to Exhibit
(3-1) of the Company's Annual Report
on Form 10-K for the year ended
June 30, 1993).
(3-2) -- Regulations (Incorporated by reference
to Exhibit (3-2) of the Company's
Annual Report on Form 10-K for the
year ended June 30, 1993).
Exhibit (4) -- Registrant agrees to file a copy of
documents defining the rights of
holders of long-term debt upon request
of the Commission.
Exhibit (10-1) -- The Procter & Gamble 1992 Stock
Plan (as amended December 14, 1993)
which was adopted by the shareholders
at the annual meeting on October 13,
1992 (Incorporated by reference to
Exhibit (10-1) of the Company's Annual
Report on Form 10-K for the year ended
June 30, 1994).
(10-2) -- The Procter & Gamble 1983 Stock Plan
(as amended May 11, 1993) which was
adopted by the shareholders at the
annual meeting on October 11, 1983
(Incorporated by reference to Exhibit
(10-2) of the Company's Annual Report
on Form 10-K for the year ended June
30, 1993).
(10-3) -- The Procter & Gamble Executive Group
Life Insurance Policy (each executive
officer is covered for an amount equal
to annual salary plus bonus)
(Incorporated by reference to Exhibit
(10-3) of the Company's Annual Report
on Form 10-K for the year ended June
30, 1993).
(10-4) -- Additional Remuneration Plan (as
amended June 12, 1990) which was
adopted by the Board of Directors on
April 12, 1949 (Incorporated by
reference to Exhibit (10-4) of the
Company's Annual Report on Form 10-K
for the year ended June 30, 1993).
(10-5) -- The Procter & Gamble Deferred
Compensation Plan for Directors which
was adopted by the Board of Directors
on September 9, 1980 (Incorporated by
reference to Exhibit (10-5) of the
Company's Annual Report on Form 10-K
for the year ended June 30, 1993).
(10-6) -- The Procter & Gamble Retirement Plan
for Directors which was adopted by the
Board of Directors on December 12,
1989 (Incorporated by reference to
Exhibit (10-6) of the Company's Annual
Report on Form 10-K for the year
ended June 30, 1993).
(10-7) -- The Procter & Gamble Board of
Directors Charitable Gifts Program
which was adopted by the Board of
Directors on November 12, 1991
(Incorporated by Reference to Exhibit
(10-7) of the Company's Annual Report
on Form 10-K for the year ended June
30, 1993).
(10-8) -- The Procter & Gamble 1993 Non-Employee
Directors' Stock Plan which was
adopted by the shareholders at the
annual meeting on October 11, 1994
and which was amended on January 10,
1995, by the Board of Directors, and
ratified by the shareholders at the
annual meeting on October 10, 1995
(Incorporated by reference to Appendix
A of the proxy statement filed
September 1, 1995 since the close of
the fiscal year ended June 30, 1995).
(10-9) -- Richardson-Vicks Inc. Special Stock
Equivalent Incentive Plan which was
authorized by the Board of Directors
of The Procter & Gamble Company and
adopted by the Board of Directors of
Richardson-Vicks Inc. on December 31,
1985 (Incorporated by reference to
Exhibit (10-9) of the Company's Annual
Report on Form 10-K for the year ended
June 30, 1994).
(10-10) -- The Procter & Gamble Executive Group
Life Insurance Policy (Additional
Policy).
Exhibit (11) -- Computation of earnings per share.
Exhibit (12) -- Computation of ratio of earnings to
fixed charges.
Exhibit (13) -- Annual Report to Shareholders.
(Pages 1-15 and 20-43)
Exhibit (21) -- Subsidiaries of the registrant.
Exhibit (23) -- Consent of Deloitte & Touche LLP.
Exhibit (27) -- Financial Data Schedule.
Exhibit (99-1) -- Directors and Officers Liability
Policy (Incorporated by reference
to Exhibit 99-1 of the Company's
Annual Report on Form 10-K for the
year ended June 30, 1995) (the
"Policy Period" has been extended to
6/30/99).
(99-2) -- Directors and Officers (First) Excess
Liability Policy (Incorporated by
reference to Exhibit 99-2 of the
Company's Annual Report on Form 10-K
for the year ended June 30, 1995)
(the "Policy Period" has been
extended to 6/30/97).
(99-3) -- Directors and Officers (Second)
Excess Liability Policy (Incorporated
by reference to Exhibit 99-3 of the
Company's Annual Report on Form 10-K
for the year ended June 30, 1995)
(the "Policy Period" has been
extended to 6/30/97).
(99-4) -- Directors and Officers (Third) Excess
Liability Policy (Incorporated by
reference to Exhibit 99-4 of the
Company's Annual Report on Form 10-K
for the year ended June 30, 1995)
(the "Policy Period" has been extended
to 6/30/97).
(99-5) -- Directors and Officers (Fourth) Excess
Liability Policy (Incorporated by
reference to Exhibit 99-5 of the
Company's Annual Report on Form 10-K
for the year ended June 30, 1995)
(the "Policy Period" has been extended
to 6/30/97).
(99-6) -- Fiduciary Responsibility Insurance
Policy (Incorporated by reference
to Exhibit 99-6 of the Company's
Annual Report on Form 10-K for the
year ended June 30, 1995) (the
"Policy Period" has been extended to
6/30/97).
The exhibits listed are filed with the Securities and
Exchange Commission but are not included in this booklet.
Copies of these exhibits may be obtained by sending a
request to: Linda D. Rohrer, Assistant Secretary, The
Procter & Gamble Company, P. O. Box 599, Cincinnati, Ohio
45201
B. Reports on Form 8-K:
None.
SIGNATURES
------------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the city of Cincinnati,
State of Ohio.
THE PROCTER & GAMBLE COMPANY
By JOHN E. PEPPER
----------------------------------
John E. Pepper
Chairman of the Board and Chief Executive
September 10, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
JOHN E. PEPPER Chairman of the Board and |
- ----------------------- Chief Executive and Director |
(John E. Pepper) (Principal Executive Officer) |
|
ERIK G. NELSON Senior Vice President |
- ----------------------- (Principal Financial Officer) |
(Erik G. Nelson) |
|
EDWIN H. EATON, JR. Vice President and Comptroller |
- ----------------------- (Principal Accounting Officer) |
(Edwin H. Eaton, Jr.) September 10, 1996
|
EDWIN L. ARTZT |
- ----------------------- Director |
(Edwin L. Artzt) |
|
NORMAN R. AUGUSTINE |
- ----------------------- Director |
(Norman R. Augustine) |
|
DONALD R. BEALL |
- ----------------------- Director |
(Donald R. Beall) |
|
GORDON F. BRUNNER |
- ----------------------- Director |
(Gordon F. Brunner) |
|
RICHARD B. CHENEY |
- ----------------------- Director |
(Richard B. Cheney) |
|
HARALD EINSMANN |
- ----------------------- Director |
(Harald Einsmann) |
|
|
- ----------------------- Director |
(Richard J. Ferris) |
|
|
- ----------------------- Director September 10, 1996
(Joseph T. Gorman) |
|
DURK I. JAGER |
- ----------------------- Director |
(Durk I. Jager) |
|
CHARLES R. LEE |
- ----------------------- Director |
(Charles R. Lee) |
|
LYNN M. MARTIN |
- ----------------------- Director |
(Lynn M. Martin) |
|
JOHN C. SAWHILL |
- ----------------------- Director |
(John C. Sawhill) |
|
JOHN F. SMITH, JR. |
- ----------------------- Director |
(John F. Smith, Jr.) |
|
RALPH SNYDERMAN |
- ----------------------- Director |
(Ralph Snyderman) |
|
ROBERT D. STOREY |
- ----------------------- Director |
(Robert D. Storey) |
|
- ----------------------- Director |
(Marina v.N. Whitman) |
EXHIBIT INDEX
-------------
Exhibit (3-1) -- Amended Articles of Incorporation (Incorporated
by reference to Exhibit (3-1) of the Company's
Annual Report on Form 10-K for the year ended
June 30, 1993).
(3-2) -- Regulations (Incorporated by reference to Exhibit
(3-2) of the Company's Annual Report on Form 10-K
for the year ended June 30, 1993).
Exhibit (4) -- Registrant agrees to file a copy of documents
defining the rights of holders of long-term debt
upon request of the Commission.
Exhibit (10-1) -- The Procter & Gamble 1992 Stock Plan (as amended
December 14, 1993) which was adopted by the
shareholders at the annual meeting on October 13,
1992 (Incorporated by reference to Exhibit (10-1)
of the Company's Annual Report on Form 10-K for
the year ended June 30, 1994).
(10-2) -- The Procter & Gamble 1983 Stock Plan (as amended
May 11, 1993) which was adopted by the
shareholders at the annual meeting on October 11,
1983 (Incorporated by reference to Exhibit (10-2)
of the Company's Annual Report on Form 10-K for
the year ended June 30, 1993).
(10-3) -- The Procter & Gamble Executive Group Life
Insurance Policy (each executive officer is
covered for an amount equal to annual salary plus
bonus) (Incorporated by reference to Exhibit
(10-3) of the Company's Annual Report on Form
10-K for the year ended June 30, 1993).
(10-4) -- Additional Remuneration Plan (as amended June 12,
1990) which was adopted by the Board of Directors
on April 12, 1949 (Incorporated by reference to
Exhibit (10-4) of the Company's Annual Report on
Form 10-K for the year ended June 30, 1993).
(10-5) -- The Procter & Gamble Deferred Compensation Plan
for Directors which was adopted by the Board of
Directors on September 9, 1980 (Incorporated by
reference to Exhibit (10-5) of the Company's
Annual Report on Form 10-K for the year ended
June 30, 1993).
(10-6) -- The Procter & Gamble Retirement Plan for Directors
which was adopted by the Board of Directors on
December 12, 1989 (Incorporated by reference to
Exhibit (10-6) of the Company's Annual Report on
Form 10-K for the year ended June 30, 1993).
Exhibit (10-7) -- The Procter & Gamble Board of Directors Charitable
Gifts Program which was adopted by the Board of
Directors on November 12, 1991 (Incorporated by
Reference to Exhibit (10-7) of the Company's
Annual Report on Form 10-K for the year ended
June 30, 1993).
(10-8) -- The Procter & Gamble 1993 Non-Employee Directors'
Stock Plan which was adopted by the shareholders
at the annual meeting on October 11, 1994 and
which was amended on January 10, 1995, by the
Board of Directors, and ratified by the
shareholders at the annual meeting on October 10,
1995 (Incorporated by reference to Appendix A of
the proxy statement filed September 1, 1995 since
the close of the fiscal year ended June 30, 1995).
(10-9) -- Richardson-Vicks Inc. Special Stock Equivalent
Incentive Plan which was authorized by the Board
of Directors of the Procter & Gamble Company and
adopted by the Board of Directors of
Richardson-Vicks Inc. on December 31, 1985
(Incorporated by Reference to Exhibit (10-9) of
the Company's Annual Report on Form 10-K for the
year ended June 30, 1994).
(10-10) -- The Procter & Gamble Executive Group Life
Insurance Policy (Additional Policy)
Exhibit (11) -- Computation of earnings per share.
Exhibit (12) -- Computation of ratio of earnings to fixed charges.
Exhibit (13) -- Annual Report to Shareholders.
(Pages 1-15 and 20-43)
Exhibit (21) -- Subsidiaries of the registrant.
Exhibit (23) -- Consent of Deloitte & Touche LLP.
Exhibit (27) -- Financial Data Schedule.
Exhibit (99-1) -- Directors and Officers Liability Policy
(Incorporated by reference to Exhibit 99-1 of the
Company's Annual Report on Form 10-K for the year
ended June 30, 1995) (the "Policy Period" has been
extended to 6/30/99).
(99-2) -- Directors and Officers (First) Excess Liability
Policy (Incorporated by reference to Exhibit 99-2
of the Company's Annual Report on Form 10-K for
the year ended June 30, 1995) (the "Policy
Period" has been extended to 6/30/97).
(99-3) -- Directors and Officers (Second) Excess Liability
Policy (Incorporated by reference to Exhibit 99-3
of the Company's Annual Report on Form 10-K for
the year ended June 30, 1995) (the "Policy
Period" has been extended to 6/30/97).
(99-4) -- Directors and Officers (Third) Excess Liability
Policy (Incorporated by reference to Exhibit 99-4
of the Company's Annual Report on Form 10-K for
the year ended June 30, 1995) (the "Policy
Period" has been extended to 6/30/97).
(99-5) -- Directors and Officers (Fourth) Excess Liability
Policy (Incorporated by reference to Exhibit 99-5
of the Company's Annual Report on Form 10-K for
the year ended June 30, 1995) (the "Policy
Period" has been extended to 6/30/97).
(99-6) -- Fiduciary Responsibility Insurance Policy
(Incorporated by reference to Exhibit 99-6 of the
Company's Annual Report on Form 10-K for the year
ended June 30, 1995) (the "Policy Period" has been
extended to 6/30/97).
Exhibit (10-10)
-----------------
The Procter & Gamble Executive Group Life Insurance Policy (Additional Policy)
Group Control No. 363417
AETNA LIFE INSURANCE COMPANY
HARTFORD, CONNECTICUT
(Herein called the Insurance Company)
Group Policy No.: GL-363417 Policy Delivered In: Ohio
(State or other Jurisdiction)
Policy holder: THE PROCTER & GAMBLE COMPANY
Policy Signed: June 14, 1977 To Take Effect: April 13, 1977
This policy is a contract between the Policyholder and the Insurance Company and
shall be construed in accordance with the law of the jurisdiction in which it is
delivered.
In consideration of the payment by the Policyholder of premiums in the amounts
and at the times hereinafter provided, the Insurance company hereby agrees with
the Policyholder, subject to the terms appearing on this and the following pages
of this policy (including, if any, the riders, endorsements, and amendments, to
this policy which are signed by the Insurance Company), to pay benefits in
accordance with the terms of this policy. The obligations and the rights of all
persons under this policy shall be determined in accordance with the terms of
this policy.
In witness whereof the Insurance Company has signed this policy at Hartford,
Connecticut.
Aetna Life Insurance Company
/S/HARVEY P. BERMAN /S/WILLIAM O. BAILEY
Secretary President
/S/HELEN N. MATIJCZYK
Registrar
GROUP LIFE INSURANCE POLICY
INDEX
Page
Article I-GENERAL PROVISIONS.
Article II-BENEFITS.
Article III-TERMINATION OF INSURANCE.
Article IV-PREMIUMS.
Article V-DISCONTINUANCE OF POLICY.
Article VI-MISCELLANEOUS PROVISIONS.
COPY OF APPLICATION
Article I-GENERAL PROVISIONS 363417
Section 1. General Definitions
As used in this policy:
(a) The term "Employee Coverage" means only insurance as to an
employee.
(b) The term "date of issue" means the date this policy took
effect as shown on Page 1 of this policy.
(c) Commencing January 1, 1978, "policy anniversaries" shall be
deemed to occur on said date, and on the same day in each
succeeding year.
(d) The term "policy year" means a period commencing with the date
of issue of this policy, or a policy anniversary, and
terminating immediately prior to the next succeeding policy
anniversary.
(e) A "policy month" shall commence on the date of issue. Each
"policy month" thereafter shall be deemed to commence on the
first day of the calendar month.
(f) "Contributory insurance" means insurance for which an employee
makes written request to his Participant Employer and agrees
to make the required contributions to his Participant
Employer. "Non-contributory insurance" is insurance for which
an employee does not make written request nor contribute
toward the cost. This policy provides insurance on the
non-contributory basis.
(g) The term "Added Compensation" means the total amount of
additional remuneration:
1) awarded by the Board of Directors of The Procter &
Gamble Company, the Compensation Committee of The Procter
& Gamble Company or the Procter & Gamble Chief Executive
Officers and heads of the various subsidiary companies,
and
2) charges against the Executive Additional Remuneration
Reserve, but excluding any supplemental awards which
are made because of the limits imposed by the Employee
Retirement Income Security Act of 1974 on credits to the
Profit Sharing Trust Plan.
(h) The term "Total Compensation" means the sum of (a) base
salary plus, (b) added compensation.
Section 2. List of Participant Employers
An Employer shall be eligible to be included in this list as a
Participant Employer if such inclusion is not contrary to any
applicable insurance law of the state or other jurisdiction in which
this contract is delivered.
The Policyholder may act for and on behalf of any and all of the
Employers included in this list in all matters pertaining to this
contract, and every act done by the Policyholder, agreement made
between the Insurance company and the Policyholder, or notice given by
the Insurance Company to the Policyholder or by the Policyholder to the
Insurance Company, shall be binding on all such Employers.
Any eligible Employer may be added to this list as a Participant
Employer only upon written agreement between the Policyholder and the
Insurance Company and upon terms mutually agreeable to them.
An Employer shall be eliminated automatically from this list when this
contract is discontinued with respect to employees of such Employer, as
provided for elsewhere in this contract, but termination of an
Employer's status as a Participant Employer shall not relieve such
Employer from any obligations to the Insurance Company with respect to
the time such Employer was a Participant Employer under this contract.
This list shall, at any time, consist of those Employers which have
been included under this contract by written agreement between the
Policyholder and the Insurance Company, and which have not been
removed, in accordance with the above terms of this section.
Section 3. Employees to be Insured
(I) Employee Coverage
A. Employees Eligible:
All employees of a Participant Employer shall be eligible for
Employee Coverage except employees in the following classes:
(a) temporary or substitute employees (i.e.,
employees who are not classified by
such Employer as permanent employees);
(b) employees who are actively working for such
Employer on a part-time basis, but this
exceptions shall not apply in the case of a
regular, full-time, active employee of such
Employer if and while he is only temporarily
working for such Employer on a part-time
basis;
(c) regular full-time active employees who are
not key executives of The Procter &
Gamble Company or its subsidiaries.
Each employee in an eligible class who has completed six
months or more of continuous service on the date of issue
shall become eligible for Employee Coverage on that date, and
each other employee in an eligible class shall become eligible
for Employee Coverage on the date on which he completes six
months of continuous service.
Anything to the contrary notwithstanding, if an individual is
in the employ of or connected with two or more Participant
Employers, he shall not be eligible for multiple coverage
under this policy, but shall be treated the same as if he were
in the employ of or connected with a single Participant
Employer; the amount of insurance for which any such
individual shall be eligible under this policy shall under no
circumstances exceed the amount which would apply if all of
the Participant Employers with which he is employed or
connected were a single Participant Employer and if the
aggregate of the remuneration being paid to him by all such
Participant Employers were being paid to him by a single
Participant Employer. If any Participant Employer is a
partnership, the natural-person partners thereof shall be
considered to be employees within the meaning of this policy
if and while they are actively engaged in and devoting their
time on a substantially full-time basis to the conduct of the
business of the partnership. If any Participant Employer is an
individual proprietorship, the natural-person proprietor
thereof shall be considered to be an employee within the
meaning of this policy on the same terms as those applicable
to partners of a partnership.
B. Effective Dates of Insurance:
(1) As to contributory insurance, each employee who makes
written request to his Participant Employer for
Employee Coverage and agrees to make the required
contributions therefor to his Participant Employer is
to be insured for Employee Coverage on the date he
becomes eligible for Employee Coverage or on the date
he makes such request, whichever is later; provided,
however, that
(a) the Employee Coverage of any employee who makes
such written request after thirty-one days from the
date he becomes eligible, or who revokes any written
request previously made, shall become effective only
if and when the Insurance Company gives its written
consent; and
(b) any employee who is both disabled (i.e., ill or
injured) and away from work on the date Employee
Coverage is to become effective shall not be insured
until he actually returns to work on a full-time
basis.
(2) As to non-contributory insurance, each employee is to be
insured for Employee Coverage on the date he becomes eligible
therefor; provided, however, that any employee who is both
disabled (i.e., ill or injured) and away from work on the date
Employee Coverage is to become effective shall not be insured
until he actually returns to work on a full-time basis.
Section 4. Changes in Amounts of Insurance
The initial amount of insurance for an employee under any Title of this policy
shall conform to that provided for his classification.
As to contributory insurance, if, for any reason, the terms of any Title of this
policy warrant an amount of insurance for any employee greater or less than that
for which he is then insured, the amount of his insurance shall be increased or
reduced as follows: Any reduction in insurance because of attainment of a
specified age or because of retirement shall become effective on the employee's
"reduction date"; any other reduction in insurance shall become effective on the
date the employee makes a request therefor to his Participant Employer: any
increase in insurance shall become effective only in conformity with the terms
applicable with respect to the effecting of the initial insurance of employees
as set forth in Section 3 of Article I of this policy.
As to non-contributory insurance, if, for any reason, the terms of any Title of
this policy warrant an amount of insurance for any employee greater or less than
that for which he is then insured, the amount of his insurance shall be
increased or reduced to the applicable amount as specified in such Title;
provided, however, that in any instance in which an employee is both disables
(i.e., ill or injured) and not working on the date his insurance would otherwise
be increased, the effective date of the increase in insurance shall be deferred
until he actually returns to active work on a full-time basis.
A retroactive change in an employee's rate of earnings shall be deemed to be
effective on the date of the determination of the change in the rate of
earnings.
If the terms of Title ELIC provide for a reduction in the amount of any
employee's insurance under that Title because of attainment of a specified age
or because of retirement, no further increases or reduction will be made in the
amount of such employee's insurance under that Title because of a change in the
employee's classification or because of a change in the Schedule of Insurance in
accordance with the terms of this section after the first reduction because of
age or retirement becomes effective.
Article II-BENEFITS
TITLE ELIC-EMPLOYEES' LIFE INSURANCE COVERAGE
Section 1. Life Insurance Benefit
If an employee shall die while Employee Coverage is in force for the employee,
the Insurance Company shall pay, upon receipt of due proof of the death of such
employee-to the beneficiary determined in accordance with the terms of this
policy-the amount determined in accordance with the terms of this policy.
Schedule of Insurance
---------------------
Classification Amount of Insurance
-------------- -------------------
All employees An amount equal to 100% of the
employee's total compensation, the
resulting amount, if not an integral
multiple of $500 is to be taken to
the nearest integral multiple of
$500, but in no event shall the
amount of insurance be more than
$1,000,000 nor less than $4,000.
Continuation of Coverage for Retired Employees
If an employee, while insured under this Title, becomes retired from the service
of a Participant Employer, his employment, for the purposes of this policy, will
be continued while the Policyholder continues to make premium payments for such
employee's insurance, provided the following requirements are met:
The employee retires in accordance with the terms of his Participant
Employer's Qualified Pension Plan and will receive pension
consideration (other than a deferred vested pension) thereunder.
Employees retired prior to January 1, 1981 and eligible only for the amounts of
insurance shown in the schedule of insurance below.
Schedule of Insurance
---------------------
Classification Amount of Insurance
-------------- -------------------
All employees An amount equal to 100% of the
employee's Annual Rate of Basic
Earnings, the resulting amount, if
not an integral multiple of $500, to
be taken to the nest higher integral
multiple of $500, but in no event
shall the amount of insurance be
more than $400,000 nor less than
$4,000.
Article III-TERMINATION OF INSURANCE
Section 1. Employee Coverage
All insurance of any employee under this policy shall terminate at the earliest
time specified below:
(1) Upon discontinuance of the policy.
(2) Immediately when the employee's employment with a Participant
employer in the classes of employees eligible for insurance
terminates. Cessation of active work by an employee shall be
deemed to be termination of his employment, except that
(a) in the case of an absence from active work because of
sickness or injury, his employment may, for the
purposes of insurance under this policy, be deemed to
continue until terminated by his Participant
Employer, but in no case beyond twelve months from
the date such absence from active work started, or
(b) in the case of absence of an employee from active
work because of temporary lay-off or leave of absence
(other than leave for military service), his
employment may, for the purposes of insurance under
this policy, be deemed to continue until terminated
by his Participant Employer but in no case beyond 12
months from the date such lay-off or leave of absence
commenced.
In the case of any of the exceptions in the foregoing
paragraph, the insurance under this policy for such employee
shall automatically cease on the date of such termination of
his employment by his Participant Employer, as evidenced to
the Insurance Company by the Policyholder, whether by
notification or by cessation of premium payment on account of
such employee's insurance hereunder. Any maximum period of
continuation permitted by the foregoing paragraph may be
extended by written mutual agreement between the Policyholder
and the Insurance Company.
In no event may any insurance provided on a contributory basis be continued
beyond the end of the period for which the employee has made to his Participant
Employer the contributions required.
Article IV-PREMIUMS
Section 1. PREMIUM RATES
EMPLOYEE COVERAGE
<TABLE>
TABLE OF PREMIUM RATES
<CAPTION>
Age on Monthly Age on Monthly Age on Monthly Age on Monthly
Birthday Premium Birthday Premium Birthday Premium Birthday Premium
Nearest Per Nearest Per Nearest Per Nearest Per
Beginning $1,000 Beginning $1,000 Beginning $1,000 Beginning $1,000
of the of of the of of the of of the of
Policy Year Insurance Policy Year Insurance Policy Year Insurance Policy Year Insurance
<S> <C> <C> <C> <C> <C> <C> <C>
15 $ .19 35 $ .32 55 $1.65 75 $ 8.56
16 .20 36 .34 56 1.80 76 9.24
17 .21 37 .36 57 1.97 77 10.00
18 .22 38 .38 58 2.14 78 10.86
19 .23 39 .41 59 2.32 79 11.81
20 .23 40 .45 60 2.51 80 12.83
21 .24 41 .49 61 2.72 81 13.93
22 .24 42 .53 62 2.96 82 15.07
23 .25 43 .58 63 3.21 83 16.26
24 .25 44 .63 64 3.48 84 17.50
25 .25 45 .68 65 3.78 85 18.80
26 .25 46 .74 66 4.11 86 20.16
27 .26 47 .81 67 4.48 87 21.60
28 .26 48 .89 68 4.89 88 23.13
29 .26 49 .97 69 5.34 89 24.79
30 .27 50 1.06 70 5.81 90 26.62
31 .27 51 1.16 71 6.32 91 28.68
32 .28 52 1.26 72 6.84 92 31.03
33 .29 53 1.38 73 7.38 93 33.75
34 .30 54 1.51 74 7.95 94 36.95
95 40.98
</TABLE>
For annual, semi-annual, or quarterly premiums multiply the monthly premiums
determined from the above table by 11.83, 5.96 or 2.99 respectively.
Policy Charge
The premium calculated as above shall be increased by a policy charge of $.20
for each $1,000 of insurance in force hereunder at the beginning of the then
current policy year for each policy month which occurs during the premium paying
period, provided that the policy charge shall not exceed $8.00 in respect of any
month.
During the first policy year, the policy charge shall be waived and the total
premium is subject to a reduction of 35%.
Advance Expense Adjustment
For the first policy year the total premium, including the policy charge, shall
be reduced by the applicable advance expense adjustment indicated below (for
annual, semi-annual or quarterly premiums, divide the total premium, including
the policy charge by 12, 6, or 8, respectively, before entering this table):
Total Monthly Advance Expense Total Monthly Advance Expense
Premium Before Adjustment Premium Before Adjustment
Advance Expense Advance Expense
Adjustment Adjustment
Under $125 0% $ 700- 899 26%
$125-149 10 900- 1,399 27
150-174 11 1,400- 2,499 28
175-199 13 2,500- 3,999 29
200-224 14 4,000- 7,499 30
225-249 16 7,500-11,999 31
250-299 17 12,000-26,999 32
300-349 19 27,000-59,999 33
350-399 20 60,000-79,999 34
400-449 21 80,000 and over 35
450-499 22
500-549 23
550-599 24
600-699 25
Section 2. Premium Calculations and Experience Rating
Portion Applicable to Employee Coverage Only:
At the beginning of each policy year the Insurance Company shall compute an
aggregate annual, semi-annual, quarterly, or monthly premium, as the case may
be, based upon the frequency of premium payments then agreed upon between the
Policyholder and the Insurance Company, which shall be the sum of the individual
premiums for the employees then insured, calculated according to the table of
premium rates then in effect hereunder on the basis of the ages (nearest
birthday) then attained by the employees insured for Employee Coverage and their
respective amounts of insurance. From such computation an average premium rate
shall be determined by dividing the aggregate premium by the aggregate amount of
insurance then in force, and such average premium rate shall remain in effect,
and shall be used in calculating premiums under this policy, until a new one is
determined. Each premium due during the policy year shall be calculated by
multiplying the amount of insurance in force at the beginning of the
premium-paying period by the average premium rate in effect on the premium-due
date.
Portion Having General Application:
The premium due under this policy on any premium-due date shall be the sum of
the premium charges for the insurance provided under the Titles then forming a
part of this policy.
If premiums are payable monthly, any insurance becoming effective shall, except
as hereinafter provided, be charged for from the first day of the policy month
coinciding with or next following the date the insurance takes effect, and
premium charges for any insurance terminated shall cease as of the first day of
the policy month coinciding with or next following the date the insurance
terminates. If premiums are payable quarterly, semi-annually, or annually,
premium charges or credits for a fraction of a premium-paying period required by
the foregoing terms of this paragraph shall, except as hereinafter provided, be
made on a pro-rate basis for the number of policy months between the date
premium charges commence or cease and the end of the premium-paying period. If
this policy is amended to provide additional coverage, or any increase in
coverage, and if the effective date of such amendment is other than the first
day of a premium-paying period, a pr-rate premium in respect of such coverage
shall become due and payable as of such date, to cover the period beginning on
that date and ending immediately prior to the commencement of the next
premium-paying period.
The premium charges for the insurance under any Title forming a part of this
policy shall be calculated at the premium rates specified above, subject to such
reductions or increases as the Insurance Company shall determine to be warranted
by experience or by reason of any change in factors bearing on the risk assumed.
Each reduction or increase in any premium rate shall be made by written
notification to the Policyholder by the Insurance Company.
No experience reduction or increase in premium rates shall become effective less
than twelve months after the effective date of this policy.
As of the end of any policy year the Insurance Company may declare an experience
credit in such amount as the Insurance Company shall determine. The amount of
each experience credit declared by the Insurance Company shall be refunded to
the Policyholder, or upon request by the Policyholder, a part or all of the
experience credit shall be applied against the payment of any premium or
premiums.
If at any time the aggregate of employee contributions theretofore made for
group insurance shall exceed the aggregate of premiums theretofore paid for
group insurance (after giving effect to any experience credits allowed the
Policyholder), such excess shall be applied by the Policyholder for the sole
benefit of employees, but the Insurance Company shall not be obliged to see to
the application of any such excess.
Instead of the method of calculation of premiums above provided, premiums may be
calculated by any method which produces approximately the same total amount of
premiums and is mutually agreeable to the Insurance Company and the
Policyholder.
Section 3. Premiums, How Payable
Premiums shall be payable by the Policyholder in advance at the Home Office of
the Insurance Company or to its authorized agent.
The first premium under this policy shall be due and payable as of the date of
issue to cover the period beginning on that date and ending on the last day of
the first policy month and thereafter premiums shall be due and payable on the
first day of each policy month. The Policyholder may change the frequency of
premium payments as of any premium-due date with the written consent of the
Insurance Company.
Section 4. Grace Period
A grace period of thirty-one days following the due-date shall be allowed the
Policyholder for the payment of each premium.
Article V-DISCONTINUANCE OF POLICY
The Policyholder may discontinue this policy with respect to all employees of
any one or more Participant Employers, and any Participant Employer may
discontinue this policy with respect to all employees of such Employer, by
giving to the Insurance Company written notice stating when, after the date of
such notice, such discontinuance shall become effective; but no such
discontinuance shall become effective with respect to employees of any
Participant Employer during any period for which a premium has been paid to the
Insurance Company with respect to employees of such Employer.
The Insurance Company reserves the right to discontinue this policy.
(a) with respect to all employees of any Participant Employer, at
any time after the end of the grace period allowed for payment
of a premium with respect to employees of such Employer which
has not been paid, by giving written notice to the
Policyholder stating when such discontinuance shall become
effective;
(b) either in its entirety or with respect to all employees of any
Participant Employer, at any time, by giving to the
Policyholder written notice stating the date as of which such
discontinuance shall become effective but such date shall not
be one that occurs earlier than thirty-one days after the date
of such notice unless mutually satisfactory to the
Policyholder and the Insurance Company.
If this policy discontinues with respect to any of the employees of a
Participant Employer, the Policyholder and the Employer shall be jointly and
severally liable to the Insurance Company for all unpaid premiums for the period
during which this policy was in force with respect to any of the employees of
such Employer.
Article VI-MISCELLANEOUS PROVISIONS
Section 1. Assignment
No assignment of any present or future right or interest, under this policy by
the Policyholder or by any Participant Employer shall bind the Insurance Company
without its written consent.
Neither the employees nor their beneficiaries may assign any of the insurance or
other benefits under this policy; provided, however, that if the Policyholder
and the Insurance Company consent in writing, the employee or his assignee may,
as a gift, transfer by absolute and irrevocable assignment all of his incidents
of ownership and all of his other right, title, and interest, both present and
future, in and to insurance under this policy, including but not limited to the
right to designate and change the beneficiary, the right to make any requisite
contributions to maintain the insurance in force under this policy, and the
right to exercise any conversion privilege provided under this policy.
No assignment shall be binding upon the Insurance Company unless the assignment
meets the foregoing conditions and requirements, is in form approved by the
Insurance Company, and it or a duplicate thereof is filed with the Insurance
Company at its Home Office in Hartford, Connecticut.
Neither the Insurance Company nor the Policyholder guarantees or assumes any
obligation as to the validity, sufficiency, or effect of any assignment.
Section 1-A. Claims of Creditors
Except so far as may be contrary to the laws of any state having jurisdiction in
the premises, the insurance and other benefits under this policy shall be exempt
from execution, attachment, garnishment, or other legal or equitable process,
for the debts of the employees or their beneficiaries.
Nothing in this section, however, shall be construed so as to prejudice the
right of any person to receive payment pursuant to the beneficiary provisions of
this policy.
Section 2. Employees' Certificates
The Insurance Company will issue to the Policyholder, for delivery to each
insured employee, an individual certificate setting forth a summary of the
essential features of the insurance coverage to which the employee is entitled
and stating to whom the benefits are payable, together with a statement of the
"Conversion Privilege" set forth in Section 7 of this Article.
Section 3. Data Required-Clerical Error-Misstatements-Non-Discrimination
The Policyholder and each of the Participant Employers shall furnish to the
Insurance Company all information which the Insurance Company may reasonably
require with regard to any matters pertaining to this policy. All documents,
books, and records which may have a bearing on the insurance or premiums shall
be open for inspection by the Insurance Company at all reasonable times during
the continuance of this policy and until the final determination of all rights
and obligations under this policy.
Neither clerical error (whether by the Policyholder, by any of the Participant
Employers, or by the Insurance Company) in keeping any records pertaining to the
insurance, nor delays in making entries thereon, shall invalidate insurance
otherwise validly in force or continue insurance otherwise validly terminated,
but upon discovery of such error or delay an equitable adjustment of premiums
shall be made.
If any relevant facts pertaining to any individual to whom the insurance relates
shall be found to have been misstated, an equitable adjustment of premiums shall
be made, and if such misstatement affects the existence or the amount of
insurance, the true facts shall be used in determining whether insurance is in
force under the terms of this policy and in what amount.
No refund of any premium or portion thereof, whether paid in error or otherwise,
shall be made for any period commencing earlier than (a) three months prior to
the date on which evidence that the particular refund should be made is received
by the Insurance Company, or (b) the beginning of the policy year in which such
evidence is received, whichever method (a) or (b) above would result in the
greater refund.
In connection with the administration of this policy, the Policyholder and the
Participant Employers shall act so as not to discriminate unfairly between
individuals in similar situations at the time of such action, but the Insurance
Company shall be entitled to rely upon any action of the Policyholder or of any
of the Participant Employers without being obliged to inquire into the
circumstances thereof.
Section 4. Entire Contract-Incontestability
This policy and the application of the Policyholder, a copy of which is attached
to this policy, constitutes the entire contract. All statements made by the
Policyholder or by the insured employees shall be deemed representations and not
warranties. No written statement made by any insured employee shall be used by
the Insurance Company in any contest unless a copy of the instrument containing
the statement is or has been furnished to such employee or to his beneficiary.
The validity of this policy shall not be contested, except for non-payment of
premiums, after it has been in force for two years from its effective date. No
statement made by any insured employee relating to his insurability shall be
used by the Insurance Company in contesting the validity of the insurance with
respect to which such statement was made after such insurance has been in force
prior to the contest for a period of two years during such employee's lifetime
nor unless such statement is contained in a written instrument signed by him.
This policy is issued in the non-participating department of the Insurance
Company. This policy may be changed at any time or times by written agreement
between the Insurance Company and the Policyholder, without the consent of any
employee or other person. All agreements made by the Insurance Company are
signed by an executive officer of the Insurance Company. No other person can
change or waive any of the terms of this policy or make any agreement which
shall be binding upon the Insurance Company.
Failure to insist upon compliance with any provision of this policy at any given
time or times on under any given set or sets of circumstances shall not operate
to waive or modify such provision, or in any manner whatsoever to render it
unenforceable, as to any other time or times or as to any other occurrence or
occurrences, whether the circumstances are, or are not, the same.
Section 5. Contribution By Employee
Contributory Insurance: The maximum amount that any employee shall be required
or permitted to contribute toward the cost of his contributory insurance, if
any, under Title ELIC shall be $0.60 per month for each One Thousand Dollars of
such insurance hereunder.
Non-contributory Insurance: No insured employee shall be required or permitted
to contribute toward the cost of non-contributory insurance, if any hereunder.
Section 6. Beneficiary and Mode of Settlement
Beneficiary
An employee, whether or not employment has terminated, may designate a
beneficiary, and from time to time change his designation of beneficiary, by
written request filed at the headquarters of the Policyholder or at the Home
Office of the Insurance Company. Such designation or change shall take effect as
of the date of execution of such request, whether or not the employee be living
at the time of such filing, but without prejudice to the Insurance Company on
account of any payments made by it before receipt of such request at its Home
Office.
Any amount payable to a beneficiary to a beneficiary shall be paid to the
beneficiary or beneficiaries designated by the employee, except that, unless
otherwise specifically provided by the employee in his beneficiary designation:
(a) if more than one beneficiary is designated, the designated
beneficiaries shall share equally;
(b) if any designated beneficiary predeceases the employee, the
share which such beneficiary would have received if surviving
the employee shall be payable equally to the remaining
designated beneficiary or beneficiaries, if any, who survive
the employee; and
(c) if no designated beneficiary survives the employee, or if no
beneficiary has been designated, payment shall be made to the
employee's widow or widower, if surviving the employee; if not
surviving the employee, in equal shares to the employee's
children who survive the employee; if none survives the
employee, to the employee's parents, equally, or to the
survivor; if neither survives the employee, in equal shares to
the employee's brothers and sisters who survive the employee;
or, if non survives the employee, to the employee's executors
or administrators.
Mode of Settlement
The whole or any part of any amount payable under Article II shall be paid in
accordance with that one of the following Methods (A) or (B) that shall be
elected by the employee, or in accordance with such other method of settlement
as shall be elected by the employee and agreed to by the Insurance Company. An
employee may revoke any such election at any time before payments commence upon
written notice filed at the Home Office of the Insurance Company. An employee
may change any such election at any time but only with the consent of the
Insurance Company.
In any case where the amount of any death benefit is payable in one sum, the
beneficiary may, after the death of the employee but before payment is made,
elect that the whole or any part of any death benefit be payable in accordance
with Method (B) below, or in accordance with such other method of settlement as
shall be elected by the beneficiary and agreed to by the Insurance Company. A
beneficiary may change or revoke any such election but only with the consent of
the Insurance Company.
METHOD (A): Payment in one sum. This method shall be automatic if no other
method is elected.
METHOD (B): Payment in monthly installments of any fixed amount specified in
the election (which shall be not less than $5.00 per month per
$1,000 so payable nor less than $10.00 per month regardless of the
amount so payable), until the amount so payable with interest
is exhausted. With respect to each such election of this method,
the rate of interest to be allowed on the unpaid balance shall be
determined by the Insurance Company but shall in no case be less
than the guaranteed rate of interest provided for with respect to
optional methods of settlements under the individual policies of
life insurance being issued by the Insurance Company on the date of
such election. At the death of the payee to whom payment is being
made under this method, the unpaid balance shall be paid in one sum
to the executors or administrators of the payee, unless otherwise
provided in the election.
If any payee for any benefit payment under this policy is a minor or is, in the
opinion of the Insurance Company, legally incapable of giving a valid receipt
and discharge for such benefit payment, the Insurance Company shall have the
option, unless claim has been made by a duly appointed guardian or committee of
such payee, of paying such benefit in monthly installments of not over $100 the
first month and not over $50 a month thereafter to the person or persons who, in
the opinion of the Insurance Company, are caring for and supporting such payee.
Payment made in accordance with the terms of this paragraph shall be a complete
discharge of the Insurance Company's obligations to the extent of such payment,
and the Insurance Company shall not be obligated to see to the application of
any payment so made.
Section 7. Conversion Privilege
Employee Coverage
If an employee's insurance under this policy, or any amount of such insurance,
ceases because of termination of employment or because of termination of
membership in the class or classes of employees eligible for insurance under
this policy, the employee shall be entitled to have issued to him by the
Insurance Company, without evidence of insurability, an individual policy of
life insurance without disability or other supplementary benefits, provided
written application for the individual policy shall be made, and the first
premium thereon paid, to the Insurance Company within thirty-one days after such
termination, and provided further that:
(a) the individual policy shall be on any of the forms, other than
term insurance, that shall be selected by the employee from
among the forms then customarily issued by the Insurance
Company at the age and for the amount applied for:
(b) the individual policy shall be in an amount equal to or, at
the option of the employee, an amount less than the amount of
the employee's life insurance which ceases under this policy
because of such termination;
(c) the premiums payable under the individual policy shall be at
the Insurance Company's then customary rate applicable to the
form and amount of the individual policy, to the class of risk
to which the employee then belongs, and to his age (nearest
birthday) attained on the effective date of the individual
policy; and
(d) any individual policy issued under the terms of this section
shall take effect at the end of the thirty-one day period
during which application for the individual policy may be
made.
If this policy discontinues, whether by its terms or by agreement between the
Insurance Company and the Employer, and whether with respect to all employees or
with respect to any class or classes of employees insured hereunder, any
employee insured under this policy at the date of such discontinuance who has
been continuously insured for group life insurance by the Insurance Company
under this policy for at least five years prior to such discontinuance shall, if
his insurance this policy, or any portion of such insurance, ceased because of
such discontinuance, be entitled to the conversion privilege as though his
employment had terminated on the date of such discontinuance, except that the
amount of the individual policy shall not exceed the smaller of (a) the amount
of the employee's life insurance which ceases under this policy because of such
discontinuance, less the amount of any life insurance for which he is or becomes
eligible within thirty-one days after such discontinuance under any group
policy, whether issued by the Insurance Company or by any other insurer, and (b)
$2,000.
If an employee dies during the thirty-one day period within which he is entitled
to have an individual policy issued to him in accordance with this section and
before any insurance such individual policy has become effective, the amount of
life insurance which the employee is entitled to have issued to him under such
individual policy shall be payable as a claim under Title ELIC, whether or not
application for the individual policy or the payment of the first premium
therefor has been made.
When any insurance becomes effective under an individual policy issued under the
conversion privilege, it shall be in exchange for all privileges and benefits
under the group policy.
<PAGE>
Aetna Life Insurance Company
Hartford, Connecticut
(Herein called the Insurance Company)
Group Policy No.: GC-363417 Policy Delivered In: Ohio
State of other jurisdiction)
Policyholder: THE PROCTER & GAMBLE COMPANY
Policy Signed: November 11, 1981 To Take Effect: October 1, 1981
This policy is a contract between the Policyholder and the Insurance Company and
shall be construed in accordance with the law of the jurisdiction in which it is
delivered.
In consideration of the payment by the Policyholder of premiums in the amounts
and at the times hereinafter provided, the Insurance Company hereby agrees with
the Policyholder, subject to the terms appearing on this and the following pages
of this policy (including, if any, the riders, endorsements, and amendments, to
this policy which are signed by the Insurance Company), to pay benefits in
accordance with the terms of this policy. The obligations and the rights of all
persons under this policy shall be determined in accordance with the terms of
this policy.
In witness whereof the Insurance company has signed this policy at Hartford,
Connecticut.
Aetna Life Insurance Company
/S/LEWIS R MERVINE /S/WILLIAM O. BAILEY
Secretary President
Registrar
Countersigned at Cincinnati, Ohio, April 13, 1982
by ___________________________
Licensed Resident Agent
GROUP INSURANCE POLICY
INDEX
Page
Article I--GENERAL PROVISIONS
Article II--BENEFITS
Article III--TERMINATION OF INSURANCE
Article IV--PREMIUMS
Article V--DISCONTINUANCE OF POLICY
Article VI--MISCELLANEOUS PROVISIONS
COPY OF APPLICATION
ARTICLE I -- GENERAL PROVISIONS
Section 1. General Definitions
As used in this policy:
(a) The term "Employee Coverage means only insurance as to an
employee.
(b) The term "non-occupational disease" means a disease which
does not arise, and which is not caused or contributed to by,
or as a consequence of, any disease which arises, out of or
in the course of any employment or occupation for
compensation or profit; however if evidence satisfactory to
the Insurance Company is furnished that the individual
concerned is covered as an employee under any workmen's
compensation law, occupational disease law, or any other
legislation of similar purpose, or under the maritime
doctrine of maintenance, wages, and cure, but that the
disease involved is one not covered under the applicable laws
or doctrine, then such disease shall, for the purposes of
this policy, be regarded as a "non-occupational disease".
(c) The term "non-occupational injury" means an accidental bodily
injury which does not arise, and which is not caused or
contributed to by, or a as a consequence of, any injury which
arises, out of or in the course of any employment or
occupation for compensation or profit.
(d) The term "date of issue" means the date this policy took
effect shown on Page 1 of this policy.
(e) Commencing January 1, 1982, "policy anniversaries" shall be
deemed to occur on said date, and on the same day in each
succeeding year.
(f) The term "policy year" means a period commencing with the date
of issue of this policy, or a policy anniversary, and
terminating immediately prior to the next succeeding policy
anniversary.
(g) A "policy month" shall commence on the date of issue. Each
"policy month" thereafter shall be deemed to commence on the
first day of the calendar month.
(h) The term "physician" or "surgeon" means only a legally
qualified physician.
(i) "Contributory insurance" means insurance for which an employee
makes written request to his Participant Employer and agrees
to make the required contributions to his Participant
Employer. "Non-contributory insurance" is insurance for which
an employee does not make written request nor contribute
toward the cost. This policy provides insurance on the
non-contributory.
(j) The term "Added Compensation" means the total amount of
additional remuneration:
1) Awarded by the Board of Directors of The Procter &
Gamble Company, the Compensation Committee of The
Procter & Gamble Company or the Procter & Gamble
Chief Executive Officers and heads of the various
subsidiary companies, and
2) Charges against the Executive Additional Remuneration
Reserve, but excluding any supplemental awards which
are made because of the limits imposed by the
Employee Retirement Income Security Act of 1974 on
credits to the Profit Sharing Trust Plan.
(k) The term "Total Compensation" means the sum of (a) base
salary plus, (b) added compensation.
Section 2. List of Participant Employers
An Employer shall be eligible to be included in this list as a Participant
Employer if such inclusion is not contrary to any applicable insurance law of
the state or other jurisdiction in which this contract is delivered.
The Policyholder may act for and on behalf of any and all of the Employers
included in this list in all matters pertaining to this contract, and every act
done by the Policyholder, agreement made between the Insurance Company and the
Policyholder, or notice given by the Insurance Company to the Policyholder or by
the Policyholder to the Insurance Company, shall be binding on all such
Employers.
Any eligible Employer may be added to this list as a Participant Employer only
upon written agreement between the Policyholder and the Insurance Company and
upon terms mutually agreeable to them.
An Employer shall be eliminated automatically from this list when this contract
is discontinued with respect to employees of such Employer, as provided for
elsewhere in this contract, but termination of an Employer's status as a
Participant Employer shall not relieve such Employer from any obligations to the
Insurance Company with respect to the time such Employer was a Participant
Employer under this contract.
This list shall, at any time, consist of those Employers which have been
included under this contract by written agreement between the Policyholder and
the Insurance Company, and which have not been removed, in accordance with the
above terms of this section.
Section 3. Employees to be Insured
(I) Employee Coverage
A. Employees Eligible:
All employees of a Participant Employer shall be eligible for
Employee Coverage except employees in the following classes:
(a) temporary or substitute employees (i.e. employees
who are not classified by such Employer as
permanent employees);
(b) employees who are actively working for such
Employer on a part-time basis, but this exception
shall not apply in the case of a regular,
full-time, active employee of such Employer if
and while he is only temporarily working for such
Employer on a part-time basis;
(c) regular full-time employees who are not key
executives of The Procter & Gamble Company or
its subsidiaries.
Each employee in an eligible class who has completed six
months or more of continuous service on the date of issue
shall become eligible for Employee Coverage on that date, and
each other employee in an eligible class shall become eligible
for Employee Coverage on the date on which he completes six
months of continuous service.
Anything to the contrary notwithstanding, if an individual is
in the employ of or connected with two or more Participant
Employers, he shall not be eligible for multiple coverage
under this policy, but shall be treated the same as if he were
in the employ of or connected with a single Participant
Employer; the amount of insurance for which any such
individual shall be eligible under this policy shall under no
circumstances exceed the amount which would apply if all of
the Participant Employers with which he is employed or
connected were a single Participant Employer and if the
aggregate of the remuneration being paid to him by all such
Participant Employers were being paid to him by a single
Participant Employer.
If any Participant Employer is a partnership, the
natural-person partners thereof shall be considered to be
employees within the meaning of this policy if and while they
are actively engaged in and devoting their time on a
substantially full-time basis to the conduct of the business
of the partnership. If any Participant Employer is an
individual proprietorship, the natural-person proprietor
thereof shall be considered to be an employee within the
meaning of this policy on the same terms as those applicable
to partners of a partnership.
B. Effective Dates of Insurance:
(1) As to contributory insurance, each employee who makes
written request to his Participant Employer for
Employee Coverage and agrees to make the required
contributions therefor to his Participant Employer is
to be insured for Employee Coverage on the date he
becomes eligible for Employee Coverage or on the date
he makes such request, whichever is later; provided,
however, that
(a) the Employee Coverage of any employee who
makes such written request after thirty-one
days from the date he becomes eligible, or
who revokes any written request previously
made, shall become effective only if and
when the Insurance Company gives its written
consent; and
(b) any employee who is both disabled (i.e., ill
or injured) and away from work on the date
Employee Coverage is to become effective
shall not be insured until he actually
returns to work on a full-time basis.
(2) As to non-contributory insurance, each employee is to
be insured for Employee Coverage on the date he
becomes eligible therefor; provided, however, that
any employee who is both disabled (i.e., ill or
injured) and away from work on the date Employee
Coverage is to become effective shall not be insured
until he actually returns to work on a full-time
basis.
Section 4. Changes in Amounts of Insurance
EMPLOYEE COVERAGE
A retroactive change in an employee's rate of earnings or classification will
not result in a retroactive change in coverage. Any change in coverage will be
effective on the date the change in earnings or classification is determined.
This section will not apply to any reduction due to attainment of a specified
age. Any such rules appear in Title ADDC, if included in this policy. If any
rule which reduces an employee's Principal Sum due to attainment of a specified
age is changed so that an employee is eligible for an increased amount of
Principal Sum by reason of such change, such increase will become effective only
if the Insurance Company gives its written consent.
As to contributory insurance:
If, at any time, the employee's rate of earnings or classification changes so as
to warrant level of benefits different from that for which the employee is then
covered, the amount of his coverage will be changed as follows:
Any reduction under Title ADDC, if included in this policy, will become
effective on the date the employee requests his Participant Employer to
make the reduction.
Any other reduction will become effective automatically.
Any increase will become effective automatically; provided, however, that
the employee may, within thirty-one days of the date an increase would
become effective under Title ADDC, if included in this policy, refuse
such increase. If an employee refuses such increase, then no increase in
the employee's amount of Principal Sum by reason of a change in his rate
of earnings or classification will become effective until the Insurance
Company gives its written consent.
If, at any time, any schedule or level of benefits is changed so as to warrant
an amount different from that for which the employee is then covered, the amount
of his coverage will be increased or decreased automatically, However, the
employee may, within thirty-one days of the date an increase would become
effective under Title ADDC, if included in this policy, refuse such an increase.
The employee may at any thereafter elect that the increase become effective; it
will only be effective if the Insurance Company gives its written consent.
In any instance in which an employee is both disabled (i.e., ill or injured) and
not working on the date his coverage would otherwise be increased, the effective
date of the increase shall be deferred until he actually returns to active work
on a full-time basis.
As to non contributory insurance:
If, for any reason and at any time, the employee's rate of earnings or
classification, any schedule or any level of benefits is changed so as to
warrant an amount different from that for which the employee is then covered,
the amount of his coverage will be increased or decreased automatically as
warranted. However, in any instance in which an employee is both disabled (i.e.,
ill or injured) and not working on the date his coverage would otherwise be
increased, the effective date of the increase in insurance shall be deferred
until he actually returns to active work on a full-time basis.
Article II --BENEFITS
TITLE ADDC--ACCIDENTAL DEATH AND DISMEMBERMENT COVERAGE
Section 1. Accidental Death and Dismemberment Benefit
Schedule of Insurance
---------------------
Classification Principal Sum
-------------- -------------
All employees An amount equal to 100% of the employees
total compensation, the resulting amount, if
not an integral multiple of $500 is to be
taken to the nearest integral multiple of
$500, but in no event shall the amount of
insurance (Principal Sum) be more than
$1,000,000 nor less than $4,000.
If an employee suffers a bodily injury caused by an accident and as a direct
result of such injury and, to the exclusion of all other causes, sustains within
not more than ninety days after the date of the accident which causes such
injury any of the losses listed in the Table of Benefits in this section, then,
provided:
(a) the injury occurs while insurance is in force for the employee
under this Title; and
(b) the loss resulting from the injury is not excluded from coverage
in accordance with Section 2 of this Title;
the insurance Company shall, subject to the terms of this policy, pay a benefit
in the amount provided for such loss in said Table of Benefits but in no case
shall more than the Principal Sum be paid for all losses sustained by an
employee through any one accident.
Table of Benefits
-----------------
In the Event of Loss of The Benefit will be
- ----------------------- -------------------
Life The Principal Sum
A Hand One-Half The Principal Sum
A Foot One-Half The Principal Sum
An Eye One-Half The Principal Sum
Loss means, with regard to a hand or foot, actual severance through or
above the wrist or ankle joint; with regard to an eye, the entire and
irrecoverable loss of sight of such eye.
Section 2. Exclusions
The insurance provided under this Title does not include, and no payment shall
be made for, any loss resulting from any injury caused or contributed to by, or
as a consequence of, any of the following excluded risks, even though the
proximate or precipitating cause of loss is accidental bodily injury:
(a) bodily or mental infirmity; or
(b) disease, ptomaines or bacterial infections, of any kind, except
a pus-forming infection attributable solely to and occurring as
the proximate result of an injury not excluded by this Title; or
(c) medical or surgical treatment, except a loss covered by this
Title which results directly from a surgical operation made
necessary solely by an injury not excluded by this Title and
performed within ninety days after the date of such injury; or
(d) suicide or any attempt there at (whether sane or insane), or
intentionally self-inflicted injury; or
(e) war or any act of war (whether war is declared or not).
Section 3. Beneficiary
An employee, whether or not employment has terminated, may designate a
beneficiary, and from time to time change his designation of beneficiary, by
written request filed at the headquarters of the Policy holder or at the Home
Office of the Insurance Company. Such designation or change shall take effect as
of the date of execution of such request, whether or not the employee be living
at the time of such filing, but without prejudice to the Insurance Company on
account of any payments made by it before receipt of such request at its Home
Office.
Any amount payable to a beneficiary shall be paid to the beneficiary or
beneficiaries designated by the employee, except that, unless otherwise
specifically provided by the employee in his beneficiary designation;
(a) if more than one beneficiary is designated, the designated
beneficiaries shall hare equally;
(b) if any designated beneficiary predeceases the employee, the
share which such beneficiary would have received if surviving
the employee shall be payable equally to the remaining
designated beneficiary or beneficiaries, if any, who survive the
employee; and
(c) if no designated beneficiary survives the employee, or if no
beneficiary has been designated, payment shall be made to the
employee's widow or widower, if surviving the employee; if not
surviving the employee, in equal shares to the employee's
children who survive the employee; if none survives the
employee, to the employee's parents, equally, or to the
survivor; if neither survives the employee, in equal shares to
the employee's brothers and sisters who survive the employee;
or, if none survives the employee, to the employee's executors
or administrators.
Article III--TERMINATION OF INSURANCE
Section 1. Employee Coverage
All insurance of any employee under this policy shall terminate at the earliest
time specified below:
(1) Upon discontinuance of the policy.
(2) Immediately when the employee's employment with a Participant Employer in
the classes of employees eligible for insurance terminates. Cessation of
active work by an employee shall be deemed to be termination of his
employment, except that
(a) in the case of an absence from active work because of sickness
or injury, his employment may, for the purposes of insurance
under this policy, be deemed to continue until terminated by his
Participant Employer but in no case beyond twelve months from
the date such absence from active work started, or
(b) in the case of absence of an employee from active work because
of temporary lay-off or leave of absence (other than leave from
military service), his employment may, for the purposes of
insurance under this policy, be deemed to continue until
terminated by his Participant Employer but in no case beyond the
end of the policy month following the policy month in which such
lay-off or leave of absence commenced.
In the case of any of the exceptions in the foregoing paragraph, the
insurance under this policy for such employee shall automatically cease
on the date of such termination of his employment by his Participant
Employer, as evidenced to the Insurance Company by the Policyholder,
whether by notification or by cessation of premium payment on account of
such employee's insurance hereunder. Any maximum period of continuation
permitted by the foregoing paragraph may be extended by written mutual
agreement between the Policyholder and the Insurance Company in each
individual case.
In no event may any insurance provided on a contributory basis be continued
beyond the end of the period for which the employee has made to his Participant
Employer the contributions required.
Article IV--PREMIUMS
Section 1. Premium Rates
The premium rates are as follows, but are subject to change as hereinafter
provided: The premium rates shown are for a period of one month.
Title ADDC- Premium per $1,000 of Principal Sum: $ .02
Section 2. Premium Calculations and Experience Rating
The premium due under this policy on any premium-due date shall be the sum of
the premium charges for the insurance provided under the Titles then forming a
part of this policy. The premium charges for the insurance under any such Title
shall be calculated at the Premium Rates specified above, subject to such
reductions or increases as the Insurance Company shall determine to be warranted
by experience or by reason of any change in factors bearing on the risk assumed.
Each reduction or increase in any premium rate shall be made by written
notification to the Policyholder by the Insurance Company.
No experience reduction or increase in premium rates shall become effective less
than twelve months after the effective date of this policy.
As of the end of any policy year the Insurance Company may declare an experience
credit in such amount as the Insurance Company shall determine. The amount of
each experience credit declared by the Insurance Company shall be refunded to
the Policyholder, or upon request by the Policyholder, a part or all of the
experience credit shall be applied against the payment or any premium or
premiums.
If at any time the aggregate of employee contributions theretofore made for
group insurance shall exceed the aggregate of premiums theretofore paid for
group insurance (after giving effect to any experience credits allowed the
Policyholder), such excess shall be applied by the Policy holder for the sole
benefit of employees, but the Insurance Company shall not be obliged to see to
the application of any such excess.
If premiums are payable monthly, any insurance becoming effective shall, except
as hereinafter provided, be charged for from the first day of the policy month
coinciding with or next following the date the insurance takes effect, and
premium charges for any insurance terminated shall cease as of the first day of
the policy month coinciding with or next following the date the insurance
terminates. If premiums are payable quarterly, semi-annually, or annually,
premium charges or credits for a fraction of a premium-paying period required by
the foregoing terms of this paragraph shall except as hereinafter provided, be
made on a pro-rata basis for the number of policy months between the date
premium charges commence or cease and the end of the premium-paying period. If
this policy is amended to provide additional insurance, or any increase in
insurance and if the effective date of such amendment is other than the first
day of a premium-paying period, a pro-rata premium in respect of such insurance
shall become due and payable as of such date, to cover the period beginning on
that date and ending immediately prior to the commencement of the next
premium-paying period.
Instead of the method of calculation of premiums above provided, premiums may be
calculated by any method which produces approximately the same total amount of
premiums and is mutually agreeable to the Insurance Company and the
Policyholder.
Section 3. Premiums, How Payable
Premiums shall be payable by the Policyholder in advance at the Home Office of
the Insurance Company or to its authorized agent.
The first premium under this policy shall be due and payable as of the date of
issue to cover the period beginning on that date and ending on the last day of
the first policy month and thereafter premiums shall be due and payable on the
first day of each policy month.
Section 4. Grace Period
A grace period of thirty-one days following the due-date shall be allowed the
Policyholder for the payment of each premium.
Article V--DISCONTINUANCE OF POLICY
The Policyholder may discontinue this policy with respect to all employees of
any one or more Participant Employers, and any Participant Employer may
discontinue this policy with respect to all employees of such Employer, by
giving to the Insurance Company written notice stating when, after the date of
such notice, such discontinuance shall become effective; but no such
discontinuance shall become effective with respect to employees of any
Participant Employer during any period for which a premium has been paid to the
Insurance Company with respect to employees of such Employer.
The Insurance Company reserves the right to discontinue this policy,
(a) with respect to all employees of any Participant Employer, at
any time after the end of the grace period allowed for payment
of a premium with respect to employees of such Employer which
has not been paid, by giving written notice to the Policyholder
stating when such discontinuance shall become effective;
(b) either in its entirety or with respect to all respect to all
employees of any Participant Employer, at any time, by giving to
the Policyholder written notice stating the date as of which
such discontinuance shall become effective but such date shall
not be one that occurs earlier than thirty-one days after the
date of such notice unless mutually satisfactory to the
Policyholder and the Insurance Company.
If this policy discontinues with respect to any of the employees of a
Participant Employer, the Policyholder and the Employer shall be jointly and
severally liable to the Insurance Company for all unpaid premiums for the period
during which this policy was in force with respect to any of the employees of
such Employer.
Article VI--MISCELLANEOUS PROVISIONS (Continued)
Section 5. Time Limit on Certain Defenses
No claim for loss incurred or commencing after two years from the effective date
of the insurance coverage with respect to which claim is made shall be reduced
or denied on the ground that a disease or physical condition not excluded from
coverage by name or specific description effective on the date of loss, had
existed prior to the effective date of the coverage with respect to which claim
is made.
Section 6. Proofs of Loss
Written proof covering the occurrence, the character, and the extent of loss
must be furnished to the Insurance Company, in case of claim for loss under
Title WBC, if included in this policy, within 90 days after the termination of
the period for which the Insurance Company is liable, and in case of claim for
any other loss, within 90 days after the date of such loss. Failure to furnish
such proof within the time required shall not invalidate nor reduce any claim if
it was not reasonably possible to give proof within such time, provided such
proof is furnished as soon as reasonably possible and in no event, except in the
absence of legal capacity of the employee, later than one year from the time
proof is otherwise required. No action at law or in equity shall be brought to
recover on this policy after the expiration of three years after time written
proof of loss is required to be furnished.
Section 7. Payment of Claims
Benefits payable under this policy for any loss with be paid immediately upon
receipt of due written proof of loss.
The benefit, if any, for loss of life will be payable in accordance with the
beneficiary designation and the provisions respecting such payment. All other
benefits are payable to the insured employee.
If any benefit under any Title of this policy shall be payable to the estate of
the insured employee, or to an insured employee who is a minor or otherwise not
competent to give a valid release, the Insurance Company may pay such benefit up
to an amount not exceeding $1,000 to any relative by blood or connection by
marriage of the insured employee who is deemed by the Insurance Company to be
equitably entitled thereto. Any payment made by the Insurance Company in good
faith pursuant to this provision shall fully discharge the Insurance Company to
the extent of such payment.
Subject to any written direction of the insured employee in a request for
insurance or otherwise, all or a portion of the benefits, if any, provided by
this policy on account of hospital, nursing, medical, or surgical service may,
at the Insurance Company's option, and unless the insured employee requests
otherwise in writing not later than the time proof of loss is filed, be paid
directly to the hospital or person rendering such services, but it is not
required that the service be rendered by a particular hospital or person.
The Insurance Company at its own expense shall have the right and opportunity to
examine the person of any individual whose injury or sickness is the basis of
claim when and as often as it may reasonably require during the pendency of a
claim hereunder.
[Page 12 is missing]
Section 8. Conversion Privilege (Continued)
(4) the converted policy may include a provision whereby the Insurance
Company may request information at any premium due date of such policy of
any individual covered thereunder as to whether he is then covered by
another policy of hospital or surgical expense insurance or hospital
service or medical expense indemnity corporation subscriber contract
providing similar benefits or is then covered by a group contract or
policy providing similar benefits or is then provided with similar
benefits required by any statute or provided by any welfare plan or
program--if any such individual is so covered or so provided and fails to
furnish the details of such coverage when requested, the benefits payable
under the converted policy may be based on the hospital, surgical, or
medical expenses actually incurred after excluding expenses to the extent
they are payable under such other coverage or provided under such
statute, plan, or program; and
(5) the Insurance Company may decline to issue the converted policy
(i) if application therefor is not made in the jurisdiction in which
this group policy is delivered or in some other jurisdiction in
which the Insurance Company is authorized to issue or deliver the
converted policy; or
(ii) if termination of insurance under said Titles of this policy takes
place prior to the date the employee concerned has been insured
thereunder for at least three months; and
(6) the Insurance Company may decline
(i) to cover an individual who t is desired be included in the
converted policy, if the insurance under said Titles of this
policy terminated because such individual had exhausted the
maximum benefit available to him under said Titles; and
(ii) to cover an individual who it is desired be included in the
converted policy for any one or more of the benefits included in
the converted policy, if the provision of such benefit or
benefits, as the case may be, is prohibited by any application for
such policy is made; and
(7) the premium payable under the converted policy on its effective date
shall be at the Insurance Company's then customary rate applicable to the
class of risk to which the insured individual under the converted policy
belongs, to the age of such insured individual and to the form and amount
of insurance under the converted policy; and
(8) any converted policy issued under the terms of this section shall take
effect as of the date of termination of insurance under said Titles of
this policy.
Any converted policy issued pursuant to this section shall be in exchange for
all privileges and benefits under said Titles with respect to the person or
persons named in the converted policy.
<TABLE>
EXHIBIT (11)
<CAPTION>
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
Computation of Earnings Per Share
----------------------------------
Dollars and Share Amounts in Millions
Years Ended June 30
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET EARNINGS PER SHARE 1992 1993 1994 1995 1996
- ---------------------- ------ ------ ------ ------ ------
Net Earnings/(Loss) $1,872 $(656) $2,211 $2,645 $3,046
Deduct preferred stock dividends 94 102 102 102 103
------- ------- ------- ------- -------
Net Earnings/(Loss) Applicable to Common Stock 1,778 (758) 2,109 2,543 $2,943
- ----------------------------------------------
Average number of common shares
outstanding 677.4 680.4 683.1 686.0 686.3
Per Share
- ---------
Net earnings before prior years' effect
of accounting changes $0.25
Prior year effect of accounting changes $(1.36)
Net Earnings/(Loss) per share $2.62 $(1.11) $3.09 $3.71 $4.29
NET EARNINGS PER SHARE ASSUMING
FULL DILUTION
- -------------------------------
Net Earnings/(Loss) $1,872 $(656) $2,211 $2,645 $3,046
Deduct differential -- preferred
vs. common dividends 60 57 51 45 39
-------- -------- -------- -------- -------
Net Earnings/(Loss) Applicable to Common Stock 1,812 (713) 2,160 2,600 3,007
- ----------------------------------------------
Average number of common shares outstanding 677.4 680.4 683.1 686.0 686.3
Add potential effect of:
Exercise of options 7.5 7.2 6.0 8.5 9.9
Conversion of preferred stock 55.2 54.7 53.9 52.8 51.9
-------- -------- -------- -------- -------
Average number of common shares
outstanding, assuming full dilution 740.1 742.3 743.0 747.3 748.1
Per Share Assuming full dilution
- --------------------------------
Net earnings before prior years' effect
of accounting changes $0.29
Prior year effect of accounting changes $(1.25)
Net Earnings/(Loss) $2.45 $(0.96) $2.91 $3.48 $4.02
</TABLE>
<TABLE>
EXHIBIT (12)
<CAPTION>
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
Computation of Ratio of Earnings to Fixed Charges
-------------------------------------------------
Millions of Dollars
Years Ended June 30
--------------------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED
- -------------------
Earnings from operations before income taxes
after eliminating undistributed earnings
of equity method investees $2,870 $ 294 $3,307 $4,022 $4,695
Fixed charges, excluding capitalized interest 584 631 569 571 576
-------- -------- -------- -------- -------
TOTAL EARNINGS, AS DEFINED $3,454 $ 925 $3,876 $4,593 $5,271
====== ====== ====== ====== ======
FIXED CHARGES, AS DEFINED
- -------------------------
Interest expense $ 510 $ 552 $ 482 $ 488 $ 484
1/3 of rental expense 74 79 87 83 92
------- ------- ------- ------- -------
584 631 569 571 576
Capitalized interest 25 25 19 23 9
------- ------- ------- ------- -------
TOTAL FIXED CHARGES, AS DEFINED $ 609 $ 656 $ 588 $ 594 $ 585
====== ====== ====== ====== ======
RATIO OF EARNINGS TO FIXED CHARGES 5.7 1.4 6.6 7.7 9.0
</TABLE>
Exhibit (13)
------------
Annual Report to shareholders. (Pages 1-15 and 20-43)
(Picture top of Page 1 from left to right: John E. Pepper, Chairman of
the Board and Chief Executive; Durk I. Jager, President and Chief
Operating Officer)
TO OUR SHAREHOLDERS:
Ally Heeter, our "cover girl" for this year's Annual Report, is one of
America's Dirtiest Kids. But her mom, Jenni, doesn't mind. "I don't even think
twice about dirty clothes," she told us "because I know that Tide will get them
clean."
That's the kind of confidence that has made Tide America's favorite
laundry detergent for nearly 50 years -- and it's the same confidence that
consumers have in literally dozens of P&G brands.
Consumers trust our brands and have made many of them market leaders in
countries around the world. It's that depth and breadth of leadership across
categories and across geographies -- that drives your Company's growth.
That was certainly the case in 1995/96, a year of continued strong
progress. Shipments, sales and earnings all reached record levels. Each of our
four regions contributed to this growth by achieving record volume levels, and
our four largest product categories built share globally. (For additional
perspective on worldwide and regional financial results, please see the
Financial Review that begins on page 20.)
We know the leadership of our brands will continue to be the principal
driver of P&G's growth in the years ahead, so we want to use this year's Annual
Report to talk about leadership -- the leadership goals we've set for your
Company and the leadership strengths we've relied on to build many of the
world's most successful brands.
SETTING OUR SIGHTS ON GROWTH
We have set three growth goals for the Company.
1. DOUBLE UNIT VOLUME IN 10 YEARS. Consider what this means: we'll need
to build as much business in a decade as we've built in the 159 years since your
Company was founded. A stretching goal, to be sure, but one we are striving to
achieve with continued, fast-paced geographic expansion and extraordinary levels
of innovation in both existing and new businesses.
2. ACHIEVE SHARE GROWTH IN THE MAJORITY OF OUR CATEGORIES. The growth
potential of this goal is enormous. A one percentage point share increase in a
major global category such as Hair Care could mean more than $100 million in
additional sales. Multiply that across the many categories in which we compete,
and you can see the opportunity for growth.
3. DELIVER TOTAL SHAREHOLDER RETURN (TSR) THAT RANKS US OVER TIME AMONG
THE TOP THIRD OF OUR PEER GROUP. This is an especially challenging goal. Despite
the challenge, we consider this an important goal because TSR -- stock price
appreciation plus dividends --- is the best measurement of our overall financial
performance. We've been among the top third for the past three-, five-, 10-year
periods, and we will stay focused on achieving that level of performance in the
years ahead.
(Top of Page 2 - Cumulative Consolidated Operating Cash Flow (in
billions of dollars) Trend Chart for 1994 - 3.6, 1995 - 7.2 and 1996-
11.4 and 1994-96 Primary Uses of Cash Pie Chart for Capital
Expenditures, Dividends Paid, Acquisitions, Net Debt Reduction and
Treasury Purchases)
(Center of Page 2 - Picture of Ariel, Pantene, Always and Pampers with
the following caption: "These are just a few of P&G's established
global brands.)
PREPARING TO WIN IN THE 21ST CENTURY
We know these are the right goals.
Broad share growth in our categories and steady, significant gains in
volume assure us that our brands are meeting the needs of consumers around the
world.
Meeting the needs of consumers is the best way to generate leadership
shareholder returns.
And, achieving the growth we're targeting -- while adhering to the core
values that have always distinguished P&G -- is the best way to attract and
retain the talented men and women who are the producers of P&G's long-term
growth and health.
We know also that to achieve these goals, we'll need to be better than
we've ever been, because the competitive environment we're entering will be
tougher than it's ever been. There will be little if any room for marginal
performers.
What will set tomorrow's winners and losers apart? The winners will be
strong global businesses. They will put tremendous pressure on costs. They'll
bring innovations to market at a much faster pace than today -- and not just in
one or two countries at a time, but worldwide. As a result, they won't only be
the share leaders of their categories. They will lead in every other measure
that matters, as well: sales growth, volume growth, geographic presence,
profitability.
This environment exists already, but it will intensify in the years
ahead. And as that happens, we'll need to work even harder in a number of
important areas.
FIRST, WE WILL NEED TO EXPAND OUR OWN LINEUP OF GLOBAL BRANDS.
We have a solid foundation to build on. For example, in BRANDWEEK
magazine's 1995 ranking of "Super Brands," P&G led the list of companies in the
categories in which we compete. BRANDWEEK included 17 P&G brands among its list
of Super Brands. The next closest competitor had eight.
And the BRANDWEEK ranking was based only on U.S. sales. Though the U.S.
remains P&G's largest single market, the real breadth and depth of our business
is reflected in the list of our brands that are truly global. Pantene Pro-V hair
care products, for example. Always and Whisper feminine protection products.
Ariel detergent, Pampers diapers, Vicks cough and cold products. Brands that are
winning the loyalty of consumers around the world.
And we are adding to the list.
(Top of Page 3 - Net Earnings per Employee Trend Chart for
1994-$22,912, 1995 - $26,663 and 1996 - $29,573 and Total Shareholder
Return Trend Chart for Ten Year - 18.7%, Five Year - 19.8% and Three
Year - 25.1%)
(Center of Page 3 - Picture of Head & Shoulders, Old Spice and Olay
with the following caption: "These are a few of P&G's potential global
brands.")
Tide detergent, for instance. The U.S. market leader for nearly 50
years. Now also the leader in Canada, Saudi Arabia, Morocco. And moving toward
leadership in Russia and China.
Head & Shoulders shampoo. This brand has been the U.S. market leader
virtually since it was introduced in 1961. Today, it is quickly becoming a
global market leader, as well, with growing businesses in nearly 40 countries.
And there are many others, like Oil of Olay and Old Spice, that are on
their way to becoming strong global brands.
SECOND, WE WILL NEED TO STRENGTHEN OUR ABILITY TO DELIVER BREAKTHROUGH
PRODUCT INNOVATION.
There will be a far greater premium on leading-edge product technology.
Brands that fall into the trap of merely shifting value with "me-too" line
extensions will quickly fall behind the market leaders that create value with
fundamentally better, new products. In fact, a hallmark of tomorrow's leading
brands will be their ability not just to improve existing products but to create
entirely new product categories with innovative technologies.
P&G has a long history of being among the technology pacesetters.
Today, we have more than 250 proprietary technologies in the marketplace,
technologies that provide a clear-cut advantage for brands like Bounty paper
towels. And, we are accelerating our pace of innovation. In 1995, for example,
P&G filed for more than 17,000 patents worldwide -- a 35% increase over 1994 and
a 60% increase over 1993.
THIRD, WE WILL NEED TO ACHIEVE AN EXTRAORDINARY LEVEL OF COST EFFECTIVENESS.
The strongest brands of the 21st century will respond to consumers'
increasing demands for good value. In fact, the best of these brands will push
consumers' value expectations even higher by continually resetting the standard
for delivering the highest possible quality at the lowest possible cost.
We're working hard to ensure that our brands are among those that set
the standard for good value. We are driving out costs that don't add value and
investing the savings in those things that do. For example, as we reported in
last year's Letter to Shareholders, the Company has reduced the total delivered
costs (TDC) of products by more than one dollar per case since 1990/91 -- $1.6
billion in total. And in 1995/96, we continued to tightly control TDC spending.
At the same time, we made major investments in new product initiatives, such as
the upcoming Pampers Baby-Dry launch -- which you can read about on page 12 --
and in a number of new manufacturing plants, including important new facilities
in China, Brazil and Thailand.
We've made good progress, but we know we'll need to do even better. We
will need breakthrough efficiencies in virtually every part of the organization.
(Center of Page 4 - Picture of Bounty, Pringles and Folgers with the
following caption: These flagship brands are leading P&G into the 21st
Century.")
FOURTH, WE WILL NEED TO WORK MORE EFFECTIVELY WITH RETAIL AND WHOLESALE
CUSTOMERS TO BUILD CONSUMER LOYALTY.
This is truly a breakthrough opportunity. Until recently,
manufacturers, retailers and wholesalers rarely saw one another as business
partners. In many cases, we saw one another as adversaries. As a result, we
created inefficiencies in the supply chain that increased consumers' prices and
eroded loyalty to brands and stores alike.
The competitive environment ahead of us will reward manufacturers and
retailers who reject this obsolete way of doing business and work together to
increase consumer value.
This is a new global marketplace reality, and we are moving fast to get
ahead of the curve. The most far-reaching of our efforts is our involvement in
an industry initiative called Efficient Consumer Response (ECR). We are working
closely with retailers and wholesalers to fundamentally change the way consumer
products are introduced, marketed, shipped and sold to consumers. We anticipate
that, industrywide, ECR will generate more than $30 billion in annual savings in
North America alone -- and we are helping to implement similar changes in
Europe, Latin America and Asia, as well. By investing our savings to increase
consumer value, we will build consumer loyalty and make our brands even
stronger.
BOUND AND DETERMINED TO WIN
These implications for our business are challenging, to be sure, but
they come with extraordinary opportunities for growth -- opportunities that we
believe P&G is uniquely positioned to capture. Why? Because the winners of the
21st century will be the companies that are best at building leadership brands.
And building brands consumers love is what we do best.
As we noted at the beginning of this letter, our organization turned in
an excellent performance in 1995/96, and we are committed -- bound and
determined, in fact -- to continue that performance in the years to come . . .
with leadership brands built and nurtured by an organization of leaders around
the world. On that note we'd like to thank the men and women of P&G for their
excellent performance this past year and thank you for your support of our
Company.
/S/ JOHN E. PEPPER
John E. Pepper
Chairman and Chief Executive
/S/DURK I. JAGER
Durk I. Jager
President and Chief Operating Officer
August 8, 1996
(Top of Page 5 - Caption "Building Leadership Brands" with a Pyramid
Picture listing "The Best People," "Loyal Consumers," "Good Value,"
"Superior Products," and "Great Brands." Also a picture of the
following brands: Always, Pampers, Tide and Pringles.)
(The rest of Page 5 shows a consumer shopping with the following
caption: "Turn the page to learn more about how P&G builds many of the
world's most successful leading brands.")
(Top of Page 6 - Pie Chart showing Total U.S. Wash Loads for All Other
Brands, Other P&G Brands and Tide with the following caption: U.S.
consumers use Tide to clean nearly 12 billion wash loads - 33 million
tons of clothes - every year. Also a picture of a 1946 Tide box with
the following caption: "Tide, the first heavy-duty synthetic laundry
detergent, is introduced in 1946 as 'the Washday Miracle.' Tide
radically changes the way people wash their clothes and quickly
establishes itself as America's favorite laundry brand.)
(The rest of Page 6 shows consumers at the laundromat using Tide.)
(Top of Page 7 has a picture of a 1988 Tide box with the following
caption: "After more than 40 years, Tide is still the best-selling
laundry brand in the U.S. Key to its long success is its ability to
continually reinvent the laundry category. Tide with Bleach, for
example, does what no other detergent can do. It combines a heavy-duty
detergent and full-strength color-safe bleach in one product." Also a
picture of a 1996 Tide box with the following caption: "Tide celebrates
its 50th birthday with a series of breakthrough innovations. On the
heels of its revolutionary carezyme technology, which helps keep
clothes looking like new, the brand's Ultra 2 initiative sets a new
standard for soil and stain removal.")
(Center of Page 7 has different Tide packages with the following
caption: "Tide is the 6th largest of all brands sold in U.S. grocery
stores.")
GREAT BRANDS
Great brands always stand for something -- something that consumers
care about, something the brand delivers better than any competitor, something
that can last and is consistent over time.
This "something" is what we think of as a brand's "equity." It is the
fundamental reason that consumers purchase any given brand on a sustained basis.
Tide, P&G's single largest brand, is one of the best examples of how to
build and maintain a strong equity. Since its introduction in 1946, Tide has
been known as the gold standard: "If it's got to be clean, it's got to be Tide."
Winning such a high degree of consumer confidence is tough to do, but
Tide has been doing it for generations. In fact, Tide has been the number 1
laundry brand in the U.S. for nearly half a century and today, as this great
brand celebrates its 50th birthday, its market share is the highest it's been
since 1952.
Most important, Tide's future is bright. In 1996 we are rolling out
Tide Ultra 2 -- a new generation of Tide that represents the latest of more than
60 performance improvements since the brand was introduced. Ultra 2, like
virtually every Tide innovation that preceded it, resets the standard for
cleaning, with even better stain removal and advanced color care technologies.
In the process, this breakthrough innovation reinforces Tide's equity as "the
best clean you can get."
Building great brands that consumers trust is a difficult and
never-ending challenge -- but it's one of the things that P&G does best. Another
source of our leadership, as you'll see on the next page, is the outstanding
performance of our products.
(Top of Page 8 - Picture of Always With Wings with the following
caption: "Always invented the unique "wing" design that helps hold the
pad in place and, as a result, provides better protection." Also a
Picture of Always Dri-Weave Topsheet with the following caption:
"Always patented Dri-Weave Topsheet helps keep moisture in the pad and
away from the skin, providing cleaner, drier protection.")
(Center of Page 8 - Picture of different Always packages with the
following caption: "P&G feminine protection products hold nearly 1,000
patents worldwide.")
SUPERIOR PRODUCTS
Great brands earn consumers' trust by meeting their needs -- better
than anyone else -- with truly superior products.
P&G's Always and Whisper feminine protection brands are good examples.
Feminine hygiene habits vary widely around the world -- based on culture,
clothing and available products. Still, the basic needs in this category are
very much the same. Women worldwide need protection and the cleaner, drier
feeling that a superior pad provides.
In one country after another, Always and Whisper have been first to
market with truly breakthrough products that meet these needs. The combination
of our proprietary "wings" design and our patented Dri-Weave technology have
helped make P&G the global leader of this $6 billion business today.
And we are expanding our brands' leadership with new products, as well.
Always with Side Channels, introduced in the U.S. in 1995, directs moisture away
from the edges and toward the center of the pad for added protection. And
Alldays with Duo-Active technology, introduced in Germany and France in 1995,
has driven the growth of our pantiliner business in Europe. The product's core
locks in wetness and actually absorbs odor.
Other pantiliners use perfume to mask odor.
Innovative products like these are the cornerstones of all our leading
brands -- and are principal drivers of P&G's leadership in one category after
another. The third element of our leadership, as you'll read on page 10, is our
consistent ability to deliver the best possible value to consumers around the
world.
(Top of Page 9 - Picture of Whisper Curve with the following caption:
"Whisper Curve, launched in Japan in 1995, is designed to fit a woman's
body better than previous products. The product's 'fusion bonded'
channels prevent bunching and reduce leakage, delivering substantially
improved performance." Also a Pie Chart showing All Other Brands and
P&G with the following caption: "One-fourth of all the feminine
protection pads and pantiliners sold worldwide are Procter & Gamble
products.)
(The rest of Page 9 shows a mother and daughter talking about the use
of Always as a feminine protection pad.)
(Top of Page 10 - Picture of Pringles in a number "1" with the
following caption: "Consumer demand--in more than 40 countries--has
made Pringles P&G's number one export brand." Also a picture of a stack
of individual Pringles with the following caption: "One Product.
Pringles leverages its growing global scale and builds brand equity by
staying focused on a consistent product formulation and the most
popular snack flavors. In fact, Pringles is able to meet 80% of
worldwide consumer demand with only six flavors.")
(The rest of Page 10 shows three young people with a canister of
Pringles and a rugby ball.)
(Top of Page 11 - Picture of one package of Pringles with the following
caption: "No matter where in the world you buy Pringles, you'll find it
in the same familiar can. Pringles' ability to maintain just one basic
package design not only reaps substantial cost savings but reinforces
the brand's growing global equity, as well." Also a picture of a boy
looking at a Pringles canister with stars coming out of it with the
following caption: "One Message. Pringles advertising is another area
in which the brand achieves a high level of cost effectiveness while
building consumer loyalty. The proven 'Once you pop, you can't stop'
campaign has helped grow Pringles' business around the world, from
Chicago to London to Tokyo.")
(Center of Page 11 - Picture of Sunny Delight, Crisco, Jif and Folgers
with the following caption: "90% of P&G's Food and Beverage brands grew
share this year.")
GOOD VALUE
It's important to have great brands with a lineup of superior products.
But even these cornerstone elements won't build a leading brand over time unless
consumers feel it represents a good value -- a fair price for a superior
product.
Consequently, we work hard to keep our prices down by keeping our costs
low. Our Food and Beverage business is a good example. Five years ago, this
business was struggling, with profits below the Company average -- despite a
strong lineup of brands, including Folgers coffee, Crisco Oil and Jif peanut
butter. We needed a breakthrough to realize our potential in this business.
We achieved that breakthrough, in part, with relentless cost control.
We knew we were spending more than competitors and that, if we could lower our
costs dramatically, we'd free our brands to compete on the strength of their
quality, value and equity with consumers -- a prescription for leadership.
That is exactly what happened. Our cost control efforts provided a
strong foundation for our Food and Beverage brands to grow profitably. Pringles,
for example, achieved breakthrough savings in manufacturing, product and package
costs -- savings we then invested in strong marketing and value pricing
initiatives. The business impact has been tremendous. In the past four years,
Pringles has more than doubled its worldwide volume and, today, is one of P&G's
fastest growing global brands.
Similar success stories -- great brands providing superior products at
a good value -- can be found throughout our Company. Consumers trust our brands
and that trust is the foundation of consumer loyalty. But preserving their
loyalty is a never-ending challenge, as our Pampers story on page 12
illustrates.
(Top of Page 12 - Picture of Pampers Premium with the following
caption: "Better Diapers. Pampers Premium is a new 'breathable' diaper
with revolutionary side panels that allow air to pass through to
baby's skin. Pediatricians know that this is important to skin
health." Also a picture of Pampers Unisex Baby-Dry with the following
caption: "Simpler Choices. Unisex Baby-Dry diapers use a newly
designed core technology that concentrates absorbency where both boys
and girls need it most, making gender-specific Pampers obsolete.")
(Center of Page 12 - Picture of three Pampers packages with the
following caption: "Pampers has more than a 70% share of eight
markets.")
LOYAL CONSUMERS
Loyal consumers rely on their favorite brands week in and week out.
They don't have to worry whether they're getting the best deal because they know
the brands they love deliver the best products at a good value every day. This
kind of loyalty is hard to earn and it can be easily lost if consumer confidence
is eroded.
For example, the disposable diaper category has become so complex that
many consumers walk away unsure of whether they've gotten the best value -- or
even the right product! They're forced to choose between so many different
sizes, genders and features that they become frustrated and confused.
Pampers, which is celebrating its 35th birthday in 1996, is working
hard to end this confusion. With the introduction of Pampers Baby-Dry in the
U.S. and Canada this fall -- part of P&G's biggest diaper initiative in a decade
- -- the brand is redefining the way consumers shop for diapers.
New breakthrough absorbency technology on Pampers Baby-Dry makes
gender-specific Pampers obsolete. This move not only makes it simpler to find
the right product, it frees up shelf space in stores that can now be used to
provide a full range of large-count packages in all sizes for the first time.
As a result, parents will be able to buy better-performing diapers --
and select the right diaper more easily -- while also having a wider selection
of money-saving, large-count packs in every size from which to choose.
All our brands look for ways to provide the kind of bold leadership
that Pampers is providing. And it's no surprise, because as you'll hear from
three of our employees on the following pages, leadership is a way of life at
P&G.
(Top of Page 13 - Picture of Pampers Jumbo with the following caption:
"More Convenience. An expanded range of large-count packs of Pampers,
which had been previously unavailable in many sizes, better meets
consumers' usage needs. Jumbo-size packs are now available on all sizes
of Pampers and Luvs in the U.S." Also a picture of the Pampers 35 year
logo with the following caption: "As Pampers celebrated its 35th
anniversary, P&G's U.S. diaper business achieved its highest level of
volume growth in a decade.")
(The rest of Page 13 shows a mother with her baby and a package of
Pampers sitting next to them.)
(Top of Page 14 - A book entitled "Built to Last: Successful Habits of
Visionary Companies," authors James C. Collins and Jerry I. Porras with
the following caption: "P&G understands the importance of constantly
developing talent so as to never face gaps in succession at any level,
and therefore to preserve its core throughout the Company." Also a
picture of Clarence Hall, Ivorydale Technician Leader with the
following caption: "My ability to impact the business directly -- every
day, in whatever way is necessary -- is greater today than at any time
in my 30-year career with P&G.")
(The rest of Page 14 shows Mr. Hall and another employee working with
Zest.)
(Top of Page 15 - A picture of Cindy Moseley, Ivorydale Reliability
Manager with the following caption: "I don't spend time inspecting
other people's work. Instead, I work with people -- technician leaders
and their teams -- who need direction, not inspection. That enables me
to have far more impact than I ever expected." Also a picture of
Toufic Waked, Ivorydale Power and Controls Manager with the following
caption: "The great benefit of driving leadership responsibility down
to every level in the organization is continuity. Most of our
technician leaders will spend their career at a single P&G plant.
And that continuity breeds mastery -- which is fundamental to the
speed and excellence today's business environment requires.")
(Center of Page 15 - Book entitled "The 100 Best Companies to Work for
in America," author Robert Levering and Milton Moskowitz with the
caption: "P&G is regularly ranked as a top employer in the U.S. and
around the world.")
THE BEST PEOPLE
Leadership is a way of life at P&G because it comes naturally to the
men and women who keep our business growing around the world. We take full
advantage of the leadership qualities of our people by creating a business
culture in which P&G leaders can thrive. An example is the "high performance"
environment in which many of our people work. At P&G plants, such as our
Ivorydale Beauty Care plant in Cincinnati, Ohio, the traditional lines dividing
technicians and managers have been essentially erased. Everyone in the
organization is empowered to make decisions . . . empowered to lead.
"We place tremendous emphasis on teamwork at our plant," says Clarence
Hall, a technical leader at Ivorydale. "Everyone at every level and in every
function understands what we are all responsible for building the business. If
something needs to be changed, or can be improved, we're empowered to make the
change. That empowerment has created a culture steeped in ownership and
breakthrough thinking."
This kind of everyday, yet extraordinary, leadership is crucial,
because it is the most important factor in our ability to build leadership
brands . . . and to keep your Company growing in the years and decades ahead.
(Top of Page 20 - Picture of the globe.)
(Center of Page 20 - Net Sales and Net Earnings Trend Charts for 1994,
1995 and 1996.)
FINANCIAL REVIEW
RESULTS OF OPERATIONS
The Company's financial results for its year ended June 30, 1996
reflect record levels of unit volume, net sales, and net earnings, with profit
margins reaching the highest level in over 45 years. Results for the year
reflect the Company's strategy to provide superior products at better value to
consumers, while pursuing simplification of product lines and marketing
strategies to improve efficiency and build profitability.
Worldwide net earnings for the year were $3,046 million, a 15% increase
over the prior year of $2,645 million. Current year results include settlement
of the Bankers Trust lawsuit, sale of the Company's share of a health care joint
venture, a reserve for estimated losses on a supply agreement entered into as
part of the previous divestiture of the commercial pulp business, and early
adoption of FASB Statement No. 121, covering recognition of impairment of
long-lived assets. Excluding these items, net earnings for the current year were
$3,031 million. The prior year results included a $50 million after-tax charge
for costs related to the earthquake in Kobe, Japan. Excluding the unusual items
in both years, net earnings grew 12%.
New earnings per share for the current year were $4.29, a 16% increase
over the prior year amount of $3.71. Excluding the unusual items in both years,
net earnings per share grew 13%.
Worldwide net sales for the current year were $35,284 million, up 5%.
Worldwide unit volume increased 7%, with all geographic regions achieving record
volume levels.
Worldwide gross margin for the current year was 41.2% compared to 41.6%
in the prior year. The current year was impacted by difficult economic
conditions in Mexico. Additionally, the early adoption of FASB Statement No.
121, which provides new guidance on recognition of impaired assets, impacted the
cost of products sold by approximately $50 million.
Worldwide marketing, research, and administrative expenses were $9,707
million compared to $9,677 million in the prior year. This represents 27.5% of
sales, compared with 28.9% in the prior year, and reflects the emphasis on cost
control, as well as benefits of the restructuring program. Additionally,
expenses were reduced in certain markets as the Company expanded its value
pricing and simplification of trade terms initiatives, which are designed to
provide better value to consumers, to countries outside the United States.
Other income, net of expense, contributed $338 million before-tax in
the current year, including: a $120 million benefit to reverse the remaining
reserve previously established for two interest rate swap contracts following
settlement of a lawsuit against Bankers Trust; a $185 million gain on the sale
of the Company's 50% share of a health care joint venture to its venture
partner; and a $230 million charge to increase the reserve for estimated losses
on a supply agreement entered into as part of the previous sale of the Company's
commercial pulp business. In the prior year, other income was $244 million
before-tax and contained a $77 million charge related to the Kobe, Japan
earthquake.
Top of Page 21 the following statement by John E. Pepper, Chairman and
Chief Executive: "This was a year of continued strong progress.
Shipments, sales and earnings all reached record levels. Each of our
four regions contributed to this growth through record volume levels
and excellent cost control. Importantly, our four largest categories
built share globally.")
(Center of Page 21 - Operating Margin Trend Chart for 1994, 1995 and
1996.)
Net earnings margin increase to 8.6% in the current year from 7.9% in
the prior year, including the effects of unusual items in both years. Excluding
the unusual items, it was 8.6% in the current year, up from 8.0% in the prior
year, reflecting unit volume growth and continued emphasis on cost control
through the Company's simplification and standardization programs.
The following provides perspective on the year ended June 30, 1995
versus the prior year:
Worldwide net earnings increased 20% to $2,645 million, including a $50
million after-tax charge for costs associated with the earthquake in Kobe,
Japan. Net earnings for 1994 were $2,211 million, including a $102 million
after-tax charge related to two interest rate contracts. Excluding the unusual
items in both periods, net earnings increased by 17%.
Worldwide net sales for 1995 increased 10% to $33,482 million. The
sales growth was driven by year-to-year unit volume growth of 10%, with
acquisitions contributing approximately 2%. More favorable exchange rates
positively impacted net sales by 2%, but the effect was offset by lower pricing
in certain markets.
The decline in worldwide gross margin from 42.9% in 1994 to 41.6% in
1995, was primarily due to higher green coffee bean costs, net of related
pricing. Higher raw material prices, most importantly pulp, more than offset the
incremental benefits of restructuring activities and other cost reduction
programs during 1995. The Company's gross margin trends were also affected by
changes in promotional policies. Specifically, from 1993 to 1995, the Company's
value pricing initiative reduced list prices by approximately $1 billion
(excluding coffee).
Worldwide marketing, research, and administrative expenses were 28.9%
of sales in 1995, down from 30.9% in 1994. This reflects the benefits of cost
control efforts, as well as an incremental benefit from restructuring actions,
which more than offset increased research and development costs.
Other income, net of expense, was $244 million before-tax in 1995,
which included a $77 million charge related to the Kobe, Japan earthquake. The
1994 amount of $158 million contained a $157 million charge to establish a
reserve related to two interest rate contracts with Bankers Trust.
Net earnings margin increased to 7.9% in 1995 from 7.3% in 1994,
including the effect of unusual items in both years. Excluding the unusual
items, net earnings margin increased to 8.0% in 1995 from 7.6% in 1994.
FINANCIAL CONDITION
Cash flow from operations was $4,158 million, $3,568 million and $3,649
million in 1996, 1995, and 1994 respectively. Generally, operating cash flow
provided the primary source of funds to finance operating needs and capital
expenditures.
(Top of Page 22 - Net Sales By Business Segment Pie Chart -- 30% -
Laundry & Cleaning; 29% Paper; 20% - Beauty Care; 12% Food & Beverage;
8% - Health Care and 1% - Corporate)
(Center of Page 22 - Dividends Per Share Trend Chart for 1992, 1993,
1994, 1995 and 1996.)
Cash and cash equivalents were fairly stable from June 30, 1995,
following a decline of $345 million in the prior year. Importantly, in the
current year $331 million was transferred to investment securities.
Under the share repurchase program initiated in 1995, current year
purchases were $432 million compared to $114 million in the prior year. The
Company is authorized to purchase up to 6 million shares annually to mitigate
the dilutive impact of management compensation programs.
The Company recently announced its intention to repurchase additional
outstanding shares of up to $1 billion during 1997. Funds for the repurchase
program will come primarily from existing cash balances and operating cash not
needed for the business.
Capital expenditures were $2,179 million in 1996, $2,146 million in
1995, and $1,841 million in 1994. Over 65% of current year expenditures were
related to the Laundry and Cleaning and Paper businesses, reflecting capacity
expansions and technological advances. Capital expenditures are expected to
increase during the upcoming year, reflecting the planned expansions associated
with Olean, a recently approved fat substitute, additional paper capacity, and
other planned capacity increases. Funds for these activities generally are
provided from operations.
Common share dividends grew 14% to $1.60 per share in 1996, compared to
$1.40 and $1.24 in 1995 and 1994, respectively. For the coming year, the annual
dividend rate will increase to $1.80 per common share, marking the 41st
consecutive year of increased common share dividend payments. Total dividend
payments, to both common and preferred shareholders, were $1,202 million, $1,062
million, and $949 million in 1996, 1995, and 1994, respectively.
During the year, the Company issued $300 million of 30-year, 6.45%
debentures under the shelf registration statement that was filed in 1995.
Subsequently, the amount available under the shelf was raised to $725 million.
Securities pursuant to this registration statement may be offered as determined
appropriate in light of market conditions. Additionally, the Company has the
ability to issue commercial paper at favorable rates.
Total debt was down $345 million. Exchange effects, primarily the
Japanese yen and German mark, reduced total debt by approximately $250 million.
During the current year, the Company completed the previously announced
program to divest certain non-strategic brands in order to focus organizational
resources on the Company's core businesses. The program did not have a
significant effect on the Company's results of operations or financial
condition. The proceeds from these sales, combined with other asset sales,
generated $402 million in cash flow in the current year. Acquisitions, including
Millstone Coffee, the global baby and child wipes business of the former Scott
Paper Company, and several Latin America laundry and cleaning businesses,
reduced cash by $358 million. In prior years, the net amount of cash required
for these activities was $313 million in 1995 and $190 million in 1994. The
Company expects to continue to divest minor, non-strategic brands as considered
appropriate to increase its focus on larger opportunities.
(Top of Page 23 - Pie Chart showing Net Sales by Geographic Segment --
North America - 49%, Europe, Middle East & Africa - 33%, Asia - 11%,
Latin America - 6% and Corporate - 1%.)
(Center of Page 23 - Operating Cash Flow Trend Chart for 1994, 1995 and
1996.)
RESTRUCTURING RESERVE STATUS
In the year ended June 30, 1993, a reserve of $2.4 billion was
established to cover a worldwide restructuring effort to consolidate
manufacturing systems and reduce overhead costs. The primary elements of this
reserve were costs related to fixed asset disposals and separation-related
costs.
The restructuring program is expected to be completed during the next
year. The cost of completing it is expected to approximate the original
estimate. Substantially all of the planned closures have been announced in order
to provide advance notice to the employees.
With incremental after-tax savings of approximately $100 million in the
current year, cumulative restructuring savings have exceeded the $500 million
after-tax objective originally established. Total savings, which have been
offset to some degree by lower pricing and other actions to build the business,
are expected to exceed the original estimate by approximately 20%.
The following pages provide perspective on the Company's geographic
segments. Additionally, the Corporate segment includes interest income and
expense, segment eliminations, and other general corporate income and expense.
<TABLE>
<CAPTION>
Original Balance Balance Balance
Reserve 6/30/94 6/30/95 Charges 6/30/96
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Separation
costs<F1> $ 965 $ 596 $ 369 $130 $239
Fixed asset
disposals 1,109 960 597 282 315
Other<F2> 328 227 194 60 134
- -------------------------------------------------------------------------
$2,402 $1,783 $1,160 $472 $688
- -------------------------------------------------------------------------
<FN>
<F1> Includes separation allowances and related benefits, outplacement
services, and personnel relocation costs.
<F2> Includes closing, environmental remediation and contract termination
costs for sites shut down or divested, offset by proceeds from asset
sales. No cost element within this category exceeds 5% of the total
reserve.
</FN>
</TABLE>
(Top of Page 24 map of North America - Population: 300 million - with
the following bullet points "Sales increased 6% to $17.1 billion;"
"Unit volume grew 5%, on strength of Laundry and Cleaning and Paper;"
and "Region produced record earnings of $2.2 billion.")
(Center of Page 24 - North America Net Earnings Trend Chart for 1994,
1995 and 1996.)
NORTH AMERICA REGION
Excellent results in most established businesses drove the financial
performance of the North America region to record levels during the current
year.
Net sales for the year were $17,133 million, up 6% from the prior year
level of $16,233 million. Unit volume increased 5%. Progress during the current
year compares to a strong 1995, when net sales increased 7% and unit volume grew
6% over 1994.
The region's unit volume progress, combined with more favorable raw
material prices and a continued focus on cost control, produced record net
earnings of $2,220 million, a 19% increase over the prior year. Excluding the
gain on the sale of the Company's share of a health care joint venture, net
earnings increased 12%. Prior year net earnings were $1,872 million, which
represented a 9% increase over 1994. Excluding the unusual item in the current
year, net profit margin for the region was 12.3%, compared to 11.5% and 11.3% in
1995 and 1994, respectively.
Laundry and Cleaning drove the region's current year unit volume and
earnings growth, delivering over 40% of the total region's unit volume increase.
The Laundry and Fabric Conditioner categories contributed heavily to the
segment's unit volume increase. In the prior year, Laundry and Cleaning was also
a key driver, achieving a unit volume growth rate above the regional average.
Tide, which celebrated its 50th anniversary, continued to maintain market
leadership, making excellent unit volume and earnings progress in the current
year.
The strength of the Paper segment also contributed to the region's
current year progress, generating 7% unit volume growth despite capacity
constraints, which will be addressed in the upcoming year. The Tissue and Towel
category delivered strong increases for the second straight year. Following
several years of disappointing results due to competitive pressure, the Diaper
category responded strongly with increased unit volume. Product initiatives and
more favorable pricing related to the pulp price declines in the latter part of
the year were key in reversing prior years' trends. Innovation remained a focus,
evidenced by the planned introduction of Pampers Baby-Dry, a significant new
diaper initiative that is consistent with the Company's simplification strategy
to build consumer value. Due to the inherent dependence on pulp, volatility of
pulp prices may affect results in this segment, but the impact is directly
influenced by pricing policies.
The Food and Beverage segment achieved 7% unit volume growth in the
current year, led by the Coffee category. Sales growth was less than volume
growth due to price reductions made in response to declining green coffee costs.
In 1995, unit volume growth in this segment was hampered by the effect of crop
freezes in Brazil, but was mitigated by unit volume growth in the Snacks and
Juice categories. Overall, the segment achieved excellent earnings progress in
the current year due to lower costs in key categories. During the upcoming year,
the Food & Beverage segment will move forward on capacity additions for Olean, a
recently approved fat substitute, and testing marketing of new snack products.
Unit volume in the Beauty Care segment grew 4% during the year, led by
the Hair Care category. This growth followed strong results in the prior year,
when unit volume for the segment increased above the region average. Net
earnings benefited from simplification and other cost reduction efforts,
achieving double-digit earnings growth in both the current and prior year.
Competitive activity in the Oral Care and Over-the-Counter (OTC)
categories contributed to overall unit volume and net sales declines in the
Health Care segment. Unit volume was down 3% for the year, compared to a 1%
increase in 1995. During the year, the Company divested its share of a health
care joint venture that marketed Aleve and Femstat 3. Excluding the effect of
this one-time gain, net earnings declined significantly, reflecting the effects
of competitive activity, as well as increased investment in the business to
regenerate growth in our key brand franchises. We expect to continue a high
level of investment in these categories into the next year. Additionally, a high
level of investment in research and development in the Pharmaceuticals area
continued in the current year, after a sizable increase in 1995 that affected
prior year results for this segment. Overall, the Pharmaceuticals business made
good progress, with increased sales and earnings in the current year.
(Top of Page 25 - Map of Europe, Middle East and Africa - Population:
1.9 billion - with the following bullet points "Sales increased 6% to
$11.7 billion;" "Unit volume grew 6%;" and "Cost control and volume
growth drove earnings to $767 million, up 14%.")
(Center of Page 25 - Europe, Middle East, and Africa Net Earnings Trend
Chart for 1994, 1995 and 1996.)
EUROPE, MIDDLE EAST, AND AFRICA REGION
Coming off a strong comparison period, the Europe, Middle East, and
Africa region delivered continued solid progress during the current fiscal year,
generating nearly one-third of the Company's total unit volume.
Net sales grew 6% to $11,719 million, on comparable unit volume growth.
During the prior year, sales increased 13% to $11,017 million on 15% unit volume
growth, which included 5% due to acquisitions. Exchange effects in 1995
contributed 6% to net sales growth, but were offset by lower pricing in certain
markets.
The region's net earnings progress continued in the current year,
growing 14% to $767 million. This follows 16% growth in the prior year, with
earnings of $675 million. The net profit margin in the current year increased to
6.5% from 6.1% and 6.0%, in 1995 and 1994, respectively. Cost control efforts
complemented the region's unit volume growth to deliver these results.
Central and Eastern Europe led the region's unit volume progress,
achieving 65% growth following an increase of over 40% in 1995. In this
geography, P&G held leadership share positions in many key categories, such as
Diapers, Laundry, and Hair Care. The excellent volume progress contributed to
strong earnings growth, reflecting the economies of scale achieved by early
entry into the market.
The Middle East and General Export business also achieved excellent
unit volume and earnings growth in both the current and prior year, led by the
Laundry, Hair Care, and Diapers categories.
Western Europe unit volume increased slightly, compared to 13% in the
prior year, despite the introduction of value pricing and a simplification of
trade terms designed to provide better value to consumers by eliminating
inefficient promotion costs. When introduced in the United States, these
initiatives negatively impacted short-term results due to trade inventory
adjustments, but were significant factors in improved long-term results. The
initial introduction in Europe has faced similar challenges, but the Company is
achieving the results it had expected and remains committed to this strategy.
Notwithstanding the low rate of unit volume growth, earnings increased solidly
as the impact of the value pricing initiative was more than offset by cost
reduction efforts.
Within Western Europe, the Laundry and Cleaning and Beauty Care
segments contributed the strongest earnings growth. Initiatives such as the use
of the carezyme enzyme and growth of the mid-price segment were factors in the
Laundry and Cleaning growth, while the Hair Care category, led by Pantene, was
an important driver of the Beauty Care progress.
(Top of Page 26 - Map of Asia - Population: 3.1 billion - with the
following bullet points "Sales increased 5% to $3.8 billion;" "Unit
volume grew 16%;" and "Excellent progress in key markets was important
in achieving earnings of $222 million.")
(Center of Page 26 - Asia Net Earnings Trend Chart for 1994, 1995 and
1996.)
ASIA REGION
Results in the Asia region were positive, driven by the excellent
progress of developing markets in achieving growth objectives, off-set, in part,
by the effect of the economic and competitive environment in Japan.
Net sales for the region were $3,790 million, up 5%, as unit volume
grew 16%. Sales were reduced 3% by exchange effects. This follows excellent
results in the prior year, when net sales grew 15% on unit volume growth of 24%.
Exchange effects contributed 7% to 1995 sales. The differential between unit
volume and net sales increases reflects the continued growth of lower-priced
brands in developing markets. Excluding exchange effects, this differential
narrowed in the current year, reflecting favorable pricing and mix effects.
The region's net earnings were $222 million, an increase of 12%. Prior
year net earnings were $199 million, a 51% increase over 1994. Net profit margin
in 1996 was 5.9%, compared to 5.5% and 4.2% in 1995 and 1994, respectively.
Margin progress has been achieved by cost control efforts building on strong
volume growth in key markets.
China led the region's growth, achieving over 50% unit volume growth
while maintaining excellent earnings progress. These results reflect the
expansion of geographical coverage and share growth in all categories.
The Philippines was also a key contributor to the region's progress,
with unit volume growing 18%. The Hair Care, Personal Cleansing and Feminine
Hygiene categories achieved record shares during the current year.
Unit volume was down slightly in Japan, reflecting the competitive
market environment and difficult economic climate. Additionally, unfavorable
exchange rates and pricing contributed to a decline in sales and net earnings.
The diaper business continued to face challenges in maintaining market share and
increasing profitability. Profits were also affected by the investment
associated with the successful Joy dishwashing liquid launch, which achieved
market leadership in just 5 weeks after national introduction.
Asia's unit volume growth was also broad based across product segments,
with core categories representing approximately 80% of the region's business
growing at double-digit rates. Proven success models were expanded into new
geographies and new products were introduced, including Pampers Comfort, Pantene
Extra Treatment, and Pantene Styling. Crest dentifrice and toothbrushes were
introduced into China, the Company's first major introduction of oral care
products in the region.
(Top of Page 27 - Map of Latin America - Population: 500 million - with
the following bullet points "Affected by economic conditions, sales
were stable at $2.2 billion;" "Unit volume grew 4%;" and "Boosted by
improved profit margins, net earnings were $218 million.")
(Center of Page 27 - Latin America Net Earnings Trend Chart for 1994,
1995 and 1996.)
LATIN AMERICA REGION
Latin America achieved satisfactory results overall, as strong growth
in most of the region was largely offset by Mexico, where economic weakness
following the December 1994 peso devaluation continued to hamper results.
Despite unit volume growth of 4% for the region, net sales were flat at
$2,173 million, reflecting the full-year impact of the Mexican peso devaluation.
In the prior year, unit volume grew 6%, while sales declined 3%, reflecting the
initial effect of the peso devaluation.
Net earnings for the region were $218 million, a 2% increase. Prior
year net earnings were $213 million, a 36% increase over 1994. Net profit margin
for the current year increased to 10.0% from 9.8% and 7.0% in 1995 and 1994,
respectively, reflecting aggressive pricing and cost control efforts in the
difficult economic environment.
Mexico represents the Company's largest operation in the region, and
its economic situation presented a significant challenge during the period
following the initial peso devaluation. Unit volume was down 6% in the current
year, while higher costs and the effect of exchange rate movements also
contributed to significantly lower earnings. These results follow a 4% decline
in the country's prior year unit volume.
The effect of Mexico was balanced by excellent progress in other key
countries, as the remainder of the region achieved unit volume growth of 16% in
the current year.
Venezuela, another large market in the region, achieved solid growth,
with a 17% increase in unit volume and excellent earnings growth, following a
decline in unit volume in the prior year. The recent devaluation in Venezuela is
not expected to significantly impact the Company's 1997 results.
FORWARD LOOKING STATEMENT
The Company has made and will make certain forward-looking statements
in this Annual Report and in other contexts relating to volume growth, increases
in market shares, total shareholder return and cost reductions, among others.
These forward-looking statements represent challenging goals for the
Company and are based on certain assumptions and estimates regarding the
worldwide economy, technological innovation, competitive activity, pricing,
currency movements, product introductions, governmental action and the
development of certain markets. Among the key factors necessary to achieve the
Company's goals are: 1) the achievement of lower costs and increases in
reliability and capacity utilization, resulting from simplification and
standardization, 2) the ability to improve results despite unusual levels of
competitive activity, 3) the successful implementation of value pricing and the
ability to maintain key customer relationships in important developed markets,
4) the continuation of substantial growth in significant developing markets such
as China, Mexico, Brazil, Russia and the balance of Central and Eastern Europe,
5) obtaining successful outcomes in regulatory and tax matters, 6) the ability
to continue technological innovation. If the Company's assumptions and estimates
are incorrect or do not come to fruition, or if the Company does not achieve all
of these key factors, then the Company's actual performance could vary
materially from the forward-looking statements made herein.
RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The consolidated financial statements and the related financial
information included in this report are the responsibility of Company
management. This responsibility includes preparing the statements in accordance
with generally accepted accounting principles and necessarily includes estimates
that are based on management's best judgments.
To help insure the accuracy and integrity of Company financial data,
management maintains a system of internal controls that is designed to provide
reasonable assurance that transactions are executed as authorized and accurately
recorded and that assets are properly safeguarded. These controls are monitored
by an extensive and ongoing program of internal audits. These audits are
supplemented by a self-assessment program that enables individual organizations
to evaluate the effectiveness of their control structure. Careful selection of
employees and appropriate divisions of responsibility also are designed to
achieve our control objectives. The Company's "Worldwide Business Conduct
Manual" sets forth management's commitment to conducting its business affairs in
keeping with the highest ethical standards.
Deloitte & Touche LLP, independent public accountants, have audited and
reported on the Company's consolidated financial statements. Their audits were
performed in accordance with generally accepted auditing standards.
The Board of Directors, acting through its Audit Committee composed
entirely of outside directors, oversees the adequacy of the Company's control
environment. The Audit Committee meets periodically with representatives of
Deloitte & Touche LLP and internal financial management to review internal
control, auditing, and financial reporting matters. The independent auditors and
the internal auditors also have full and free access to meet privately with the
Audit Committee.
/S/JOHN E. PEPPER /S/ERIK G. NELSON
John E. Pepper Erik G. Nelson
Chairman and Chief Executive Chief Financial Officer
- ---------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
DELOITTE & TOUCHE LLP 250 East Fifth Street
________________________ Cincinnati, Ohio 45202
To the Board of Directors and Shareholders of The Procter & Gamble Company:
We have audited the accompanying consolidated balance sheets of The
Procter & Gamble Company and subsidiaries as of June 30, 1996 and 1995 and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended June 30, 1996. These
financial statements are the responsibility of the Company'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 audits 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, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company at June
30, 1996 and 1995 and the results of operations and cash flows for each of the
three years in the period ended June 30, 1996, in conformity with generally
accepted accounting principles.
/S/DELOITTE & TOUCHE LLP
August 8, 1996
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS
(Amounts in Millions Except Per Share Amounts)
<CAPTION>
Years Ended June 30 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $35,284 $33,482 $30,385
Cost of products sold 20,762 19,561 17,338
Marketing, research, and administrative expenses 9,707 9,677 9,377
- ---------------------------------------------------------------------------------------------------------------
OPERATING INCOME 4,815 4,244 3,670
Interest expense 484 488 482
Other income, net 338 244 158
- ---------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 4,669 4,000 3,346
Income taxes 1,623 1,355 1,135
- ---------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 3,046 $ 2,645 $ 2,211
- ---------------------------------------------------------------------------------------------------------------
NET EARNINGS PER COMMON SHARE $ 4.29 $ 3.71 $ 3.09
FULLY DILUTED NET EARNINGS PER COMMON SHARE $ 4.02 $ 3.48 $ 2.91
DIVIDENDS PER COMMON SHARE $ 1.60 $ 1.40 $ 1.24
AVERAGE COMMON SHARES OUTSTANDING 686.3 686.0 683.1
- ---------------------------------------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions Except Per Share Amounts)
<CAPTION>
June 30 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,074 $ 2,028
Investment securities 446 150
Accounts receivable 2,841 3,010
Inventories
Materials and supplies 1,254 1,315
Work in process 210 247
Finished goods 1,666 1,891
Deferred income taxes 598 804
Prepaid expenses and other current assets 1,718 1,397
- ---------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 10,807 10,842
PROPERTY, PLANT, AND EQUIPMENT
Buildings 3,369 3,364
Machinery and equipment 14,174 13,734
Land 569 641
- ---------------------------------------------------------------------------------------------------------
18,112 17,739
Less accumulated depreciation 6,994 6,713
- ---------------------------------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT, AND EQUIPMENT 11,118 11,026
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill 4,175 4,474
Trademarks and other intangible assets 1,095 1,008
- ---------------------------------------------------------------------------------------------------------
5,270 5,482
Less accumulated amortization 989 910
- ---------------------------------------------------------------------------------------------------------
TOTAL GOODWILL AND OTHER INTANGIBLE ASSETS 4,281 4,572
OTHER NON-CURRENT ASSETS 1,524 1,685
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS $27,730 $28,125
- ---------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,366 $ 2,891
Accrued and other liabilities 3,851 4,219
Taxes payable 492 568
Debt due within one year 1,116 970
- ---------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 7,825 8,648
LONG-TERM DEBT 4,670 5,161
DEFERRED INCOME TAXES 638 531
OTHER NON-CURRENT LIABILITIES 2,875 3,196
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 16,008 17,536
- ---------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock, stated value $1 per share
(600 shares authorized) 1,886 1,913
Non-Voting Class B preferred stock, stated value $1 per share
(200 shares authorized; none issued) - -
Common stock, stated value $1 per share (2,000 shares authorized;
shares outstanding: 1996 - 685.6 and 1995 - 686.6) 686 687
Additional paid-in capital 862 693
Currency translation adjustments (418) 65
Reserve for employee stock ownership plan debt retirement (1,676) (1,734)
Retained earnings 10,382 8,965
- ---------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 11,722 10,589
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $27,730 $28,125
- ---------------------------------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY
(Dollars in Millions/Shares in Thousands)
<CAPTION>
Common Additional Currency Reserve for
Shares Common Preferred Paid-In Translation ESOP Debt Retained
Outstanding Stock Stock Capital Adjustments Retirement Earnings Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE JUNE 30, 1993 681,754 $682 $1,969 $477 $ (99) $(1,836) $ 6,248 $ 7,441
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings 2,211 2,211
Dividends to shareholders:
Common (847) (847)
Preferred, net of tax benefit (102) (102)
Currency translation adjustments 36 36
Treasury purchases (255) (1) (14) (15)
Employee plan issuances 1,872 2 57 59
Preferred stock conversions 977 1 (27) 26 0
ESOP debt guarantee reduction 49 49
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE JUNE 30, 1994 684,348 684 1,942 560 (63) (1,787) 7,496 8,832
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings 2,645 2,645
Dividends to shareholders:
Common (960) (960)
Preferred, net of tax benefit (102) (102)
Currency translation adjustments 128 128
Treasury purchases (1,708) (1) (114) (115)
Employee plan issuances 2,883 3 105 108
Preferred stock conversions 1,051 1 (29) 28 0
ESOP debt guarantee reduction 53 53
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE JUNE 30, 1995 686,574 687 1,913 693 65 (1,734) 8,965 10,589
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings 3,046 3,046
Dividends to shareholders:
Common (1,099) (1,099)
Preferred, net of tax benefit (103) (103)
Currency translation adjustments (483) (483)
Treasury purchases (5,234) (5) (427) (432)
Employee plan issuances 3,257 3 143 146
Preferred stock conversions 976 1 (27) 26 0
ESOP debt guarantee reduction 58 58
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE JUNE 30, 1996 685,573 $686 $1,886 $862 $(418) $(1,676) $10,382 $11,722
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Millions)
<CAPTION>
Years Ended June 30 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 2,028 $ 2,373 $ 2,322
- -------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings 3,046 2,645 2,211
Depreciation and amortization 1,358 1,253 1,134
Deferred income taxes 328 181 196
Change in accounts receivable 17 (161) (136)
Change in inventories 202 (401) 25
Change in accounts payable (366) 70 218
Change in other operating assets and liabilities (716) (84) (281)
Other 289 65 282
- -------------------------------------------------------------------------------------------------
TOTAL OPERATING ACTIVITIES 4,158 3,568 3,649
- -------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (2,179) (2,146) (1,841)
Proceeds from asset sales 402 310 105
Acquisitions (358) (623) (295)
Change in investment securities (331) 96 23
- -------------------------------------------------------------------------------------------------
TOTAL INVESTING ACTIVITIES (2,466) (2,363) (2,008)
- -------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Dividends to shareholders (1,202) (1,062) (949)
Change in short-term debt 242 (429) (281)
Additions to long-term debt 339 449 414
Reductions of long-term debt (619) (510) (797)
Proceeds from stock options 89 66 36
Treasury purchases (432) (114) (14)
- -------------------------------------------------------------------------------------------------
TOTAL FINANCING ACTIVITIES (1,583) (1,600) (1,591)
- -------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (63) 50 1
- -------------------------------------------------------------------------------------------------
CHANGE IN CASH AND CASH EQUIVALENTS 46 (345) 51
- -------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,074 $ 2,028 $ 2,373
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE
Cash payments for:
Interest, net of amount capitalized $ 459 $ 444 $ 487
Income taxes 1,339 1,047 1,225
Liabilities assumed in acquisitions 56 575 65
- --------------------------------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars Except Per Share Amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The consolidated financial statements include The Procter
& Gamble Company and its controlled subsidiaries (the Company). Investments in
companies that are at least 20% to 50% owned and over which the Company exerts
significant influence but does not control the financial and operating decisions
are accounted for by the equity method. These investments are managed as
integral parts of the Company's segment operations, and the Company's share of
their results is included in net sales and in earnings for the related segments.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying disclosures. Although these estimates are based on
management's best knowledge of current events and actions the Company may
undertake in the future, actual results ultimately may differ from the
estimates.
ACCOUNTING CHANGES: In 1996, the Company adopted FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," which requires review for possible impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The effect of the adoption was not material.
CURRENCY TRANSLATION: The financial statements of subsidiaries outside the
U.S. generally are measured using the local currency as the functional currency.
Translation adjustments are accumulated in a separate component of shareholders'
equity. For subsidiaries operating in highly inflationary economies, the U.S.
dollar is the functional currency. Remeasurement and other transactional
exchange losses reflected in net earnings were $28, $38 and $27 for 1996, 1995
and 1994, respectively.
CASH EQUIVALENTS: Highly liquid investments with maturities of three months or
less when purchased are considered cash equivalents.
INVENTORY VALUATION: Inventories are valued at cost, which is not in excess of
current market price. Cost is primarily determined by either the average cost or
the first-in, first-out method. The replacement cost of last-in, first-out
inventories exceeds carrying value by approximately $169.
GOODWILL AND OTHER INTANGIBLE ASSETS: The cost of intangible assets is
amortized, principally on a straight-line basis, over the estimated periods
benefited (not exceeding 40 years). The average remaining life is 31 years. The
realizability of goodwill and other intangibles is evaluated periodically as
events or circumstances indicate a possible inability to recover the carrying
amount. Such evaluation is based on various analyses, including cash flow and
profitability projections that incorporate the impact on existing Company
businesses. The analyses necessarily involve significant management judgment to
evaluate the capacity of an acquired business to perform within projections.
Historically, the Company has generated sufficient returns from acquired
businesses to recover the cost of the goodwill and other intangible assets.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at
cost reduced by accumulated depreciation. Depreciation expense is provided based
on estimated useful lives using the straight-line method.
SELECTED OPERATING EXPENSES: Research and development costs are charged to
earnings as incurred and were $1,221 in 1996, $1,148 in 1995 and $964 in 1994.
Advertising costs are charged to earnings as incurred and were $3,254 in 1996,
$3,284 in 1995, and $2,996 in 1994.
NET EARNINGS PER COMMON SHARE: Net earnings less preferred dividends (net of
related tax benefits) are divided by the weighted average number of common
shares outstanding during the year to calculate net earnings per common share.
Fully diluted net earnings per common share are calculated to give effect to
stock options and convertible preferred stock.
FAIR VALUES OF FINANCIAL INSTRUMENTS: Fair values of cash equivalents, short and
long-term investments, and short-term debt approximate cost. The estimated fair
values of other financial instruments, including debt and risk management
instruments, have been determined using available market information and
valuation methodologies, primarily discounted cash flow analysis. These
estimates require considerable judgment in interpreting market data, and changes
in assumptions or estimation methods may significantly affect the fair value
estimates.
RECLASSIFICATIONS: Certain reclassifications of prior years' amounts have been
made to conform with the current year presentation. Importantly, costs related
to research and development now are reported as an element of marketing,
research, and administrative expenses. Concurrently, certain component elements
of research and development have been reclassified, primarily to administrative
expense. Delivery costs now are in cost of products sold. Certain balance sheet
elements have been reclassified to separately reflect trade accounts receivable
and payable.
2. ACQUISITIONS
In 1995, the Company purchased the European tissue business of Vereinigte
Papierwerke Schickedanz AG and the prestige fragrance business of Giorgio
Beverly Hills, Inc. These purchase acquisitions had an aggregate purchase price
of $598. Other acquisitions accounted for as purchases totaled $358, $25, and
$295 in 1996, 1995, and 1994, respectively.
<TABLE>
3. SUPPLEMENTAL LIABILITY INFORMATION
<CAPTION>
June 30 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
ACCRUED AND OTHER LIABILITIES
Marketing expenses $ 990 $ 1,135
Restructuring reserves 748 828
Compensation expenses 437 419
Other 1,676 1,837
- -------------------------------------------------------------------------
3,851 4,219
OTHER NON-CURRENT LIABILITIES
Postretirement benefits 1,347 1,402
Pension benefits 879 777
Restructuring reserves - 466
Other 649 551
- -------------------------------------------------------------------------
2,875 3,196
</TABLE>
<TABLE>
4. SHORT-TERM AND LONG-TERM DEBT
<CAPTION>
June 30 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM
U.S. obligations $ 465 $ 26
Foreign obligations 231 450
Current portion of long-term debt 420 494
- -------------------------------------------------------------------------
1,116 970
</TABLE>
The weighted average short-term interest rates were 7.4% and 9.5% as of
June 30, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Average
June 30 Rate Maturities 1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM
U.S. notes and
debentures 7.86% 1997-2029 $1,982 $1,899
U.S. commercial paper 772 922
Foreign obligations 660 1,100
ESOP Series A 8.28% 1997-2004 676 734
ESOP Series B 9.36% 2021 1,000 1,000
Current portion of
long-term debt (420) (494)
- ----------------------------------------------------------------------------
4,670 5,161
</TABLE>
The long-term weighted average interest rates are as of June 30, 1996
and exclude the effects of related interest rate swaps. Certain commercial paper
balances have been classified as long-term debt based on the Company's intent
and ability to renew the obligations on a long-term basis. The Company has
entered into derivative instruments that convert these commercial paper
obligations into fixed-rate obligations.
The fair value of the long-term debt was $5,014 and $5,662 June 30,
1996 and 1995, respectively. The following payments are required the next five
years: 1997 - $420; 1998 - $344; 1999 - $87; 2000 - $240; and 2001 - $338.
5. RISK MANAGEMENT ACTIVITIES
The Company is exposed to market risk including changes in interest rates,
currency exchange rates, and certain commodity prices. To manage the volatility
relating to these exposures, the Company enters into various derivative
transactions pursuant to the Company's policies in areas such as counterparty
exposure and hedging practices. Positions are monitored using techniques
including market value and sensitivity analyses. The Company does not hold or
issue derivative financial instruments for trading purposes.
INTEREST RATE MANAGEMENT
The Company's policy is to manage interest cost using a mix of fixed and
variable rate debt. To manage this mix in a cost-efficient manner, the Company
enters into interest rate swaps, in which the Company agrees to exchange, at
specified intervals, the difference between fixed and variable interest amounts
calculated by reference to an agreed-upon notional principal amount. These swaps
hedge underlying debt obligations, and the interest rate differential is
reflected as an adjustment to interest expense over the life of the swaps.
The following table presents information for outstanding interest rate
swaps:
<TABLE>
<CAPTION>
1996 1995
------------- --------------
1996- Beyond 1995- Beyond
June 30 2001 2001 2000 2000
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pay Fixed:
Notional amount $859 $536 $845 $914
Weighted average
receive rate 6.2% 5.4% 4.9% 5.8%
Weighted average
pay rate 6.8% 6.7% 5.9% 7.0%
Pay Variable:
Notional amount $377 -- $535 $171
Weighted average
receive rate 8.4% -- 6.3% 9.3%
Weighted average
pay rate 6.7% -- 6.8% 7.7%
- -------------------------------------------------------------------------
</TABLE>
Certain of the above instruments are currency rate swaps that are
designated as a hedge of the Company's related foreign net asset exposure. The
currency effects of these hedges are reflected in the currency translation
adjustments section of shareholders' equity, offsetting a portion of the
translation of the net assets.
The following table presents information for all interest rate
instruments, including warrants and options. The notional amount does not
necessarily represent amounts exchanged by the parties and, therefore, is not a
direct measure of the exposure of the Company. The fair value approximates the
cost to settle the outstanding contracts. The carrying value includes the net
amount due to counterparties under swap contracts, currency translation
associated with currency interest rate swaps, and any marked-to-market value of
instruments.
<TABLE>
<CAPTION>
June 30 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Notional amount $1,872 $2,765
- ----------------------------------------------------------------------
Fair value $ (165) $ (373)
Carrying value (121) (298)
- ----------------------------------------------------------------------
Unrecognized Loss (44) (75)
</TABLE>
Although derivatives are an integral part of the Company's interest
rate management program, their incremental effect on interest expense for 1996
and 1995 was not material. Additionally, based on the Company's overall variable
rate position at June 30, 1996, including other interest rate instruments, a
change within a 95% confidence level based on historical interest rate movements
would not have a material effect on earnings.
CURRENCY RATE MANAGEMENT
The primary purpose of the Company's foreign currency hedging activities is to
protect against the volatility associated with local currency purchase
transactions. Corporate policy prescribes the range of hedging activity into
which the subsidiary operations may enter. To execute this policy, the Company
primarily utilizes forward exchange contracts and purchased options with
durations of generally less than 12 months. Because these are entered into as a
hedge of planned transactions, a change in the fair value of the instruments is
offset by a corresponding change in the related exposure.
In addition, the Company enters into foreign currency swaps to hedge
intercompany financing transactions and purchases foreign currency options to
hedge against the effect of exchange rate fluctuations on royalties and foreign
source income.
Gains and losses related to qualifying hedges of foreign currency firm
commitments or anticipated transactions are recognized in income when the hedged
transaction occurs. Other foreign exchange contracts are marked-to-market on a
current basis through income.
Currency instruments outstanding are as follows:
<TABLE>
<CAPTION>
Notional Fair
June 30 Amount Value
- --------------------------------------------------------------------
<S> <C> <C> <C>
1996
Forward Contracts $2,586 $ (23)
Purchased Options 1,726 41
Currency Swaps 505 (17)
1995
Forward Contracts $3,423 $ (20)
Purchased Options 2,419 38
Currency Swaps 863 (140)
- --------------------------------------------------------------------
</TABLE>
The deferred gains/losses on these instruments were not material. The
major currency exposures (notional amounts) hedged by the Company at June 30,
1996 and 1995, respectively include the German mark ($1,276 and $2,465), U.S.
dollar ($623 and $824), British pound sterling ($525 and $811), Belgian franc
($519 and $631), Italian lira ($453 and $299), and French franc ($437 and $535).
Based on the Company's estimates at June 30, 1996, a change within a 95%
confidence level based on historical currency rate movements would not have a
material effect on earnings.
Currency exposure related to the net assets of subsidiaries is managed
primarily through local currency financing and foreign currency denominated
financing instruments entered into by the parent. Gains or losses on instruments
designated as a hedge of net assets are offset against the translation effects
reflected in shareholders' equity.
At June 30, 1995, the Company's total foreign net assets were $6,895.
Of this, approximately 20% is denominated in the German mark. The Canadian
dollar, Japanese yen, British pound, Chinese renminbi, Mexican peso, and Italian
lira each represent between approximately 5% and 10% of the total. No other
individual country represents more than 5% of the total. The Company has
designated $1,458 and $1,386 of foreign currency instruments as hedges of its
net asset exposure in certain foreign subsidiaries at June 30, 1996 and 1995,
respectively. These hedges resulted in gains/(losses)of $129 and $(115) that are
net of ($80) and $73 in tax effects reflected in shareholders' equity.
COMMODITY PRICE MANAGEMENT
Because market prices of certain raw materials used in food and beverage
products depend on a number of unpredictable factors, such as weather, the
Company's policy is to manage the resulting volatility using commodities
contracts. Commodity activity is not material to the Company's earnings or cash
flows.
CREDIT RISK
Credit risk arising from the inability of a counterparty to meet the terms of
the Company's financial instrument contracts is generally limited to the
amounts, if any, by which the counterparties' obligations exceed the obligations
of the Company. It is the Company's policy to only enter into financial
instruments with a diversity of creditworthy counterparties. Therefore, the
Company does not expect to incur material credit losses on its risk management
or other financial instruments.
6. STOCK OPTIONS
Under the Company's stock option plans, options have been granted to key
employees an directors to purchase common shares of the Company within a
ten-year term at the market value on the dates of the grants. Stock option
activity was as follows:
<TABLE>
<CAPTION>
Options in Thousands 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding, July 1 31,692 30,556 28,497
Granted 4,802 3,926 3,880
Exercised (3,055) (2,639) (1,673)
Canceled (111) (151) (148)
- ----------------------------------------------------------------------
Outstanding, June 30 33,328 31,692 30,556
Exercisable 28,524 27,777 26,685
Available for grant 12,209 9,755 6,418
Average Price:
Outstanding $49.59 $42.72 $38.23
Granted 81.74 66.21 56.81
Exercised 29.04 25.18 21.35
- ----------------------------------------------------------------------
</TABLE>
Effective with 1997 year-end reporting, the Company intends to adopt
the disclosure requirements of FASB Statement No. 123, "Accounting for
Stock-Based Compensation," while continuing to measure compensation cost for
stock options and awards under APB Opinion No. 25, "Accounting for Stock Issued
to Employees."
7. POSTRETIREMENT BENEFITS
The Company offers various postretirement benefits to U.S. and international
employees.
PENSION BENEFITS
Within the U.S., the most significant retirement benefit is the defined
contribution profit sharing plan funded by an employee stock ownership plan
(ESOP) and Company contributions. Annual credits to participants' accounts are
based on individual base salaries and years of service, not exceeding 15% of
total participants' annual salaries and wages.
<TABLE>
<CAPTION>
Years Ended June 30 1996 1995 1994
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Preferred shares
allocated at market value $200 $155 $117
Company contributions` 75 112 157
- -----------------------------------------------------------------------
Benefits earned 275 267 274
</TABLE>
Certain other employees, primarily outside the U.S., are covered by
local defined benefit pension plans, with summarized information as follows:
<TABLE>
<CAPTION>
June 30 1996 1995
- ----------------------------------------------------------------
<S> <C> <C>
Vested benefit obligations $1,315 $1,250
Non-vested benefit obligations 188 178
- ----------------------------------------------------------------
Accumulated benefit obligations 1,503 1,428
Effect of projected salaries 383 375
- ----------------------------------------------------------------
Projected benefit obligations 1,886 1,803
Plan assets at market value (1,019) (890)
- ----------------------------------------------------------------
Unfunded pension benefit
obligations 867 913
Unrecognized:
Net transition obligations (37) (37)
Prior service costs (43) (45)
Net gains (losses) 32 (30)
- -----------------------------------------------------------------
Net accrued pension costs 819 801
</TABLE>
Plan assets are held in restricted trusts or foundations. The assets
are in stocks, bonds, insurance contracts, and other investments within the
limits prescribed by local laws and in line with local investment practices for
pension and retirement plans. Funding policies vary by country and consider such
factors as actuarial reports, tax regulations, and local practices. In the U.S.,
plan assets exceeded the projected benefit obligation by $27 in 1996 and $21 in
1995.
<TABLE>
<CAPTION>
PENSION EXPENSE
Years Ended June 30 1996 1995 1994
- --------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned during the year $ 96 $ 89 $ 84
Interest on projected
benefit obligations 131 116 97
Actual return on plan assets (132) (74) (63)
Net amortization and other 60 10 3
- -------------------------------------------------------------------
155 141 121
</TABLE>
The actuarial assumptions vary by country and consider such factors as
economic conditions and the nature of plan assets. The following is a summary of
assumptions, reflecting an average for the Company:
<TABLE>
<CAPTION>
ASSUMPTIONS
Years Ended June 30 1996 1995 1994
- ---------------------------------------------------------------
<S> <C> <C> <C>
Long-term rate of return
on plan assets 9% 9% 9%
Increase in compensation 5% 6% 6%
Discount rate 7% 7% 7.4%
- ---------------------------------------------------------------
</TABLE>
OTHER RETIREE BENEFITS
The Company provides certain health care and life insurance benefits for
substantially all U.S. employees and, to a lesser extent, certain foreign
employees who become eligible for these benefits when they meet minimum age and
service requirements. Generally, the health care plans require contributions
from retirees and pay a stated percentage of expenses, reduced by deductibles
and other coverages. Retiree contributions change annually in line with medical
cost trends. These benefits are partially funded by an ESOP, as well as certain
other assets contributed by the Company.
<TABLE>
<CAPTION>
ACCUMULATED BENEFIT OBLIGATION AND
NET LIABILITY
June 30 1996 1995
- --------------------------------------------------------------
<S> <C> <C>
Retirees $ 613 $ 611
Employees eligible to retire 125 133
Other active employees 667 681
- --------------------------------------------------------------
Accumulated benefit
obligation 1,405 1,425
Unrecognized gain 821 458
Plan assets at market value (838) (440)
- ---------------------------------------------------------------
Net liability 1,388 1,443
</TABLE>
<TABLE>
<CAPTION>
BENEFIT EXPENSE
Years Ended June 30 1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned during
the year $ 47 $ 43 $ 60
Interest on accumulated
benefit obligation 102 98 116
Actual return on plan assets (377) (364) (21)
Net amortization and other 239 241 (79)
- ----------------------------------------------------------------------------
Gross benefit expense 11 18 76
Dividends on ESOP
preferred stock (79) (79) (79)
- ----------------------------------------------------------------------------
(68) (61) (3)
</TABLE>
<TABLE>
<CAPTION>
ASSUMPTIONS
Years Ended June 30 1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.5% 7.5% 8%
Long-term rate of return
on plan assets 9% 9% 9%
Initial health care cost
trend rate<F1> 9.5% 10.5% 11%
- ----------------------------------------------------------------------------
<FN>
<F1>
Assumed to decline gradually to 5% in 2006 and thereafter.
</FN>
</TABLE>
The pre-tax effect of a 1% increase in the assumed health care cost
trend rate would increase the accumulated benefit obligations at June 30, 1996
and 1995 by approximately $210 and $200 and increase the respective annual costs
by $27 and $24.
8. EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains the Procter & Gamble Profit Sharing Trust and Employee
Stock Ownership Plan (ESOP) to provide funding for two primary postretirement
benefits described in Note 7: a defined contribution profit sharing plan and
certain U.S. postretirement health care benefits.
The ESOP borrowed $1,000 in 1989, which has been guaranteed by the
Company. The proceeds were used to purchase Series A ESOP Convertible Class A
Preferred Stock to fund a portion of the defined contribution plan. Principal
and interest requirements are $117 per year, paid by the trust from dividends on
the preferred shares and from cash contributions by the Company. The shares are
convertible at the option of the holder into one share of the Company's common
stock. The liquidation value is equal to the issue price of $27.50 per share.
In 1991, the ESOP borrowed an additional $1,000, also guaranteed by the
Company. The proceeds were used to purchase Series B ESOP Convertible Class A
Preferred Stock to fund a portion of retiree health care benefits. Debt service
requirements are $94 per year, funded by preferred stock dividends and cash
contributions from the Company. Each share is convertible at the option of the
holder into one share of the Company's common stock. The liquidation value is
equal to the issuance price of $52.24 per share.
<TABLE>
<CAPTION>
Shares in Thousands 1996 1995 1994
- --------------------------------------------------------------------
<S> <C> <C> <C>
Shares outstanding:
Series A 32,281 33,218 34,269
Series B 19,102 19,142 19,142
</TABLE>
Shares of the ESOP are allocated at original cost based on debt service
requirements. The fair value of the Series A shares serves to reduce the
Company's cash contribution required to fund the profit sharing plan
contributions earned. The Series B shares are considered plan assets of the
other retiree benefits plan. Dividends on all preferred shares, net of related
tax benefit, are charged to retained earnings. The preferred shares held by the
ESOP are considered outstanding from inception for purposes of calculating fully
diluted net earnings per common share.
9. INCOME TAXES
Earnings before income taxes consist of the following:
<TABLE>
<CAPTION>
Years Ended June 30 1996 1995 1994
- ------------------------------------------------------------------
<S> <C> <C> <C>
United States $3,023 $2,683 $2,216
International 1,646 1,317 1,130
- ------------------------------------------------------------------
4,669 4,000 3,346
</TABLE>
The income tax provision consists of the following:
<TABLE>
<CAPTION>
Years Ended June 30 1996 1995 1994
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense
U.S. Federal $ 776 $ 718 $ 574
International 413 399 298
U.S. State & Local 106 57 67
- -----------------------------------------------------------------------
1,295 1,174 939
Deferred tax expense
U.S. Federal 220 124 118
International and other 108 57 78
- -----------------------------------------------------------------------
328 181 196
</TABLE>
Taxes credited to Shareholders' Equity for the years ended June 30,
1996 and 1995 were $3 and $144.
Undistributed earnings of foreign subsidiaries that are considered to
be reinvested indefinitely $5,078 at June 30, 1996.
The effective income tax rate was 34.8%, 33.9% and 33.9% in 1996, 1995
and 1994, respectively, compared to the U.S. statutory rate of 35%.
Deferred income tax assets and liabilities are comprised of the
following:
<TABLE>
<CAPTION>
June 30 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Current deferred tax assets:
Restructuring reserve $ 267 $ 293
Other 331 511
- ------------------------------------------------------------------------
598 804
Non-current deferred tax assets (liabilities):
Depreciation (1,005) (1,164)
Postretirement benefits 492 550
Restructuring reserve -- 170
Loss carryforwards 166 276
Other (291) (363)
- ------------------------------------------------------------------------
(638) (531)
</TABLE>
Included in the above are total valuation allowances of $252 and $263
in 1996 and 1995, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company has various purchase commitments for materials, supplies and items
of permanent investment incidental to the ordinary conduct of business. In the
aggregate, such commitments are not at prices in excess of current market.
Additionally, the Company has a pulp supply agreement entered into in
conjunction with the prior sale of the Company's commercial pulp business. In
the year ended June 30, 1996, the Company increased the reserve related to this
contract by $230.
The Company is subject to various lawsuits and claims with respect to
matters such as governmental regulations, income taxes, and other actions
arising out of the normal course of business. The Company is also subject to
contingencies pursuant to environmental laws and regulations that in the future
may require the Company to take action to correct the effects on the environment
of prior manufacturing and disposal practices. Accrued environmental liabilities
for remediation and closure costs at June 30, 1996 were $100 and, in
management's opinion, such accruals are appropriate based on existing facts and
circumstances. Under the most adverse circumstances, however, this potential
liability could be higher. Current year expenditures were not material.
While the effect on future results of these items is not subject to
reasonable estimation because considerable uncertainty exists, in the opinion of
management and Company counsel, the ultimate liabilities resulting from such
claims will not materially affect the consolidated financial position, results
of operations or cash flows of the Company.
11. SEGMENT INFORMATION
Geographic segments are aligned into four regions: North America -- including
the United States and Canada; Europe, Middle East and Africa; Asia; and Latin
America.
Business segments are aligned as follows:
Laundry and Cleaning - laundry, dishcare, hard surface cleaners and
fabric conditioners. Representative brands include Ariel, Tide, Cascade, Dawn,
Mr. Proper, Downy.
Paper - tissue/towel, feminine hygiene, incontinence, and diapers.
Representative brands include Bounty, Charmin, Always, Whisper, Pampers,
Attends.
Beauty Care - hair care, deodorants, personal cleansing, skin care and
cosmetics and fragrances. Representative brands include Pantene, Vidal Sassoon,
Secret, Safeguard, Olay, Cover Girl, Giorgio Beverly Hills.
Food and Beverage - coffee, peanut butter, juice, snacks, shortening
and oil, baking mixes and commercial services. Representative brands include
Folgers, Jif, Sunny Delight, Pringles, Crisco, Duncan Hines.
Health Care - oral care, gastro-intestinal, respiratory care,
analgesics and pharmaceuticals. Representative brands include Crest, Scope,
Metamucil, Vicks.
Corporate items primarily include interest income and expense, segment
eliminations, and other general corporate income and expense.
The Company's operations are characterized by interrelated raw
materials and manufacturing facilities and centralized research and staff
functions. Accordingly, separate profit determination by segment is dependent
upon assumptions regarding allocations.
<TABLE>
<CAPTION>
GEOGRAPHIC SEGMENTS
Europe,
North Middle East Latin
America and Africa Asia America Corporate Total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales 1996 $17,133 $11,719 $3,790 $2,173 $ 469 $35,284
1995 16,233 11,017 3,617 2,178 437 33,482
1994 15,164 9,738 3,133 2,250 100 30,385
- -------------------------------------------------------------------------------------------------------------
Net Earnings 1996<F1> 2,220 767 222 218 (381) 3,046
1995 1,872 675 199 213 (314) 2,645
1994 1,713 581 132 157 (372) 2,211
- -------------------------------------------------------------------------------------------------------------
Identifiable Assets 1996 11,894 6,895 2,882 1,445 4,614 27,730
1995 11,375 7,446 3,311 1,305 4,688 28,125
1994 10,699 5,576 2,690 1,302 5,268 25,535
- -------------------------------------------------------------------------------------------------------------
<FN>
<F1>Includes a gain on the sale of the Company's share of a health care joint
venture: North America - $120 after tax, Health Care - $185 before tax.
</FN>
</TABLE>
<TABLE>
<CAPTION>
BUSINESS SEGMENTS
Laundry and Beauty Food and Health
Cleaning Paper Care Beverage Care Corporate Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 1996 $10,673 $10,196 $6,914 $4,066 $2,966 $ 469 $35,284
1995 10,222 9,291 6,507 3,988 3,037 437 33,482
1994 9,837 8,282 5,912 3,261 2,993 100 30,385
- ----------------------------------------------------------------------------------------------------------------------------
Earnings Before 1996<F1> 1,869 1,253 966 574 426 (419) 4,669
Income Taxes 1995 1,690 1,125 728 513 358 (414) 4,000
1994 1,512 1,091 570 362 363 (552) 3,346
- ----------------------------------------------------------------------------------------------------------------------------
Identifiable Assets 1996 5,316 6,824 5,317 2,026 3,633 4,614 27,730
1995 5,375 7,082 5,511 2,148 3,321 4,688 28,125
1994 4,777 5,521 4,936 2,049 2,984 5,268 25,535
- ----------------------------------------------------------------------------------------------------------------------------
Capital 1996 643 804 344 186 175 27 2,179
Expenditures 1995 608 731 341 150 295 21 2,146
1994 590 663 247 136 182 23 1,841
- ----------------------------------------------------------------------------------------------------------------------------
Depreciation 1996 316 519 211 101 176 35 1,358
and 1995 279 500 189 108 144 33 1,253
Amortization 1994 252 435 177 113 131 26 1,134
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Includes a gain on the sale of the Company's share of a health care joint
venture: North America - $120 after tax, Health Care - $185 before tax.
</FN>
</TABLE>
<TABLE>
12. QUARTERLY RESULTS (UNAUDITED)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Quarters Ended
-------------------------------------------- Total
Sept. 30 Dec. 31 Mar. 31 Jun. 30 Year
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales 1995-96 $9,027 $9,090 $8,587 $8,580 $35,284
1994-95 8,177 8,485 8,318 8,502 33,482
- -------------------------------------------------------------------------------------------------------
Operating Income 1995-96 1,435 1,352 1,193 835 4,815
1994-95 1,270 1,208 1,064 702 4,244
- -------------------------------------------------------------------------------------------------------
Net Earnings 1995-96 896 836 760 554 3,046
1994-95 792 750 631 472 2,645
- -------------------------------------------------------------------------------------------------------
Net Earnings 1995-96 1.27 1.18 1.07 .77 4.29
Per Common Share 1994-95 1.12 1.06 .88 .65 3.71
- -------------------------------------------------------------------------------------------------------
Fully Diluted Net Earnings 1995-96 1.18 1.11 1.01 .72 4.02
Per Common Share 1994-95 1.05 .99 .81 .63 3.48
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Millions of Dollars Except Per Share Amounts)
1996 1995 1994 1993<F1><F2> 1992
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales 35,284 33,482 30,385 30,498 29,390
Operating Income 4,815 4,244 3,670 521 2,895
Net Earnings/(Loss) 3,046 2,645 2,211 (656) 1,872
Net Earnings Margin 8.6% 7.9% 7.3% -- 6.4%
Net Earnings/(Loss) Per Common Share 4.29 3.71 3.09 (1.11) 2.62
Dividend Per Common Share 1.60 1.40 1.24 1.10 1.025
Research and Development Expense 1,221 1,148 964 868 782
Advertising Expense 3,254 3,284 2,996 2,973 2,693
Total Assets 27,730 28,125 25,535 24,935 24,025
Capital Expenditures 2,179 2,146 1,841 1,911 1,911
Long-Term Debt 4,670 5,161 4,980 5,174 5,223
Shareholders' Equity 11,722 10,589 8,832 7,441 9,071
Cash Flow from Operations 4,158 3,568 3,649 3,338 3,025
- ---------------------------------------------------------------------------------------------------------
<FN>
<F1>Operating income includes a pre-tax charge totaling $2,705 for restructuring.
<F2>Net earnings and net earnings per common share include an after-tax charge
totaling $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.
</FN>
</TABLE>
SHAREHOLDER INFORMATION
<TABLE>
<CAPTION>
COMMON STOCK PRICE RANGE AND DIVIDENDS
Price Range Dividends
- ---------------------------------------------------------------------------------------------------------------------
1995-96 1994-95 1995-96 1994-95
- ---------------------------------------------------------------------------------------------------------------------
Quarter Ended High Low High Low
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
September 30 $78.50 $66.13 $60.88 $53.13 $.40 $.35
December 31 89.50 76.50 64.63 58.25 .40 .35
March 31 90.63 81.13 70.38 60.63 .40 .35
June 30 93.88 79.38 74.25 65.88 .40 .35
</TABLE>
SHAREHOLDER RECORDS
Shareholder records are maintained by the Company. Questions concerning
shareholder accounts, stock transfer or name changes should be directed to the
Shareholder Services address shown at right or by calling 1-800-742-6253.
Stock certificates are valuable and should be safeguarded since replacement
takes time and requires a service charge to the shareholder. If a stock
certificate is lost, stolen or destroyed, notify Shareholder Services promptly.
CERTIFICATE SAFEKEEPING
P&G offers a Certificate Safekeeping Service. You deposit your P&G stock
certificates with the Company and receive a statement. If interested, please
contact Shareholder Services.
ADDRESS CHANGES
Please notify Shareholder Services in writing of any address change. This will
help prevent returned dividend checks and other financial mailings.
DUPLICATE MAILINGS
Financial reports must be mailed for each separate account unless you instruct
us otherwise. To help us reduce costs by discontinuing multiple mailings to your
address, please contact Shareholder Services.
SHAREHOLDER INVESTMENT PROGRAM
This programs allows participants to reinvest their dividends and make optional
cash purchases of Procter & Gamble Common Stock directly through the Program.
For a copy of the prospectus, please contact Shareholder Services.
DIRECT DEPOSIT OF DIVIDENDS
Shareholders of record may have their dividends electronically deposited into
their bank account. If you are interested in this service, please contact
Shareholder Services.
SHAREHOLDERS' MEETING
The next annual meeting of the shareholders will be held on Tuesday, October 8,
1996, at the Company's General Offices, Two Procter & Gamble Plaza, Cincinnati,
OH 45202.
CORPORATE HEADQUARTERS
The Procter & Gamble Company
P.O. Box 599
Cincinnati, Ohio 45201-0599
TRANSFER AGENT/SHAREHOLDER SERVICES
The Procter & Gamble Company
Shareholder Services Department
P.O. Box 5572
Cincinnati, Ohio 45201-5572
REGISTRAR
PNC Bank, Ohio, N.A.
P.O. Box 1198
Cincinnati, Ohio 45201-1198
EXCHANGE LISTING
New York, Cincinnati, Amsterdam, Paris, Basle, Geneva, Lausanne, Zurich,
Frankfurt, Antwerp, Brussels, Tokyo.
SHAREHOLDERS OF COMMON STOCK
There were 216,271 Common Stock shareholders of record, including participants
in the Shareholder Investment Program, as of July 19, 1996.
FORM 10-K
Beginning in October 1996, shareholders may obtain a copy of the Company's 1996
report to the Securities and Exchange Commission on Form 10-K by sending a
request to Mr. Robert J. Thompson, Manager, Shareholder Services, at the above
Shareholder Services address.
COMPANY INFORMATION
Financial information is available 24 hours a day, seven days a week, by dialing
1-800-764-7483.
This report printed on recycled paper made from 50% recycled fiber including 10%
post-consumer waste.
EXHIBIT (21)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
=============================================
Subsidiaries of the Registrant
------------------------------
The Procter & Gamble Company [Ohio]
Arbora Capital, S.A. [Spain]
Arbora Holding, S.A. [Spain]
Ausonia Higiene, S.L. [Spain]
Ausonia Portuguesa-Productos de Higiene, S.A. [Portugal]
Richvest B.V. [Netherlands]
Cotonificio Medical S.A. [Spain]
Deterperu S.A. [Peru]
Deterperu Industrial S.A. [Peru]
The Dover Wipes Company [Ohio]
Fisher Nut Company [Ohio]
The Folger Coffee Company [Ohio]
P&G Consultoria E Servicos Ltda. [Brazil]
FPG Oleochemicals Sdn. Bhd. [Malaysia]
Giorgio Beverly Hills, Inc.[Delaware]
Giorgio Beverly Hills (Europe) Ltd. [United Kingdom]
Industria de Concentrados Crush Limitada [Uruguay]
Industrias Inextra, S.A. [Colombia]
Inversiones Procter & Gamble de Venezuela, C.A. [Venezuela]
Inversiones Industrias Mammi, C.A. [Venezuela]
Midway Holdings Ltd. [Cayman Islands]
Marcvenca Inversiones, C.A. [Venezuela]
Procter & Gamble de Venezuela, C.A. [Venezuela]
Jetco Chemicals, Inc. [Texas]
Karm, S.A. [Liechtenstein]
Millstone Coffee, Inc. [Washington]
Noxell Corporation [Maryland]
Max Factor & Co. [Delaware]
Noxell (Barbados) Limited [Barbados]
Noxell (Panama) S.A. [Panama]
Noxell (Thailand) Limited [Thailand]
Noxell de Venezuela, C.A. [Venezuela]
P&G Brands Comercio S.A. [Brazil]
Procter & Gamble do Brasil S.A. [Brazil]
Phebo do Nordeste S/A [Brazil]
P&G Holding B.V. [Netherlands]
P&G Tissues B.V. [Netherlands]
Richardson-Vicks B.V. [Netherlands]
Richardson-Vicks Overseas Finance N.V. [Netherlands Antilles]
Tempo Italiana SrL [Italy]
Procter & Gamble A.G. [Switzerland]
Betrix (Schweiz) AG [Switzerland]
Detergent Products A.G. [Switzerland]
Modern Industries Company - Dammam [Saudi Arabia]
Modern Industries Company - Jeddah [Saudi Arabia]
Modern Products Company - Jeddah [Saudi Arabia]
Deurocos Cosmetic AG [Switzerland]
Moroccan Modern Industries [Morocco]
Comunivers sa [Morocco]
Pantene A.G. [Switzerland]
Procter & Gamble Austria GmbH [Austria]
The Procter & Gamble Company of South Africa (Proprietary) Limited
[S. Africa]
Procter & Gamble South Africa Proprietary Limited [South Africa]
Procter & Gamble Development Company A.G. Glarus [Switzerland]
Procter & Gamble (East Africa) Limited [Kenya]
Procter & Gamble Egypt [Egypt]
Procter & Gamble (Egypt) Industrial and Commercial Company [Egypt]
Procter & Gamble (Egypt) Manufacturing Company [Egypt]
Procter & Gamble Hellas A.E. (Chemical Industries) [Greece]
Procter & Gamble-Hutchison Ltd. [Hong Kong]
Procter & Gamble (Chengdu) Ltd. [PRC]
Procter & Gamble (China) Ltd. [PRC]
Procter & Gamble Detergent (Guangzhou) Ltd. [PRC]
Procter & Gamble (Guangzhou) Ltd. [PRC]
Procter & Gamble Oral Care (Guangzhou) [China]
Procter & Gamble Lonkey (Guangzhou) Ltd. [PRC]
Procter & Gamble Lonkey (Shaoguan) Ltd. [PRC]
Procter & Gamble Manufacturing (Tianjin) Co. Ltd. [PRC]
Procter & Gamble Manufacturing Detergent (Tianjin) Co. Ltd. [PRC]
Procter & Gamble Manufacturing Paper (Tianjin) Co. Ltd. [PRC]
Procter & Gamble Panda Detergent Co. Ltd Beijing [PRC]
Procter & Gamble Paper (Guangzhou) Ltd. [PRC]
Procter & Gamble Personal Cleansing (Tianjin) Ltd. [PRC]
Procter & Gamble Jamaica Ltd. [Jamaica]
The Procter & Gamble Manufacturing Company of Lebanon, S.A.L.[Lebanon]
Procter & Gamble Marketing A.G. [Switzerland]
Procter & Gamble Maroc [Morocco]
Procter & Gamble Nigeria Limited [Nigeria]
Procter & Gamble Pakistan (Private) Limited [Pakistan]
Procter & Gamble de Panama, S.A. [Panama]
Procter & Gamble Tissues AG [Switzerland]
Procter & Gamble (Yemen) Ltd [Yemen]
Societe Immobiliere Les Colombettes, S.A. [Switzerland]
Procter & Gamble Asia Pacific Ltd. [Hong Kong]
Procter & Gamble Asia Pacific Ltd. Manila Regional
Headquarters [Philippines]
Procter & Gamble Benelux [Belgium]
Procter & Gamble do Brazil, Inc. [Delaware]
Procter & Gamble do Brasil & Cia [Brazil]
The Procter & Gamble Cellulose Company [Delaware]
Procter & Gamble Chile, Inc. [Ohio]
The Procter & Gamble Commercial Company [Ohio]
PROGAM Leasing, Inc. [Puerto Rico]
Procter & Gamble Commercial de Cuba, S.A. [Cuba]
The Procter & Gamble Distributing Company [Ohio]
Procter & Gamble FSC (Barbados) Inc. [Barbados]
Procter & Gamble Eastern Europe, Inc. [Ohio]
Detergenti SA Timisoara [Romania]
Hyginett KFT [Hungary]
Novomoskovskbytkhim [Russia]
Procter & Gamble Bulgaria Ltd. [Bulgaria]
Procter & Gamble Croatia [Croatia]
Procter & Gamble Marketing Federal Republic of Yugoslavia Ltd. [Serbia]
Procter & Gamble Hungary Wholesale Trading Partnership (KKT) [Hungary]
Alvorada BT [Hungary]
Beta BT [Hungary]
Beauty-Care Beauty-Treatment Product Distribution Foreign Trade Ltd.
[Hungary]
Carlos BT [Hungary]
Cleveland Export-Import Trading Ltd. [Hungary]
Diego BT [Hungary]
Elysee BT [Hungary]
Ferraris BT [Hungary]
Frank BT [Hungary]
Helga BT [Hungary]
Olga BT [Hungary]
Pal BT [Hungary]
Pannonia Trading Ltd. [Hungary]
Shampoo-Trade Export Import Trading Ltd. [Hungary]
Stan BT [Hungary]
Transylvania Trading Ltd. [Hungary]
Varadi BT [Hungary]
Procter & Gamble Kereskedelmi BT [Hungary]
Procter & Gamble Marketing & Commercial Activities d.o.o. [Slovenia]
Procter & Gamble Marketing Latvia Ltd. [Latvia]
Procter & Gamble Marketing Romania SRL (Romania)
Procter & Gamble Manufacturing Romania SRL [Romania]
Procter & Gamble Operations Polska - Spolka Akcyjna [Poland]
Procter & Gamble Polska Sp. zo.o [Poland]
Procter & Gamble T.O.O. [Russia]
Procter & Gamble Spol. s.r.o. (Ltd) [Slovak Republic]
Procter & Gamble Ukraine (Ukraine)]
Procter & Gamble Rakona Ltd. [Czech Republic]
Procter & Gamble European Technical Center S.A. [Belgium]
Procter & Gamble European Manufacturing Company [Belgium]
Procter & Gamble Far East, Inc. [Ohio]
Max Factor K.K. [Japan]
American Cosmetics K.K. [Japan]
Betrix Japan K.K. [Japan]
Max Factor Hanbai K.K. [Japan]
Procter & Gamble Asia Pte. Ltd. [Singapore]
Procter & Gamble India Holdings, Inc. [Ohio]
Procter & Gamble Bangladesh Private Ltd. [Bangladesh]
Procter & Gamble Home Products (India) Limited [India]
Procter & Gamble Sri Lanka Private Ltd. [Sri Lanka]
Procter & Gamble Korea Inc. [Korea]
Procter & Gamble NPD, Inc. [Ohio]
Procter & Gamble Taiwan Limited [Taiwan]
Procter & Gamble (Vietnam) Ltd. [Vietnam]
Procter & Gamble FED, Inc. [Delaware]
Procter & Gamble Finance Corporation [Canada]
The Procter & Gamble Global Finance Company [Ohio]
Procter & Gamble Inc. [Ontario, Canada]
Crest Toothpaste Inc. [Canada]
Procter & Gamble Financial Services [Ireland]
Procter & Gamble Mississauga Real Estate Company [Canada]
Procter & Gamble Services Company S.A. [Belgium]
Shulton de Venezuela, C.A. S.A.[Venezuela]
Procter & Gamble Inversiones S.A. [Chile]
Productos Sanitarios S.A. [Chile]
Procter & Gamble Investment Corporation [Canada]
Procter & Gamble Italia, S.p.A. [Italy]
Eurocos Italia S.p.A. [Italy]
Fater S.p.A. [Italy]
Fameccanica Data S.p.A. [Italy]
Procter & Gamble Distributing Company (Europe) [Belgium]
Procter & Gamble Holding S.p.A.[Italy]
Procter & Gamble Pharmaceuticals Italia S.p.A. [Italy]
Procter & Gamble Tissues Italia S.p.A. [Italy]
Progasud S.p.A. [Italy]
Procter & Gamble Pescara Technical Center S.p.A. [Italy]
Procter & Gamble Portugal S.A. (Portugal)
Neoblanc-Produtos de Higiene e Limpeza Lda. [Portugal]
Procter & Gamble Tuketim Mallari Sanayii A.S. [Turkey]
Eczacibasi Procter & Gamble Dagitim Ve Satis AS [Turkey]
Panel Piyasa Arastima Ve Danismanlik AS [Turkey]
PROGAVI S.p.A. [Italy]
Rapik S.p.A. [Italy]
Sanipak Saglik Urunleri Sanayi Ve Ticaret A.S. [Turkey]
Procter & Gamble Limited [U.K.]
European Beauty Products (U.K.) Limited [U.K.]
Max Factor & Co. (U.K.) Ltd. [Bermuda]
Max Factor Limited [U.K.]
Gala Cosmetics & Fragrances Limited [U.K.]
Gala Cosmetics International Limited [U.K.]
Komal Manufacturing Chemists Ltd. [India]
Gala of London Limited [U.K.]
Girl Cosmetics Ltd. [U.K.]
Max Factor Manufacturing Ltd. [U.K.]
Procter & Gamble (Enterprise Fund) Limited [United Kingdom]
Procter & Gamble (Health & Beauty Care) Limited [U.K.]
Noxell Limited [U.K.]
Noxell (Malaysia) Sdn. Bhd. [Malaysia]
Noxell (Singapore) Pte. Ltd. [Singapore]
Procter & Gamble (Cosmetics and Fragrances) Limited [U.K.]
Shulton (Great Britain) Ltd. [U.K.]
Colfax Laboratories (India) Ltd. [India]
Procter & Gamble (NTC) Limited [U.K.]
Procter & Gamble Pharmaceuticals U.K., Limited [U.K.]
Procter & Gamble Product Supply (U.K.) Limited [U.K.]
Procter & Gamble (Properties) Ltd. [U.K.]
The Procter & Gamble Manufacturing Company [Ohio]
Procter & Gamble Manufacturing (Thailand) Limited [Thailand]
Procter & Gamble de Mexico, S.A. de C.V. [Mexico]
Max Factor Mexicana, S.A. de C.V. [Mexico]
The Procter & Gamble Paper Products Company [Ohio]
Procter & Gamble Philippines, Inc. [Philippines]
Progam Realty & Development Corporation [Philippines]
Procter & Gamble Productions, Inc. [Ohio]
Fountain Square Music Publishing Co., Inc. [Ohio]
Riverfront Music Publishing Co., Inc. [Ohio]
Sycamore Productions, Inc. [Ohio]
Procter & Gamble S.A. [France]
Fonciere des 96 et 104 Avenue Charles de Gaulle [France] Laboratoire
Lachartre SNC [France] Procter & Gamble Amiens SNC [France] Procter &
Gamble France S.N.C.[France] Procter & Gamble Hygiene Beaute France
SNC [France] Procter & Gamble Pharmaceuticals France S.A. [France]
Procter & Gamble Tissues France
Laboratoires Sofabel S.A.R.L. [France]
Procter & Gamble Brionne S.N.C. [France]
Procter & Gamble Scandinavia, Inc. [Ohio]
Procter & Gamble Hygien AB [Sweden]
Procter & Gamble Hygien A/S [Norway]
Procter & Gamble Hygien OY [Finland]
The Procter & Gamble U.K. Tissue Company [Ohio]
Productos Sanitarios S.A. [Argentina]
Eguimad S.A. [Argentina]
Topsy S.A. [Argentina]
Promotora de Bienes y Valores, S.A. de C.V. [Mexico]
REVAC 2 Corp. [Delaware]
Richardson-Vicks Inc. [Delaware]
Celtic Insurance Company Limited [Bermuda]
Olay Company, Inc. [Delaware]
P&G do Brasil Comercial Ltda. [Brazil]
Procter & Gamble Australia Proprietary Limited [Australia]
Procter & Gamble (NBD) Pty. Ltd. [Australia]
Procter & Gamble Espana S.A. [Spain]
Procter & Gamble GmbH [Germany]
Beautycos Cosmetic GmbH [Germany]
Betrix Cosmetic GmbH [Germany]
Blendax GmbH [Germany]
Blendax Unterstutzungskasse GmbH [Germany]
Buscher GmbH [Germany]
Cover Girl Cosmetic GmbH [Germany]
Eurocos Cosmetic GmbH [Germany]
Eurocos Cosmetic Warenvertrieb GmbH [Austria]
EURO-Juice G.m.b.H. Import und Vertrieb [Germany]
Euro-Juice y Compania, S. en C. [Spain]
HELIX Speditions-und Lagerei GmbH [Germany]
Medimas Media-und Marketing Service GmbH I.L. [Germany]
Procter & Gamble Central & Eastern Europe Services GmbH [Germany]
Procter & Gamble European Service GmbH [Germany]
Procter & Gamble GmbH & Co. Manufacturing OHG [Germany]
Exquisit - Kosmetik GmbH [Germany]
Noris Transport GmbH [Germany]
Papierhygiene GmbH [Germany]
Tempo AG [Switzerland]
Bess Hygiene AG [Switzerland]
Tempo Holding GmbH I.G. [Germany]
Bess Hygiene GmbH I.G. [Germany]
Unterstutzungskasse der Vereinigte Papierwerke AG Nurnberg
e.V. [Germany]
Procter & Gamble Pharmaceuticals-Germany GmbH [Germany]
Rohm Pharma GmbH [Germany]
Egnaro Arzneimittel GmbH [Germany]
Rohm Pharma GmbH Wien [Austria]
Rolf H. Dittmeyer GmbH [Germany]
SCS Sales + Cosmetic Service GmbH [Germany]
Shulton GmbH [Germany]
Temca Chemische Union Vertriebs GmbH [Germany]
TRAPOFA Leonhard-Speditions GmbH I.L. [Germany]
Trapofa GmbH [Austria]
Procter & Gamble Health & Beauty Care-Europe Limited [U.K.]
Procter & Gamble Health & Beauty Care Sweden AB [Sweden]
Procter & Gamble Health Products, Inc. [Delaware]
Procter & Gamble Hong Kong Limited [Hong Kong]
Procter & Gamble India Limited [India]
Procter & Gamble Interamericas Inc. [Delaware]
Alejandro Llauro E Hijos S.A.I.C. [Argentina]
Compania Quimica S.A. [Argentina]
Procter & Gamble Ecuador Compania Anonima [Ecuador]
Procter & Gamble Interamericas de Costa Rica, S.A. [Costa Rica]
Procter & Gamble Interamericas de Nicaragua, S.A. [Nicaragua]
Procter & Gamble (Malaysia) Sdn. Berhad [Malaysia]
Procter & Gamble Pharmaceuticals, Inc. [Ohio]
Norwich Overseas, Inc. [Delaware]
Norwich Pharmacal Company del Peru [Peru]
Procter & Gamble Pharmaceuticals Australia Pty.
Limited [Australia]
Procter & Gamble Pharmaceuticals Canada, Inc. [Canada]
S.A. Procter & Gamble Pharmaceuticals N.V. [Belgium]
Procter & Gamble Pharmaceuticals Puerto Rico, Inc. [Delaware]
Procter & Gamble (Singapore) Pte. Ltd. [Singapore]
P. T. Procter & Gamble Indonesia [Indonesia]
Richardson-Vicks do Brasil Quimica e Farmaceutica S.A. [Brazil]
Richardson-Vicks Limited [Thailand]
Richardson-Vicks Real Estate Inc. [Ohio]
R-V Chemicals Holdings Ltd. [Ireland]
Procter & Gamble (Ireland) Limited [Ireland]
Procter & Gamble (Manufacturing) Ireland Limited [Ireland]
Vick International Corporation [Delaware]
Vick Nigeria Limited [Nigeria]
Rosemount Corporation [Delaware]
Anjali Corporation [Delaware]
Kangra Valley Enterprises Ltd. [Delaware]
The Mandwa Company, Inc. [Delaware]
Ramalayam Investments Company [Delaware]
Yamuna Investments Company [Delaware]
The Malabar Company [Delaware]
Temple Trees [India]
Sacoma, S.A. [Argentina]
Shulton, Inc. [New Jersey]
Shulton S.A. [Guatemala]
Shulton (New Zealand) Limited [New Zealand]
Shulton (Thailand) Ltd. [Thailand]
Sundor Brands Inc. [Florida]
Sundor Canada Inc. [Delaware]
Sundor Brands Limited [U.K.]
Sycamore Investment Company [Ohio]
Thomas Hedley & Co. Limited [U.K.]
[ ] Brackets indicate state or country of incorporation and do not form part of
corporate name.
Exhibit (23)
------------
Consent of Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
250 East Fifth Street
Post Office Box 5340
Cincinnati, Ohio 45201-5340
Telephone: (513) 784-7100
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ---------------------------------------------------
We consent to the incorporation by reference in the following documents of our
report dated August 8, 1996, incorporated by reference in this Annual Report on
Form 10-K of The Procter & Gamble Company for the year ended June 30, 1996.
1. Amendment No. 2, Post-Effective Amendment No. 2 to Registration Statement No.
33-26514 on Form S-8 for The Procter & Gamble 1983 Stock Plan;
2. Amendment No. 1 on Form S-8 to Registration Statement No. 33-31855 on Form
S-4 (now S-8) for the 1982 Noxell Employees' Stock Option Plan and the 1984
Noxell Employees' Stock Option Plan;
3. Amendment No. 1, Post-Effective Amendment No. 1 to Registration Statement
No. 33-49289 on Form S-8 for The Procter & Gamble 1992 Stock Plan;
4. Registration Statement No. 33-47656 on Form S-8 for The Procter & Gamble
International Stock Ownership Plan;
5. Registration Statement No. 33-49111 on Form S-3 for The Procter & Gamble
Stock Investment Program;
6. Registration Statement No. 33-50273 on Form S-8 for The Procter & Gamble
Commercial Company Employees' Savings Plan;
7. Registration Statement No. 33-51469 on Form S-8 for The Procter & Gamble
1993 non-employee Directors' Stock Plan;
8. Amendment No. 1 to Registration Statement No. 33-55471 on Form S-3 for The
Procter & Gamble Company Debt Securities and Warrants;
9. Registration Statement No. 333-03821 on Form S-3 for The Procter & Gamble
Company Debt Securities and Warrants;
10. Registration Statement No. 333-05715 on Form S-8 for The Procter & Gamble
Profit Sharing Trust and Employee Stock Ownership Plan; and
11. Amendment No. 1, Post-Effective Amendment No. 1 to Registration Statement
No. 33-59257 on Form S-3 for The Procter & Gamble Shareholder Investment
Program.
/S/DELOITTE & TOUCHE LLP
September 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE
FISCAL YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> THE PROCTER & GAMBLE COMPANY
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<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
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<PP&E> 18,112
<DEPRECIATION> 6,994
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<CURRENT-LIABILITIES> 7,825
<BONDS> 4,670
0
1,886
<COMMON> 686
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<INCOME-PRETAX> 4,669
<INCOME-TAX> 1,623
<INCOME-CONTINUING> 3,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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