SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] for the fiscal year ended June 30,
1997, or
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] for the transition period from
________________ to ______________________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below: The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan, The Procter & Gamble Company,
Two Procter & Gamble Plaza, Cincinnati, Ohio 45202.
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: The Procter & Gamble
Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202.
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance With
the Financial Reporting Requirements of ERISA
THE PROCTER & GAMBLE
PROFIT SHARING TRUST AND
EMPLOYEE STOCK OWNERSHIP
PLAN
Financial Statements for the Years Ended
June 30, 1997 and 1996 and Supplemental
Schedules for the Year Ended June 30, 1997
and Independent Auditors' Report
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits, June 30, 1997 and
1996
Statements of Changes in Net Assets Available for Benefits for the
Years Ended June 30, 1997 and 1996
Notes to Financial Statements for the Years Ended June 30, 1997 and
1996
SUPPLEMENTAL SCHEDULES:
Assets Held for Investment, Item 27a of Form 5500, June 30, 1997
Reportable Transactions, Item 27d of Form 5500, for the Year Ended
June 30, 1997
SCHEDULES OMITTED - The following schedules were omitted because of
the absence of conditions under which they are required:
Assets Acquired and Disposed Within the Plan Year
Party-In-Interest Transactions
Obligations In Default
Leases In Default
Deloitte & Touche LLP
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Logo
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250 East Fifth Street Telephone: (513) 784-7100
P.O. Box 5340
Cincinnati, Ohio 45201-5340
INDEPENDENT AUDITORS' REPORT
The Policy Committee of The Procter & Gamble Profit Sharing Trust and Employee
Stock Ownership Plan and The Trustees of The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan
(Plan) as of June 30, 1997 and 1996, and the related statements of changes in
net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at June 30, 1997 and
1996, and the changes in net assets available for benefits for the years then
ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in the audit of
the basic 1997 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic 1997 financial
statements taken as a whole.
/s/DELOITTE & TOUCHE LLP
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Deloitte & Touche LLP
September 10, 1997
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Deloitte Touche
Tohmatsu
International
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THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
JUNE 30, 1997 AND 1996
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
1997 1996
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Short-term investments, plus accrued interest $ 68,310,306 $ 83,737,641
Money market and money bond funds 271,642,318 72,928,751
The Procter & Gamble Company common stock -
62,713,680 shares (cost, $2,019,014,690) at June 30, 1997;
68,724,786 shares (cost, $2,034,232,861) at June 30, 1996 8,858,307,300 6,228,183,731
The Procter & Gamble Company ESOP Convertible
Class A Preferred Stock:
Series A - 31,475,802 shares (cost ($865,586,945) at June 30,
1997; 32,281,484 shares (cost, $887,743,005) at June 30, 1996 4,445,957,032 2,925,509,488
Series B - 19,022,418 shares (cost $993,730,724) at June 30,
1997; 19,102,420 shares (cost, $997,910,639) at June 30, 1996 2,686,916,543 1,731,156,813
Deferred annuities 101,518,979 124,704,573
Loans to participants 60,005,672 60,008,227
--------------- ---------------
Total investments 16,492,658,150 11,226,229,224
--------------- ---------------
ACCOUNTS RECEIVABLE:
Contribution from The Procter & Gamble Company 11,436,240 55,374,034
Dividends receivable (preferred stock) 12,202,000 12,358,000
--------------- ---------------
Total accounts receivable 23,638,240 67,732,034
--------------- ---------------
Total assets 16,516,296,390 11,293,961,258
--------------- ---------------
LIABILITIES:
Interest payable on notes and debentures 64,092,873 64,898,573
Note payable to The Procter & Gamble Company 19,995,826
Notes payable (Series A Preferred Stock) 613,309,444 675,938,329
Debentures (Series B Preferred Stock) 1,000,000,000 1,000,000,000
--------------- ---------------
Total liabilities 1,697,398,143 1,740,836,902
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $14,818,898,247 $ 9,553,124,356
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
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<CAPTION>
1997 1996
<S> <C> <C>
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $ 5,906,380,113 $2,320,432,937
Dividends 263,985,801 261,399,548
Interest on investments 22,000,188 20,632,035
Interest on loans to participants 5,036,269 4,878,056
--------------- --------------
Total investment income 6,197,402,371 2,607,342,576
--------------- --------------
Contributions by The Procter & Gamble Company
(Net of forfeitures of $294,665 in 1997 and $507,739 in 1996) 60,372,467 119,424,034
Employee automatic salary contributions 79,343,226
Employee contributions 5,750,603
--------------- --------------
Total contributions 145,466,296 119,424,034
--------------- --------------
Total additions 6,342,868,667 2,726,766,610
--------------- --------------
DEDUCTIONS:
Distributions to participants:
The Procter & Gamble Company common stock -
4,571,656 shares (cost, $130,612,406) in 1997;
7,031,426 shares (cost, $192,490,376) in 1996 (517,564,652) (573,629,592)
Cash (322,846,434) (224,252,475)
Money bond funds (319,562) (1,503,861)
Deferred annuities (393,950) (139,810)
Automatic dividends paid to participants (79,343,226)
Interest expense (147,503,638) (150,875,657)
--------------- --------------
Total deductions (1,067,971,462) (950,401,395)
--------------- --------------
TRANSFERS TO OTHER TRUSTS - Transfer to
The Procter & Gamble Retiree Benefit Trust (9,123,314) (3,416,234)
--------------- --------------
NET INCREASE IN NET ASSETS 5,265,773,891 1,772,948,981
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 9,553,124,356 7,780,175,375
--------------- --------------
End of year $14,818,898,247 $9,553,124,356
=============== ==============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
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1. PLAN DESCRIPTION
GENERAL - The Procter & Gamble Profit Sharing Trust and Employee Stock
Ownership Plan (Plan) is a defined contribution plan covering
substantially all domestic employees of The Procter & Gamble Company
and certain of its subsidiaries (Company). Prior to July 1, 1996, the
Plan was comprised of three trusts - the Long-Term Incentive Trust
(LIT), the Retirement Distribution Trust (RDT) and the Employee Stock
Ownership Trust (ESOT). The Plan still maintains the separate trust for
the ESOT. Effective July 1, 1996, the Plan merged the LIT into the RDT
and changed the name of the surviving trust to the Retirement Trust
(RT). These financial statements relate to the RT and the ESOT and the
accompanying financial statements for the year ended June 30, 1996
represent the combined LIT and RDT activity. The Plan is funded through
both Company and employee contributions. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan document should be referred to for the complete text
of the Plan agreement.
The ESOT was established by resolution of the board of directors of the
Company on January 10, 1989. During March 1989, the ESOT borrowed
$1,000,000,000 (see Note 8) and, with the proceeds from such
borrowings, purchased 9,090,909 shares of The Procter & Gamble Company
Series A ESOP Convertible Class A Preferred Stock (Series A Preferred
Stock) (see Note 5). The number of shares initially issued increased to
36,363,636 as a result of the two-for-one stock splits effective
October 20, 1989 and May 15, 1992. During March 1997, the ESOT borrowed
an additional $19,995,826 (see Note 8) from the Company as a means of
extending the benefits of the ESOP to participants over a longer
period. These shares of Series A Preferred Stock are utilized to fund a
portion of the Company's annual profit sharing contribution to the
Plan.
In May 1990, the Company's board of directors authorized an amendment
to the Plan to establish a separate account in accordance with Section
401(h) of the Internal Revenue Code to fund a portion of the Company's
postretirement obligation for retired Plan participants satisfying
certain requirements specified in the Plan agreement. This amendment
became effective July 1, 1990. During November 1990, the ESOT borrowed
$1,000,000,000 (see Note 9) and with the proceeds from such borrowings,
purchased 9,571,209 shares of The Procter & Gamble Company Series B
ESOP Convertible Class A Preferred Stock (Series B Preferred Stock)
(see Note 6). The number of outstanding shares increased to 19,142,418
as a result of the two-for-one stock split effective May 15, 1992. In
June 1993 these shares were exchanged for an equal number of shares
with identical terms, except for amended restrictions on transfer (see
Note 6). These shares are only available to fund postretirement
benefits and may not be used for profit sharing purposes.
At June 30, 1997 and 1996, the net assets available to the ESOT to
satisfy a portion of the postretirement benefits were $1,687,360,947
and $731,750,642, respectively. The related postretirement obligations
are not a component of this Plan's obligations but are included in the
financial statements of a separate health and welfare plan sponsored by
the Company.
<TABLE>
The balances in the investments and liabilities held in the ESOT related to
Series A and B Preferred Stock are summarized as follows for the years ended
June 30, 1997 and 1996.
<CAPTION>
June 30, 1997
---------------------------------------------------
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
Short-term investments, plus accrued interest $ 15,773,365 $ 39,944,404 $ 55,717,769
Series A Preferred Stock 4,445,957,032 4,445,957,032
Series B Preferred Stock 2,686,916,543 2,686,916,543
-------------- -------------- --------------
Total investments 4,461,730,397 2,726,860,947 7,188,591,344
Dividends receivable 4,902,000 7,300,000 12,202,000
-------------- -------------- --------------
Total assets 4,466,632,397 2,734,160,947 7,200,793,344
-------------- -------------- --------------
Interest payable on notes and debentures (17,292,873) (46,800,000) (64,092,873)
Note payable to The Procter & Gamble Company (19,995,826) (19,995,826)
Notes payable (Series A Preferred Stock) (613,309,444) (613,309,444)
Debentures (Series B Preferred Stock) (1,000,000,000) (1,000,000,000)
-------------- -------------- --------------
Total liabilities (650,598,143) (1,046,800,000) (1,697,398,143)
-------------- -------------- --------------
ESOT Net assets available for benefits $3,816,034,254 $1,687,360,947 $5,503,395,201
============== ============== ==============
<CAPTION>
June 30, 1996
----------------------------------------------------
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
Short-term investments, plus accrued interest $ 16,443,897 $ 40,062,829 $ 56,506,726
Series A Preferred Stock 2,925,509,488 2,925,509,488
Series B Preferred Stock 1,731,156,813 1,731,156,813
-------------- -------------- --------------
Total investments 2,941,953,385 1,771,219,642 4,713,173,027
Dividends receivable 5,027,000 7,331,000 12,358,000
-------------- -------------- --------------
Total assets 2,946,980,385 1,778,550,642 4,725,531,027
-------------- -------------- --------------
Interest payable on notes and debentures (18,098,573) (46,800,000) (64,898,573)
Note payable to The Procter & Gamble Company
Notes payable (Series A Preferred Stock) (675,938,329) (675,938,329)
Debentures (Series B Preferred Stock) (1,000,000,000) (1,000,000,000)
-------------- -------------- --------------
Total liabilities (694,036,902) (1,046,800,000) (1,740,836,902)
-------------- -------------- --------------
ESOT net assets available for benefits $2,252,943,483 $ 731,750,642 $2,984,694,125
============== ============== ==============
</TABLE>
<TABLE>
The activity in the investments and activity held in the ESOT related to Series
A and B Preferred Stock are summarized as follows for the years ended June 30,
1997 and 1996.
<CAPTION>
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
ESOT net assets for benefits at June 30, 1995 $1,656,077,589 $ 375,785,856 $2,031,863,445
Net appreciation in fair value of investments 612,730,425 359,488,100 972,218,525
Interest on investments and dividends 66,918,930 79,812,920 146,731,850
Contributions by The Procter & Gamble Company 50,370,000 13,680,000 64,050,000
Interest expense (57,275,657) (93,600,000) (150,875,657)
Distributions to participants - cash (363,438) (363,438)
Net transfers among trusts (75,514,366) (3,416,234) (78,930,600)
-------------- -------------- --------------
ESOT net assets available for benefits June 30, 1996 2,252,943,483 731,750,642 2,984,694,125
Net appreciation in fair value of investments 1,609,445,416 964,883,044 2,574,328,460
Interest on investments and dividends 65,153,160 79,515,575 144,668,735
Contributions by The Procter & Gamble Company 31,813,174 13,935,000 45,748,174
Interest expense (53,903,638) (93,600,000) (147,503,638)
Distributions to participants - cash (419,468) (419,468)
Net transfers among trusts (88,997,873) (9,123,314) (98,121,187)
-------------- -------------- --------------
ESOT net assets available for benefits June 30, 1997 $3,816,034,254 $1,687,360,947 $5,503,395,201
============== ============== ==============
</TABLE>
PARTICIPANT ACCOUNTS AND INVESTMENT OPTIONS - Each participant's
account is credited with the allocation of Company contributions (see
Note 10), his or her employee contributions (see Note 11) and Plan
earnings. All such participant accounts are maintained in the RT.
Company contributions are allocated based on participant base earnings
and credit service years. Effective July 1, 1996, the Plan began paying
quarterly dividends earned on the shares of Plan common stock held
within a participant's account directly to the participant (automatic
dividends). The amount of automatic dividends paid to a participant is
subject to IRS limitations. A portion of a participant's pre-tax
compensation is deferred and contributed to his or her Plan account to
offset the automatic dividends (automatic salary contribution). All
automatic salary contributions to the Plan are invested in Company
common stock, unless otherwise directed by the participant.
Additionally, a participant may choose to receive some or all of the
quarterly dividends earned on the shares of Plan common stock within
his or her account in cash. Prior to July 1, 1996, common stock
dividends received by vested participants were maintained in their
account and used to purchase common stock or liquidated at the
participant's discretion with the proceeds used to purchase investments
in the money market and money bond funds. The benefit to which a
participant is entitled is the vested benefit that can be provided from
the participant's account.
Vested participants may allocate the portion of the annual Company
contribution received in cash between the money market and bond funds
and common stock of the Company. In addition, certain participants
retain investments in group deferred annuities; however, contributions
and transfers to this fund are no longer permitted.
COMMON STOCK FUND - A fund investing in shares of Company common stock.
DEFERRED ANNUITIES FUND - A fund investing in guaranteed investment
contracts (Contracts) with Aetna Capital Management, Inc., The
Prudential Asset Management Company, Metropolitan Life Insurance
Company and Travelers Insurance. These Contracts bear interest at rates
ranging from 8.05% to 9.57% with various maturity dates through
December 31, 1999.
MONEY MARKET FUND AND MONEY BOND FUND AND SHORT-TERM INVESTMENTS -
Funds investing in commercial paper, short-term U.S. Government
securities and various short-term bank funds.
<TABLE>
The activity and balances in the investment funds held in the RT are
summarized as follows for the years ended June 30, 1997 and 1996.
<CAPTION>
Money Market Fund
Common Deferred Money Bond Fund
Stock Loan Annuities Short-term
Fund Fund Fund Investments Total
<S> <C> <C> <C> <C> <C>
RT investment balances at
June 30, 1995 $5,355,394,513 $62,194,640 $145,743,057 $ 91,706,814 $5,655,039,024
Investment income 1,464,342,092 4,878,056 11,660,160 7,511,893 1,488,392,201
Contributions by The Procter &
Gamble Company 1,921,661 (1,921,661) 93,272,906 93,272,906
Distributions to participants (573,629,592) (5,142,808) (139,810) (220,250,090) (799,162,300)
Net interfund transfers (98,775,543) (32,558,834) 131,334,377
Net transfers between trusts 78,930,600 (3,416,234) 75,514,366
-------------- ----------- ------------ ------------ --------------
RT investment balances
at June 30, 1996 6,228,183,731 60,008,227 124,704,573 100,159,666 6,513,056,197
Investment income 3,452,794,770 5,036,269 9,637,014 10,937,123 3,478,405,176
Contributions by The Procter &
Gamble Company 345,973 (345,973) 143,655,916 143,655,916
Distributions to participants (517,564,652) (4,692,851) (393,950) (397,396,903) (920,048,356)
Net interfund transfers (403,573,709) (32,428,658) 436,002,367
Net transfers between trusts 98,121,187 (9,123,314) 88,997,873
-------------- ----------- ------------ ------------ --------------
RT investment balances
at June 30, 1997 $8,858,307,300 $60,005,672 $101,518,979 $284,234,855 $9,304,066,806
============== =========== ============ ============ ==============
</TABLE>
VESTING - A participant is fully vested in employee contributions plus
actual earnings thereon in his or her account regardless of years of
service. Vesting in the Company contribution portion of their accounts
plus actual earnings thereon is based on years of service. A
participant is fully vested in Company contributions plus actual
earnings thereon in his or her account after five years of service.
PAYMENTS OF BENEFITS - Effective July 1, 1996, retired or terminated
employees may maintain their accounts within the Plan until reaching
the federal mandatory distribution age (70 1/2). Upon election of a
distribution, a vested participant may elect to receive (1) all cash,
securities and annuities in his or her account or (2) an annuity
purchased for the value of his or her account. In addition to the above
alternatives, a retired vested participant electing a distribution may
also elect to receive annual distributions of cash and securities in
his or her account on a pro-rata basis not to exceed the lesser of 15
years or the participant's life expectancy.
PLAN TERMINATION - Although it has not expressed any intent to do so,
the Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan termination, participants
will become fully vested in their entire account and the net assets of
the Plan will be distributed to the participants in an order of
priority determined in accordance with ERISA and its applicable
regulations and the Plan document.
LOAN PROVISION - The Plan allows participants to borrow funds from
their accounts in certain circumstances up to maximum amounts specified
in the Plan agreement and at an interest rate equal to prime rate plus
1%. Loans are repayable through payroll deductions of principal and
interest over a maximum term of 54 months (114 months if the loan is to
purchase a primary residence).
FORFEITURES - Participants who terminate service prior to vesting
forfeit their account balance. The Company applies forfeited amounts
against the annual contribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements are prepared on the
accrual basis of accounting and the Plan's net assets and transactions
are recorded at fair value. Fair value of the Company common stock is
determined by composite trading prices on the New York Stock Exchange.
The Company's common stock, included in the Plan's statements of net
assets, is recorded at $141.25 and $90.625 per share as of June 30,
1997 and 1996, respectively. Fair value of Series A and Series B
Preferred Stock is determined as the greater of the fair value of the
Company's common stock as defined in the Plan agreement or $27.50
(Series A) and $52.24 (Series B) per share (see Notes 5 and 6).
The Series A and Series B Preferred Stock, included in the Plan's
statement of net assets, is recorded at $141.25 and $90.625 per share
as of June 30, 1997 and 1996, respectively. Deferred annuities are
recorded at contract value, which approximates fair value, except for
certain individual deferred annuities (see Note 7) recorded at cost as
the insurance companies are unable to provide fair values. Other
investments are valued at cost which approximates fair value. Loans to
participants are valued at the unpaid principal balance. The cost of
securities sold, transferred or distributed is determined by the
weighted average cost of securities allocated to the participant's
account.
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 financial statements and accompanying notes. Actual
results could differ from those estimates.
RECLASSIFICATIONS - Certain prior year amounts have been reclassified
to conform with 1997 classifications.
STOCK SPLIT - In July 1997, the Company's Board of Directors approved
a two-for-one stock split that was effective for common and preferred
shareholders of record as of August 22, 1997. The financial statements
and notes have not been adjusted to reflect the stock split for the
years presented.
EXPENSES OF THE PLAN - All administrative expenses of the Plan are paid
by the Company, provided however, that investment expenses shall be
paid by the Plan to the extent that such expenses are not paid by the
Company. Any such expenses paid by the Plan are netted with investment
income on the financial statements and approximated $329,000 and
$239,000, respectively, at June 30, 1997 and 1996.
3. INCOME TAX STATUS
The Company has received a determination letter from the Internal
Revenue Service (IRS) stating that the Plan, as amended, is a qualified
employer's trust under Sections 401(a), 401(h) and 409 of the Internal
Revenue Code (IRC) and, as such, is exempt from federal income taxes
under Section 501(a). The Plan has been amended since receiving the
determination letter. However, the plan administrator believes that
the Plan is designed and currently being operated in compliance with
the applicable provisions of the IRC.
4. PARTY-IN-INTEREST INVESTMENTS AND TRANSACTIONS
The Company is a party-in-interest, as defined by ERISA. During the
Plan year ended June 30, 1997, the Company loaned the ESOT $19,995,286.
This transaction qualifies as party-in-interest; however, there were no
prohibited party-in-interest investments or transactions during the
years ended June 30, 1997 and 1996.
5. SERIES A PREFERRED STOCK
CONVERSION, DISTRIBUTION AND LIQUIDATION RIGHTS - The Series A
Preferred Stock is convertible by the holder (Plan trustee) at the rate
of one share of the Company's common stock for each share of Series A
Preferred Stock subject to the conditions described herein.
Additionally, in order to make a distribution to a participant, the
Series A Preferred Stock can be "put" to the Company at its liquidation
value plus accrued dividends. Hence, upon distribution, participants
will receive $27.50 per Series A Preferred Share, or one share of the
Company's common stock, whichever has a higher value. Participants
must receive distributions of cash or common stock upon election of a
distribution form the Plan. Participants age 55 to 59 may also elect to
convert up to 25% of their Series A Preferred Shares to alternative
investments which are held by the RT. This conversion option increases
to 50% at age 60. The fair value of the Company's common stock as of
June 30, 1997 and 1996 was $141.25 and $90.625, respectively, per
share. During 1997 and 1996, respectively, 805,682 and 936,145 Series A
Preferred Shares were converted into common shares and the former
preferred shares were retired.
ELIGIBILITY - All participants are eligible for allocation of Series A
Preferred Stock.
DIVIDEND RIGHTS - Annual dividends of $2.03 per share are paid
quarterly at $0.5075 per share. In the event that dividends have not
been paid when due, payment or declaration of dividends on securities
subordinated to the Series A Preferred Stock generally is not
permitted.
CALL PROVISIONS - The Series A Preferred Stock may be called at certain
premium amounts as described in the Company's amended articles of
incorporation.
VOTING RIGHTS - Each share is entitled to a number of votes equal to
the number of shares of the Company's common stock into which it is
convertible.
RESTRICTIONS ON TRANSFER - The ESOT or another employee benefit plan of
the Company are the only permissible holders of the Series A Preferred
Stock. Upon transfer to any other holder, shares automatically convert
to shares of the Company's common stock.
ALLOCATION OF SHARES TO PARTICIPANT ACCOUNTS - Shares of the Series A
Preferred Stock are released for allocation to participant accounts in
accordance with the Plan agreement as the borrowings are repaid (see
Note 8). In 1997 and 1996, 2,008,886 and 2,424,242 Series A Preferred
Shares valued at $271,144,505 and $220,662,619, respectively, were
released for allocation to participant accounts of which $247,210,484
and $199,615,223, respectively, was used to fund a portion of the
annual profit sharing contribution. At June 30, 1997 and 1996,
respectively, 17,385,055 and 19,393,942 Series A Preferred Shares were
unallocated.
6. SERIES B PREFERRED STOCK
CONVERSION, DISTRIBUTION AND LIQUIDATION RIGHTS - The Series B
Preferred Stock is convertible at any time by the holder (Plan trustee)
at the rate of one share of the Company's common stock for each share
of Series B Preferred Stock. Additionally, in order to make a
distribution to a participant for retiree medical expenses, the Series
B Preferred Stock can be "put" to the Company at its liquidation price
plus accrued dividends. Hence, upon distribution, participants will
receive $52.24 per Series B Preferred Share, or one share of the
Company's common stock, whichever has a higher value. The fair value of
the Company's common stock as of June 30, 1997 and 1996 was $141.25 and
$90.625, respectively, per share. During 1997 and 1996, 80,002 and
39,998 shares of Series B Preferred Stock were converted to common
stock and the former preferred shares were retired for retiree medical
expenses. The proceeds from the conversion of shares were transferred
to The Procter & Gamble Retiree Benefit Trust to fund postretirement
benefits.
ELIGIBILITY - Active participants who are eligible to retire from the
Company and all participants who have retired under the terms of the
PST are eligible for allocation of Series B Preferred Stock.
DIVIDEND RIGHTS - Annual dividends of $4.12 per share are paid
quarterly at $1.03 per share. In the event that dividends have not been
paid when due, payment or declaration of dividends on securities
subordinated to the Series B Preferred Stock generally is not
permitted.
CALL PROVISIONS - The Series B Preferred Stock may be called at certain
premium amounts as described in the Company's amended articles of
incorporation.
VOTING RIGHTS - Each share is entitled to a number of votes equal to
the number of shares of the Company's common stock into which it is
convertible.
RESTRICTIONS ON TRANSFER - Effective June 29, 1993, all shares of the
Series B Preferred Stock were exchanged for an equal number of shares
of Series B Preferred Stock with amended restrictions on transfer.
Terms were amended to lift the transfer restrictions and to provide the
Company with the right of first refusal on the purchase of Series B
Preferred Stock. In prior years, the ESOT or another employee benefit
plan of the Company were the only permissible holders of the Series B
Preferred Stock. Upon transfer to any other holder, shares
automatically converted to shares of the Company's common stock.
ALLOCATION OF SHARES TO PARTICIPANT ACCOUNTS - Shares of the Series B
Preferred Stock will be released for straight line allocation to
participant retiree health care fund accounts in accordance with the
Plan agreement as interest and/or principal are paid (see Note 9). In
1997 and 1996, 543,296 Series B Preferred shares valued at $73,835,476
and $49,058,057 , respectively, were released for allocation to
participant accounts. At June 30, 1997 and 1996, respectively,
15,841,896 and 16,385,192 and Series B Preferred shares were
unallocated.
7. DEFERRED ANNUITIES
Deferred annuities are recorded at contract value, which approximates
fair value, except for certain individual deferred annuities recorded
at cost as the insurance companies are unable to provide fair values.
Deferred annuities owned by the Plan at June 30 are comprised of the
following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Group deferred annuities (at contract value) $101,412,928 $124,588,522
Individual deferred annuities (at cost) 106,051 116,051
------------ ------------
Total $101,518,979 $124,704,573
============ ============
</TABLE>
8. NOTES PAYABLE (SERIES A PREFERRED SHARES)
<TABLE>
Notes payable consist of the following at June 30:
<CAPTION>
PRINCIPAL
----------------------------------
INTEREST
RATES SERIES MATURITY DATE 1997 1996
<S> <C> <C> <C> <C> <C>
8.14% Series H September 3, 1996 $ 30,689,903
8.14% Series H March 3, 1997 31,938,982
8.17% Series I September 3, 1997 $ 33,238,898 33,238,898
8.17% Series I March 3, 1998 34,596,707 34,596,707
8.17% Series J September 3, 1998 36,009,983 36,009,983
8.17% Series J March 3, 1999 37,480,991 37,480,991
8.33% Series K September 3, 1999 39,012,089 39,012,089
8.33% Series K March 3, 2000 40,636,943 40,636,943
8.33% Series K September 3, 2000 42,329,471 42,329,471
8.33% Series K March 3, 2001 44,092,494 44,092,494
8.33% Series K September 3, 2001 45,928,946 45,928,946
8.33% Series K March 3, 2002 47,841,887 47,841,887
8.33% Series K September 3, 2002 49,834,501 49,834,501
8.33% Series K March 3, 2003 51,910,108 51,910,108
8.33% Series K September 3, 2003 54,072,164 54,072,164
8.33% Series K March 3, 2004 56,324,262 56,324,262
------------ ------------
Total $613,309,444 $675,938,329
============ ============
</TABLE>
These notes are guaranteed by the Company. Repayment of principal and
interest is to be funded through annual contributions by the Company
and dividends received on the Series A Preferred Stock. Interest on the
notes is payable semiannually on September 3 and March 3.
The note payable to the Company consists of principal maturities of
$9,825,959 and $10,169,867 on September 3, 1997 and March 3, 1998,
respectively. Repayment of principal and interest is also funded
through annual contributions by the Company and dividends received on
the Series A Preferred Stock. Interest on the notes is payable
semiannually on September 3 and March 3.
The fair value of the notes payable is estimated based on current rates
for debt of the same remaining maturities and approximated $676,100,000
and $720,815,000, respectively, at June 30, 1997 and 1996.
9. DEBENTURES (SERIES B PREFERRED SHARES)
The debentures bear interest at a rate of 9.36% and are due on January
1, 2021. Mandatory sinking fund payments are required beginning July 1,
2006 and are payable semiannually thereafter. Interest is payable
semiannually on July 1 and January 1. The debentures are guaranteed by
the Company. Repayment of principal and interest is to be funded
through annual contributions by the Company and dividends received on
the Series B Preferred Stock. The fair value of the debentures is
estimated based on current rates for debt of the same remaining
maturities and approximated $1,222,300,000 and $1,200,300,000,
respectively, at June 30, 1997 and 1996.
10. COMPANY CONTRIBUTION
Annual credits to participants' accounts are based on individual base
salary and years of service not exceeding 15% of total compensation of
Plan participants as defined in the Plan agreement. The Company's
contribution is reduced by the value of Series A Preferred Shares
released and available for allocation to ESOT participant accounts in
accordance with terms specified in the Plan agreement (see Note 5). The
Company also funds a portion of principal and interest payments on the
notes payable and debentures through contributions to the ESOT (see
Notes 8 and 9).
During 1997, the Company granted one share of P&G Common Stock to all
employees who had completed a year of service. The additional share
was credited to each participant's account. The amount contributed to
these shares is reported as contributions from the Company in the
Plan's financial statements.
<TABLE>
Company contributions to the Plan for the years ended June 30 are as
follows:
<CAPTION>
1997 1996
<S> <C> <C>
Contribution for debt service $ 45,748,174 $ 64,050,000
Contribution for Annual Fund Credit $ 11,436,240 $ 55,374,034
Contribution for one-share program 3,188,053
------------ ------------
Total $ 60,372,467 $119,424,034
============ ============
</TABLE>
11. EMPLOYEE CONTRIBUTIONS
In addition to the participant automatic salary contribution (see Note
1), beginning April 1, 1997, a participant may also elect to
contribute up to 25% of pre-tax compensation, as defined by the Plan.
Contributions are subject to IRS limitations.
12. INVESTMENTS
<TABLE>
The Plan's investments (at fair value) consist of the following at June
30. Investments that represent five percent or more of the Plan's net
assets are separately identified.
<CAPTION>
1997 1996
<S> <C> <C>
Common stock:
The Procter & Gamble Company -
62,713,680 shares at June 30, 1997;
68,724,786 shares at June 30, 1996 $ 8,858,307,300 $ 6,228,183,731
Preferred stocks:
The Procter & Gamble Company ESOP
Convertible Class A:
Series A - 31,475,802 shares at
June 30, 1997; 32,281,484 shares
at June 30, 1996 4,445,957,032 2,925,509,488
Series B - 19,022,418 shares at
June 30, 1997; 19,102,420 shares at
June 30, 1996 2,686,916,543 1,731,156,813
Short-term investments
plus accrued interest 68,310,306 83,737,641
Money market and bond funds 271,642,318 72,928,751
Deferred annuities 101,518,979 124,704,573
Loans to participants 60,005,672 60,008,227
--------------- ---------------
Total $16,492,658,150 $11,226,229,224
=============== ===============
</TABLE>
13. SUBSEQUENT EVENTS
Effective July 1, 1997, the "Retirement Plus" feature was added to
the Plan. This feature allows a retiree or a vested former employee
with account balances equal to or greater than $5,000 to maintain
some or all of his or her funds in the Plan. If a participant chooses
this option, he or she must maintain at least 50% of their account
balance invested in Company common stock. Also, all common and
preferred stock dividends are paid in cash to the participant. A
participant may elect to distribute all or a portion of his or her
account balance at anytime in accordance with the Plan agreement.
This feature offers the following investment options: Company common
stock, Individual Deferred Annuities, JP Morgan Money Market Fund,
JP Morgan Bond Fund, JP Morgan U.S. Large Company Stock Fund, and
three pre-mixed JP Morgan Funds.
* * * * * *
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
ASSETS HELD FOR INVESTMENT
ITEM 27a of FORM 5500,
JUNE 30, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FAIR
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS:
Wachovia Bank Authorized Demand Notes, 5.7% $ 206,642 $ 206,642
AT&T Corporation Promissory Note, 5.47%, due July 1, 1997 105,452 105,452
BMW U.S. Capital Corporation Promissory Note, 5.54%, due July 1, 1997 19,486,475 19,486,475
Corporate One Credit Union Promissory Note, 5.6%, due July 1, 1997 14,986,000 14,986,000
Wood Street Funding Promissory Note, 5.65%, due July 1, 1997 4,995,292 4,995,292
Ascot Capital Promissory Note, 5.62%, due July 1, 1997 15,940,720 15,940,720
U.S. Treasury Bill Due May 28, 1998 2,851,980 2,851,980
Commercial Paper (Various companies) Interest rates ranging from 5.34% to 5.68%,
dated March 6, 1997 through June 25,
1997, due July 1, 1997 through February 27,
1998 9,737,745 9,737,745
-------------- --------------
Total short-term investments $ 68,310,306 $ 68,310,306
============== ==============
THE PROCTER & GAMBLE CO. COMMON STOCK, NO PAR VALUE $2,019,014,690 $8,858,307,300
============== ==============
THE PROCTER & GAMBLE CO. SERIES A ESOP CONVERTIBLE CLASS A
PREFERRED STOCK, NO PAR VALUE $ 865,586,945 $4,445,957,032
============== ==============
THE PROCTER & GAMBLE CO. SERIES B ESOP CONVERTIBLE CLASS A
PREFERRED STOCK, NO PAR VALUE $ 993,730,724 $2,686,916,543
============== ==============
VARIOUS INSURANCE COMPANIES Deferred Annuities $ 101,518,979 $ 101,518,979
============== ==============
MONEY MARKET AND BOND FUNDS:
Wachovia Bank Money Market Fund $ 249,062,416 $ 249,062,416
JP Morgan Money Bond Fund 20,240,085 20,240,085
Merrill Lynch Government Series Bond Fund 2,339,817 2,339,817
-------------- --------------
Total money market and bond funds $ 271,642,318 $ 271,642,318
============== ==============
LOANS TO PARTICIPANTS Various participants, interest rates ranging
from 6.5% to 11%, various maturities
through December 24, 2006 $ - $ 60,005,672
============== ==============
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
REPORTABLE TRANSACTIONS
ITEM 27d OF FORM 5500
FOR THE YEAR ENDED JUNE 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COST OF
DESCRIPTION OF ASSET PURCHASES (A) SALES SALES
<S> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS:
None
SERIES TRANSACTIONS (B):
Wachovia Bank Diversified
Trust Fund $741,354,091 (165) $741,354,091 (87) $741,354,091
<FN>
NOTES:
(A) The market value of all assets acquired at the time of acquisition is equal
to the purchase price.
(B) The numbers in parentheses represent the number of transactions.
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
TRUSTEES (OR OTHER PERSONS WHO ADMINISTER THE EMPLOYEE BENEFIT PLAN) HAVE DULY
CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO
DULY AUTHORIZED.
The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan
/S/WILLIAM J. O'NEIL
Date: December 19, 1997 ---------------------------------------
William J. O'Neil
Member, Policy Committee
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche
DELOITTE &
TOUCHE LLP
- ------------------- ------------------------------------------------------
250 East Fifth Street Telephone: (513) 784-7100
P.O. Box 5340
Cincinnati, Ohio 45201-5340
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement No.
33-49081 of The Procter & Gamble Company on Form S-8 of our report dated
September 10, 1997 appearing in this Annual Report on Form 11-K of The Procter &
Gamble Profit Sharing Trust and Employee Stock Ownership Plan for the year ended
June 30, 1997.
/s/DELOITTE & TOUCHE LLP
- --------------------------
Deloitte & Touche LLP
Cincinnati, Ohio
December 19, 1997
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
