RULE NO. 424(b)(2)
REGISTRATION NO. 333-30949
SUPPLEMENT NO. 1 DATED NOVEMBER 5, 1998
TO PROSPECTUS SUPPLEMENT DATED OCTOBER 30, 1998
TO PROSPECTUS DATED JULY 17, 1997.
$75,000,000
The Procter & Gamble Company
Floating Rate Notes due November 4, 2048
--------------
The definition of "Adjusted LIBOR Rate" on page 5 of the Prospectus
Supplement is amended and restated in its entirety as follows:
"Adjusted LIBOR Rate" means the LIBOR Rate less 29 basis points. "LIBOR
Rate" is the rate for deposits in U.S. dollars for the 3-month period which
appears on "Telerate Page 3750" at approximately 11:00 A.M., London time, on the
second Business Day prior to the applicable Interest Reset Date; provided that
the interest rate in effect from the date of issue to the first Interest Reset
Date will be the Adjusted LIBOR Rate as calculated on the second Business Day
prior to the date of issue. If such rate does not so appear on the Telerate Page
3750, the rate will be determined on the basis of the rates at which deposits in
U.S. dollars are offered by four major banks in the London interbank market
(selected by the Calculation Agent) at approximately 11:00 a.m., London time, on
the second Business Day prior to the applicable Interest Reset Date to prime
banks in the London interbank market for a period of three months commencing on
that Interest Reset Date and in a principal amount equal to an amount not less
than $1,000,000 that is representative for a single transaction in such market
at such time. In such case, the Calculation Agent will request the principal
London office of each of the aforesaid major banks to provide a quotation of
such rate. If at least two such quotations are provided, the rate for that
Interest Reset Date will be the arithmetic mean of the quotations, and, if fewer
than two quotations are provided as requested, the rate for that Interest Reset
Date will be the arithmetic mean of the rates quoted by major banks in the City
of New York, selected by the Calculation Agent, at approximately 11:00 A.M., New
York City time, on the second Business Day prior to the applicable Interest
Reset Date for loans in U.S. dollars to leading European banks for a period of
three months commencing on that Interest Reset Date and in a principal amount
equal to an amount not less than $1,000,000 that is representative for a single
transaction in such market at such time. "Telerate Page 3750" means the display
page so designated on the Dow Jones Telerate Service (or such other page as may
replace such page on that service for the purpose of displaying London interbank
offered rates of major banks). The interest rate on the Notes will in no event
be higher than the maximum rate permitted by New York law as the same may be
modified by United States law of general application.
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 17, 1997.
$75,000,000
THE PROCTER & GAMBLE COMPANY
FLOATING RATE NOTES DUE NOVEMBER 4, 2048
--------------
The Company will pay interest on the Notes on February 4, May 4, August 4
and November 4 of each year. The first such payment will be made on February 4,
1999. Interest on each Note will be reset on February 4, May 4, August 4 and
November 4 of each year based on the Adjusted LIBOR Rate. The Notes will be
issued only in denominations of $1,000 and integral multiples of $1,000.
The Company has the option to redeem the Notes at any time on or after
November 4, 2028, at the redemption prices specified herein, plus interest
accrued on such Notes to the date the Notes are redeemed. The Company may redeem
all or a portion of the Notes.
In addition, holders of the Notes may require the Company to repurchase all
or a portion of the Notes on November 4 of every third year, beginning on
November 4, 2008, at the redemption prices specified herein, plus interest
accrued on such Notes to the date the Notes are repurchased.
Upon the occurrence of a Tax Event, the Company will have the right to
shorten the maturity of the Notes to the extent required so that the interest
paid on the Notes will be deductible for United States federal income tax
purposes. The amount payable on such Notes on such new maturity date will be
equal to 100% of the principal amount of such notes plus interest accrued on
such Notes to the date such Notes mature on such new maturity date.
--------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
<TABLE>
<CAPTION>
Per Note Total
-------- -----
<S> <C> <C>
Initial public offering price .............. 100% $75,000,000
Underwriting discount ...................... 1% $ 750,000
Proceeds, before expenses, to the Company .. 99% $74,250,000
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from November 4, 1998 and
must be paid by the purchaser if the Notes are delivered after November 4, 1998.
--------------
The underwriters are severally underwriting the Notes being offered. The
underwriters expect to deliver the Notes in book-entry form only through the
facilities of The Depository Trust Company against payment in New York, New York
on November 4, 1998.
GOLDMAN, SACHS & CO. SALOMON SMITH BARNEY
--------------
Prospectus Supplement dated October 30, 1998.
THE COMPANY
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 otherwise requires,
all references to the Company are to The Procter & Gamble Company and its
consolidated subsidiaries.
The Company is managed in four operating segments: North America, which
includes the United States and Canada; Europe, Middle East and Africa; Asia; and
Latin America. The following is supplemental information on product groups,
aligned as follows: Laundry and Cleaning, Paper, Beauty Care, Food and Beverage,
and Health Care:
. The Laundry and Cleaning segment includes laundry, dishcare, hard surface
cleaners and fabric conditioners. Representative brands include Ariel,
Tide, Cascade, Dawn, Fairy and Downy.
. The Paper segment includes tissue/towel, feminine protection and diapers.
Representative brands include Bounty, Charmin, Always, Whisper, Pampers
and Pampers Wipes.
. The Beauty Care segment includes hair care, deodorants, personal
cleaning, skin care and cosmetics and fragrances. Representative brands
include Pantene, Vidal Sassoon, Secret, Safeguard, Olay and Cover Girl.
. The Food and Beverage segment includes coffee, peanut butter, juice,
snacks, shortening and oil, and commercial services. Representative
brands include Folgers, Jif, Sunny Delight, Pringles, Olean and Crisco.
. The Health Care segment includes oral care, gastrointestinal, respiratory
care and pharmaceuticals. Representative brands include Crest, Scope,
Metamucil and Vicks.
The Laundry category and the Diaper category constituted 20% and 12% of
consolidated 1998 fiscal-year sales, respectively.
In the United States, the Company owned and operated manufacturing
facilities at 38 locations in 22 states as of June 30, 1998. In addition, it
owned and operated 97 manufacturing facilities in 46 other countries as of such
date. Laundry and Cleaning products were produced at 44 of these locations;
Paper products at 51; Health Care products at 26; Beauty Care products at 45;
and Food and Beverage products at 19.
The Company's principal executive offices are located at One Procter &
Gamble Plaza, Cincinnati, Ohio 45202, and its telephone number is (513)
983-1100.
RECENT DEVELOPMENTS
On October 22, 1998 The Procter & Gamble Company announced basic net
earnings per share for the July-September quarter of $.86, a nine percent
increase over the same quarter of the prior year. Net earnings for the quarter
were $1.17 billion, a seven percent increase over the same quarter last year.
Worldwide net sales for the quarter were $9.5 billion, a two percent
increase over the same quarter of the prior year. Weaker currencies, primarily
in Asia and Latin America, reduced sales by three percent. Unit volume was flat,
with the difference in sales and volume growth caused primarily by price
increases and favorable product mix.
Regional results for the current quarter, compared to the same period of
the prior year, are as follows:
. NORTH AMERICA REGION. North America sales for the quarter grew one
percent on a one percent unit volume decline. Sales growth was driven by
improved pricing in laundry & cleaning and paper products. The decline in
volume was due to the prior year divestiture of Duncan Hines, and
increased competition in the hair care and oral care markets.
Importantly, the laundry & cleaning business benefited from strength in
fabric care behind the launch of Febreze, and the paper business achieved
gains behind growth in diapers. In addition, excluding the impact of the
divestiture of Duncan Hines, food & beverage unit grew behind a broad
recovery in coffee driven by lower commodity costs. The region achieved
an 11 percent net earnings increase due primarily to improved pricing in
laundry and paper products.
. EUROPE, MIDDLE EAST, AND AFRICA REGION. Net sales for Europe, Middle
East, and Africa increased four percent on a two percent decline in
unit volume. Sales outpaced volume behind increased pricing, primarily in
laundry and paper products. The region's unit volume was negatively
impacted by Central and Eastern Europe, as a result of the economic
crisis in Russia. Volumes were also soft in laundry & cleaning, due to
increased competitive initiatives. Food & beverage achieved strong volume
gains behind the strength of Pringles in Western Europe and the launch of
Sunny Delight in the United Kingdom. The paper products business was up
slightly behind continued growth in Bounty and Baby Wipes. The region's
net earnings grew eight percent, primarily behind pricing-driven
improvements in gross margins and cost reduction efforts.
. ASIA REGION. Asia first quarter unit volume increased two percent,
primarily behind the prior year acquisition of the Ssangyong Paper
Company in Korea and improvement in the base business in Japan, which
grew despite the country's economic difficulties, and increased market
share behind product initiatives, primarily in beauty care and laundry &
cleaning. Volume continues to be negatively impacted by the recession and
lower consumption in much of the region. Sales fell seven percent due to
the effects of unfavorable exchange rates. Net earnings increased
11 percent versus the same quarter last year, as improved pricing, cost
reduction, and the favorable settlement of a patent litigation dispute
offset the continuing impact of economic difficulties in the region.
. LATIN AMERICA REGION. Latin America unit volume for the quarter grew
15 percent, led by Mexico, which benefited from the prior year
acquisition of the Loreto y Pena paper business and growth in its base
business. Importantly, the region's laundry & cleaning business
strengthened behind accelerated product innovation. The region's sales
were up 13 percent, as increased pricing largely offset the effects of
unfavorable exchange rates. Earnings for the region were up 21 percent,
reflecting effective balance sheet management in the face of the peso
devaluation in Mexico.
* * *
<TABLE>
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Amounts in Millions Except Per Share Amounts
<CAPTION>
Three Months Ended September 30
-------------------------------------
1998 1997 % Change
<S> <C> <C> <C>
Net Sales $9,510 $9,355 +2%
Net Earnings 1,167 1,087 +7%
Net Earnings Per Common Share:
- Basic .86 .79 +9%
- Diluted .80 .73 +10%
Average Common Shares Outstanding 1,332.4 1,348.3
</TABLE>
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods indicated:
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------
1994 1995 1996 1997 1998
------- -------- ------- -------- ------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges<F1>.......... 6.6 7.7 9.0 10.9 9.9
- ------------------------------------
<FN>
<F1>
Earnings used to compute this ratio are earnings before income taxes and
before fixed charges (excluding interest capitalized during the period)
and after deducting undistributed earnings of equity method investees.
Fixed charges consist of interest, whether expensed or capitalized,
amortization of debt discount and expense, and one-third of all rent
expense (considered representative of the interest factor).
</FN>
</TABLE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set forth
in the Prospectus, to which description reference is hereby made. Certain
defined terms in the Indenture are capitalized herein. Whenever a defined term
is referred to and not herein defined, the definition thereof is contained in
the Indenture.
GENERAL
The Notes offered hereby will be limited to $75,000,000 aggregate principal
amount and will be issued under the Indenture. The Notes will mature on November
4, 2048. The Notes are not entitled to any sinking fund. The Notes are subject
to defeasance and covenant defeasance.
The Notes will be issued only in registered, book-entry form, in
denominations of $1,000 and any integral multiple thereof.
INTEREST
Interest will accrue from November 4, 1998 at the Adjusted LIBOR Rate (as
defined below) and will be payable quarterly in arrears on February 4, May 4,
August 4 and November 4 of each year (each such date is herein called an
"Interest Payment Date"), commencing February 4, 1999. Interest will be payable
to the person in whose name the Note (or one or more predecessor Notes) is
registered at the close of business on the January 20, April 19, July 20 and
October 20, as the case may be, next preceding the related Interest Payment
Date. Interest is payable from the date of issue of the Notes or from the most
recent date to which interest on such Note has been paid or duly provided for,
until the principal amount of the Note is paid or duly made available for
payment. The Adjusted LIBOR Rate will be reset quarterly on February 4, May 4,
August 4 and November 4 of each year (each such date, an "Interest Reset Date").
"Adjusted LIBOR Rate" means the LIBOR Rate less 29 basis points. "LIBOR
Rate" is the rate for deposits in U.S. dollars for the 3-month period which
appears on "Telerate Page 3750" at approximately 11:00 A.M., London time, on the
second Business Day prior to the applicable Interest Reset Date; provided that
the interest rate in effect from the date of issue to the first Interest Reset
Date will be the Adjusted LIBOR Rate as calculated on the date of issue. If such
rate does not so appear on the Telerate Page 3750, the rate will be determined
on the basis of the rates at which deposits in U.S. dollars are offered by four
major banks in the London interbank market (selected by the Calculation Agent)
at approximately 11:00 a.m., London time, on the second Business Day prior to
the applicable Interest Reset Date to prime banks in the London interbank market
for a period of three months commencing on that Interest Reset Date and in a
principal amount equal to an amount not less than $1,000,000 that is
representative for a single transaction in such market at such time. In such
case, the Calculation Agent will request the principal London office of each of
the aforesaid major banks to provide a quotation of such rate. If at least two
such quotations are provided, the rate for that Interest Reset Date will be the
arithmetic mean of the quotations, and, if fewer than two quotations are
provided as requested, the rate for that Interest Reset Date will be the
arithmetic mean of the rates quoted by major banks in the City of New York,
selected by the Calculation Agent, at approximately 11:00 A.M., New York City
time, on the second Business Day prior to the applicable Interest Reset Date for
loans in U.S. dollars to leading European banks for a period of three months
commencing on that Interest Reset Date and in a principal amount equal to an
amount not less than $1,000,000 that is representative for a single transaction
in such market at such time. "Telerate Page 3750" means the display page so
designated on the Dow Jones Telerate Service (or such other page as may replace
such page on that service for the purpose of displaying London interbank offered
rates of major banks). The interest rate on the Notes will in no event be higher
than the maximum rate permitted by New York law as the same may be modified by
United States law of general application.
In the case where any Interest Payment Date or the maturity date of the
Notes does not fall on a Business Day, payment of interest or principal
otherwise payable on such day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date or the maturity date of the Notes, as the case may
be, unless the next succeeding Business Day is in the next succeeding calendar
month, in which case such Interest Payment Date shall be the immediately
preceding Business Day. The term "Business Day" shall mean any day other than a
Saturday or Sunday or a day on which banking institutions in New York City or
London are authorized or obligated by law or executive order to close.
The Calculation Agent will, upon the request of the holder of any Note,
provide the interest rate then in effect. The Calculation Agent is The First
National Bank of Chicago until such time as the Company appoints a successor
Calculation Agent. All calculations made by the Calculation Agent in the absence
of manifest error shall be conclusive for all purposes and binding on the
Company and the holders of the Notes. The Company may appoint a successor
Calculation Agent with the written consent of the Trustee, which consent shall
not be unreasonably withheld.
Interest on the Notes will be computed and paid on the basis of a 360-day
year and the actual number of days in each quarterly interest payment period.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time, at the option of the Company, in
whole or in part, in amounts of $1,000 or an integral multiple thereof at the
following redemption prices (in each case expressed as a percentage of the
principal amount), if redeemed during the 12-month period beginning on
November 4 of any of the following years:
REDEMPTION
YEAR PRICE
---- ----------
2028............................. 105.0%
2029............................. 104.5%
2030............................. 104.0%
2031............................. 103.5%
2032............................. 103.0%
2033............................. 102.5%
2034............................. 102.0%
2035............................. 101.5%
2036............................. 101.0%
2037............................. 100.5%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption.
In the event of any redemption of less than all the outstanding Notes, the
particular Notes (or portions thereof in integral multiples of $1,000) to be
redeemed shall be selected by the Trustee by such method as the Trustee shall
deem fair and appropriate.
REPAYMENT AT OPTION OF HOLDER
The Notes will be repayable at the option of the holder thereof, in whole
or in part, on the repayment dates and at the repayment prices (in each case
expressed as a percentage of the principal amount) set forth in the following
table:
REDEMPTION
DATE PRICE
---- ----------
November 4, 2008................. 99.00%
November 4, 2011................. 99.25%
November 4, 2014................. 99.50%
November 4, 2017................. 99.75%
and on November 4 of every third year thereafter at 100% of the principal
amount, through and including November 4, 2047, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).
In order for a Note to be repaid, the Paying Agent must receive, at least
30 but not more than 60 calendar days prior to the optional repayment date, (i)
the Note with the form entitled "Option to Elect Repayment" on the reverse of
the Note duly completed or (ii) a telegram, facsimile transmission or a letter
from a member of a national securities exchange or a member of the National
Association of Securities Dealers, Inc. (the "NASD") or a commercial bank or
trust company in the United States which must set forth the name of the holder
of the Note, the principal amount of the Note, the principal amount of the Note
to be repaid, the certificate number or a description of the tenor and terms of
the Note, a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Note to be repaid, together with the duly
completed form entitled "Option to Elect Repayment" on the reverse of the Note,
will be received by the Paying Agent not later than the fifth Business Day after
the date of such telegram, facsimile transmission or letter. The repayment
option may be exercised by the holder of a Note for less than the entire
principal amount of the Note but, in that event, the principal amount of the
Note remaining outstanding after repayment must be in an authorized
denomination.
CONDITIONAL RIGHT TO SHORTEN MATURITY
The Company intends to deduct interest paid on the Notes for United States
federal income tax purposes. However, there have been proposed tax law changes
over the past two years that, among other things, would have prohibited an
issuer from deducting interest payments on debt instruments with a maturity of
more than 40 years. While none of these proposals has become law, there can be
no assurance that similar legislation affecting the Company's ability to deduct
interest paid on the Notes will not be enacted in the future or that any such
legislation would not have a retroactive effective date. As a result, there can
be no assurance that a Tax Event (as defined below) will not occur.
Upon the occurrence of a Tax Event, the Company, without the consent of the
holders of the Notes, will have the right to shorten the maturity of the Notes
to the minimum extent required, in the opinion of nationally recognized
independent tax counsel, such that, after the shortening of the maturity,
interest paid on the Notes will be deductible for United States federal income
tax purposes or, if such counsel is unable to opine definitively as to such a
minimum period, the minimum extent so required to maintain the Company's
interest deduction to the extent deductible under current law as determined in
good faith by the Board of Directors of the Company, after receipt of an opinion
of such counsel regarding the applicable legal standards. In such case, the
amount payable on such Notes on such new maturity date will be equal to 100% of
the principal amount of such Notes plus interest accrued on such Notes to the
date such Notes mature on such new maturity date. There can be no assurance that
the Company would not exercise its right to shorten the maturity of the Notes on
the occurrence of such a Tax Event or as to the period by which such maturity
would be shortened. In the event that the Company elects to exercise its right
to shorten the maturity of the Notes on the occurrence of a Tax Event, the
Company will mail a notice to each Holder of Notes by first-class mail not more
than 60 days after the occurrence of such Tax Event, stating the new maturity
date of the Notes. Such notice shall be effective immediately upon mailing.
The Company believes that the Notes should constitute indebtedness for
United Stated federal income tax purposes under current law and, in that case,
an exercise of its right to shorten the maturity of the Notes should not be a
taxable event to Holders for such purposes. Prospective investors should be
aware, however, that the Company's exercise of its right to shorten the maturity
of the Notes will be a taxable event to Holders for United States federal income
tax purposes if the Notes are treated as equity for United States federal income
tax purposes before the maturity is shortened, assuming that the Notes of
shortened maturity are treated as debt for such purposes.
"Tax Event" means that the Company shall have received an opinion of
nationally recognized independent tax counsel to the effect that, as a result of
(a) any amendment to, clarification of, or change (including any announced
prospective amendment, clarification or change) in any law, or any regulation
thereunder, of the United States, (b) any judicial decision, official
administrative pronouncement, ruling, regulatory procedure, regulation, notice
or announcement, including any notice or announcement of intent to adopt or
promulgate any ruling, regulatory procedure or regulation (any of the foregoing,
an "Administrative or Judicial Action"), or (c) any amendment to, clarification
of, or change in any official position with respect to, or any interpretation
of, an Administrative or Judicial Action or a law or regulation of the United
States that differs from the theretofore generally accepted position or
interpretation, in each case, occurring on or after November 4, 1998, there is
more than an insubstantial increase in the risk that interest paid by the
Company on the Notes is not, or will not be, deductible, in whole or in part, by
the Company for United States federal income tax purposes.
NOTES USED AS QUALIFIED REPLACEMENT PROPERTY
Prospective investors seeking to treat the Notes as "qualified replacement
property" for purposes of section 1042 of the Internal Revenue Code of 1986, as
amended (the "Code"), should be aware that section 1042 requires the issuer to
meet certain requirements in order for the Notes to constitute qualified
replacement property. In general, qualified replacement property is a security
issued by a domestic corporation that did not, for the taxable year preceding
the taxable year in which such security was purchased, have "passive investment
income" in excess of 25 percent of the gross receipts of such corporation for
such preceding taxable year (the "Passive Income Test"). For purposes of the
Passive Income Test, where the issuing corporation is in control of one or more
corporations, all such corporations are treated as one corporation (the
"Affiliated Group") for the purposes of computing the amount of passive
investment income for purposes of section 1042. The Company believes that less
than 25 percent of its Affiliated Group's gross receipts is passive investment
income for the taxable year ending June 30, 1998. In making this determination,
the Company has made certain assumptions and used procedures which it believes
are reasonable. No assurance can be given as to whether the Company will
continue to meet the Passive Income Test. It is, in addition, possible that the
IRS may disagree with the manner in which the Company has calculated the
Affiliated Group's gross receipts (including the characterization thereof) and
passive investment income and the conclusions reached herein. Prospective
purchasers of the Notes are advised to consult with their own tax advisors with
respect to these and other tax matters relating to the Notes.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will be represented by one or more global
securities (the "Book-Entry Securities"). Each global security representing the
Book-Entry Securities will be deposited with, or on behalf of, The Depository
Trust Company, as Depository (the "Depository"), and registered in the name of a
nominee of the Depository. Book-Entry Securities will not be exchangeable at the
option of the Holder for certificated Notes and, except under the circumstances
described below, will not otherwise be issuable in definitive form.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depository was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depository's participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own the Depository. Access to the Depository's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Upon issuance of the Book-Entry Securities, the Depository will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Notes represented by such Book-Entry Securities to the accounts
of institutions that have accounts with the Depository or its nominees
("participants"). The accounts to be credited shall be designated by the
Underwriters. Ownership of beneficial interests in the Book-Entry Securities
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Book-Entry Securities
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depository or its nominee (with respect to
participants' interests) for such Book-Entry Securities or by participants or
persons that hold through participants. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer beneficial
interests in the Book-Entry Securities.
So long as the Depository, or its nominee, is the registered owner of the
Book-Entry Securities, the Depository or such nominee, as the case may be, will
be considered the sole owner or holder of the Book-Entry Securities for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in such Book-Entry Securities will not be entitled to have the Notes
represented by such Book-Entry Securities registered in their names, will not
receive or be entitled to receive physical delivery of Notes in definitive form
and will not be considered the owners or holders thereof under the Indenture.
Principal and interest payments on Book-Entry Securities registered in the
name of or held by the Depository or its nominee will be made to the Depository
or its nominee, as the case may be, as the registered owner or holder of the
Book-Entry Securities. Neither the Company, the Trustee nor any paying agent for
such Book-Entry Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in Book-Entry Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depository, upon receipt of any payments or
principal or interest in respect of the Book-Entry Securities, will credit
immediately the accounts of the related participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Book-Entry Securities as shown on the records of the Depository. The
Company also expects that payments by participants to owners of beneficial
interests in such Book-Entry Securities held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
Unless and until it is exchanged, in whole or in part, for Notes in
definitive form in accordance with the terms of the Notes, the Book-Entry
Securities may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor of the Depository or a nominee of such successor. If the Depository is
at any time unwilling or unable to continue as depository or if at any time the
Depository ceases to be a clearing agency registered under the Exchange Act, and
a successor Depository is not appointed by the Company within 90 days, the
Company will issue Notes in definitive registered form in exchange for the
Book-Entry Securities. In addition, the Company may at any time and in its sole
discretion determine not to have any Notes represented by one or more Book-Entry
Securities and, in such event, will issue Notes in definitive registered form in
exchange for all Book-Entry Securities. Further, if an event of default, or an
event which, with the giving of notice or lapse of time, or both, would
constitute an event of default under the Indenture occurs and is continuing with
respect to the Notes, of if the Company so specifies with respect to the Notes,
the Depository may exchange the Book-Entry Securities for Notes in definitive
registered form. In any such instance, an owner of a beneficial interest in a
Book-Entry Security will be entitled to physical delivery in definitive form of
Notes represented by such Book-Entry Security in principal amount equal to such
beneficial interest and to have such Notes registered in its name.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Any secondary market trading activity in the Notes will be required to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading activity
(if any) in the Notes.
UNDERWRITING
Goldman, Sachs & Co. and Salomon Smith Barney Inc. (the "Underwriters") and
the Company have entered into a pricing agreement, which incorporates by
reference an underwriting agreement, with respect to the Notes. Subject to
certain conditions, the Underwriters have agreed to purchase the number of Notes
indicated in the following table.
Principal
---------
Underwriter Amount of Notes
----------- ---------------
Goldman, Sachs & Co. .................... $60,000,000
Salomon Smith Barney Inc................. 15,000,000
-----------
Total................................ $75,000,000
===========
Notes sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. If all the Notes are not sold at the initial offering price, the
Underwriters may change the offering price and the other selling terms.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater aggregate
principal amount of Notes than it is required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the Notes
while the offering is in process.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
The Company estimates that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $60,000.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
Goldman, Sachs & Co. was the lead manager in September 1998 of an offering
by the Company of its 5.25% Notes due 2003 and provides and may provide
investment banking services to the Company and its affiliates in the ordinary
course of business. Salomon Smith Barney Inc. and its affiliates provide or may
provide commercial banking and/or investment banking services to the Company and
its affiliates in the ordinary course of business.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by Elizabeth
M. Rutherford, Esq., Senior Counsel, The Procter & Gamble Company, One Procter &
Gamble Plaza, Cincinnati, Ohio 45202, and for the Underwriters by Fried, Frank,
Harris, Shriver & Jacobson (a partnership including professional corporations),
One New York Plaza, New York, New York 10004. Ms. Rutherford may rely as to
matters of New York law upon the opinion of Fried, Frank, Harris, Shriver &
Jacobson, and Fried, Frank, Harris, Shriver & Jacobson may rely as to matters of
Ohio law upon the opinion of Ms. Rutherford. Fried, Frank, Harris, Shriver &
Jacobson from time to time performs legal services for the Company.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048; and Suite
1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Information relating to the operation of the public reference
facility may be obtained by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission. The address of the Commission Internet site
is (http://www.sec.gov). Copies of such materials can be obtained by mail from
the Public Reference Branch of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy
statements and other information concerning the Company may also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, and the offices of the Cincinnati Stock Exchange, 400 S. LaSalle
Street, 5th Floor, Chicago, Illinois 60605.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement.
THE PROCTER & GAMBLE COMPANY
DEBT SECURITIES AND WARRANTS
-----------------------------
The Company may from time to time offer Debt Securities consisting of
debentures, notes and/or other unsecured evidences of indebtedness in one or
more series and Warrants to purchase Debt Securities or to buy and sell
government debt securities, foreign currencies, currency units or units of a
currency index or currency basket, units of a stock index or stock basket or a
commodity or a commodity index from which the Company will receive proceeds of
up to an aggregate of $2,000,000,000 (or the equivalent in foreign currency or
currency units). The Debt Securities and Warrants may be offered independently
or together for sale directly to purchasers or through dealers, underwriters or
agents to be designated. The Debt Securities and Warrants will be offered to the
public on terms determined by market conditions. The Debt Securities and
Warrants may be sold for U.S. dollars, foreign currency or currency units and
the principal of and any premium and interest on the Debt Securities may
likewise be payable in U.S. dollars or, at the option of the Company if so
specified in the applicable Prospectus Supplement, in any other foreign currency
or currency units, including composite currencies such as the European Currency
Unit.
The specific designation, aggregate principal amount, purchase price,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, if any, any listing on a securities exchange and other specific terms
not set forth herein of the Debt Securities in respect of which this Prospectus
is being delivered, the duration, purchase price, exercise price, detachability
and any other specific terms not set forth herein of any Warrants in respect of
which this Prospectus is being delivered, and the names of any underwriters,
dealers or agents, and the other terms and manner of the sale and distribution
of such Debt Securities and Warrants, are set forth in the accompanying
Prospectus Supplement ("Prospectus Supplement"). See "Description of Debt
Securities", "Description of Warrants" and "Plan of Distribution".
As used from time to time herein, the term "Securities" means the Debt
Securities and the Warrants.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is July 17, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048; and Suite
1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such materials can be obtained by mail from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, and
the offices of the Cincinnati Stock Exchange, 400 S. LaSalle Street, 5th Floor,
Chicago, Illinois 60605.
The Company has filed with the Commission a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-434) pursuant to
the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996 (which incorporates by reference portions of the
Company's definitive Proxy Statement dated August 30, 1996 for the
Company's Annual Meeting of Stockholders held on October 8, 1996 and
portions of its 1996 Annual Report to Stockholders for the year ended
June 30, 1996).
2. The Company's Quarterly Reports on Form 10-Q for the periods
ended September 30, 1996, December 31, 1996 and March 31, 1997.
3. All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Securities. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of the Registration Statement or
this Prospectus to the extent that a statement contained herein, in a
Prospectus Supplement or in any other document subsequently filed with
the Commission which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the documents which are incorporated by reference herein, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to Linda D. Rohrer,
Assistant Secretary, The Procter & Gamble Company, at One Procter & Gamble
Plaza, Cincinnati, Ohio 45202, telephone: (513) 983-8697.
THE COMPANY
The Procter & Gamble Company (the "Company") was incorporated in Ohio in 1905,
having been built from a business founded in 1837 by William Procter and James
Gamble. Today, the Company manufactures and markets a broad range of consumer
products in many countries throughout the world. Unless the context otherwise
requires, all references to the Company are to The Procter & Gamble Company and
its consolidated subsidiaries.
The Company's operations fall within five business segments: Laundry and
Cleaning, Paper, Beauty Care, Food and Beverage, and Health Care:
. The Laundry and Cleaning segment includes laundry, dishcare, hard
surface cleaners and fabric conditioners. Representative brands include
Ariel, Tide, Cascade, Dawn, Mr. Proper, Downy.
. The Paper segment includes tissue/towel, feminine protection and diapers.
Representative brands include Bounty, Charmin, Always, Whisper, Pampers.
. The Beauty Care segment includes hair care, deodorants, personal cleansing,
skin care and cosmetics and fragrances. Representative brands include
Pantene, Vidal Sassoon, Secret, Safeguard, Olay, Cover Girl.
. The Food and Beverage segment includes, coffee, peanut butter, juice, snacks,
shortening and oil, baking mixes and commercial services. Representative
brands include Folgers, Jif, Sunny Delight, Pringles, Crisco, Duncan Hines.
. The Health Care segment includes oral care, gastro-intestinal, respiratory
care and pharmaceuticals. Representative brands include Crest, Scope,
Metamucil, Vicks.
The Laundry category and Diaper category constituted 21% and 13% of
consolidated 1996 fiscal-year sales, respectively.
In the United States, the Company owned and operated manufacturing facilities
at 36 locations in 20 states as of June 30, 1996. In addition, it owned and
operated 90 manufacturing facilities in 43 other countries as of such date.
Laundry and Cleaning products were 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.
The Company's principal executive offices are located at One Procter & Gamble
Plaza, Cincinnati, Ohio 45202, and its telephone number is (513) 983-1100.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the net
proceeds from the issuance of the Debt Securities and Warrants offered hereby
will be used for general corporate purposes.
SUMMARY FINANCIAL INFORMATION
The following summary financial information for the years ended June 30, 1996
and 1995 has been derived from the Company's consolidated financial statements
contained in its Annual Report on Form 10-K for the fiscal year ended June 30,
1996. See "Incorporation of Certain Documents by Reference". The summary
financial information for the years ended June 30, 1992, 1993 and 1994 has been
derived from the Company's consolidated financial statements contained in its
Annual Reports to Shareholders for the years 1993 and 1994, as adjusted for
certain reclassifications made to conform to the presentation for the year ended
June 30, 1996.
<TABLE>
<CAPTION>
Years Ended June 30,
-------------------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales............................ $29,390 $30,498 $30,385 $33,482 $35,284
Cost of products sold................ 17,324 17,683 17,338 19,561 20,762
Earnings before income taxes
and prior years' effect of
accounting changes.................. 2,885 349 3,346 4,000 4,669
Income taxes......................... 1,013 80 1,135 1,355 1,623
Net earnings/(loss)<F1>.............. 1,872 (656) 2,211 2,645 3,046
Net earnings/(loss) per common
share<F1>........................... $ 2.62 $ (1.11) $ 3.09 $ 3.71 $ 4.29
Net earnings/(loss) per common
share assuming full
dilution(1)......................... $ 2.45 $ (.96) $ 2.91 $ 3.48 $ 4.02
Average shares outstanding........... 677.4 680.4 683.1 686.0 686.3
Ratio of earnings to fixed
charges<F2>......................... 5.7 1.4 6.6 7.7 9.0
FINANCIAL POSITION
(AT PERIOD END):
Working capital...................... $ 1,724 $ 1,688 $ 1,948 $ 2,194 $ 2,982
Total assets......................... 24,025 24,935 25,535 28,125 27,730
Long-term debt....................... 5,223 5,174 4,980 5,161 4,670
Shareholders' equity................. 9,071 7,441 8,832 10,589 11,722
- --------
<FN>
<F1> In 1993, net earnings and per share earnings include an after-tax charge of
$1,746 or $2.57 per share for restructuring and an after-tax charge of $925
or $1.36 per share for the prior years' effect of accounting changes.
<F2> Earnings used to compute this ratio are earnings before income taxes and
before fixed charges (excluding interest capitalized during the period) and
after deducting undistributed earnings of equity method investees. Fixed
charges consist of interest, whether expensed or capitalized, amortization
of debt discount and expense, and one-third of all rent expense (considered
representative of the interest factor).
</FN>
</TABLE>
RESULTS OF OPERATIONS: YEAR ENDED JUNE 30, 1996 COMPARED TO THE YEAR ENDED
JUNE 30, 1995
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%.
Net 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.
Net earnings margin increased 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.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Offered Debt Securities.
The Offered Debt Securities are to be issued under an Indenture, dated as of
September 28, 1992 (the "Indenture"), between the Company and The First National
Bank of Chicago, as Trustee (the "Trustee"), a copy of which Indenture is filed
as an exhibit to the Registration Statement. The following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture, including the definitions therein of certain terms. Wherever
particular provisions or defined terms of the Indenture are referred to, such
provisions or defined terms are incorporated herein by reference. Certain
defined terms in the Indenture are capitalized herein.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indenture does not limit the amount of Debt Securities that may be issued
thereunder and provides that Debt Securities may be issued thereunder from time
to time in one or more series.
Reference is made to the Prospectus Supplement relating to the Offered Debt
Securities for the following terms, where applicable, of the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the date or dates
on which the Offered Debt Securities will mature; (4) the rate or rates (which
may be fixed or variable) at which the Offered Debt Securities will bear
interest, if any, and the date or dates from which such interest will accrue;
(5) the dates on which such interest, if any, will be payable and the Regular
Record Dates for such Interest Payment Dates; (6) any mandatory or optional
sinking fund or analogous provisions; (7) the price at which, the periods within
which, and the terms and conditions upon which the Offered Debt Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed at the
option of the Company; (8) the terms and conditions upon which the Offered Debt
Securities may be repayable prior to final maturity at the option of the holder
thereof (which option may be conditional); (9) the portion of the principal
amount of the Offered Debt Securities, if other than the principal amount
thereof, payable upon acceleration of maturity thereof; (10) the right of the
Company to defease the Offered Debt Securities or certain restrictive covenants
and certain Events of Default under the Indenture; (11) if other than in United
States dollars, the currency or currencies, including composite currencies, of
payment of principal of and premium, if any, and interest on the Offered Debt
Securities (and federal income tax consequences and other special considerations
applicable to any such Offered Debt Securities denominated in a currency or
currencies other than United States dollars); (12) any index used to determine
the amount of payments of principal of and premium, if any, and interest, if
any, on the Offered Debt Securities; (13) if the Offered Debt Securities will be
issuable only in the form of a Global Security as described under "Book-Entry
Debt Securities", the Depository or its nominee with respect to the Offered Debt
Securities and the circumstances under which the Global Security may be
registered for transfer or exchange in the name of a Person other than the
Depository or its nominee; and (14) any other terms of the Offered Debt
Securities. (Section 301)
Unless otherwise indicated in the Prospectus Supplement relating to Offered
Debt Securities, principal of and premium, if any, and interest, if any, on the
Debt Securities will be payable, and the Debt Securities will be exchangeable
and transfers thereof will be registrable, at the office of the Trustee at 14
Wall Street, 8th Floor, New York, New York 10005, provided that, at the option
of the Company, payment of interest may be made by: (1) wire transfer on the
date of payment in immediately available federal funds or next day funds to an
account specified by written notice to the Trustee from any Holder of Debt
Securities; (2) any similar manner that such Holder may designate in writing to
the Trustee; or (3) by check mailed to the address of the Person entitled
thereto as it appears in the Security Register. (Sections 301, 305 and 1002) Any
payment of principal and premium, if any, and interest, if any, required to be
made on an Interest Payment Date, Redemption Date or at Maturity which is not a
Business Day need not be made on such day, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date or at Maturity, as the case may be, and
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date or Maturity. (Section 113)
Unless otherwise indicated in the Prospectus Supplement relating to Offered
Debt Securities, the Debt Securities will be issued only in fully registered
form, without coupons, in denominations of $1,000 or any integral multiple
thereof. (Section 302) No service charge will be made for any transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from their stated
principal amount. In addition, under Treasury Regulations it is possible that
Debt Securities which are offered and sold at their stated principal amount
would, under certain circumstances, be treated as issued at an original issue
discount for federal income tax purposes, and special rules may apply to Debt
Securities and Warrants which are considered to be issued as "investment units".
Federal income tax consequences and other special considerations applicable to
any such Original Issue Discount Securities (or other Debt Securities treated as
issued at an original issue discount) and to "investment units" will be
described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of Default
and the continuation thereof. (Section 101)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depository or its nominee
identified in the Prospectus Supplement relating to the Offered Debt Securities.
In such a case, one or more Global Securities will be issued in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of Outstanding Debt Securities of the series to be represented by such
Global Security or Securities. Unless and until it is exchanged in whole or in
part for Debt Securities in definitive registered form, a Global Security may
not be registered for transfer or exchange except as a whole by the Depository
for such Global Security to a nominee of such Depository and except in the
circumstances described in the Prospectus Supplement relating to the Offered
Debt Securities. (Sections 204 and 305)
RESTRICTIVE COVENANTS
RESTRICTIONS ON SECURED DEBT
If the Company or any Domestic Subsidiary shall incur, assume or guarantee any
Debt secured by a Mortgage on any Principal Domestic Manufacturing Property or
on any shares of stock or debt of any Domestic Subsidiary, the Company will
secure, or cause such Domestic Subsidiary to secure, the Debt Securities then
outstanding equally and ratably with (or prior to) such Debt, unless after
giving effect thereto the aggregate amount of all such Debt so secured, together
with all Attributable Debt in respect of sale and leaseback transactions
involving Principal Domestic Manufacturing Properties, would not exceed 5% of
the Consolidated Net Tangible Assets of the Company and its consolidated
subsidiaries. The restriction will not apply to, and there shall be excluded in
computing secured Debt for the purpose of such restriction, Debt secured by (a)
Mortgages on property of, or on any shares of stock or debt of, any corporation
existing at the time such corporation becomes a Domestic Subsidiary, (b)
Mortgages in favor of the Company or a Domestic Subsidiary, (c) Mortgages in
favor of U.S. governmental bodies to secure progress or advance payments, (d)
Mortgages on property, shares of stock or debt existing at the time of
acquisition thereof (including acquisition through merger or consolidation),
purchase money Mortgages and construction cost Mortgages and (e) any extension,
renewal or refunding of any Mortgage referred to in the foregoing clauses (a)
through (d), inclusive. (Section 1004) The Indenture does not restrict the
incurrence of unsecured debt by the Company or its subsidiaries.
RESTRICTIONS ON SALES AND LEASEBACKS
Neither the Company nor any Domestic Subsidiary may enter into any sale and
leaseback transaction involving any Principal Domestic Manufacturing Property,
the completion of construction and commencement of full operation of which has
occurred more than 120 days prior thereto, unless (a) the Company or such
Domestic Subsidiary could incur a lien on such property under the restrictions
described above under "Restrictions on Secured Debt" in an amount equal to the
Attributable Debt with respect to the sale and leaseback transaction without
equally and ratably securing the Debt Securities then outstanding or (b) the
Company, within 120 days, applies to the retirement of its Funded Debt an amount
not less than the greater of (i) the net proceeds of the sale of the Principal
Domestic Manufacturing Property leased pursuant to such arrangement or (ii) the
fair value of the Principal Domestic Manufacturing Property so leased (subject
to credits for certain voluntary retirements of Funded Debt). This restriction
will not apply to any sale and leaseback transaction (a) between the Company and
a Domestic Subsidiary or between Domestic Subsidiaries or (b) involving the
taking back of a lease for a period of less than three years. (Section 1005)
CERTAIN DEFINITIONS
The term "Attributable Debt" means the total net amount of rent (discounted at
10% per annum compounded annually) required to be paid during the remaining term
of any lease. (Section 101)
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities and (b) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent balance sheet of the Company
and its consolidated subsidiaries and computed in accordance with generally
accepted accounting principles. (Section 101)
The term "Domestic Subsidiary" means a subsidiary of the Company except a
subsidiary which neither transacts any substantial portion of its business nor
regularly maintains any substantial portion of its fixed assets within the
United States or which is engaged primarily in financing the operations of the
Company and its subsidiaries outside the United States. (Section 101)
The term "Funded Debt" means Debt having a maturity of, or by its terms
extendible or renewable for, a period of more than 12 months after the date of
determination of the amount thereof.
The term "Principal Domestic Manufacturing Property" means any facility
(together with the land on which it is erected and fixtures comprising a part
thereof) used primarily for manufacturing or processing, located in the United
States, owned or leased by the Company or a subsidiary of the Company and having
a gross book value in excess of 3/4 of 1% of Consolidated Net Tangible Assets,
other than any such facility or portion thereof (i) which is a pollution control
or other facility financed by obligations issued by a State or local
governmental unit pursuant to Section 103(b)(4)(E), 103(b)(4)(F) or 103(b)(6) of
the Internal Revenue Code of 1954, or any successor provision thereof, or (ii)
which, in the opinion of the Board of Directors of the Company, is not of
material importance to the total business conducted by the Company and its
subsidiaries as an entirety. (Section 101)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to Debt
Securities of any series: (a) failure to pay principal of or premium, if any, on
any Debt Security of that series when due; (b) failure to pay any interest on
any Debt Security of that series when due, continued for 30 days; (c) failure to
deposit any sinking fund payment, when due, in respect of any Debt Security of
that series; (d) failure to perform any other covenant of the Company in the
Indenture (other than a covenant included in the Indenture solely for the
benefit of a series of Debt Securities other than that series), continued for 90
days after written notice as provided in the Indenture; (e) certain events in
bankruptcy, insolvency or reorganization; and (f) any other Event of Default
provided with respect to Debt Securities of that series. (Section 501)
If an Event of Default with respect to Outstanding Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that series
may declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all the Debt Securities of that
series to be due and payable immediately. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on acceleration has been obtained, the Holders
of a majority in principal amount of the Outstanding Debt Securities of that
series may, under certain circumstances, rescind and annul such acceleration.
(Section 502) For information as to waiver of defaults, see "Modification and
Waiver".
Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that the Trustee will be under no obligation, subject
to the duty of the Trustee during default to act with the required standard of
care, to exercise any of its rights or powers under the Indenture at the request
or direction of any of the Holders, unless such Holders shall have offered to
the Trustee reasonable indemnity. (Section 603) Subject to such provisions for
indemnification of the Trustee, the Holders of a majority in principal amount of
the Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Debt Securities of that series. (Section 512)
The Company will furnish to the Trustee annually a certificate as to
compliance by the Company with all conditions and covenants under the Indenture.
(Section 1007)
DEFEASANCE
The Prospectus Supplement will state if any defeasance provision will apply to
the Offered Debt Securities.
DEFEASANCE AND DISCHARGE
The Indenture provides that, if applicable, the Company will be discharged
from any and all obligations in respect of the Debt Securities of any series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace stolen, lost or mutilated Debt Securities
of such series, to maintain paying agencies and to hold monies for payment in
trust) upon the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations (as defined) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of and premium, if any, and each
installment of interest on the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the Indenture and the
Debt Securities of such series. Such a trust may only be established if, among
other things, (i) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling to the effect that Holders of the Debt
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred, and (ii) the Company has delivered to the
Trustee an Opinion of Counsel (who may be an employee of or counsel for the
Company) to the effect that the Debt Securities of such series, if then listed
on the New York Stock Exchange, Inc., will not be delisted as a result of such
deposit, defeasance and discharge. (Section 403)
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT
The Indenture provides that, if applicable, the Company may omit to comply
with any restrictive covenants in Sections 1004 (Limitation on Liens) and 1005
(Limitation on Sales and Leasebacks), and Section 501(4) (described in clause
(d) under "Events of Default") with respect to Sections 1004 and 1005 shall not
be deemed to be an Event of Default under the Indenture and the Debt Securities
of any series, upon the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations (as defined) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of and premium, if any, and each
installment of interest on the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the Indenture and the
Debt Securities of such series. The obligations of the Company under the
Indenture and the Debt Securities of such series other than with respect to the
covenants referred to above and the Events of Default other than the Event of
Default referred to above shall remain in full force and effect. Such a trust
may only be established if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel (who may be an employee of or counsel for the
Company) to the effect that (i) the Holders of the Debt Securities of such
series will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and defeasance of certain covenants and Events of
Default and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such deposit
and defeasance had not occurred, and (ii) the Debt Securities of such series, if
then listed on the New York Stock Exchange, Inc., will not be delisted as a
result of such deposit and defeasance. (Section 1006)
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT
In the event the Company exercises its option to omit compliance with certain
covenants of the Indenture with respect to the Debt Securities of any series as
described above and the Debt Securities of such series are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "Events of Default", the amount of
money and U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Debt Securities of such series at the time
of their Stated Maturity but may not be sufficient to pay amounts due on the
Debt Securities of such series at the time of the acceleration resulting from
such Event of Default. However, the Company shall remain liable for such
payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of 66 2/3% in principal amount of
the Outstanding Debt Securities of each series affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby, (a) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Debt Security, (b) reduce the principal
amount of, or the premium, if any, or interest, if any, on, any Debt Security,
(c) reduce the amount of principal of an Original Issue Discount Security
payable upon acceleration of the Maturity thereof, (d) change the place or
currency of payment of principal of, or premium, if any, or interest, if any,
on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, or (f)
reduce the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of the Holders of which is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults. (Section 902)
The Holders of 66 2/3% in principal amount of the Outstanding Debt Securities
of any series may on behalf of the Holders of all Debt Securities of that series
waive, insofar as that series is concerned, compliance by the Company with
certain restrictive provisions of the Indenture. (Section 1008) The Holders of a
majority in principal amount of the Outstanding Debt Securities of any series
may on behalf of the Holders of all Debt Securities of that series waive any
past default under the Indenture with respect to that series, except a default
in the payment of the principal of or premium, if any, or interest on any Debt
Security of that series or in respect of a provision which under the Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of that series affected. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate or merge with or into, or transfer or lease its
assets as an entirety to, any Person, provided that (i) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or which acquires or leases the assets of the Company substantially as an
entirety is organized and existing under the laws of any United States
jurisdiction and assumes the Company's obligations on the Debt Securities and
under the Indenture, (ii) after giving effect to such transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing (provided that a
transaction will only be deemed to be in violation of this condition (ii) as to
any series of Debt Securities as to which such Event of Default or such event
shall have occurred and be continuing), and (iii) certain other conditions are
met. (Article Eight)
REGARDING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture. The
First National Bank of Chicago is also a depositary of the Company and has
performed other services for the Company and its subsidiaries in the normal
course of its business.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement (the "Offered Warrants") and the extent, if any, to which such
general provisions may apply to the Warrants so offered will be described in the
Prospectus Supplement relating to such Offered Warrants.
The Company may issue Warrants for the purchase of Debt Securities, Warrants
to buy or sell debt securities of or guaranteed by the United States
("Government Debt Securities"), Warrants to buy or sell foreign currencies,
currency units or units of a currency index or currency basket, Warrants to buy
or sell units of a stock index or stock basket and Warrants to buy and sell a
commodity or a commodity index. Warrants may be issued independently or together
with any Debt Securities offered by any Prospectus Supplement and may be
attached to or separate from such Debt Securities. The Warrants will be settled
either through physical delivery or through payment of a cash settlement value
as set forth herein and in any applicable Prospectus Supplement. The Offered
Warrants will be issued under a Warrant Agreement to be entered into between the
Company and a bank or trust company, as Warrant Agent, all as set forth in the
Prospectus Supplement relating to the particular issue of Warrants. The Warrant
Agent will act solely as an agent of the Company in connection with the Warrant
Certificates and will not assume any obligation or relationship of agency or
trust for or with any holders of Warrant Certificates or beneficial owners of
Warrants. The following summaries of certain provisions of the forms of Warrant
Agreement do not purport to be complete and are subject to, and are qualified in
their entirety by reference to the provisions of the forms of Warrant Agreement
(including the forms of Warrant Certificates), copies of which are filed as an
exhibit to the Registration Statement.
GENERAL
The Prospectus Supplement will describe the following terms of the Offered
Warrants (to the extent such terms are applicable to such Warrants): (i) the
offering price; (ii) the currency, currency unit, currency index or currency
basket based on or relating to currencies (including ECU) for which Warrants may
be purchased; (iii) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (iv) whether the Warrant
Certificates will be issuable in definitive registered form or global form or
both; (v) federal income tax consequences; (vi) whether the Warrant is for Debt
Securities, Government Debt Securities, currencies, currency units, currency
indices or currency baskets, stock indices, stock baskets, commodities,
commodity indices or such other index or reference as therein described; and
(vii) any other terms of the Warrants, including any terms which may be required
or advisable under United States laws or regulations.
If the Offered Warrants are to purchase Debt Securities, the Prospectus
Supplement will also describe (a) the designation, aggregate principal amount,
currency, currency unit or currency basket of denomination and other terms of
the Debt Securities purchasable upon exercise of the Offered Warrants; (b) the
designation and terms of the Debt Securities with which the Offered Warrants are
issued and the number of Offered Warrants issued with each such Debt Security;
(c) the date on and after which the Offered Warrants and the related Debt
Securities will be separately transferable; and (d) the principal amount of Debt
Securities purchasable upon exercise of one Offered Warrant and the price at
which and currency, currency unit or currency basket in which such principal
amount of Debt Securities may be purchased upon such exercise.
If the Offered Warrants are to buy or sell Government Debt Securities or a
foreign currency, currency unit, currency index or currency basket, such Offered
Warrants will be listed on a national securities exchange and the Prospectus
Supplement will describe the amount and designation of the Government Debt
Securities or currency, currency unit, currency index or currency basket, as the
case may be, subject to each Offered Warrant, whether such Offered Warrants
provide for cash settlement or delivery of the Government Debt Securities or
foreign currency, currency unit, units of the currency index or currency basket
upon exercise, and the national securities exchange on which the Offered
Warrants will be listed.
If the Offered Warrants are Offered Warrants on a stock index or a stock
basket, such Offered Warrants will provide for payment of an amount in cash
determined by reference to increases or decreases in such stock index or stock
basket and will be listed on a national securities exchange, and the Prospectus
Supplement will describe the terms of the Offered Warrants, the stock index or
stock basket covered by the Offered Warrants and the market to which such stock
index or stock basket relates, and the national securities exchange on which the
Offered Warrants will be listed.
If the Offered Warrants are Offered Warrants on a commodity or commodity
index, such Offered Warrants will provide for cash settlement or delivery of the
particular commodity or commodities and such Offered Warrants will be listed on
a national securities exchange. The Prospectus Supplement will describe the
terms of the Offered Warrants, the commodity or commodity index covered by the
Offered Warrants and the market, if any, to which such commodity or commodity
index relates and the national securities exchange on which the Warrants will be
listed.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, may (if in registered form) be presented for
registration of transfer, and may be exercised at the corporate trust office of
the Warrant Agent or any other office indicated in the Prospectus Supplement.
Warrants to buy or sell Government Debt Securities or a foreign currency,
currency unit, currency index or currency basket, and Warrants on stock indices
or stock baskets or on commodities or commodity indices, may be issued in the
form of a single Global Warrant Certificate, registered in the name of the
nominee of the depository of the Warrants, or may initially be issued in the
form of definitive certificates that may be exchanged, on a fixed date, or on a
date or dates selected by the Company, for interests in a Global Warrant
Certificate, as set forth in the applicable Prospectus Supplement. Prior to the
exercise of their Warrants, holders of Warrants to purchase Debt Securities will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal of, premium,
if any, or interest, if any, on the Debt Securities purchasable upon such
exercise or to enforce covenants in the Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of Debt
Securities or buy or sell such amount of Government Debt Securities or of a
currency, currency unit, currency index or currency basket, stock index or stock
basket, commodity or commodities at such exercise price, or receive such
settlement value in respect of such amount of Government Debt Securities or of a
currency, currency unit, currency index or currency basket, stock index or stock
basket, commodity or commodity index, as shall in each case be set forth in or
calculable from, the Prospectus Supplement relating to the Warrants or as
otherwise set forth in the Prospectus Supplement. Warrants may be exercised at
any time up to 3:00 P.M. New York time on the date set forth in the Prospectus
Supplement relating to such Warrants or as may be otherwise set forth in the
Prospectus Supplement. After such time on that date (or such later date to which
such date may be extended by the Company), unexercised Warrants will become
void.
Subject to any restrictions and additional requirements that may be set forth
in the Prospectus Supplement relating thereto, Warrants may be exercised by
delivery to the Warrant Agent of the Warrant Certificate evidencing such
Warrants properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Debt Securities, or
(except in the case of Warrants providing for cash settlement) payment for or
delivery of the Government Debt Securities or currency, currency unit, currency
index, currency basket, stock index, stock basket, commodity or commodities
index as the case may be, purchased or sold upon such exercise. Warrants will be
deemed to have been exercised upon receipt of such Warrant Certificate and any
such payment, if applicable, at the corporate trust office of the Warrant Agent
or any other office indicated in the Prospectus Supplement and the Company will,
as soon as practicable thereafter, issue and deliver the Debt Securities
purchasable upon such exercise, or buy or sell such Government Debt Securities
or currency, currency unit, currency index or currency basket, stock index or
stock basket, commodity or commodities or pay the settlement value in respect of
such Warrants. If fewer than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities and Warrants to or through underwriters,
and also may sell Debt Securities and Warrants directly to other purchasers or
through agents. Such underwriters may also act as agents.
The distribution of the Debt Securities and Warrants, if any, may be effected
from time to time in one or more transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities and Warrants, if any,
underwriters may receive compensation from the Company or from purchasers of
Debt Securities and Warrants, if any, for whom they may act as agents, in the
form of discounts, concessions or commissions. Underwriters may sell Debt
Securities and Warrants, if any, to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Debt Securities and Warrants, if any, may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on the
resale of Debt Securities and Warrants, if any, by them may be deemed to be
underwriting discounts and commissions, under the Securities Act of 1933, as
amended (the "Act"). Any such underwriter or agent will be identified, and any
such compensation received from the Company will be described, in the Prospectus
Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities and Warrants, if
any, may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Debt Securities and Warrants, if any, from
the Company pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Offered Debt Securities and Offered Warrants, if any, shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement relating to Offered
Debt Securities and Offered Warrants, if any, the validity of Offered Debt
Securities and Offered Warrants, if any, will be passed upon for the Company by
Terry L. Overbey, Esq., Secretary and Associate General Counsel, The Procter &
Gamble Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202, and for the
underwriters or agents, as the case may be, by Fried, Frank, Harris, Shriver &
Jacobson (a partnership including professional corporations), One New York
Plaza, New York, New York 10004. Mr. Overbey may rely as to matters of New York
law upon the opinion of Fried, Frank, Harris, Shriver & Jacobson, and Fried,
Frank, Harris, Shriver & Jacobson may rely as to matters of Ohio law upon the
opinion of Mr. Overbey. Fried, Frank, Harris, Shriver & Jacobson from time to
time performs legal services for the Company.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K have been audited by
Deloitte" Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
such report given upon the authority of that firm as experts in auditing and
accounting.
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE NOTES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND
IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page
----
The Company................................................................ S-2
Recent Developments........................................................ S-2
Consolidated Ratio of Earnings to Fixed
Charges................................................................. S-4
Description of Notes....................................................... S-4
Underwriting............................................................... S-11
Validity of the Notes...................................................... S-12
Available Information...................................................... S-12
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents
By Reference............................................................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Summary Financial Information.............................................. 4
Description of Debt Securities............................................. 5
Description of Warrants.................................................... 11
Plan of Distribution....................................................... 13
Legal Opinions............................................................. 14
Experts.................................................................... 14
===============================================================================
===============================================================================
$75,000,000
THE
PROCTER & GAMBLE
COMPANY
FLOATING RATE NOTES
DUE NOVEMBER 4, 2048
---------------------
LOGO
----------------------
Goldman, Sachs & Co.
Salomon Smith Barney
===============================================================================
