<PAGE>
FILED PURSUANT TO
RULE 424B5
FILE NO. 333-87133
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 30, 1999)
(Yen)40,000,000,000
The Procter & Gamble Company
1.5% Notes Due December 7, 2005
------------
The notes will bear interest at the rate of 1.5% per year. Interest on the
notes is payable on June 7 and December 7 of each year, beginning on June 7,
2000. The notes will mature on December 7, 2005. The notes will not be
redeemable prior to maturity unless certain events occur involving United
States taxation.
We have filed an application to list the notes on the Luxembourg Stock
Exchange in accordance with the rules thereof.
------------
Neither the United States Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities or
determined if this prospectus supplement or the related prospectus is truthful
or complete.
------------
<TABLE>
<CAPTION>
Per Notes Total
--------- -------------------
<S> <C> <C>
Public Offering Price 99.578% (Yen)39,831,200,000
Underwriting Discount 0.300% (Yen) 120,000,000
Proceeds to Procter & Gamble (before expenses) 99.278% (Yen)39,711,200,000
</TABLE>
Interest on the notes will accrue from and including December 7, 1999 to the
date of delivery.
------------
The underwriters are offering the notes subject to various conditions. The
underwriters expect to deliver the notes in book-entry form only through the
facilities of The Depository Trust Company, Euroclear or Cedelbank, as
applicable, on or about December 7, 1999.
------------
Joint Book-Running Managers
Nikko SalomonSmithBarney Americas Tokyo-Mitsubishi International plc
------------
Bank of America International Limited
Deutsche Bank
Goldman Sachs International
J.P. Morgan Securities Ltd.
November 30, 1999
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus supplement or the accompanying prospectus is accurate as of any date
other than the date on the front of this prospectus supplement.
------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company.............................................................. S-3
Summary Consolidated Financial Information............................... S-4
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... S-5
Consolidated Ratio of Earnings to Fixed Charges.......................... S-8
Capitalization........................................................... S-9
Management............................................................... S-10
Description of the Notes................................................. S-12
United States Tax Considerations......................................... S-23
Currency Conversions and Foreign Exchange Risks Affecting Yen Notes...... S-29
Underwriting............................................................. S-31
Validity of the Notes.................................................... S-33
Available Information.................................................... S-33
Incorporation of Documents by Reference.................................. S-33
Listing and General Information.......................................... S-34
Prospectus
<CAPTION>
Page
----
<S> <C>
The Company.............................................................. 3
Selected Consolidated Financial Information.............................. 4
Use of Proceeds.......................................................... 5
Description of Debt Securities........................................... 6
Description of Warrants.................................................. 14
Plan of Distribution..................................................... 17
Legal Opinions........................................................... 18
Experts.................................................................. 18
Where You Can Find More Information...................................... 19
</TABLE>
S-2
<PAGE>
In this prospectus supplement and the accompanying prospectus, unless we
otherwise specify or the context otherwise requires, references to:
. ""Procter & Gamble," "we," "us," and "our" are to The Procter & Gamble
Company and its subsidiaries;
. ""fiscal'' followed by a specific year are to our fiscal year ended or
ending June 30 of that year; and
. ""dollars," "$" and "U.S.$" are to United States dollars and references
to "Yen" and "(Yen)" are to Japanese yen.
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, we manufacture and market a broad range of consumer products in many
countries throughout the world.
As of July 1, 1999, we have reorganized our business to product-based Global
Business Units ("GBUs") in order to streamline management decision-making,
strategic planning and manufacturing. The realignment, called "Organization
2005", consists of the following product-based, reportable segments: Fabric and
Home Care, Paper, Food and Beverage, Beauty Care and Health Care.
. Fabric and Home Care includes laundry, fabric enhancers and household
cleaning products. Representative brands include Ariel, Tide, Cascade,
Dawn, Fairy and Downy.
. Paper includes tissue and towel, feminine care and baby care.
Representative brands include Bounty, Charmin, Always, Whisper, Pampers
and Pampers Wipes.
. Food and Beverage includes snacks, beverage, and commercial services.
Representative brands include Folgers, Jif, Sunny Delight, Pringles,
Olean and Crisco.
. Beauty Care includes hair care, personal beauty care, color cosmetics and
fine fragrances. Representative brands include Pantene, Vidal Sassoon,
Secret, Safeguard, Oil of Olay, Cover Girl and Old Spice.
. Health Care includes oral care, personal health care, pharmaceuticals,
and pet health and nutrition. Representative brands include Crest, Scope,
Metamucil, Vicks, Asacol, Didronel, Macrobid and Iams.
The GBU structure is complemented by eight Market Development Organizations
intended to maximize the business potential for the entire product portfolio in
each local market. In addition, Organization 2005 is intended to streamline and
standardize our global essential business services, such as accounting,
employee benefits management, order management and information technology
services, to a common Global Business Services organization.
Organization 2005 will cost $1.9 billion after-tax over the six year period
and will affect 15,000 positions worldwide.
In the United States, we owned and operated manufacturing facilities at 37
locations in 21 states as of June 30, 1999. In addition, we owned and operated
93 manufacturing facilities in 44 other countries as of that date. Fabric and
Home Care products were produced at 45 of these locations; Paper products at
49; Health Care products at 21; Beauty Care products at 38; and Food and
Beverage products at 15.
Our principal executive offices are located at One Procter & Gamble Plaza,
Cincinnati, Ohio 45202, and our telephone number is (513) 983-1100.
S-3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information for the quarters
ended September 30, 1999 and September 30, 1998 has been derived from our
unaudited consolidated financial statements contained in our Quarterly Report
to Shareholders on Form 10-Q for the quarter ended September 30, 1999. The
summary consolidated financial information for the fiscal year ended June 30,
1999 has been derived from our audited consolidated financial statements
contained in our Annual Report on Form 10-K for the fiscal year ended June 30,
1999. We believe that all adjustments necessary for the fair presentation
thereof have been made to the unaudited financial data. The results for the
interim period ended September 30, 1999 are not necessarily indicative of the
results for the full fiscal year. Prior years have been restated to conform
with the current year presentation.
<TABLE>
<CAPTION>
Three Months Ended September 30
--------------------------------
1999 1998
------------------ -------------
(Amounts in Millions Except Per
Share Amounts)
<S> <C> <C>
NET SALES..................................... $ 9,919 $ 9,510
Cost of products sold....................... 5,206 5,142
Marketing, research and administrative
expenses................................... 2,866 2,494
-------- --------
OPERATING INCOME.............................. 1,847 1,874
Interest expense............................ 147 157
Other income, net........................... 45 50
-------- --------
EARNINGS BEFORE INCOME TAXES.................. 1,745 1,767
Income taxes................................ 598 600
-------- --------
NET EARNINGS.................................. $ 1,147 $ 1,167
======== ========
PER COMMON SHARE:
Basic net earnings.......................... $ 0.85 $ 0.86
Diluted net earnings........................ $ 0.80 $ 0.80
Dividends................................... $ 0.320 $ 0.285
AVERAGE COMMON SHARES OUTSTANDING--DILUTED.... 1,435.2 1,454.5
<CAPTION>
Fiscal year
Three months ended ended
September 30, 1999 June 30, 1999
------------------ -------------
(Amounts in Millions)
<S> <C> <C>
WORKING CAPITAL............................... $ (849) $ 597
TOTAL ASSETS.................................. 35,324 32,113
LONG-TERM DEBT................................ 7,212 6,231
SHAREHOLDERS' EQUITY.......................... 12,352 12,058
</TABLE>
S-4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We reported net earnings of $1.15 billion or $0.80 per diluted share for the
quarter ended September 30, 1999. These results include charges related to our
Organization 2005 program, which was announced in June 1999. This multi-year
program is associated with our reorganization to product-based Global Business
Units, as described more fully below.
Core net earnings per diluted share, which exclude Organization 2005 costs,
were $0.88, a 10% increase over the first quarter of fiscal 1999. Core net
earnings were $1.27 billion, excluding $120 million after tax in charges
related to Organization 2005. This solid progress reflects a continued cost-
containment focus in the face of significant initiative investments that
yielded initial results in the first quarter and laid the foundation for future
growth.
Reported net sales for the quarter ended September 30, 1999 were a record
$9.92 billion, up 4%. Net sales grew 5%, excluding a 1% impact of negative
exchange rates, primarily the euro and the Brazilian real. Unit volume grew 2%.
New premium-priced initiatives and product upgrades boosted sales ahead of
volume.
Gross margin was 47.5% for the quarter ended September 30, 1999 compared to
45.9% in the same quarter of fiscal 1999 and 44.8% for all of fiscal 1999.
Included in "cost of products sold" is $105 million before tax related to
Organization 2005. Gross margin was positively impacted during the quarter
ended September 30, 1999 by improved pricing, product mix, and lower
manufacturing expenses.
Operating margin was 18.6% for the quarter compared to 19.7% in the same
quarter a year ago and 16.4% for the prior fiscal year. Excluding $160 million
before tax in Organization 2005 charges, operating margin was 20.2%, primarily
due to gross margin improvement.
Following are highlights by business segment:
Fabric and Home Care: As our biggest and fastest-growing business unit,
Fabric and Home Care set the pace for our results. Net sales grew 8% to $3.16
billion on 4% unit volume growth supplemented by the launch of higher-margin
initiatives and product upgrades. Currency impacts depressed sales by one
percent. The recent launches of Swiffer and Dryel in North America and strong
base business results drove volume gains. Share-building initiative activity in
Northeast Asia spurred double-digit volume growth in the geography. Ariel
tablets performed well after their spring 1999 launch in the United Kingdom and
are currently being expanded in Western Europe. Net earnings grew 10% to $484
million, reflecting volume growth and improved pricing, despite continued
initiative investment and the impact of unfavorable currency movements,
particularly the euro.
Paper: The Paper business demonstrated strong volume gains on certain key
brands, behind an upgrade on Charmin and increased capacity on Bounty and
Charmin. These results were mitigated by significant competitive activity,
particularly in diapers and feminine care products. Excluding a 2% impact from
the Attends divestiture, volume and net sales were stable for the quarter ended
September 30, 1999, with net sales at $3.01 billion. On the base business,
successful pricing measures on certain brands and markets were offset by
negative currency impacts. Despite the improved pricing, chiefly behind product
upgrades in diapers, increased spending in a difficult competitive environment
resulted in net earnings of $343 million, a 2% decline.
Food and Beverage: Food and Beverage posted strong results for the first
quarter ended September 30, 1999. Geographical expansion in both snacks and
juice helped push sales up five percent to $1.21 billion, on comparable unit
volume growth. A slate of new initiatives in North America, including Folgers
Whole Bean, Pringles Twin Pack, Sunny Delight Eclipse, and Jif Smooth
Sensations, along with the expansion of Pringles and Sunny Delight across
Western Europe, drove the volume growth. Earnings grew 35% to $106 million,
behind the volume gains on the base business, higher-margin initiatives, and
improved gross margin.
S-5
<PAGE>
Beauty Care: During the quarter ended September 30, 1999, Beauty Care
continued to see benefits from the launch of Oil of Olay Cosmetics, as well as
a number of other premium initiatives. Premium initiatives, as well as
favorable currency impacts in Northeast Asia, helped offset a 3% unit volume
decline to maintain sales in line with levels during the first quarter of
fiscal 1999 at $1.82 billion. Currency effects contributed 1% to the sales
increase. Volume comparisons reflect strong year-ago results and the
competitive environment, primarily for hair care in key European markets.
Western Europe results were negatively impacted by the recent introduction of
new trade terms in France and the prior year divestiture of certain minor
brands. Volume also was impacted by economic sluggishness in China that
dampened consumption and certain trade inventory adjustments in advance of
current quarter pricing actions. Net earnings were $225 million, down 4% as
volume declines and initiative spending offset pricing improvements.
Health Care: Health Care segment results included the integration of the
newly acquired pet health and nutrition business, The Iams Company, in
September 1999. Net sales increased 16% to $799 million on 7% unit volume
growth, primarily reflecting the Iams acquisition. Negative exchange impacts
reduced sales by 1% for the quarter ended September 30, 1999. Net earnings were
$91 million, a 29% increase over the prior year. The overall segment earnings
reflect the benefits of favorable pricing and increased licensing and
divestiture activity, which more than offset continued investment behind future
initiatives and product upgrades.
Corporate: The Corporate segment includes certain financing and investing
activities, other general corporate income and expense items, segment
eliminations, and Organization 2005 costs amounting to $120 million after tax
for the quarter ended September 30, 1999.
Financial Condition: Total debt increased $2.7 billion since June 30, 1999.
The incremental debt was used primarily to fund the previously announced share
repurchase program and the acquisition of The Iams Company, which was completed
August 31, 1999.
Year 2000 Update: As outlined in our Annual Report on Form 10-K for the year
ended June 30, 1999, we have substantially completed our program to address the
possible exposures related to the impact on our computer systems of the Year
2000 issue. These plans have not changed materially in terms of scope or
estimated costs to complete, and have progressed according to previously
identified time schedules.
Implementation of required changes to critical systems is complete. Testing
and certification of critical systems, which includes review of documented
remediation work and test results by technical experts, key users, and a
central project team, was successfully completed by September 30, 1999. The
focus in this area is now on maintaining Year 2000 readiness. Our risk
management program, which was expanded to include the Year 2000 Business
Continuity Plan ("BCP"), was completed by October 31, 1999, consistent with
previously identified time schedules. The objectives of the BCP are twofold:
(1) to ensure business-critical processes are protected from disruption and
will continue to function during and after the year 2000; and (2) to ensure our
ability to produce an acceptable level of products and services is safeguarded
in the event of failures of external systems and services. The BCP included,
for example, identification of alternative suppliers or customers, possible
increases in safety inventory levels and other backup procedures.
Businesses and assets that we acquired after June 30, 1999 but prior to the
end of 1999 are subjected to a Year 2000 assessment process and, where
feasible, representations as to Year 2000 readiness are obtained from the
seller. Post-closing, we will take such actions as we consider necessary
regarding Year 2000 readiness, including modification or remediation work and
testing.
Incremental costs related to Year 2000 efforts, which include contractor
costs to modify existing systems and costs of internal resources dedicated to
achieving and maintaining Year 2000 compliance, are charged to expenses as
incurred. Costs are expected to total approximately $90 million, of which over
90% has been spent through September 30, 1999.
We are taking all reasonable steps to prevent major interruptions in our
business due to the Year 2000 issue. The effect, if any, on our financial
statements if we, our customers, our suppliers, or the public sector are
S-6
<PAGE>
not fully Year 2000 compliant is not reasonably estimable. We believe, however,
that the successful completion of our Year 2000 project will significantly
reduce the risk of a major business interruption due to Year 2000 failures.
Additionally, our broad base of customers and suppliers and the whole worldwide
nature of its operations is expected to mitigate any Year 2000 risks.
Organization 2005 Update: On June 9, 1999, we announced an Organization 2005
program that is an integral part of our broader 2005 initiative, which includes
a realignment of our organizational structure, work processes and culture
designed to accelerate growth by streamlining management decision-making,
manufacturing and other work processes. These changes are intended to increase
our ability to innovate and bring initiatives to global markets more quickly.
In order to implement the program's structural changes and achieve the benefits
of faster growth, we need to make a number of structural changes to both our
administrative and manufacturing operations.
Charges related to Organization 2005 consist primarily of costs related to
the consolidation of manufacturing facilities (including accelerated
depreciation, asset writedowns and contract termination costs) and employee
separation costs. During the quarter ended September 30, 1999, we recorded
expenses totaling $160 million before tax related to Organization 2005, as
detailed in the following table:
Organization 2005 July-September, 1999 Charges (before tax) (amounts in
millions)
<TABLE>
<CAPTION>
Cash Amount
Total Spent Charged
Beginning New During Against Ending
Reserves Charges Period Assets Reserves
--------- ------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
Employee separations................. $ 35 $ 47 $ (12) $ -- $ 70
Asset write-downs.................... -- 2 -- (2) --
Accelerated depreciation............. -- 100 -- (100) --
Other................................ 9 11 (6) (2) 12
---- ---- ----- ----- ----
44 160 (18) (104) 82
</TABLE>
Organization 2005 charges are included in our cost of products sold ($105
million) and in marketing, research and administrative expenses ($55 million),
and are included in Corporate & Other in our segment reporting disclosure. The
underlying plant closures and consolidations will impact all regions and
product segments. The planned plant closures and consolidations will not all be
executed immediately due to either capacity or logistics constraints.
Employee separation charges in July-September, 1999 relate to severance
packages for approximately 700 people, representing primarily administrative
employees in North America, Asia, Europe, Middle East and Africa. The
predominantly voluntary packages are formula-driven, based on salary levels and
past service. Severance costs related to voluntary separations are charged to
earnings when the employee accepts the offer in accordance with our policy for
such programs. On average, net enrollment is expected to decline by
approximately 75% of total separations, as some terminations will be partially
offset through increased enrollment at remaining sites. Of total separations
expected through fiscal 2001, approximately half will take place in
manufacturing with the balance in administrative functions. Separation costs
related to manufacturing employees are included in cost of products sold, while
those for administrative employees are reported in marketing, research and
administrative expenses.
Charges for accelerated depreciation relate to long-lived assets that will
be taken out of service prior to the end of their normal service period due to
manufacturing consolidations, technology standardization and closures that will
occur primarily over the next three fiscal years as a result of the
Organization 2005 program. We have changed the estimated useful lives of such
assets, resulting in an acceleration of depreciation. The majority of
accelerated depreciation recorded in the July-September, 1999 quarter is
concentrated in the Paper segment and reflects the standardization of
manufacturing and work processes being undertaken in that segment.
Other costs include primarily relocation and training costs, as well as
other Organization 2005-related expenses. Such costs are expensed as incurred.
S-7
<PAGE>
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges for the periods indicated.
<TABLE>
<CAPTION>
Three
Months
Ended
September
30
----------
1998 1999
---- ----
<S> <C> <C>
Ratio of earnings to fixed charges(1)........................ 10.3x 11.4x
</TABLE>
- --------
(1) Earnings used to compute this ratio are earnings before income and 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 representation of the interest factor).
S-8
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
Procter & Gamble and its subsidiaries at September 30, 1999.
<TABLE>
<CAPTION>
September 30, 1999(1)
-------------------------
(in millions of dollars
except per share amounts)
<S> <C>
Debt:
Commercial paper and other borrowing due within one
year (2)............................................ $ 4,916
Long-Term Borrowings:
Due from one to two years.......................... 550
Due after two and through five years............... 2,580
Due after five years............................... 4,082
-------
Total debt....................................... $12,128
=======
Shareholders' Equity:
Convertible Class A preferred stock, stated value $1
per share; 600,000,000 shares authorized, 95,405,000
outstanding......................................... $ 1,768
Non-Voting Class B preferred stock, stated value $1
per share; 200,000,000 shares authorized, none
outstanding......................................... --
Common Stock, stated value $1 per share;
5,000,000,000 shares authorized, 1,315,700,000
outstanding......................................... 1,316
Additional paid-in capital........................... 1,432
Reserve for Employee Stock Ownership Plan debt
retirement.......................................... (1,531)
Accumulated other comprehensive income............... (1,513)
Retained earnings.................................... 10,880
-------
Total shareholders' equity....................... 12,352
=======
Total capitalization........................... $24,480
=======
</TABLE>
- --------
(1) As of November 15, 1999, we are not aware of any material changes since
September 30, 1999 in our common stock, increases in our consolidated long-
term debt or any decreases in our consolidated net current assets or
consolidated shareholders' equity, except in connection with acquisitions
of common stock under our previously announced discretionary stock
repurchase plan. Since September 30, 1999, we have acquired Recovery
Engineering, Inc. and have completed an October 19, 1999 offering of $81
million principal amount of floating rate notes due October 26, 2049, and a
November 10, 1999 offering of $70 million principal amount of floating rate
notes due November 15, 2039.
(2) Includes $265 million equivalent to current portion of long-term debt due
within one year. We maintain credit facilities in support of our short-term
commercial paper borrowings. At September 30, 1999 our short-term bank
lines with banks amounted to $3.5 billion (none of which had been utilized
at October 31, 1999).
S-9
<PAGE>
MANAGEMENT
Directors
<TABLE>
<CAPTION>
Name Principal Occupation
---- --------------------
<C> <S>
Norman R. Augustine Chairman of the Executive Committee, Lockheed Martin
Corporation (aerospace, electronics, telecommunications,
information management and energy systems). Director of
Lockheed Martin Corporation, The Black and Decker
Corporation and Phillips Petroleum Company; Director of
Procter & Gamble since 1989; Chairman of the Compensation
Committee and member of the Executive and Finance
Committees; age 64.
Donald R. Beall Retired Chairman and Chief Executive Officer, Rockwell
International Corporation (industrial, automation,
avionics and communications and electronic commerce) and
Chairman of the Executive Committee. Director of Rockwell
International Corporation, Conexant Systems, Inc., Meritor
Automotive, Inc. and Times-Mirror Company; Director of
Procter & Gamble since 1992; Chairman of the Audit
Committee and member of the Executive and Public Policy
Committees; age 61.
Gordon F. Brunner Chief Technology Officer. Director of Procter & Gamble
since 1991; age 61.
Richard B. Cheney Chief Executive Officer, Halliburton Company (energy
services, engineering and construction). Director of
Halliburton Company, Electronic Data Systems Corporation,
and Union Pacific Corporation; Director of Procter &
Gamble since 1993; member of the Audit, Compensation and
Public Policy Committees; age 58.
Richard J. Ferris Retired Co-Chairman, Doubletree Corporation. Director of
BP Amoco Corporation and Candlewood Hotel Company, Inc.;
Director of Procter & Gamble since 1979; Chairman of the
Finance Committee and member of the Executive and Public
Policy Committees; age 63.
Joseph T. Gorman Chairman and Chief Executive Officer, TRW Inc.
(electronic, automotive, industrial and aerospace
equipment). Director of TRW Inc. and Aluminum Company of
America; Director of Procter & Gamble since 1993; member
of the Compensation, Executive and Finance Committees; age
62.
Durk I. Jager Chairman of the Board, President and Chief Executive.
Director of Eastman Kodak Company; Director of Procter &
Gamble since 1989; member of the Executive Committee; age
56.
Charles R. Lee Chairman and Chief Executive Officer, GTE Corporation
(telecommunications services). Director of GTE
Corporation, United Technologies Corporation and USX
Corporation; Director of Procter & Gamble since 1994;
member of the Audit, Board Organization and Nominating,
and Compensation Committees; age 59.
Lynn M. Martin Professor, J.L. Kellogg Graduate School of Management,
Northwestern University. Director of SBC Communications,
Ryder System, Inc., TRW Inc., Dreyfus Funds and Harcourt
General Inc.; Director of Procter & Gamble since 1994;
member of the Finance, Board Organization and Nominating
and Public Policy Committees; age 59.
John E. Pepper Retired Chairman of the Board and Chief Executive.
Director of Motorola, Inc. and Xerox Corporation. Director
of Procter & Gamble since 1984; Chairman of the Executive
Committee and member of the Finance and Public Policy
Committees; age 61.
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
Name Principal Occupation
---- --------------------
<C> <S>
John C. Sawhill, Ph.D. President and Chief Executive Officer, The Nature
Conservancy (an international conservation
organization). Director of Pacific Gas & Electric
Company, NACCO Industries, Newfield Exploration
Company and Vanguard Group of Mutual Funds;
Director of Procter & Gamble since 1996; member of
the Audit, Board Organization and Nominating and
Public Policy Committees; age 63.
John F. Smith, Jr. Chairman and Chief Executive Officer, General
Motors Corporation (automobile and related
businesses). Director of General Motors
Corporation; Director of Procter & Gamble since
1995; member of the Audit, Board Organization and
Nominating and Public Policy Committees; age 61.
Ralph Snyderman, M.D. Chancellor for Health Affairs, Executive Dean,
School of Medicine at Duke University, and
President/CEO of Duke University Health System.
Director of Ariad, Inc.; Director of Procter &
Gamble since 1995; member of the Audit, Board
Organization and Nominating and Public Policy
Committees; age 59.
Robert D. Storey Partner in the law firm of Thompson, Hine & Flory,
L.L.P., Cleveland, Ohio. Director of GTE
Corporation and The May Department Stores Company;
Director of Procter & Gamble since 1988; Chairman
of the Public Policy Committee and member of the
Audit and Board Organization and Nominating
Committees; age 63.
Marina v.N. Whitman, Ph.D. Professor of Business Administration and Public
Policy, University of Michigan. Director of
Aluminum Company of America, Browning-Ferris
Industries, Inc., Chase Manhattan Corporation and
its subsidiary Chase Manhattan Bank, and Unocal
Corporation; Director of Procter & Gamble since
1976; Chairman of the Board Organization and
Nominating Committee, and member of the
Compensation and Finance Committees; age 64.
</TABLE>
Executive Officers
<TABLE>
<CAPTION>
Name Office Held
---- -----------
<C> <S>
Durk I. Jager........... Chairman of the Board, President and Chief Executive.
Director since December 12, 1989.
Wolfgang C. Berndt...... President--Global Fabric & Home Care and Europe
Alan G. Lafley.......... President--Global Beauty Care and North America
Jorge P. Montoya........ President--Global Food & Beverage and Latin America
Richard L. Antoine...... Global Human Resources & Product Supply Officer
Gordon F. Brunner....... Chief Technology Officer. Director since March 1,
1991.
Bruce L. Byrnes......... President--Global Health Care and Corporate New
Ventures
R. Kerry Clark.......... President--Global Feminine Care and Asia
Clayton C. Daley, Jr.... Chief Financial Officer
Stephen N. David........ Global Customer Business Development Officer
James J. Johnson........ Chief Legal Officer
Mark D. Ketchum......... President--Global Baby Care
Gary T. Martin.......... President--Global Tissues & Towel
David R. Walker......... Vice President and Comptroller
</TABLE>
All of the above Executive Officers, except James J. Johnson and David R.
Walker, are members of the Global Leadership Council of The Procter & Gamble
Company and have been employed by Procter & Gamble for over five years.
S-11
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
the more general description of the debt securities contained in the
accompanying prospectus. If there are any inconsistencies between the
information in this section and the information in the prospectus, the
information in this section controls.
Investors should read this section together with the section entitled
"Description of Debt Securities" in the accompanying prospectus. Any
capitalized terms that are defined in the prospectus have the same meanings in
this section unless a different definition appears in this section. We qualify
the description of the notes by reference to the indenture as described below.
General
The notes:
. will be in the aggregate principal amount of (Yen)40,000,000,000,
subject to our ability to issue additional notes which may be of the
same series as these notes as described under "--Further Issues,"
. are senior debt of Procter & Gamble, ranking equally with all other
present and future unsecured and unsubordinated indebtedness of Procter
& Gamble,
. will be issued as a separate series under the indenture between Procter
& Gamble and Bank One Trust Company, NA (formerly known as The First
National Bank of Chicago), as the trustee, dated as of September 28,
1992, in registered, book-entry form only,
. will be issued as of December 7, 1999, in Japanese yen in denominations
of (Yen)1 million and integral multiples of (Yen)1 million,
. will mature on December 7, 2005,
. will be repaid at par at maturity,
. are not redeemable by us prior to maturity, other than as described
below in connection with certain events involving U.S. taxation,
. are subject to defeasance and covenant defeasance, and
. are not subject to any sinking fund.
The indenture and the notes do not limit the amount of indebtedness which
may be incurred or the amount of securities which may be issued by us or our
subsidiaries, and contain no financial or similar restrictions on us or our
subsidiaries, except as described in the prospectus under the caption
"Description of Debt Securities--Restrictive Covenants."
The currency of payment for the notes is Japanese yen. However, when
interests in the notes are held through DTC, all payments in respect of such
DTC notes will be made in U.S. dollars, unless the holder of a beneficial
interest in the DTC notes elects to receive payment in Japanese yen. See
"Currency Conversions and Foreign Exchange Risks Affecting Yen Notes--Currency
Conversions."
Interest
The notes will bear interest from and including December 7, 1999 at the rate
of 1.5% per annum, payable in equal semi-annual installments on June 7 and
December 7 of each year, the first such payment to be made on June 7, 2000, to
the person in whose name the notes are registered at the close of business on
the fifteenth calendar day next preceding such June 7 and December 7 (the
"record date").
Whenever it is necessary to compute any amount of accrued interest in
respect of the notes for a period of less than one full year, other than with
respect to regular semi-annual interest payments, interest will be calculated
on the basis of the actual number of days in the period and a year of 365 days.
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If either a date for payment of principal or interest on the notes or the
maturity date of the notes falls on a day that is not a Business Day, the
related payment of principal or interest will be made on the next succeeding
Business Day as if made on the date the payment was due. No interest will
accrue on any amounts payable for the period from and after the date for
payment of principal or interest on the notes or the maturity date of the
notes. For these purposes, "Business Day" means any day which is a day on which
commercial banks and foreign exchange markets settle payments and are open for
general business (including dealings in foreign exchange and foreign currency
deposits) in: (a) the relevant place of payment and (b) The City of New York,
Tokyo and London.
A fiscal agency agreement dated as of December 7, 1999 will be entered into
in relation to the notes between Procter & Gamble, Citibank, N.A. London
office, as registrar, fiscal agent and exchange agent, and the other paying
agent named therein. Payment of principal of and interest on the notes will be
made through the office of the fiscal agent in London. The terms "registrar,"
"fiscal agent," "exchange agent" and "paying agent" shall include any
successors appointed from time to time in accordance with the provisions of the
fiscal agency agreement, and any reference to an "agent" or "agents" shall mean
any or all (as applicable) of such persons.
The noteholders are bound by, and are deemed to have notice of, the
provisions of the fiscal agency agreement. Copies of the fiscal agency
agreement are available for inspection during usual business hours at the
principal office of the fiscal agent. A copy of the fiscal agency agreement
will also be available for inspection at the office of Credit Agricole Indosuez
Luxembourg S.A.
Additional Amounts
All payments of principal and interest in respect of the notes will be made
free and clear of, and without deduction or withholding for or on account of
any present or future taxes, duties, assessments or other governmental charges
of whatsoever nature imposed, levied, collected, withheld or assessed by the
United States or any political subdivision or taxing authority of or in the
United States, unless such withholding or deduction is required by law (see
"United States Tax Considerations" below).
In the event such withholding or deduction is required by law, subject to
the limitations described below, we will pay as additional interest on the
notes to the holder or beneficial owner of any note who is a non-U.S. holder
(as defined under "United States Tax Considerations--Non-U.S. Holders" below)
such additional amounts ("Additional Amounts") as may be necessary in order
that every net payment by us or any paying agent of principal of or interest on
the notes (including upon redemption), after deduction or withholding for or on
account of any present or future tax, duty, assessment or other governmental
charge imposed upon or as a result of such payment by the United States or any
political subdivision or taxing authority of or in the United States, will not
be less than the amount provided for in such note to be then due and payable
before any such tax, duty, assessment or other governmental charge.
However, our obligation to pay Additional Amounts shall not apply to:
(a) any tax, duty, assessment or other governmental charge which would
not have been so imposed but for:
(1) the existence of any present or former connection between such
holder or beneficial owner (or between a fiduciary, settlor,
beneficiary, member or shareholder or other equity owner of, or a
person having a power over, such holder or beneficial owner, if such
holder or beneficial owner is an estate, a trust, a limited liability
company, a partnership, a corporation or other entity) and the United
States, including, without limitation, such holder or beneficial owner
(or such fiduciary, settlor, beneficiary, member, shareholder or other
equity owner or person having such a power) being or having been a
citizen or resident or treated as a resident of the United States or
being or having been engaged in a trade or business in the United
States or being or having been present in the United States or having
or having had a permanent establishment in the United States,
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(2) the failure of such holder or beneficial owner to comply with
any requirement under United States tax laws and regulations to
establish entitlement to a partial or complete exemption from such tax,
duty, assessment or other governmental charge (including, but not
limited to, the requirement to provide Internal Revenue Service Forms
W-8BEN, Forms W-8ECI, or any subsequent versions thereof or successor
thereto) or
(3) such holder's or beneficial owner's present or former status as
a personal holding company or a foreign personal holding company with
respect to the United States, as a controlled foreign corporation with
respect to the United States, as a passive foreign investment company
with respect to the United States, as a foreign tax exempt organization
with respect to the United States or as a corporation which accumulates
earnings to avoid United States federal income tax;
(b) any tax, duty, assessment or other governmental charge imposed by
reason of the holder or beneficial owner:
(1) owning or having owned, directly or indirectly, actually or
constructively, 10% or more of the total combined voting power of all
classes of Procter & Gamble's stock,
(2) being a bank receiving interest described in section
881(c)(3)(A) of the Internal Revenue Code (as defined in "United States
Tax Considerations" below) or
(3) being a controlled foreign corporation with respect to the
United States that is related to Procter & Gamble by stock ownership;
(c) any tax, duty, assessment or other governmental charge which would
not have been so imposed but for the presentation by the holder or
beneficial owner of such note for payment on a date more than 10 days after
the date on which such payment became due and payable or the date on which
payment of the note is duly provided for and notice is given to holders,
whichever occurs later, except to the extent that the holder or beneficial
owner would have been entitled to such additional amounts on presenting
such note on any date during such 10-day period;
(d) any estate, inheritance, gift, sales, transfer, personal property,
wealth, interest equalization or similar tax, assessment or other
governmental charge;
(e) any tax, duty, assessment or other governmental charge which is
payable otherwise than by withholding from payment of principal of or
interest on such note;
(f) any tax, duty, assessment or other governmental charge which is
payable by a holder that is not the beneficial owner of the note, or a
portion of the note, or that is a fiduciary, partnership, limited liability
company or other similar entity, but only to the extent that a beneficial
owner, a beneficiary or settlor with respect to such fiduciary or member of
such partnership, limited liability company or similar entity would not
have been entitled to the payment of an additional amount had such
beneficial owner, settlor, beneficiary or member received directly its
beneficial or distributive share of the payment;
(g) any tax, duty, assessment or other governmental charge required to
be withheld by any paying agent from any payment of principal of or
interest on any note, if such payment can be made without such withholding
by any other paying agent; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g).
For purposes of this section, the holding of or the receipt of any payment
with respect to a note will not constitute a connection (1) between the holder
or beneficial owner and the United States or (2) between a fiduciary, settlor,
beneficiary, member or shareholder or other equity owner of, or a person having
a power over, such holder or beneficial owner if such holder or beneficial
owner is an estate, a trust, a limited liability company, a partnership, a
corporation or other entity and the United States.
Any reference in this prospectus supplement and the prospectus, in the
indenture, in the fiscal agency agreement or in the notes to principal or
interest shall be deemed to refer also to Additional Amounts which may be
payable under the provisions of this section.
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Procter & Gamble will pay all stamp and other duties, if any, which may be
imposed by the United States or any political subdivision thereof or taxing
authority therein with respect to the execution and delivery of the fiscal
agency agreement or issuance of the notes.
Except as specifically provided in the notes, Procter & Gamble will not be
required to make any payment with respect to any tax, duty, assessment or
other governmental charge imposed by any government or any political
subdivision or taxing authority of or in the United States.
Tax Redemption
Except as provided below, the notes may not be redeemed prior to maturity.
Unless previously redeemed or repurchased and canceled, the notes will be
payable at par, including Additional Amounts, if any, on December 7, 2005, or
such earlier date on which the notes shall be due and payable in accordance
with the terms and conditions of the notes. However, if the maturity date of
the notes is not a Business Day, the notes will be payable on the next
succeeding Business Day and no interest shall accrue for the period from
December 7, 2005 to such payment date.
The notes may be redeemed at our option, in whole but not in part, at a
redemption price equal to 100% of the principal amount of the notes to be
redeemed, together with interest accrued and unpaid to the date fixed for
redemption, at any time, on giving not less than 30 nor more than 60 days'
notice in accordance with "Notices" below, which notice shall be irrevocable,
if
(a) we have or will become obligated to pay Additional Amounts as a
result of any change in or amendment to the laws, regulations or rulings of
the United States or any political subdivision or any taxing authority of
or in the United States affecting taxation, or any change in or amendment
to an official application, interpretation, administration or enforcement
of such laws, regulations or rulings, which change or amendment is
announced or becomes effective on or after the date of this prospectus
supplement, or
(b) any action shall have been taken by a taxing authority, or any
action has been brought in a court of competent jurisdiction, in the United
States or any political subdivision or taxing authority of or in the United
States, including any of those actions specified in (a) above, whether or
not such action was taken or brought with respect to Procter & Gamble, or
any change, clarification, amendment, application or interpretation of such
laws, regulations or rulings shall be officially proposed, in any such case
on or after the date of this prospectus supplement, which results in a
substantial likelihood that we will be required to pay Additional Amounts
on the next interest payment date.
However, no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which we would be, in the case of a redemption
for the reasons specified in (a) above, or there would be a substantial
likelihood that we would be, in the case of a redemption for the reasons
specified in (b) above, obligated to pay such Additional Amounts if a payment
in respect of the notes were then due.
Prior to the publication of any notice of redemption pursuant to this
section, we will deliver to the trustee
(1) a certificate signed by one of our duly authorized officers stating
that we are entitled to effect such redemption and setting forth a
statement of facts showing that the conditions precedent to our right so to
redeem have occurred, and
(2) in the case of a redemption for the reasons specified in (a) or (b)
above, a written opinion of independent legal counsel of recognized
standing to the effect that we have or will become obligated to pay such
Additional Amounts as a result of such change or amendment or that there is
a substantial likelihood that we will be required to pay such Additional
Amounts as a result of such action or proposed change, clarification,
amendment, application or interpretation, as the case may be.
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Such notice, once delivered by us to the trustee, will be irrevocable.
Book-Entry System
The information set out below in connection with DTC, Euroclear and
Cedelbank is subject to any change in or reinterpretation of the rules,
regulations and procedures of the clearing systems currently in effect. The
information in this section concerning the clearing systems has been obtained
from sources that we believe to be reliable, but neither we nor any underwriter
takes any responsibility for the accuracy thereof.
Investors wishing to use the facilities of any of the clearing systems are
advised to confirm the applicability of the rules, regulations and procedures
of the relevant clearing system. Neither Procter & Gamble nor any other party
to the fiscal agency agreement will have any responsibility or liability for
any aspect of the records relating to, or payments made on account of interests
in the notes held through the facilities of, any clearing system or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
General
Notes which are offered and sold outside the United States (the
"international notes") will be represented by beneficial interests in a fully
registered permanent global note (the "international global note") without
interest coupons attached, which will be registered in the name of Citivic
Nominees Limited, as nominee for, and shall be deposited on or about December
7, 1999 with, Citibank, N.A. London office, as common depositary for, and in
respect of interests held through, Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System, and Cedelbank. The
international notes will initially be held through the Euroclear System.
Cedelbank will not hold any of the international notes until it receives
appropriate approval from the United States Securities & Exchange Commission
for transactions of this nature. It is expected that notes may be held through
Cedelbank after it obtains such approval.
Notes which are offered and sold in the United States (the "DTC notes" and,
together with the international notes, the "notes") will be represented by
beneficial interests in a fully registered permanent global note (the "DTC
global note" and, together with the international global note, the "global
notes"), without interest coupons attached, which will be deposited on or about
December 7, 1999 with Citibank, N.A. London office, as custodian for, and
registered in the name of Cede & Co., as nominee for the Depository Trust
Company.
Together, the notes represented by the global notes will equal the aggregate
principal amount of the notes outstanding at any time. The amount of notes
represented by each of the DTC global note and the international global note is
evidenced by the register maintained for that purpose by the registrar.
Beneficial interests in the global notes will be shown on, and transfers
thereof will be effected only through, records maintained by DTC, Euroclear and
Cedelbank and their participants. Except as described herein, individual
registered certificates will not be issued in exchange for beneficial interests
in the global notes.
A holder of DTC notes will receive all payments under the DTC notes in U.S.
dollars, unless such holder makes an election as described herein for payment
in Japanese yen. The amount payable in U.S. dollars will be equal to the amount
of Japanese yen otherwise payable exchanged into U.S. dollars at the
(Yen)/U.S.$ rate of exchange prevailing two Business Days prior to the relevant
payment date. See "Currency Conversions and Foreign Exchange Risks Affecting
Yen Notes--Currency Conversions" herein.
Owners of beneficial interests in the global notes will not be entitled to
have notes registered in their names, and will not receive or be entitled to
receive physical delivery of definitive notes representing individual
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notes. In the event definitive notes are issued, we will appoint a paying agent
and transfer agent in Luxembourg and holders of definitive notes will be able
to receive payments and effect transfers at the offices of the Luxembourg
paying and transfer agent.
Individual registered certificates in respect of notes will not be issued in
exchange for the global notes, except in very limited circumstances. If (1)
Euroclear, Cedelbank or DTC notifies us that it is unwilling or unable to
continue as a clearing system in connection with a global note or, in the case
of DTC only, DTC ceases to be a clearing agency registered under the United
States Securities Exchange Act of 1934, as amended, and in each case we do not
appoint a successor clearing system within 90 days after receiving such notice
from Euroclear, Cedelbank or DTC or on becoming aware that DTC is no longer so
registered, (2) an event of default has occurred and is continuing under the
indenture or (3) we elect at our option to terminate the book-entry system
through DTC, Euroclear and Cedelbank, we will issue or cause to be issued
individual certificates in registered form on registration of, transfer of or
in exchange for book-entry interests in the notes represented by such global
note in whole but not in part upon delivery of such global note for
cancellation.
Subject to applicable law and the terms of the indenture, Procter & Gamble,
the registrar and any paying agent will treat the persons in whose names the
global notes are registered, initially Cede & Co. and Citivic Nominees Limited,
as owners of such notes for the purpose of receiving payments of principal and
interest (and Additional Amounts, if any) on the notes and for all other
purposes whatsoever. Therefore, none of Procter & Gamble, the registrar or any
paying agent has any direct responsibility or liability for the payment of
principal of or interest on the notes to owners of beneficial interests in the
global notes. All payments made by Procter & Gamble to the registered holders
of the global notes shall discharge the liability of Procter & Gamble under the
notes to the extent of the sums so paid.
The Depository Trust Company
DTC is acting as securities depositary for the DTC notes. The DTC notes have
been issued as fully registered notes registered in the name of Cede & Co. DTC
is:
. a limited-purpose trust company organized under the New York Banking Law;
. a "banking organization" under the New York Banking Law;
. a member of the Federal Reserve System;
. a "clearing corporation" under the New York Uniform Commercial Code; and
. a "clearing agency" registered under the provisions of Section 17A of
the United States Securities Exchange Act of 1934, as amended.
DTC holds securities that its direct participants deposit with DTC. DTC also
facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in direct participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants of DTC include securities brokers and dealers (including
underwriters), banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Indirect participants of DTC,
such as securities brokers and dealers, banks and trust companies, can also
access the DTC system if they maintain a custodial relationship with a direct
participant.
If you are not a direct participant or an indirect participant and you wish
to purchase, sell or otherwise transfer ownership of, or other interests in,
notes, you must do so through a direct participant or an indirect participant.
DTC agrees with and represents to DTC participants that it will administer its
book-entry system in accordance with its rules and by-laws and requirements of
law. The United States Securities and Exchange Commission has on file a set of
the rules applicable to DTC and its direct participants.
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Purchases of notes under DTC's system must be made by or through direct
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each beneficial owner is in turn to be recorded on the
records of direct participants and indirect participants. Beneficial owners
will not receive written confirmation from DTC of their purchase, but
beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the direct participants or indirect participants through which such
beneficial owners entered into the transaction. Transfers of ownership
interests in the notes are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners will not
receive certificates representing their ownership interests in notes, except in
limited circumstances.
The DTC notes deposited with DTC are registered in the name of DTC's
nominee, Cede & Co. The deposit of notes with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the notes. DTC's records reflect
only the identity of the direct participants to whose accounts such notes are
credited, which may or may not be the beneficial owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Year 2000 Compliance
DTC has advised that DTC management is aware that some computer
applications, systems and the like for processing data that are dependent on
calendar dates, including dates before, on and after January 1, 2000, may
encounter "Year 2000" computer problems. DTC has informed its participants and
other members of the financial community that it has developed and is
implementing a program so that its computer systems, as the same relate to the
timely payment of distributions (including principal and interest payments) to
securityholders, book-entry deliveries and settlement of trades within DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.
DTC's ability to perform properly its services is also dependent on third
parties, including but not limited to issuers and their agents, as well as
third party vendors from whom DTC licenses software and hardware, and third
party vendors on whom DTC relies for information or the provision of services,
including telecommunications and electrical utility service providers, among
others. DTC has informed the financial community that it is contacting (and
will continue to contact) third party vendors from whom DTC acquires services
to (1) impress upon them the importance of such services being Year 2000
compliant and (2) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In addition, DTC
is in the process of developing such contingency plans as it deems appropriate.
The foregoing information with respect to DTC's Year 2000 preparations has
been provided to the financial community for informational purposes only and is
not intended to serve as a representation, warranty or contract modification of
any kind.
Cedelbank
Cedelbank was incorporated as a limited company under Luxembourg law. Cedel
International, societe anonyme, owns Cedelbank. Cedel International's
shareholders are banks, securities dealers and financial institutions.
Cedelbank holds securities for its customers and facilitates the clearance
and settlement of securities transactions between Cedelbank customers through
electronic book-entry changes in accounts of Cedelbank
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customers, thus eliminating the need for physical movement of certificates.
Cedelbank provides to its customers, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in a number of countries. Cedelbank has established an
electronic bridge with Morgan Guaranty Trust Company of New York, the operator
of the Euroclear System, to facilitate settlement of trades between Cedelbank
and Euroclear.
As a registered bank in Luxembourg, Cedelbank is subject to regulation by
the Luxembourg Commission for the Supervision of the Financial Sector.
Cedelbank customers are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies
and clearing corporations. In the United States, Cedelbank customers are
limited to securities brokers and dealers. Cedelbank customers may include the
underwriters. Other institutions that maintain a custodial relationship with a
Cedelbank customer may obtain indirect access to Cedelbank. Cedelbank is an
indirect participant in DTC.
Distributions with respect to the notes held beneficially through Cedelbank
will be credited to cash accounts of Cedelbank customers in accordance with its
rules and procedures, to the extent received by Cedelbank.
The Euroclear System
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thus eliminating the need for physical movement of certificates and
risk from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in many currencies, including United States dollars. The
Euroclear System provides various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described below.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York through its Brussels, Belgium office (the "Euroclear Operator"), under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "Cooperative"). The Euroclear Operator conducts all
operations, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear System on behalf of Euroclear
participants. Euroclear participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
Euroclear is an indirect participant in DTC.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. The Board of
Governors of the Federal Reserve System, the New York State Banking Department
and the Belgian Banking Commission regulate and examine the Euroclear Operator.
The Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear System and applicable Belgian law govern
securities clearance accounts and cash accounts with the Euroclear Operator.
Specifically, these terms and conditions govern:
. transfers of securities and cash within the Euroclear System;
. withdrawal of securities and cash from the Euroclear System; and
. receipts of payments with respect to securities in the Euroclear System.
All securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the terms and conditions only on behalf of
Euroclear participants and has no record of or relationship with persons
holding securities through Euroclear participants.
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Distributions with respect to notes held beneficially through Euroclear will
be credited to the cash accounts of Euroclear participants in accordance with
the Euroclear Terms and Conditions, to the extent received by the Euroclear
Operator and by Euroclear.
Euroclear, Cedelbank and DTC Arrangements
So long as DTC or its nominee or Euroclear, Cedelbank or the nominee of
their common depositary is the registered holder of the global notes, DTC,
Euroclear, Cedelbank or such nominee, as the case may be, will be considered
the sole owner or holder of the notes represented by such global notes for all
purposes under the fiscal agency agreement and the notes. Payments of
principal, interest and additional amounts, if any, in respect of the global
notes will be made to DTC, Euroclear, Cedelbank or such nominee, as the case
may be, as the registered holder thereof. None of Procter & Gamble, any agent
or any underwriter or any affiliate of any of the above or any person by whom
any of the above is controlled (as such term is defined in the United States
Securities Act of 1933, as amended), have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the global notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Distributions of principal and interest with respect to book-entry interests
in the notes held through Euroclear or Cedelbank will be credited, to the
extent received by Euroclear or Cedelbank from the fiscal agent, to the cash
accounts of Euroclear or Cedelbank customers in accordance with the relevant
system's rules and procedures.
Holders of book-entry interests in the notes through DTC will receive, to
the extent received by DTC from the fiscal agent, all distributions of
principal and interest with respect to book-entry interests in the notes from
the fiscal agent through DTC. Distributions in the United States will be
subject to relevant U.S. tax laws and regulations.
Interest on the notes (other than interest on redemption) will be paid to
the holder shown on the register on the applicable record date. Trading between
the DTC global note and the international global note will therefore be net of
accrued interest from the record date to the relevant interest payment date.
The laws of some states of the United States require that certain persons
take physical delivery of securities in definitive form. Consequently, the
ability to transfer interests in the global notes to such persons will be
limited. Because DTC, Euroclear and Cedelbank can only act on behalf of
participants, who in turn act on behalf of indirect participants, the ability
of a person having an interest in the global notes to pledge such interest to
persons or entities which do not participate in the relevant clearing system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate in respect of such interest.
The holdings of book-entry interests in the notes through Euroclear,
Cedelbank and DTC will be reflected in the book-entry accounts of each such
institution. As necessary, the registrar will adjust the amounts of the notes
on the register for the accounts of (i) Citivic Nominees Limited and (ii) Cede
& Co. to reflect the amounts of notes held through Euroclear and Cedelbank, and
DTC, respectively.
Beneficial ownership of notes will be held through financial institutions as
direct and indirect participants in Euroclear, Cedelbank and DTC. Interests in
the global notes will be in uncertificated book-entry form.
Secondary Market Trading in Relation to Registered Global Notes
Trading between Euroclear and/or Cedelbank Participants
Secondary market sales of book-entry interests in the notes held through
Euroclear or Cedelbank to purchasers of book-entry interests in the
international notes through Euroclear or Cedelbank will be conducted in
accordance with the normal rules and operating procedures of Euroclear and
Cedelbank and will be settled using the procedures applicable to conventional
Eurobonds.
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Trading between DTC Participants
Secondary market sales of book-entry interests in the DTC notes between DTC
participants will occur in the ordinary way in accordance with DTC rules and
will be settled using the procedures applicable to United States corporate debt
obligations if payment is effected in U.S. dollars, or free of payment if
payment is not effected in U.S. dollars. Where payment is not effected in U.S.
dollars, separate payment arrangements outside DTC are required to be made
between the DTC participants.
Trading between DTC Seller and Euroclear/Cedelbank Purchaser
When book-entry interests in notes are to be transferred from the account of
a DTC participant holding a beneficial interest in a DTC global note to the
account of a Euroclear or Cedelbank accountholder wishing to purchase a
beneficial interest in an international global note (subject to the
certification procedures provided in the fiscal agency agreement), the DTC
participant will deliver instructions for delivery to the relevant Euroclear or
Cedelbank accountholder to DTC by 12:00 noon, New York City time, on the
settlement date. Separate payment arrangements are required to be made between
the DTC participant and the relevant Euroclear or Cedelbank accountholder. On
the settlement date, the custodian will instruct the registrar to (i) decrease
the amount of notes registered in the name of Cede & Co. and evidenced by the
DTC global note and (ii) increase the amount of notes registered in the name of
the nominee (being Citivic Nominees Limited) of the common depositary for
Euroclear and Cedelbank and evidenced by the international global note. Book-
entry interests will be delivered free of payment to Euroclear or Cedelbank, as
the case may be, for credit to the relevant accountholder on the first business
day following the settlement date but for value settlement date.
Trading between Euroclear/Cedelbank Seller and DTC Purchaser
When book-entry interests in the notes are to be transferred from the
account of a Euroclear or Cedelbank accountholder to the account of a DTC
participant wishing to purchase a beneficial interest in the DTC global note
(subject to the certification procedures provided in the fiscal agency
agreement), the Euroclear or Cedelbank participant must send to Euroclear or
Cedelbank delivery free of payment instructions by 7:45 p.m.,
Luxembourg/Brussels time as the case may be, one business day prior to the
settlement date. Euroclear or Cedelbank, as the case may be, will in turn
transmit appropriate instructions to the common depositary for Euroclear and
Cedelbank and the registrar to arrange delivery to the DTC participant on the
settlement date. Separate payment arrangements are required to be made between
the DTC participant and the relevant Euroclear and Cedelbank accountholder, as
the case may be.
On the settlement date, the common depositary for Euroclear and Cedelbank
will (a) transmit appropriate instructions to the custodian who will in turn
deliver such book-entry interests in the notes free of payment to the relevant
account of the DTC participant and (b) instruct the registrar to (i) decrease
the amount of notes registered in the name of the nominee (being Citivic
Nominees Limited) of the common depositary for Euroclear and Cedelbank and
evidenced by the international global notes and (ii) increase the amount of
notes registered in the name of Cede & Co. and evidenced by the DTC global
note.
Although the foregoing sets out the procedures of Euroclear, Cedelbank and
DTC in order to facilitate the transfers of interests in the notes among
participants of DTC, Cedelbank and Euroclear, none of Euroclear, Cedelbank or
DTC is under any obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither we, the fiscal
agent, the registrar, the trustee, any paying agent, any underwriter or any
affiliate of any of the above, or any person by whom any of the above is
controlled for the purposes of the United States Securities Act of 1933, as
amended, will have any responsibility for the performance by DTC, Euroclear and
Cedelbank or their respective direct or indirect participants or accountholders
of their respective obligations under the rules and procedures governing their
operations or for the sufficiency for any purpose of the arrangements described
above.
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Notices
So long as the international global note is held on behalf of Euroclear and
Cedelbank or any other clearing system, notices to holders of notes represented
by a beneficial interest in the international global notes may be given by
delivery of the relevant notice to Euroclear, Cedelbank or the alternative
clearing system, as the case may be. So long as the DTC global note is held on
behalf of DTC or an alternative clearing system, notices to holders of notes
represented by a beneficial interest in the DTC global note may be given by
delivery of the relevant notice to DTC or the alternative clearing system, as
the case may be.
In addition, so long as the notes are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require, notices
will also be published in a leading newspaper having general circulation in
Luxembourg (which is expected to be the Luxemburger Wort) or, if such
publication is not practicable, in an English language newspaper having general
circulation in Europe. Published notices will be deemed to have been given on
the date they are published. If publication as described above becomes
impossible, then the trustee may publish sufficient notice by alternative means
that approximate the terms and conditions described in this paragraph.
Registrar
Citibank, N.A. has been appointed as registrar. We may at any time vary or
terminate the appointment of the registrar or any paying agent or approve any
change in the office through which they act, provided that there shall at all
times be a registrar, and provided further that so long as the notes are listed
on any stock exchange (and the rules of such stock exchange so require), we
will maintain a paying agent with offices in the city in which such stock
exchange is located.
Replacement of Notes
If any mutilated note is surrendered to the trustee, we will execute and the
trustee will authenticate and deliver in exchange for such mutilated note a new
note of the same series and principal amount. If the trustee and Procter &
Gamble receive evidence to their satisfaction of the destruction, loss or theft
of any note and such security or indemnity as may be required by them, then we
shall execute and the trustee shall authenticate and deliver, in lieu of such
destroyed, lost or stolen note, a new note of the same series and principal
amount. All expenses associated with issuing the new note shall be borne by the
owner of the mutilated, destroyed, lost or stolen note.
Prescription
Under New York's statute of limitations, any legal action to enforce our
payment obligations evidenced by the notes must be commenced within six years
after payment is due. Thereafter our payment obligations will generally become
unenforceable.
Further Issues
Procter & Gamble may from time to time, without notice to or the consent of
the registered holders of the notes, create and issue further notes ranking
equally with the notes in all respects (or in all respects other than the
payment of interest accruing prior to the issue date of such further notes or
except for the first payment of interest following the issue date of such
further notes). Such further notes may be consolidated and form a single series
with the notes and have the same terms as to status, redemption or otherwise as
the notes.
Governing Law
The indenture and the notes for all purposes shall be governed by and
construed in accordance with the laws of the State of New York.
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UNITED STATES TAX CONSIDERATIONS
The following summary describes the material United States federal income
tax consequences and, in the case of a holder that is a non-U.S. holder (as
defined below), the United States federal estate tax consequences, of
purchasing, owning and disposing of notes. This summary applies to you only if
you are the initial holder of the notes and you acquire the notes for a price
equal to the issue price of the notes. The issue price of the notes is the
first price at which a substantial amount of the notes is sold other than to
bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers.
This summary deals only with notes held as capital assets (generally,
investment property) and does not deal with special tax situations such as:
. dealers in securities or currencies;
. traders in securities;
. United States holders (as defined below) whose functional currency is
not the United States dollar;
. persons holding notes as part of a hedge, straddle, conversion or other
integrated transaction;
. certain United States expatriates;
. financial institutions;
. insurance companies;
. entities that are tax-exempt for United States federal income tax
purposes; and
. persons that acquire the notes for a price other than their issue price.
This summary does not discuss all of the aspects of United States federal
income and estate taxation which may be relevant to you in light of your
particular investment or other circumstances. In addition, this summary does
not discuss any United States state or local income or foreign income or other
tax consequences. This summary is based on United States federal income tax
law, including the provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Treasury regulations, administrative rulings and
judicial authority, all as in effect as of the date of this prospectus
supplement. Subsequent developments in United States federal income tax law,
including changes in law or differing interpretations, which may be applied
retroactively, could have a material effect on the United States federal income
tax consequences of purchasing, owning and disposing of notes as set forth in
this summary. Before you purchase notes, you should consult your own tax
advisor regarding the particular United States federal, state and local and
foreign income and other tax consequences of acquiring, owning and disposing of
the notes that may be applicable to you.
United States Holders
The following summary applies to you only if you are a United States holder
(as defined below).
Definition of a United States Holder
A "United States holder" is a beneficial owner of a note or notes who or
which is:
. an individual citizen or resident of the United States;
. a corporation or partnership created or organized in or under the laws
of the United States or of any political subdivision of the United
States, including any State (unless, in the case of a partnership,
future Treasury regulations otherwise provide);
. an estate, the income of which is subject to United States federal
income taxation regardless of the source of that income; or
. a trust, if, in general, a United States court is able to exercise
primary supervision over the trust's administration and one or more
United States persons (within the meaning of the Internal Revenue Code)
has the authority to control all of the trust's substantial decisions.
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Payments of Interest
Interest on your notes will be taxed as ordinary interest income. In
addition:
. if you use the cash method of accounting for United States federal
income tax purposes, you will have to include the interest on your notes
in your gross income at the time you receive the interest; and
. if you use the accrual method of accounting for United States federal
income tax purposes, you will have to include the interest on your notes
in your gross income at the time the interest accrues.
See "United States Tax Considerations--United States Holders--Foreign
Currency Considerations" below for additional consequences related to the notes
being denominated in Yen.
Sale or Other Disposition of Notes
Your tax basis in your notes generally will be their cost. You generally
will recognize taxable gain or loss when you sell or otherwise dispose of your
notes equal to the difference, if any, between:
. the amount realized on the sale or other disposition (less any amount
attributable to accrued interest, which will be taxable in the manner
described under "United States Tax Considerations--United States
Holders--Payments of Interest"); and
. your tax basis in the notes.
Your gain or loss generally will be capital gain or loss. Such capital gain
or loss will be long-term capital gain or loss if at the time of the sale or
other disposition you have held the notes for more than one year. If you are a
non-corporate United States holder, your long-term capital gain generally will
be subject to a maximum tax rate of 20%. Subject to limited exceptions, your
capital losses cannot be used to offset your ordinary income.
See "United States Tax Considerations--United States Holders--Foreign
Currency Considerations" below for additional consequences related to the notes
being denominated in Yen.
Backup Withholding
In general, "backup withholding" at a rate of 31% may apply:
. to any payments made to you of principal of and interest on your note,
and
. to payment of the proceeds of a sale or exchange of your note before
maturity,
if you are a non-corporate United States holder and fail to provide a correct
taxpayer identification number or otherwise comply with applicable requirements
of the backup withholding rules.
The backup withholding tax is not an additional tax and may be credited
against your United States federal income tax liability, provided that correct
information is provided to the Internal Revenue Service.
Foreign Currency Considerations
Payments of Interest in Yen
If you use the cash method of accounting for United States federal income
tax purposes and you receive a payment of interest in Yen, you will be required
to include in your gross income the United States dollar value of the payment
on the date you receive it (based on the United States dollar spot rate for Yen
on that date), regardless of whether you in fact convert the payment to United
States dollars at that time.
If you use the accrual method of accounting for federal income tax purposes,
you will be required to include in your gross income the United States dollar
value of the amount of interest income that accrues during an accrual period.
The United States dollar value of accrued interest income is determined by
translating that income at the average United States dollar exchange rate for
Yen in effect during that accrual period or, for
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an accrual period that spans two taxable years, the partial period within the
taxable year. You may elect, however, to translate your accrued interest income
using the United States dollar spot rate for Yen on the last day of the accrual
period or, for an accrual period that spans two taxable years, on the last day
of the taxable year. If the last day of an accrual period is within five
business days of the date you receive the accrued interest, you are permitted
to translate the interest using the United States dollar spot rate on the date
of receipt. That election must be applied consistently to all debt instruments
you hold from year to year and may not be changed without the consent of the
Internal Revenue Service. Prior to making that election, you should consult
your own tax advisor.
If you use the accrual method of accounting for United States federal income
tax purposes, you may recognize exchange gain or loss, which will be taxable as
ordinary income or loss, with respect to accrued interest income on the date
you receive the payment of that income. The amount of exchange gain or loss you
recognize will be the difference, if any, between the United States dollar
value of the payment in Yen that you receive in respect of the accrued interest
(based on the United States dollar spot rate for Yen on the date you receive
the payment) and the amount of income you included in respect of that accrued
interest (determined as described in the preceding paragraph).
If you receive a payment of interest in United States dollars as a result of
a currency conversion, then the United States dollar amount so received might
not be the same as the United States dollar amount required to be recognized as
interest income under the rules described above. See "Currency Conversions and
Foreign Exchange Risks Affecting Yen Notes."
Exchange or Purchase of Yen
Yen received as interest on a note or on a sale or other disposition of a
note will have a tax basis equal to its United States dollar value at the time
you receive the interest or at the time at which you sell or otherwise dispose
of your note, as the case may be. If you purchase Yen, its tax basis will
generally be its United States dollar value on the date of purchase. Any gain
or loss recognized on a sale or other disposition of Yen (including its use to
purchase notes or upon exchange for United States dollars) will be taxable as
ordinary income or loss.
Foreign Currency Gain or Loss on Sale or other Disposition
On a sale or other disposition of your note, the amount realized will be
based on the United States dollar value of Yen on the date you receive the
payment or your note is disposed of, or deemed disposed of (or, in certain
circumstances, on the settlement date of the transaction). Gain or loss
realized upon the sale or other disposition that is attributable to
fluctuations in currency exchange rates will be taxable as ordinary income or
loss, which generally will not be treated as interest income or expense. Gain
or loss attributable to fluctuations in exchange rates will be the difference
between the United States dollar value of the Yen received, determined based on
the United States dollar spot rate for Yen on the date the payment is received
or the note is disposed of, or deemed disposed of (or, in certain
circumstances, on the settlement date of the transaction), and the United
States dollar value of the amount of Yen paid to purchase the note, determined
based on the United States dollar spot rate for Yen on the date you acquired
the note (or, in certain circumstances, on the settlement date of the purchase
transaction). This foreign currency gain or loss will be recognized only to the
extent of the total gain or loss realized by you on the sale or other
disposition of the note.
Non-U.S. Holders
The following summary applies to you if you are a beneficial owner of a note
who or which is not a United States holder (as defined above) (a "non-U.S.
holder"). An individual may, subject to exceptions, be deemed to be a resident
alien, as opposed to a non-resident alien, by virtue of being present in the
United States:
. on at least 31 days in the calendar year, and
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. for an aggregate of at least 183 days during a three-year period ending
in the current calendar year, counting for such purposes all of the days
present in the current year, one-third of the days present in the
immediately preceding year, and one-sixth of the days present in the
second preceding year.
Resident aliens are subject to United States federal income tax as if they were
United States citizens.
United States Federal Withholding Tax
Under current United States federal income tax laws, and subject to the
discussion below, United States federal withholding tax will not apply to
payments by Procter & Gamble or any paying agent of Procter & Gamble (in its
capacity as such) of principal of and interest on your notes under the
"portfolio interest" exception of the Internal Revenue Code, provided that in
the case of interest:
. you do not, directly or indirectly, actually or constructively, own ten
percent or more of the total combined voting power of all classes of the
stock of Procter & Gamble entitled to vote within the meaning of section
871(h)(3) of the Internal Revenue Code and the Treasury regulations
thereunder;
. you are not (i) a controlled foreign corporation for United States
federal income tax purposes that is related, directly or indirectly, to
Procter & Gamble through sufficient stock ownership (as provided in the
Internal Revenue Code), or (ii) a bank receiving interest described in
section 881(c)(3)(A) of the Internal Revenue Code;
. such interest is not effectively connected with your conduct of a United
States trade or business; and
. you provide a signed written statement, under penalties of perjury, that
can reliably be related to you, certifying that you are not a United
States person within the meaning of the Internal Revenue Code and
providing your name and address to:
(A) Procter & Gamble or any paying agent of Procter & Gamble; or
(B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course
of its trade or business and holds your notes on your behalf and
that certifies to Procter & Gamble or any paying agent of Procter &
Gamble under penalties of perjury that it, or the bank or financial
institution between it and you, has received from you your signed,
written statement and provides Procter & Gamble or any paying agent
of Procter & Gamble with a copy of this statement.
Recently finalized Treasury regulations generally applicable to payments made
after December 31, 2000 will provide alternative methods for satisfying the
certification requirement described in this section. These regulations may
require a non-U.S. holder to also provide its United States taxpayer
identification number. These regulations generally also will require, in the
case of a note held by a foreign partnership, that:
. the certification described above be provided by the partners; and
. the partnership provide certain information, including a United States
taxpayer identification number.
Further, a look-through rule will apply in the case of tiered partnerships.
United States Federal Income Tax
Except for the possible application of United States withholding tax (see
"United States Tax Considerations--Non-U.S. Holders--United States Federal
Withholding Tax" above) and backup withholding tax (see "United States Tax
Considerations--Backup Withholding and Information Reporting" below), you
generally will not have to pay United States federal income tax on payments of
principal of and interest on your notes, or on any gain or income realized from
the sale, redemption, retirement at maturity or other disposition of your notes
(provided that, in the case of proceeds representing accrued interest, the
conditions
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described in "United States Tax Considerations--Non-U.S. Holders--United States
Federal Withholding Tax" are met) unless:
. in the case of gain, you are an individual who is present in the United
States for 183 days or more during the taxable year of the sale or other
disposition of your notes, and specific other conditions are met; or
. the gain is effectively connected with your conduct of a United States
trade or business, or, if an income tax treaty applies, is generally
attributable to a United States "permanent establishment" maintained by
you.
If you are engaged in a trade or business in the United States and interest,
gain or any other income in respect of your notes is effectively connected with
the conduct of your trade or business, or if an income tax treaty applies and
you maintain a United States "permanent establishment" to which the interest,
gain or other income is generally attributable, you may be subject to United
States income tax on the interest, gain or income (although interest is exempt
from the withholding tax discussed in the preceding paragraphs provided that
you provide a properly executed Internal Revenue Service form on or before any
payment date to claim the exemption). You will have to pay this income tax on a
net basis.
In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30% of your effectively connected earnings and
profits for the taxable year, as adjusted for certain items, unless a lower
rate applies to you under a United States income tax treaty with your country
of residence. For this purpose, you must include interest, gain or income on
your notes in the earnings and profits subject to the branch tax if these
amounts are effectively connected with the conduct of your United States trade
or business.
United States Federal Estate Tax
If you are an individual and are not a citizen or resident of the United
States at the time of your death, your notes will generally not be subject to
the United States federal estate tax, unless, at the time of your death:
. you directly or indirectly, actually or constructively, own ten percent
or more of the total combined voting power of all classes of stock of
Procter & Gamble that is entitled to vote within the meaning of
section 871(h)(3) of the Internal Revenue Code and the Treasury
regulations thereunder; or
. your interest on the notes is effectively connected with your conduct of
a United States trade or business.
Backup Withholding and Information Reporting
Under current Treasury regulations, backup withholding and information
reporting will not apply to payments made by Procter & Gamble or any paying
agent of Procter & Gamble (in its capacity as such) to you if you have provided
the required certification that you are a non-U.S. holder as described in
"United States Tax Considerations--Non-U.S. Holders--United States Federal
Withholding Tax" above, and provided that neither Procter & Gamble nor any
paying agent of Procter & Gamble has actual knowledge that you are a United
States holder (as described in "United States Tax Considerations--United States
Holders" above). Procter & Gamble or any paying agent of Procter & Gamble may,
however, report payments of interest on the notes. Payments to you of the
proceeds from your disposition of a note made to or through a foreign office of
a broker will not be subject to information reporting or backup withholding,
except that information reporting and, under recently finalized Treasury
regulations generally applicable to payments made after December 31, 2000,
backup withholding may apply to those payments if the broker is:
. a United States person (as defined in the Internal Revenue Code);
. a controlled foreign corporation for United States federal income tax
purposes;
. a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-
year period; or
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. with respect to payments made after December 31, 2000, a foreign
partnership, if at any time during its tax year, one or more of its
partners are United States persons, as defined in Treasury regulations,
who in the aggregate hold more than 50% of the income or capital
interest in the partnership or if, at any time during its tax year, the
foreign partnership is engaged in a United States trade or business.
Payment of the proceeds from your disposition of a note made to or through
the United States office of a broker is subject to information reporting and
backup withholding unless you certify as to your taxpayer identification number
or otherwise establish an exemption from information reporting and backup
withholding.
You should consult your own tax advisor regarding application of backup
withholding in your particular circumstance and the availability of and
procedure for obtaining an exemption from backup withholding under current
Treasury regulations and the Treasury regulations that will become effective
after December 31, 2000. Any amounts withheld under the backup withholding
rules from a payment to you will be allowed as a refund or a credit against
your United States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
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CURRENCY CONVERSIONS AND FOREIGN
EXCHANGE RISKS AFFECTING YEN NOTES
Currency Conversions
Notes which are offered and sold in the United States (the DTC notes) will
be represented by beneficial interests in a fully registered permanent global
note (the DTC global note) which will be deposited with Citibank, N.A. London
office, as custodian for, and registered in the name of Cede & Co., as nominee
for DTC. While interests in the DTC notes are held through the DTC global note,
all payments in respect of such DTC notes will be made in U.S. dollars, except
as otherwise provided in this section.
As determined by the exchange agent under the terms of the fiscal agency
agreement, in accordance with reasonable market practice, the amount of U.S.
dollars payable in respect of any particular payment under the DTC notes will
be equal to the amount of Japanese yen otherwise payable exchanged into U.S.
dollars at the (Yen)/U.S.$ rate of exchange prevailing as at 11:00 a.m. (New
York City time) on the day which is two business days prior to the relevant
payment date, less any costs incurred by the exchange agent for such conversion
(to be shared pro rata among the holders of DTC notes accepting U.S. dollar
payments in the proportion of their respective holdings), all in accordance
with the fiscal agency agreement. If an exchange rate bid quotation is not
available, the exchange agent shall obtain a bid quotation from a leading
foreign exchange bank in The City of New York selected by the exchange agent
for such purpose after consultation with Procter & Gamble. If no bid quotation
from a leading foreign exchange bank is available, payment will be in Japanese
yen to the account or accounts specified by DTC to the exchange agent. Until
such account or accounts are so specified, the funds still held by the exchange
agent shall bear interest at the rate of interest quoted by the exchange agent
for deposits with it on an overnight basis to the extent that the exchange
agent is reasonably able to reinvest such funds.
Notwithstanding the above, the holder of a beneficial interest in the DTC
notes may elect to receive payment or payments under such DTC Note in Japanese
yen by notifying the DTC participant through which its notes are held on or
prior to the applicable record date of (1) such investor's election to receive
all or a portion of such payment in Japanese yen and (2) wire transfer
instructions to a Japanese yen account in Japan. DTC must be notified of such
election and wire transfer instructions on or prior to the third New York
business day after such record date for any payment of interest and on or prior
to the twelfth day prior to the payment of principal. DTC will notify the
fiscal agent and the paying agent of such election and wire transfer
instructions on or prior to 5:00 p.m. New York City time on the fifth New York
business day after such record date for any payment of interest and on or prior
to 5:00 p.m. New York City time on the tenth day prior to the payment of
principal.
If complete instructions are forwarded to DTC through DTC participants and
by DTC to the fiscal agent and the paying agent on or prior to such dates, such
investor will receive payment in Japanese yen outside DTC; otherwise, only U.S.
dollar payments will be made by the fiscal agent to DTC. All costs of such
payment by wire transfer will be borne by holders of beneficial interests
receiving such payments by deduction from such payments. For purposes of this
paragraph, "New York business day" means any day other than a Saturday or
Sunday or a day on which banking institutions in New York City are authorized
or required by law or executive order to close.
Holders of notes will be subject to foreign exchange risks as to payments of
principal and interest that may have important economic and tax consequences to
them. For further information as to such consequences, see "--Foreign Exchange
Risks" below.
Foreign Exchange Risks
An investment in the Japanese yen notes, which are denominated in, and all
payments in respect of which are to be made in, a currency other than the
currency of the country in which the purchaser is resident or the
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currency in which the purchaser conducts its business or activities (the "home
currency") entails significant risks that are not associated with a similar
investment in a security denominated in the home currency. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the home currency and the Japanese yen and the possibility of the
imposition or modification of foreign exchange controls with respect to the
Japanese yen. Such risks generally depend on economic and political events over
which we have no control. In recent years, rates of exchange for certain
currencies, including the Japanese yen, have been highly volatile and such
volatility may be expected to continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative however, of fluctuations in such rate that may occur during the term
of any note. Depreciation of the Japanese yen against the relevant home
currency could result in a decrease in the effective yield of such yen note
below its coupon rate and, in certain circumstances, could result in a loss to
the investor on a home currency basis.
This description of foreign currency risks does not describe all the risks
of an investment in securities denominated in a currency other than the home
currency. Prospective investors should consult with their own financial and
legal advisors as to the risks involved in an investment in the notes.
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UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement and
pricing agreement dated the date hereof, each underwriter named below has
severally agreed to purchase, and we have agreed to sell to such underwriter,
the principal amount of notes set forth opposite the name of such underwriter.
<TABLE>
<CAPTION>
Principal Amount of
Underwriter Notes
----------- -------------------
<S> <C>
Salomon Smith Barney Inc................................ (Yen)18,000,000,000
Tokyo-Mitsubishi International plc...................... 18,000,000,000
Bank of America International Limited................... 1,000,000,000
Deutsche Bank AG London................................. 1,000,000,000
Goldman Sachs International............................. 1,000,000,000
J.P. Morgan Securities Ltd.............................. 1,000,000,000
-------------------
Total................................................. (Yen)40,000,000,000
===================
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the notes if they purchase any
of the notes.
The underwriters, for whom Salomon Smith Barney Inc. and Tokyo-Mitsubishi
International plc are acting as joint book-running managers, propose to offer
the notes directly to the public at the public offering price set forth on the
cover page of this prospectus supplement. After the initial offering of the
notes to the public, the public offering price and such concessions may be
changed.
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with this offering (expressed as a
percentage of the principal amount of the notes).
<TABLE>
<CAPTION>
Paid by
Procter & Gamble
----------------
<S> <C>
Per note.................................................... 0.30%
</TABLE>
Each underwriter represents and agrees that it will comply with all
applicable laws and regulations in force in any jurisdiction in which it
purchases, offers, sells or delivers the notes or possesses or distributes this
prospectus supplement or the accompanying prospectus and will obtain any
consent, approval or permission required by it for the purchase, offer or sale
by it of the notes under the laws and regulations in force in any jurisdiction
to which it is subject or in which it makes such purchases, offers or sales and
neither Procter & Gamble nor any other underwriter shall have any
responsibility therefor.
Each underwriter, severally and not jointly, represents and agrees that:
. it has not offered or sold and will not offer or sell any notes to
persons in the United Kingdom prior to the expiration of the period of
six months from the issue date of the notes except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995;
. it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996, as amended, or is a person to whom such document may
otherwise lawfully be issued or passed on;
S-31
<PAGE>
. it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to any notes in, from or otherwise involving the United
Kingdom; and
. the notes have not been, and will not be, registered under the
Securities and Exchange Law of Japan (the "Securities and Exchange Law")
and each underwriter has agreed that, so long as the Securities and
Exchange Law and any applicable laws, regulations and ministerial
guidelines of Japan so require, it will not offer or sell any notes,
directly or indirectly, in Japan or to, or for the benefit of, any
resident of Japan (which term as used herein means any person resident
in Japan, including any corporation or other entity organized under the
laws of Japan), or to others for reoffering or resale, directly or
indirectly, in Japan or to, or for the benefit of, a resident of Japan
and that thereafter it will offer or sell such notes in Japan or to, or
for the benefit of, a resident of Japan only pursuant to an exemption
from the registration requirements of, or otherwise in compliance with,
the Securities and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan.
The notes are a new issue of securities with no established trading market.
No assurance can be given as to the liquidity of, or the trading markets for,
the notes. We have been advised by the underwriters that they intend to make a
market in the notes, but they are not obligated to do so and may discontinue
such market-making at any time without notice. Application has been made to
list the notes on the Luxembourg Stock Exchange.
Purchasers of the notes may be required to pay stamp taxes and other charges
in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page of this prospectus
supplement.
In connection with the offering, Salomon Smith Barney Inc., on behalf of the
underwriters, may purchase and sell notes in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of notes in
excess of the principal amount of notes to be purchased by the underwriters in
the offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of the notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of notes made for
the purpose of preventing or retarding a decline in the market price of the
notes while the offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases notes originally sold by that syndicate
member.
Any of these activities may cause the price of the notes to be higher than
the price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
We estimate that the total expenses of this offering will be $325,000.
The underwriters are offering the notes subject to various conditions,
including receipt of legal opinions from counsel to us and the underwriters,
certificates of our officers, cross-receipts and other customary closing
documentation.
Salomon Smith Barney Inc., Tokyo-Mitsubishi International plc and certain of
the other underwriters or their affiliates have performed certain investment
banking and/or commercial banking services for us from time to time for which
they have received customary fees and expenses. These underwriters may, from
time to time, engage in transactions with and perform services for us in the
ordinary course of their business.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of any of those
liabilities.
S-32
<PAGE>
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for Procter & Gamble by Susan
M. Shook, Esq., 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. Shook 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. Shook. Fried, Frank, Harris, Shriver & Jacobson from
time to time performs legal services for us.
AVAILABLE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by
the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC'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 SEC at 1-800-SEC-
0330.
The SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC. The address of the SEC's Internet site is
http://www.sec.gov. Copies of such materials can be obtained by mail from the
Public Reference Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
In addition, reports, proxy statements and other information concerning us
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.
We have filed with the SEC a registration statement on Form S-3 with respect
to the securities that we are offering through this prospectus supplement and
the accompanying prospectus. This registration statement, together with all
amendments, exhibits and documents incorporated by reference, is referred to as
the "registration statement." This prospectus supplement does not contain all
of the information included in the registration statement. Certain parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. For further information, reference is made to the registration
statement.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information in documents
that we file with them. This means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus supplement and the
accompanying prospectus, and information in documents that we file after the
date of this prospectus supplement and before the termination of the offering
will automatically update information in this prospectus supplement and the
accompanying prospectus.
We incorporate by reference into this prospectus supplement:
. our Annual Report on Form 10-K for the year ended June 30, 1999;
. our Current Report on Form 8-K dated August 11, 1999;
. our Quarterly Report on Form 10-Q for the period ended September 30,
1999; and
S-33
<PAGE>
. any future filings which we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until we sell
all of the securities offered by this prospectus supplement and the
accompanying prospectus.
LISTING AND GENERAL INFORMATION
1. Application has been made to list the notes on the Luxembourg Stock
Exchange. Prior to the listing, a legal notice relating to the issue of the
notes and the Amended Articles of Incorporation and Regulations of Procter &
Gamble will be deposited with the Greffier en Chef du Tribunal d'Arrondissement
de et a Luxembourg, where such documents may be examined or copies obtained.
2. Copies of our Amended Articles of Incorporation, Regulations and Bylaws,
the indenture and each of the documents listed under "Incorporation of
Documents by Reference," as well as all present and future published annual and
quarterly consolidated financial statements of Procter & Gamble will be
available free of charge at the office of Credit Agricole Indosuez Luxembourg
S.A. during the term of the notes. Credit Agricole Indosuez Luxembourg S.A., as
listing agent, will act as intermediary between the Luxembourg Stock Exchange
and Procter & Gamble. We do not make publicly available non-consolidated
financial statements.
3. The creation and issuance of the notes was authorized on behalf of
Procter & Gamble by resolutions adopted by the Board of Directors of Procter &
Gamble on September 12, 1995, July 14, 1998, September 29, 1998 and July 22,
1999.
4. There has been no material adverse change in the consolidated financial
position of Procter & Gamble and its consolidated subsidiaries taken as a whole
since September 30, 1999, except as disclosed or contemplated in this
prospectus supplement or in the documents incorporated by reference.
5. Neither Procter & Gamble nor any of its subsidiaries is a party to any
litigation that, in our judgment, is material in the context of the issue of
the notes, except as disclosed or contemplated in this prospectus supplement
and the accompanying prospectus or in the documents incorporated by reference.
6. The notes have been assigned CUSIP No. 742718BQ1, Euroclear and Cedelbank
Common Code No. 010512450 and ISIN No. XS0105124506. The notes have been
accepted for clearance by Euroclear. The notes are expected to be accepted for
clearance through Cedelbank upon Cedelbank's receipt of necessary SEC approval.
7. The Luxembourg Stock Exchange takes no responsibility for the contents of
this document, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
prospectus supplement and the accompanying prospectus.
8. Procter & Gamble has represented and warranted to the underwriters that
this prospectus supplement and the accompanying prospectus do not contain any
untrue statement of a material fact or omit any material fact necessary to make
the statements in this prospectus supplement and the accompanying prospectus
not misleading in light of the circumstances under which these statements were
made. Procter & Gamble has taken all reasonable care to ascertain the facts and
to verify the accuracy of these statements. Procter & Gamble accepts
responsibility accordingly.
9. This prospectus supplement and the accompanying prospectus may be used
only for the purposes for which they were published. This prospectus supplement
and the accompanying prospectus together represent an offer to sell the notes
but only under circumstances and in jurisdictions where it is lawful to do so.
10. You should rely only on information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No
person has been authorized to give any information or to make any
representations other than those contained in this prospectus supplement and
the accompanying
S-34
<PAGE>
prospectus in connection with the issue or sale of the notes, and if given or
made, such information or representations must not be relied upon as having
been authorized by Procter & Gamble or the underwriters. Neither the delivery
of these listing particulars or the accompanying prospectus shall, under any
circumstances, create any implication that there has been no change in affairs
of Procter & Gamble since the date on the cover of this prospectus and the
accompanying prospectus, respectively.
S-35
<PAGE>
PROSPECTUS
$4,000,000,000
The Procter & Gamble Company
By this prospectus, we may offer --
Debt Securities
Warrants
------------
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
------------
This prospectus may not be used to offer and sell securities unless
accompanied by a prospectus supplement.
------------
Neither the securities and exchange commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
This date of this Prospectus is September 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company................................................................ 3
Selected Consolidated Financial Information................................ 4
Use of Proceeds............................................................ 5
Description of Debt Securities............................................. 6
Description of Warrants.................................................... 14
Plan of Distribution....................................................... 17
Legal Opinions............................................................. 18
Experts.................................................................... 18
Where You Can Find More Information........................................ 19
</TABLE>
------------
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may,
from time to time, sell in one or more offerings up to a total dollar amount of
$3,825,000,000 of any combination of our debt securities and warrants.
This prospectus provides you with a general description of the securities
that we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering, including the specific amounts, prices and terms of the securities
offered. The prospectus supplement may also add, update or change information
contained in this prospectus.
You should carefully read both this prospectus and any prospectus supplement
together with additional information described below under the heading "Where
You Can Find More Information."
2
<PAGE>
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, we manufacture and market a broad range of consumer products in many
countries throughout the world.
Prior to July 1, 1999, we were managed in four operating segments: North
America, which was comprised of the United States and Canada; Europe, Middle
East and Africa; Asia; and Latin America. In addition, our operations fell
within five product groups, aligned as follows: Laundry and Cleaning, Paper,
Beauty Care, Food and Beverage, and Health Care.
. Laundry and Cleaning includes laundry, dish care, hard surface cleaners
and fabric conditioners. Representative brands include Ariel, Tide,
Cascade, Dawn, Fairy and Downy.
. Paper includes tissue/towel, feminine protection, diapers and wipes.
Representative brands include Bounty, Charmin, Always, Whisper, Pampers
and Pampers Wipes.
. Beauty Care includes hair care, deodorants, personal cleaning, skin care
and cosmetics and fragrances. Representative brands include Pantene,
Vidal Sassoon, Secret, Safeguard, Oil of Olay, Cover Girl and Old Spice.
. Food and Beverage includes coffee, peanut butter, juice, snacks,
shortening and oil, and commercial services. Representative brands
include Folgers, Jif, Sunny Delight, Pringles, Olean and Crisco.
. Health Care includes oral care, gastrointestinal, respiratory care and
pharmaceuticals. Representative brands include Crest, Scope, Metamucil,
Vicks, Asacol, Didronel and Macrobid.
The Laundry and Cleaning group and the Paper group each constituted 30% of
consolidated 1999 fiscal-year sales.
We have begun a major reorganization of our operations, moving from a
geographical structure to product-based Global Business Units ("GBUs") that
will streamline management decision-making, strategic planning and
manufacturing. We call this change "Organization 2005." Consistent with this
change, prior segment reporting will be restated starting with the first
quarter of fiscal 2000 (July 1, 1999 through September 30, 1999) to reflect the
following product-based segments: Fabric and Home Care, Paper, Beauty Care,
Food and Beverage and Health Care.
We will complement the GBU structure with eight Market Development
Organizations intended to maximize the business potential for the entire
product portfolio in each local market. Our new organization structure was
effective July 1, 1999, although certain strategic planning activities were
effective January 1, 1999. Organization 2005 will also streamline and
standardize our global essential business services, such as accounting,
employee benefits management, order management and information technology
services, to a common Global Business Services organization.
Organization 2005, which we began implementing in April 1999, will cost $1.9
billion after-tax over the six year period and will affect 15,000 positions
worldwide.
In the United States, we owned and operated manufacturing facilities at 37
locations in 21 states as of June 30, 1999. In addition, we owned and operated
93 manufacturing facilities in 44 other countries as of such date. Laundry and
Cleaning products were produced at 45 of these locations; Paper products at 49;
Health Care products at 21; Beauty Care products at 38; and Food and Beverage
products at 15.
Our principal executive offices are located at One Procter & Gamble Plaza,
Cincinnati, Ohio 45202, and our telephone number is (513) 983-1100.
3
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected consolidated financial information for the year ended June 30,
1999 was derived from our consolidated financial statements contained in our
Annual Report on Form 10-K for the fiscal year ended June 30, 1999. The
selected consolidated financial information for the years ended June 30, 1998,
1997 and 1996 has been derived from our consolidated financial statements
contained in our Annual Report on Form 10-K for the fiscal year ended June 30,
1998. The selected financial information for the year ended June 30, 1995 has
been derived from our consolidated financial statements contained in our Annual
Report on Form 10-K for the fiscal year ended June 30, 1995, as adjusted for
certain reclassifications made to conform to the presentation for the year
ended June 30, 1996. All information is reported in U.S. dollars.
<TABLE>
<CAPTION>
Years Ended June 30,
---------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Results:
Net sales............................. $33,482 $35,284 $35,764 $37,154 $38,125
Cost of products sold................. 19,561 20,938 20,510 21,064 21,206
Earnings before income taxes.......... 4,000 4,669 5,249 5,708 5,838
Income taxes.......................... 1,355 1,623 1,834 1,928 2,075
Net earnings.......................... 2,645 3,046 3,415 3,780 3,763
Basic net earnings per common share... $ 1.85 $ 2.14 $ 2.43 $ 2.74 $ 2.75
Diluted net earnings per common
share................................ $ 1.74 $ 2.01 $ 2.28 $ 2.56 $ 2.59
Basic average shares outstanding (in
millions)(1)......................... 1,372.0 1,372.6 1,360.3 1,343.4 1,328.1
Ratio of earnings to fixed
charges(2)........................... 7.7 9.0 10.9 9.9 8.8
Financial Position (at period end):
Working Capital....................... $ 2,194 $ 2,982 $ 2,988 $ 1,327 $ 597
Total Assets.......................... 28,125 27,730 27,544 30,966 32,113
Long-term debt........................ 5,161 4,670 4,143 5,765 6,231
Shareholders' equity.................. 10,589 11,722 12,046 12,236 12,058
</TABLE>
- --------
(1) Restated for two-for-one stock split effective August 22, 1997.
(2) Earnings used to compute this ratio are earnings before income taxes and
before fixed charges (excluding interest capitalized during the period) and
after deducting undistributed earnings of equity method investees. Fixed
charges consist of interest, whether expensed or capitalized, amortization
of debt discount and expense, and one-third of all rent expense (considered
representative of the interest factor).
Results of Operations: Year Ended June 30, 1999 Compared to the Year Ended June
30, 1998
We achieved strong core earnings performance for the year ended June 30,
1999. Basic net earnings were $3.76 billion or $2.75 per share compared to
$3.78 billion or $2.74 per share in the prior year. Results include charges of
$385 million after tax for the current year costs of the Organization 2005
initiative approved in June 1999. Organization 2005 is our multiyear program
designed to accelerate sales and earnings growth over the coming years.
Core net earnings were $4.15 billion for the fiscal year, up 10% from the
prior year. Core net earnings exclude the Organization 2005 costs. Core basic
net earnings per share were $3.04, an increase of 11% from the prior year.
Fiscal year profit results were driven by higher value initiatives, effective
cost containment and improved pricing.
Worldwide net sales for the current year were $38.13 billion, an increase of
3% on flat unit volume. The increase in sales was attributable to improved
pricing in all regions and favorable volume and product mix in North America,
partially offset by exchange impacts. Unfavorable exchange rates, primarily in
Asia and Latin America, depressed sales by 1% for the year.
4
<PAGE>
Worldwide gross margin was 44.4%, compared to 43.3% in the prior year. Gross
margin includes $443 million in before-tax charges related to the Organization
2005 program. These charges consisted primarily of accelerated depreciation and
asset write-downs. Excluding these charges, gross margin increased to 45.5%,
reflecting effective cost containment, primarily in North America.
Worldwide marketing, research, and administrative expenses were $10.67
billion, versus $10.04 billion in the prior year, or 28.0% and 27.0% of sales
for 1999 and 1998, respectively. The 6% increase in total spending was
primarily due to increased research spending, primarily in the paper and health
care businesses, and increased spending for new initiatives. Organization 2005
costs increased marketing, research, and administrative expenses by $38
million, related primarily to employee separation expenses.
Operating income grew 3%. Excluding the charges for Organization 2005,
operating income grew 11%. These trends reflect sales growth and cost control
efforts.
Interest expense increased 19% to $650 million on increased debt, primarily
due to share repurchases. Other income, net, which consists primarily of
interest and investment income, contributed $235 million in the current year
compared to $201 million in the prior year.
Our effective tax rate for the year was 35.5%, compared to 33.8% in the
prior year. The increase reflects a reduction in benefits for research and
development tax credits in North America, which were included in prior year
results, as well as the impact of various country tax rates on our Organization
2005 program costs. Excluding Organization 2005 program costs and related tax
effects, the tax rate was 34.4%.
Net earnings margin was 9.9% versus 10.2% in the prior year. Excluding the
Organization 2005 charges, core net earnings margin was 10.9%, the highest in
58 years.
Over the last several years, we maintained an ongoing program of
simplification and standardization, which included projects to consolidated
selected manufacturing facilities, re-engineer manufacturing and distribution
processes, redesign organizations, simplify product line-ups and divest non-
strategic brands and assets. This program did not have a significant impact on
1999 or 1998 net earnings. Beginning with the fourth quarter of 1999, this
program was superseded by Organization 2005.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we will
use the net proceeds from the sale of debt securities and warrants offered by
this prospectus for general corporate purposes.
5
<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of any debt
securities that we may offer in the future. A prospectus supplement relating to
a particular series of debt securities will describe the specific terms of that
particular series and the extent to which the general terms and provisions
apply to that particular series.
General
We expect to issue the debt securities under an indenture, dated as of
September 28, 1992, between us and Bank One Trust Company, NA (formerly The
First National Bank of Chicago), as trustee. We have incorporated by reference
the indenture as an exhibit to the registration statement of which this
prospectus forms a part. The following summaries of various provisions of the
indenture are not complete. You should read the indenture for a more complete
understanding of the provisions described in this section. The indenture
itself, not this description or the description in the prospectus supplement,
defines your rights as a holder of debt securities. Parenthetical section and
article numbers in this description refer to sections and articles in the
indenture.
The debt securities will be unsecured obligations of Procter & Gamble. The
indenture does not limit the amount of debt securities that we may issue under
the indenture. The indenture provides that we may issue debt securities from
time to time in one or more series.
Terms of a Particular Series
Each prospectus supplement relating to a particular series of debt
securities will include specific information relating to the offering. This
information will include some or all of the following terms of the debt
securities of the series:
. the title of the debt securities;
. any limit on the total principal amount of the debt securities;
. the date or dates on which the debt securities will mature;
. the rate or rates, which may be fixed or variable, at which the debt
securities will bear interest, if any, and the date or dates from which
interest will accrue;
. the dates on which interest, if any, will be payable and the regular
record dates for interest payments;
. any mandatory or optional sinking fund or similar provisions;
. any optional or mandatory redemption provisions, including the price at
which, the periods within which, and the terms and conditions upon which
we may redeem or repurchase the debt securities;
. the terms and conditions upon which the debt securities may be repayable
prior to final maturity at the option of the holder;
. the portion of the principal amount of the debt securities that will be
payable upon acceleration of maturity, if other than the entire principal
amount;
. provisions allowing us to defease the debt securities or certain
restrictive covenants and certain events of default under the indenture;
. 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 debt securities;
. the federal income tax consequences and other special considerations
applicable to any debt securities denominated in a currency or currencies
other than United States dollars;
6
<PAGE>
. any index used to determine the amount of payments of principal of and
premium, if any, and interest, if any, on the debt securities;
. if the debt securities will be issuable only in the form of a global
security as described below, the depository or its nominee with respect
to the 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
. any other terms of the debt securities. (Section 301)
Payment of Principal, Premium and Interest
Unless otherwise indicated in the prospectus supplement, 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 of debt securities
will be registrable, at the office of the trustee at 153 West 51st Street, New
York, New York 10019. At our option, however, payment of interest may be made
by:
. 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;
. any similar manner that the holder may designate in writing to the
trustee; or
. check mailed to the address of the holder 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 a day that is not a business day need not be made on that day,
but may be made on the next succeeding business day with the same force and
effect as if made on the non-business day. No interest will accrue for the
period from and after the non-business day. (Section 113)
Unless otherwise indicated in the prospectus supplement relating to the
particular series of debt securities, we will issue the debt securities only in
fully registered form, without coupons, in denominations of $1,000 or any
multiple of $1,000. (Section 302) We will not require a service charge for any
transfer or exchange of the debt securities, but we may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection with any transfer or exchange. (Section 305)
Original Issue Discount Securities
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. An original issue discount security under the indenture
includes any security which provides for an amount less than its principal
amount to be due and payable upon a declaration of acceleration upon the
occurrence of an event of default. In addition, under regulations of the U.S.
Treasury Department 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 applicable
prospectus supplement.
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 debt securities. In
this case, one or more global securities will be issued in a denomination or
total denominations equal to the portion of the total principal amount of
outstanding debt securities to be represented by the global
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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 the
global security to a nominee of the depository and except in the circumstances
described in the prospectus supplement relating to the debt securities. We will
describe in the prospectus supplement the terms of any depository arrangement
and the rights and limitations of owners of beneficial interests in any global
debt security. (Sections 204 and 305)
Restrictive Covenants
In this section we describe the principal covenants that will apply to the
debt securities unless the prospectus supplement for a particular series of
debt securities states otherwise. We make use of several defined terms in this
section. The definitions for these terms are located at the end of this section
under "--Definitions Applicable to Covenants."
Restrictions on Secured Debt
If we 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, we will secure, or
cause such Domestic Subsidiary to secure, the debt securities then outstanding
equally and ratably with (or prior to) such Debt. However, we will not be
restricted by this covenant if, after giving effect to the particular Debt so
secured the total amount of all 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 our and our consolidated
subsidiaries' Consolidated Net Tangible Assets.
In addition, the restriction will not apply to, and there shall be excluded
in computing secured Debt for the purpose of the restriction, Debt secured by
(1) Mortgages on property of, or on any shares of stock or debt of, any
corporation existing at the time the corporation becomes a Domestic
Subsidiary;
(2) Mortgages in favor of us or a Domestic Subsidiary;
(3) Mortgages in favor of U.S. governmental bodies to secure progress or
advance payments;
(4) Mortgages on property, shares of stock or debt existing at the time
of their acquisition, including acquisition through merger or
consolidation, purchase money Mortgages and construction cost Mortgages;
and
(5) any extension, renewal or refunding of any Mortgage referred to in
clauses (1) through (4) above, inclusive. (Section 1004)
The indenture does not restrict the incurrence of unsecured debt by us or
our subsidiaries.
Restrictions on Sales and Leasebacks
Neither we nor any Domestic Subsidiary may enter into any sale and leaseback
transaction involving any Principal Domestic Manufacturing Property whose
completed construction and start of fully operating status has occurred more
than 120 days prior to the proposed sale and leaseback, unless
. we or the Domestic Subsidiary could incur a lien on the 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
. we, within 120 days, apply to the retirement of our Funded Debt an amount
not less than the greater of (1) the net proceeds of the sale of the
Principal Domestic Manufacturing Property leased pursuant to such
arrangement or (2) the fair value of the Principal Domestic Manufacturing
Property so leased, subject to credits for various voluntary retirements
of Funded Debt.
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This restriction will not apply to any sale and leaseback transaction
. between us and a Domestic Subsidiary,
. between Domestic Subsidiaries or
. involving the taking back of a lease for a period of less than three
years. (Section 1005)
Definitions Applicable to Covenants
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.
The term "Consolidated Net Tangible Assets" means the total amount of
assets, less applicable reserves and other properly deductible items, after
deducting (a) all current liabilities and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as described on our and our consolidated subsidiaries' most
recent balance sheet and computed in accordance with generally accepted
accounting principles.
The term "Debt" means notes, bonds, debentures or other similar evidences
of indebtedness for money borrowed.
The term "Domestic Subsidiary" means any of our subsidiaries 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 our and our
subsidiaries' operations outside the United States.
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 of Debt.
The term "Mortgage" means pledges, mortgages and other liens.
The term "Principal Domestic Manufacturing Property" means any facility
(together with the land on which it is erected and fixtures comprising a part
of the land) used primarily for manufacturing or processing, located in the
United States, owned or leased by us or one of our subsidiaries and having a
gross book value in excess of 3/4 of 1% of Consolidated Net Tangible Assets.
However, the term "Principal Domestic Manufacturing Property" does not include
any facility or portion of a facility (1) 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 (2)
which, in the opinion of our board of directors, is not of material importance
to the total business conducted by us and our subsidiaries as an entirety.
Events of Default
Any one of the following are events of default under the indenture with
respect to debt securities of any series:
(1) our failure to pay principal of or premium, if any, on any debt
security of that series when due;
(2) our failure to pay any interest on any debt security of that series
when due, continued for 30 days;
(3) our failure to deposit any sinking fund payment, when due, in
respect of any debt security of that series;
(4) our failure to perform any other of our covenants in the indenture,
other than a covenant included in the indenture solely for the benefit of
other series of debt securities, continued for 90 days after written notice
as provided in the indenture;
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(5) certain events involving bankruptcy, insolvency or reorganization;
and
(6) 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, the 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 some circumstances, rescind and
annul the acceleration. (Section 502) For information as to waiver of
defaults, see the section below entitled "Modification and Waiver".
A prospectus supplement relating to each series of debt securities which
are original issue discount securities will describe 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 its continuation.
During default, the trustee has a duty to act with the required standard of
care. Otherwise, the indenture provides that the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders, unless the holders shall have
offered to the trustee reasonable indemnity. (Section 603) If the provisions
for indemnification of the trustee have been satisfied, 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)
We will furnish to the trustee annually a certificate as to our compliance
with all conditions and covenants under the indenture. (Section 1007)
Defeasance
The prospectus supplement will state if any defeasance provision will apply
to the debt securities. Defeasance refers to the discharge of some or all of
our obligations under the indenture.
Defeasance and Discharge
We will be discharged from any and all obligations in respect of the debt
securities of any series if we deposit with the trustee, in trust, money
and/or U.S. government securities which through the payment of interest and
principal 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 the series on the dates those payments are due and payable.
If we defease a series of debt securities, the holders of the debt
securities of the series will not be entitled to the benefits of the
indenture, except for
. the rights of holders to receive from the trust funds payment of
principal, premium and interest on the debt securities,
. our obligation to register the transfer or exchange of debt securities of
the series,
. our obligation to replace stolen, lost or mutilated debt securities of
the series,
. our obligation to maintain paying agencies,
. our obligation to hold monies for payment in trust, and
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. the rights of holders to benefit, as applicable, from the rights, powers,
trusts, duties and immunities of the trustee.
We may defease a series of debt securities only if, among other things:
. we have received from, or there has been published by, the Internal
Revenue Service a ruling to the effect that holders of the debt
securities of the series will not recognize income, gain or loss for
federal income tax purposes as a result of the 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 the deposit, defeasance and discharge had not occurred, and
. we have delivered to the trustee an opinion of counsel, who may be our
employee or counsel, to the effect that the debt securities of the
series, if then listed on the New York Stock Exchange, will not be
delisted as a result of the deposit, defeasance and discharge. (Section
403)
Defeasance of Covenants and Events of Default
We may elect not to comply with the covenants described above under
"Restrictions on Secured Debt" (Section 1004) and "Restrictions on Sales and
Leasebacks" (Section 1005), and the failure to comply with these covenants will
not be deemed an event of default (Section 501(4)), if we deposit with the
trustee, in trust, money and/or U.S. government securities which through the
payment of interest and principal 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 the series on the dates those payments are due and
payable. Our obligations under the indenture and the debt securities of the
series will remain in full force and effect, other than with respect to the
defeased covenants and related events of default.
We may defease the covenants and the related events of default described
above only if, among other things, we have delivered to the trustee an opinion
of counsel, who may be our employee or counsel, to the effect that
. the holders of the debt securities of the series will not recognize
income, gain or loss for federal income tax purposes as a result of the
deposit and defeasance of the covenants and events of default, and the
holders of the debt securities of the series 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 the deposit and defeasance had not
occurred, and
. the debt securities of the series, if then listed on the New York Stock
Exchange, will not be delisted as a result of the deposit and defeasance.
(Section 1006)
If we choose covenant defeasance with respect to the debt securities of any
series as described above and the debt securities of the series are declared
due and payable because of the occurrence of any event of default other than
the event of default described in clause (4) under "Events of Default", the
amount of money and U.S. government securities on deposit with the trustee will
be sufficient to pay amounts due on the debt securities of the series at the
time of their stated maturity. The amount on deposit with the trustee may not
be sufficient to pay amounts due on the debt securities of the series at the
time of the acceleration resulting from the event of default. However, we will
remain liable for these payments.
Modification and Waiver
Procter & Gamble and the trustee may make modifications of and amendments to
the indenture if the holders of at least 66 3/4% in principal amount of the
outstanding debt securities of each series affected by the modification or
amendment consent to the modification or amendment.
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However, the consent of the holder of each debt security affected will be
required for any modification or amendment that
. changes the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security,
. reduces the principal amount of, or the premium, if any, or interest, if
any, on, any debt security,
. reduces the amount of principal of an original issue discount security
payable upon acceleration of the maturity of the security,
. changes the place or currency of payment of principal of, or premium, if
any, or interest, if any, on, any debt security,
. impairs the right to institute suit for the enforcement of any payment on
any debt security, or
. reduces the percentage in principal amount of debt securities of any
series necessary to modify or amend the indenture or to waive compliance
with various provisions of the indenture or to waive various defaults.
(Section 902)
Without the consent of any holder of debt securities, we and the trustee may
make modifications or amendments to the indenture in order to
. evidence the succession of another person to us and the assumption by
that person of the covenants in the indenture,
. add to the covenants for the benefit of the holders,
. add additional events of default,
. permit or facilitate the issuance of securities in bearer form or
uncertificated form,
. add to, change, or eliminate any provision of the indenture in respect of
a series of debt securities to be created in the future,
. secure the securities as required by "Restrictions on Secured Debt,"
. establish the form or terms of securities of any series,
. evidence the appointment of a successor trustee, or
. cure any ambiguity, correct or supplement any provision which may be
inconsistent with another provision, or make any other provision,
provided that any action may not adversely affect the interests of
holders of debt securities in any material respect.
The holders of at least 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 compliance by us with various 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 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
. a default 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 that would be affected. (Section 513)
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Consolidation, Merger and Sale of Assets
If the conditions below are met, we may, without the consent of any holders
of outstanding debt securities:
. consolidate or merge with or into another entity, or
. transfer or lease our assets as an entirety to another entity.
We have agreed that we will engage in a consolidation, merger or transfer
or lease of assets as an entirety only if
. the entity formed by the consolidation or into which we are merged or
which acquires or leases our assets is a corporation, partnership or
trust organized and existing under the laws of any United States
jurisdiction and assumes our obligations on the debt securities and under
the indenture,
. after giving effect to the transaction no event of default would have
happened and be continuing, and
. various 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 depository of Procter & Gamble and
has performed other services for us and our subsidiaries in the normal course
of its business.
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DESCRIPTION OF WARRANTS
This section describes the 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 and the extent, if any, to which
the general provisions may apply to the warrants so offered will be described
in the prospectus supplement relating to the offered warrants.
We may issue the following types of warrants:
. warrants for the purchase of debt securities,
. warrants to buy or sell government debt securities, which are debt
securities of or guaranteed by the United States,
. 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.
We may issue warrants independently or together with any debt securities
offered by any prospectus supplement. Warrants may be attached to or separate
from any debt securities. The warrants will be settled either through physical
delivery or through payment of a cash settlement value as described below and
in any applicable prospectus supplement.
Warrants will be issued under a warrant agreement to be entered into between
Procter & Gamble and a bank or trust company, as warrant agent, all as
described in the prospectus supplement relating to the particular issue of
warrants. The warrant agent will act solely as our agent 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.
We have incorporated by reference the form of warrant agreement, including
the form of warrant certificate, as an exhibit to the registration statement of
which this prospectus forms a part. The following summaries of various
provisions of the form of warrant agreement are not complete. You should read
the form of warrant agreement for a more complete understanding of the
provisions described in this section. The warrant agreement itself, not this
description or the description in the prospectus supplement, defines your
rights as a holder of warrants.
Terms
The prospectus supplement will describe the following terms of the offered
warrants:
. the offering price;
. the currency, currency unit, currency index or currency basket based on
or relating to currencies for which warrants may be purchased;
. the date on which the right to exercise the warrants commences and the
date on which the right expires;
. whether the warrant certificates will be issuable in definitive
registered form or global form or both;
. federal income tax consequences;
. 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 another index
or reference as described in the prospectus supplement; and
. any other terms of the warrants, including any terms which may be
required or advisable under United States laws or regulations.
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Warrants to Purchase Debt Securities
If the offered warrants are to purchase debt securities, the prospectus
supplement will also describe
. the designation, total principal amount, currency, currency unit or
currency basket of denomination and other terms of the debt securities
purchasable upon exercise of the offered warrants;
. the designation and terms of the debt securities with which the offered
warrants are issued and the number of offered warrants issued with each
debt security;
. the date on and after which the offered warrants and the related debt
securities will be separately transferable; and
. 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 exercise.
Warrants to Buy or Sell Government Debt Securities or Foreign Currencies
If the offered warrants are to buy or sell government debt securities or a
foreign currency, currency unit, currency index or currency basket, the 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 the 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.
Warrants on a Stock Index or a Stock Basket
If the offered warrants are warrants on a stock index or a stock basket, the
offered warrants will provide for payment of an amount in cash determined by
reference to increases or decreases in the 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 the stock index or stock basket relates, and
. the national securities exchange on which the offered warrants will be
listed.
Warrants on a Commodity or Commodity Index
If the offered warrants are warrants on a commodity or commodity index, the
offered warrants will provide for cash settlement or delivery of the particular
commodity or commodities and the 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 the commodity or commodity index relates, and
. the national securities exchange on which the warrants will be listed.
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Warrant Certificates
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 us, for interests in a global warrant certificate, as
described 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 exercise of the warrant, including the right to
receive payments of principal of, premium, if any, or interest, if any, on the
debt securities or to enforce covenants in the indenture.
Exercise of Warrants
As described in or calculable from the prospectus supplement relating to the
warrants, you may exercise your warrant
. to purchase the principal amount of debt securities at the exercise
price,
. to buy or sell the 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 the exercise price, or
. to 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.
Warrants may be exercised at any time up to 3:00 P.M. New York time on the
date described in the prospectus supplement relating to such warrants or as may
be otherwise described in the prospectus supplement. After that time on that
date, or a later date to which the date may be extended by us, unexercised
warrants will become void.
If there are no restrictions or additional requirements described in the
prospectus supplement, you may exercise warrants by delivering to the warrant
agent
. the properly completed and duly executed warrant certificate, and
. 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 the exercise of the warrant.
Warrants will be deemed to have been exercised upon receipt of the warrant
certificate and any payment, if applicable, at the corporate trust office of
the warrant agent or any other office indicated in the prospectus supplement.
We will, as soon as possible, issue and deliver the debt securities purchasable
upon exercise, or buy or sell the 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 the
warrants. If you exercise fewer than all of the warrants represented by the
warrant certificate, you will receive a new warrant certificate for the
remaining amount of the warrants.
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PLAN OF DISTRIBUTION
General
We may sell debt securities and/or warrants in one or more transactions from
time to time to or through underwriters, who may act as principals or agents,
directly to other purchasers or through agents to other purchasers.
A prospectus supplement relating to a particular offering of debt securities
or warrants may include the following information:
. the terms of the offering,
. the names of any underwriters or agents,
. the purchase price of the securities from us,
. the net proceeds to us from the sale of the securities,
. any delayed delivery arrangements,
. any underwriting discounts and other items constituting underwriters'
compensation,
. any initial public offering price, and
. any discounts or concessions allowed or reallowed or paid to dealers.
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, at market prices prevailing at the time of sale,
at prices related to prevailing market prices or at negotiated prices.
Underwriting Compensation
In connection with the sale of debt securities and warrants, if any,
underwriters may receive compensation from us or from purchasers for whom they
may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell debt securities and warrants to or through dealers, and
the 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 may be deemed to be underwriters under the
Securities Act. Any discounts or commissions that they receive from us and any
profit that they receive on the resale of debt securities and warrants may be
deemed to be underwriting discounts and commissions under the Securities Act.
If any entity is deemed an underwriter or any amounts deemed underwriting
discounts and commissions, the prospectus supplement will identify the
underwriter or agent and describe the compensation received from us.
Indemnification
We may enter agreements under which underwriters and agents who participate
in the distribution of debt securities and warrants may be entitled to
indemnification by us against various liabilities, including liabilities under
the Securities Act, and to contribution with respect to payments which the
underwriters, dealers or agents may be required to make.
Related Transactions
Various of the underwriters who participate in the distribution of debt
securities or warrants, and their affiliates, may perform various commercial
banking and investment banking services for us from time to time in the
ordinary course of business.
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Delayed Delivery Contracts
We may authorize underwriters or other persons acting as our agents to
solicit offers by institutions to purchase debt securities and/or warrants from
us pursuant to contracts providing for payment and delivery on a future date.
These institutions may include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases we must approve these institutions.
The obligations of any purchaser under any of these contracts will be subject
to the condition that the purchase of the debt securities and/or warrants shall
not at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and other agents will not
have any responsibility in respect of the validity or performance of these
contracts.
No Established Trading Market
The debt securities and/or warrants, when first issued, will have no
established trading market. Any underwriters or agents to or through whom we
sell debt securities or warrants for public offering and sale may make a market
in the securities but will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the debt securities or warrants.
Price Stabilization and Short Positions
If underwriters or dealers are used in the sale, until the distribution of
the securities is completed, rules of the Securities and Exchange Commission
may limit the ability of any underwriters to bid for and purchase the
securities. As an exception to these rules, representatives of any underwriters
are permitted to engage in transactions that stabilize the price of the
securities. These transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the securities. If the
underwriters create a short position in the securities in connection with the
offering, that is if they sell more securities than are set forth on the cover
page of the prospectus supplement, the representatives of the underwriters may
reduce that short position by purchasing securities in the open market.
We make no representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the price of the
securities. In addition, we make no representation that the representatives of
any underwriters will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.
LEGAL OPINIONS
The validity of the issuance of our securities offered by this prospectus
will be passed upon for The Procter & Gamble Company by Terry L. Overbey,
Secretary, and for any underwriters or agents by Fried, Frank, Harris, Shriver
& Jacobson (a partnership including professional corporations). Mr. Overbey may
rely as to matters of New York law upon the opinion of Fried, Frank, Harris,
Shriver & Jacobson. Fried, Frank, Harris, Shriver & Jacobson may rely as to
matters of Ohio law upon the opinion of Mr. Overbey. Fried, Frank, Harris,
Shriver & Jacobson performs legal services for us from time to time.
EXPERTS
Deloitte and Touche LLP, independent accountants, have audited our
consolidated financial statements, which are incorporated by reference from our
annual report on Form 10-K. Our consolidated financial statements are
incorporated by reference in reliance on Deloitte and Touche LLP's report,
given on their authority as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the SEC, including the registration statement, at the following SEC
reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, DC 20549 New York, New York 10048 Chicago, Illinois 60661
Please telephone the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC also maintains an internet site at
http://www.sec.gov that contains reports, proxy statements and other
information regarding issuers that file electronically with the SEC. You may
find our reports, proxy statements and other information at this SEC website.
In addition, you can obtain our reports, proxy statements and other
information about Procter & Gamble at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, and at the offices of the
Cincinnati Stock Exchange, 400 LaSalle Street, 5th Floor, Chicago, Illinois
60605.
The SEC allows us to "incorporate by reference" into this document the
information which we filed with the SEC. This means that we can disclose
important information by referring you to those documents. The information
incorporated by reference is an important part of this prospectus and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below:
. Our Annual Report on Form 10-K for our fiscal year ended June 30, 1999
. Our Current Report on Form 8-K filed on August 11, 1999
In addition to the documents listed above, we also incorporate by reference
any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 (other than information filed in
response to Items 402(i), (j) and (k) of Regulation S-K) until we have sold all
of the offered securities to which this prospectus relates or the offering is
otherwise terminated.
You may request a copy of these filings (other than exhibits, unless that
exhibit is specifically incorporated by reference into the filing), at no cost,
by writing us at the following address or telephoning us at (513) 983-8697
between 8:00 a.m. and 5:00 p.m., Eastern Standard Time:
The Procter & Gamble Company
Attn: Linda D. Rohrer, Assistant Secretary
1 Procter & Gamble Plaza
Cincinnati, Ohio 45202-3315
You may also get a copy of these reports from our website at
http://www.pg.com. Please note, however, that we have not incorporated any
other information by reference from our website, other than the documents
listed above.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume the information in this prospectus or any supplemental
prospectus is accurate as of any date other than the date on the front of those
documents.
19
<PAGE>
PRINCIPAL OFFICE OF
The Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, Ohio 45202
U.S.A.
TRUSTEE
Bank One Trust Company, NA
One North State
9th Floor, Suite 0126
Chicago, Illinois 60670-0126
U.S.A.
FISCAL AGENT, REGISTRAR
AND EXCHANGE AGENT
Citibank N.A.
5 Carmelite Street
London EC4Y OPA
England
LUXEMBOURG PAYING AGENT
Credit Agricole Indosuez Luxembourg S.A.
39 Allee Scheffer
L-2520 Luxembourg
LEGAL ADVISORS
To the Company: To the Underwriters:
Susan M. Shook, Esq. Fried, Frank, Harris, Shriver &
Counsel Jacobson
One Procter & Gamble Plaza (a partnership including
Cincinnati, Ohio 45202 professional corporations)
U.S.A. One New York Plaza
New York, New York 10004
U.S.A.
AUDITORS
Deloitte & Touche LLP
250 East Fifth Street
Cincinnati, Ohio 45202
U.S.A.
LISTING AGENT
Credit Agricole Indosuez Luxembourg S.A.
39 Allee Scheffer
L-2520 Luxembourg
<PAGE>
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(Yen)40,000,000,000
The Procter & Gamble Company
1.5% Notes due December 7, 2005
[LOGO OF PROCTER & GAMBLE]
-------------------
PROSPECTUS SUPPLEMENT
November 30, 1999
-------------------
Joint Book-Running Managers
Nikko SalomonSmithBarney Americas
Tokyo-Mitsubishi International plc
-------------------
Bank of America International Limited
Deutsche Bank
Goldman Sachs International
J.P. Morgan Securities Ltd.
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