SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, OR
\ \ FOR TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO _______________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: Giorgio Employee Savings Plan, The Procter &
Gamble Company, Two Procter & Gamble Plaza, Cincinnati, Ohio 45202.
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202.
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance With
the Financial Reporting Requirements of ERISA
GIORGIO EMPLOYEE SAVINGS PLAN
Financial Statements for the Years Ended
December 31, 1998 and 1997 and Supplemental
Schedule as of December 31, 1998 and
Independent Auditors' Report
GIORGIO EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- ----------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1998 and 1997 3
Notes to Financial Statements for the Years Ended
December 31, 1998 and 1997 4
SUPPLEMENTAL SCHEDULE - Assets Held for Investment
(Item 27a of Form 5500), December 31, 1998 11
SUPPLEMENTAL SCHEDULES OMITTED - The following schedules were
omitted because of the absence of conditions under which they
are required or due to their inclusion in information filed
by The Procter & Gamble Master Savings Trust:
Reportable Transactions for the Year Ended December 31, 1998
Assets Acquired and Disposed of Within the Plan Year
Party-in-Interest Transactions
Obligations in Default
Leases in Default
DELOITTE &
TOUCHE LLP
- ------------ ------------------------------------------------------
Deloitte & Touche LLP Telephone: (513) 784-7100
250 East Fifth Street
P.O. Box 5340
Cincinnati, Ohio 45201-5340
INDEPENDENT AUDITORS' REPORT
To The Procter & Gamble Master Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of the Giorgio Employee Savings Plan ("the Plan") as of December 31, 1998 and
1997, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The schedule is the responsibility of the Plan's management. Such schedule
has been subjected to the auditing procedures applied in our audit of the basic
1998 financial statements, and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/S/DELOITTE & TOUCHE LLP
April 30, 1999
- ---------------
Deloitte Touche
Tohmatsu
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<TABLE>
GIORGIO EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
- -----------------------------------------------
<CAPTION>
1998 1997
<S> <C> <C>
INVESTMENTS, At fair value:
Investment in The Procter and Gamble Master Savings Trust $11,964,102 $11,688,141
Loans to participants 362,722 318,358
----------- -----------
Total investments 12,326,824 12,006,499
INVESTMENT INCOME RECEIVABLE 4,960 -
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $12,331,784 $12,006,499
=========== ===========
See notes to financial statements.
</TABLE>
<TABLE>
GIORGIO EMPLOYEE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- ----------------------------------------------------------
<CAPTION>
1998 1997
<S> <C> <C>
ADDITIONS:
Equity in net earnings of The Procter
& Gamble Master Savings Trust $ 2,106,958 $ 2,459,719
Interest income 39,278 7,824
----------- -----------
Total investment income 2,146,236 2,467,543
Transfer from merged plan 3,554,780
Transfer from unaffiliated plans 78 13,313
----------- -----------
Total additions 2,146,314 6,035,636
DEDUCTIONS - Distributions and withdrawals
to participants 1,821,029 906,950
----------- -----------
NET INCREASE 325,285 5,128,686
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 12,006,499 6,877,813
----------- -----------
End of year $12,331,784 $12,006,499
=========== ===========
See notes to financial statements.
</TABLE>
GIORGIO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- ----------------------------------------------
1. PLAN DESCRIPTION
The following brief description of the Giorgio Employee Savings Plan
("Plan") is provided for general information purposes only. Participants
should refer to the Plan agreement for more complete information.
GENERAL - Effective August 30, 1994, The Procter & Gamble Company ("P&G")
acquired Giorgio Beverly Hills, Inc. ("Company") from Avon Products, Inc.
Prior to the acquisition, certain employees of the Company participated in
the Avon Employees' Savings and Stock Ownership Plan ("Predecessor Plan").
Pursuant to the sales agreement with Avon, assets under the Predecessor
Plan owned by employees of the Company were transferred to create the Plan
on August 30, 1994. Effective January 1, 1997, the Giorgio Pension Plan, a
defined contribution plan, was merged into the Plan. This merger is
recorded as a transfer from merged plans of approximately $3,600,000 in the
Plan's financial statements in 1997.
The Plan assets are held in a combined trust account, The Procter & Gamble
Master Savings Trust ("Master Trust"), with the assets of other P&G
sponsored defined contribution plans (see Note 4). Each of the plans
participating in the Master Trust has a proportionate and undivided
ownership interest in the Master Trust assets. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS AND VESTING - Effective December 31, 1996, both employee and
employer contributions to the Plan were suspended and all participants
became fully vested. Plan participants became eligible to participate in
The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan
effective December 31, 1996.
DISTRIBUTIONS - The Plan provides for benefits to be paid upon retirement,
disability, death, or separation other than retirement as defined by the
Plan document. Plan benefits may be made in a lump sum of cash or shares of
common stock or as installment payments. Retired or terminated employees
shall commence benefit payments upon attainment of age 70-1/2.
WITHDRAWALS - A participant may withdraw any portion of after-tax
contributions once in any six-month period. Participants who have attained
age 59-1/2 or have demonstrated financial hardship may withdraw all or any
portion of their before-tax contributions once in any six-month period.
PLAN TERMINATION - Although the Company has not expressed any intent to do
so, it has the right under the Plan to terminate the Plan subject to the
provisions of ERISA.
ADMINISTRATION - The Plan is administered by the Master Savings Plan
Committee consisting of four members appointed by the Board of Directors of
P&G, except for duties specifically vested in the trustee, PNC Bank, Ohio,
N.A. ("PNC Bank"), who is also appointed by the Board of Directors of P&G.
LOANS - The Plan has a loan feature under which active participants may
borrow up to 50% of the current value of their vested account values (up to
a maximum of $50,000). Loans are repayable via payroll deductions over a
period of up to five years, except for loans used to purchase a primary
residence which are repaid via payroll deduction over a period of up to 10
years. Principal and interest paid is credited to applicable funds in the
borrower's account. Upon participant termination or retirement, the
outstanding loan balance is treated as a distribution to the participant.
TRANSFER FROM UNAFFILIATED PLANS - Amounts represent account balances of
Company employees transferred from unaffiliated Company plans.
PARTICIPANT ACCOUNTS AND INVESTMENT OPTIONS - Each participant's account is
credited with an allocation of the Plan's earnings. The benefit to which a
participant is entitled is limited to the benefit that can be provided from
the participant's account. Participants may allocate their account in one
or all of the following investment options offered by the Plan (Note 4):
RESERVE FUND - The prospectus indicates that this fund invests in
short to medium length maturity, interest-bearing instruments.
COMPANY STOCK FUND - A fund investing in shares of P&G common stock.
MANAGED BOND - The prospectus indicates that this fund invests in a
diversified portfolio of publicly and privately traded corporate,
government, international and mortgage backed bonds.
LARGE COMPANY FUND - The prospectus indicates that this fund invests
in equity securities of approximately 300 domestic, large company
stocks.
DIVERSIFIED FUND - The prospectus indicates that this fund invests in
a balanced portfolio consisting of both equity and fixed securities.
INTERNATIONAL EQUITY FUND - The prospectus indicates that this fund
invests in a diversified portfolio of equity securities of foreign
corporations.
SMALL COMPANY FUND - The prospectus indicates that this fund invests
in a portfolio of equity securities issued by small companies.
<TABLE>
The activity and balances in the funds are summarized as follows for the years
ended December 31, 1998 and 1997:
<CAPTION>
LARGE MANAGED COMPANY INTERNATIONAL
COMPANY DIVERSIFIED BOND RESERVE STOCK EQUITY
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Net assets available for benefits,
December 31, 1996 $2,682,827 $1,648,505 $ 854,449 $ 667,692 $ 646,969 $ 67,254
Equity in net earnings of The Procter & Gamble
Master Savings Trust 1,012,303 410,252 95,987 31,138 836,975 5,393
Interest income
Transfer from merged plan 856,924 796,230 292,876 212,500 1,088,741 177,048
Transfer from unaffiliated plan 2,171 4,630 2,171 4,341
Distributions and withdrawals to participants (478,087) (174,710) (91,482) (110,975) (30,554) (4,214)
Interfund transfers (241,050) (342,453) (135,869) (217,898) 771,789 70,910
---------- ---------- ---------- ---------- ---------- --------
Net assets available for benefits,
December 31, 1997 3,835,088 2,337,824 1,015,961 587,087 3,316,091 320,732
Equity in net earnings of The Procter & Gamble
Master Savings Trust 1,097,807 414,392 67,771 28,241 466,764 42,422
Interest income
Transfer from unaffiliated plan 78
Distributions and withdrawals to participants (658,875) (351,596) (64,361) (129,550) (440,506) (77,528)
Interfund transfers (106,997) (75,964) (95,943) (50,155) 288,552 (13,713)
---------- ---------- ---------- ---------- ---------- --------
Net assets available for benefits,
December 31, 1998 $4,167,023 $2,324,656 $ 923,428 $ 435,623 $3,630,979 $271,913
========== ========== ========== ========== ========== ========
<CAPTION>
SMALL
COMPANY LOANS TO
FUND PARTICIPANTS TOTAL
<S> <C> <C> <C>
Net assets available for benefits,
December 31, 1996 $ 93,166 $216,951 $ 6,877,813
Equity in net earnings of The Procter & Gamble
Master Savings Trust 67,671 2,459,719
Interest income 7,824 7,824
Transfer from merged plan 130,461 3,554,780
Transfer from unaffiliated plan 13,313
Distributions and withdrawals to participants (12,219) (4,709) (906,950)
Interfund transfers 5,164 89,407
-------- -------- -----------
Net assets available for benefits,
December 31, 1997 284,243 309,473 12,006,499
Equity in net earnings of The Procter & Gamble
Master Savings Trust (10,439) 2,106,958
Interest income 39,278 39,278
Transfer from unaffiliated plan 78
Distributions and withdrawals to participants (36,277) (62,336) (1,821,029)
Interfund transfers (16,548) 70,768
-------- -------- -----------
Net assets available for benefits,
December 31, 1998 $220,979 $357,183 $12,331,784
======== ======== ===========
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are prepared
under the accrual basis of accounting and the Plan's net assets and
transactions are recorded at fair value. The Plan's investment in P&G
common stock is valued at the closing price on an established security
exchange. The Plan's investment funds (funds) are valued by the fund
manager, JP Morgan Investment Management, Inc., based upon the fair value
of the funds' underlying investments. Income from investments is recognized
when earned and is allocated to each participating plan in the Master Trust
by the trustee and to each participant's account by the Plan's
recordkeeper.
EXPENSES OF THE PLAN - Trustee fees and other expenses of the Plan are paid
by P&G.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
3. TAX STATUS
The Internal Revenue Service (IRS) has determined and informed the Company
by letter dated March 22, 1996, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan has been amended since receiving the determination
letter. However, the plan administrator believes that the Plan is designed
and is currently being operated in compliance with the applicable
provisions of the IRC at December 31, 1998 and 1997.
4. INTEREST IN MASTER TRUST
Effective January 1, 1993, P&G formed the Master Trust in accordance with a
master trust agreement with PNC Bank.
Use of a master trust permits the commingling of investments that fund
various P&G-sponsored defined contribution plans for investment and
administrative purposes. Although assets are commingled in the Master
Trust, PNC Bank maintains records for the purpose of allocating
contributions and changes in net assets of the Master Trust to
participating plans based upon each plan's proportionate interest in the
Master Trust. The following represents the 1998 and 1997 audited financial
information regarding the net assets and investment income of the Master
Trust:
<TABLE>
Assets of the Master Trust at December 31, 1998 are summarized as follows:
<CAPTION>
INTER-
LARGE SMALL NATIONAL MANAGED
COMPANY COMPANY COMPANY EQUITY RESERVE DIVERSIFIED BOND
STOCK FUND FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair
value $82,686,007 $76,750,124 $4,587,218 $2,999,260 $26,401,544 $33,445,663 $6,050,716 $232,920,532
Accrued interest and
dividends 4,781 235 47 7 38 32 13 5,153
----------- ----------- ---------- ---------- ----------- ----------- ---------- ------------
Total $82,690,788 $76,750,359 $4,587,265 $2,999,267 $26,401,582 $33,445,695 $6,050,729 $232,925,685
=========== =========== ========== ========== =========== =========== ========== ============
Plan's investment in
Master Trust $ 3,623,825 $ 4,164,775 $ 220,553 $ 270,291 $ 434,734 $ 2,324,845 $ 925,079 $ 11,964,102
=========== =========== ========== ========== =========== =========== ========== ============
Plan's percentage
ownership interest
in Master Trust 4% 5% 5% 9% 2% 7% 15% 5%
=========== =========== ========== ========== =========== =========== ========== ============
</TABLE>
<TABLE>
Investments, at fair value, held by the Master Trust at December 31, 1998 are
summarized as follows:
<CAPTION>
INTER-
LARGE SMALL NATIONAL MANAGED
COMPANY COMPANY COMPANY EQUITY RESERVE DIVERSIFIED BOND
STOCK FUND FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Procter & Gamble
Company common stock $82,247,171 $ 82,247,171
Mutual funds $76,778,262 $4,596,117 $3,005,413 $26,409,391 $33,460,753 $6,048,229 150,298,165
Short-term investments
(overdraft) 438,836 (28,138) (8,899) (6,153) (7,847) (15,090) 2,487 375,196
----------- ----------- ---------- ---------- ----------- ----------- ---------- ------------
Total $82,686,007 $76,750,124 $4,587,218 $2,999,260 $26,401,544 $33,445,663 $6,050,716 $232,920,532
=========== =========== ========== ========== =========== =========== ========== ============
</TABLE>
<TABLE>
Investment income from the Master Trust for the year ended December 31, 1998 is
summarized as follows:
<CAPTION>
INTER-
LARGE SMALL NATIONAL MANAGED
COMPANY COMPANY COMPANY EQUITY RESERVE DIVERSIFIED BOND
STOCK FUND FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net appreciation
(depreciation) in
fair value of
investments $11,339,483 $18,695,385 $ (263,745) $ 396,904 $ 1,376,097 $ 4,973,756 $ 416,005 $ 36,933,885
Dividends 1,029,974 1,029,974
Interest 49,241 54 83 22 129 41 125 49,695
----------- ----------- ---------- ---------- ----------- ----------- ---------- ------------
Total $12,418,698 $18,695,439 $ (263,662) $ 396,926 $ 1,376,226 $ 4,973,797 $ 416,130 $ 38,013,554
=========== =========== ========== ========== =========== =========== ========== ============
Plan's equity in
net earnings of
Master Trust $ 466,764 $ 1,097,807 $ (10,439) $ 42,422 $ 28,241 $ 414,392 $ 67,771 $ 2,106,958
=========== =========== ========== ========== =========== =========== ========== ============
</TABLE>
<TABLE>
Assets of the Master Trust at December 31, 1997 are summarized as follows:
<CAPTION>
INTER-
LARGE SMALL NATIONAL MANAGED
COMPANY COMPANY COMPANY EQUITY RESERVE DIVERSIFIED BOND
STOCK FUND FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair
value $75,945,362 $60,121,937 $4,728,540 $2,629,430 $28,051,469 $33,669,298 $5,858,170 $211,004,206
Accrued interest and
dividends 6,317 141 22 16 380 101 26 7,003
----------- ----------- ---------- ---------- ----------- ----------- ---------- ------------
Total $75,951,679 $60,122,078 $4,728,562 $2,629,446 $28,051,849 $33,669,399 $5,858,196 $211,011,209
=========== =========== ========== ========== =========== =========== ========== ============
Plan's investment in
Master Trust $ 3,313,890 $ 3,828,148 $ 288,139 $ 316,718 $ 588,255 $ 2,332,416 $1,020,575 $ 11,688,141
=========== =========== ========== ========== =========== =========== ========== ============
Plan's percentage
ownership interest
in Master Trust 4% 6% 6% 12% 2% 7% 17% 6%
=========== ========== ========== =========== =========== ========== ============ ===========
</TABLE>
<TABLE>
Investments, at fair value, held by the Master Trust at December 31, 1997 are
summarized as follows:
<CAPTION>
INTER-
LARGE SMALL NATIONAL MANAGED
COMPANY COMPANY COMPANY EQUITY RESERVE DIVERSIFIED BOND
STOCK FUND FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Procter & Gamble
Company common stock $74,844,561 $ 74,844,561
Mutual funds $60,121,830 $4,728,479 $2,629,377 $27,988,957 $33,669,235 $5,858,117 134,995,995
Short-term investments 1,100,801 107 61 53 62,512 63 53 1,163,650
----------- ----------- ---------- ---------- ----------- ----------- ---------- ------------
Total $75,945,362 $60,121,937 $4,728,540 $2,629,430 $28,051,469 $33,669,298 $5,858,170 $211,004,206
=========== =========== ========== ========== =========== =========== ========== ============
</TABLE>
<TABLE>
Investment income from the Master Trust for the year ended December 31, 1997 is
summarized as follows:
<CAPTION>
INTER-
LARGE SMALL NATIONAL MANAGED
COMPANY COMPANY COMPANY EQUITY RESERVE DIVERSIFIED BOND
STOCK FUND FUND FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net appreciation in
fair value of
investments $22,915,525 $15,017,239 $ 817,130 $ 52,370 $ 1,468,561 $ 5,581,761 $ 520,449 $ 46,373,035
Dividends 836,156 836,156
Interest 56,289 3,197 59,486
----------- ----------- ---------- ---------- ----------- ----------- ---------- ------------
Total $23,807,970 $15,017,239 $ 817,130 $ 52,370 $ 1,471,758 $ 5,581,761 $ 520,449 $ 47,268,677
=========== =========== ========== ========== =========== =========== ========== ============
Plan's equity in
net earnings of
Master Trust $ 836,975 $ 1,012,303 $ 67,671 $ 5,393 $ 31,138 $ 410,252 $ 95,987 $ 2,459,719
=========== =========== ========== ========== =========== =========== ========== ============
</TABLE>
5. DISTRIBUTIONS
Distributions payable to participants at December 31, 1998 and 1997 are
approximately $12,000 and $155,000, respectively.
* * * * * *
<TABLE>
GIORGIO EMPLOYEE SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT (ITEM 27a of Form 5500)
DECEMBER 31, 1998
- --------------------------------------------------------------
<CAPTION>
IDENTITY OF ISSUE,
BORROWER, LESSOR FAIR
OR SIMILAR PARTY DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C>
Participant Loans 58 loans with maturities ranging from January 1999
to September 2008 and interest rates ranging from $ - $362,722
7-10% ====== ========
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
TRUSTEES (OR OTHER PERSONS WHO ADMINISTER THE EMPLOYEE BENEFIT PLAN) HAVE DULY
CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO
DULY AUTHORIZED.
Giorgio Employee Savings Plan
/s/THOMAS J. MESS
Date: June 22, 1999 ---------------------------------------
Thomas J. Mess
Secretary for Trustees
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche
Deloitte &
Touche LLP
- ----------- ----------------------------------------------------------
250 East Fifth Street Telephone: (513) 784-7100
P.O. Box 5340
Cincinnati, Ohio 45201-5340
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-14387 of The Procter & Gamble Company on Form S-8 of our report dated
April 30, 1999 appearing in this Annual Report on Form 11-K of the Giorgio
Employee Savings Plan for the year ended December 31, 1998
/S/DELOITTE & TOUCHE LLP
Cincinnati, Ohio
June 21, 1999
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
