Prospectus Supplement
(to Prospectus dated SEPTEMBER 30, 1999)
RULE NO. 424(b)(5)
REGISTRATION NO. 333-87133
$40,000,000
The Procter & Gamble Company
Floating Rate Notes Due August 15, 2050
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We will pay interest on the notes on February 15, May 15, August 15 and
November 15 of each year. The first interest payment date is November 15, 2000.
Interest on each note will be reset on February 15, May 15, August 15 and
November 15 of each year, beginning on August 14, 2000, based on the "3 month
LIBOR Rate" less 0.35%.
We have the option to redeem the notes beginning on August 15, 2030 or any
August 15 thereafter at the redemption prices listed in this prospectus
supplement, plus accrued interest on the notes to the date we redeem the notes.
We may redeem all or a portion of the notes.
The holders of the notes may require us to repurchase all or a portion of
the notes on August 15 of every third year, beginning on August 15, 2010, at the
redemption prices listed in this prospectus supplement, plus accrued interest on
the notes to the date we repurchase the notes.
If there is a "tax event," we have the right to shorten the maturity of the
notes to the extent needed, so that the interest we pay on the notes will be
deductible for United States Federal income tax purposes. On the new maturity
date, we will pay 100% of the principal amount of the notes, plus accrued
interest on the notes to the new maturity date.
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<TABLE>
<CAPTION>
Per Note Total
-------- -----
<S> <C> <C>
Public Offering Price ........................................ 100.00% $40,000,000
Underwriting Discount ........................................ 1.00% $ 400,000
Proceeds, before expenses, to the Company .................... 99.00% $39,600,000
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE UNDERWRITER EXPECTS TO DELIVER THE NOTES IN BOOK-ENTRY FORM ONLY
THROUGH THE DEPOSITORY TRUST COMPANY ON OR ABOUT AUGUST 14, 2000.
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PAINEWEBBER INCORPORATED
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The date of this prospectus supplement is August 9, 2000.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
The Company.................................................................S-3
Recent Developments.........................................................S-4
Summary Consolidated Financial Information..................................S-6
Consolidated Ratio of Earnings to Fixed Charges.............................S-6
Description of the Notes....................................................S-7
Underwriting................................................................S-15
Validity of the Notes.......................................................S-16
Available Information.......................................................S-16
Incorporation of Documents by Reference.....................................S-16
PROSPECTUS
PAGE
----
The Company...................................................................3
Selected Consolidated Financial Information...................................4
Use of Proceeds...............................................................5
Description of Debt Securities................................................6
Description of Warrants......................................................13
Plan of Distribution.........................................................18
Legal Opinions...............................................................20
Experts......................................................................20
Where You Can Find More Information..........................................20
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THE COMPANY
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.
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 ("GBU's") 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, Beauty Care, Health Care and Food and
Beverage.
. 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.
. 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.
. Food and Beverage includes snacks, beverage, and commercial services.
Representative brands include Folgers, Jif, Sunny Delight, Pringles, Olean
and Crisco.
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 $2.1 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 & 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.
RECENT DEVELOPMENTS
On August 1, 2000, we issued a press release announcing earnings for the
fourth quarter and fiscal year, both ending June 30, 2000.
We reported net earnings of $516 million or 36 cents per share for the
April-June quarter. Results include a $261 million after-tax charge related to
the Organization 2005 restructuring program. Core net earnings, which exclude
the Organization 2005 charges, were $777 million for the quarter. Core net
earnings per share were 55 cents, flat versus the prior year. Sales were $9.66
billion, a two percent increase, consistent with unit volume growth. Sales grew
five percent excluding currency effects, primarily from the euro.
We reported net earnings of $3.54 billion or $2.47 per share for the fiscal
year ended June 30, 2000. Results included a charge of $688 million after-tax
related to our Organization 2005 program.
Core net earnings for the fiscal year increased to $4.23 billion, excluding
the Organization 2005 costs. Core net earnings per share were $2.95, an increase
of four percent from the prior year. Fiscal year earnings grew due to volume and
sales progress partially offset by higher spending behind new initiatives. Net
sales grew to $39.95 billion. Excluding a negative two percent exchange rate
impact, net sales increased seven percent on four percent unit volume growth.
FISCAL YEAR SEGMENT HIGHLIGHTS
. Fabric and home care delivered strong sales growth for the fiscal year,
spurred by the introduction of new brands and solid base business
performance in North America and Northeast Asia. Net sales for the year
were $12.16 billion, an increase of seven percent from the prior year, on
unit volume growth of five percent. Excluding foreign exchange impacts,
primarily in Western Europe, sales grew nine percent. North America led
progress, generating strong unit volume and sales growth versus the prior
year with product upgrades on Tide and several new brand initiatives
including Swiffer, Dryel and Mr. Clean Wipes. Additional contributions to
top-line growth were due to product upgrades on Ariel in Northeast Asia and
continued expansion into the Southern Cone of Latin America. Despite volume
and sales improvement, segment earnings fell three percent to $1.45
billion, behind significant investments in these initiatives.
. Results in paper reflected tissue and towel expansion in Western Europe,
investments in new product initiatives on Charmin, a tough competitive
environment in baby care and feminine care businesses, and unfavorable raw
and packing material cost trends. Net sales were $12.04 billion, a one
percent decline from the prior year on flat unit volume. Excluding the
impact of exchange rates, sales were up one percent. Unit volume was up two
percent excluding the prior year divestiture of the Attends adult
incontinence brand. Volume growth in tissue and towel was offset by
softness in the remainder of the business, particularly in Western Europe.
Net earnings declined 16 percent to $1.07 billion.
. Beauty care net sales were comparable to the prior year at $7.39 billion,
including a one percent unfavorable exchange impact, primarily in Western
Europe. Unit volume declined two percent, impacted by a difficult
competitive environment in hair care in key European markets and
significant contraction of the market in China. Sales were ahead of volume
due to the focus on high-performance, premium-priced initiatives, including
the launch of the Physique styling line, cosmetics and skin care product
initiatives, and the expansion of Secret Platinum. Net earnings were $894
million, a three percent decrease from the prior year. The earnings decline
reflected the weakness in China and Western Europe and higher marketing
costs associated with the introduction of new and established brand product
initiatives, which more than offset gains from minor brand divestitures.
. Health care posted strong results, fueled by the acquisition of the Iams
Company, a leader in pet nutrition. Net sales, including a two percent
impact from weaker currencies were $3.91 billion, with growth coming
primarily from acquisitions. Volume and sales both increased over 30
percent versus the prior year. Net earnings were $335 million, a 38 percent
increase. Excluding acquisitions, sales increased four percent despite a
two percent volume decline, and net earnings increased 17 percent. Actonel,
a new brand for the prevention and treatment of osteoporosis, was launched
late in the year, with launch costs partially funded by a milestone payment
earned upon FDA approval.
. Food and beverage delivered solid earnings results despite flat sales and
volume. Sales were $4.63 billion, including a one percent negative exchange
impact. Excluding the prior year divestiture of Hawaiian Punch, unit volume
increased five percent, behind strong growth in Western Europe and
Northeast Asia, partially due to the expansion of Pringles. Net earnings
increased to $364 million, up 11 percent versus last year, primarily due to
gross margin improvement.
. The corporate segment includes both operating and non-operating elements,
including certain financing costs, goodwill amortization, employee benefit
costs, other general corporate items and Organization 2005 charges.
OTHER FISCAL YEAR HIGHLIGHTS
. Effective July 1, 2000, A.G. Lafley, formerly president-global beauty care
and North America, was elected as chief executive of the company,
succeeding Durk I. Jager, who retired after more than 30 years of service.
The board of directors also elected John E. Pepper, previously retired from
P&G and chairman of the executive committee of the board, to be chairman of
the board.
. The company's Organization 2005 restructuring program is delivering savings
as anticipated. Organization 2005 is designed to realign the organization
structure, work processes, and culture to accelerate growth and innovation.
To achieve this, certain structural and organizational changes are being
made to administrative and manufacturing operations - including
implementation of standardized global manufacturing capabilities. The cost
of this multi-year program is estimated at $2.1 billion after-tax over six
years, with going savings currently estimated at $1.2 billion per year. The
total cost estimate has increased approximately $200 million, while
estimated going savings have increased by $300 million per year.
. Dividends will increase nine percent to $1.40 per share, effective August
15, 2000, marking the 45th consecutive year of increased dividend payments.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information for the nine
months ended March 31, 2000 and March 31, 1999 has been derived from our
unaudited consolidated financial statements contained in our Quarterly Report to
Shareholders on Form 10-Q for the quarter ended March 31, 2000. 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 March
31, 2000 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>
Nine Months Ended March 31,
---------------------------
2000 1999
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(Amounts in Millions
Except Per Share Amounts)
<S> <C> <C>
NET SALES..................................................... $30,290 $28,675
Cost of products sold....................................... 16,096 15,375
Marketing, research and administrative expenses............. 9,185 7,924
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OPERATING INCOME.............................................. 5,009 5,376
Interest expense............................................ 505 491
Other income, net........................................... 147 163
------- -------
EARNINGS BEFORE INCOME TAXES.................................. 4,651 5,048
Income taxes................................................ 1,625 1,699
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NET EARNINGS.................................................. $ 3,026 $ 3,349
======= =======
PER COMMON SHARE:
Basic net earnings.......................................... $ 2.23 $ 2.46
Diluted net earnings........................................ $ 2.10 $ 2.30
Dividends................................................... $ 0.960 $ 0.855
AVERAGE COMMON SHARES OUTSTANDING--DILUTED 1,432.9 1,448.3
<CAPTION>
As of Fiscal year ended
March 31, 2000 June 30, 1999
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(Amounts in Millions)
<S> <C> <C>
WORKING CAPITAL............................................... $ 627 $ 597
TOTAL ASSETS.................................................. 35,249 32,113
LONG-TERM DEBT................................................ 9,394 6,231
SHAREHOLDERS' EQUITY.......................................... 12,328 12,058
</TABLE>
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>
Years Ended June 30, 9 Mo. Ended
-------------------------------- -----------
1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1) 7.7 9.0 10.9 9.9 8.8 9.1
</TABLE>
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(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).
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes (referred to
in the accompanying prospectus as the "Offered Debt Securities") 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.
GENERAL
The notes:
. will be limited to $40,000,000 aggregate principal amount and will be
issued under the indenture;
. are senior debt of Procter & Gamble, ranking equally with all other
present and future unsecured and unsubordinated indebtedness of
Procter & Gamble;
. will mature on August 15, 2050;
. will not be entitled to any sinking fund;
. will be subject to defeasance and covenant defeasance;
. will be issued only in registered, book-entry form, in denominations
of $1,000 and any integral multiple of $1,000;
. will be redeemable by us prior to maturity; and
. will be repayable at the option of the holders prior to maturity.
The indenture and the notes do not limit the amount of indebtedness that we
(or our subsidiaries) may incur or issue, and do not contain any financial or
similar restrictions on us, except as described in the prospectus under the
caption "Description of Debt Securities--Restrictive Covenants."
INTEREST
The notes will bear interest at the "3 month LIBOR rate" (as defined below)
less 0.35% (35 basis points). Interest will accrue from August 14, 2000 or from
the most recent date to which interest on that note has been paid or provided
for. Interest is payable quarterly in arrears on February 15, May 15, August 15
and November 15 of each year starting November 15, 2000 (these dates are called
"interest payment dates"). We will pay interest to the person in whose name the
note is registered at the close of business fifteen calendar days before the
interest payment date. The 3 month LIBOR rate will be reset quarterly on
February 15, May 15, August, 15 and November 15 of each year (each of these
dates is called an "interest reset date").
"3 month LIBOR rate" is the rate for three-month deposits in U.S. dollars
in the London interbank market appearing on "Telerate Page 3750" at
approximately 11:00 A.M., London time, on the second business day before the
applicable interest reset date; provided that the interest rate in effect from
the date of issue to the first interest reset date will be the 3 month LIBOR
rate as calculated on the second business day before the date of issue. If this
rate does not appear on Telerate Page 3750, the calculation agent will determine
the rate based on the rates at which deposits in U.S. dollars are offered by
four major banks in the London interbank market (as selected by the calculation
agent), at approximately 11:00 A.M., London time, on the second business day
before the applicable interest reset date, to prime banks in the London
interbank market. The three-month period for these three-month deposits in U.S.
dollars are to begin on that interest reset date and be in a principal amount
equal to an amount not less than $1,000,000 that is representative for a single
transaction in such market at that time. In that case, the calculation agent
will request the principal London office of each of the major banks mentioned
above to provide a quotation of that rate. If at least two quotations are
provided, the rate for that interest reset date will be the arithmetic mean of
the quotations, and, if fewer than two quotations are provided as requested, the
rate for that interest reset date will be the arithmetic mean of the rates
quoted by major banks in The City of New York, selected by the calculation
agent, at approximately 11:00 A.M., New York City time, on the second business
day before the applicable interest reset date for three-month loans in U.S.
dollars to leading European banks. The three-month period for these three-month
loans in U.S. dollars are to begin on that interest reset date and be in a
principal amount equal to an amount not less than $1,000,000 that is
representative for a single transaction in that market at that time. "Telerate
Page 3750" means the display page so designated on the Dow Jones Telerate
Service (or another page as may replace that page on that service for the
purpose of displaying London interbank offered rates of major banks). The
interest rate on the notes will not be higher than the maximum rate permitted by
New York law as that rate may be periodically modified by United States law of
general application.
If any interest payment date or the maturity date of the notes does not
fall on a business day, payment of interest or principal otherwise payable on
that day need not be made on that day, but may be made on the next business day
with the same force and effect as if made on that interest payment date or the
maturity date of the notes unless the next business day is in the next calendar
month, in which case such interest payment date shall be the immediately
preceding business day. The term "business day" shall mean any day other than a
Saturday or Sunday or a day on which banking institutions in New York City or
London are authorized or obligated by law or executive order to close.
The calculation agent will, upon the request of the holder of any note,
provide the holder with the interest rate then in effect. The calculation agent
is Bank One Trust Company (formerly known as The First National Bank of Chicago)
until such time as we appoint a successor calculation agent. All calculations
made by the calculation agent in the absence of manifest error will be
conclusive for all purposes and binding on us and the holders of the notes. We
may appoint a successor calculation agent with the written consent of the
trustee, which consent shall not be unreasonably withheld.
Interest on the notes will be computed and paid on the basis of a 360-day
year and the actual number of days in each quarterly interest payment period.
OPTIONAL REDEMPTION
The notes may be redeemed at any time, at our option, in whole or in part,
in amounts of $1,000 or any multiple of $1,000 at the following redemption
prices (in each case expressed as a percentage of the principal amount), if
redeemed during the 12-month period beginning on August 15 of any of the
following years:
Redemption
Year Price
---- ----------
2030............................. 105.0%
2031............................. 104.5%
2032............................. 104.0%
2033............................. 103.5%
2034............................. 103.0%
2035............................. 102.5%
2036............................. 102.0%
2037............................. 101.5%
2038............................. 101.0%
2039............................. 100.5%
and thereafter at 100% of the principal amount, in each case, together with any
accrued and unpaid interest to the redemption date (subject to the rights of
holders of record on relevant record dates to receive interest due on an
interest payment date).
We must mail notice of any redemption at least 30 days but not more than 60
days before the redemption date to each holder of the notes to be redeemed.
Unless we default in the payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the notes or portions of the
notes called for redemption.
In the event of any redemption of less than all the outstanding notes, the
particular notes (or portions of notes in multiples of $1,000) to be redeemed
shall be selected by the trustee by the method the trustee considers fair and
appropriate.
REPAYMENT AT OPTION OF HOLDER
The notes will be repayable at the option of the holder of the notes, in
whole or in part, on the repayment dates and at the repayment prices (in each
case expressed as a percentage of the principal amount) set forth in the
following table:
Redemption
Date Price
---- ----------
August 15, 2010.................. 99.00%
August 15, 2013.................. 99.25%
August 15, 2016.................. 99.50%
August 15, 2019.................. 99.75%
and on August 15 of every third year thereafter at 100% of the principal amount,
through and including August 15, 2049, in each case, together with any accrued
and unpaid interest to the redemption date (subject to the rights of holders of
record on relevant record dates to receive interest due on an interest payment
date).
In order for a note to be repaid, the paying agent must receive, at least
30 but not more than 60 calendar days before the optional repayment date, (1)
the note with the form entitled "Option to Elect Repayment" on the reverse of
the note duly completed or (2) a telegram, facsimile transmission or a letter
from a member of a national securities exchange or a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States which must set forth:
. the name of the holder of the note;
. the principal amount of the note;
. the principal amount of the note to be repaid;
. the certificate number or a description of the tenor and terms of the
note;
. a statement that the option to elect repayment is being exercised; and
. a guarantee that the note is to be repaid.
These items, together with the duly completed form entitled "Option to
Elect Repayment" on the reverse of the note, must be received by the Paying
Agent not later than the fifth business day after the date of that telegram,
facsimile transmission or letter. The repayment option may be exercised by the
holder of a note for less than the entire principal amount of the note but, in
that event, the principal amount of the note remaining outstanding after
repayment must be in an authorized denomination.
CONDITIONAL RIGHT TO SHORTEN MATURITY
We intend to deduct interest paid on the notes for United States Federal
income tax purposes. However, there have been proposed tax law changes over the
past several years that, among other things, would have prohibited an issuer
from deducting interest payments on debt instruments with a maturity of more
than 40 years. While none of these proposals has become law, we cannot assure
you that similar legislation affecting our ability to deduct interest paid on
the notes will not be enacted in the future or that any such legislation would
not have a retroactive effective date. As a result, we cannot assure you that a
tax event (as defined below) will not occur.
If a tax event occurs, we will have the right to shorten the maturity of
the notes, without the consent of the holders of the notes, to the minimum
extent required, in the opinion of nationally recognized independent tax
counsel, so that, after shortening the maturity, interest paid on the notes will
be deductible for United States Federal income tax purposes or, if that counsel
cannot opine definitively as to such a minimum period, the minimum extent so
required to maintain our interest deduction to the extent deductible under
current law as determined in good faith by our board of directors, after receipt
of an opinion of that counsel regarding the applicable legal standards. In that
case, the amount payable on those notes on that new maturity date will be equal
to 100% of the principal amount of those notes plus interest accrued on those
notes to the date those notes mature on that new maturity date. We cannot assure
you that we would not exercise our right to shorten the maturity of those notes
if a tax event occurs or as to the period that the maturity would be shortened.
If we elect to exercise our right to shorten the maturity of the notes when a
tax event occurs, we will mail a notice to each holder of notes by first-class
mail not more than 60 days after the occurrence of the tax event, stating the
new maturity date of the notes. This notice shall be effective immediately upon
mailing.
We believe that the notes should constitute indebtedness for United Stated
Federal income tax purposes under current law and, in that case, an exercise of
our right to shorten the maturity of the notes should not be a taxable event to
holders for those purposes. Prospective investors should be aware, however, that
our exercise of our right to shorten the maturity of the notes will be a taxable
event to holders for United States Federal income tax purposes if the notes are
treated as equity for United States Federal income tax purposes before the
maturity is shortened, assuming that the notes of shortened maturity are treated
as debt for those purposes.
"Tax event" means that we shall have received an opinion of nationally
recognized independent tax counsel to the effect that, as a result of:
. any amendment to, clarification of, or change (including any announced
prospective amendment, clarification or change) in any law, or any
regulation thereunder, of the United States;
. any judicial decision, official administrative pronouncement, ruling,
regulatory procedure, regulation, notice or announcement, including
any notice or announcement of intent to adopt or promulgate any
ruling, regulatory procedure or regulation (any of the foregoing, an
"administrative or judicial action"); or
. any amendment to, clarification of, or change in any official position
with respect to, or any interpretation of, an administrative or
judicial action or a law or regulation of the United States that
differs from the previously generally accepted position or
interpretation,
in each case, occurring on or after August 14, 2000, there is more than an
insubstantial increase in the risk that interest paid by us on the notes is
not, or will not be, deductible, in whole or in part, by us for United
States Federal income tax purposes.
NOTES USED AS QUALIFIED REPLACEMENT PROPERTY
Prospective investors seeking to treat the notes as "qualified replacement
property" for purposes of section 1042 of the Internal Revenue Code of 1986, as
amended (the "Code"), should be aware that section 1042 requires the issuer to
meet certain requirements in order for the notes to constitute qualified
replacement property. In general, qualified replacement property is a security
issued by a domestic corporation that did not, for the taxable year preceding
the taxable year in which such security was purchased, have "passive investment
income" in excess of 25 percent of the gross receipts of such corporation for
such preceding taxable year (the "Passive Income Test"). For purposes of the
Passive Income Test, where the issuing corporation is in control of one or more
corporations, all such corporations are treated as one corporation (the
"Affiliated Group") for the purposes of computing the amount of passive
investment income for purposes of section 1042.
We believe that less than 25 percent of our Affiliated Group's gross
receipts is passive investment income for the taxable year ending June 30, 2000.
In making this determination, we have made certain assumptions and used
procedures which we believe are reasonable. We cannot give any assurance as to
whether we will continue to meet the Passive Income Test. It is, in addition,
possible that the Internal Revenue Service may disagree with the manner in which
we have calculated our Affiliated Group's gross receipts (including the
characterization of those gross receipts) and passive investment income and the
conclusions reached in this discussion. Prospective purchasers of the notes
should consult with their own tax advisors with respect to these and other tax
matters relating to the notes.
BOOK-ENTRY SYSTEM
We have obtained the information in this section concerning The Depository
Trust Company and its book-entry system and procedures from sources that we
believe to be reliable, but we take no responsibility for the accuracy of this
information.
The notes will initially be represented by one or more fully registered
global notes. Each such global note will be deposited with, or on behalf of, The
Depository Trust Company or any successor thereto ("DTC") and registered in the
name of Cede & Co., DTC's partnership nominee.
You may hold your interests in the global notes in the United States
through DTC, either as a participant in that system or indirectly through
organizations which are participants in that system. So long as DTC or its
nominee is the registered owner of the global securities representing the notes,
DTC or that nominee will be considered the sole owner and holder of the notes
for all purposes of the notes and the indenture. Except as provided below,
owners of beneficial interests in the notes will not be entitled to have the
notes registered in their names, will not receive or be entitled to receive
physical delivery of the notes in definitive form and will not be considered the
owners or holders of the notes under the indenture, including for purposes of
receiving any reports that we or the trustee deliver pursuant to the indenture.
Therefore, each person owning a beneficial interest in a note must rely on the
procedures of DTC or its nominee and, if that person is not a participant, on
the procedures of the participant through which that person owns its interest,
in order to exercise any rights of a holder of notes.
Unless and until we issue the notes in fully certificated form under the
limited circumstances described below under the heading "Book-Entry System -
Certificated Notes":
. you will not be entitled to receive a certificate representing your
interest in the notes;
. all references in this prospectus supplement or in the accompanying
prospectus to actions by holders will refer to actions taken by DTC
upon instructions from its direct participants; and
. all references in this prospectus supplement or the accompanying
prospectus to payments and notices to holders will refer to payments
and notices to DTC or Cede & Co., as the registered holder of the
notes, for distribution to you in accordance with DTC procedures.
THE DEPOSITORY TRUST COMPANY
DTC will act as securities depositary for the notes. The notes will be
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 provision of Section 17A of
the Securities Exchange Act of 1934.
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 Securities and Exchange Commission has on file a set of the rules
applicable to DTC and its direct participants.
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 as provided below in
"Book-Entry System - Certificated Notes."
To facilitate subsequent transfers, all 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.
BOOK-ENTRY FORMAT
Under the book-entry format, the trustee will pay interest or principal
payments to Cede & Co., as nominee of DTC. DTC will forward the payment to the
direct participants, who will then forward the payment to the indirect
participants or to you as the beneficial owner. You may experience some delay in
receiving your payments under this system.
DTC is required to make book-entry transfers on behalf of its direct
participants and is required to receive and transmit payments of principal,
premium, if any, and interest on the notes. Any direct participant or indirect
participant with which you have an account is similarly required to make
book-entry transfers and to receive and transmit payments with respect to the
notes on your behalf. We and the trustee under the indenture have no
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The trustee will not recognize you as a holder under the indenture, and you
can only exercise the rights of a holder indirectly through DTC and its direct
participants. DTC has advised us that it will only take action regarding a note
if one or more of the direct participants to whom the note is credited direct
DTC to take such action. DTC can only act on behalf of its direct participants.
Your ability to pledge notes to non-direct participants, and to take other
actions, may be limited because you will not possess a physical certificate that
represents your notes.
SAME-DAY SETTLEMENT AND PAYMENT
The underwriter will settle the notes in immediately available funds. We
will make principal and interest payments on the notes in immediately available
funds or the equivalent.
Secondary market trading between DTC direct participants will occur in
accordance with DTC rules and will be settled in immediately available funds
using DTC's Same-Day Funds Settlement System. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity (if any) in the notes.
CERTIFICATED NOTES
Unless and until they are exchanged, in whole or in part, for notes in
definitive form in accordance with the terms of the notes, the notes may not be
transferred except (1) as a whole by DTC to a nominee of DTC or (2) by a nominee
of DTC to DTC or another nominee of DTC or (3) by DTC or any such nominee to a
successor of DTC or a nominee of such successor.
We will issue notes to you or your nominees, in fully certificated
registered form, rather than to DTC or its nominees, only if:
. we advise the trustee in writing that DTC is no longer willing or able
to discharge its responsibilities properly or that DTC is no longer a
registered clearing agency under the Securities Exchange Act of 1934,
and the trustee or we are unable to locate a qualified successor
within 90 days;
. an event of default has occurred and is continuing under the
indenture; or
. we, at our option, elect to terminate the book-entry system through
DTC.
If any of the three above events occurs, DTC is required to notify all
direct participants that notes in fully certificated registered form are
available through DTC. DTC will then surrender the global note representing the
notes along with instructions for re-registration. The trustee will re-issue the
notes in fully certificated registered form and will recognize the registered
holders of the certificated notes as holders under the indenture.
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.
UNDERWRITING
We have entered into an underwriting agreement and a pricing agreement with
respect to the notes with the underwriter listed below. Subject to certain
conditions, the underwriter has agreed to purchase the principal amount of notes
indicated in the following table:
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
PaineWebber Incorporated ................. $40,000,000
-----------------------
Notes sold by the underwriter to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus
supplement. If all the notes are not sold at the initial offering price, the
underwriter may change the offering price and the other selling terms.
The notes are a new issue of securities with no established trading market.
We have been advised by the underwriter that the underwriter intends to make a
market in the notes, but it is not obligated to do so and may at the
underwriter's sole discretion discontinue market making at any time without
notice. No assurance can be given as to whether a trading market for the notes
will develop or as to the liquidity of the trading market for the notes.
In connection with the offering, the underwriter may purchase and sell the
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriter of a greater aggregate
principal amount of notes than it is required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the notes
while the offering is in process.
The underwriter also may impose a penalty bid, whereby selling concessions
allowed to broker-dealers in respect of the notes may be reclaimed by the
underwriter if such notes are repurchased by the underwriter in stabilizing or
short covering transactions.
These activities by the underwriter may stabilize, maintain or otherwise
affect the market price of the notes. Neither we nor the underwriter makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above might have on the price of the notes. In
addition, neither we nor the underwriter makes any representation that the
underwriter will engage in such transactions. As a result, the price of the
notes may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriter at any time. These transactions may be effected in the
over-the-counter market or otherwise.
We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $90,000.
We have agreed to indemnify the underwriter against certain liabilities,
including liabilities under the Securities Act of 1933.
PaineWebber Incorporated or its affiliates from time to time have performed
and may in the future perform various investment and/or commercial banking
services for us for which they have received customary compensation.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for Procter & Gamble by
Sandra T. Lane, Esq., Senior Counsel, The Procter & Gamble Company, One Procter
& Gamble Plaza, Cincinnati, Ohio 45202, and for the underwriter by Fried, Frank,
Harris, Shriver & Jacobson (a partnership including professional corporations),
One New York Plaza, New York, New York 10004. Ms. Lane 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. Lane. Fried, Frank, Harris, Shriver & Jacobson 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 Reports on Form 8-K dated August 11, 1999, March 7,
2000, May 15, 2000 and June 8, 2000;
. our Quarterly Report on Form 10-Q for the periods ended September
30, 1999, December 31, 1999 and March 31, 2000; and
. any future filings made 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.
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
TABLE OF CONTENTS
Page
The Company...................................................................3
Selected Consolidated Financial Information...................................4
Use of Proceeds...............................................................5
Description of Debt Securities................................................6
Description of Warrants......................................................13
Plan of Distribution.........................................................18
Legal Opinions...............................................................20
Experts......................................................................20
Where You Can Find More Information..........................................20
------------
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."
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.
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.
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.
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;
. 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 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.
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;
(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
. 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 2/3% in principal amount of the
outstanding debt securities of each series affected by the modification or
amendment consent to the modification or amendment.
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)
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.
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.
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.
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.
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.
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.
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.
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$40,000,000
[P&G LOGO]
THE PROCTER & GAMBLE COMPANY
FLOATING RATE NOTES DUE AUGUST 14, 2050
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PROSPECTUS SUPPLEMENT
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PAINEWEBBER INCORPORATED
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AUGUST 14, 2000
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