SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED] for the fiscal year ended June 30, 2000, or
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED] for the transition period from ________________
to ______________________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: The Procter & Gamble Profit Sharing Trust and
Employee Stock Ownership Plan, The Procter & Gamble Company, Two Procter &
Gamble Plaza, Cincinnati, Ohio 45202.
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202.
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance With the
Financial Reporting Requirements of ERISA
THE PROCTER & GAMBLE
PROFIT SHARING TRUST
AND EMPLOYEE STOCK
OWNERSHIP PLAN
Financial Statements for the Years Ended June 30,
2000 and 1999 and Supplemental Schedules for the
Year Ended June 30, 2000 and Independent
Auditors' Report
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits, June 30, 2000 and
1999 2
Statements of Changes in Net Assets Available for Benefits for the
Years Ended June 30, 2000 and 1999 3
Notes to Financial Statements for the Years Ended June 30, 2000 and
1999 4
SUPPLEMENTAL SCHEDULES:
Schedule of Assets Held for Investment, Schedule H, Part IV, Line 4i
of Form 5500, June 30, 2000 15
Schedule of Reportable Transactions, Schedule H, Part IV, Line 4J
of Form 5500 for the Year Ended June 30, 2000 16
SCHEDULES OMITTED - The following schedules were omitted because
of the absence of conditions under which they are required:
Assets Acquired and Disposed Within the Plan Year
Party-In-Interest Transactions
Obligations In Default
Leases In Default
INDEPENDENT AUDITORS' REPORT
The Policy Committee of The Procter & Gamble
Profit Sharing Trust and Employee Stock Ownership Plan and
The Trustees of The Procter & Gamble Profit Sharing Trust
and Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan
(Plan) as of June 30, 2000 and 1999, and the related statements of changes in
net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at June 30, 2000 and
1999, and the changes in net assets available for benefits for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in the audit of
the basic 2000 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic 2000 financial
statements taken as a whole.
/S/DELOITTE & TOUCHE LLP
------------------------
September 1, 2000
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 2000 AND 1999
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
2000 1999
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Short-term investments, plus accrued interest $ 41,219,992 $ 63,266,263
Money market funds 212,425,641 289,942,332
The Procter & Gamble Company common stock -
88,210,651 shares (cost $2,023,520,638) at June 30, 2000;
97,955,320 shares (cost $1,985,282,415) at June 30, 1999 5,050,059,770 8,742,512,310
The Procter & Gamble Company ESOP Convertible
Class A Preferred Stock:
Series A - 55,925,072 shares (cost $768,972,865) at June 30, 2000;
58,342,179 shares (cost $802,207,857) at June 30, 1999 3,201,710,372 5,207,039,475
Series B - 37,084,836 shares (cost $968,656,445) at June 30, 2000;
37,484,836 shares (cost $979,104,439) at June 30, 1999 2,123,106,861 3,345,521,613
Mutual funds 219,097,659 260,580,029
Deferred annuities 143,058 2,885,903
Loans to participants 55,687,129 63,259,576
--------------- ---------------
Total investments 10,903,450,482 17,975,007,501
--------------- ---------------
ACCOUNTS RECEIVABLE:
Contribution from The Procter & Gamble Company 998,359 17,722,485
Dividends receivable (Preferred Stock) 16,841,000 15,393,000
--------------- ---------------
Total accounts receivable 17,839,359 33,115,485
--------------- ---------------
Total assets 10,921,289,841 18,008,122,986
--------------- ---------------
LIABILITIES:
Interest payable on notes and debentures 57,826,064 59,514,850
Note payable to The Procter & Gamble Company
(Series A Preferred Stock) 23,600,000 78,500,000
Notes payable (Series A Preferred Stock) 392,333,833 471,982,865
Debentures (Series B Preferred Stock) 1,000,000,000 1,000,000,000
--------------- ---------------
Total liabilities 1,473,759,897 1,609,997,715
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,447,529,944 $16,398,125,271
=============== ===============
The accompanying notes are an integral part of these statements.
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
--------------------------------------------------------------------------------------------------------------------------
<CAPTION>
2000 1999
<S> <C> <C>
ADDITIONS:
Investment income (losses):
Net depreciation in fair value of investments $(5,731,954,162) $ (367,182,578)
Dividends 269,187,152 266,721,486
Interest on investments 18,948,623 16,073,688
Interest on loans to participants 5,276,323 5,543,755
--------------- ---------------
Total investment losses (5,438,542,064) (78,843,649)
--------------- ---------------
Contributions by The Procter & Gamble Company
(Net of forfeitures of $267,893 in 2000 and
$197,303 in 1999) 110,683,533 85,844,550
Employee automatic salary contributions 58,983,698 65,058,873
Employee contributions 29,871,970 29,787,865
--------------- ---------------
Total contributions 199,539,201 180,691,288
--------------- ---------------
Total changes (5,239,002,863) 101,847,639
--------------- ---------------
DEDUCTIONS:
Distributions to participants:
The Procter & Gamble Company common stock -
10,374,956 shares (cost $185,717,518) in 2000;
11,898,467 shares (cost, $202,617,121) in 1999; (923,902,997) (1,046,086,176)
Cash (557,549,167) (536,311,335)
Mutual funds - (191,360)
Deferred annuities (25,000) (86,964)
Automatic dividends paid to participants (58,983,698) (65,058,873)
Interest expense (134,816,533) (140,670,115)
--------------- ---------------
Total deductions (1,675,277,395) (1,788,404,823)
--------------- ---------------
TRANSFERS (TO) FROM OTHER TRUSTS AND PLANS:
Transfer to The Procter & Gamble Retiree Benefit Trust (36,315,069) (28,499,410)
Transfers from affiliated plans - 231,296,586
--------------- ---------------
Total net transfers (36,315,069) 202,797,176
--------------- ---------------
NET DECREASE IN NET ASSETS (6,950,595,327) (1,483,760,008)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 16,398,125,271 17,881,885,279
--------------- ---------------
End of year $ 9,447,529,944 $16,398,125,271
=============== ===============
The accompanying notes are an integral part of these statements.
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
---------------------------------------------------------------------------
1. PLAN DESCRIPTION
GENERAL - The Procter & Gamble Profit Sharing Trust and Employee Stock
Ownership Plan (Plan) is a defined contribution plan covering substantially
all domestic employees of The Procter & Gamble Company and certain of its
subsidiaries (Company). Effective July 1, 2000 and January 1, 2001,
employees of Recovery Engineering, Inc. and IAMS, respectively, are
eligible to participate in the Plan. The Plan is comprised of two trusts,
the Retirement Trust (RT) and the Employee Stock Ownership Trust (ESOT).
These financial statements include the RT and the ESOT. The Plan is funded
through both Company and employee contributions. Effective July 1, 1998 and
November 1, 1998, the Board of Directors of the Company approved the
mergers of The P&G/Noxell Transitional Profit Sharing Trust (Noxell) and
the Sundor Brands Profit Sharing Plan, respectively, into the Plan. The
total net assets transferred to the Plan from these plans were $231,296,586
in 1999. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The Plan document should be referred
to for the complete text of the Plan agreement.
The ESOT was established by resolution of the Board of Directors of the
Company on January 10, 1989. During March 1989, the ESOT borrowed
$1,000,000,000 (see Note 7) and, with the proceeds from such borrowings,
purchased 9,090,909 shares of The Procter & Gamble Company Series A ESOP
Convertible Class A Preferred Stock (Series A Preferred Stock) (see Note
5). The number of shares initially issued increased to 72,727,272 as a
result of the two-for-one stock splits effective October 20, 1989, May 15,
1992, and August 22, 1997. As a means of extending the benefits of the ESOP
to participants over a longer period, the ESOT entered into a term loan
agreement with the Company under which outstanding borrowings were
$23,600,000 and $78,500,000 as of June 30, 2000 and 1999, respectively (see
Note 7). These shares of Series A Preferred Stock are utilized to fund a
portion of the Company's annual profit sharing contribution to the Plan.
In May 1990, the Company's Board of Directors authorized an amendment to
the Plan to establish a separate account in accordance with Section 401(h)
of the Internal Revenue Code to fund a portion of the Company's
postretirement obligation for retired Plan participants satisfying certain
requirements specified in the Plan agreement. This amendment became
effective July 1, 1990. During November 1990, the ESOT borrowed
$1,000,000,000 (see Note 8) and with the proceeds from such borrowings,
purchased 9,571,209 shares of The Procter & Gamble Company Series B ESOP
Convertible Class A Preferred Stock (Series B Preferred Stock) (see Note
6). The number of outstanding shares increased to 38,284,836 as a result of
the two-for-one stock splits effective May 15, 1992 and August 22, 1997. In
June 1993 these shares were exchanged for an equal number of shares with
identical terms, except for amended restrictions on transfer (see Note 6).
These shares are available to fund postretirement benefits and may not be
used for profit sharing purposes, except as permitted under certain
provisions in the Plan document.
At June 30, 2000 and 1999, the net assets available to the ESOT to satisfy
a portion of the postretirement benefits were $1,122,282,872 and
$2,345,075,330, respectively. The related postretirement obligations are
not a component of this Plan's obligations but are included in the
financial statements of a separate health and welfare plan sponsored by the
Company.
<TABLE>
The balances in the investments and liabilities held in the ESOT related to
Series A and B Preferred Stock are summarized as follows for the years ended
June 30, 2000 and 1999.
<CAPTION>
June 30, 2000
---------------------------------------------------------
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
Short-term investments, plus accrued interest $ 10,200 $ 38,860,011 $ 38,870,211
Series A Preferred Stock 3,201,710,372 3,201,710,372
Series B Preferred Stock 2,123,106,861 2,123,106,861
-------------- -------------- --------------
Total investments 3,201,720,572 2,161,966,872 5,363,687,444
Dividends receivable 9,725,000 7,116,000 16,841,000
-------------- -------------- --------------
Total assets 3,211,445,572 2,169,082,872 5,380,528,444
-------------- -------------- --------------
Interest payable on notes and debentures (11,026,064) (46,800,000) (57,826,064)
Note payable to The Procter & Gamble Company
(Series A Preferred Stock) (23,600,000) (23,600,000)
Notes payable (Series A Preferred Stock) (392,333,833) (392,333,833)
Debentures (Series B Preferred Stock) (1,000,000,000) (1,000,000,000)
-------------- -------------- --------------
Total liabilities (426,959,897) (1,046,800,000) (1,473,759,897)
-------------- -------------- --------------
ESOT Net assets $2,784,485,675 $1,122,282,872 $3,906,768,547
============== ============== ==============
<CAPTION>
June 30, 1999
----------------------------------------------------------
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
Short-term investments, plus accrued interest $ 15,907,878 $ 39,160,717 $ 55,068,595
Series A Preferred Stock 5,207,039,475 5,207,039,475
Series B Preferred Stock 3,345,521,613 3,345,521,613
-------------- -------------- --------------
Total investments 5,222,947,353 3,384,682,330 8,607,629,683
Dividends receivable 8,200,000 7,193,000 15,393,000
-------------- -------------- --------------
Total assets 5,231,147,353 3,391,875,330 8,623,022,683
-------------- -------------- --------------
Interest payable on notes and debentures (12,714,850) (46,800,000) (59,514,850)
Note payable to The Procter & Gamble Company
(Series A Preferred Stock) (78,500,000) (78,500,000)
Notes payable (Series A Preferred Stock) (471,982,865) (471,982,865)
Debentures (Series B Preferred Stock) (1,000,000,000) (1,000,000,000)
-------------- -------------- --------------
Total liabilities (563,197,715) (1,046,800,000) (1,609,997,715)
-------------- -------------- --------------
ESOT Net assets $4,667,949,638 $2,345,075,330 $7,013,024,968
============== ============== ==============
</TABLE>
<TABLE>
The activity in the investments and liabilities held in the ESOT related to
Series A and B Preferred Stock are summarized as follows for the years ended
June 30, 2000 and 1999.
<CAPTION>
SERIES A SERIES B TOTAL
<S> <C> <C> <C>
ESOT net assets June 30, 1998 4,912,163,225 2,442,580,308 7,354,743,533
Net depreciation in fair value of investments (113,134,456) (68,581,854) (181,716,310)
Interest on investments and dividends 68,549,588 78,501,286 147,050,874
Contributions by The Procter & Gamble Company 52,557,500 14,675,000 67,232,500
Interest expense (47,070,115) (93,600,000) (140,670,115)
Distributions to participants - cash (3,746,400) (3,746,400)
Net transfers among trusts (201,369,704) (28,499,410) (229,869,114)
-------------- -------------- --------------
ESOT net assets June 30, 1999 4,667,949,638 $2,345,075,330 $7,013,024,968
Net depreciation in fair value of investments (1,788,156,238) (1,186,099,683) (2,974,255,921)
Interest on investments and dividends 74,514,780 77,802,294 152,317,074
Contributions by The Procter & Gamble Company 93,984,942 15,420,000 109,404,942
Interest expense (41,216,533) (93,600,000) (134,816,533)
Distributions to participants - cash (5,418,048) - (5,418,048)
Net transfers among trusts (217,172,866) (36,315,069) (253,487,935)
-------------- -------------- --------------
ESOT net assets June 30, 2000 $2,784,485,675 $1,122,282,872 $3,906,768,547
============== ============== ==============
</TABLE>
PARTICIPANT ACCOUNTS AND INVESTMENT OPTIONS - Each participant's account is
credited with the allocation of Company contributions (see Note 9), his or
her employee contributions (see Note 10) and Plan earnings. All such
participant accounts are maintained in the RT. Company contributions are
allocated based on participant base earnings and Plan credit years, as
defined in the Plan document. The benefit to which a participant is
entitled is the vested benefit that can be provided from the participant's
account.
Prior to July 1, 2000, a participant could choose to receive some or all of
the quarterly dividends earned on the shares of Plan common stock within
his or her account in cash. Additionally, the Plan paid quarterly dividends
earned on the shares of Plan common stock held within a participant's
account, as elected by each participant, directly to the participant
(automatic dividends). The amount of automatic dividends paid to a
participant is subject to IRS limitations. A portion of a participant's
pre-tax compensation was deferred and contributed to his or her Plan
account to offset the automatic dividends (automatic salary contribution).
All automatic salary contributions to the Plan were invested in Company
common stock, unless otherwise directed by the participant.
Effective July 1, 2000, dividends earned on the shares of common stock
within a participant's account will automatically be distributed to the
participant as part of his or her compensation. At the same time the
dividend is distributed, the Company will reduce the participant's
compensation by the amount of the dividend. The Company will then allocate
a discretionary contribution consisting of Series A Preferred Stock to the
participant's account that is equal to the amount of the dividend. The
discretionary contribution will be used to prepay debt on the Plan's note
payable (Series A Preferred Stock), resulting in the release of Series A
Preferred Stock equal to the aggregate dividend.
Vested participants may allocate the portion of the annual Company
contribution received in cash between the money market fund, short-term
investments, JP Morgan bond fund, and common stock of the Company. In
addition, certain participants retain investments in group deferred
annuities; however, contributions and transfers to this fund are no longer
permitted. Effective July 1, 2000, employee contributions and account
balances of vested participants that have reached the age of fifty may be
allocated to the investment options that were previously only available to
Retirement Plus participants as well as to the investments options
previously described. A description of the investment options is as
follows:
COMMON STOCK FUND - A fund investing in shares of Company common
stock.
DEFERRED ANNUITIES FUND - A fund investing in guaranteed investment
contracts with various insurance companies.
MONEY MARKET FUND AND SHORT-TERM INVESTMENTS - Funds investing in
commercial paper, short-term U.S. Government securities and various
short-term bank funds.
JP MORGAN BOND FUND - The prospectus indicates that this fund invests
in a broad diversity of publicly traded and privately placed bonds.
In addition to the previously described changes effective July 1, 2000, the
Retirement Plus feature allows a retiree or a vested former employee with
account balances equal to or greater that $3,500 to maintain some or all of
his or her funds in the Plan. If a participant chooses the Retirement Plus
option, he or she must maintain at least 50% (40% effective July 1, 2000)
of his or her account balance invested in Company common stock. Also, all
common and Series A Preferred Stock dividends are paid in cash to the
participant. A participant may elect to distribute all or a portion of his
or her account balance at anytime in accordance with the Plan agreement.
Each participant's account is credited with an allocation of Plan earnings.
In addition to the investment options described previously for vested
participants, this feature also offers the following investment options:
JP MORGAN U.S. LARGE COMPANY STOCK FUND - The prospectus indicates
that this fund invests in equity securities of approximately 300
domestic, large company stocks.
JP MORGAN PRE-MIXED FUND A - The prospectus indicates that this fund
invests in money market instruments (50%), bonds (30%), U.S. large
company stocks (10%), international stocks (6%) and U.S. small company
stocks (4%).
JP MORGAN PRE-MIXED FUND B - The prospectus indicates that this fund
invests in bonds (40%), U.S. large company stocks (25%), international
stocks (15%), U.S. small company stocks (10%) and money market
instruments (10%).
JP MORGAN PRE-MIXED FUND C - The prospectus indicates that this fund
invests in U.S. large company stocks (40%), international stocks
(24%), U.S. small company stocks (16%), money market instruments (10%)
and bonds (10%).
Effective with the merger of Noxell into the Plan, the former Noxell
participants may retain their balances in the Discretionary Contribution
Fund and the American Express Trust Income Fund investment options.
Effective July 1, 1998, all contributions to these funds were discontinued.
Former Noxell participants may transfer balances from the Discretionary
Contribution Fund into the American Express Trust Income Fund or any of the
other investment options offered by the Plan, as described above. Former
Noxell participants may also transfer balances from the American Express
Trust Income Fund into any of the investment options offered by the Plan,
as described above. Descriptions of the Discretionary Contribution Fund and
the American Express Trust Income Fund are as follows:
DISCRETIONARY CONTRIBUTION FUND - A fund investing in various equity
and debt funds with Barclays Global Investors, including the Extended
Market Fund, Equity Index Fund E, EAFE Index Fund and US Debt Index
Fund, and Company common stock.
AMERICAN EXPRESS TRUST INCOME FUND - The prospectus indicates that
this fund invests in guaranteed investment contracts with varying
maturities, sizes and yields.
VESTING - A participant is fully vested in employee contributions and
automatic salary contributions plus actual earnings thereon in his or her
account regardless of years of service. Vesting in the Company contribution
portion of their accounts plus actual earnings thereon is based on years of
service. A participant is fully vested in Company contributions plus actual
earnings thereon in his or her account after five years of service.
PAYMENT OF BENEFITS - Retired or terminated employees may maintain their
accounts within the Plan until reaching the federal mandatory distribution
age (70 1/2). Upon election of a distribution, a vested participant may
elect to receive (1) all cash, securities and annuities in his or her
account or (2) an annuity purchased for the value of his or her account. In
addition to the above alternatives, a retired vested participant electing a
distribution may also elect to receive annual distributions of cash and
securities in his or her account on a pro-rata basis not to exceed the
lesser of 15 years or the participant's life expectancy. Effective July 1,
2000, active participants are permitted to receive annual in-service
withdrawals up to 2% of their account balance.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at
any time, provided that the Company's $300 million guarantee described in
footnote nine is satisfied, and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan termination, participants will
become fully vested in their entire accounts and the net assets of the Plan
will be distributed to the participants in an order of priority determined
in accordance with ERISA and its applicable regulations and the Plan
document.
LOAN PROVISION - The Plan allows participants to borrow funds from their
accounts in certain circumstances up to maximum amounts specified in the
Plan agreement and at an interest rate equal to the prime rate plus 1%.
Loans are repayable through payroll deductions of principal and interest
over a maximum term of 54 months (114 months if the loan is to purchase a
primary residence).
FORFEITURES - Participants who terminate service prior to vesting forfeit
their account balance. The Company applies forfeited amounts against the
annual contribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements are prepared on the accrual
basis of accounting and the Plan's net assets and transactions are recorded
at fair value. Fair value of the Company common stock is determined by
composite trading prices on the New York Stock Exchange. The Company's
common stock, included in the Plan's statements of net assets, is recorded
at $57.25 and $89.25 per share as of June 30, 2000 and 1999, respectively.
Fair value of Series A and Series B Preferred Stock is determined as the
greater of the fair value of the Company's common stock as defined in the
Plan agreement or $13.75 (Series A) and $26.12 (Series B) per share (see
Notes 5 and 6). The Series A and Series B Preferred Stock, included in the
Plan's statements of net assets, is recorded at $57.25 and $89.25 per share
as of June 30, 2000 and 1999, respectively. Deferred annuities are recorded
at contract value, which approximates fair value. Mutual funds (funds) are
valued by the fund managers, J.P. Morgan Investment Management, Inc. and
Barclays Global Investors, based upon the fair values of the funds'
underlying investments. Loans to participants are valued at the unpaid
principal balance. The cost of securities sold, transferred or distributed
is determined by the weighted average cost of securities allocated to the
participant's account.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
EXPENSES OF THE PLAN - All administrative expenses of the Plan are paid by
the Company, provided however, that investment expenses shall be paid by
the Plan to the extent that such expenses are not paid by the Company. Any
such expenses paid by the Plan are netted with investment income on the
financial statements and approximated $1,072,000 and $685,000 in 2000 and
1999, respectively.
3. INCOME TAX STATUS
The Company has received a determination letter from the Internal Revenue
Service dated October 8, 1998, stating that the Plan, as amended, is a
qualified employer's trust under Sections 401(a), 401(h) and 409 of the
Internal Revenue Code (IRC) and, as such, is exempt from federal income
taxes under Section 501(a). The Plan has been amended since receiving the
determination letter. However, the plan administrator believes that the
Plan is designed and currently being operated in compliance with the
applicable provisions of the IRC.
4. PARTY-IN-INTEREST INVESTMENTS AND TRANSACTIONS
The Company is a party-in-interest, as defined by ERISA. During the Plan
years ended June 30, 2000 and 1999, borrowings outstanding under the term
loan agreement (see Note 7) between the Company and the ESOT were
$23,600,000 and $78,500,000, respectively. This transaction qualifies as a
party-in-interest transaction; however, the plan administrator has not
identified any prohibited party-in-interest investments or transactions
during the years ended June 30, 2000 and 1999.
5. SERIES A PREFERRED STOCK
CONVERSION, DISTRIBUTION AND LIQUIDATION RIGHTS - The Series A Preferred
Stock is convertible by the holder (Plan trustee) at the rate of one share
of the Company's common stock for each share of Series A Preferred Stock
subject to the conditions described herein. Additionally, in order to make
a distribution to a participant, the Series A Preferred Stock can be "put"
to the Company at its liquidation value plus accrued dividends. Hence, upon
distribution, participants will receive $13.75 per share of Series A
Preferred Stock plus accrued dividends, or one share of the Company's
common stock, whichever has a higher value. Participants must receive
distributions of cash or common stock upon election of a distribution from
the Plan. Participants age 55 to 59 may also elect to convert up to 25% of
their shares of Series A Preferred Stock to alternative investments which
are held by the RT. This conversion option increases to 50% at age 60. The
fair value of the Company's common stock as of June 30, 2000 and 1999 was
$57.25 and $89.25, respectively, per share. During 2000 and 1999,
respectively, 2,417,107 and 2,292,480 shares of Series A Preferred Stock
were converted into shares of Company common stock and the former Series A
Preferred Stock was retired.
ELIGIBILITY - All participants are eligible for allocation of Series A
Preferred Stock.
DIVIDEND RIGHTS - In 2000 and 1999, annual dividends of $1.28 and $1.14 per
share were paid quarterly at $0.32 and $0.285 per share, respectively. In
the event that dividends have not been paid when due, payment or
declaration of dividends on securities subordinated to the Series A
Preferred Stock generally is not permitted.
CALL PROVISIONS - The Series A Preferred Stock may be called at certain
premium amounts as described in the Company's amended articles of
incorporation.
VOTING RIGHTS - Each share is entitled to a number of votes equal to the
number of shares of the Company's common stock into which it is
convertible.
RESTRICTIONS ON TRANSFER - The ESOT or another employee benefit plan of the
Company are the only permissible holders of the Series A Preferred Stock.
Upon transfer to any other holder, shares automatically convert to shares
of the Company's common stock.
ALLOCATION OF SHARES TO PARTICIPANT ACCOUNTS - Shares of the Series A
Preferred Stock are released for allocation to participant accounts in
accordance with the Plan agreement as the borrowings are repaid (see Note
7). In 2000 and 1999, 6,009,754 and 3,550,295 shares of Series A Preferred
Stock valued at $342,800,203 and $305,640,071, respectively, were released
for allocation to participant accounts, of which $313,219,537 and
$279,667,633, respectively, was used to fund a portion of the annual profit
sharing contribution and $29,580,666 and $25,972,438 respectively, was used
to fund annual dividends on allocated shares. At June 30, 2000 and 1999,
respectively, 22,315,171 and 28,324,925 shares of Series A Preferred Stock
were unallocated.
6. SERIES B PREFERRED STOCK
CONVERSION, DISTRIBUTION AND LIQUIDATION RIGHTS - The Series B Preferred
Stock is convertible at any time by the holder (Plan trustee) at the rate
of one share of the Company's common stock for each share of Series B
Preferred Stock. Additionally, in order to make a distribution to a
participant for retiree medical expenses, the Series B Preferred Stock can
be "put" to the Company at its liquidation price plus accrued dividends.
Hence, upon distribution, participants will receive $26.12 per share of
Series B Preferred Stock plus accrued dividends, or one share of the
Company's common stock, whichever has a higher value. The fair value of the
Company's common stock as of June 30, 2000 and 1999 was $57.25 and $89.25,
respectively, per share. During 2000 and 1999, respectively, 400,000 and
320,000 shares of Series B Preferred Stock were converted to Company common
stock and the former Series B Preferred Stock was retired. The proceeds
from the conversion of shares were transferred to The Procter & Gamble
Retiree Benefit Trust to fund postretirement benefits.
ELIGIBILITY - Active participants who are eligible to retire from the
Company and all participants who have retired under the terms of the Plan
are eligible for allocation of Series B Preferred Stock. Additionally,
former participants that have retired from the Company and are currently
participating in a Company sponsored retiree healthcare plan are also
eligible for allocation of Series B Preferred Stock.
DIVIDEND RIGHTS - Annual dividends of $2.06 per share are paid quarterly at
$0.515 per share. In the event that dividends have not been paid when due,
payment or declaration of dividends on securities subordinated to the
Series B Preferred Stock generally is not permitted.
CALL PROVISIONS - The Series B Preferred Stock may be called at certain
premium amounts as described in the Company's amended articles of
incorporation.
VOTING RIGHTS - Each share is entitled to a number of votes equal to the
number of shares of the Company's common stock into which it is
convertible.
RESTRICTIONS ON TRANSFER - Effective June 29, 1993, all shares of the
Series B Preferred Stock were exchanged for an equal number of shares of
Series B Preferred Stock with amended restrictions on transfer. Terms were
amended to lift the transfer restrictions and to provide the Company with
the right of first refusal on the purchase of Series B Preferred Stock. In
prior years, the ESOT or another employee benefit plan of the Company were
the only permissible holders of the Series B Preferred Stock. Upon transfer
to any other holder, shares automatically converted to shares of the
Company's common stock.
ALLOCATION OF SHARES TO PARTICIPANT ACCOUNTS - Shares of the Series B
Preferred Stock will be released for straight line allocation to eligible
participant retiree health care fund accounts in accordance with the Plan
agreement as interest and/or principal are paid (see Note 8). In each of
2000 and 1999, 1,086,592 shares of Series B Preferred Stock valued at
$59,039,594 and $91,306,189, respectively, were released for allocation to
participant accounts. At June 30, 2000 and 1999, respectively, 28,424,016
and 29,510,608 shares of Series B Preferred Stock were unallocated.
7. NOTES PAYABLE (SERIES A PREFERRED STOCK)
<TABLE>
Notes payable consist of the following at June 30:
<CAPTION>
PRINCIPAL
INTEREST ----------------------------
RATES SERIES MATURITY DATE 2000 1999
<S> <C> <C> <C> <C>
8.33% Series K September 3, 1999 $ 39,012,089
8.33% Series K March 3, 2000 40,636,943
8.33% Series K September 3, 2000 $42,329,471 42,329,471
8.33% Series K March 3, 2001 44,092,494 44,092,494
8.33% Series K September 3, 2001 45,928,946 45,928,946
8.33% Series K March 3, 2002 47,841,887 47,841,887
8.33% Series K September 3, 2002 49,834,501 49,834,501
8.33% Series K March 3, 2003 51,910,108 51,910,108
8.33% Series K September 3, 2003 54,072,164 54,072,164
8.33% Series K March 3, 2004 56,324,262 56,324,262
------------ ------------
Total $392,333,833 $471,982,865
============ ============
</TABLE>
These notes are guaranteed by the Company. Repayment of principal and
interest is funded through annual contributions by the Company and
dividends received on the Series A Preferred Stock. Interest on the notes
is payable semiannually on September 3 and March 3.
On March 3, 1999, the ESOT entered into a term loan agreement ("loan") with
the Company under which it could borrow a total principal amount up to
$365,500,000. Under the terms of the loan agreement, the Plan elected to
make a prepayment of $88,500,000 during 2000 that was applied against the
unpaid loan balance. The Plan, which borrowed $33,600,000 during 2000, may
borrow a total principal amount up to $277,000,000. Principal borrowings
allowed for the years ended June 30, 2001 through 2004 are as follows: 2001
- $44,000,000; 2002 - $57,000,000; 2003 - $69,600,000; 2004 - $82,800,000.
Mandatory semiannual repayments of principal and interest commence on
September 3, 2004 and will be funded through annual contributions by the
Company and dividends received on the Series A Preferred Stock. The loan
bears an interest rate of 6% and borrowings as of June 30, 2000 and 1999
were $23,600,000 and $78,500,000, respectively.
The fair value of the total outstanding notes payable is estimated based on
current rates for debt of the same remaining maturities and approximated
$336,537,000 and $582,000,000, respectively, at June 30, 2000 and 1999.
8. DEBENTURES (SERIES B PREFERRED STOCK)
The debentures bear interest at a rate of 9.36% and are due on January 1,
2021. Mandatory sinking fund payments are required beginning July 1, 2006
and are payable semiannually thereafter. Interest is payable semiannually
on July 1 and January 1. The debentures are guaranteed by the Company.
Repayment of principal and interest is to be funded through annual
contributions by the Company and dividends received on the Series B
Preferred Stock. The fair value of the debentures is estimated based on
current rates for debt of the same remaining maturities and approximated
$1,173,000,000 and $1,205,500,000, respectively, at June 30, 2000 and 1999.
9. COMPANY CONTRIBUTION
Annual credits to participants' accounts are based on individual base
salary and years of service not exceeding 15% of total compensation of Plan
participants as defined in the Plan agreement. The Company's contribution
is reduced by the value of Series A Preferred Stock released and available
for allocation to ESOT participant accounts in accordance with terms
specified in the Plan agreement (see Note 5). The Company also funds a
portion of principal and interest payments on the notes payable and
debentures through contributions to the ESOT (see Notes 7 and 8). Beginning
in 1997 and subsequently modified in 1999, the Company's cash contribution
is guaranteed up to $300 million above and beyond the benefit funded by the
shares released by the ESOT as specified in the Plan document.
Beginning July 1, 1997, the Company granted one share of Company common
stock to all new employees who become participants in the Plan. The
additional share was credited to each participant's account. The amount
contributed to these shares is reported as contributions from the Company
in the Plan's financial statements. Effective July 1, 2000 new Plan
participants will not receive one share of Company common stock.
<TABLE>
Company contributions to the Plan for the years ended June 30 are as
follows:
<CAPTION>
2000 1999
<S> <C> <C>
Contribution for debt service $109,404,942 $67,232,500
Contribution for Annual Fund Credit 998,359 18,214,222
Contribution for one-share program 280,232 397,828
------------ -----------
Total $110,683,533 $85,844,550
============ ===========
</TABLE>
10. EMPLOYEE CONTRIBUTIONS
In addition to the participant automatic salary contribution (see Note 1),
a participant may also elect to contribute up to 25% of pre-tax
compensation, as defined by the Plan. Contributions are subject to IRS
limitations.
11. INVESTMENTS
The Plan's investments (at fair value) consist of the following at June 30.
Investments that represent five percent or more of the Plan's net assets
are separately identified.
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Common stock (A):
The Procter & Gamble Company $ 5,050,059,770 $ 8,742,512,310
Preferred stocks:
The Procter & Gamble Company ESOP
Convertible Class A:
Series A 3,201,710,372 5,207,039,475
Series B 2,123,106,861 3,345,521,613
Other investments 528,573,479 679,934,103
--------------- ---------------
Total $10,903,450,482 $17,975,007,501
=============== ===============
(A) Represents nonparticipant-directed investments under
the guidance of SOP 99-3.
</TABLE>
For the years ended June 30, 2000 and 1999, the Plan's investments,
including gains and losses on investments bought and sold as well as held
during the year, depreciated as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Net appreciation (depreciation) in fair value of:
Procter & Gamble common stock $(2,760,326,016) $(200,528,243)
Procter & Gamble Series A preferred stock (1,788,156,238) (113,134,456)
Procter & Gamble Series B preferred stock (1,186,099,683) (68,581,854)
Mutual funds 2,627,775 15,061,975
--------------- -------------
Total $(5,731,954,162) $(367,182,578)
=============== =============
</TABLE>
12. NONPARTICIPANT-DIRECTED INVESTMENTS
The Procter & Gamble Common Stock Fund is considered to be
nonparticipant-directed under the guidance of SOP 99-3 because Retirement
Plus participants are required to maintain at least 50% of their account
balances in Company common stock.
The net assets of The Procter & Gamble Common Stock Fund as of June 30 are
as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Net assets - Common Stock Fund $ 5,050,059,770 $ 8,742,512,310
=============== ===============
</TABLE>
The significant components of the changes in net assets of the Common Stock
Fund consist of the following for the years ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Net depreciation in fair value $(2,760,326,016) $ (200,528,243)
Dividends 118,491,515 121,164,119
Contributions 107,026,334 134,786,312
Distributions to participants (1,050,947,977) (1,186,479,305)
Net interfund transfers (360,184,331) (532,855,429)
Transfers from ESOT 253,487,935 229,869,114
Transfers from affiliated plans - 74,028,174
--------------- ---------------
Total changes in net assets (3,692,452,540) (1,360,015,258)
Net assets, beginning of year 8,742,512,310 10,102,527,568
--------------- ---------------
Net assets, end of year $ 5,050,059,770 $ 8,742,512,310
=============== ===============
</TABLE>
* * * * * *
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
ASSETS HELD FOR INVESTMENT
SCHEDULE H, PART IV LINE 4i OF FORM 5500
JUNE 30, 2000
-----------------------------------------------------------------------------------------------------------
<CAPTION>
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT FAIR VALUE
<S> <C> <C>
SHORT-TERM INVESTMENTS:
Citibank Cash $ 15,465
State Street Bank Diversified Trust Fund 2,349,781
Electricite de France Promissory Note, 5.93%, due July 3, 2000 19,584,746
Windmill Funding Corporation Promissory Note, 6.17%, due July 3, 2000 19,270,000
--------------
TOTAL SHORT-TERM INVESTMENTS $ 41,219,992
==============
THE PROCTER & GAMBLE CO. COMMON STOCK, NO PAR VALUE, 88,210,651 SHARES $5,050,059,770
(cost basis, $2,023,520,638) ==============
THE PROCTER & GAMBLE CO. SERIES A ESOP CONVERTIBLE CLASS A
PREFERRED STOCK, NO PAR VALUE, 55,925,072 SHARES $3,201,710,372
==============
THE PROCTER & GAMBLE CO. SERIES B ESOP CONVERTIBLE CLASS A
PREFERRED STOCK, NO PAR VALUE, 37,084,836 SHARES $2,123,106,861
==============
VARIOUS INSURANCE COMPANIES Deferred Annuities $ 143,058
==============
JP MORGAN Money Market Fund $ 212,425,641
==============
MUTUAL FUNDS:
JP Morgan Bond Fund $ 46,830,152
JP Morgan Pre-Mix A Fund 4,704,136
JP Morgan Pre-Mix B Fund 27,680,166
JP Morgan Pre-Mix C Fund 24,521,389
JP Morgan U.S. Large Company Stock Fund 15,243,545
Merrill Lynch Government Series Bond Fund 267,806
American Express Trust Income Fund 2,753,961
Discretionary Contribution Fund:
The Procter & Gamble Company Co.
common stock 526,680 shares 30,152,430
Barclays Global Investors Equity Index Fund E 29,498,352
Barclays Global Investors Extended Market Fund 11,583,126
Barclays Global Investors U.S. Debt Index Fund 15,276,655
Barclays Global Investors EAFE Index Fund 10,585,941
--------------
TOTAL MUTUAL FUNDS $ 219,097,659
==============
LOANS TO PARTICIPANTS Various participants, interest rates ranging
from 6.5% to 11%, maturities ranging from
July 2000 through December 2009 $ 55,687,129
==============
</TABLE>
THE PROCTER & GAMBLE PROFIT SHARING TRUST
AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
REPORTABLE TRANSACTIONS
SCHEDULE H, PART IV LINE 4j OF FORM 550
FOR THE YEAR ENDED JUNE 30, 2000
--------------------------------------------------------------------------------------------------------
<CAPTION>
DESCRIPTION OF ASSET PURCHASES (A) SALES COST OF SALES
<S> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS:
None
SERIES TRANSACTIONS (B):
Procter & Gamble Company
Common Stock $345,543,182 (346) $609,246,610 (949) $192,067,269
<FN>
NOTES:
(A) The market value of all assets acquired at the time of acquisition is equal
to the purchase price.
(B) The numbers in parentheses represent the number of transactions.
</FN>
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
TRUSTEES (OR OTHER PERSONS WHO ADMINISTER THE EMPLOYEE BENEFIT PLAN) HAVE DULY
CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO
DULY AUTHORIZED.
The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan
/s/THOMAS J. MESS
Date: December 14, 2000 ---------------------------------------
Thomas J. Mess
Secretary, Trustees of The Procter &
Gamble Profit Sharing Trust and Employee
Stock Ownership Plan
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche
