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, 2001, 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 Profit Sharing Retirement Plan of The
Procter & Gamble Commercial Company, 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 PROFIT SHARING RETIREMENT PLAN
OF THE PROCTER & GAMBLE COMMERCIAL COMPANY
Financial Statements for the Years Ended June 30, 2001 and 2000
and Independent Auditor's Report
THE PROFIT SHARING RETIREMENT PLAN OF
THE PROCTER & GAMBLE COMMERCIAL COMPANY
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits, June 30, 2001 and 2000 2
Statements of Changes in Net Assets Available for Benefits for the Years
Ended June 30, 2001 and 2000 3
Notes to Financial Statements for the Years Ended June 30, 2001 and 2000 4
SUPPLEMENTAL SCHEDULES OMITTED - The following schedules were omitted because
of the absence of conditions under which they are required or due to their
inclusion in information filed by The Procter & Gamble Master Savings Trust
in which this plan participates:
Assets Held for Investment
Reportable Transactions
Assets Acquired and Disposed of Within Plan Year
Party-in-Interest Transactions
Obligations in Default
Leases in Default
INDEPENDENT AUDITORS' REPORT
To The Procter & Gamble Master
Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of The Profit Sharing Retirement Plan of The Procter & Gamble Commercial Company
(the "Plan") as of June 30, 2001 and 2000, 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 as of June 30, 2001
and 2000 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.
November 2, 2001
THE PROFIT SHARING RETIREMENT PLAN OF
THE PROCTER & GAMBLE COMMERCIAL COMPANY
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
JUNE 30, 2001 AND 2000
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2001 2000
---- ----
ASSETS:
Investment in The Procter & Gamble Master
Savings Trust, at fair value $30,723,506 $31,180,027
Contributions receivable 2,725,775 2,414,143
----------- -----------
Total assets 33,449,281 33,594,170
LIABILITIES - Accrued administrative expenses 32,475 22,743
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $33,416,806 $33,571,427
=========== ===========
See notes to financial statements.
THE PROFIT SHARING RETIREMENT PLAN OF
THE PROCTER & GAMBLE COMMERCIAL COMPANY
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED JUNE 30, 2001 AND 2000
--------------------------------------------------------------------------------
2001 2000
ADDITIONS:
Equity in net earnings (losses) of
The Procter & Gamble Master Savings Trust $ 718,944 $(5,327,560)
Company contributions (net of forfeitures) 2,744,525 2,390,067
----------- -----------
Total changes 3,463,469 (2,937,493)
----------- ----------
DEDUCTIONS:
Distributions to participants 3,566,677 2,867,036
Administrative expenses 51,413 79,637
----------- ----------
Total deductions 3,618,090 2,946,673
----------- ----------
NET DECREASE (154,621) (5,884,166)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 33,571,427 39,455,593
----------- -----------
End of year $33,416,806 $33,571,427
=========== ===========
See notes to financial statements.
THE PROFIT SHARING RETIREMENT PLAN OF
THE PROCTER & GAMBLE COMMERCIAL COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2001 AND 2000
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1. PLAN DESCRIPTION
The following brief description of The Profit Sharing Retirement Plan of
The Procter & Gamble Commercial Company (Plan) is provided for general
information purposes only. Participants should refer to the Plan document
for more complete information.
GENERAL - The Plan is funded through contributions by The Procter & Gamble
Commercial Company, the Procter & Gamble Pharmaceuticals, Inc. and Olay
Company, Inc. (hereinafter collectively referred to as the "Plan
Sponsors"). The Plan Sponsors are wholly-owned subsidiaries of The Procter
& Gamble Company (Company). Substantially all employees of the Plan
Sponsors are eligible to participate in the Plan upon completion of one
year of service. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
All Plan assets are held in The Procter & Gamble Master Savings Trust
(Master Trust) at June 30, 2001 and 2000, along with the assets of other
Company sponsored defined contribution plans (see Note 4). Each Company
sponsored plan participating in the Master Trust has a proportionate and
undivided ownership interest in the Master Trust assets.
CONTRIBUTIONS AND VESTING - The Plan Sponsors make contributions to the
Plan each year based upon the amount of compensation and number of credit
service years of each Plan participant, as defined by the Plan agreement,
up to specified limitations. The Plan Sponsors' contributions are
calculated by applying the relevant participation percentage to the total
compensation, both as defined by the Plan. Participants are not permitted
to make contributions to the Plan. The following schedule details the
participation percentages by years of service.
PARTICIPATION
YEARS OF SERVICE PERCENTAGE
1-3 8%
4-6 9%
7-8 10%
9-10 11%
11-12 12%
13-14 13%
15 or more 14%
Participants are vested 100% upon completion of five years of service.
Participants are also 100% vested in their accounts upon termination for
disability, early or normal retirement, death and also upon attainment of
65 years of age, regardless of years of service.
DISTRIBUTIONS - Distributions of Plan benefits may be made in a lump sum
or in installment payments over a period not to exceed ten years after the
date of death, termination, retirement, or disability. Prior to April 1,
2001, participants could elect to receive installment payments over a
period not to exceed fifteen years. Distributions payable to participants
as of June 30, 2001 and 2000 are approximately $123,700 and $59,000,
respectively.
FORFEITURES - Participants who terminate service prior to vesting forfeit
their account balance. If the participant is rehired prior to a five-year
break in service, as defined by the Plan, the amount which was forfeited
is restored to the participant's account. Forfeited amounts are used to
reduce the Plan Sponsors' annual contributions.
PARTICIPANT ACCOUNTS - As described in the Plan document, participants may
allocate contributions made to their account in one or all of the
following investment options offered by the Master Trust (Note 4):
ENHANCED CASH FUND - The prospectus states that this fund invests in
short to medium length maturity, interest-bearing instruments.
COMPANY STOCK FUND - This fund invests in shares of The Procter &
Gamble Company common stock.
ACTIVE FIXED-INCOME CORE FUND - The prospectus states that this fund
invests in a diversified portfolio of publicly and privately traded
corporate, government, international and mortgage backed bonds.
DISCIPLINED EQUITY FUND - The prospectus states that this fund invests
in equity securities of approximately 300 domestic, large company
stocks.
DIVERSIFIED FUND - The prospectus states that this fund invests in both
equity and fixed-income securities.
SMALL COMPANY FUND - The prospectus states that this fund invests in a
portfolio of equity securities issued by small companies.
EAFE EQUITY CORE FUND - The prospectus states that this fund invests in
a diversified portfolio of equity securities of foreign corporations.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Plan Sponsors have the right under the Plan to discontinue their
contributions at any time and to terminate the Plan subject to the
provisions of ERISA. If the Plan is terminated, participants will become
fully vested in their accounts and the net assets of the Plan will be
distributed in an order of priority determined in accordance with ERISA
and its applicable regulations and the Plan document.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are prepared
on the accrual basis of accounting and the Plan's net assets and
transactions are recorded at fair value. The Plan's investment in the
Company common stock is valued at the closing price on established
security exchanges. The Plan's investment funds (funds) are valued by the
fund manager, JP Morgan Investment Management, Inc., based upon the fair
value of the funds' underlying investments. Income from investments is
recognized when earned and is allocated to each plan participating in the
Master Trust by PNC Bank, Ohio, N.A., (PNC Bank), the trustee of the Plan
and to each participant's account by the Plan's recordkeeper.
EXPENSES OF THE PLAN - Fees charged by the investment manager are paid by
the Plan, while all other fees are paid by the Company.
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.
The Plan invests in various securities including U.S. Government
securities, corporate debt instruments, and corporate stocks. Investment
securities, in general, are exposed to various risks, such as interest
rate, credit, and overall market volatility. Due to the level of risk
associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near
term and that such changes could materially affect the amounts reported in
the statements of net assets available for plan benefits.
ACCOUNTING POLICIES - On July 1, 2000, the Plan adopted Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities". SFAS No. 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities. It requires that
all derivatives, including those embedded in other contracts, be
recognized as either assets or liabilities and that those financial
instruments be measured at fair value. The adoption of this standard did
not have a material effect on the Plan's financial statements.
3. INCOME TAX STATUS
The Plan is exempt from Puerto Rico income taxes under the provisions of
Section 165(a) of the Puerto Rico Income Tax Act of 1954, as amended. The
Plan is also a qualified employees' trust under Section 401(a) 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
latest determination letters. However, the plan administrator believes
that the Plan is currently designed and being operated in compliance with
the applicable requirements of the Puerto Rico Income Tax Act of 1954 and
the IRC. Therefore, they believe that the Plan was qualified and
tax-exempt as of June 30, 2001 and 2000 and no provision for income taxes
has been reflected in the accompanying financial statements.
4. INTEREST IN MASTER TRUST
Effective January 1, 1993, the Company formed the Master Trust in
accordance with a master trust agreement with PNC Bank.
Use of a master trust permits the commingling of various Company-sponsored
defined contribution plans for investment and administrative purposes.
Although assets are commingled in the Master Trust, PNC Bank maintains
records for the purpose of allocating contributions and changes in net
assets of the Master Trust to participating plans based upon each plan's
proportionate interest in the Master Trust. The following represents the
2001 and 2000 audited financial information regarding the net assets and
investment income of the Master Trust:
Assets of the Master Trust at June 30, 2001 are summarized as follows:
COMPANY JP MORGAN
STOCK FUND FUNDS TOTAL
Investments, at fair value $ 54,559,876 $138,296,264 $192,856,140
Accrued interest and dividends 22 54 76
------------ ------------ ------------
Total $ 54,559,898 $138,296,318 $192,856,216
============ ============ ============
Plan's investment in Master Trust $ 14,291,021 $ 16,432,485 $ 30,723,506
============ ============ ============
Plan's percentage ownership interest
in Master Trust 26% 12% 16%
============ ============ ============
Investments, at fair value, held by the Master Trust at June 30, 2001 are summarized
as follows:
COMPANY JP MORGAN
STOCK FUND FUNDS TOTAL
The Procter & Gamble Company common
stock $ 54,559,876 $ 54,559,876
Mutual Funds 138,292,253 138,292,253
Short-term investments 4,011 4,011
------------ ------------ ------------
Total investments at fair value $ 54,559,876 $138,296,264 $192,856,140
============ ============ ============
Investment income(loss) from the Master Trust for the year ended June 31, 2001 is summarized
as follows:
COMPANY JP MORGAN
STOCK FUND FUNDS TOTAL
Net appreciation (depreciation) in
fair value of investments $ 6,471,911 $(12,145,773) $ (5,673,862)
Dividends 1,234,104 1,234,104
Interest 3,044 3,044
----------- ------------ ------------
Total $ 7,709,059 $(12,145,773) $ (4,436,714)
=========== ============ ============
Plan's equity in net earnings (losses) $ 1,717,684 $ (998,740) $ 718,944
of Master Trust =========== ============ ============
Assets of the Master Trust at June 30, 2000 are summarized as follows:
COMPANY JP MORGAN
STOCK FUND FUNDS TOTAL
Investments, at fair value $ 50,535,834 $158,929,742 $209,465,576
Accrued interest and dividends 46 243 289
------------ ------------ ------------
Total $ 50,535,880 $158,929,985 $209,465,865
============ ============ ============
Plan's investment in Master Trust $ 12,453,585 $ 18,726,442 $ 31,180,027
============ ============ ============
Plan's percentage ownership interest
in Master Trust 25% 12% 15%
============ ============ =============
Investments, at fair value, held by the Master Trust at June 30, 2000 are summarized
as follows:
COMPANY JP MORGAN
STOCK FUND FUNDS TOTAL
The Procter & Gamble Company common
stock $ 50,532,641 $ 50,532,641
Mutual Funds 158,925,084 158,925,084
Short-term investments 3,193 4,658 7,851
------------ ------------ ------------
Total investments at fair value $ 50,535,834 $158,929,742 $209,465,576
============ ============ ============
Investment income(loss) from the Master Trust for the year ended June 30, 2000 is summarized
as follows:
COMPANY JP MORGAN
STOCK FUND FUNDS TOTAL
Net appreciation (depreciation) in fair
value of investments $(27,902,338) $ 9,782,327 $(18,120,011)
Dividends 1,111,541 1,111,541
Interest 26,720 2,338 29,058
------------ ----------- ------------
Total $ 26,764,077) $ 9,784,665 $(16,979,412)
============ =========== ============
Plan's equity in net losses of
Master Trust $ (6,595,356) $ 1,267,796 $ (5,327,560)
============ =========== ============
* * * * * *
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 Profit Sharing Retirement Plan
of The Procter & Gamble Commercial
Company
Date: December 18, 2001 /S/ THOMAS J. MESS
------------------------------------
Thomas J. Mess
Secretary, Trustees of The Profit
Sharing Retirement Plan of The
Procter & Gamble Commercial Company
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche