SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2002, OR
\ \ FOR TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
_______________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: Procter & Gamble International Stock Ownership
Plan, P&G AG, 1 Rue du Pre De La Bichette, P.O. Box 2696, 1211 Geneva 2,
Switzerland
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 1. Audited statements of financial condition as of the end of the latest
two fiscal years of the plan (or such lesser period as the plan has
been in existence). (See Page 2)
Item 2. Audited statements of income and changes in plan equity for each of the
latest three fiscal years of the plan (or such lesser period as the plan
has been in existence). (See Page 3)
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PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Benefits as of
June 30, 2002 and 2001, Statements of Changes in Net Assets
Available for Benefits for the Years Ended June 30, 2002,
2001, and 2000 and Independent Auditors' Report
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PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
June 30, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits for
the Years Ended June 30, 2002, 2001 and 2000 3
Notes to Financial Statements for the Years Ended
June 30, 2002, 2001 and 2000 4
INDEPENDENT AUDITORS' REPORT
To The Procter & Gamble Company:
We have audited the accompanying statements of net assets available for benefits
of the Procter & Gamble International Stock Ownership Plan (the "Plan") as of
June 30, 2002 and 2001, and the related statements of changes in net assets
available for benefits for the years ended June 30, 2002, 2001 and 2000. 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, 2002
and 2001, and the changes in net assets available for benefits for the years
ended June 30, 2002, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America.
/S/ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
October 7, 2002
PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF JUNE 30, 2002 AND 2001
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2002 2001
ASSETS:
Investments in The Procter & Gamble Company common stock,
at fair value $ 367,245,357 $ 266,945,951
Investments in The J.M. Smucker Company common stock,
at fair value 2,778,975
Cash 3,254 26,420
Employee contributions receivable 3,251,618 3,384,130
Employer contributions receivable 1,179,911 1,178,015
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 374,459,115 $ 271,534,516
============= =============
See notes to financial statements.
PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000
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2002 2001 2000
ADDITIONS:
Dividends on The Procter & Gamble Company
common stock $ 5,212,398 $ 4,658,108 $ 3,742,619
Net appreciation (depreciation) in fair value of The
Procter & Gamble Company common stock 103,577,463 21,109,631 (113,032,894)
Net appreciation in fair value of The J.M. Smucker
Company common stock 230,426
------------- ------------- --------------
Total investment income (loss) 109,020,287 25,767,739 (109,290,275)
------------- ------------- --------------
Contributions:
Employee contributions 36,408,017 41,280,349 47,658,406
Employer contributions 12,562,875 13,675,494 13,609,826
------------- ------------- -------------
Total contributions 48,970,892 54,955,843 61,268,232
The J.M. Smucker Company common stock received 2,548,549
------------- ------------- -------------
Total changes 160,539,728 80,723,582 (48,022,043)
DEDUCTIONS -
Distributions and withdrawals to participants 57,615,129 33,486,463 37,820,218
------------- ------------- -------------
NET INCREASE (DECREASE) 102,924,599 47,237,119 (85,842,261)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 271,534,516 224,297,397 310,139,658
------------- ------------- -------------
End of year $ 374,459,115 $ 271,534,516 $ 224,297,397
============= ============= =============
See notes to financial statements.
PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000
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1. DESCRIPTION OF THE PLAN
The following brief description of the Procter & Gamble International
Stock Ownership Plan (the "Plan") is provided for general information
only. Participants should refer to the Plan agreement and their country's
Plan supplement for more complete information.
General - The Plan is a defined contribution plan established in June of
1992 for international employees of The Procter & Gamble Company and
certain of its subsidiaries ("P&G"). The purpose of the Plan is to provide
eligible employees the opportunity to purchase common stock of P&G through
payroll deductions and contributions from P&G. The Plan is not subject to
the Employee Retirement Income Security Act of 1974, nor is it subject to
U.S. income taxation.
Participation and Vesting - Full-time employees are eligible to
participate in the Plan on the first day of the month following the
completion of the service requirements as defined in the plan document.
Participants are fully vested in all shares of P&G common stock credited
to his or her account under the plan, except for Switzerland and Saudi
Arabia, which are credited in accordance with their respective plan
documents.
One Share Program - Prior to July 1, 2000, each participant's account was
credited with one share of P&G common stock as part of the One Share
Program after completing one year of employment with P&G, regardless of
participation in the Plan. The One Share Program was terminated effective
for employees hired on or after July 1, 2000.
Contributions - Participants may contribute up to 15% of their base pay
through payroll deductions. In addition, employees may elect to make a
"Special Additional Deposit" as a lump sum payment once per month.
Participants may change their contribution rate effective as of the first
day of any month.
P&G matches an amount equal to 50% of the first 5% of base pay contributed
by participants. Employees in their initial year of eligibility receive a
100% P&G matching contribution, up to 1% of his or her contributions.
Investments - Participants are only permitted to invest in P&G common
stock. All employee and employer contributions are converted into U.S.
dollars and then invested in shares of P&G common stock on the 18th day of
each month (or the first business day immediately following the 18th).
Sales of P&G common stock occur once per week and are subsequently
converted into the applicable local currencies, where required, for
payment to employees. Prior to July 1, 2000, sales of P&G common stock
occurred twice per month. Any dividends on shares of P&G common stock are
invested in additional shares of P&G common stock.
Withdrawals - Participants may withdraw any portion of their contributions
made in excess of 5% of their base pay at any time during the year, with
only two withdrawals per year. Contributions made up to 5% of base pay and
P&G matches are available to be withdrawn without penalty five years after
the end of the plan year in which the deposits are made. If a participant
withdraws these funds prior to the completion of five years, P&G will
suspend matching of employee contributions for one year. Withdrawals
payable to participants as of June 30, 2002 and 2001 were approximately
$4,386,000, $2,424,000, respectively.
Plan Termination - Although the Company has not expressed any intent to do
so, it has the right under the Plan to terminate the Plan.
Administration - The Plan is administered by P&G. All Plan assets are held
by the trustee, Banque Internationale a Luxembourg (the "Trustee"). Buck
Consultants provides record keeping services for the Plan.
The J.M. Smucker Company Common Stock - In May of 2002, the Jif peanut
butter and Crisco shortening brands were spun-off to the Company's
shareholders and subsequently merged into The J.M. Smucker Company
("Smuckers"). As a result of the spin-off, participants holding P&G common
stock received one share of Smuckers stock for each fifty shares of P&G
common stock. The cost basis of P&G common stock prior to the Smuckers
spin-off was allocated between P&G common stock held and the Smuckers
common stock received. Participants are not permitted to purchase
additional shares of Smuckers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Accounting - The accompanying financial statements have been
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 P&G and
Smuckers common stock is valued at the closing price on an established
security exchange.
Expenses of the Plan - Investment management, record keeping expenses, and
other administrative expenses are paid by P&G. Brokerage commissions are
paid by the participant, and other costs related to the purchase or sale
of shares are reflected in the price of the shares and borne by the
participant.
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 P&G and Smuckers common stock. 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.
Cash - Amounts shown as cash are uninvested funds held by the Trustee that
are to be invested in P&G common stock in the following month.
Contributions receivable - Contributions that are pending transfer to the
Trustee as of June 30, 2002 and 2001 are recorded as contributions
receivable to the Plan in the accompanying financial statements.
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.
Reclassifications - Certain 2001 amounts have been reclassified to conform
to the 2002 presentation.
3. INVESTMENT IN P&G AND SMUCKERS COMMON STOCK
Investments in P&G common stock represent five percent or more of the
Plan's Net Assets Available for Benefits. Investments in P&G common stock
held by the Plan at June 30, 2002 and 2001 were as follows:
2002 2001
Number of shares 4,112,498 4,184,106
Market value $367,245,357 $266,945,951
Cost $179,780,757 $175,408,295
Investments in Smuckers common stock held by the Plan at June 30, 2002
were as follows:
Number of shares 81,423
Market value $ 2,778,975
Cost $ 2,548,549
4. PLAN PARTICIPANTS
As of June 30, 2002, the Plan had approximately 37,000 participants
employed at P&G's international locations in Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Columbia, Costa Rica,
Czech Republic, Denmark, Egypt, El Salvador, Estonia, Finland, Germany,
Greece, Guatemala, Honduras, Hong Kong, Hungary, India, Indonesia, Italy,
Kenya, Korea, Latvia, Lebanon, Malaysia, Mexico, Morocco, Netherlands, New
Zealand, Nicaragua, Nigeria, Norway, Pakistan, Panama, Peru, Philippines,
Poland, Portugal, Romania, Saudi Arabia, Singapore, Slovak Republic, South
Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, Venezuela,
and Yemen. Effective in 2003, employees in Russia will be eligible to
participate in the Plan.
5. TAX STATUS
The Plan is not qualified under Section 401(a) of the Internal Revenue
Code, and is exempt from the provisions of Title I of ERISA pursuant to
Section 4(b)(4) thereof. P&G believes that the Trustee should be viewed as
a direct custodian and that, for U.S. tax purposes, the participating
employees should be treated as the owners of the shares of P&G common
stock held for their account under the Plan.
Plan management believes that the participating employees should be
treated as the beneficial owners of the shares of P&G common stock held
for their account under the Plan for U.S. tax purposes and that, subject
to certain procedural conditions, the information provided by the
employees may be relied upon in determining the applicable U.S. tax
withholding rate on dividends paid by P&G with respect to these shares.
6. CLASS ACTION LAWSUIT
During March of 2000, a class action lawsuit was filed against The Procter
& Gamble Company by shareholders of common stock. The class was certified
on October 29, 2001 by the United States District Court for the Southern
District of Ohio, Western Division (the "Court"), and a settlement of
$49,000,000 has been approved. The Plan joined the class of plaintiffs on
March 25, 2002. Once the allocation of the settlement is determined and
approved by the Court, the Plan will receive its portion of the settlement
to allocate to participant accounts.
* * * * *
THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Luxembourg, Luxembourg,
on October 10, 2002.
PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
By: BANQUE INTERNATIONALE A LUXEMBOURG, TRUSTEE
By: /S/ PHILIPPE MEYERS
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Philippe Meyers
Fonde de Pouvoir Principal
Trustee
By: /S/PHILIPPE GILTAIRE
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Philippe Giltaire
Fonde de Pouvoir
Trustee
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche