SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended December 31, 2004, or
\ \ 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: The Procter & Gamble Subsidiaries Savings Plan,
The Procter & Gamble Company, Two Procter & Gamble Plaza, Cincinnati, Ohio
45202.
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202.
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance With the
Financial Reporting Requirements of ERISA.
THE PROCTER & GAMBLE
SUBSIDIARIES SAVINGS PLAN
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS
ENDED DECEMBER 31, 2004 AND 2003,
SUPPLEMENTAL SCHEDULE AS OF
DECEMBER 31, 2004, AND
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2004 and 2003 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE-- 9
Form 5500, Schedule H, Part IV, Line 4i--Schedule
of Assets (Held at End of Year) as of December 31, 2004 10
NOTE: All other schedules required by Section 2520.103-10 of the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974
have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Procter & Gamble Master Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Subsidiaries Savings Plan (the "Plan") as of December
31, 2004 and 2003, 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2004 and 2003, 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 schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The schedule is the responsibility of the Plan's management. Such schedule
has been subjected to the auditing procedures applied in our audit of the basic
2004 financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/S/ DELOITTE & TOUCHE LLP
-------------------------
Deloitte & Touche LLP
Cincinnati, Ohio
June 22, 2005
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
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2004 2003
INVESTMENTS:
At fair value:
The Procter & Gamble Company common stock $ 58,808,333 $ 52,329,627
The J.M. Smucker Company common stock 441,014 459,551
Mutual funds 137,335,859 134,456,525
Loans to participants 2,128,475 2,587,237
------------ ------------
198,713,681 189,832,940
At contract value-
J.P. Morgan Stable Value Fund 34,557,774 37,258,521
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $233,271,455 $227,091,461
============ ============
See notes to financial statements.
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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2004 2003
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $ 15,453,936 $ 31,435,851
Net appreciation in contract value of investments 1,402,644 667,335
Interest and dividend income 5,726,351 4,292,330
------------ ------------
Total investment income 22,582,931 36,395,516
Rollover and other additions 87,820
------------ ------------
Total additions 22,670,751 36,395,516
------------ ------------
DEDUCTIONS:
Distributions to and withdrawals by participants 16,482,032 16,375,699
Administrative expenses 8,725 9,926
------------ ------------
Total deductions 16,490,757 16,385,625
------------ ------------
INCREASE IN NET ASSETS 6,179,994 20,009,891
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 227,091,461 207,081,570
------------ ------------
End of year $233,271,455 $227,091,461
============ ============
See notes to financial statements.
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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1. DESCRIPTION OF THE PLAN
The following brief description of The Procter & Gamble Subsidiaries
Savings Plan (the "Plan") is provided for general information only.
Participants should refer to the Plan agreement for more complete
information.
GENERAL--The Plan was established effective March 2, 1990 upon the
acquisition of the Hawaiian Punch Division of DelMonte by The Procter &
Gamble Company (the "Company"). During the period from March 1996 through
June 2002, the following plans were merged into the Plan: the Sundor
Brands Savings Plan, Max Factor Savings Plan, the Speas Savings Plan, the
Tambrands, Inc. Savings Plan ("Tambrands"), the Iams Company Savings Plan
("Iams"), Recovery Engineering, Inc. Salary Savings Plan ("Pur"), the
Richardson-Vicks Savings Plan ("Richardson-Vicks"), The Procter & Gamble
Subsidiaries Savings and Investment Plan ("Subsidiaries Savings and
Investment"), the Procter & Gamble Pharmaceuticals Savings Plan
("Pharmaceuticals"), and the Millstone Coffee, Inc. 401(k) Savings and
Profit Sharing Plan ("Millstone").
The Plan is a voluntary defined contribution plan covering all eligible
employees of Sundor Group, Inc., including the Sundor Brands and Hawaiian
Punch divisions, Max Factor & Company, Speas Company, Tambrands Company,
Iams Company, Pur Company, Richardson-Vicks Company, Maryland Club Foods,
Inc., Shulton, Inc., Dover Baby Wipes Company, Giorgio Beverly Hills,
Inc., Millstone Coffee, Inc., Norwich Eaton, and former employees of
Fisher Nut Company who were members of the Twin Cities Bakery and
Confectionery Workers Union Local No. 22, all subsidiaries of the Company.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
CONTRIBUTIONS AND VESTING--Effective April 1996, all contributions to the
Plan were suspended and all participants became fully vested. Tambrands,
Iams, Pur, Richardson-Vicks, Subsidiaries Savings and Investment,
Pharmaceuticals, and Millstone Savings Plans were frozen prior to
conversion into the Plan.
DISTRIBUTIONS--The Plan provides for benefits to be paid upon retirement,
disability, death, or separation other than retirement as defined by the
Plan document. Plan benefits may be made in a lump sum of cash or shares
of Company common stock, in installments over not more than 120 months, or
variable amounts paid monthly. Retired or terminated employees shall
commence benefit payments upon attainment of age 70 1/2.
WITHDRAWALS--A participant may withdraw any portion of after-tax
contributions once in any three-month period. Participants who have
attained age 59 1/2 or have demonstrated financial hardship may withdraw
all or any portion of their before-tax contributions once in any six-month
period.
Account balances attributable to terminated employees are approximately
$111,648,000 and $102,000,000 as of December 31, 2004 and 2003,
respectively.
PLAN TERMINATION--Although the Company has not expressed any intent to do
so, it has the right under the Plan agreement to terminate the Plan
subject to the provisions of ERISA.
ADMINISTRATION--The Plan is administered by the Master Savings Plan
Committee consisting of three members appointed by the Board of Directors
of the Company, except for duties specifically vested in the trustee, J.P.
Morgan Chase Bank ("trustee"), and J.P. Morgan Retirement Plan Services
LLC ("recordkeeper"), who are also appointed by the Board of Directors of
the Company.
LOANS--The Plan has a loan feature under which active participants may
borrow up to 50% of the current value of their vested account balances
exclusive of amounts attributable to Company contributions (up to a
maximum of $50,000). Loans are repaid via payroll deduction over a period
of up to five years, except for loans used to purchase a primary
residence, which are repaid via payroll deduction over a period of up to
10 years. Principal and interest paid is credited to applicable funds in
the borrower's account. Former Company participants may not borrow against
their account balances. Upon participant termination or retirement, the
outstanding loan balance is treated as a distribution to the participant
if repayment is not made by the participant.
PARTICIPANT ACCOUNTS--Individual accounts are maintained for each Plan
participant. Each participant's account is credited with an allocation of
the Plan's earnings or losses. The benefit to which a participant is
entitled is limited to the benefit that can be provided from their
account. Participants can allocate their account to one or all of the
investment options offered by the Plan.
STOCK SPLIT--In March 2004, the Company's Board of Directors approved a
two-for-one stock split effective for common and preferred shareholders of
record as of May 21, 2004. Share data in Note 6 has been restated to
reflect the stock split for all periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING--The accompanying financial statements have been
prepared on the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America.
EXPENSES OF THE PLAN--Investment management expenses are paid by the Plan
and are netted against investment income. Loan processing fees are paid by
the participants through reduction in their investment balances.
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 Company common stock, J.M. Smucker Company common
stock, and in various mutual funds which include investments in U.S.
Government securities, corporate debt instruments, corporate stocks, and
investment contracts. 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.
INVESTMENT VALUATION AND INCOME RECOGNITION--The Plan's investments are
stated at fair value except for its benefit-responsive investment
contract, which is valued at contract value (see Note 5). Quoted market
prices are used to value investments. Shares of mutual funds are valued at
quoted market prices, which represent the net asset value of shares held
by the Plan at year end. Loans to participants are valued at the
outstanding loan balances.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis and dividends are
recorded on the ex-dividend date.
Management fees and operating expenses charged to the Plan for investments
in the mutual funds are deducted from income earned on a daily basis and
are not separately reflected. Consequently, management fees and operating
expenses are reflected as a reduction of net appreciation, or an increase
in net depreciation in the fair market value of such investments.
PAYMENT OF BENEFITS--Benefit payments to participants are recorded upon
distribution. Amounts allocated to accounts of persons who have elected to
withdraw from the Plan but have not yet been paid were $117,000 and
$367,000 at December 31, 2004 and 2003, respectively.
3. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated March 7, 2002, that the Plan and related trust were designed
in accordance with the applicable regulations of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter;
however, the Company and the plan administrator believe that the Plan is
currently designed and operated in compliance with the applicable
requirements of the Internal Revenue Code and the Plan and related trust
continue to be tax-exempt. Therefore, no provision for income taxes has
been included in the Plan's financial statements
4. INVESTMENTS
The following is a summary of the Plan's investments for the years ended
December 31. Investments that represent five percent or more of the Plan's
net assets are separately identified.
DESCRIPTION 2004 2003
At fair value:
The Procter & Gamble Company common stock $ 58,808,333 $ 52,329,627
American Century Equity Index Fund 73,241,670 76,100,627
Royce Low Priced Stock Fund 26,231,553
J.P. Morgan Bond Fund 18,264,673 20,358,333
J.P. Morgan International Equity Fund 13,182,595 11,760,990
Fidelity Low Price Fund 20,510,078
Other 8,984,857 8,773,285
------------ ------------
198,713,681 189,832,940
------------ ------------
At contract value-J.P. Morgan Stable Value Fund:
J.P. Morgan Chase Bank Intermediate Bond Fund 33,669,655 23,596,185
Other 888,119 13,662,336
------------ ------------
34,557,774 37,258,521
------------ ------------
Total $233,271,455 $227,091,461
============ ============
Interest and dividend income and changes in the Plan's investments, which
include investments bought and sold as well as held during the years ended
December 31, consist of the following:
2004 2003
Net appreciation in fair value of:
Mutual funds $10,031,751 $23,779,574
The Procter & Gamble Company common stock 5,403,907 7,601,576
The J.M. Smucker Company common stock 18,278 54,701
----------- -----------
15,453,936 31,435,851
Net appreciation in contract value of
J.P. Morgan Stable Value Fund 1,402,644 667,335
----------- -----------
16,856,580 32,103,186
----------- -----------
Dividend income 5,571,271 4,058,976
Interest income 155,080 233,354
----------- -----------
5,726,351 4,292,330
----------- -----------
Total investment income $22,582,931 $36,395,516
=========== ===========
5. INVESTMENT CONTRACT WITH INSURANCE COMPANY
In 2003, the Plan entered into a benefit-responsive investment contract
with Monumental Life Insurance Co., Bank of America N.A. and State Street
Bank & Trust Company (collectively, the "issuers"). The issuers maintain
the contributions in a general account, which is credited with earnings on
the underlying investments and charged for participant withdrawals and
administrative expenses. The investment contract is included in the
financial statements at contract value as reported to the Plan by the
issuers. Contract value represents contributions made under the contract,
plus earnings, less participant withdrawals and administrative expenses.
Participants may ordinarily direct the withdrawal or transfer of all or a
portion of their investment at contract value.
There are no reserves against contract value for credit risk of the
contract issuer or otherwise. The crediting interest rate was 4.36% at
December 31, 2004 and 4.26% at December 31, 2003. The crediting interest
rate is based on a formula agreed upon with the issuer, but may not be
less than zero percent. Such interest rates are reviewed on a quarterly
basis for resetting. The average yield was 3.91% for the year ended
December 31, 2004 and 1.7% for the year ended December 31, 2003.
6. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by J.P. Morgan
Chase Bank. J.P. Morgan Retirement Plan Services LLC is the recordkeeper
as defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions. Fees paid by the Plan for investment
management services were included as a reduction of the return earned on
each fund.
At December 31, 2004 and 2003, the Plan held 1,067,689 and 1,047,644
shares, respectively, of common stock of The Procter & Gamble Company, the
sponsoring employer, with a cost basis of $28,382,420 and $25,226,679,
respectively. During the years ended December 31, 2004 and 2003, the Plan
recorded dividend income on The Procter & Gamble Company common stock of
$1,031,650 and $967,000, respectively.
******
SUPPLEMENTAL SCHEDULE
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2004
-----------------------------------------------------------------------------------------------------------
FAIR VALUE/
IDENTITY OF ISSUER DESCRIPTION OF INVESTMENT CONTRACT VALUE
INVESTMENTS AT FAIR VALUE:
* The Procter & Gamble Company Common stock $ 58,808,333
The J.M. Smucker Company Common stock 441,014
Mutual Funds:
American Century Equity Index Fund 73,241,670
The Royce Funds Low Price Fund 26,231,553
* J.P. Morgan Funds Bond Fund 18,264,673
* J.P. Morgan Funds International Equity Fund 13,182,595
Fidelity Investments Dividend Growth Fund 5,563,338
* J.P. Morgan Funds Prime Money Market Fund 852,030
* Loans to participants 382 loans with maturities ranging from
January 2005 to October 2016 and interest
rates ranging from 5% to 11.5% 2,128,475
-------------
Total 198,713,681
-------------
J.P. MORGAN STABLE VALUE FUND
AT CONTRACT VALUE:
US Treasury Note, 1.5%, due July 31, 2005 79,462
US Treasury Note, 1.125%, due June 30, 2005 134,172
-------------
213,634
Common/Collective Trust Funds:
* J.P. Morgan Chase Bank Liquidity Fund 541,268
* J.P. Morgan Chase Bank Intermediate Bond Fund 33,669,655
Monumental Life Insurance Company
Bank of America, N.A., State
Street Bank and Trust Company Wrapper Contract 133,217
-------------
Total 34,557,774
-------------
TOTAL INVESTMENTS $ 233,271,455
=============
* Denotes party-in-interest.
THE PLAN. 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
SUBSIDIARIES SAVINGS PLAN
/S/THOMAS J. MESS
Date: June 24, 2005 ------------------------------------------
Thomas J. Mess
Secretary for Trustees
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche LLP