UNITED STATES
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 DECEMBER 31, 2004, 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 Commercial Company
Employees' Savings Plan, 355 Tetuan Street, Old San Juan, P.O. Box 363187,
San Juan, Puerto Rico 00936-3187.
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
COMMERCIAL COMPANY
EMPLOYEES' SAVINGS PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2004 AND
2003 AND FOR THE YEARS THEN ENDED, AND
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 2004 AND REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' 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 - 7
SUPPLEMENTAL SCHEDULES:
Form 5500, Schedule H, Part IV, Line 4i- Schedule of Assets
(Held at End of Year) as of December 31, 2004 8
Form 5500, Schedule H, Part IV, Line 4j- Schedule of Reportable
Transactions for the Year Ended December 31, 2004 9
All others 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 Participants and Retirement Committee of
The Procter & Gamble Commercial Company
Employees' Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Commercial Company Employees' 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 at 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 accompanying 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 our audit of the basic 2004 financial statements and, in our opinion,
are fairly stated in all material respects when considered in relation to the
basic financial statements taken as a whole.
/S/ DELOITTE & TOUCHE LLP
-------------------------
Deloitte & Touche LLP
San Juan, Puerto Rico
June 21, 2005
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
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ASSETS 2004 2003
INVESTMENTS-At fair value $12,196,882 $10,214,580
----------- -----------
RECEIVABLES:
Participants' contributions 14,001
Employer's contributions 4,606
----------- -----------
Total receivables 18,607
----------- -----------
Total assets 12,196,882 10,233,187
LIABILITIES-Excess contribution to be
recognized next year 95,866 115,997
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $12,101,016 $10,117,190
=========== ===========
See notes to financial statements.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
------------------------------------------------------------------------------
2004 2003
ADDITIONS:
Contributions:
Participants $ 983,184 $ 1,007,667
Employer 298,154 280,466
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Total contributions 1,281,338 1,288,133
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Investment income:
Net appreciation in fair value of
investments, including gain on sale
of investment of $55,248 in 2004
and $34,229 in 2003 861,440 1,471,054
Dividends 303,394 171,650
Interest 5,334 4,091
----------- -----------
Total investment income 1,170,168 1,646,795
----------- -----------
Total additions 2,451,506 2,934,928
----------- -----------
DEDUCTIONS-Benefits paid to participants 467,680 443,871
----------- -----------
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 1,983,826 2,491,057
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 10,117,190 7,626,133
----------- -----------
End of year $12,101,016 $10,117,190
=========== ===========
See notes to financial statements.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of The Procter & Gamble Commercial Company (the
"Company") Employees' Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
a. GENERAL--The Plan is a defined contribution plan covering all
full-time employees of the Company and of two affiliated companies,
Olay Company, Inc. and Procter & Gamble Pharmaceuticals Puerto Rico,
Inc. (the "Companies") who are residents of Puerto Rico, have
completed one year of service and are age twenty-one or older. The
Plan was established effective November 1, 1993 and is sponsored by
the Companies. This Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
b. CONTRIBUTIONS--Each year, participants may contribute up to 10 percent
of pretax annual compensation, as defined in the Plan, not exceeding
the maximum deferral amount specified by Puerto Rico law. Participants
may also contribute amounts representing distributions from other
qualified defined benefit or contribution plans. Participants direct
the investment of their contributions into various investment options
offered by the Plan. The Plan currently offers seven mutual funds and
a fund, which invests in common stock of the Company, as investment
options for participants. The Companies contribute 40 percent of the
first 5 percent of base compensation that a participant contributes to
the Plan. The matching Companies' contributions are invested directly
in The Procter & Gamble Company common stock. Contributions are
subject to certain limitations.
c. PARTICIPANT ACCOUNTS--Each participant's account is credited with the
participant's contribution and allocations of (A) the Companies'
contributions and, (B) Plan earnings. Allocations are based on
participant earnings or account balances, as defined. The benefit to
which a participant is entitled is the benefit that can be provided
from the participant's vested account.
d. VESTING--Participants are vested immediately in their contributions
plus actual earnings thereon. The Companies' contributions portion of
their accounts plus actual earnings thereon is 100 percent vested upon
the occurrence of any of the following events: completion of three
years of credited service; attaining age 65; total disability while
employed by the Companies or death while employed by the Companies.
e. PAYMENT OF BENEFITS--Upon termination of service, a participant may
receive the value of the vested interest in his or her account as a
lump-sum distribution.
f. LOANS TO PARTICIPANTS--Loans to participants are not permitted.
g. FORFEITED ACCOUNTS--For the year ended December 31, 2004, forfeited
nonvested accounts totaled $189,000. These accounts will be used to
reduce future Companies contributions to the Plan.
h. PLAN TERMINATION--Although it has not expressed any intent to do so,
the Companies have the right under the Plan to discontinue their
contributions at any time and to terminate the Plan subject to the
provisions of ERISA. In the event of plan termination, participants
will become 100% vested in their employer contributions.
i. STOCK SPLIT--In March 2004, The Procter & Gamble Company's ("P&G")
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 3 has been restated to reflect the stock split for all
periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING--The financial statements of the Plan are prepared
under the accrual basis of accounting and the Plan's net assets and
transactions are recorded at fair value.
b. USE OF ESTIMATES--The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires the Plan administrator to make estimates
and assumptions that affect the participant account balances and the
reported amounts of net assets available for benefits and changes
therein. Actual results could differ from those estimates.
The Plan utilizes various investment instruments. 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.
c. INVESTMENTS VALUATION AND INCOME RECOGNITION--The Plan's investments
are stated at fair value. Quoted market prices are used to value
investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year-end. The Plan's investment in P&G
and the J.M. Smucker Company common stock is valued at the closing
price on an established security exchange.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
d. PAYMENT OF BENEFITS--Benefits are recorded when paid.
e. PLAN EXPENSES--All expenses incurred in administering the Plan may be
paid out of the invested assets unless paid by the Company.
3. INVESTMENTS
The Plan's investments that represented five percent or more of the Plan's
net assets available for benefits are as follows:
2004 2003
The Procter & Gamble Company-common stock;
126,030.77 and 111,986.66 shares, respectively $6,941,775 $5,592,914
J.P. Morgan Diversified Institutional Fund,
100,227.08 units 1,282,910
ACI Equity Index, 405,248.19 and 421,540.47 units,
respectively 1,959,654 1,871,640
Oakmark Equity and Income - 59,851.24 units 1,408,365
Fidelity Low Price Fund, 15,736.12 units 550,449
Royce Low Price Stock Fund, 57,284.09 units 879,174
During 2004 and 2003, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value as follows:
2004 2003
Common stock $ 590,184 $1,068,584
Mutual funds 271,256 402,470
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Total $ 861,440 $1,471,054
========== ==========
The dividend and interest income of the Plan for the years ended December
31, 2004 and 2003 were as follows:
2004 2003
Dividend income:
Common stock $ 115,624 $ 93,610
Mutual funds 187,770 78,040
---------- ----------
Total $ 303,394 $ 171,650
========== ==========
Interest income-interest-bearing deposit $ 5,334 $ 4,091
========== ==========
4. NONPARTICIPANT-DIRECTED INVESTMENT
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investment
(the common stock of The Procter & Gamble Company) is as follows:
2004 2003
Net assets at December 31-P&G Common stock $6,941,775 $5,592,914
========== ==========
Changes in net assets for the years ended
December 31, 2004 and 2003 (P&G common stock):
Contributions $ 658,958 $ 610,678
Net appreciation in fair value of investment 580,526 756,620
Dividends 114,387 92,803
Benefits paid to participants (130,204) (181,137)
Net transfers to participant directed
investments 174,994 (77,519)
Other disbursements (49,800) (20,554)
---------- ----------
Net increase in net assets $1,348,861 $1,180,891
========== ==========
5. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by J.P. Morgan
and an interest bearing deposit with J.P. Morgan Chase Bank, the trustee
as defined by the Plan. J.P. Morgan Retirement Plan Services performs
record keeping and administrative services for the Plan and, therefore,
these transactions qualify as party-in-interest transactions.
6. INCOME TAXES
The Plan is exempt from Puerto Rico income taxes under the provisions of
the Puerto Rico Internal Revenue Code of 1994 ("PRIRC"), as amended. The
Plan is not qualified under Section 401(a) of the Internal Revenue Code,
but it is exempt from United States taxation under Section 1022 of the
Employee Retirement Income Security Act of 1974. The Plan is required to
operate in conformity with the PRIRC to maintain its qualification.
The Plan participants are not taxed on the income and contributions made
to their accounts until such time as the participant or the participant's
beneficiary receives distributions from the Plan.
******
SCHEDULE I
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-
SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2004
------------------------------------------------------------------------------------------------
DESCRIPTION OF
IDENTITY OF ISSUE INVESTMENT COST FAIR VALUE
The Procter & Gamble Company * Common stock $ 5,379,831 $ 6,941,775
The J.M. Smucker Company Common stock 24,976 39,811
American Century Equity Index
Institutional Fund * Mutual fund ** 1,959,654
Oakmark Equity & Income Fund Mutual fund ** 1,408,365
Royce Low Price Mutual fund ** 879,174
J.P. Morgan Prime Money Market
Institutional Fund * Mutual fund ** 343,897
J.P. Morgan Bond Ultra Fund * Mutual fund ** 327,444
J.P. Morgan International Equity Fund * Mutual fund ** 243,698
Fidelity Dividend Growth Fund Mutual fund ** 39,860
J.P. Morgan Chase Bank * Deposit 13,204 13,204
-----------
Total $12,196,882
===========
* Party-in-interest.
** Cost information is not required for participant-directed
investments and, therefore is not included.
SCHEDULE II
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4j-
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2004
-------------------------------------------------------------------------------------------------------------------------
SINGLE TRANSACTIONS-None.
SERIES OF TRANSACTIONS:
Current
Value of
Asset on Net
Number of Number of Purchase Sales Cost of Transaction Gain
Description of Asset Purchases Sales Amount Amount Asset Date on Sale
The Procter & Gamble
Company-common stock 4 2 $ 1,082,483 $326,902 $273,130 $326,902 $ 53,772
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
thereunto duly authorized.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
DATE: June 24, 2005
-------------- /S/THOMAS J. MESS
--------------------------------
Thomas J. Mess
Secretary for Trustees
EXHIBIT INDEX
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Exhibit No.
23 Consent of Deloitte & Touche LLP