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, 2002, 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 for the Years Ended December 31,
2002 and 2001 and Supplemental Schedule as of
December 31, 2002 and Independent Auditors' Report
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits for
the Years Ended December 31, 2002 and 2001 3
Notes to Financial Statements for the Years Ended
December 31, 2002 and 2001 4
SUPPLEMENTAL SCHEDULE--Schedule of Assets Held
(at End of Year)(Schedule H, Line 4i of Form 5500), December 31, 2002 9
SUPPLEMENTAL SCHEDULES OMITTED--The following schedules were
omitted because of the absence of conditions under which they
are required:
Reportable Transactions
Assets Acquired and Disposed of Within the 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 Procter & Gamble Subsidiaries Savings Plan (the "Plan") as of December
31, 2002 and 2001, 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 December 31,
2002 and 2001 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
2002 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
May 20, 2003
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
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2002 2001
---- ----
ASSETS:
Investments at fair value:
Procter & Gamble Common Stock Fund $ 50,213,015 $ 6,706,757
The J.M. Smucker Company common stock 448,825
Mutual funds 153,202,748 91,388,235
Loans to participants 3,216,982 2,628,726
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 207,081,570 $ 100,723,718
============= =============
See notes to financial statements.
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
-------------------------------------------------------------------------------------------------------------------------
2002 2001
ADDITIONS: ---- ----
Investment income (loss):
Net appreciation (depreciation) in fair value of investments $ (25,684,697) $ 2,153,441
Interest and dividend income 2,786,604 438,279
Equity in net losses of the Procter and Gamble
Master Savings Trust (1,055,736)
------------- -------------
Total investment income (loss) (22,898,093) 1,535,984
The J.M. Smucker Company common stock received 364,742
------------- -------------
Total change (22,533,351) 1,535,984
------------- -------------
DEDUCTIONS:
Distributions and withdrawals to participants 19,609,308 1,317,849
Administrative expenses 10,726
------------- -------------
Total deductions 19,620,034 1,317,849
------------- -------------
NET INCREASE (DECREASE) PRIOR TO TRANSFERS (42,153,385) 218,135
TRANSFERS FROM AFFILIATED PLANS 148,511,237 88,728,375
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 100,723,718 11,777,208
------------- -------------
End of year $ 207,081,570 $ 100,723,718
============= =============
See notes to financial statements.
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
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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 ("Company"). Effective March 14, 1996, the Sundor Brands
Savings Plan, Max Factor Savings Plan and Speas Savings Plan were merged
into the Plan. Effective November 2, 2001, the Tambrands, Inc. Savings
Plan ("Tambrands") was merged into the Plan. Effective December 1, 2001,
the Iams Company Savings Plan ("Iams") and Recovery Engineering, Inc.
Salary Savings Plan ("Pur") were merged into the Plan. Effective February
28, 2002, the Richardson-Vicks Savings Plan ("Richardson-Vicks") was
merged into the Plan. Effective April 30, 2002, The Procter & Gamble
Subsidiaries Savings and Investment Plan and the Procter & Gamble
Pharmaceuticals Savings Plan ("Pharmaceuticals") were merged into the
Plan. Effective June 30, 2002, the Millstone Coffee, Inc. 401(k) Savings
and Profit Sharing Plan ("Millstone") was merged into the Plan.
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 common stock, in installment payments over a period not to exceed 180
months or an annuity. 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 six-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
$89,000,000 and $27,000,000 as of December 31, 2002 and 2001,
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 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,
American Century, effective November 1, 2001 ("current trustee") or PNC
Bank, Ohio, N.A. ("prior trustee"), who is 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 values
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 employees with deferred balances may
not borrow against their accounts. Upon participant termination or
retirement, the outstanding loan balance is treated as a distribution to
the participant.
TRANSFERS FROM AFFILIATED PLANS--Amount represents account balances of
Richardson-Vicks, Maryland Club Foods, Shulton, Fisher Nut, Dover,
Giorgio, Millstone, and Norwich Eaton employees transferred into the Plan
for 2002 and Tambrands, Iams and Pur employees transferred into the Plan
for 2001.
PARTICIPANT ACCOUNTS AND INVESTMENT OPTIONS--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. As of November 1, 2001 and after conversion
to the current trustee from the prior trustee, participants can allocate
their account in one or all of the following investment options offered by
the plan:
AMERICAN CENTURY HERITAGE FUND--The prospectus states that this fund
invests in a portfolio of equity securities issued by small to medium
companies.
J.P. MORGAN PRIME MONEY MARKET FUND--The prospectus states that this
fund invests in short length maturity, interest-bearing instruments.
J.P. MORGAN BOND FUND--The prospectus states that this fund invests in
a diversified portfolio of publicly and privately traded corporate,
government, private placement, asset backed, and mortgage backed bonds.
PUTNAM INTERNATIONAL GROWTH FUND--The prospectus for this fund
indicates that it invests in a diversified portfolio of equity
securities of foreign corporations.
J.P. MORGAN DISCIPLINED EQUITY FUND--The prospectus states that this
fund invests in equity securities of approximately 300 domestic, large
company stocks.
COMPANY STOCK FUND--This fund invests in shares of The Procter & Gamble
Company common stock.
PRE-MIXED PORTFOLIO FUNDS--Three funds invested in varying percentages
to the investment options noted above, excluding the Company Stock
Fund.
Effective July 1, 2002, the J.P. Morgan Prime Money Market Fund, J.P.
Morgan Bond Fund, J.P. Morgan Disciplined Equity Fund, and J.P. Morgan
Pre-Mixed Funds A, B, and C were converted from commingled to
institutional funds.
Through November 1, 2001 and until conversion to the current trustee from
the prior trustee, participants could allocate their account in one or all
of the following investment options offered by the Plan:
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 a
balanced portfolio consisting of both equity and fixed securities.
INTERNATIONAL EQUITY FUND--The prospectus states that this fund invests
in a diversified portfolio of equity securities of foreign
corporations.
SMALL COMPANY EQUITY II FUND--The prospectus states that this fund
invests in a portfolio of equity securities issued by small companies.
Effective July 1, 2003, the J.P. Morgan Disciplined Equity Fund will be
converted to an American Century large cap index fund, the American
Century Heritage Fund will be converted to a Fidelity small cap fund, and
the Putnam International Growth Fund will be converted to the J.P. Morgan
Fleming International Fund. Additionally, the J.P. Morgan Stable Value
Fund and a Fidelity large cap fund will be added as investment options to
the plan. While the J.P. Morgan Money Market Fund will remain as a Plan
investment, the current funds in that investment will be converted to the
J.P. Morgan Stable Value Fund.
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 common
stock received one share of Smuckers stock for each fifty shares of
Company common stock. The cost basis of the Company common stock prior to
the Smuckers spin-off was allocated between the Company common stock held
and the Smuckers common stock received. All grants related to common stock
were made in Smuckers common stock; however, vested participants have the
option of selling the Smuckers common stock and reinvesting the funds into
other investment options. Participants are not permitted to purchase
additional shares of Smuckers.
RECLASSIFICATION--Certain prior year amounts have been reclassified to
conform to the current year presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
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 investments are valued
at the closing prices on an established security exchange. Income from
investments is recognized when earned and is allocated to each plan
participating in the Plan by the current trustee and the prior trustee and
to each participant's account by the Plan's recordkeeper.
EXPENSES OF THE PLAN--Investment management expenses are paid by the Plan
and are netted against investment income. Effective July 1, 2002, loan
processing fees are paid by the participants through reduction in their
investment balances. Previously, these fees were paid by the participants
directly to the recordkeeper. 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 Company common stock, Smuckers common stock, and in
various mutual funds which include investments in 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.
3. TAX STATUS
----------
The Internal Revenue Service has determined and informed the Company by
letter dated March 7, 2002 that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan has been amended since receiving the latest determination letter.
However, the plan administrator believes that the Plan is designed and is
currently being operated in compliance with the applicable provisions of
the IRC at December 31, 2002 and 2001. Therefore, they believe that the
Plan was qualified and tax-exempt as of December 31, 2002 and 2001 and no
provision for income taxes has been reflected in the accompanying
financial statements.
4. INVESTMENTS
-----------
The following is a summary of the Plan's investments for the years ended
December 31, 2002 and 2001. Investments that represent five percent or
more of the Plan's net assets are separately identified.
Description 2002 2001
Procter & Gamble common stock $ 50,213,015 $ 6,706,757
J.P. Morgan Disciplined Equity Fund 67,314,747 46,289,792
J.P. Morgan Money Market Fund 40,344,272 20,084,925
American Century Heritage Fund 15,136,788 11,827,951
J.P. Morgan Bond Fund 20,663,124 5,764,746
Putnam International Growth Fund 9,743,817 7,420,821
Other 3,665,807 2,628,726
------------- -------------
Total $ 207,081,570 $ 100,723,718
============= =============
Interest and dividend income and changes in the Plan's investments after
November 1, 2001 (see Note 5), which include investments bought and sold
as well as held during the years ended December 31, 2002 and 2001, consist
of the following:
2002 2001
Dividend income $ 2,412,847 $ 31,500
Interest income 373,757 406,779
------------- ------------
2,786,604 438,279
------------- ------------
Net appreciation (depreciation) in
fair value of:
Mutual funds (25,849,739) 1,893,788
Procter & Gamble common stock 114,804 259,653
The J.M. Smucker Company common stock 50,238
------------- ------------
(25,684,697) 2,153,441
------------- ------------
Total $ (22,898,093) $ 2,591,720
============= ============
5. INTEREST IN MASTER TRUST
------------------------
Effective January 1, 1993, the Company formed the Master Trust in
accordance with a master trust agreement with PNC Bank. Effective November
1, 2001 and upon conversion to American Century, the Plan no longer
participates in the Master Trust.
Use of a master trust permitted the commingling of investments that fund
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 audited financial
information regarding the net assets and investment income of the Master
Trust:
Investment income (loss) from the Master Trust for the year ended December
31, 2001 is summarized as follows:
Company JP Morgan
Stock Fund Funds Total
---------- --------- -----
Net appreciation (depreciation) in fair value
of investments $ 221,329 $(9,489,678) $(9,268,349)
Dividends 1,258,927 1,258,927
Interest 2,848 110,122 112,970
----------- ----------- -----------
Total $ 1,483,104 $(9,379,556) $(7,896,452)
=========== =========== ===========
Plan's equity in net losses of Master Trust $ (108,565) $ (947,171) $(1,055,736)
=========== =========== ===========
6. DISTRIBUTIONS PAYABLE
---------------------
Distributions payable to participants at December 31, 2002 and 2001 were
$0 and $44,155, respectively.
* * * * * *
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
SCHEDULE OF ASSETS HELD (AT END OF YEAR),
(SCHEDULE H, PART IV, LINE 4i OF FORM 5500),
DECEMBER 31, 2002
--------------------------------------------------------------------------------
Investment Fair Value
---------- ----------
Procter & Gamble common stock $ 50,213,015
J.M. Smucker Company common stock 448,825
J.P. Morgan Disciplined Equity Fund 67,314,747
J.P. Morgan Money Market Fund 40,344,272
American Century Heritage Fund 15,136,788
Putnam International Growth Fund 9,743,817
J.P. Morgan Bond Fund 20,663,124
Loans to participants -- 552 loans with maturities ranging
from January 2003 to October 2016 and interest rates
ranging from 5.25% to 11.5% 3,216,982
-------------
$ 207,081,570
=============
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 25, 2003 ------------------------------------------
Thomas J. Mess
Secretary for Trustees
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche