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 [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
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS
As of December 31, 2002 and 2001 and
for the Year Ended December 31, 2002
SUPPLEMENTAL SCHEDULES
Year Ended December 31, 2002
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
PAGE
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2002 3
Notes to Financial Statements 4-7
Supplemental Schedules:
Schedule I - Schedule of Assets Held at December 31, 2002
(Schedule H, Line 4(i) on Form 5500) 8
Schedule II - Schedule of Reportable Transactions for the Year Ended
December 31, 2002 (Schedule H, Line 4(j) on Form 5500) 9
Schedule III - Nonexempt Transactions for the Year Ended
December 31, 2002 (Schedule H, Line 4(a) on Form 5500) 10
INDEPENDENT AUDITORS' REPORT
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, 2002 and 2001, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2002. 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 year
ended December 31, 2002 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 2002 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 11, 2003
Stamp No. 1887637
affixed to original.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
---------------------------------------------------------------------------------------------
ASSETS 2002 2001
------ ---- ----
INVESTMENTS, At fair value $7,714,738 $5,338,302
---------- ----------
RECEIVABLES:
Participants' contributions 30,225 72,483
Employers' contributions 8,649 17,587
---------- ----------
Total receivables 38,874 90,070
---------- ----------
Total assets 7,753,612 5,428,372
LIABILITIES - Excess contribution to be recognized next year 127,479
----------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $7,626,133 $5,428,372
========== ==========
See notes to financial statements.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2002
----------------------------------------------------------------------------
ADDITIONS:
Contributions:
Participants $ 959,990
Employer 298,190
-----------
Total contributions 1,258,180
-----------
Investment loss:
Net depreciation in fair value of investments (288,593)
Interest 27,864
Dividends 129,957
-----------
Total investment loss, net (130,772)
Transfers in from predecessor qualified plans 1,372,118
-----------
Total additions 2,499,526
-----------
DEDUCTIONS:
Benefits paid to participants 289,009
Other expenses 12,756
-----------
Total deductions 301,765
-----------
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 2,197,761
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 5,428,372
-----------
End of year $ 7,626,133
===========
See notes to financial statements.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2002
--------------------------------------------------------------------------------
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. In 2002, the assets and liabilities of the Olay
Company, Inc. Employees' Savings Plan and the Procter & Gamble
Pharmaceuticals CODA Profit Sharing Plan, both qualified plans, were
transferred into the Plan (see Note 3). 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 six 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 - On 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 - At December 31, 2002, forfeited nonvested
accounts totaled $40,753. 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 Company has 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.
2. SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING - The financial statements of the Plan are
prepared under the accrual method of accounting.
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.
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. TRANSFERS IN FROM PREDECESSOR QUALIFIED PLANS
In 2002, the assets and liabilities of the Olay Company, Inc. Employees'
Savings Plan and the Procter & Gamble Pharmaceuticals CODA Profit Sharing
Plan, both qualified plans, were transferred into the Plan. Net assets
transferred amounted to $1,372,118.
4. INVESTMENTS
The following presents investments as of December 31, 2002 and 2001 that
represent five percent or more of the Plan's net assets:
2002 2001
---- ----
The Procter & Gamble Company - common stock;
51,338.41and 37,688.92 shares, respectively $ 4,412,023 $ 2,982,324
JP Morgan Disciplined Equity Institutional Fund -
125,902.18 units 1,328,268
JP Morgan Diversified Institutional Fund - 87,722.30 units 943,892
JP Morgan Prime Money Market Institutional Fund
328,309.68 units 328,310
JP Morgan Bond Ultra Fund- 28,062.84 units 285,680
Fidelity Advisor Growth Opportunities Fund - Class T;
36,032.48 units 1,044,238
Fidelity Advisor Balanced Fund - Class T;
40,758.96 units 635,032
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
Common stock $ 348,601
Mutual funds (637,194)
---------
Total $(288,593)
=========
The dividend and interest income of the Plan for the year ended December
31, 2002 were as follows:
Dividend income:
Common stock $ 76,972
Mutual funds 52,985
---------
Total $ 129,957
=========
Interest income- interest-bearing deposit $ 27,864
=========
5. INVESTMENT IN 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 ("Smucker"). As a result of the spin-off, holders of
The Procter & Gamble Company ("P&G") common stock received one share of
the Smucker stock for each fifty shares of P&G common stock. The cost
basis of P&G common stock owned by the Plan at the time of the Smucker
spin-off was allocated between the P&G common stock held and the Smucker
common stock received. The Plan is not permitted to purchase additional
shares of the Smucker common stock. At December 31, 2002, the Plan's
investment in Smucker common stock consisted of 924.59 shares with a fair
value of $36,808.
6. 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:
2002 2001
---- ----
Net assets at December 31, 2002 and 2001 - Common stock $ 4,412,023 $ 2,982,324
=========== ===========
Changes in net assets for the year ended December 31, 2002:
Contributions $ 665,791
Transfers in from predecessor qualified plans 708,384
Net appreciation 311,793
Dividends 76,972
Benefits paid to participants (97,750)
Net transfers to participant directed investments (148,246)
Other disbursements (87,245)
-----------
Net increase in net assets $ 1,429,699
===========
7. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by J.P. Morgan
and American Century and an interest bearing deposit with JP Morgan Chase
Bank. J.P. Morgan/American Century Retirement Plan Services, an area of
American Century Services Corporation, performs record keeping and
administrative services to the Plan and, therefore, these transactions
qualify as party-in-interest transactions.
8. 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.
9. 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 plaintiffs on
March 25, 2002. Once the allocation of the setlement is determined and
approved by the Court, the Plan will receive its portion of the settlement
to allocate to participant accounts.
******
SCHEDULE I
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
SCHEDULE OF ASSETS HELD AT DECEMBER 31, 2002
(FORM 5500, SCHEDULE H, LINE 4i)
------------------------------------------------------------------------------------------------------------------------------------
Description of Shares/Units/
Identity of Issue Investment Par Value Cost Fair Value
----------------- -------------- ------------- ---- ----------
The Procter & Gamble Company Common stock 51,338.41 $ 4,118,159 $ 4,412,023
The J.P. Smucker Company Common stock 924.59 26,697 36,808
JP Morgan Disciplined Equity Institutional Fund * Mutual fund 125,902.18 N/A 1,328,268
JP Morgan Diversified Institutional Fund * Mutual fund 87,722.30 N/A 943,892
JP Morgan Prime Money Market Institutional Fund * Mutual fund 328,309.68 N/A 328,310
JP Morgan Bond Ultra Fund * Mutual fund 28,062.84 N/A 285,680
American Century Heritage Institutional Fund * Mutual fund 29,200.56 N/A 267,477
Putnam International Growth Fund * Mutual fund 5,726.83 N/A 95,346
JP Morgan Chase Bank Interest-bearing 6,934.00 16,934 16,934
deposit -----------
Total $ 7,714,738
===========
*Registered Investment Company.
N/A = Not applicable.
SCHEDULE II
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2002
(FORM 5500, SCHEDULE H, LINE 4j)
--------------------------------------------------------------------------------------------
SINGLE TRANSACTIONS - None.
Current
SERIES OF TRANSACTIONS: Value of
Asset on Net
Purchase Sales Cost of Transaction Gain
Description of Asset Amount Amount Asset Date on Sale
-------------------- -------- ------ ------- ----------- -------
The Procter & Gamble
Company - common stock $ 769,249 $ 348,485 $ 312,795 $ 348,485 $ 35,690
SCHEDULE III
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
SCHEDULE OF NONEXEMPT TRANSACTIONS
YEAR ENDED DECEMBER 31, 2002
(FORM 5500, SCHEDULE H, ITEM 4a)
----------------------------------------------------------------------------------------------------------------------
Relationship Description of Cost of
Identity of Party Involved to Plan Transaction Asset
-------------------------- ------------ -------------- -------
The Procter & Gamble Plan Sponsor Certain participant contributions
Commercial Company for the year ended December 31, 2002
were remitted to the Plan after the
maximum time period described in
29 CFR 2510.3-102 $ 161,569
Olay Company, Inc. Plan Sponsor Certain participant contributions
for the year ended December 31, 2002
were remitted to the Plan after the
maximum time period described in
29 CFR 2510.3-102 81,422
Procter & Gamble Pharmaceuticals Plan Sponsor Certain participant contributions
Puerto Rico, Inc. for the year ended December 31, 2002
were remitted to the Plan after the
maximum time period described in
29 CFR 2510.3-102 24,780
---------
Total $ 267,771
=========
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 25, 2003 /S/ Thomas J. Mess
--------------------------------
Thomas J. Mess
Secretary for Trustees
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche