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Ohio		2840		31-0411980
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Chris B. Walther, Esq. The Procter & Gamble Company One Procter & Gamble Plaza Cincinnati, Ohio 45202 (513) 983-7854		Dennis J. Block, Esq. Cadwalader, Wickersham & Taft LLP One World Financial Center New York, New York 10281 (212) 504-6000		Richard K. Willard, Esq. The Gillette Company Prudential Tower Building Boston, Massachusetts 02199 (617) 421-7000		George R. Bason, Jr., Esq. Davis Polk & Wardwell 450 Lexington Ave. New York, New York 10017 (212) 450-4000

Proposed Maximum

Proposed Maximum

Amount of

Title of each Class of

Amount to be

Offering Price

Aggregate

Registration

Securities to be Registered

Registered

Per Unit

Offering Price

Fee(3)

Common Stock, without par value

1,046,576,578(1)

$51.11

$53,490,528,907.97(2)

$6,295,835.25

(1)	Represents the maximum number of shares of common stock, without par value, of Procter & Gamble (“Procter & Gamble Common Stock”) estimated to be issuable upon completion of the Merger, based on the exchange ratio of 0.975 shares of Procter & Gamble Common Stock for each share of common stock, par value $1.00 per share, of Gillette (“Gillette Common Stock”) (based on 994,383,431 shares of Gillette Common Stock outstanding on March 7, 2005 and 79,028,444 shares issuable pursuant to the exercise of options).
(2)	Pursuant to Rules 457(c) and 457(f)(1) under the Securities Act of 1933, as amended, and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to (x) the estimated number of shares of Gillette Common Stock to be exchanged in the Merger multiplied by (y) $51.11, the average of the high and low sale prices per share of Gillette Common Stock on the New York Stock Exchange Composite Tape on March 7, 2005.
(3)	This fee has been calculated under Section 6(b) of the Securities Act, by multiplying the proposed maximum aggregate offering amount of $53,490,528,907.97 by 0.00011770.

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The information in this joint proxy statement/ prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary joint proxy statement/ prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

A.G. Lafley		James M. Kilts
Chairman of the Board, President and Chief Executive		Chairman of the Board, President and Chief Executive Officer
The Procter & Gamble Company		The Gillette Company

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if you are a Procter & Gamble shareholder:				if you are a Gillette shareholder:
By Mail:		The Procter & Gamble Company		By Mail:		The Gillette Company
		P.O. Box 5572				Prudential Tower Building
		Cincinnati, OH 45201-5572				Boston, MA 02199-8004
		Attention: Shareholder Services				Attention: Office of the Secretary
By Telephone:		(800) 764-7483		By Telephone:		(617) 421-7000

	•	Through the Internet, by visiting a web site established for that purpose at www.proxyvote.com and following the instructions; or
	•	By telephone, by calling the toll-free number (800) 690-6903 in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions; or
	•	By mail, by marking, signing, and dating your proxy and returning it in the postage-paid envelope provided or returning it to The Procter & Gamble Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

	•	Through the Internet, by visiting a web site established for that purpose at www.proxyvote.com and following the instructions; or
	•	By telephone, by calling the number (800) 690-6903 in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions; or
	•	By mail, by marking, signing, and dating your proxy and returning it in the postage-paid envelope provided or returning it to The Gillette Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

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	1.	A proposal to adopt the Agreement and Plan of Merger, dated as of January 27, 2005, among Procter & Gamble, Aquarium Acquisition Corp., a wholly owned subsidiary of Procter & Gamble, and Gillette, and approve the issuance of Procter & Gamble common stock in the merger. A copy of the merger agreement is attached as Annex A to the joint proxy statement/ prospectus accompanying this notice; and
	2.	To transact such other business as may properly come before the special meeting and any adjournment or postponement thereof.

	By Order of the Board of Directors
	James J. Johnson
	Secretary

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	1.	A proposal to adopt the Agreement and Plan of Merger, dated as of January 27, 2005, among Procter & Gamble, Aquarium Acquisition Corp., a wholly owned subsidiary of Procter & Gamble, and Gillette and approve the merger contemplated by the merger agreement. A copy of the merger agreement is attached as Annex A to the joint proxy statement/ prospectus accompanying this notice; and
	2.	To transact such other business as may properly come before the special meeting and any adjournment or postponement thereof.

	By Order of the Board of Directors

	William J. Mostyn III
	Deputy General Counsel, Secretary and
	Corporate Governance Officer

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CHAPTER ONE: THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER			I-1
SUMMARY			I-3
	The Companies		I-3
	What Gillette Shareholders Will Receive in the Merger		I-3
	Recommendations to Shareholders		I-3
	Reasons for the Merger		I-4
	Shareholder Votes Required		I-4
	The Merger		I-4
	Treatment of Gillette Stock Options and Other Equity-Based Awards		I-5
	Ownership of Procter & Gamble After the Merger		I-5
	Conditions to the Completion of the Merger		I-5
	Termination of Merger Agreement		I-6
	Regulatory Approvals		I-7
	Material Federal Income Tax Consequences of the Merger		I-8
	Listing of Procter & Gamble Common Stock		I-8
	Dissenters’ Rights		I-8
	Interests of Certain Persons in the Merger		I-8
	Accounting Treatment of the Merger		I-8
	Opinion of Procter & Gamble’s Financial Advisor		I-8
	Opinions of Gillette’s Financial Advisors		I-9
	Selected Historical Financial Information		I-10
	Selected Unaudited Pro Forma Combined Financial Information		I-11
	Comparative Per Share Information		I-11
	Comparative Per Share Market Price and Dividend Information		I-13
	Recent Closing Prices		I-13
RISK FACTORS			I-14
FORWARD-LOOKING STATEMENTS			I-17
THE PROPOSED MERGER			I-19
	General		I-19
	Procter & Gamble Proposal		I-19
	Gillette Proposal		I-19
	Background of the Merger		I-19
	Reasons for the Merger		I-25
	Factors Considered by, and Recommendation of, the Board of Directors of Procter & Gamble		I-27
	Factors Considered by, and Recommendation of, the Board of Directors of Gillette		I-28
	Accounting Treatment		I-31
	Material Federal Income Tax Consequences of the Merger		I-31
	Regulatory Matters Relating to the Merger		I-33
	Dissenters’ Rights		I-33
	Federal Securities Laws Consequences; Stock Transfer Restriction Agreements		I-35
	Repurchase of Common Stock		I-36
	Stock Exchange Listing; Delisting and Deregistration of Gillette Common Stock		I-36
	Recent Developments		I-36

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THE COMPANIES			I-37
	Procter & Gamble		I-37
	Gillette		I-37
OPINIONS OF FINANCIAL ADVISORS			I-39
	Opinion of Procter & Gamble’s Financial Advisor		I-39
	Opinions of Gillette’s Financial Advisors		I-45
INTERESTS OF CERTAIN PERSONS IN THE MERGER			I-58
	Interests of Certain Persons in the Merger		I-58
	Ownership of Common Stock; Stock Options		I-60
	Directors and Executive Officers		I-61
	Treatment of Gillette Stock Options		I-61
	Indemnification; Directors’ and Officers’ Insurance		I-61
THE MERGER AGREEMENT			I-62
	General		I-62
	Closing Matters		I-62
	Consideration to Be Received in the Merger; Treatment of Stock Options		I-62
	Exchange of Certificates in the Merger		I-63
	Fractional Shares		I-63
	Listing of Procter & Gamble Stock		I-63
	Covenants		I-64
	Representations and Warranties		I-68
	Conditions		I-69
	Termination of Merger Agreement		I-70
	Amendments, Extensions and Waivers		I-72
CHAPTER TWO: SELECTED FINANCIAL DATA
PROCTER & GAMBLE AND GILLETTE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT			II-1
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME			II-3
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME			II-4
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET			II-5
CHAPTER THREE: INFORMATION ABOUT THE MEETINGS AND VOTING
	Matters Relating to the Meetings		III-1
	Vote Necessary to Approve the Procter & Gamble and Gillette Proposals		III-3
	Proxies		III-3
	How to Vote by Proxy		III-3
	Proxies for Procter & Gamble Plan Participants		III-5
	Procter & Gamble Householding Information		III-5
	Proxies for Gillette Plan Participants		III-5
	Gillette Householding Information		III-6
	Revoking Your Proxy		III-6
	Voting in Person		III-6
	People with Disabilities		III-6
	Proxy Solicitation		III-6
	Other Business; Adjournments		III-7
	Gillette Shareholder Account Maintenance		III-7

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CHAPTER FOUR: CERTAIN LEGAL INFORMATION
COMPARISON OF PROCTER & GAMBLE/ GILLETTE SHAREHOLDER RIGHTS			IV-1
	Public Markets for the Shares		IV-1
	Amendment of Charter Documents		IV-1
	Amendment and Repeal of Bylaws and Regulations		IV-1
	Classification of Board of Directors		IV-2
	Removal of Directors		IV-2
	Vacancies on the Board		IV-2
	Right to Call Special Meetings of Shareholders		IV-3
	Shareholder Action Without a Meeting		IV-3
	Class Voting		IV-3
	Cumulative Voting		IV-3
	Provisions Affecting Control Share Acquisitions and Business Combinations		IV-4
	Mergers, Acquisitions, Share Purchases and Certain Other Transactions		IV-4
	Rights of Dissenting Shareholders		IV-5
	Dividends		IV-6
	Preemptive Rights of Shareholders		IV-6
	Director Liability and Indemnification		IV-6
DESCRIPTION OF PROCTER & GAMBLE CAPITAL STOCK			IV-8
	Authorized Capital Stock		IV-8
	Procter & Gamble Common Stock		IV-8
	Procter & Gamble Preferred Stock		IV-8
	Gillette Shareholder Rights Agreement		IV-9
	Transfer Agent and Registrar		IV-11
LEGAL MATTERS			IV-11
EXPERTS			IV-11
CHAPTER FIVE: ADDITIONAL INFORMATION FOR SHAREHOLDERS FUTURE SHAREHOLDER PROPOSALS			V-1
	Procter & Gamble		V-1
	Gillette		V-1
WHERE YOU CAN FIND MORE INFORMATION			V-2
ANNEXES
Annex A  Agreement and Plan of Merger
Annex B  Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Annex C  Opinion of Goldman, Sachs & Co.
Annex D  Opinion of UBS Securities LLC
Annex E  Section 1701.85 of the Ohio Revised Code
EX-23.1 CONSENT OF DELOITTE & TOUCHE LLP
EX-23.2 CONSENT OF KPMG LLP
EX-99.4: CONSENT OF MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
EX-99.6: CONSENT OF GOLDMAN, SACHS & CO.
EX-99.8: CONSENT OF UBS SECURITIES LLC

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I-1

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	•	changes in the business, operations or prospects of Procter & Gamble or Gillette;
	•	governmental and/or litigation developments and/or regulatory considerations;
	•	market assessments as to whether and when the merger will be consummated;
	•	governmental action affecting the consumer products industry generally; and
	•	general market and economic conditions.

	•	the necessity of coordinating geographically separated organizations, systems and facilities; and
	•	integrating personnel with diverse business backgrounds.

I-14

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	•	the ability to achieve business plans, including with respect to lower income consumers and growing existing sales and volume profitably despite high levels of competitive activity, especially with respect to the product categories and geographical markets (including developing markets) in which the combined company has chosen to focus;
	•	the ability to successfully execute, manage and integrate key acquisitions and mergers, including Wella A.G. (in the case of Procter & Gamble) and the merger;
	•	the ability to manage and maintain key customer relationships;
	•	the ability to maintain key manufacturing and supply sources (including sole supplier and plant manufacturing sources);
	•	the ability to successfully manage regulatory, tax and legal matters (including product liability, patent and other intellectual property matters), and to resolve pending matters within current estimates;
	•	the ability to successfully implement, achieve and sustain cost improvement plans in manufacturing and overhead areas, including outsourcing projects;
	•	the ability to successfully manage currency (including currency issues in volatile countries), debt (including debt related to Procter & Gamble’s share repurchase plan), interest rate and certain commodity cost exposures;
	•	the ability to manage the continued global political and/or economic uncertainty and disruptions, especially in the combined company’s significant geographical markets, as well as any political and/or economic uncertainty and disruptions due to terrorist activities;
	•	the ability to successfully manage the pattern of its sales, including the variation in sales volume within periods;
	•	the ability to successfully manage competitive factors, including prices, promotional incentives and trade terms for its products;

I-17

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	•	the ability to obtain patents and respond to technological advances attained by competitors and patents granted to competitors;
	•	the ability to successfully manage increases in the prices of raw materials used to make the combined company’s products;
	•	the ability to stay close to consumers in an era of increased media fragmentation; and
	•	the ability to stay on the leading edge of innovation.

I-18

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	•	complementary strengths in innovation, selling and go-to-market capabilities to improve sales growth;
	•	strengthened line-up of industry leading brands;
	•	increased scale for better consumer value and lower costs; and
	•	enhanced relationships with retail customers.

	•	Both companies consider innovation as their “lifeblood.” Both companies are leaders in investments in research and development and creation of products which deliver new benefits, improved performance and quality as well as superior value to consumers. Procter & Gamble has increased the pace of innovation with its “Connect and Develop Strategy” which links innovation and technologies across businesses, geographies and disciplines. The merger will create the opportunity to take this strategy to a higher level due to Gillette’s complementary consumer knowledge and product technologies, particularly in shaving and hair removal, as well as their complementary innovation capabilities in the area of design. The combined company will be a preferred innovation partner in the consumer products industry because of its diversity of businesses, technologies and commercialization capability.
	•	The combination of Procter & Gamble’s existing distribution infrastructure and Gillette’s brands enhances the opportunity for the combined company to grow faster. Procter & Gamble can distribute leading brands like Gillette and Duracell more deeply and more cost-effectively through Procter & Gamble’s Market Development Organization, particularly in developing markets where Procter & Gamble is about five times the size of Gillette. In many developing markets Procter & Gamble has built supply and distribution networks for key categories, such as detergents and shampoo. The combined company will be able to draw on this infrastructure to bring Gillette brands to more stores, which, in turn, will drive more trial usage, more household penetration, more regular usage and more repeat purchases. In addition, Procter & Gamble’s capabilities will be enhanced in markets such as India and Brazil where it is under-developed today. With greater scale in these countries, Procter & Gamble can build the kind of supply and distribution infrastructure it has built elsewhere, and thereby innovate more affordably and more profitably.
	•	Gillette’s expertise in trading consumers up to higher value added products and its in-store marketing capabilities will enhance the combined company’s ability to increase value from leading brands as well as new product launches. Many of Gillette’s global brands are leaders in categories with consistently high growth. Gillette’s marketing keeps these categories growing with leadership innovation, while continually increasing Gillette’s sales and margins. This expertise fits well with Procter & Gamble’s focus on creating similar product lines with broad consumer appeal such as: Olay, Tide and Pampers. Finally, Gillette brings innovation with great product launch expertise and in-store execution. As a result, Gillette people and Gillette brands will help Procter & Gamble do an even better job of reaching more consumers, more effectively and more profitably, in more aisles in more stores around the world.

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	•	determined by a unanimous vote of the directors present at the meeting that the merger agreement and the transactions contemplated thereby, including the issuance of Procter & Gamble common stock in the merger, are advisable, fair to and in the best interests of Procter & Gamble and its shareholders;
	•	approved the merger agreement and the issuance of Procter & Gamble common stock in the merger;
	•	directed that the merger agreement and the issuance of Procter & Gamble common stock in the merger be submitted for consideration to the Procter & Gamble shareholders; and
	•	recommended that the Procter & Gamble shareholders vote FOR the proposal to adopt the merger agreement and approve the issuance of Procter & Gamble common stock in the merger.

	•	information concerning the financial performance and condition, results of operations, asset quality, prospects and businesses of each of Procter & Gamble and Gillette as separate entities and on a combined basis, including:

	•	the revenues of the companies, their complementary businesses and the potential for cost savings and revenue enhancement; and
	•	the recent and historical stock price performance of Procter & Gamble common stock and Gillette common stock.

	•	the importance of market position, significant scale and scope and financial resources to a company’s ability to compete effectively in the global consumer products market;

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	•	the strategic nature of the transaction, which combines Procter & Gamble’s and Gillette’s complementary businesses, and creates a broader company with enhanced global reach and greater resources, enhanced future operating flexibility and increased opportunity for growth;
	•	the potential benefits to be derived from a combination of the two companies as described under “Reasons for the Merger” on page      , including potential cost savings and efficiencies that could result from the merger;
	•	the agreement of Mr. Kilts to remain employed with the combined company through a period of integration and to agree to restrictions on his ability to exercise his options for, or sell his holdings of, Procter & Gamble stock;
	•	the current industry, economic and market conditions and trends;
	•	the fact that the customer and consumer bases to be served will be broader and more diverse;
	•	the opportunity for the shareholders of Procter & Gamble to participate in a larger company with a broader and more diverse product line and to benefit from future growth of the combined company;
	•	the opinion of Merrill Lynch, which is described below, under “Opinion of Financial Advisors — Opinion of Procter & Gamble’s Financial Advisor” on page     , to the effect that, as of the date of its opinion and based upon and subject to the assumptions, qualifications and limitations set out in its written opinion, the exchange ratio in the merger was fair, from a financial point of view, to Procter & Gamble;
	•	the structure of the transaction as a tax-free reorganization for United States federal income tax purposes; and
	•	the ability to consummate the merger, including the conditions to the merger requiring receipt of necessary regulatory approvals in accordance with the terms of the merger agreement.

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	•	Strategic Benefits. The Gillette board of directors believes that the combination of Gillette with Procter & Gamble will create the best consumer products company in the world. The combined company will have combined annual sales of $62 billion and 21 global brands each with sales over $1 billion annually. Given the complementary brands and markets of Gillette and Procter & Gamble, the Gillette board of directors believes that the combined company will be well positioned to deliver superior sustainable growth for its shareholders. The Gillette board of directors also believes that the combined company will provide greater opportunities to accelerate brand growth and innovation by taking advantage of the combined company’s resources and highly developed infrastructure.
	•	Similar Culture, Vision and Values. The Gillette board of directors believes that Gillette and Procter & Gamble share similar corporate cultures, a vision of becoming the best consumer products company in the world and a number of important core values, including dedication to the highest standards of achievement, focus on innovation quality and cost reduction, commitment to employees and upgrading capabilities and adherence to the highest ethical standards.
	•	Complementary Brands and Markets. The Gillette board of directors believes that the expertise and product offerings of Gillette and Procter & Gamble are highly complementary and present significant opportunities for leveraging the combined company’s marketing and research and development capabilities. Gillette and Procter & Gamble both market their products around the world and have placed a high priority on growth in developing markets. The merger will enable the combined company to accelerate execution of Gillette’s and Procter & Gamble’s shared strategy of increasing growth in these developing markets.
	•	Synergies. The Gillette board of directors believes that, following the merger, the combined company will be able to use its combined scale to generate synergies to generate value for its shareholders.
	•	Participation in the Combined Company. The Gillette board of directors considered that Gillette shareholders in the aggregate will represent a significant equity percentage of the earnings and prospects of the combined company and will accordingly participate in the strategic and other benefits of the combination.
	•	Presentations and Opinion of Financial Advisors. The Gillette board of directors considered the presentations by and analyses of UBS and Goldman Sachs, financial advisors to Gillette, and the opinions of UBS and Goldman Sachs that as of January 27, 2005, and based upon and subject to the factors, assumptions, procedures, limitations and qualifications set forth in such opinions, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to the holders of Gillette’s common stock.
	•	Alternatives to the Merger. The Gillette board of directors considered the possibility, as alternatives to the merger, of not pursuing any transaction or of pursuing an acquisition of, or a business combination with, an entity other than Procter & Gamble. The Gillette board of directors concluded that a transaction with Procter & Gamble was more feasible and was expected to yield greater benefits than these alternatives.
	•	Valuation. The Gillette board of directors believes that the exchange ratio provided for in the merger agreement provides Gillette shareholders with an attractive valuation for their interest in Gillette, including a 18% premium over the closing price of Gillette’s common stock on January 27, 2005, the last trading day prior to the public announcement of the merger agreement, and a multiple of 18.8 times its EBITDA for 2004.

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	•	Due Diligence Review. The Gillette board of directors considered the results of the due diligence review conducted by members of Gillette’s senior management relating to Procter & Gamble’s businesses and operations, which were consistent with the expectations of the Gillette board of directors with respect to the strategic and financial benefits of the merger.
	•	Integration. The Gillette board of directors considered the fact that James M. Kilts will serve as a vice chairman of Procter & Gamble for at least one year following consummation of the merger and will also join the Procter & Gamble board of directors, which the Gillette board of directors considered to be of significant importance in ensuring an effective and timely integration of the two companies’ operations.
	•	Stock Purchase. The Gillette board of directors considered Procter & Gamble’s intent to repurchase up to $22 billion of Procter & Gamble shares by June 2006, with the resulting positive effects on the shareholder value.
	•	Financial Strength. The Gillette board of directors considered that the merger is expected to produce a combined company with greater financial strength than Gillette had on its own.
	•	Tax-Free Transaction. The Gillette board of directors considered that the merger is expected to be tax-free for U.S. federal income tax purposes to Gillette’s shareholders.
	•	Other Agreement Terms. The Gillette board of directors considered the terms and conditions of the merger agreement, including the conditions to closing, the termination fee payable under certain circumstances and the restrictions imposed on the conduct of business of Gillette and Procter & Gamble in the period prior to closing.

	•	Risk Factors. The Gillette board of directors considered the risk factors described under “Risk Factors,” including the challenges and costs inherent in integrating two businesses, the size of Gillette and Procter & Gamble, and the management time and effort from both Gillette and Procter & Gamble executives that will be required to successfully achieve that integration.
	•	Regulatory Approval. The Gillette board of directors considered the risk that the governmental agencies from which Gillette and Procter & Gamble will seek approval might seek to impose conditions on or enjoin or otherwise prevent or delay the merger.
	•	Fixed Exchange Ratio. The Gillette board of directors considered the risks associated with a fixed exchange ratio, which by its nature would not adjust upwards to compensate for declines (or downwards to compensate for increases) in Procter & Gamble’s stock price prior to the completion of the merger, and that the terms of the merger agreement did not include “collar” provisions or stock price-based termination rights that would be triggered by a decrease in the value of the merger consideration implied by the Procter & Gamble stock price.
	•	Transaction Risk. The Gillette board of directors considered the risk that the merger would not be consummated, whether as a result of regulatory actions or otherwise.

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	•	a shareholder that is not a citizen or resident of the United States;
	•	a financial institution or insurance company;
	•	a mutual fund;
	•	a tax-exempt organization;
	•	a dealer or broker in securities or foreign currencies;
	•	a trader in securities that elect to apply a mark-to-market method of accounting;
	•	a shareholder that holds its Procter & Gamble stock or Gillette common stock as part of a hedge, appreciated financial position, straddle, conversion, or other risk reduction transaction; or
	•	a shareholder that acquired its Procter & Gamble stock or Gillette common stock pursuant to the exercise of options or similar derivative securities or otherwise as compensation.

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	•	A holder of Gillette common stock will not recognize any gain or loss upon the exchange of that shareholder’s shares of Gillette common stock for shares of Procter & Gamble common stock in the merger, except that gain or loss will be recognized on the receipt of cash instead of a fractional share of Procter & Gamble common stock;
	•	To the extent that a holder of Gillette common stock receives cash instead of a fractional share of Procter & Gamble common stock, the holder will be required to recognize gain or loss, measured by the difference between the amount of cash received and the portion of the tax basis of that holder’s shares of Gillette common stock allocable to that fractional share of Procter & Gamble common stock. This gain or loss will be capital gain or loss and will be long-term capital gain or loss if the holding period for the share of Gillette common stock exchanged for the fractional share of Procter & Gamble common stock is more than one year at the completion of the merger;
	•	A holder of Gillette common stock will have a tax basis in the Procter & Gamble common stock received in the merger equal to (1) the tax basis of the Gillette common stock surrendered by that holder in the merger, less (2) any tax basis of the Gillette common stock surrendered that is allocable to a fractional share of Procter & Gamble common stock for which cash is received; and
	•	The holding period for shares of Procter & Gamble common stock received in exchange for shares of Gillette common stock in the merger will include the holding period for the shares of Gillette common stock surrendered in the merger.
	•	In the case of a holder of Gillette common stock who holds shares of Gillette common stock with differing tax bases and/or holding periods, the preceding rules must be applied to each identifiable block of Gillette common stock.

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	•	must be a record holder of the shares of Procter & Gamble common stock, Series A ESOP Preferred Stock, or Series B ESOP Preferred Stock as to which he or she seeks relief on the record date as of the date fixed for the determination of shareholders entitled to notice of the Procter & Gamble special meeting;
	•	must not vote his or her shares of Procter & Gamble common stock, Series A ESOP Preferred Stock, or Series B ESOP Preferred Stock in favor of adoption of the merger agreement and the issuance of Procter & Gamble common stock in the merger; and
	•	must deliver to Procter & Gamble, not later than ten days after the Procter & Gamble special meeting, a written demand for payment of the fair cash value of the shares as to which he or she seeks relief. The written demand must state the name of the shareholder, his or her address, the number and class of shares as to which he or she seeks relief and the amount claimed as the fair value for those shares.

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	•	the dissenting shareholder has not complied with Section 1701.85, unless Procter & Gamble, by its board of directors, waives this failure (however, Procter and Gamble agreed pursuant to the terms of the merger agreement not to waive, without Gillette’s consent, any failure of a dissenting shareholder to comply with Section 1701.85);
	•	Procter & Gamble abandons or is finally enjoined or prevented from carrying out, or the shareholders of Procter & Gamble rescind their approval of, the merger agreement;
	•	the dissenting shareholder withdraws his or her written demand with the consent of Procter & Gamble, by its board of directors; or
	•	Procter & Gamble and the dissenting shareholder have not agreed upon the fair cash value per share of the Procter & Gamble common stock and neither has timely filed or joined in a petition in an appropriate court for a determination of the fair cash value of the shares.

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	•	Household Care includes the Fabric Care, Home Care, Snacks, Coffee and commercial services businesses. Fabric Care includes laundry detergents and fabric enhancers. Home Care includes dish care, surface care and air care.
	•	Health, Baby and Family Care includes the Health Care, Baby Care and Family Care businesses. Health Care includes oral care, personal health care, pharmaceuticals and pet health and nutrition. Baby Care includes diapers and baby wipes. Family Care includes bath tissue and kitchen towels.
	•	Beauty Care includes retail and professional hair care, skin care, feminine care, cosmetics, fine fragrances and personal cleansing.

	•	Blades and Razors — Gillette is the world leader in blades and razors. Gillette sells male shaving systems under such brands as M3Power, Mach3Turbo, Mach3, Sensor3, SensorExcel, Sensor, Atra, and Trac II, and disposable razors under the Sensor3, Custom Plus, and Good News brands. In February 2005, Gillette introduced the M3Power Nitro shaving system for men, which is scheduled to be available to consumers in North America in the spring 2005. Gillette’s female shaving systems are sold under the Gillette for Women Venus and Venus Devine, SensorExcel for Women, and Sensor for Women brands, and its disposable razors are sold under the Agility and Daisy brands. In December 2004, Gillette introduced the Venus Vibrance shaving system for women and Venus disposable razors, both of which are scheduled to be available to consumers in North America in the spring 2005. Gillette also introduced Venus Divine disposable razors in December 2004, scheduled to be available to consumers in select European markets in the spring 2005.
	•	Duracell — Gillette is the world leader in alkaline batteries for consumers. Its products include Duracell CopperTop and Duracell Ultra alkaline batteries and Duracell primary lithium, zinc air, and rechargeable nickel-metal hydride batteries.
	•	Oral Care — Gillette is the world leader in manual and power toothbrushes. In the second quarter of 2004, Gillette acquired the Rembrandt brand at-home and professional teeth-whitening products and Zooth, Inc., a leader in licensed manual and power toothbrushes for children. In February

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		2005, Gillette introduced Oral-B Pulsar, a pulsating adult manual toothbrush, which is scheduled to be available to consumers in North America in July 2005.
	•	Braun — Gillette sells electric shavers under the Braun brand and hair epilators under the Braun Silk-Epil brand. These products include the number one foil electric shaver for men and the number one hair epilator for women. Gillette also sells small household and personal diagnostic appliances under the Braun brand.
	•	Personal Care — Gillette sells shaving preparations, skin care products, and antiperspirants/deodorants under brands such as Gillette Complete Skincare, Gillette Series, Foamy, Satin Care, Right Guard, Soft & Dri, and Dry Idea.

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	•	reviewed certain publicly available business and financial information relating to Procter & Gamble and Gillette that Merrill Lynch deemed to be relevant;
	•	reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of Procter & Gamble and Gillette, including financial forecasts relating to Gillette prepared by the management of Gillette and Procter & Gamble, as well as the amount and timing of the cost savings and related expenses and synergies expected to result from the merger (the “Expected Synergies”) furnished to Merrill Lynch by Procter & Gamble;
	•	conducted discussions with members of senior management and representatives of Procter & Gamble and Gillette concerning the matters described in the first two bullets above, as well as their respective businesses and prospects before and after giving effect to the merger and the Expected Synergies;
	•	reviewed the market prices and valuation multiples for Procter & Gamble common stock and Gillette common stock and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant;
	•	reviewed the results of operations of Procter & Gamble and Gillette and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant;
	•	compared the proposed financial terms of the merger with the financial terms of other transactions that Merrill Lynch deemed to be relevant;
	•	participated in certain discussions and negotiations among representatives of Procter & Gamble and Gillette and their financial and legal advisors;
	•	reviewed the relative contributions of Procter & Gamble and Gillette to selected operational metrics of the combined company based on financial forecasts and estimates prepared by the management of Procter & Gamble;
	•	reviewed the potential pro forma impact of the merger, including the effects of Procter & Gamble’s share repurchase plans;
	•	reviewed a draft of the merger agreement dated January 26, 2005; and
	•	reviewed such other financial studies and analyses and took into account such other matters as Merrill Lynch deemed necessary, including Merrill Lynch’s assessment of general economic, market and monetary conditions.

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Target		Acquirer
Dreyer’s Grand Ice-Cream Inc.		Nestlé SA
Gatorade (implied in The Quaker Oats Company)		PepsiCo Inc.
Neutrogena Corporation		Johnson & Johnson
Nivea (implied in Beiersdorf AG)		Tchibo Holding AG

Target		Acquirer
Duracell		Gillette
Rayovac Corporation		T.H. Lee Partners L.P.

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Target		Acquirer
Helene Curtis Industries, Inc.		Unilever NV
Clairol		Procter & Gamble
Maybelline, Inc.		L’Oreal USA Inc.
Wella AG		Procter & Gamble
Tambrands, Inc.		Procter & Gamble
Kolynos Corporation		Colgate-Palmolive Company
The Dial Corporation		Henkel Group

Target		Acquirer
Remington Products Company LLC		Rayovac Corporation

Business Segment		Multiple Range
Blades and Razors		19.0x — 24.0x
Duracell		9.0x — 12.0x
Oral Care		13.0x — 15.0x
Personal Care		13.0x — 15.0x
Braun		8.0x — 10.0x

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		Perpetuity Growth
Segment		Rate Range
Blades & Razors			2.8% — 3.8%
Personal Care			1.5% — 2.5%
Duracell			(0.1%) — 0.9%
Oral Care			2.4% — 3.4%
Braun			0.5% — 1.5%
Fixed Cost Savings			2.5%
Variable Cost Savings			3.0%
Revenue Synergies			3.0% — 4.0%

		Equity Value
		Per Share
Standalone			$40.75 — $56.00
Standalone plus Expected Synergies resulting from cost savings			$50.25 — $65.50
Standalone plus total Expected Synergies			$55.75 — $70.75

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		Accretion/(Dilution)
		Fiscal Year Ending June 30,
		2006E		2007E		2008E
Earnings per share		$(0.25) — $(0.30)		$(0.10) — $0.05		$(0.05) — $0.15
Earnings per share excluding one-time charges		(0.21) — (0.26)		(0.09) — 0.06		(0.05) — 0.15
Earnings per share excluding one-time charges and new amortization		(0.16) — (0.21)		(0.03) — 0.12		0.00 — 0.20

	•	trading characteristics of Procter & Gamble and Gillette;
	•	historical market prices for Procter & Gamble common stock and Gillette common stock;
	•	financial, operating and stock market data of Procter & Gamble and Gillette, as compared to corresponding data of selected publicly traded companies in the consumer products industry, none of which was sufficiently similar to Procter & Gamble or Gillette to draw any conclusions with respect to such financial, operating and stock market data; and
	•	selected research analysts’ reports on Procter & Gamble and Gillette, including stock price targets of those analysts, discounted back to present value at an estimated cost of equity of 10%.

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	•	the merger agreement;
	•	certain publicly available business and financial information relating to Gillette and Procter & Gamble;
	•	certain financial estimates and forecasts relating to the business and financial prospects of Gillette prepared by certain research analysts that were publicly available;
	•	certain internal financial information and other data relating to the business and financial prospects of Gillette, including financial analyses and forecasts for Gillette prepared by its management (the “Gillette Forecasts”), and certain cost savings and operating synergies projected by the managements of Gillette and Procter & Gamble to result from the merger (collectively, the “Synergies”), in each case provided to Goldman Sachs by the management of Gillette and not publicly available;
	•	certain financial information and other data relating to the business of Procter & Gamble provided to Goldman Sachs by the managements of Gillette and Procter & Gamble, which were not publicly available, which information did not include forecasts for Procter & Gamble; and
	•	certain financial estimates and forecasts relating to the business and financial prospects of Procter & Gamble prepared by certain research analysts that were publicly available, as adjusted and provided to Goldman Sachs and UBS by the management of Gillette following their discussions with the management of Procter & Gamble as to public guidance expected to be given by Procter & Gamble contemporaneously with the announcement of the merger (the “Procter & Gamble Adjusted Street Forecasts”).

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	•	Gillette’s financial advisor in connection with the acquisition of certain assets of Den-Mat Corporation in April 2004;
	•	sole manager with respect to a public offering of Gillette’s 4.125% Senior Notes due 2007 (aggregate principal amount $250,000,000) in August 2002; and
	•	joint lead manager with respect to a secondary public offering of 40,895,000 shares of Gillette common stock in July 2001.

	•	financial advisor in connection with the sale of Sunny Delight in August 2004;
	•	lead manager with respect to a public offering of Procter & Gamble’s 4.95% Senior Notes due 2014 and 5.8% Senior Notes due 2034 (aggregate principal amount $1,500,000,000) in August 2004;
	•	joint lead manager with respect to a public offering of Procter & Gamble’s Senior Floating Rate Notes Series A (aggregate principal amount $1,500,000,000) in August 2004;
	•	lead manager with respect to a public offering of Procter & Gamble’s 5.5% Notes due 2034 (aggregate principal amount $500,000,000) in January 2004;
	•	co-lead manager with respect to a public offering of Procter & Gamble’s 4.85% Notes due 2015 (aggregate principal amount $150,000,000) in December 2003;
	•	lead manager with respect to a public offering of Procter & Gamble’s 3.5% Notes due 2008 and 4.85% Notes due 2015 (aggregate principal amount $1,200,000,000) in November 2003;
	•	joint-lead manager with respect to a public offering of Procter & Gamble’s 4.3% Notes due 2008 (aggregate principal amount $500,000,000) in July 2002;
	•	agent in Procter & Gamble’s share repurchase program;
	•	agent in Procter & Gamble’s medium term note program; and
	•	dealer in Procter & Gamble’s commercial paper program.

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	•	reviewed the merger agreement;
	•	reviewed certain publicly available business and financial information relating to Gillette and Procter & Gamble;
	•	reviewed certain financial estimates and forecasts relating to the business and financial prospects of Gillette prepared by certain research analysts that were publicly available;
	•	reviewed certain internal financial information and other data relating to the business and financial prospects of Gillette, including the Gillette Forecasts, and the Synergies, in each case provided to UBS by the management of Gillette and not publicly available;
	•	reviewed certain financial information and other data relating to the business of Procter & Gamble provided to UBS by the managements of Gillette and Procter & Gamble, which were not publicly available, which information did not include forecasts for Procter & Gamble;
	•	reviewed the Procter & Gamble Adjusted Street Forecasts;
	•	reviewed the reported price and trading activity for the Gillette common stock and the Procter & Gamble common stock;
	•	compared certain publicly available financial and stock market information for Gillette and Procter & Gamble with similar financial and stock market information with respect to certain other companies in lines of business UBS believed to be generally comparable to those of Gillette and Procter & Gamble;
	•	compared the financial terms of the merger with certain other transactions which UBS believed to be generally relevant;
	•	considered certain pro forma effects of the merger on Procter & Gamble’s financial statements;

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	•	conducted discussions with members of the senior management of Gillette and Procter & Gamble concerning their assessment of the strategic rationale for, and the potential benefits of, the merger and the past and current business operations, financial condition and future prospects of Gillette and Procter & Gamble (including as a result of the significant stock buyback being announced by Procter & Gamble contemporaneously with the merger); and
	•	conducted such other financial studies, analyses, and investigations and considered such other information as UBS deemed necessary or appropriate.

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	•	consideration in the form of 100% Procter & Gamble common stock;
	•	the fixed exchange ratio of 0.975 (Procter & Gamble share per Gillette share);
	•	the implied offer value of $54.05 per share (based on the closing price of Procter & Gamble’s common stock of $55.44 on January 26, 2005), representing equity value of $55 billion and enterprise value of $57 billion;
	•	a premium of 20.1% (based on the closing price of Gillette’s common stock of $45.00 on January 26, 2005);
	•	pro forma ownership, based on fully diluted shares per treasury method, by current Procter & Gamble stockholders and current Gillette stockholders of 73.8% and 26.8%, respectively, of the combined company; and
	•	a pro forma dividend of $0.975 per share (an increase of 50% over the current dividend of $0.65 per share).

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		Gillette at
January 26, 2005		offer price:
EV/ CY2004E Sales(1)			5.5x
EV/ CY2004E EBITDA(1)			18.8
CY2005E P/ E(1)			28.5
CY2006E P/ E(1)			25.6
Premium to(2):
1 day (based on Gillette closing price of $45.00 on 1/26/05)			20.1	%
3 month average			22.3	%
6 month average			26.6	%
1 year average			30.2	%
52 week high			18.7	%
52 week low			45.9	%
3 year average			52.4	%

(1)	Estimates for Gillette at offer price per IBES, except for 2004E Sales, diluted shares and net debt, per Gillette’s management.
(2)	Averages based on trading days.

Current (Spot)		Average
January 26, 2005			0.812x
1 Week			0.801x
1 Month			0.800x
3 Months			0.805x
6 Months			0.780x
1 Year			0.770x
High			0.829x
Low			0.703x

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	•	Avon;
	•	Clorox;
	•	Colgate-Palmolive;
	•	Estee Lauder;
	•	Kimberly Clark;
	•	L’Oreal; and
	•	Reckitt Benckiser.

	•	the enterprise value, which is the market value of common equity plus the book value of debt plus the book value of minority interests less cash and investments and less investments in unconsolidated affiliates, as a multiple of estimated 2004 sales;

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	•	the enterprise value as a multiple of estimated 2004 and 2005 EBITDA;
	•	the ratio of the price per share to the estimated 2005 and 2006 EPS (earnings per share), or P/ E multiple; and
	•	the ratio of the estimated 2005 P/ E multiple to year-over-year earnings growth rate, or PEG.

Enterprise Value/CY:

CY

Sales

EBITDA

CY P/E

2005E

LT

Growth

2004E

2004E

2005E

2005E

2006E

PEG

Rate(1)

Selected Companies in the Consumer Products Industry

Median

2.6

x

12.0

x

11.0

x

19.5

x

17.3

x

2.0

x

9.4%

Mean

2.5

x

12.2

x

11.4

x

19.7

x

17.6

x

2.0

x

10.2%

Range

1.8x-3.0

x

10.1x-14.7

x

9.7x-13.0

x

16.8x-22.2

x

15.5x-20.2

x

1.6x-2.3

x

8.1%- 13.0%

Procter & Gamble

3.2

x

13.9

x

12.8

x

20.2

x

18.3

x

1.9

x

10.9%

Gillette at Jan. 26 2005 closing price

4.7

x

16.2

x

14.6

x

23.7

x

21.3

x

2.1

x

11.1%

Gillette at $54.05 (Gillette Street Case)

5.5

x

18.8

x

17.4

x

28.5

x

25.6

x

2.6

x

11.1%

Gillette at $54.05 (Gillette Mgmt. Upside Case)

5.5

x

18.8

x

16.2

x

26.2

x

22.9

x

2.1

x

12.6%

Note:	International companies converted at spot exchange rates of 1/26/05. International companies multiples adjusted for good will.

	(1)	Per IBES, except for Gillette Management Case, which is per Gillette management.

Date Announced		Acquirer		Target
Dec-2003		Henkel		Dial
Oct-2003		Tchibo		Beiersdorf
Mar-2003		Procter & Gamble		Wella
Jan-2003		Energizer		Schick-Wilkinson Sword (Pfizer)
Dec-2002		Cadbury Schweppes		Adams (Pfizer)
Nov-2001		Johnson Wax Professional		DiverseyLever (Unilever)
May 2001		Procter & Gamble		Clairol (Bristol Myers Squibb)
Jan-2001		Nestle S.A.		Ralston Purina
Dec-2000		Pepsi		Quaker Oats
Oct-2000		SmithKline Beecham		Block Drug
Jun-2000		Philip Morris		Nabisco
Jun-2000		Unilever		Bestfoods
Jul-1999		Reckitt & Colman		Benckiser
Oct-1998		Newell		Rubbermaid
Oct-1998		Clorox		First Brands
Oct-1997		S.C. Johnson & Son		DowBrands (Dow Chemical)
Apr-1997		Procter & Gamble		Tambrands

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	•	transaction value (enterprise value as if 100% of target was acquired);
	•	enterprise value as multiple of the LTM (last twelve months) sales and LTM EBITDA; and
	•	premium paid over the stock price one-week prior to announcement.

		Multiple of LTM:
		Sales		EBITDA		Premium to 1 Week Prior to Announcement
Median		2.5x		15.6x		19.3%
Mean		2.6x		15.6x		25.6%
Range		1.9x-4.1x		13.7x-17.6x		5.3%-65.5%
Gillette at $54.05		5.5x		18.8x		20.1%(1)

(1)	Relative to closing price on Wednesday January 19, 2005.

		Multiple of LTM:
		Sales		EBITDA		Premium to 1 Week Prior to Announcement
Median		2.2x		13.0x		19.3%
Mean		2.2x		13.2x		29.1%
Range		1.1x-4.1x		8.4x-17.6x		5.3%-92.6%
Gillette at $54.05		5.5x		18.8x		20.1%(1)

(1)	Relative to closing price on Wednesday January 19, 2005.

		Median Premium				Range of Premiums
		Paid One Week Pre-				Paid One Week Pre-
		Announcement in				Announcement in
		Selected Large Cap				Selected Large Cap
Year		Transactions				Transactions
2004			20.1	%			3.1%-31.5%
2003			21.3	%			17.6%-39.0%
2002			29.7	%			22.9%-36.6%
2001			28.0	%			10.2%-36.7%
2000			43.0	%			13.5%-74.7%

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			Procter &
			Gamble’s				Gillette’s
			Contribution to				Contribution to
			Combined				Combined
			Company				Company
Sales
	CY 2004E			83.6	%			16.4	%
	CY 2005E			83.8	%			16.2	%
EBITDA
	CY 2004E			80.0	%			20.0	%
	CY 2005E			79.1	%			20.9	%
EBIT
	CY 2004E			80.9	%			19.1	%
	CY 2005E			79.7	%			20.3	%
Net Income
	CY 2004E			80.3	%			19.7	%
	CY 2005E			78.9	%			21.1	%
	Net Income CY 2006E			78.4	%			21.6	%
	Net Income CY 2007			78.3	%			21.7	%
	Net Income CY 2008			78.3	%			21.7	%
At Market
	Equity Value			77.2	%			22.8	%
	Enterprise Value			77.9	%			22.1	%
At Offer
	Equity Value			73.8	%			26.2	%
	Enterprise Value			74.7	%			25.3	%

	•	June 2005 closing date;
	•	after-tax synergies of $1.05 billion phased in 30%, 75% and 100%;
	•	cash cost to achieve synergies of $0.9 billion over two years (net of tax);

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	•	approximately 8% of excess purchase price allocated to intangible assets and amortized over 17 years;
	•	approximately 2% of excess purchase price allocated to fixed assets and depreciated over 15 years;
	•	approximately $20 billion of shares repurchased by June 2006 (to resume normal course repurchase thereafter of approximately $5 billion per annum); and
	•	cost of debt based on spread over forward LIBOR curve (initial share repurchase financed with new debt).

		2006E				2007E				2008E				2009E
EPS Accretion/(Dilution)		$	(0.29	)		$	(0.07	)		$	0.02			$	0.02
EPS Accretion/(Dilution) %			(10.0	)%			(2.3	)%			0.7	%			0.5	%
Debt/ EBITDA			2.1	x			1.8	x			1.5	x			1.3x

(1)	Assumes June Fiscal Year

		2006E				2007E				2008E				2009E
EPS Accretion/(Dilution)		$	(0.25	)		$	(0.02	)		$	0.09			$	0.10
EPS Accretion/(Dilution) %			(8.7	)%			(0.7	)%			2.5	%			2.5	%
Debt/ EBITDA			2.0	x			1.7	x			1.5	x			1.2x

(1)	Assumes June Fiscal Year

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	•	all outstanding awards vest and become exercisable; and
	•	if an employee participant is terminated for any reason other than for cause or terminates his employment for good reason (as those terms are defined in the applicable plan), or a director’s service terminates during the two-year period following the change of control, the applicable exercise period for all options (including substituted or assumed awards) granted to that participant will be the greater of two years from the date of termination or the post-termination exercise period that would have otherwise applied to those options, but in no event will any option be exercisable more than ten years after the applicable grant date.

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	•	a payment equal to his prorated annual bonus for the year of the termination calculated based on the greater of his target annual bonus or his actual annual bonus for any of the prior three full fiscal years;
	•	a payment equal to three times the sum of his annual base salary and the greater of his target annual bonus or his actual annual bonus for any of the prior three full fiscal years;
	•	a payment equal to the actuarial equivalent of three years of additional service for purposes of determining the supplemental pension benefit to which he is entitled; and
	•	in the event he was subject to excise tax under Section 4999 of the Code on any payments made to him, a make whole payment for such tax liability.

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	•	the assignment to the executive officer of any duties inconsistent with the executive officer’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as they existed immediately prior to the change of control; and
	•	relocation of the executive officer to an office more than 35 miles from where the executive officer’s office was located immediately prior to the change of control.

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	•	each share of Gillette common stock issued and outstanding immediately prior to the effective time of the merger, together with the associated rights issued under the Gillette rights agreement, but excluding shares of Gillette common stock owned by Procter & Gamble, Gillette or any of their respective subsidiaries (other than those shares held by Gillette in a fiduciary or representative capacity), will be converted into 0.975 shares of Procter & Gamble common stock;
	•	each outstanding and unexercised option or right to purchase shares of Gillette common stock granted under the Gillette stock option plans will accelerate immediately prior to the effective time of the merger and option holders will have the opportunity to exercise and receive either (i) the merger consideration with respect to the shares issuable as a result of such exercise (the “Merger Shares”) or (ii) a cash payment equal to the product of (a) the excess (if any) of the per share value of the Merger Shares over the per share exercise price and (b) the number of shares with respect to which such options are exercised; and
	•	each Gillette stock option remaining outstanding at the effective time of the merger will be converted into an option to acquire on the same terms and conditions previously applicable, shares of Procter & Gamble common stock. The number of shares of Procter & Gamble common stock underlying the new Procter & Gamble option will equal the number of shares of Gillette common stock for which the corresponding Gillette option was exercisable, multiplied by 0.975 (rounded, if necessary, to the nearest whole share). The per share exercise price of each new Procter & Gamble option will equal the exercise price of the corresponding Gillette option divided by 0.975. Prior to the effective time, Gillette will amend its stock option plans to provide, and each option holder will enter into an agreement with Gillette agreeing to, the following: (i) each option holder will be bound by a non-compete agreement prohibiting such holder’s competing with any business conducted by Gillette immediately prior to the effective time or any business of Procter & Gamble

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		or its affiliates in which the holder was employed, and which otherwise parallels the terms and conditions of the non-compete agreement contained in Procter & Gamble’s stock option plan, and (ii) a termination of employment for “good reason” after the effective time will be treated for all purposes under Gillette’s stock option plans the same as “special separation” or “retirement” (in the case of a retirement-eligible holder) under Procter & Gamble’s stock option plan.

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	•	initiate, solicit, encourage or knowingly facilitate, including by way of furnishing information, any inquiries or the making of any proposal or offer with respect to a third party “acquisition proposal” of the type described below;
	•	have any discussion with or provide any confidential information or data to any person relating to an acquisition proposal;
	•	engage in negotiations concerning an acquisition proposal;
	•	knowingly facilitate any effort or attempt to make or implement an acquisition proposal; or
	•	subject to Gillette’s right to terminate the merger agreement under certain circumstances described in “— Termination of Merger Agreement” if Gillette receives a superior proposal of the type described below, accept an acquisition proposal.

	•	its meeting of shareholders to vote on the adoption of the merger agreement has not occurred;
	•	its board of directors concludes in good faith (i) after consultation with its independent financial advisor, that there is a reasonable likelihood that the acquisition proposal could result in a “superior proposal” of the type described below and (ii) after consultation with its outside legal counsel, that failure to take such action could be reasonably expected to result in a breach of its fiduciary duties;
	•	prior to providing any information or data to any person in connection with an acquisition proposal, the proposing party first signs a confidentiality agreement customary for such transactions; and
	•	Gillette notifies and keeps Procter & Gamble informed of the status and terms of the acquisition proposal and any discussions or negotiations relating to the acquisition proposal.

	•	a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Gillette;
	•	any purchase or sale of the consolidated assets of Gillette and its subsidiaries, taken as a whole, having an aggregate value equal to 10% or more of the market capitalization of Gillette; or
	•	any purchase or sale of, or tender offer or exchange offer for, 10% or more of the equity securities of Gillette.

	•	is made by a third party in respect of a transaction or series of related transactions that if consummated would result in such third party acquiring, directly or indirectly, all or substantially all of Gillette’s voting securities or all or substantially all of the assets of Gillette and its subsidiaries;

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	•	is not subject to any conditions to either party’s obligation to consummate the transaction (other than conditions that are in the aggregate as likely to result in the consummation of such transaction as the aggregate of the conditions contained in the merger agreement); and
	•	Gillette’s board of directors determines in its good faith judgment, after consulting with its financial advisor of nationally recognized reputation, is more favorable from a financial point of view to its shareholders than the merger with Procter & Gamble, taking into account any changes to the terms of the merger agreement offered by Procter & Gamble in response to the superior proposal or otherwise.

	•	following receipt of any acquisition proposal with respect to which its board of directors believes in good faith, after consultation with its independent financial advisor, there is a reasonable likelihood that such acquisition proposal could result in a superior proposal; or
	•	if a material adverse effect has occurred with respect to Procter & Gamble

	•	declaring or paying dividends in amounts inconsistent with past practice;
	•	amending their respective governing documents (other than, in the case of Procter & Gamble, amendments related to the composition or structure of its board of directors or committees thereof or other governance-related matters);
	•	making acquisitions of, or investments in, other entities beyond specified amounts; or
	•	changing their respective accounting methods (other than to comply with changes in accounting principles) or fiscal year.

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	•	making changes in its share capital, including among other things, stock splits, combinations or reclassifications, except for any transaction by a wholly owned subsidiary of Gillette which remains a wholly owned subsidiary after the completion of the transaction;
	•	repurchasing or redeeming its capital stock, except (i) for any transaction by a wholly owned subsidiary of Gillette which remains a wholly owned subsidiary after the completion of the transaction, (ii) in connection with agreed-upon Section 965 dividend plans, (iii) the redemption or exchange of rights in accordance with the Gillette rights agreement and (iv) in the ordinary course of business in connection with its benefit plans;
	•	issuing, delivering or selling any shares of its capital stock or other equity interests, other than, among others, in connection with Gillette’s benefit plans or in connection with the exercise of options or other stock awards or stock option agreements and other than issuances by a wholly owned subsidiary of Gillette of capital stock to the subsidiary’s parent or another wholly owned subsidiary of Gillette;
	•	other than certain permitted expenditures, (i) entering into or terminating a material agreement (except for licensing agreements entered into for the purpose of settling or avoiding an action or claim against Gillette), (ii) entering into any new line of business, (iii) entering into a capital expenditure that is not otherwise permitted or (iv) entering into any contract or arrangement for the sale of inventories or the furnishing of services by Gillette which may give rise to commitments extending beyond twelve months unless it can be terminated with less than 60 days’ notice and results in no material detriment;
	•	disposing of any brands or lines of business, except in connection with internal reorganizations, as previously disclosed in prior SEC reports or, as required by or in conformance with a law or regulation in order to permit or facilitate the transaction;
	•	making loans, advances, capital contributions or investments in any other entity pursuant to a legal obligation not existing on January 27, 2005, other than in the ordinary course and consistent with past practice, and other than loans, advances, capital contributions or investments by Gillette to its subsidiaries or from subsidiaries of Gillette to Gillette;
	•	increasing the compensation of or entering into any new agreements with any officers, directors or employees or issuing any additional stock options or adopting any additional benefit plans, other than in the ordinary course;
	•	making any material tax election, settling or compromising any material tax liability or changing its fiscal year, except with the written permission of Procter & Gamble;
	•	entering into any agreements containing restrictions that would limit or restrict Gillette or its subsidiaries, or after the effective time, Procter & Gamble, from competing or entering into any line of business or conducting business in any geographic area; and
	•	settling or compromising any material action, suit or claim without consultation with Procter & Gamble, and in the case of litigation arising after the date of the merger agreement, settling or compromising any material action, suit or claim without the consent of Procter & Gamble.

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(1)	Procter & Gamble selling, holding separate, licensing or disposing of assets, in response to the requirements imposed by antitrust authorities; and
(2)	Gillette, at the direction of Procter & Gamble, selling, holding separate, licensing or disposing of assets, in response to the requirements imposed by antitrust authorities.

	•	maintain a substantially comparable aggregate level of benefits and compensation (excluding equity-based awards) for employees of Gillette and its subsidiaries (other than those subject to collective bargaining agreements) until the second anniversary of the effective time of the merger;
	•	maintain retiree welfare benefits for existing retirees of Gillette and its subsidiaries and employees of Gillette and its subsidiaries who are vested in such benefits immediately prior to the effective time of the merger and who retire prior to the second anniversary thereof that are no less favorable in the aggregate to those provided to such persons prior to the effective time, but only to the extent that Procter & Gamble continues to maintain its own retiree welfare benefits; provided that Procter & Gamble may reduce or terminate such retiree welfare benefits to the extent it reduces or terminates retiree welfare benefits for similarly situated employees of Procter & Gamble;
	•	assume and honor all the terms of the benefit plans of Gillette and its subsidiaries and pay the benefits provided under such plans (and recognize that the consummation of the merger will constitute a “change in control” for purposes of such plans that have modifications to benefits in the event of a change in control); and
	•	provide credit for service with Gillette and its subsidiaries under Procter & Gamble plans in which employees of Gillette and its subsidiaries (other than employees subject to collective bargaining agreements whose service will be determined under such collective bargaining agreements) may participate to the same extent as their service was counted under similar Gillette plans, except where such credit would result in a duplication of benefit accrual.

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	•	corporate existence, qualification to conduct business and corporate standing and power;
	•	capital structure;
	•	corporate authority to enter into, and carry out the obligations under, the merger agreement and enforceability of the merger agreement;
	•	absence of a breach of the certificate of incorporation, bylaws, law or material agreements as a result of the merger;
	•	filings with the SEC and financial statements;
	•	information supplied for use in this joint proxy statement/ prospectus;
	•	board of directors approval;
	•	required shareholder vote;
	•	litigation;
	•	compliance with laws;
	•	absence of certain changes or events;
	•	payment of fees to finders or brokers in connection with the merger agreement;
	•	opinions of financial advisors;
	•	tax matters;
	•	employee benefit plans; and
	•	material contracts.

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	•	the adoption of the merger agreement by the Gillette shareholders, and the adoption of the merger agreement and approval of the issuance of Procter & Gamble common stock by the Procter & Gamble shareholders;
	•	the absence of any law, order or injunction prohibiting completion of the merger in the United States or European Union;
	•	the absence of any pending action or proceeding by any governmental authority of competent jurisdiction in the United States or European Union seeking to make the merger illegal or otherwise prohibiting consummation of the merger;
	•	Gillette’s rights agreement shall have been amended so that no event shall have occurred which would trigger a distribution;
	•	the expiration or termination of the applicable waiting periods under the HSR Act;
	•	the approval of the merger by the European Commission;
	•	the approval for listing by the New York Stock Exchange of the Procter & Gamble common stock to be issued in the merger, subject to official notice of issuance; and
	•	the SEC having declared effective the Procter & Gamble registration statement, of which this joint proxy statement/ prospectus forms a part.

	•	the representations and warranties of the other company contained in the merger agreement which are qualified as to material adverse effect, being true and correct as of the date of the agreement and as of the closing date of the merger, except to the extent that such representation or warranty speaks as of another date and except as such representations and warranties are affected by actions explicitly permitted by the merger agreement;
	•	the representations and warranties of the other company which are not qualified as to material adverse effect being true and correct except where the failure to be true and correct, individually or in the aggregate, would not have a material adverse effect on the other company, as of the date of the merger agreement and as of the closing date of the merger as if they were made on that date, except to the extent that such representation or warranty speaks as of another date;
	•	each party has performed or complied with all agreements or covenants required to be performed by it under the merger agreement which are qualified as to material adverse effect and each party has performed or complied in all material respects with all other material agreements or covenants required to be performed by it under the merger agreement, in each case, at or prior to the closing date;
	•	the receipt of an opinion of each company’s counsel to the effect that the merger will qualify as a “reorganization” under the Internal Revenue Code; and
	•	the other party having not suffered from any change that would reasonably be expected to have a material adverse effect on such party.

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	•	Gillette’s rights plan having been amended so that no event occurs which would trigger a distribution under Gillette’s rights agreement;
	•	the receipt of all other governmental and regulatory consents, approvals and authorizations necessary for the merger unless not obtaining those consents or approvals would not reasonably be expected to have a material adverse effect on the combined company, taken as a whole; and
	•	holders of not more than 5% of the outstanding common stock of Procter & Gamble having exercised their dissenters’ rights under the Ohio General Corporation Law.

	•	by mutual written consent.
	•	by either company:

	•	if the merger has not been completed by November 30, 2005 or, if the conditions to closing relating to antitrust or other governmental approvals of the merger, have not been satisfied, but all other conditions to closing are satisfied or are capable of being satisfied, this date is automatically extended to February 28, 2006; except that a party may not terminate the merger agreement if the cause of the merger not being completed is that party’s failure to fulfill its obligations under the merger agreement;
	•	if a governmental authority or a court in the United States or European Union permanently orders or prohibits the completion of the merger or a governmental authority in the United States or European Union fails to grant any necessary approval of the merger and such decisions have become final and non-appealable, except that a party may not terminate the merger agreement if the cause of the prohibition or failure to obtain approval is a result of that party’s failure to fulfill its obligations under the provision of the merger agreement which, among other requirements, requires each party to use its commercially reasonable efforts to obtain government approvals for the completion of the merger and requires each party to divest certain assets in response to requirements imposed by antitrust authorities; or
	•	if Procter & Gamble’s shareholders fail to adopt the merger agreement and approve the issuance of Procter & Gamble common stock in the merger or Gillette’s shareholders fail to adopt the merger agreement.

	•	by Procter & Gamble:

	•	if Gillette’s board of directors either changes its recommendation in a manner adverse to Procter & Gamble, or fails to call the Gillette special meeting to vote on the merger in the manner contemplated by the merger agreement; or
	•	if Gillette has breached in any material respect any of its representations or warranties, or has failed to perform in any material respect any of its covenants or obligations under the merger agreement and such breach:

	•	would result in the failure of certain closing conditions to the merger being satisfied; and
	•	is incapable of being cured or remains uncured at November 30, 2005 (or February 28, 2006, if the termination date is automatically extended).

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	•	by Gillette:

	•	if Procter & Gamble’s board of directors changes its recommendation in a manner adverse to Gillette or fails to call the Procter & Gamble special meeting to vote on the merger in the manner contemplated by the merger agreement;
	•	if Procter & Gamble has breached in any material respect any of its representations or warranties, or has failed to perform in any material respect any of its covenants or obligations under the merger agreement and such breach:

	•	would result in the failure of certain closing conditions to the merger being satisfied; and
	•	is incapable of being cured or remains uncured at November 30, 2005 (or February 28, 2006, if the termination date is automatically extended); or

	•	if Gillette’s board of directors authorizes Gillette to enter into a written agreement concerning a transaction that Gillette’s board of directors has determined in accordance with the merger agreement is a superior proposal, except that Gillette cannot terminate the merger agreement for this reason unless (1) Gillette provides Procter & Gamble with notice of the existence and terms of the superior proposal, including the identity of the person making the superior proposal and a statement as to whether Gillette intends to enter into a definitive agreement for a business combination, (2) Procter & Gamble, within four business days of receiving such notice from Gillette, does not make an offer that the board of directors of Gillette determines is at least as favorable to the Gillette shareholders as the superior proposal Gillette received from the third party and (3) Gillette pays Procter & Gamble the fee described in “Termination Fee Payable by Gillette” at or prior to such termination.

	•	the merger agreement is (1) terminated by Procter & Gamble because the board of directors of Gillette withdraws or changes its recommendation in a manner adverse to Procter & Gamble or for any reason Gillette fails to call its shareholders’ meeting as contemplated by the merger agreement (but only if, on or before the date the agreement is terminated, there was an offer or proposal for, or announcement with respect to, a “business combination” involving Gillette) and (2) within twelve months of the termination, Gillette enters into a definitive agreement or completes a transaction with respect to a business combination with a third party;
	•	the merger agreement is (1) terminated by Procter & Gamble or Gillette because Gillette’s shareholders failed to adopt the merger agreement (but only if, prior to the date of the Gillette special meeting there was an offer or proposal for, or any public announcement with respect to, a business combination involving Gillette) and (2) within twelve months of the termination, Gillette enters into a definitive agreement or completes a transaction with respect to a business combination with a third party; or
	•	the merger agreement is (1) terminated by Procter & Gamble or Gillette because the merger has not been completed by November 30, 2005 (or February 28, 2006, if the termination date is automatically extended), and at the time of termination Gillette has not yet obtained its shareholder approval and there has been an offer or proposal for, or announcement with respect to, a business combination involving Gillette and (2) within twelve months of the termination, Gillette enters into a definitive agreement or completes a transaction with respect to a business combination with a third party.

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	(1)	a merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving Gillette as a result of which either:

	•	Gillette’s shareholders prior to the transaction in the aggregate cease to own at least 50% of the voting securities of the entity surviving or resulting from the transaction;
	•	Any person beneficially owns at least 35% of the voting securities of the ultimate parent entity of the entity surviving or resulting from the transaction; or
	•	The individuals comprising the board of directors of Gillette prior to the transaction do not constitute a majority of the board of directors of the ultimate parent entity of the entity surviving or resulting from the transaction;

	(2)	a sale, lease, exchange, transfer or other disposition of at least 50% of the assets of Gillette; or
	(3)	the acquisition by a person of beneficial ownership of 35% or more of the common stock of Gillette (other than as described in (1) above).

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	•	accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements;
	•	separate unaudited historical financial statements of Procter & Gamble as of and for the three- and six-month periods ended December 31, 2004, included in the Procter & Gamble quarterly report on Form 10-Q for the three months ended December 31, 2004, as conformed to present the reclassification of certain investments from cash and cash equivalents to investment securities as contained in the Procter & Gamble Form 8-K filed March 14, 2005, which is incorporated by reference into this document;
	•	separate historical financial statements of Procter & Gamble as of and for the fiscal year ended June 30, 2004, included in the Procter & Gamble annual report on Form 10-K for the fiscal year ended June 30, 2004, as conformed to organizational and segment measurement changes contained in the Procter & Gamble Form 8-K filed October 22, 2004, and as conformed to present the reclassification of certain investments from cash and cash equivalents to investment securities as contained in the Procter & Gamble Form 8-K filed March 14, 2005, which is incorporated by reference into this document; and
	•	separate historical financial statements of Gillette as of and for the year ended December 31, 2004, included in the Gillette annual report on Form 10-K for the year ended December 31, 2004, which is incorporated by reference into this document.

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		Procter &								Pro Forma				Pro Forma
		Gamble(a)				Gillette(b)				Adjustments				Combined(b)
Net Sales		$	51,407			$	9,705							$	61,112
Cost of products sold			25,076				4,010				23	(c)			29,109
Selling, general and administrative expense			16,504				3,411				202	(d)			20,117
Operating Income			9,827				2,284				(225	)			11,886
Interest expense, net			629				35								664
Other non-operating income (expense), net			152				(13	)							139
Earnings Before Income Taxes			9,350				2,236				(225	)			11,361
Income taxes			2,869				660				(69	)(e)			3,460
NET EARNINGS		$	6,481			$	1,576			$	(156	)		$	7,901
BASIC NET EARNINGS PER COMMON SHARE		$	2.46											$	2.19
DILUTED NET EARNINGS PER COMMON SHARE		$	2.32											$	2.09
DIVIDENDS PER COMMON SHARE		$	0.93											$	0.93
Weighted Average Shares Outstanding (millions):
Basic			2,580								965	(f)			3,545
Diluted			2,790								988	(f)			3,778

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		Procter &								Pro Forma				Pro Forma
		Gamble				Gillette(b)				Adjustments				Combined(b)
Net Sales		$	28,196			$	5,799							$	33,995
Cost of products sold			13,482				2,418				11	(g)			15,911
Selling, general and administrative expense			8,774				2,082				101	(h)			10,957
Operating Income			5,940				1,299				(112	)			7,127
Interest expense, net			381				19								400
Other non-operating income (expense), net			237				(27	)							210
Earnings Before Income Taxes			5,796				1,253				(112	)			6,937
Income taxes			1,756				363				(34	)(e)			2,085
NET EARNINGS		$	4,040			$	890			$	(78	)		$	4,852
BASIC NET EARNINGS PER COMMON SHARE		$	1.57											$	1.37
DILUTED NET EARNINGS PER COMMON SHARE		$	1.47											$	1.30
DIVIDENDS PER COMMON SHARE		$	0.50											$	0.50
Weighted Average Shares Outstanding (millions):
Basic			2,535								965	(f)			3,500
Diluted			2,749								988	(f)			3,737

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(a)	On September 2, 2003, Procter & Gamble acquired a controlling interest in Wella AG (Wella). Procter & Gamble’s operating results include Wella after the acquisition date.
(b)	Certain reclassifications have been made to the historical presentation of Gillette to conform to the presentation used in the Unaudited Pro Forma Condensed Combined Balance Sheet and the Unaudited Pro Forma Condensed Combined Statements of Earnings.
(c)	Represents a $55 increase in depreciation expense resulting from the fair value adjustments to Gillette’s property, plant and equipment (see note (b2) to the Unaudited Pro Forma Condensed Combined Balance Sheet), partially offset by a $32 reduction in cost of sales attributable to the impact of the fair value adjustment to Gillette’s pension and other postretirement medical benefits obligations (see note (b6) to the Unaudited Pro Forma Condensed Combined Balance Sheet).
(d)	Represents an increase in intangible asset amortization expense of $250 resulting from the fair value adjustments to Gillette’s intangible assets (see note (b3) to the Unaudited Pro Forma Condensed Combined Balance Sheet), partially offset by a $48 reduction in selling, general and administrative costs attributable to fair value adjustments to Gillette’s pension and other postretirement medical benefits obligations (see note (b6) to the Unaudited Pro Forma Condensed Combined Balance Sheet).
	The unaudited pro forma condensed combined financial statements reflect a preliminary allocation to tangible assets, liabilities, goodwill and other intangible assets. The final purchase price allocation may result in a different allocation for tangible and intangible assets than that presented in these unaudited pro forma condensed combined financial statements.
(e)	Income tax impacts as a result of purchase accounting adjustments are estimated at the Procter & Gamble effective income tax rate for the periods presented, which reflects our best estimate of Procter & Gamble statutory income tax rates for all tax jurisdictions.
(f)	The pro forma combined per share amounts and weighted average common shares reflect the combined weighted average of Procter & Gamble common shares for each period presented and the Gillette common shares, adjusted to reflect the exchange ratio of 0.975 shares of Procter & Gamble common stock for each share of Gillette common stock.
(g)	Represents a $27 increase in depreciation expense resulting from the fair value adjustments to Gillette’s property, plant and equipment (see note (b2) to the Unaudited Pro Forma Condensed Combined Balance Sheet), partially offset by a $16 reduction in cost of sales attributable to the impact of the fair value adjustments to Gillette’s pension and other postretirement medical benefits obligations (see note (b6) to the Unaudited Pro Forma Condensed Combined Balance Sheet).
(h)	Represents an increase in intangible asset amortization expense of $125 resulting from the fair value adjustments to Gillette’s intangible assets (see note (b3) to the Unaudited Pro Forma Condensed Combined Balance Sheet), partially offset by a $24 reduction in selling, general and administrative costs attributable to fair value adjustments to Gillette’s pension and other postretirement medical benefits obligations (see note (b6) to the Unaudited Pro Forma Condensed Combined Balance Sheet).

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				Procter &								Pro Forma				Pro Forma
				Gamble(a)				Gillette(a)				Adjustments				Combined
ASSETS
Cash and cash equivalents				$	6,401			$	219							$	6,620
Investment securities					1,769				847								2,616
Accounts receivable					4,689				835								5,524
Total inventories					5,176				1,291				58	(b1)			6,525
Deferred income taxes					1,017				303								1,320
Prepaid expenses and other receivables					1,944				573								2,517
TOTAL CURRENT ASSETS					20,996				4,068				58				25,122
NET PROPERTY, PLANT AND EQUIPMENT					14,502				3,747				818	(b2)			19,067
NET GOODWILL AND OTHER INTANGIBLE ASSETS					25,306				1,609				54,239	(b3)			81,154
OTHER NON-CURRENT ASSETS					2,228				1,307								3,535
TOTAL ASSETS				$	63,032			$	10,731			$	55,115			$	128,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
	Accounts payable			$	3,264			$	698			$	150	(b4)		$	4,112
	Accrued and other liabilities				8,083				1,972								10,055
	Taxes payable				2,695				289								2,984
	Debt due within one year				9,861				1,244								11,105
TOTAL CURRENT LIABILITIES					23,903				4,203				150				28,256
LONG-TERM DEBT					13,385				2,142								15,527
DEFERRED INCOME TAXES					2,307				723				2,788	(b5)			5,818
OTHER NON-CURRENT LIABILITIES					3,553				827				1,447	(b6)			5,827
TOTAL LIABILITIES					43,148				7,895				4,385				55,428
SHAREHOLDERS’ EQUITY
		Preferred stock			1,505				—								1,505
		Common stock			2,523				990				(2	)(b7)			3,511
		Additional paid-in capital			2,779				1,521				51,057	(b7)			55,357
		Reserve for ESOP debt retirement			(1,271	)			—								(1,271	)
		Accumulated other comprehensive income			(366	)			(760	)			760	(b7)			(366	)
		Retained earnings			14,714				1,085				(1,085	) (b7)			14,714
TOTAL SHAREHOLDERS’ EQUITY					19,884				2,836				50,730	(b7)			73,450
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				$	63,032			$	10,731			$	55,115			$	128,878

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(a)	Certain reclassifications have been made to the historical presentation of Procter & Gamble and Gillette to conform to the presentation used in the Unaudited Pro Forma Condensed Combined Balance Sheet.
(b)	Gillette shareholders will receive 0.975 shares of Procter & Gamble common stock for each share of Gillette common stock. Each outstanding Gillette stock option will become fully-vested and exercisable immediately prior to the merger and will be exchanged for an equivalent number of shares. Shares of Procter & Gamble common stock to be issued to Gillette shareholders in the merger will represent approximately 28% of the outstanding Procter & Gamble common stock after the merger on a fully diluted basis.

				Common
				Shares				Capital in
				(stated value				Excess of
				$1.00 share)				Par Value				Total
(b7)		Issuance of Procter & Gamble shares to Gillette’s shareholders (988.3 million shares at $54.20)		$	988			$	52,578			$	53,566
(b4)		Estimated Procter & Gamble transaction costs											150
		Total consideration										$	53,716

Procter & Gamble has not completed an assessment of the fair value of assets and liabilities of Gillette and the related business integration plans. The table below represents a preliminary allocation of the total consideration to Gillette’s tangible and intangible assets and liabilities based on management’s preliminary estimate of their respective fair value as of the date of the business combination.

(b7)		Gillette’s historical net book value		$	2,836
(b3)		Elimination of Gillette’s historical goodwill			(1,052	)
(b1)		Adjustment to fair value inventory			58
(b2)		Adjustment to fair value property, plant and equipment			818
(b3)		Adjustment to fair value identifiable intangible assets			9,863
(b6)		Adjustment to fair value pension and post-retirement obligations			(1,447	)
(b5)		Deferred tax impact of purchase accounting adjustments			(2,788	)
(b3)		Residual goodwill created from the merger			45,428
		Total consideration allocated		$	53,716

	Upon completion of the fair value assessment after the closing of the merger, Procter & Gamble anticipates that the ultimate purchase price allocation may differ from the preliminary assessment outlined above. Any changes to the initial estimates of the fair value of the assets and liabilities will be allocated to residual goodwill.
	For purposes of the preliminary allocation, Procter & Gamble has estimated a fair value adjustment for Gillette’s property, plant and equipment equal to 20% of Gillette’s accumulated depreciation, based on valuation studies from other recent Procter & Gamble acquisitions. The fair value adjustment will be depreciated over an estimated weighted-average useful life of fifteen years.

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	Procter & Gamble has estimated the fair value of Gillette’s identifiable intangible assets as $10,420. The preliminary allocation included in these pro forma financial statements is as follows:

						Estimated
						average
		Increase				remaining
		in value				useful life
Asset class:
Brand Intangibles — indefinite lived		$	5,803				Indefinite
Brand Intangibles — definite lived			3,158				18 years
Technology and customer relationships			1,459				15 years
		$	10,420

	The majority of this intangible valuation relates to brand intangibles, including Gillette, Duracell, Oral B, Braun and others. Procter & Gamble’s preliminary assessment as to brand intangibles that have an indefinite life and those that have a definite life was based on a number of factors, including the competitive environment, market share, brand history, operating plan and the macroeconomic environment of the countries in which the brand is sold. For perspective, if Procter & Gamble determines that 50 percent of the amount allocated to indefinite lived intangible assets is more appropriately allocated to definite lived intangible assets with an estimated weighted average useful life of fifteen years, the annual income statement impact is estimated as $135 after-tax, or $0.04 per share.
	Procter & Gamble has estimated the fair value of Gillette’s pension and post-retirement obligation based on Gillette’s unrecognized actuarial losses as of December 31, 2004. The recognition of the fair value of Gillette’s pension and post-retirement obligation eliminates the unrecognized actuarial loss and related amortization expense over the estimated weighted-average remaining service life of eighteen years.
	Deferred income tax impacts as a result of purchase accounting adjustments are estimated at the Procter & Gamble effective income tax rate for the periods presented, which reflects our best estimate of Procter & Gamble statutory income tax rates for all tax jurisdiction.

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		Procter & Gamble Meeting		Gillette Meeting
Time and Place:		[    ], 2005 at [    ], local time, at the Procter & Gamble General Offices, Two Procter & Gamble Plaza, Cincinnati, OH 45202.		[    ], 2005 at [    ], local time, at [    ].
Admission to Meeting:		An admission ticket, which is required for entry into the Procter & Gamble special meeting, is included in the accompanying joint proxy statement/ prospectus. If you plan to attend the special meeting, please submit your proxy and present the admission ticket in order to gain admittance to the meeting. This ticket admits only the shareholder listed on the reverse side and is not transferable. If your shares are held in the name of a broker, trust, bank, or other nominee and you plan to attend the meeting, you should bring with you a proxy or letter from that broker, trust, bank or nominee that confirms that you are the beneficial owner of those shares.		Proof of ownership of Gillette common stock, as well as a form of personal identification, may be requested in order to be admitted to the special meeting If you are a shareholder of record, your name can be verified against Gillette’s shareholder list. If your shares are held in the name of a bank, broker, or other holder of record, proof of your ownership of Gillette stock, such as a bank or brokerage account statement, may be requested to be admitted to the special meeting. No cameras, recording equipment, or electronic devices will be permitted in the special meeting, and large bags, briefcases, or packages may be subject to inspection.
Purpose of Meeting is to Vote on the Following Items:		1. To adopt the merger agreement and approve the issuance of Procter & Gamble common stock in the merger, as described in “Chapter One — The Merger” on page   . 2. To transact such other business as may properly come before the meeting, and any adjournment or postponement thereof.		1. To adopt the merger agreement and approve the merger, as described in “Chapter One — The Merger” on page   . 2. To transact such other business as may properly come before the meeting, and any adjournment or postponement thereof.
Record Date:		The record date for Procter & Gamble shares entitled to vote is [         ], 2005.		The record date for Gillette shares entitled to vote is [         ], 2005.

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		Procter & Gamble Meeting		Gillette Meeting
Outstanding Shares Held:		As of [         ], 2005, the record date for the Procter & Gamble special meeting, there were approximately [    ] shares of Procter & Gamble common stock outstanding, [    ] shares of Procter & Gamble Series A ESOP Preferred Stock outstanding, and [    ] shares of Procter & Gamble Series B ESOP Preferred Stock outstanding.		As of [    ], the record date for the Gillette special meeting, there were approximately [    ] shares of Gillette common stock outstanding.
Shares Entitled to Vote:		Shares entitled to vote at the Procter & Gamble special meeting are Procter & Gamble common stock, Series A ESOP Preferred Stock and Series B ESOP Preferred Stock held as of the close of business on the record date, [         ], 2005, voting together as a single class. Each share of Procter & Gamble stock is entitled to one vote. Shares held by Procter & Gamble and its subsidiaries as treasury shares are not voted.		Shares entitled to vote at the Gillette special meeting are Gillette common stock held as of the close of business on the record date, [    ], 2005. Each share of Gillette common stock is entitled to one vote. Shares held by Gillette in its treasury are not voted.
Quorum Requirement:		A quorum of shareholders is necessary to hold a valid meeting. The presence in person or by proxy at the meeting of holders of a majority of the outstanding shares of Procter & Gamble stock entitled to vote at the meeting is a quorum. Abstentions and broker non-votes count as present for establishing a quorum. Shares held by Procter & Gamble and its subsidiaries as treasury shares do not count toward a quorum. A broker non-vote occurs on an item when a broker is not permitted to vote on that item without instruction from the beneficial owner of the shares and no instruction is given.		A quorum of shareholders is necessary to hold a valid meeting. The presence in person or by proxy at the meeting of holders of a majority of the votes represented by outstanding shares of Gillette common stock entitled to vote at the meeting is a quorum. Abstentions and broker non-votes count as present and entitled to vote for establishing a quorum. Shares held by Gillette in its treasury do not count toward a quorum. A broker non-vote occurs on an item when a broker is not permitted to vote on that item without instruction from the beneficial owner of the shares and no instruction is given.
Shares Beneficially Owned by Procter & Gamble and Gillette Directors and Executive Officers as of [    ], 2005.		Procter & Gamble directors and officers beneficially owned [    ] shares of Procter & Gamble common stock, Series A ESOP Preferred Stock, and Series B ESOP Preferred Stock on the record date, including exercisable options. These shares represent in total approximately [    ]% of the total voting power of Procter & Gamble’s voting securities.		Gillette directors and officers beneficially owned [    ] shares of Gillette common stock on the record date, including exercisable options. These shares represent in total approximately [    ]% of the total voting power of Gillette’s voting securities.

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Company		Vote Necessary
Procter & Gamble		Adoption of the merger agreement and approval of the issuance shares of Procter & Gamble common stock in the merger requires the affirmative vote of at least a majority of the outstanding shares of Procter & Gamble common stock, Series A ESOP Preferred Stock, and Series B ESOP Preferred Stock, voting together as a single class. Abstentions and broker non-votes have the same effect as a vote against the proposal.
Gillette		Adoption of the merger agreement and approval of the merger requires the affirmative vote of at least a majority of the outstanding shares of Gillette common stock. Abstentions and broker non-votes have the same effect as a vote against the proposal.

*

Under New York Stock Exchange rules, if your broker holds your shares in its name, your broker may not vote your shares on, in the case of Procter & Gamble, the proposal to adopt the merger agreement and approve the issuance of Procter & Gamble common stock in the merger, or, in the case of Gillette, the proposal to adopt the merger agreement and approve the merger absent instructions from you. Without your voting instructions on those items, a broker non-vote will occur.

		Procter & Gamble		Gillette
By Mail:		To submit your proxy by mail, simply mark your proxy, date and sign it, and if you are a shareholder of record, return it to ADP, in the postage-paid envelope provided. If the envelope is missing, please address your completed proxy card to The Procter & Gamble Company c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. If you are a beneficial owner, please refer to your proxy card or the information provided to you by your bank, broker, custodian or record holder.		To submit your proxy by mail, simply mark your proxy, date and sign it, and if you are a shareholder of record, return it to ADP, in the postage-paid envelope provided. If the envelope is missing, please address your completed proxy card to The Gillette Company c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. If you are a beneficial owner, please refer to your proxy card or the information provided to you by your bank, broker, custodian or record holder.

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		Procter & Gamble		Gillette
By Telephone:		If you are a shareholder of record, you can submit your proxy by telephone by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. on [  ]. Easy-to-follow voice prompts allow you to submit your proxy and confirm that your instructions have been properly recorded. If you are a beneficial owner, please refer to your proxy card or the information provided by your bank, broker, custodian or record holder for information on telephone voting. If you submit your proxy by telephone you do not need to return your proxy card. If you are located outside the United States, Canada and Puerto Rico, see your proxy card or other materials for additional instructions. If you hold shares through a broker or other custodian, please check the voting form used by that firm to see if it offers telephone voting.		If you are a shareholder of record, you can submit your proxy by telephone by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. on [ ]. Easy-to-follow voice prompts allow you to submit your proxy and confirm that your instructions have been properly recorded. If you are a beneficial owner, please refer to your proxy card or the information provided by your bank, broker, custodian or record holder for information on telephone voting. If you submit your proxy by telephone you do not need to return your proxy card. If you are located outside the United States, Canada and Puerto Rico, see your proxy card or other materials for additional instructions. If you hold shares through a broker or other custodian, please check the voting form used by that firm to see if it offers telephone voting.
By Internet:		You can also choose to submit your proxy on the Internet. If you are a shareholder of record, the web site for Internet voting is on your proxy card. Internet voting is available 24 hours a day, and will be accessible until 11:59 p.m. on [     ], 2005. If you are a beneficial owner, please refer to your proxy card or the information provided by your bank, broker, custodian or record holder for information on Internet voting. As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you submit your proxy on the Internet, you do not need to return your proxy card. If you hold shares through a broker or other custodian, please check the voting form to see if it offers Internet voting.		You can also choose to submit your proxy on the Internet. If you are a shareholder of record, the web site for Internet voting is on your proxy card. Internet voting is available 24 hours a day, and will be accessible until 11:59 p.m. on [ ], 2005. If you are a beneficial owner, please refer to your proxy card or the information provided by your bank, broker, custodian or record holder for information on Internet voting. As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you submit your proxy on the Internet, you do not need to return your proxy card. If you hold shares through a broker or other custodian, please check the voting form to see if it offers Internet voting.

Procter & Gamble		Gillette
•  “FOR” adoption of the merger agreement and the approval of the issuance of Procter & Gamble common stock in the merger		•  “FOR” adoption of the merger agreement and approval of the merger

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	•	timely delivery of a valid, later-dated proxy, including a proxy given by telephone or Internet;
	•	written notice to your company’s Secretary before the meeting that you have revoked your proxy; or
	•	voting by ballot at either the Procter & Gamble special meeting or Gillette special meeting.

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	•	10 business days following the date of any public announcement that a person (such person is referred to as an acquiring person), alone or together with a group of affiliated or associated persons, but excluding particular persons and entities, has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding Gillette common stock, or
	•	10 business days following the commencement of a tender offer or an exchange offer that would result in an acquiring person beneficially owning 15% or more of the outstanding Gillette common stock.

	•	Gillette is acquired in a merger or other business combination,
	•	Gillette acquires a person in a merger or other business combination where any or all of Gillette common stock is exchanged for the stock or other securities of any other person or cash or any other property, or
	•	Gillette or one or more of its subsidiaries sells or otherwise transfers 50% or more of the assets or earning power of Gillette and its subsidiaries, taken as a whole,

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	Chairman of the Governance & Nominating Committee
	The Procter & Gamble Company
	c/o Secretary
	One Procter & Gamble Plaza
	Cincinnati, OH 45202-3315

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Procter & Gamble SEC Filings
(File No. 001-00434)		Period
Annual Report on Form 10-K		Fiscal Year ended June 30, 2004 as conformed to organizational and segment measurement changes contained in the Procter & Gamble Form 8-K filed October 22, 2004, and as conformed to present the reclassification of certain investments from cash and cash equivalents to investment securities as contained in the Proctor & Gamble Form 8-K filed March 14, 2005
Quarterly Reports on Form 10-Q		Quarters ended September 30, 2004 and December 31, 2004
Current Reports on Form 8-K		Filed on July 14, 2004, August 2, 2004, September 1, 2004, September 9, 2004, October 13, 2004, October 22, 2004, October 27, 2004, December 8, 2004, December 15, 2004, January 11, 2005, January 28, 2005, January 28, 2005, and March 14, 2005
Proxy Statement on Schedule 14A		Filed on August 27, 2004

Gillette SEC Filings (File No. 001-00922)		Period
Annual Report on Form 10-K		Fiscal Year ended December 31, 2004
Current Reports on Form 8-K		Filed on January 28, 2005 and February 3, 2005
Proxy Statement on Schedule 14A		Filed on April 12, 2004

	The Procter & Gamble Company
	One Procter & Gamble Plaza
	Cincinnati, OH 45202-5572
	Attention: Shareholder Services
	(800) 764-7483
	The Gillette Company
	Prudential Tower Building, 48th Floor
	Boston, MA 02199
	Attention: Office of the Secretary
	(617) 421-7000

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				Page
ARTICLE 1 THE MERGER; CERTAIN RELATED MATTERS
Section 1.01		The Merger			A-1
Section 1.02		Closing			A-1
Section 1.03		Effective Time			A-1
Section 1.04		Effects of the Merger			A-2
Section 1.05		Certificate of Incorporation			A-2
Section 1.06		Bylaws			A-2
Section 1.07		Officers and Directors			A-2
Section 1.08		Effect on Capital Stock			A-2
Section 1.09		Company Stock Options and Other Equity-based Awards			A-2
Section 1.10		Certain Adjustments			A-4
ARTICLE 2 EXCHANGE OF SHARES
Section 2.01		Exchange Fund			A-4
Section 2.02		Exchange Procedures			A-4
Section 2.03		Distributions with Respect to Unexchanged Shares			A-5
Section 2.04		No Further Ownership Rights in Company Common Stock			A-5
Section 2.05		No Fractional Shares of Parent Common Stock			A-5
Section 2.06		Termination of Exchange Fund			A-5
Section 2.07		No Liability			A-5
Section 2.08		Investment of the Exchange Fund			A-6
Section 2.09		Lost Certificates			A-6
Section 2.10		Withholding Rights			A-6
Section 2.11		Further Assurances			A-6
Section 2.12		Stock Transfer Books			A-6
Section 2.13		Affiliates			A-6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
Section 3.01		Representations and Warranties of Parent			A-7
Section 3.02		Representations and Warranties of the Company			A-12
Section 3.03		Representations and Warranties of Parent and Merger Sub			A-20
ARTICLE 4 COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01		Covenants of Parent			A-20
Section 4.02		Covenants of the Company			A-21
Section 4.03		Governmental Filings			A-24
Section 4.04		Control of Other Party’s Business			A-24
ARTICLE 5 ADDITIONAL AGREEMENTS
Section 5.01		Preparation of Proxy Statement; Stockholders Meetings			A-24
Section 5.02		Access to Information/ Employees			A-26

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				Page
Section 5.03		Commercially Reasonable Efforts			A-27
Section 5.04		Acquisition Proposals			A-28
Section 5.05		Fees And Expenses			A-29
Section 5.06		Directors’ And Officers’ Indemnification And Insurance			A-29
Section 5.07		Public Announcements			A-30
Section 5.08		Accountant’s Letters			A-30
Section 5.09		Listing of Shares of Parent Common Stock			A-30
Section 5.10		Dividends			A-31
Section 5.11		Affiliates			A-31
Section 5.12		Section 16 Matters			A-32
Section 5.13		Tax Treatment			A-32
Section 5.14		Notification of Certain Matters			A-32
Section 5.15		Employee Matters			A-32
Section 5.16		Director Resignations			A-33
Section 5.17		Appraisal Rights			A-33
ARTICLE 6 CONDITIONS PRECEDENT
Section 6.01		Conditions to Each Party’s Obligation to Effect the Merger			A-34
Section 6.02		Additional Conditions to Obligations of Parent and Merger Sub			A-34
Section 6.03		Additional Conditions to Obligations of the Company			A-35
ARTICLE 7 TERMINATION AND AMENDMENT
Section 7.01		General			A-36
Section 7.02		Obligations in Event of Termination			A-37
Section 7.03		Amendment			A-38
Section 7.04		Extension; Waiver			A-38
ARTICLE 8 GENERAL PROVISIONS
Section 8.01		Non-Survival of Representations, Warranties and Agreements			A-38
Section 8.02		Notices			A-38
Section 8.03		Interpretation			A-39
Section 8.04		Counterparts			A-39
Section 8.05		Entire Agreement; No Third Party Beneficiaries			A-39
Section 8.06		Governing Law			A-40
Section 8.07		Severability			A-40
Section 8.08		Assignment			A-40
Section 8.09		Submission To Jurisdiction; Waivers			A-40
Section 8.10		Enforcement			A-40
Section 8.11		Definitions			A-40

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Exhibit				Title
	5	.11		Form of Affiliate Letter
	6	.02(c)(1)		Form of Tax Opinion of Cadwalader, Wickersham & Taft LLP
	6	.02(c)(2)		Form of Parent Tax Representations Letter to Cadwalader, Wickersham & Taft LLP
	6	.02(c)(3)		Form of Company Tax Representations Letter to Cadwalader, Wickersham & Taft LLP
	6	.03(c)(1)		Form of Tax Opinion of Davis Polk & Wardwell
	6	.03(c)(2)		Form of Parent Tax Representations Letter to Davis Polk & Wardwell
	6	.03(c)(3)		Form of Company Tax Representations Letter to Davis Polk & Wardwell

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	(i) Each of Parent and each of its Subsidiaries (as defined in Section 8.11) is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has the requisite corporate (or similar) power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failures to be so organized, existing or in good standing or to have such power and authority, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect (as defined in Section 8.11) on Parent, and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary except where the failures so to qualify or to be in good standing, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent. The copies of the amended articles of incorporation and regulations of Parent which were previously furnished or made available to the Company are true, complete and correct copies of such documents as in effect on the date of this Agreement.
	(ii) Exhibit 21 to Parent’s Annual Report on Form 10-K for the year ended June 30, 2004 includes all the Subsidiaries of Parent which as of the date thereof were Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC). All the outstanding shares of capital stock of, or other equity interests in, each such Significant Subsidiary have been validly issued and are fully paid and non-assessable and are, except as set forth in Exhibit 21, owned directly or indirectly by Parent, free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, “Liens”) (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests), except for restrictions imposed by applicable laws.

	(i) As of December 31, 2004, the authorized capital stock of Parent consisted of (A) 10,000,000,000 shares of Parent Common Stock of which 2,522,583,573 shares were outstanding and 453,866,904 shares were held in the treasury of Parent, (B) 600,000,000 shares of Class A Preferred Stock, without par value, of which (i) 89,248,669 shares have been designated Series A ESOP Convertible Class A Preferred Stock, all of which were outstanding, and (ii) 69,126,896 shares have been designated Series B ESOP Convertible Class A Preferred Stock, all of which were outstanding, and (C) 200,000,000 shares of Class B Preferred Stock, without par value, none of which are outstanding. All issued and outstanding shares of the capital stock of Parent are, and when shares of Parent Common Stock are issued in the Merger or upon exercise of stock options converted in the Merger pursuant to Section 1.09, such shares will be, duly authorized, validly issued, fully paid and non-assessable and free of any preemptive rights. There were outstanding as of December 31, 2004, no options, warrants or other rights to acquire capital stock from Parent other than options, restricted stock and other rights to acquire capital stock from Parent representing in the aggregate the right to purchase 270,623,943 shares of Parent Common Stock (collectively, the “Parent Stock Options”) under Parent’s 2001 Stock and Incentive Compensation Plan, Parent’s 1992 Stock Plan, Parent’s 1993 Non-Employee Directors’ Stock Plan, Parent’s Future Shares Plan and Parent’s 2003 Non-Employee Directors’ Stock Plan (collectively, the “Parent Stock Option Plans”).
	(ii) No bonds, debentures, notes or other indebtedness of Parent having the right to vote on any matters on which holders of capital stock of Parent may vote (“Parent Voting Debt”) are issued or outstanding.

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(iii) Except as disclosed in the Parent SEC Reports filed prior to the date hereof or as otherwise set forth in this Section 3.01(b) and as contemplated by Section 1.08 and Section 1.09, as of January 24, 2005, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Parent or any of its Significant Subsidiaries is a party or by which any of them is bound obligating Parent or any of its Significant Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of Parent or any of its Significant Subsidiaries or obligating Parent or any of its Significant Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. Except as disclosed in the Parent SEC Reports filed prior to the date hereof, as of the date of this Agreement, there are no outstanding obligations of Parent or any of its Significant Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Parent or any of its Significant Subsidiaries. Except as disclosed in the Parent SEC Reports filed prior to the date hereof, there are not outstanding any stock-appreciation rights, security-based performance units, “phantom” stock or other security rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance or other attribute of Parent or any of its Subsidiaries or assets or calculated in accordance therewith (other than payments or commissions to employees or agents of Parent or any of its Subsidiaries in the ordinary course of business consistent with past practices) or to cause Parent or any of its Subsidiaries to file a registration statement under the Securities Act or which otherwise relate to the registration of any securities of Parent or its Subsidiaries.

	(i) Parent has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, subject to obtaining the requisite stockholder approval (the “Parent Stockholder Approval”) of this Agreement and the issuance of the shares of Parent Common Stock to be issued in the Merger (the “Share Issuance”). The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent, subject to obtaining the Parent Stockholder Approval. This Agreement has been duly executed and delivered by Parent and constitutes a valid and binding agreement of Parent, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).
	(ii) The execution and delivery of this Agreement by Parent does not or will not, as the case may be, and the consummation by Parent of the Merger and the other transactions contemplated hereby will not, conflict with, or result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result by its terms in the, termination, material amendment, cancellation or acceleration of any material obligation or the loss of a material benefit under, or the creation of a lien, pledge, security interest, charge or other encumbrance on, or the loss of, any material assets (any such conflict, violation, default, right of termination, amendment, cancellation or acceleration, loss or creation, a “Violation”) pursuant to: (A) any provision of the amended articles of incorporation or regulations of Parent or except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent, any provision of the certificate of incorporation or bylaws of any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X of the SEC) of Parent, or (B) except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent, subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise,

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	license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent or any Subsidiary of Parent or their respective properties or assets.
	(iii) No consent, approval, order or authorization of, or registration, declaration or filing with, any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a “Governmental Entity”), is required by or with respect to Parent or any Subsidiary of Parent in connection with the execution and delivery of this Agreement by Parent or Merger Sub or the consummation of the Merger and the other transactions contemplated hereby, except for those required under or in relation to (A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (B) state securities or “blue sky” laws (the “Blue Sky Laws”), (C) the Securities Act, (D) the Exchange Act, (E) the DGCL with respect to the filing of the Certificate of Merger, (F) rules and regulations of the NYSE, (G) antitrust or other competition laws, of the European Union or other jurisdictions, and (H) such other consents, approvals, orders, authorizations, registrations, declarations and filings the failures of which to make or obtain, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent. Consents, approvals, orders, authorizations, registrations, declarations and filings required under or in relation to any of the foregoing clauses (A) through (G) are hereinafter referred to as “Specified Consents.”

	(i) Parent has filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents required to be filed by it with the SEC since June 30, 2003 (collectively, including all exhibits thereto, the “Parent SEC Reports”). No Subsidiary of Parent is required to file any form, report, registration statement, prospectus or other document with the SEC. None of the Parent SEC Reports, as of their respective dates (and, if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), contained or will contain any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the financial statements (including the related notes) included in the Parent SEC Reports presents fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of Parent and its consolidated Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with generally accepted accounting principles (“GAAP”) consistently applied during the periods involved except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to the absence of notes and normal year-end adjustments that have not been and are not expected to be material in amount. All of such Parent SEC Reports, as of their respective dates (and as of the date of any amendment to the respective Parent SEC Report), complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder.
	(ii) Except as disclosed in the Parent SEC Reports filed prior to the date hereof, since December 31, 2003, Parent and its Subsidiaries have not incurred any liabilities that are of a nature that would be required to be disclosed on a balance sheet of Parent and its Subsidiaries or the footnotes thereto prepared in conformity with GAAP, other than (A) liabilities incurred in the ordinary course of business and (B) liabilities that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent.

	(i) None of the information supplied or to be supplied by Parent for inclusion or incorporation by reference in (A) the Form S-4 (as defined in Section 5.01) will, at the time the Form S-4 is filed with the SEC, at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact

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	required to be stated therein or necessary to make the statements therein not misleading and (B) the Joint Proxy Statement/ Prospectus will, on the date it is first mailed to the Company stockholders or Parent stockholders or at the time of the Company Stockholders Meeting or the Parent Stockholders Meeting (each as defined in Section 5.01), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
	(ii) Notwithstanding the foregoing provisions of this Section 3.01(e), no representation or warranty is made by Parent with respect to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement/ Prospectus based on information supplied by the Company for inclusion or incorporation by reference therein.

	(i) Except as disclosed in the Parent SEC Reports filed prior to the date of this Agreement, there are no suits, actions, claims, arbitrations, proceedings or investigations (collectively “Actions”) pending or, to the knowledge of Parent, threatened, against or affecting Parent or any Subsidiary of Parent which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Parent, nor are there any judgments, decrees, injunctions, rules or orders of any Governmental Entity or arbitrator outstanding against Parent or any Subsidiary of Parent which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Parent.
	(ii) Except as disclosed in the Parent SEC Reports filed prior to the date of this Agreement and except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent, (A) Parent and its Subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities which are necessary for the operation of the businesses of Parent and its Subsidiaries, taken as a whole (the “Parent Permits”), and (B) no Parent Permit is subject to any pending revocation or forfeiture. Parent and its Subsidiaries are in compliance with the terms of the Parent Permits, except where the failures to so comply, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent. Except as disclosed in the Parent SEC Reports filed prior to the date of this Agreement, neither Parent nor any of its Subsidiaries is in violation of, and Parent and its Subsidiaries have not received any notices of violations with respect to, any laws, ordinances or regulations of any Governmental Entity, except for violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Parent.

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	(i) Parent and each of its Subsidiaries has timely filed, or has caused to be timely filed, all Tax Returns required to be filed, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns would not, individually or in the aggregate, have a Material Adverse Effect on Parent. All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on Parent.
	(ii) The most recent financial statements contained in Parent SEC Reports reflect an adequate reserve for all Taxes payable by Parent and its Subsidiaries for all Taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any Taxes has been proposed, asserted or assessed against Parent or any of its Subsidiaries, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on Parent.
	(iii) The Federal income Tax Returns of Parent and each of its Subsidiaries consolidated in such Returns have been examined by and settled with the United States Internal Revenue Service for all years through 1998. All material assessments for Taxes due with respect to such completed and settled examinations or any concluded litigation have been fully paid.
	(iv) There are no material Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of Parent or any of its Subsidiaries.
	(v) Neither Parent nor any of its Subsidiaries has been a party to any distribution occurring during the previous three (3) years in which the parties to such distribution treated the distribution as one to which Section 355 applied.
	(vi) For purposes of this Agreement:

	(A) “Taxes” includes all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, foreign, Federal or other Governmental Entity, including all interest, penalties and additions imposed with respect to such amounts.

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	(B) “Tax Return” means all Federal, state, local, provincial and foreign Tax returns, declarations, statements, reports, schedules, forms and information returns and any amended Tax return relating to Taxes.

	(i) Each of the Company and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has the requisite corporate (or similar) power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failures to be so organized, existing or in good standing or to have such power and authority, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company, and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary except where the failures so to qualify or to be in good standing, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company. The copies of the certificate of incorporation and bylaws of the Company which were previously furnished or made available to Parent are true, complete and correct copies of such documents as in effect on the date of this Agreement.
	(ii) Exhibit 21 to the Company’s Annual Report on Form 10K for the year ended December 31, 2003 includes all the Subsidiaries of the Company which as of the date thereof were Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC). All the outstanding shares of capital stock of, or other equity interests in, each such Significant Subsidiary have been validly issued and are fully paid and non-assessable and are, except as set forth in Exhibit 21, owned directly or indirectly by the Company, free and clear of all Liens (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests), except for restrictions imposed by applicable laws.

(i) As of December 31, 2004, the authorized capital stock of the Company consisted of (A) 2,325,000,000 shares of Company Common Stock, of which 989,820,024 shares were outstanding and 391,859,869 shares were held in the treasury of the Company and (B) 5,000,000 shares of Preferred Stock, no par value, of which 400,000 shares of which have been designated Series A Junior Participating Preferred Stock and reserved for issuance upon exercise of the rights (the “Company Rights”) distributed to the holders of Company Common Stock pursuant to the Renewed Rights Agreement, dated as of December 14, 1995, between the Company and The Bank of New York (as amended, the “Company Rights Agreement”). All issued and outstanding shares of the capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, and no class of capital stock is entitled to preemptive rights. There were outstanding as of December 31, 2004, no options, warrants or other rights to acquire capital stock from the Company other than (x) Company Rights and (y) options and other rights to acquire capital stock of the Company representing in the aggregate the right to purchase 84,040,668 shares of Company Common Stock (collectively, the “Company Stock Options”) under the Company’s 1971 Stock Option Plan, as amended, the Company’s 2004 Long-Term Incentive Plan and the James M. Kilts Non-Statutory Stock Option Plan (collectively, the “Company Stock Option Plans”). Section 3.02(b) of the Company Disclosure

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	Schedule sets forth a complete and correct list, as of January 24, 2005, of the number of shares of Company Common Stock subject to Company Stock Options or other rights to purchase or receive Company Common Stock granted under the Company Benefit Plans or otherwise, the dates of grant and the exercise prices thereof.
	(ii) No bonds, debentures, notes or other indebtedness of the Company having the right to vote on any matters on which stockholders may vote (“Company Voting Debt”) are issued or outstanding.
	(iii) Except as disclosed in the Company SEC Reports filed prior to the date hereof or as otherwise set forth in this Section 3.02(b), as of January 24, 2005, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its Significant Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Significant Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or any of its Significant Subsidiaries or obligating the Company or any of its Significant Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. Except as disclosed in the Company SEC Reports filed prior to the date hereof, as of the date of this Agreement, there are no outstanding obligations of the Company or any of its Significant Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Significant Subsidiaries. Except as disclosed in the Company SEC Reports filed prior to the date hereof, there are no outstanding stock-appreciation rights, security-based performance units, “phantom” stock or other security rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance or other attribute of the Company or any of its Subsidiaries or assets or calculated in accordance therewith (other than payments or commissions to employees or agents of the Company or any of its Subsidiaries in the ordinary course of business consistent with past practices) or to cause the Company or any of its Subsidiaries to file a registration statement under the Securities Act or which otherwise relate to the registration of any securities of the Company or its Subsidiaries.

	(i) The Company has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, subject in the case of the consummation of the Merger to the adoption of this Agreement by the Company Stockholder Approval (as defined in Section 3.02(g)). The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, subject in the case of the consummation of the Merger to the adoption of this Agreement by the Company Stockholder Approval. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).
	(ii) The execution and delivery of this Agreement by the Company does not or will not, as the case may be, and the consummation by the Company of the Merger and the other transactions contemplated hereby will not, conflict with, or result in a Violation pursuant to: (A) any provision of the certificate of incorporation or bylaws of the Company or except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company, any provision of the certificate of incorporation or bylaws of any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X of the SEC) of the Company or (B) except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company or, subject to obtaining or making the consents, approvals, orders, authorizations, registrations,

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	declarations and filings referred to in paragraph (iii) below, any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any Subsidiary of the Company or their respective properties or assets.
	(iii) No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to the Company or any Subsidiary of the Company in connection with the execution and delivery of this Agreement by the Company or the consummation of the Merger and the other transactions contemplated hereby, except the Specified Consents and such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company.

	(i) The Company has filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents required to be filed by it with the SEC since January 1, 2003 (collectively, including all exhibits thereto, the “Company SEC Reports”). No Subsidiary of the Company is required to file any form, report, registration statement or prospectus or other document with the SEC. None of the Company SEC Reports, as of their respective dates (and, if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), contained or will contain any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the financial statements (including the related notes) included in the Company SEC Reports presents fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with GAAP consistently applied during the periods involved except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to the absence of notes and normal year-end adjustments that have not been and are not expected to be material in amount. All of such Company SEC Reports, as of their respective dates (and as of the date of any amendment to the respective Company SEC Report), complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder.
	(ii) Except as disclosed in the Company SEC Reports filed prior to the date hereof, since December 31, 2003, the Company and its Subsidiaries have not incurred any liabilities that are of a nature that would be required to be disclosed on a balance sheet of the Company and its Subsidiaries or the footnotes thereto prepared in conformity with GAAP, other than (A) liabilities incurred in the ordinary course of business and (B) liabilities that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company.
	(iii) Since the enactment of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Company has been and is in compliance in all material respects with (A) the applicable provisions of the Sarbanes-Oxley Act and (B) the applicable listing and corporate governance rules and regulations of the NYSE. Section 3.01(d)(iii) of the Company Disclosure Letter sets forth, as of the date hereof, a schedule of all officers and directors of the Company who may have outstanding loans from the Company, and there has been no default on, or forgiveness or waiver of, in whole or in part, any such loan during the two years immediately preceding the date hereof.
	(iv) The Company has designed disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities.
	(v) The Company has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s auditors and the audit committee of the Company’s Board of Directors (A) any

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	significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
	(vi) As of the date hereof, the Company has not identified any material control deficiencies other than as disclosed in Section 3.01(d)(vi) of the Company Disclosure Letter. To the knowledge of the Company, there is no reason to believe that its auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.

	(i) None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (A) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) the Joint Proxy Statement/ Prospectus will, on the date it is first mailed to the Company stockholders or Parent stockholders or at the time of the Company Stockholders Meeting or the Parent Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
	(ii) Notwithstanding the foregoing provisions of this Section 3.02(e), no representation or warranty is made by the Company with respect to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement/ Prospectus based on information supplied by Parent or Merger Sub for inclusion or incorporation by reference therein.

	(i) Except as disclosed in the Company SEC Reports filed prior to the date of this Agreement, there are no Actions pending or, to the knowledge of the Company, threatened, against or affecting the Company or any Subsidiary of the Company which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on the Company, nor are there any judgments, decrees, injunctions, rules or orders of any Governmental Entity or arbitrator outstanding against the Company or any Subsidiary of the Company which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on the Company.
	(ii) Except as disclosed in the Company SEC Reports filed prior to the date of the Agreement and except as would, individually or in the aggregate, not reasonably be expected to have a Material Adverse Effect on the Company, (A) the Company and its Subsidiaries hold all permits, licenses,

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variances, exemptions, orders and approvals of all Governmental Entities which are necessary for the operation of the businesses of the Company and its Subsidiaries, taken as a whole (the “Company Permits”), and (B) no Company Permit is subject to any pending revocation or forfeiture. The Company and its Subsidiaries are in compliance with the terms of the Company Permits, except where the failures to so comply, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company. Except as disclosed in the Company SEC Reports filed prior to the date of this Agreement, neither the Company nor its Subsidiaries is in violation of, and the Company and its Subsidiaries have not received any notices of violations with respect to, any laws, ordinances or regulations of any Governmental Entity, except for violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company.

	(i) Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company and except as disclosed in the Company SEC Reports filed prior to the date of this Agreement, (i) the operations of the Company and its Subsidiaries are in compliance with all Environmental Laws and with all licenses required by Environmental Laws, (ii) there are no pending or, to the knowledge of the Company, threatened, Environmental Claims under or pursuant to Environmental Laws against the Company or its Subsidiaries, (iii) to the knowledge of the Company, the Company and its Subsidiaries have not incurred any Environmental Liabilities and no facts, circumstances or conditions attributable to any real property currently or previously owned, operated or leased, or to which Hazardous Materials were sent, by the Company or its Subsidiaries or any predecessors thereof, or operations thereon would reasonably be expected to result in the incurrence of any Environmental Liabilities and (iv) all real property now or previously owned and, to the knowledge of the Company, all real property now or previously operated or leased by the Company or its Subsidiaries is free of contamination from Hazardous Material that violates or is required to be remediated under any Environmental Laws, and (v) to the knowledge of the Company, there are no facts or circumstances likely to delay or prevent implementation of this Agreement, or to require any remediation, in each case pursuant to environmental transfer statutes including without limitation the Connecticut Transfer Act, Conn. Gen. Stat. §§ 22a-134, et. seq. and the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq.
	(ii) For purposes of this Agreement, the following terms shall have the following meanings:
	“Environmental Claim” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, orders, claims, liens, investigations, requests for information, proceedings, or written notices of noncompliance or violation by any person (including, without limitation, any Governmental Entity) alleging liability or potential liability arising out of, based on or resulting from (A) the presence, release or disposal or threatened release or disposal, of any Hazardous Materials at any location, or (B) any violation or alleged violation of any Environmental Law or permit thereunder, or (C) any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from exposure to or the presence, release, or disposal or threat thereof of any Hazardous Materials.
	“Environmental Law” means any applicable law, regulation, code, license, permit, order, judgment, decree or injunction promulgated by any Governmental Entity, (A) for the protection of human health or the environment (including air, water, soil and natural resources) or (B) regulating the use, storage, handling, release or disposal of any chemical, material, waste or hazardous substance.

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	“Hazardous Material” means any substance listed, defined, designated or regulated pursuant to any applicable Environmental Law including petroleum products and byproducts, asbestos and polychlorinated biphenyls.
	“Environmental Liabilities” means all liabilities, remedial obligations, losses, damages, fines, penalties and sanctions arising under any Environmental Law.

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	(i) The Company and each of its Subsidiaries has timely filed, or has caused to be timely filed, all Tax Returns required to be filed, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns would not, individually or in the aggregate, have a Material Adverse Effect on the Company. All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company.
	(ii) The most recent financial statements contained in the Company SEC Reports reflect an adequate reserve for all Taxes payable by the Company and its Subsidiaries for all Taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any Taxes has been proposed, asserted or assessed against the Company or any of its Subsidiaries, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company.
	(iii) The Federal income Tax Returns of the Company and each of its Subsidiaries consolidated in such Returns have been examined by and settled with the United States Internal Revenue Service for all years through 1990. All material assessments for Taxes due with respect to such completed and settled examinations or any concluded litigation have been fully paid.
	(iv) There are no material Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of the Company or any of its Subsidiaries.
	(v) Neither the Company nor any of its Subsidiaries has been a party to any distribution occurring during the previous three (3) years in which the parties to such distribution treated the distribution as one to which Section 355 applied.

	(i) Section 3.02(p) of the Company Disclosure Schedule sets forth all Benefit Plans maintained by the Company, true, complete and correct copies of which have been provided or otherwise made available to Parent. Except as disclosed in the Company SEC Reports, there are no Benefit Plans maintained by the Company covering only the Company executive officers.
	(ii) Except where failure to comply, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company, each Benefit Plan maintained by the Company has been operated and administered in compliance with its terms and applicable law.
	(iii) The execution of this Agreement and the consummation of the Merger will not constitute an event under any Benefit Plan maintained by the Company that will or may result in any payment, acceleration, termination, forgiveness of indebtedness, vesting, distribution, increase in compensation or benefits or obligation to fund benefits with respect to any Company Employee which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on the Company. Except as would not be reasonably expected to result in a Material Adverse Effect on the

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	Company, neither the Company nor any of its Subsidiaries maintains or contributes to any plan or arrangement which contains life insurance, health insurance, pension benefits or other employee benefits after termination of employment, and neither the Company nor any of its Subsidiaries has ever represented or promised that such benefits would be provided.

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	(i) The Company and its Subsidiaries shall carry on their respective businesses in the ordinary course in all material respects, and shall use commercially reasonable efforts to preserve intact their business, maintain their rights and franchises and preserve their relationships with customers, suppliers and others having business dealings with them.
	(ii) Other than in connection with acquisitions permitted by Section 4.02(e), the Company shall not, and shall not permit any of its Subsidiaries to, (A) enter into any material licensing agreement, except for licensing agreements (1) set forth in Section 4.02(a)(ii) of the Company Disclosure Schedule or (2) entered into for the purpose of settling or avoiding an action, suit or claim against the Company or any of its Subsidiaries, (B) enter into or terminate any material contract or agreement or make any material change in any material lease or contract, other than in the ordinary course of business; (C) enter into any new line of business; (D) incur or commit to any capital expenditures or any obligations or liabilities in connection therewith other than Permitted Capital Expenditures (as defined below) and obligations or liabilities in connection therewith or (E) enter into any contract, agreement or other arrangement for the sale of inventories or for the furnishing of services by the Company or any of its Subsidiaries which contract, agreement or other arrangement may give rise to commitments which may extend beyond twelve months from the date of such contract, agreement or arrangement, unless, such contract, agreement or arrangement can be terminated by the Company or its Subsidiary, as the case may be, by giving less than 60 days’ notice

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	and without incurring an obligation to pay any material premium or penalty or suffering any other material detriment. As used herein, a “Permitted Capital Expenditure” is a capital expenditure which is up to $775 million in the aggregate for all capital expenditures incurred in any twelve-month period.

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	(i) assume and honor the terms of all Benefit Plans of the Company and its Subsidiaries set forth on Section 3.02(p) of the Company Disclosure Schedule and to pay or provide, or cause its Subsidiaries to pay or provide, the benefits required thereunder, recognizing that the consummation of the transactions contemplated hereby will constitute a “change in control” for purposes of such Benefit Plans that include a provision for modifications to benefits in the event of a “change in control”;
	(ii) until the second anniversary of the Effective Time (the “Benefits Maintenance Period”), with respect to employees of the Company and the Subsidiaries as of the Effective Time (“Company Employees”) (other than those subject to collective bargaining obligations or agreements), provide a level of aggregate employee benefits and compensation (excluding equity-based awards), taking into account all such Company Benefit Plans and other programs sponsored or maintained by the Company and its Subsidiaries (other than equity-based plans) that is substantially comparable in the aggregate to the aggregate employee benefits and compensation provided, with respect to service to

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	the Company or any of its Subsidiaries, to Company Employees immediately prior to the Effective Time; and
	(iii) following the Benefit Maintenance Period, Parent shall make no alteration or modification of any retiree welfare benefit covering any retired Company Employees or any Company Employee who, immediately prior to the Effective Time, is entitled to retiree welfare benefits and who retires during the Benefit Maintenance Period which would result in such individual (or such individual’s eligible dependents) receiving retiree welfare benefits that are less favorable in the aggregate than those provided to such persons immediately prior to the Effective Time or upon retirement during the Benefits Maintenance Period (as applicable); provided that Parent may reduce or terminate the foregoing benefits to the extent Parent reduces or terminates retiree welfare benefits for similarly situated employees of Parent.

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	(i) if to Parent or Merger Sub, to:

	The Procter & Gamble Company
	One Procter & Gamble Plaza
	Cincinnati, OH 45202
	Fax: (513) 983-2024
	Attention: James J. Johnson, Esq.

	Cadwalader, Wickersham & Taft LLP
	One World Financial Center
	New York, New York 10281
	Fax: (212) 504-6666
	Attention: Dennis J. Block, Esq.

	(ii) if to the Company, to:

	Prudential Tower Building
	Suite 4800
	Boston, MA 02199
	Fax: (617) 421-7874
	Attention: Richard K. Willard, Esq.

	Davis Polk & Wardwell
	450 Lexington Avenue
	New York, New York 10017
	Fax: (212) 450-3800
	Attention: George R. Bason, Jr., Esq.

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	The Procter & Gamble Company

	By:	/s/ A.G. Lafley

	Name: A.G. Lafley

	Title:	Chairman of the Board, President and Chief Executive

	Aquarium Acquisition Corp.

	By:	/s/ A.G. Lafley

	Name: A.G. Lafley
	Title:      President
	The Gillette Company

	By:	/s/ James M. Kilts

	Name: James M. Kilts

	Title:	Chairman of the Board, President and Chief Executive Officer

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	(1) Reviewed certain publicly available business and financial information relating to the Company and the Acquiror that we deemed to be relevant;
	(2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company and the Acquiror, including financial forecasts relating to the Company prepared by the management of the Company and the Acquiror, as well as the amount and timing of the cost savings and related expenses and synergies expected to result from the Merger (the “Expected Synergies”) furnished to us by the Acquiror;
	(3) Conducted discussions with members of senior management and representatives of the Company and the Acquiror concerning the matters described in clauses 1 and 2 above, as well as their respective businesses and prospects before and after giving effect to the Merger and the Expected Synergies;
	(4) Reviewed the market prices and valuation multiples for the Company Shares and the Acquiror Shares and compared them with those of certain publicly traded companies that we deemed to be relevant;
	(5) Reviewed the results of operations of the Company and the Acquiror and compared them with those of certain publicly traded companies that we deemed to be relevant;
	(6) Compared the proposed financial terms of the Merger with the financial terms of certain other transactions that we deemed to be relevant;
	(7) Participated in certain discussions and negotiations among representatives of he Company and the Acquiror and their financial and legal advisors;

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	(8) Reviewed the relative contributions of the Company and the Acquiror to selected operational metrics of the combined company based on financial forecasts and estimates prepared by the management of the Acquiror;
	(9) Reviewed the potential pro forma impact of the Merger, including the effects of the Acquiror’s share repurchase plans;
	(10) Reviewed a draft dated January 26, 2005 of the Agreement; and
	(11) Reviewed such other financial studies and analyses and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.

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	Very truly yours,

	Merrill Lync	h, Pierce, Fenner & Smith

	Incorporated

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	Very truly yours,
	/s/ Goldman, Sachs & Co.
	(GOLDMAN, SACHS & CO.)

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	Very truly yours,
	/s/ UBS SECURITIES LLC
	UBS SECURITIES LLC

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	(A)(1) A shareholder of a domestic corporation is entitled to relief as a dissenting shareholder in respect of the proposals described in sections 1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this section.

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Item 20.	Indemnification of Directors and Officers.

Item 21.	Exhibits and Financial Statement Schedules.

Exhibit				Description
	2	.1		Agreement and Plan of Merger dated as of January 27, 2005 among The Procter & Gamble Company, Aquarium Acquisition Corp., and The Gillette Company (attached as Annex A to the joint proxy statement/ prospectus which is part of this registration statement).
	3	.1		Amended Articles of Incorporation of The Procter & Gamble Company (incorporated herein by reference to Exhibit 3-1 in the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) (File No. 001-00434).

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Exhibit				Description
	3	.2		Regulations of The Procter & Gamble Company (incorporated herein by reference to Exhibit 3-2 in the Registrant’s Annual Report on Form 10-K for fiscal the year ended June 30, 2003) (File No. 001-00434).
	5	.1		Opinion of Cadwalader, Wickersham & Taft LLP regarding the validity of the securities being registered.*
	8	.1		Opinion of Cadwalader, Wickersham & Taft LLP regarding material federal income tax consequences relating to the merger.*
	8	.2		Opinion of Davis Polk & Wardwell regarding material federal income tax consequences relating to the merger.*
	10	.1		Amendment No. 1 to the Amended and Restated Employment Agreement dated as of December 23, 2004, entered into as of January 27, 2005, between The Gillette Company and James M. Kilts (incorporated herein by reference to Exhibit 10.2 in The Gillette Company’s Form 8-K filed on January 28, 2005).
	21	.1		Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 in the Registrant’s Annual Report on Form 10-K filed for the fiscal year ended June 30, 2004 (File No. 001-00434).
	23	.1		Consent of Deloitte & Touche LLP (for The Procter & Gamble Company).
	23	.2		Consent of KPMG LLP (for The Gillette Company).
	23	.3		Consent of Cadwalader, Wickersham & Taft LLP (included in the opinions filed as Exhibit 5.1 and Exhibit 8.1 to this Registration Statement).*
	23	.4		Consent of Davis Polk & Wardwell (included in the opinion filed as Exhibit 8.2 to this Registration Statement).*
	24	.1		Power of Attorney (included on signature page to this Registration Statement).
	99	.1		Form of The Procter & Gamble Company Proxy Card.*
	99	.2		Form of The Gillette Company Proxy Card.*
	99	.3		Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated (attached as Annex B to the joint proxy statement/ prospectus which is part of this registration statement).
	99	.4		Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
	99	.5		Opinion of Goldman, Sachs & Co. (attached as Annex C to the joint proxy statement/ prospectus which is part of this registration statement).
	99	.6		Consent of Goldman, Sachs & Co.
	99	.7		Opinion of UBS Securities LLC (attached as Annex D to the joint proxy statement/ prospectus which is part of this registration statement).
	99	.8		Consent of UBS Securities LLC.

*	To be filed by Amendment.

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement

	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was

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	registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
	(4) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
	(5) That every prospectus (i) that is filed pursuant to paragraph (4) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(7) To respond to requests for information that is incorporated by reference into the joint proxy statement/ prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
	(8) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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	The Procter & Gamble Company (Registrant)

	By:	/s/ Alan G. Lafley

	Name: Alan G. Lafley

	Title:	Chairman of the Board, President

	and Chief Executive
	(Principal Executive Officer)

Signature				Title
/s/ Alan G. Lafley   Alan G. Lafley				Chairman of the Board, President, and Chief Executive (Principal Executive Officer)
/s/ Clayton C. Daley, Jr.   Clayton C. Daley, Jr.				Chief Financial Officer (Principal Financial Officer)
/s/ John K. Jensen   John K. Jensen				Comptroller (Principal Accounting Officer)
/s/ Norman R. Augustine   Norman R. Augustine				Director
/s/ Bruce L. Byrnes   Bruce L. Byrnes				Director
/s/ R. Kerry Clark   R. Kerry Clark				Director

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Signature				Title
/s/ Scott D. Cook   Scott D. Cook				Director
/s/ Domenico De Sole   Domenico De Sole				Director
/s/ Joseph T. Gorman   Joseph T. Gorman				Director
/s/ Charles R. Lee   Charles R. Lee				Director
/s/ Lynn M. Martin   Lynn M. Martin				Director
/s/ W. James McNerney, Jr.   W. James McNerney, Jr.				Director
/s/ Johnathan A. Rodgers   Johnathan A. Rodgers				Director
/s/ John F. Smith, Jr.   John F. Smith, Jr.				Director
/s/ Ralph Snyderman   Ralph Snyderman				Director
/s/ Robert D. Storey   Robert D. Storey				Director
/s/ Margaret C. Whitman   Margaret C. Whitman				Director
/s/ Ernesto Zedillo   Ernesto Zedillo				Director

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Exhibit				Description
	2	.1		Agreement and Plan of Merger dated as of January 27, 2005 among The Procter & Gamble Company, Aquarium Acquisition Corp., and The Gillette Company (attached as Annex A to the joint proxy statement/ prospectus which is part of this registration statement).
	3	.1		Amended Articles of Incorporation of The Procter & Gamble Company (incorporated herein by reference to Exhibit 3-1 in the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) (File No. 001-00434).
	3	.2		Regulations of The Procter & Gamble Company (incorporated herein by reference to Exhibit 3-2 in the Registrant’s Annual Report on Form 10-K for fiscal the year ended June 30, 2003) (File No. 001-00434).
	5	.1		Opinion of Cadwalader, Wickersham & Taft LLP regarding the validity of the securities being registered.*
	8	.1		Opinion of Cadwalader, Wickersham & Taft LLP regarding material federal income tax consequences relating to the merger.*
	8	.2		Opinion of Davis Polk & Wardwell regarding material federal income tax consequences relating to the merger.*
	10	.1		Amendment No. 1 to the Amended and Restated Employment Agreement dated as of December 23, 2004, entered into as of January 27, 2005, between The Gillette Company and James M. Kilts (incorporated herein by reference to Exhibit 10.2 in The Gillette Company’s Form 8-K filed on January 28, 2005).
	21	.1		Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 in the Registrant’s Annual Report on Form 10-K filed for the fiscal year ended June 30, 2004 (File No. 001-00434).
	23	.1		Consent of Deloitte & Touche LLP (for The Procter & Gamble Company).
	23	.2		Consent of KPMG LLP (for The Gillette Company).
	23	.3		Consent of Cadwalader, Wickersham & Taft LLP (included in the opinions filed as Exhibit 5.1 and Exhibit 8.1 to this Registration Statement).*
	23	.4		Consent of Davis Polk & Wardwell (included in the opinion filed as Exhibit 8.2 to this Registration Statement).*
	24	.1		Power of Attorney (included on signature page to this Registration Statement).
	99	.1		Form of The Procter & Gamble Company Proxy Card.*
	99	.2		Form of The Gillette Company Proxy Card.*
	99	.3		Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated (attached as Annex B to the joint proxy statement/ prospectus which is part of this registration statement).
	99	.4		Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
	99	.5		Opinion of Goldman, Sachs & Co. (attached as Annex C to the joint proxy statement/ prospectus which is part of this registration statement).
	99	.6		Consent of Goldman, Sachs & Co.
	99	.7		Opinion of UBS Securities LLC (attached as Annex D to the joint proxy statement/ prospectus which is part of this registration statement).
	99	.8		Consent of UBS Securities LLC.

*	To be filed by Amendment