SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended December 31, 2005, or
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from ___________ to _______________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: The Procter & Gamble Subsidiaries Savings Plan,
The Procter & Gamble Company, Two Procter & Gamble Plaza, Cincinnati, Ohio
45202.
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202.
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance With the
Financial Reporting Requirements of ERISA.
Exhibits:
23 Consent of Deloitte & Touche LLP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustees (Or Other Persons Who Administer the Employee Benefit Plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE PROCTER & GAMBLE
SUBSIDIARIES SAVINGS PLAN
/S/THOMAS J. MESS
Date: June 29, 2006 ------------------------------------------
Thomas J. Mess
Secretary for Trustees
THE PROCTER & GAMBLE
SUBSIDIARIES SAVINGS PLAN
Financial Statements as of and for the Years
Ended December 31, 2005 and 2004,
Supplemental Schedule as of
December 31, 2005, and
Report of Independent Registered Public
Accounting Firm
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2005 and 2004 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2005 and 2004 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULE--
Form 5500, Schedule H, Part IV, Line 4i--Schedule of Assets
(Held at End of Year) as of December 31, 2005 11
NOTE: All other schedules required by Section 2520.103-10 of the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act
of 1974 have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Procter & Gamble Master Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Subsidiaries Savings Plan (the "Plan") as of December
31, 2005 and 2004, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2005 and 2004, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
table of contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The schedule is the responsibility of the Plan's management. Such schedule
has been subjected to the auditing procedures applied in our audit of the basic
2005 financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/S/ DELOITTE & TOUCHE LLP
Cincinnati, Ohio
June 28, 2006
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------------
2005 2004
PARTICIPANT-DIRECTED INVESTMENTS:
At fair value $194,941,672 $198,713,681
At contract value 32,616,492 34,557,774
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $227,558,164 $233,271,455
============ ============
See notes to financial statements.
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2005 AND 2004
-------------------------------------------------------------------------------------
2005 2004
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $ 6,906,703 $ 15,453,936
Net appreciation in contract value of investments 1,494,462 1,402,644
Interest 115,626 155,080
Dividends 4,940,691 5,571,271
------------- -------------
Total investment income 13,457,482 22,582,931
------------- -------------
Rollover and other additions 87,820
------------- -------------
Total additions 13,457,482 22,670,751
------------- -------------
DEDUCTIONS:
Distributions to and withdrawals by participants 19,063,622 16,482,032
Administrative expenses 107,151 8,725
------------- -------------
Total deductions 19,170,773 16,490,757
------------- -------------
(DECREASE) INCREASE IN NET ASSETS (5,713,291) 6,179,994
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 233,271,455 227,091,461
------------- -------------
End of year $ 227,558,164 $ 233,271,455
============= =============
See notes to financial statements.
THE PROCTER & GAMBLE SUBSIDIARIES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of The Procter & Gamble Subsidiaries
Savings Plan (the "Plan") is provided for general information only.
Participants should refer to the Plan agreement for more complete
information.
GENERAL--The Plan was established effective March 2, 1990 upon the
acquisition of the Hawaiian Punch Division of DelMonte by The Procter &
Gamble Company (the "Company"). During the period from March 1996 through
June 2002, the following plans were merged into the Plan: the Sundor
Brands Savings Plan, Max Factor Savings Plan, the Speas Savings Plan, the
Tambrands, Inc. Savings Plan ("Tambrands"), the Iams Company Savings Plan
("Iams"), Recovery Engineering, Inc. Salary Savings Plan ("Pur"), the
Richardson-Vicks Savings Plan ("Richardson-Vicks"), The Procter & Gamble
Subsidiaries Savings and Investment Plan ("Subsidiaries Savings and
Investment"), the Procter & Gamble Pharmaceuticals Savings Plan
("Pharmaceuticals"), and the Millstone Coffee, Inc. 401(k) Savings and
Profit Sharing Plan ("Millstone").
The Plan is a voluntary defined contribution plan covering all eligible
employees of Sundor Group, Inc., including the Sundor Brands and Hawaiian
Punch divisions, Max Factor & Company, Speas Company, Tambrands Company,
Iams Company, Pur Company, Richardson-Vicks Company, Maryland Club Foods,
Inc., Shulton, Inc., Dover Baby Wipes Company, Giorgio Beverly Hills,
Inc., Millstone Coffee, Inc., Norwich Eaton, and former employees of
Fisher Nut Company who were members of the Twin Cities Bakery and
Confectionery Workers Union Local No. 22, all subsidiaries of the Company.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
The Plan is administered by the Master Savings Plan Committee consisting
of three members appointed by the Board of Directors of the Company,
except for duties specifically vested in the trustee of the Plan, J.P.
Morgan Chase Bank, and the Plan recordkeeper, J.P. Morgan Retirement Plan
Services LLC, who are also appointed by the Board of Directors of the
Company.
CONTRIBUTIONS--Effective April 1996, all contributions to the Plan were
suspended. Tambrands, Iams, Pur, Richardson-Vicks, Subsidiaries Savings
and Investment, Pharmaceuticals, and Millstone Savings Plans were frozen
prior to conversion into the Plan.
PARTICIPANT ACCOUNTS--Individual accounts are maintained for each Plan
participant. Each participant's account is credited with an allocation of
the Plan's earnings or losses. The benefit to which a participant is
entitled is limited to the benefit that can be provided from their
account. Participants can allocate their account to one or all of the
investment options offered by the Plan.
INVESTMENTS-- Participants direct the investment of their accounts into
various investment options offered by the Plan. The Plan currently offers
common stock, three mutual funds, a common collective trust fund and an
insurance investment contract as investment options for participants.
VESTING--Upon suspension of contributions, all participants were vested
immediately in their accounts plus actual earnings thereon.
PARTICIPANT LOANS--The Plan has a loan feature under which active
participants may borrow up to 50% of the current value of their vested
account balances exclusive of amounts attributable to Company
contributions (up to a maximum of $50,000). Loans are repaid via payroll
deduction over a period of up to five years, except for loans used to
purchase a primary residence, which are repaid via payroll deduction over
a period of up to 10 years. Principal and interest paid is credited to
applicable funds in the borrower's account. Former Company participants
may not borrow against their account balances. Upon participant
termination or retirement, the outstanding loan balance is treated as a
distribution to the participant if repayment is not made by the
participant.
PAYMENT OF BENEFITS--The Plan provides for benefits to be paid upon
retirement, disability, death, or separation other than retirement as
defined by the Plan document. Plan benefits may be made in a lump sum of
cash or shares of Company common stock, in installments over not more than
120 months, or variable amounts paid monthly. Retired or terminated
employees shall commence benefit payments upon attainment of age 70 1/2.
A participant may withdraw any portion of after-tax contributions once in
any three-month period. Participants who have attained age 59 1/2 or have
demonstrated financial hardship may withdraw all or any portion of their
before-tax contributions once in any six-month period.
Account balances attributable to terminated employees are approximately
$113,204,000 and $111,648,000 as of December 31, 2005 and 2004,
respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING--The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America.
USE OF ESTIMATES--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. The Plan invests in
Company common stock, J.M. Smucker Company common stock, a common
collective trust fund and in various mutual funds that include investments
in U.S. Government securities, corporate debt instruments, corporate
stocks, and investment contracts. Investment securities, in general, are
exposed to various risks, such as interest rate, credit, and overall
market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the financial
statements.
INVESTMENT VALUATION AND INCOME RECOGNITION--The Plan's investments are
stated at fair value except for its benefit-responsive investment
contract, which is valued at contract value (see Note 4). Quoted market
prices are used to value investments. Shares of mutual funds are valued at
quoted market prices, which represent the net asset value of shares held
by the Plan at year end. Loans to participants are valued at the
outstanding loan balances.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis and dividends are
recorded on the ex-dividend date.
Management fees and operating expenses charged to the Plan for investments
in the mutual funds are deducted from income earned on a daily basis and
are not separately reflected. Consequently, management fees and operating
expenses are reflected as a reduction of net appreciation, or an increase
in net depreciation in the fair market value of such investments.
ADMINISTRATIVE EXPENSES-- Investment management expenses are paid by the
Plan and are netted against investment income. Loan processing fees are
paid by the participants through reduction in their investment balances.
In addition, effective July 1, 2005, recordkeeping fees of the Plan are
paid by participants through a reduction in their investment balances.
PAYMENT OF BENEFITS--Benefit payments to participants are recorded upon
distribution. There were no amounts allocated to accounts of persons who
have elected to withdraw from the Plan but have not yet been paid at
December 31, 2005. Amounts allocated to accounts of persons who have
elected to withdraw from the Plan but have not yet been paid were $117,000
at December 31, 2004.
3. INVESTMENTS
The Plan's investments that represented five percent or more of the Plan's
net assets available for benefits as of December 31, 2005 and 2004, are as
follows:
DESCRIPTION 2005 2004
At fair value:
Barclays Global Investors Equity Index Fund F $ 74,922,244
* The Procter & Gamble Company common stock 57,673,937 $ 58,808,333
Royce Low Priced Stock Fund 25,146,006 26,231,553
PIMCO Total Return Fund 18,356,100
* Fidelity Diversified International Fund 15,431,628
* American Century Equity Index Fund 73,241,670
* J.P. Morgan Bond Fund 18,264,673
* J.P. Morgan International Equity Fund 13,182,595
At contract value-J.P. Morgan Stable Value Fund:
* J.P. Morgan Chase Bank Intermediate Bond Fund 31,435,594 33,669,655
* Indicates party-in-interest
During the years ended December 31, 2005 and 2004, the Plan's investments
(including gains and losses on investments bought and sold, as well as
held during the year) appreciated (depreciated) in value as follows:
2005 2004
Net appreciation (depreciation) in fair value of:
Mutual funds $ 94,083 $ 10,031,751
Common collective trust fund 4,036,583
The Procter & Gamble Company common stock 2,801,242 5,403,907
The J.M. Smucker Company common stock (25,205) 18,278
------------ ------------
$ 6,906,703 $ 15,453,936
============ ============
Net appreciation in contract value of-
J.P. Morgan Stable Value Fund $ 1,494,462 $ 1,402,644
============ ============
4. INVESTMENT CONTRACT WITH INSURANCE COMPANY
In 2003, the Plan entered into a benefit-responsive investment contract
with Monumental Life Insurance Co., Bank of America N.A. and State Street
Bank & Trust Company (collectively, the "issuers"). The issuers maintain
the contributions in a general account, which is credited with earnings on
the underlying investments and charged for participant withdrawals and
administrative expenses. The investment contract is included in the
financial statements at contract value as reported to the Plan by the
issuers. Contract value represents contributions made under the contract,
plus earnings, less participant withdrawals and administrative expenses.
Participants may ordinarily direct the withdrawal or transfer of all or a
portion of their investment at contract value.
There are no reserves against contract value for credit risk of the
contract issuer or otherwise. The crediting interest rate was 5.11% at
December 31, 2005 and 4.36% at December 31, 2004. The crediting interest
rate is based on a formula agreed upon with the issuer, but may not be
less than zero percent. Such interest rates are reviewed on a quarterly
basis for resetting. The average yield was 4.49% for the year ended
December 31, 2005 and 3.91% for the year ended December 31, 2004.
5. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by J.P. Morgan
Chase Bank, the trustee of the Plan as defined by the Plan. J.P. Morgan
Retirement Plan Services LLC, the recordkeeper, is affiliated with the
trustee. Therefore, these transactions qualify as party-in-interest
transactions. Fees paid by the Plan for investment management services
were included as a reduction of the return earned on each fund.
At December 31, 2005 and 2004, the Plan held 996,439 and 1,067,689 shares,
respectively, of common stock of the Company, the sponsoring employer,
with a cost basis of $26,932,785 and $28,382,420, respectively. During the
years ended December 31, 2005 and 2004, the Plan recorded dividend income
on Company common stock of $1,131,093 and $1,031,650, respectively.
6. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions set forth in ERISA.
7. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated March 7, 2002, that the Plan and related trust were designed
in accordance with the applicable regulations of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter;
however, the Company and the plan administrator believe that the Plan is
currently designed and operated in compliance with the applicable
requirements of the Internal Revenue Code and the Plan and related trust
continue to be tax-exempt. Therefore, no provision for income taxes has
been included in the Plan's financial statements
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
Upon an event of default in a participant loan, to the extent a
distribution to the participant is not permissible under the Plan, the
amount due to the Plan on account of the loan will be treated as a deemed
distribution. A loan that is a deemed distribution is treated as a
distribution on Form 5500 and removed from Plan assets on Form 5500.
However, in the Plan financial statements, and in accordance with the
Plan, such deemed distributions remain part of the participant's account
balance until a distributable event occurs for the participant.
The following is a reconciliation of net assets available for benefits per
the financial statements at December 31, 2005 to Form 5500:
2005
Net assets available for benefits
per the financial statements $ 227,558,164
Less: Certain deemed distributions of
participant loans (15,358)
-------------
Net assets available for benefits
per the Form 5500 $ 227,542,806
=============
The following is a reconciliation of the decrease in net assets per the
financial statements for the year ended December 31, 2005 to Form 5500 net
income:
2005
Net decrease in assets available for benefits
per the financial statements $ (5,713,291)
Less: Certain deemed distributions of
participant loans (15,358)
-------------
Net loss per the Form 5500 $ (5,728,649)
=============
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2005 to Form 5500:
2005
Benefits paid to participants
per the financial statements $ 19,063,622
Plus: Deemed loans distributions 15,358
-------------
Benefits paid to participants per the Form 5500 $ 19,078,980
=============
* * * * * *
SUPPLEMENTAL SCHEDULE
FORM 5500, SCHEDULE H, PART IV, LINE 4i-
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
--------------------------------------------------------------------------------------------------------------------
FAIR VALUE/
IDENTITY OF ISSUER DESCRIPTION OF INVESTMENT CONTRACT VALUE
Investments at fair value:
* The Procter & Gamble Company Common stock $ 57,673,937
The J.M. Smucker Company Common stock 365,461
Mutual Funds:
The Royce Funds Low Price Fund 25,146,006
* Fidelity Investments Diversified International Fund 15,431,628
PIMCO Total Return Fund 18,356,100
* J.P. Morgan Funds Prime Money Market Fund 1,156,189
Common Collective Trust Fund-
Barclays Global Investors Equity Index Fund F 74,922,244
* Loans to participants 309 loans with maturities ranging from
January 2006 to January 2015 and
interest rates ranging from 5% to 10.5% 1,890,107
-------------
Total 194,941,672
-------------
J.P. Morgan Stable Value Fund
at contract value:
US Treasury Note, 3.5%, due May 31, 2007 49,371
Common/Collective Trust Funds:
* J.P. Morgan Chase Bank Liquidity Fund 332,291
* J.P. Morgan Chase Bank Intermediate Bond Fund 31,435,594
Monumental Life Insurance Company
Bank of America, N.A., State
Street Bank and Trust Company Wrapper Contract 799,236
-------------
Total 32,616,492
-------------
TOTAL INVESTMENTS $ 227,558,164
=============
* Denotes party-in-interest.