UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005, OR
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] for the transition period from _________
to _______________
Commission file number 001-00434
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: The Procter & Gamble Commercial Company
Employees' Savings Plan, 355 Tetuan Street, Old San Juan, P.O. Box 363187,
San Juan, Puerto Rico 00936-3187.
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office: The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202
REQUIRED INFORMATION
Item 4. Plan Financial Statements and Schedules Prepared in Accordance
with the Financial Reporting Requirements of ERISA
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
thereunto duly authorized.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
DATE: June 29, 2006
/S/THOMAS J. MESS
--------------------------------
Thomas J. Mess
Secretary for Trustees
THE PROCTER & GAMBLE
COMMERCIAL COMPANY
EMPLOYEES' SAVINGS PLAN
Financial Statements as of and for the
Years Ended December 31, 2005 and 2004,
and Supplemental Schedules as of and for the
Year Ended December 31, 2005, and Report of
Independent Registered Public Accounting Firm
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 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 4-7
SUPPLEMENTAL SCHEDULES:
Form 5500, Schedule H, Part IV, Line 4i- Schedule of Assets
(Held at End of Year) as of December 31, 2005 8
Form 5500, Schedule H, Part IV, Line 4j- Schedule of
Reportable Transactions for the Year Ended December 31, 2005 9
All others schedules required by Section 2520.103-10 of
the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974
have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Retirement Committee of
The Procter & Gamble Commercial Company
Employees' Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of The Procter & Gamble Commercial Company Employees' Savings Plan (the "Plan")
as of December 31, 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 at 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 accompanying supplemental schedules
listed in the Table of Contents are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These schedules are the responsibility of the Plan's
management. Such schedules have been subjected to the auditing procedures
applied in our audit of the basic 2005 financial statements and, in our opinion,
are fairly stated in all material respects when considered in relation to the
basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
San Juan, Puerto Rico
June 26, 2006
Stamp No.
affixed to original.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------------
2005 2004
ASSETS:
Participant-directed invesments $ 6,072,150 $ 5,255,107
Non participant-directed investments 7,888,947 6,941,775
----------- -----------
Total investments 13,961,097 12,196,882
----------- -----------
LIABILITIES -- Excess contribution to be
recognized next year 125,237 95,866
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $13,835,860 $12,101,016
=========== ===========
See notes to financial statements.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------------
2005 2004
ADDITIONS:
Contributions:
Participants $ 976,573 $ 983,184
Employer 174,188 298,154
----------- -----------
Total contributions 1,150,761 1,281,338
----------- -----------
Investment income:
Net appreciation in fair value of investments 639,751 861,440
Dividends 227,582 303,394
Interest 13,733 5,334
----------- -----------
Total investment income 881,066 1,170,168
----------- -----------
Total additions 2,031,827 2,451,506
----------- -----------
DEDUCTIONS--Benefits paid to participants 296,983 467,680
----------- -----------
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 1,734,844 1,983,826
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 12,101,016 10,117,190
----------- -----------
End of year $13,835,860 $12,101,016
=========== ===========
See notes to financial statements.
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of The Procter & Gamble Commercial Company (the
"Company") Employees' Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
a. GENERAL--The Plan is a defined contribution plan covering all
full-time employees of the Company and two affiliated companies,
Olay Company, Inc. and Procter & Gamble Pharmaceuticals Puerto
Rico, Inc. (collectively, the "Companies") who are residents of
Puerto Rico, have completed one year of service and are age
twenty-one or older. The Plan was established effective November 1,
1993 and is sponsored by the Companies. This Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
b. CONTRIBUTIONS--Each year, participants may contribute up to 10
percent of pretax annual compensation, as defined in the Plan, not
exceeding the maximum deferral amount specified by Puerto Rico law.
Participants may also contribute amounts representing distributions
from other qualified defined benefit or contribution plans.
Participants direct the investment of their contributions into
various investment options offered by the Plan. The Plan currently
offers seven mutual funds and a fund, which invests in common stock
of The Procter & Gamble Company, as investment options for
participants. The Companies contribute 40 percent of the first 5
percent of base compensation that a participant contributes to the
Plan. The matching Companies' contributions are invested directly
in The Procter & Gamble Company common stock. Contributions are
subject to certain limitations.
c. PARTICIPANT ACCOUNTS--Each participant's account is credited with
the participant's contribution and allocations of (A) the
Companies' contributions and, (B) Plan earnings. Allocations are
based on participant earnings or account balances, as defined. The
benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account.
d. VESTING--Participants are vested immediately in their contributions
plus actual earnings thereon. The Companies' contributions portion
of their accounts plus actual earnings thereon is 100 percent
vested upon the occurrence of any of the following events:
completion of three years of credited service; attaining age 65;
total disability while employed by the Companies or death while
employed by the Companies.
e. PAYMENT OF BENEFITS--Upon termination of service, a participant may
receive the value of the vested interest in his or her account as a
lump-sum distribution.
f. LOANS TO PARTICIPANTS--Loans to participants are not permitted.
g. FORFEITED ACCOUNTS--At December31, 2005 and 2004, forfeited
nonvested accounts totaled approximately $94,000 and $189,000,
respectively. These accounts will be used to reduce future employer
contributions. During the year ended December 31, 2005, employer
contributions were reduced by $94,142 from forfeited nonvested
accounts.
h. STOCK SPLIT--In March 2004, The Procter & Gamble Company's Board of
Directors approved a two-for-one stock split effective for common
and preferred shareholders of record as of May 21, 2004. Share data
in Note 3 has been restated to reflect the stock split for all
periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING--The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America.
b. USE OF ESTIMATES--The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires the Plan administrator to make
estimates and assumptions that affect the participant account
balances and the reported amounts of net assets available for
benefits and changes therein. Actual results could differ from those
estimates.
The Plan utilizes various investment instruments. Investment
securities, in general, are exposed to various risks, such as
interest rate, credit, and overall market volatility. Due to the
level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could
materially affect the amounts reported in the statements of net
assets available for plan benefits.
c. INVESTMENTS VALUATION AND INCOME RECOGNITION--The Plan's investments
are stated at fair value. Quoted market prices are used to value
investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year-end. The Plan's investment in The
Procter & Gamble Company and the J.M. Smucker Company common stock is
valued at the closing price on an established security exchange.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
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.
d. PAYMENT OF BENEFITS--Benefits are recorded when paid.
e. PLAN EXPENSES--All expenses incurred in administering the Plan may be
paid out of the invested assets unless paid by the Company.
f. EXCESS CONTRIBUTIONS PAYABLE -- The Plan is required to return
contributions received during the plan year in excess of the Puerto
Rico Internal Revenue Code of 1994 ("PRIRC") limits.
3. INVESTMENTS
The Plan's investments that represented five percent or more of the
Plan's net assets available for benefits, are as follows:
2005 2004
The Procter & Gamble Company common stock -
136,298.33 and 126,030.77 shares, respectively $7,888,947 $6,941,775
ACI Equity Index Institutional Fund - 405,248.19 units 1,959,654
Oakmark Equity and Income Fund - 66,237.47
and 59,851.24 units, respectively 1,654,612 1,408,365
Royce Low Price Stock Fund - 63,205.19 981,577 879,174
and 57,284.09 units, respectively
Barclays Global Investor Fund S&P 500 - 14,898.21 units 2,235,773
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 in value as follows:
2005 2004
Common stock $ 378,375 $ 590,184
Common collective trust fund 102,368
Mutual funds 159,008 271,256
---------- ----------
Total $ 639,751 $ 861,440
========== ==========
4. NONPARTICIPANT-DIRECTED INVESTMENT
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investment
(the common stock of The Procter & Gamble Company) is as follows:
2005 2004
Net assets at December 31 $ 7,888,947 $ 6,941,775
=========== ===========
Changes in net assets for the years ended December 31, 2005
and 2004:
Contributions $ 700,207 $ 658,958
Net appreciation in fair value of investment 380,835 580,526
Dividends 140,265 114,387
Benefits paid to participants (157,473) (130,204)
Net transfers to participant directed investments (114,229) 174,994
Other disbursements (2,433) (49,800)
----------- -----------
Net increase in net assets $ 947,172 $ 1,348,861
=========== ===========
The Procter & Gamble Company common stock-beginning of year 6,941,775 5,592,914
The Procter & Gamble Company common stock-end of year $ 7,888,947 $ 6,941,775
=========== ===========
5. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by J.P. Morgan
and an interest bearing deposit with J.P. Morgan Chase Bank, the trustee
as defined by the Plan. J.P. Morgan Retirement Plan Services performs
record keeping and administrative services for the Plan and, therefore,
these transactions qualify as party-in-interest transactions.
At December 31, 2005 and 2004, the Plan held 136,298.33 and 126,030.77
units, respectively, of common stock of The Procter & Gamble Company, the
sponsoring employer, with a cost basis of $6,020,375 and $5,379,831,
respectively. During the years ended December 31, 2005 and 2004, the Plan
recorded dividend income of $140,065 and $114,387, respectively.
6. PLAN TERMINATION
Although they have not expressed any intention to do so, the Companies
have the right under the Plan to discontinue their contributions at any
time and to terminate the Plan subject to the provisions set forth in
ERISA. In the event that the Plan is terminated, participants would become
100 percent vested in their accounts.
7. INCOME TAXES
The Plan is exempt from Puerto Rico income taxes under the provisions of
the PRIRC, as amended. The Plan is not qualified under Section 401(a) of
the Internal Revenue Code, but it is exempt from United States taxation
under Section 1022 of the Employee Retirement Income Security Act of 1974.
The Plan is required to operate in conformity with the PRIRC to maintain
its qualification.
The Plan participants are not taxed on the income and contributions made
to their accounts until such time as the participant or the participant's
beneficiary receives distributions from the Plan.
* * * * * *
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-
SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2005
----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF
IDENTITY OF ISSUE INVESTMENT COST FAIR VALUE
The Procter & Gamble Company * Common stock $ 6,020,375 $ 7,888,947
The J.M. Smucker Company Common stock ** 36,120
Oakmark Equity & Income Fund Mutual fund ** 1,654,612
Royce Low Price Stock Fund Mutual fund ** 981,577
J.P. Morgan Prime Money Market
Institutional Fund * Mutual fund ** 443,451
PIMCO Total Return Fund Mutual fund ** 369,023
Fidelity Diversified International Fund Mutual fund ** 337,405
Barclays Global Investment S&P 500 Fund Common collective
trust fund ** 2,235,773
J.P. Morgan Chase Bank * Deposit ** 14,189
------------
Total $ 13,961,097
============
* Party-in-interest.
** Cost information is not required for participant-directed
investments and, therefore is not included.
SCHEDULE II
THE PROCTER & GAMBLE COMMERCIAL
COMPANY EMPLOYEES' SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4j-
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2005
-------------------------------------------------------------------------------------------------------------------------
SINGLE TRANSACTIONS-None.
SERIES OF TRANSACTIONS:
Current
Value of
Asset on Net
Number of Number of Purchase Sales Cost of Transaction Gain
Description of Asset Purchases Sales Amount Amount Asset Date on Sale
The Procter & Gamble
Company-common stock 4 2 $922,799 $502,772 $428,566 $502,772 $ 74,205