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, 2004, OR
\ \ FOR 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: Employee Savings and Thrift Plan (Saudi Arabia),
P. O. Box 2056, Mazda Building, Bab Makkah, Jeddah, 21451, Saudi Arabia
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 1. Audited statement of financial condition as of the end of the latest two
fiscal years of the plan (or such lesser period as the plan has been in
existence). (See Page 2)
Item 2. Audited statement of income and changes in plan equity for each of the
latest three fiscal years of the plan (or such lesser period as the plan has
been in existence). (See Page 3)
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003,
AND 2002 AND INDEPENDENT AUDITORS' REPORT
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Combined Statements of Net Assets Available for Benefits
as of December 31, 2004 and 2003 2
Combined Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 2004, 2003 and 2002 3
Notes to Combined Financial Statements for the Years Ended
December 31, 2004, 2003 and 2002 4 - 7
COMBINED SUPPLEMENTAL SCHEDULE - Statement of Investments 8
INDEPENDENT AUDITORS' REPORT
To the trustees of:
Modern Industries Company (Jeddah) - Employee Savings and Thrift Plan,
Modern Industries Company (Dammam) - Employee Savings and Thrift Plan, and
Modern Products Company - Employee Savings and Thrift Plan
We have audited the accompanying combined statements of net assets available for
benefits of the Employee Savings and Thrift Plans for Modern Industries Company
(Jeddah), Modern Industries Company (Dammam) and Modern Products Company, which
are centrally administered as the Savings and Thrift Plans (Saudi Arabia) of the
Procter & Gamble Company (the "Plans") as of December 31, 2004 and 2003, and the
related combined statements of changes in net assets available for benefits for
each of the three years in the period ended December 31, 2004. These combined
financial statements are the responsibility of the Plans' trustees. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the combined financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the combined financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall combined financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the net assets available for benefits of the Plans as of
December 31, 2004 and 2003 and the changes in net assets available for benefits
for each of the three years in the period ended December 31, 2004, 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
combined financial statements taken as a whole. The accompanying combined
supplemental schedule listed on Page 8 is presented for the purpose of
additional analysis and is not a required part of the basic combined financial
statements. The schedule is the responsibility of the Plans' trustees. Such
combined supplemental schedule has been subjected to the auditing procedures
applied in our audit of the basic combined financial statements and, in our
opinion, is fairly stated in all material respects when considered in relation
to the basic combined financial statements taken as a whole.
Deloitte & Touche
Bakr Abulkhair & Co.
/S/ AL-MUTAHHAR Y. HAMIDUDDIN
-----------------------------
Al-Mutahhar Y. Hamiduddin
License No. 296
Jeddah, Kingdom of Saudi Arabia
March 17, 2005
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2004 AND 2003
(Expressed in Saudi Riyals)
-------------------------------------------------------------------------------
2004 2003
-----------------------------------
ASSETS
Investments 41,434,310 38,047,118
Loans to participants 661,201 658,241
Other receivable 512,729 374,997
Cash 3,940,794 3,774,976
-----------------------------------
Total assets 46,549,034 42,855,332
LIABILITIES
Amounts due to employees 271,075 9,310
-----------------------------------
NET ASSETS AVAILABLE FOR BENEFITS 46,277,959 42,846,022
===================================
The combined Financial Statements were approved on March 17, 2005.
Trustee: /s/FAHAD A. ALSUKAIT
Trustee: /S/JAMAL SHOWAIKHAT
The accompanying notes form an integral part of these financial statements
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
---------------------------------------------------------------------------------------------------------
2004 2003 2002
----------------------------------------------------
ADDITIONS
Basic employee contributions 1,864,124 1,880,357 2,211,841
Additional employee contributions 2,434,885 1,269,062 1,723,766
Companies' contributions 1,591,323 1,516,176 1,672,448
----------------------------------------------------
Total contributions 5,890,332 4,665,595 5,608,055
----------------------------------------------------
Investment income:
Smucker shares - - 363,246
Dividends 529,592 508,199 608,561
Interest income: 2,369 25,018 65,556
Net appreciation in fair value of investments 2,724,551 7,053,752 1,938,332
----------------------------------------------------
Total investment income 3,256,512 7,586,969 2,975,695
----------------------------------------------------
Total additions 9,146,844 12,252,564 8,583,750
----------------------------------------------------
DEDUCTIONS
Distribution and withdrawals to participants
at market value (5,389,458) (13,108,607) (18,625,924)
Deemed distributions of loans to participants (325,449) (490,897) (816,346)
----------------------------------------------------
Total deductions (5,714,907) (13,599,504) (19,442,270)
----------------------------------------------------
NET INCREASE/(DECREASE) 3,431,937 (1,346,940) (10,858,520)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 42,846,022 44,192,962 55,051,482
----------------------------------------------------
End of year 46,277,959 42,846,022 44,192,962
====================================================
The accompanying notes form an integral part of these financial statements
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED SUPPLEMENTAL SCHEDULE - STATEMENT OF INVESTMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
1. PLANS DESCRIPTION AND RELATED MATTERS
-------------------------------------
The following brief description of the Employee Savings and Thrift Plans
for Modern Industries Company (Jeddah), Modern Industries Company (Dammam)
and Modern Products Company, which are centrally administered as the
Savings and Thrift Plans (Saudi Arabia) of The Procter & Gamble Company
(the "Plans"), is provided for general information purposes only.
Participants should refer to each plan agreement for more complete
information.
This plan is not subject to any provisions of the United States Employee
Retirement Income Security Act of 1974, nor is it qualified under the
United States Internal Revenue Code Section 401(a).
TRUSTEES
The Trustees of the Plans include the chairman of Modern Industries
Company (Jeddah), Modern Industries Company (Dammam) and Modern Products
Company (collectively, the "Companies") and nominated managers of the
Companies.
ELIGIBILITY
Any permanent employee who has been on the payrolls of the Companies for
more than 12 months is eligible to participate in the Plans.
MEMBER'S ACCOUNTS
An Employee Account and a Company Account are maintained for each member.
The Employee Account includes a member's contributions, decreased by all
withdrawals and increased by all repayments of withdrawals. The Company
Account includes the total contributions made by the Companies, which were
credited to the member's account in accordance with the terms of the
Plans. Profits on bank deposits and net dividends are credited to the
Employee Account.
EMPLOYEE CONTRIBUTIONS
Basic deductions of 5% of base salary are contributed monthly by the
members. The member has the option to invest these contributions in one of
the following investment programs offered by the Plans:
o Invest the full amount to purchase The Procter & Gamble Company
("Procter & Gamble") securities.
o Invest the full amount in bank deposits.
o Invest 50% of the amount to purchase Procter & Gamble securities, and
50% in bank deposits.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED SUPPLEMENTAL SCHEDULE - STATEMENT OF INVESTMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
The numbers of participating employees under each of the aforementioned
programs at December 31, 2004 were 159, 43 and 15 (2003: 198, 80 and 37;
2002: 279, 96 and 59), respectively. Members may elect to contribute an
additional 1% to 10% of their monthly salary. These additional
contributions are not matched by the Companies and can only be invested in
Procter & Gamble securities.
COMPANIES' CONTRIBUTIONS
The Companies credit each member with an amount ranging from 25% to 100%
of the balance in the Employee Account, depending on the member's length
of continuous service, with the rate reaching 100% after ten years of
continuous service.
EARNINGS
Any occurrence of income from the net dividends earned and credits from
forfeitures are utilized to purchase more Procter & Gamble securities.
These earnings are allocated on a pro-rata basis to the existing members
based on the prior month-end balance of their Plans' assets.
Commission earned from bank deposits is allocated amongst the members of
the Plans in proportion to their investments in bank deposits.
VESTING
The members are fully vested in their Employee Accounts and Earnings
Accounts. Members become vested in the Companies' contributions by 30%
after the first three full years from the date of their membership in the
Plans, or renewed membership (see Withdrawals), with the rate reaching
100% after ten full years of such membership.
WITHDRAWALS
Withdrawals may be made from the member's Employee Account at any time the
member chooses to, up to the extent of the member's contributions, the
vested portion of the Companies' Contributions and all relevant profits
thereon.
The non-vested portion of the Companies' Contributions and relevant
profits are placed in a frozen account that will continue to be vested
according to the vesting schedule. These are paid to the employee on
separation from the Companies unless the employee meets the criteria for
forfeiture (see Forfeitures). The employee may rejoin the Plans after a
one-year waiting period from the first withdrawal and a two-year waiting
period for every subsequent withdrawal.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED SUPPLEMENTAL SCHEDULE - STATEMENT OF INVESTMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
LOANS
An existing member who has at least five years of membership is eligible
to borrow from the Plans up to an amount that varies with the member's
monthly base salary and length of service. The maximum loan amount cannot
exceed 50% of the balance in the Employee's Account (including gains on
securities) or six months salary, whichever is lesser. Repayment of the
loan is made by monthly payroll deductions. The member may elect to repay
the outstanding loan in a lump sum at any time.
FORFEITURES
When members leave the Plans without the requirement for full vesting (see
Vesting) for a reason other than transfer out, death or disability, the
non-vested Companies' Contributions and relevant profits are forfeited.
The forfeited amount is divided amongst the existing members using the
same formula as the Companies' Contributions (see Companies
Contributions).
TRANSFERABILITY
The Plans are 100% transferable between the Companies.
COSTS OF THE PLANS
All administrative costs of the Plans are paid by the Companies.
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
BASIS OF COMBINATION
The combined financial statements include the financial statements of all
the Plans as stated in Note 1. All significant intercompany transactions
and balances have been eliminated in the combination.
BASIS OF ACCOUNTING
The accompanying combined financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America. The net assets and transactions of the Plans are
recorded at fair value.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED SUPPLEMENTAL SCHEDULE - STATEMENT OF INVESTMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
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 reported
amounts of net assets available for benefits and changes therein. Actual
results could differ from those estimates.
The Plans have investments in Procter & Gamble and J.M. Smucker Company
securities. 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 these securities, it is reasonably
possible that changes in the value of investment securities will occur in
the near term and that such changes could materially affect the amount
reported in the financial statements.
VALUATION OF INVESTMENTS
Investments in Procter & Gamble and J.M. Smucker Company securities are
valued at the closing price on the New York Stock Exchange. Bank deposits
are stated at cost.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
INTEREST INCOME
Interest income represents interest earned on bank deposits.
FOREIGN CURRENCY TRANSLATION
The Plans' primary currency is the Saudi Riyal. Non-Saudi Riyal
investments are translated into Saudi Riyals at the exchange rates in
effect on the last day of the Plans' year. Earnings on currencies other
than the Saudi Riyals are translated at average rates prevailing during
the year. Exchange gains or losses for 2004, 2003 and 2002 were not
significant.
COMPARATIVE FIGURES
Certain figures for 2003 and 2002 have been reclassified to conform with
the presentation in 2004.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED SUPPLEMENTAL SCHEDULE - STATEMENT OF INVESTMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
3. INVESTMENTS
-----------
The Plan's investments that represented five percent or more of the Plan's
net assets available for benefits at December 31, 2004 and 2003 were
investments in Procter & Gamble securities which totaled SR 41,262,967 and
SR 37,819,088, respectively. The number of shares held were 199,826 and
100,999 at December 31, 2004 and 2003, respectively.
During the years ended December 31, 2004, 2003 and 2002, the Plan's
investments in securities (including gains and losses on investments
bought and sold as well as held during the year) appreciated by SR
2,724,551, SR 7,053,752 and SR 1,938,332, respectively.
4. TAXES
-----
Currently, there are no personal income taxes in Saudi Arabia. Should they
be introduced any time in the future, the Plans require that such taxes be
borne by the members.
Dividend payments on Procter & Gamble securities are received net of
deduction of withholding taxes by the Government of the United States of
America.
5. THE J.M. SMUCKER COMPANY COMMON STOCK
-------------------------------------
In May of 2002, the Jif peanut butter and Crisco shortening brands were
spun-off to Procter & Gamble's shareholders and subsequently merged into
The J.M. Smucker Company ("Smucker"). As a result of the spin-off,
participants holding Procter & Gamble common stock received one share of
Smucker stock for every fifty shares of Procter & Gamble stock. The cost
basis of the Procter & Gamble common stock prior to the Smucker spin-off
was allocated between Procter & Gamble common stock held and the Smucker
common stock received. Participants are not permitted to purchase
additional shares of Smucker.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED SUPPLEMENTAL SCHEDULE - STATEMENT OF INVESTMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Expressed in Saudi Riyals)
------------------------------------------------------------------------------------------------------------------------------------
2004 2003 2002
-----------------------------------------------------------------------------------------------------------
Number Market Number Market Number Market
of Shares Cost Value of shares Cost Value of shares Cost value
-----------------------------------------------------------------------------------------------------------
The Procter & Gamble 199,826 29,202,627 41,262,967 100,999 27,120,933 37,819,088 118,951 32,493,550 38,141,784
Company securities
The J.M. Smucker Company
securities 971 130,739 171,343 1,314 176,922 228,030 2,014 265,120 299,028
===========================================================================================================
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this Annual Report to be signed on its behalf by the undersigned,
hereunto duly authorized, on March 29, 2005.
Employee Savings and Thrift Plan (Saudi Arabia)
By: /s/FAHAD A. ALSUKAIT
----------------------------
Fahad A. Alsukait
By: /s/JAMAL SHOWAIKHAT
-----------------------------
Jamal Showaikhat
EXHIBIT INDEX
Exhibit No.
23 Consent of Deloitte & Touche, Bahr Abulkhair & Co.