Washington, D.C. 20549

                                    FORM 10-Q

                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2000    Commission file number 1-434

                          THE PROCTER & GAMBLE COMPANY
             (Exact name of registrant as specified in its charter)

                Ohio                            31-0411980
       (State of incorporation)      (I.R.S. Employer Identification No.)

          One Procter & Gamble Plaza, Cincinnati, Ohio      45202
            (Address of principal executive offices)      (Zip Code)

        Registrant's telephone number, including area code (513) 983-1100

     Indicate by check mark whether the registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Securities Exchange Act
     of 1934 during the preceding 12 months (or for such shorter period that
         the registrant was required to file such reports), and (2) has
         been subject to such filing requirements for the past 90 days.

                                Yes X    No .

There were 1,299,875,679 shares of Common Stock outstanding as of December 31,


Item 1.  Financial Statements

The Consolidated Statements of Earnings of The Procter & Gamble Company and
subsidiaries for the three and six months ended December 31, 2000 and 1999, the
Condensed Consolidated Balance Sheets as of December 31, 2000 and June 30, 2000,
and the Condensed Consolidated Statements of Cash Flows for the six months ended
December 31, 2000 and 1999 follow. In the opinion of management, these unaudited
consolidated financial statements contain all adjustments necessary to present
fairly the financial position, results of operations, and cash flows for the
interim periods reported. However, such financial statements may not be
necessarily indicative of annual results. Certain reclassifications of prior
year's amounts have been made to conform with the current year's presentation.


Amounts in Millions Except Per Share Amounts

                                      Three Months Ended           Six Months Ended
                                          December 31                 December 31
                                    ----------------------      ----------------------
                                      2000          1999          2000          1999
                                    --------      --------      --------      --------
NET SALES                           $ 10,182      $ 10,588      $ 20,151      $ 20,507
  Cost of products sold                5,417         5,563        10,724        10,769
  Marketing, research, and
   administrative expenses             3,054         3,183         5,937         6,049
                                    --------      --------      --------      --------

OPERATING INCOME                       1,711         1,842         3,490         3,689
  Interest expense                       224           178           403           325
  Other income, net                      294            51           397            96
                                    --------      --------      --------      --------

EARNINGS BEFORE INCOME TAXES           1,781         1,715         3,484         3,460
  Income taxes                           587           589         1,135         1,187
                                    --------      --------      --------      --------

NET EARNINGS                        $  1,194      $  1,126      $  2,349      $  2,273
                                    ========      ========      ========      ========

  Basic net earnings                $    .89      $   0.83      $   1.76      $   1.68
  Diluted net earnings              $    .84      $   0.78      $   1.66      $   1.58
  Dividends                         $    .35      $   0.32      $   0.70      $    .64

  OUTSTANDING - DILUTED              1,411.0       1,434.8       1,410.0       1,434.8

                           CONSOLIDATED BALANCE SHEETS

Amounts in Millions
                                                            December 31      June 30
ASSETS                                                          2000           2000
------                                                      -----------    -----------
  Cash and cash equivalents                                 $  3,407       $  1,415
  Investment securities                                          149            185
  Accounts receivable                                          3,639          2,910
    Materials and supplies                                     1,166          1,254
    Work in process                                              399            394
    Finished products                                          1,958          1,842
  Deferred income taxes                                          183            309
  Prepaid expenses and other current assets                    1,975          1,837
                                                            -----------    -----------

TOTAL CURRENT ASSETS                                          12,876         10,146

PROPERTY, PLANT AND EQUIPMENT                                 23,471         23,221
ACCUMULATED DEPRECIATION                                      (9,877)        (9,529)
                                                            -----------    -----------

TOTAL PROPERTY, PLANT AND EQUIPMENT                           13,594         13,692

GOODWILL AND OTHER INTANGIBLE ASSETS                           8,505          8,786
OTHER NON-CURRENT ASSETS                                       1,850          1,742
                                                            -----------    -----------

  TOTAL ASSETS                                              $ 36,825       $ 34,366
                                                            ===========    ===========

  Accounts payable and accrued liabilities                  $  6,780       $  6,900
  Debt due within one year                                     4,279          3,241
                                                            -----------    -----------

TOTAL CURRENT LIABILITIES                                     11,059         10,141

LONG-TERM DEBT                                                10,061          9,012

DEFERRED INCOME TAXES                                            620            625

OTHER NON-CURRENT LIABILITIES                                  2,069          2,301
                                                            -----------    -----------

TOTAL LIABILITIES                                             23,809         22,079

  Preferred stock                                              1,721          1,737
  Common stock-shares outstanding - Dec 31  1,299.9            1,300
                                    June 30 1,305.9                           1,306
  Additional paid-in capital                                   1,919          1,794
  Reserve for ESOP debt retirement                            (1,397)        (1,418)
  Accumulated comprehensive income                            (1,972)        (1,842)
  Retained earnings                                           11,445         10,710
                                                            -----------    -----------

TOTAL SHAREHOLDERS' EQUITY                                    13,016         12,287
                                                            -----------    -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $ 36,825       $ 34,366
                                                            ===========    ===========


                                                          Six Months Ended
Amounts in Millions                                         December 31
                                                          2000        1999
                                                        --------    ---------
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR            $ 1,415     $ 2,294

  Net earnings                                            2,349       2,273
  Depreciation and amortization                             976       1,081
  Deferred income tax expense                                21         318
  Change in:
    Accounts receivable                                    (771)       (548)
    Inventories                                             (98)       (360)
    Accounts payable and accruals                           (73)       (845)
    Other operating assets & liabilities                   (140)       (533)
  Other                                                       1         119
                                                        --------    --------

TOTAL OPERATING ACTIVITIES                                2,265       1,505
                                                        --------    --------

  Capital expenditures                                   (1,251)     (1,452)
  Proceeds from asset sales                                 473         109
  Acquisitions                                              (31)     (3,082)
  Change in investment securities                            (3)        254
                                                        --------    --------

TOTAL INVESTING ACTIVITIES                                 (812)     (4,171)
                                                        --------    --------

  Dividends to shareholders                                (974)       (900)
  Change in short-term debt                                 795       1,816
  Additions to long-term debt                             1,346       2,534
  Reduction of long-term debt                               (25)       (269)
  Proceeds from stock options                                61         109
  Purchase of treasury shares                              (649)       (876)
                                                        --------    --------

TOTAL FINANCING ACTIVITIES                                  554       2,414
                                                        --------    --------

  AND CASH EQUIVALENTS                                      (15)          2

CHANGE IN CASH AND CASH EQUIVALENTS                       1,992        (250)
                                                        --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                $ 3,407     $ 2,044
                                                        ========    ========


Amounts in Millions

1.   These statements should be read in conjunction with the Company's Annual
     Report on Form 10-K for the fiscal year ended June 30, 2000. The results of
     operations for the three-month and six-month periods ended December 31,
     2000 are not indicative necessarily of the results for the full year.

2.   Comprehensive Income - Total comprehensive income is comprised primarily of
     net earnings, net currency translation gains and losses and net unrealized
     gains and losses on securities and cash flow hedges. Total comprehensive
     income for the three months ended December 31, 2000 and 1999 was $1,175 and
     $983, respectively. For the six months ended December 31, 2000 and 1999,
     total comprehensive income was $2,219 and $2,223, respectively.

3.   Segment Information - The basis for presenting segment results generally is
     consistent with overall Company reporting. The primary difference relates
     to partially-owned operations, which are presented as if owned 100% in the
     operating segments. The adjustment to ownership basis is included in
     Corporate, which also includes certain financing and investment activities,
     goodwill amortization, charges related to the Organization 2005 program,
     and other general corporate income and expense items. Additionally, for
     interim periods certain non-recurring tax impacts are reflected on a
     discrete basis for management and segment reporting purposes, but are
     eliminated in Corporate to arrive at the Company's effective tax rate for
     the quarter.

Three Months Ended                Fabric &                 Beauty      Health       Food &
December 31                      Home Care     Paper        Care        Care       Beverage     Corporate     Total
------------------               ---------     -----       ------      ------      --------     ---------     -----
Net Sales
    2000                         $ 2,929       $ 3,047     $ 1,858     $ 1,150     $ 1,178      $    20       $ 10,182
    1999                           3,168         3,181       1,903       1,074       1,321          (59)        10,588

Earnings Before Income Taxes
    2000                             590           483         412         252         195         (151)         1,781
    1999                             653           498         420         202         219         (277)         1,715

Net Earnings
    2000                             390           295         286         164         124          (65)         1,194
    1999                             405           293         273         125         137         (107)         1,126

Six Months Ended                  Fabric &                 Beauty      Health       Food &
December 31                      Home Care     Paper        Care        Care       Beverage     Corporate     Total
------------------               ---------     -----       ------      ------      --------     ---------     -----
Net Sales
    2000                         $ 6,004       $ 6,086     $ 3,723     $ 2,140     $ 2,231      $   (33)      $ 20,151
    1999                           6,328         6,193       3,722       1,874       2,530         (140)        20,507

Earnings Before Income Taxes
    2000                           1,326           996         796         369         317         (320)         3,484
    1999                           1,427         1,073         777         349         388         (554)         3,460

Net Earnings
    2000                             888           624         553         245         199         (160)         2,349
    1999                             890           637         498         215         243         (210)         2,273

Item 2. Management Discussion and Analysis

The Company reported net earnings of $1.19 billion or $0.84 per share for the
quarter ended December 31, 2000. Results included a $120 million after-tax
charge related to the Organization 2005 restructuring program. Core net
earnings, which exclude the Organization 2005 charges, were $1.31 billion for
the quarter. Core net earnings per share were $0.93, a six percent increase
versus the prior year.

Net sales were $10.18 billion for the quarter. This is equal to year ago record
levels, after adjusting for a four percent unfavorable currency impact,
primarily the euro. Unit volume was down two percent against an all-time record
quarter last year, when new brand introductions, strong initiative activity and
marketing support, and geographic expansions of established brands fueled

Business segment after-tax earnings were up two percent as pricing and tax
savings offset the impact of foreign exchange and increased product costs,
driven by higher commodity-based prices. The sale of Clearasil added
approximately $146 million after tax to the corporate segment, and was an
important factor in delivering the six percent core net earnings per share

For the first six months, reported net earnings were $2.35 billion, or $1.66 per
share. Results included a charge of $205 million after-tax related to the
Organization 2005 program. Excluding Organization 2005 charges, core net
earnings were $2.55 billion, while core net earnings per share grew three
percent to $1.81. Worldwide sales were down two percent to $20.15 billion,
including a four percent effect due to unfavorable exchange rates, on flat unit

Gross margin was 46.8 percent for the current quarter compared to 47.5 percent
in the same quarter of the prior year, and 46.1 percent for the full fiscal year
ended June 30, 2000. Included in cost of products sold is a before-tax charge of
$81 million related to Organization 2005. Excluding Organization 2005 costs,
gross margin was 47.6 percent, down from the year ago quarter as
commodity-related cost increases and unfavorable exchange impacts were not fully
offset by pricing actions.

Operating margin was 16.8 percent for the quarter compared to 17.4 percent in
the same quarter a year ago and 14.9 percent for the prior fiscal year.
Excluding $154 million before tax in Organization 2005 charges, operating margin
was 18.3 percent. The decline in operating margin was primarily driven by the
gross margin decrease.

For the six-month period, gross margin was 46.8 percent, comparable to the
quarter results, and below the 47.5 percent reported in the same period a year

The following provides additional perspective on the Company's results by
business segment:

The Company's largest segment, fabric and home care, began to show signs of
share improvement, despite a continued difficult competitive environment. Net
earnings were $390 million, down four percent against particularly strong growth
in the prior year. Net sales were $2.93 billion, with a four percent volume
decline exacerbated by a five percent unfavorable exchange impact. The unit
volume trend reflects the strength of the year-ago base period, which included
the initial shipments of Swiffer, Febreze and Dryel, as well as the impact of
inventory builds in advance of last quarter's North America laundry price
increase. Recent pricing actions in Western Europe and laundry product
improvements in North America are designed to improve the value equation with
consumers to support achievement of our future growth objectives.

For the first six months of the fiscal year, unit volume was down two percent.
Sales fell five percent while earnings were equal to year-ago levels.

The paper segment posted a one percent growth in net earnings as pricing and a
disciplined focus on controllable costs countered exchange impacts and higher
raw material prices. Net earnings for the quarter were $295 million. Excluding a
five percent unfavorable exchange impact, net sales grew one percent to $3.05
billion. Pricing benefits, primarily in North America tissues and towel and baby
care, mitigated a slight decrease in unit volume. Growth in Latin America
volume, primarily in baby care, was offset by a decline in North America,
following particularly strong results in the prior year. This segment continues
to face competitive challenges and is focused on the best approaches to deliver
a winning consumer value equation in the future.

For the first half of the year, unit volume was flat while net sales and net
earnings were down two percent.

Beauty care also delivered net earnings growth, as the segment continues to
focus on premium products. Net earnings grew five percent to $286 million. The
business supported continued investment in business-building initiatives by
managing costs, primarily lower taxes. Share progress on key brands was not
directly reflected in top-line results due to trade inventory adjustments,
primarily related to the Pantene relaunch. Net sales were $1.86 billion, down
two percent driven entirely by a five percent negative impact of currency.
Excluding exchange, the net sales growth in the face of a two percent decline in
unit volume reflects the benefit of pricing as the business extends its hair and
skin care product lines. Notable progress was achieved in the hair care business
in Latin America, and earnings progress in China following challenges in the
prior year.

On a year-to-date basis, unit volume was down one percent while sales were flat.
Net earnings grew 11 percent driven by higher value initiatives.

On top of record results in the year ago quarter, the health care segment again
delivered excellent growth, reflecting strong execution of initiative plans. Net
earnings grew 31 percent to $164 million. Disciplined focus on costs
complemented top-line growth, particularly in Iams, North America
pharmaceuticals, and oral care. Net sales were up seven percent to $1.15
billion, including a three percent negative impact from weaker currencies.
Excluding this effect, the double-digit sales growth was driven by an 11 percent
increase in unit volume. Iams continues to exceed expectations, as the expansion
into new retail channels has delivered substantial growth, while it continues to
be number one in pet specialty outlets.

For the first six months of the year, unit volume increased 21 percent with net
sales and net earnings up 14 percent.

The food and beverage segment remained below the record level of a year ago,
reflecting the continued impacts of the competitive environment and transition
impacts of a re-sizing initiative on Pringles. Net earnings were $124 million,
down nine percent, due to lower volume versus record shipments in the year ago
quarter. Net sales were $1.18 billion, down 11 percent due to a seven percent
decline in unit volume and a three percent impact of unfavorable exchange rates.

Year-to-date, unit volume reflected a nine percent decline while net sales
declined 12 percent. Net earnings were 18 percent below a year ago.

Total debt increased $2.1 billion since June 30, 2000, as the Company increased
its foreign currency debt exposure to obtain favorable interest rates and to
fund the Company's ongoing share repurchase program.

For the six-month period ended December 31, 2000, cash generated from operating
activities totaled $2.3 billion, up from $1.5 billion in the same period in the
prior year. The increase resulted primarily from improvements in working

Acquisitions were down $3.1 billion versus the year ago period, which included
the Iams Company and Recovery Engineering. Capital spending declined $201
million versus the year ago period, reflecting slowing spending patterns while
continuing Organization 2005-related capital projects.

The Company confirmed that it is comfortable with the high end of the current
range of analysts' estimates for core net earnings per share growth for the
year. Based on current trends and expectations, the Company now expects unit
volume to be about flat for the year, and net sales, excluding exchange effects,
to be up two to four percent.

Unit volume for January - March is forecasted to be flat or down two percent
versus a strong prior year base period. Net sales excluding exchange effects are
expected to grow in the low single digits. Double-digit earnings per share
growth is expected for the quarter, with core net earnings per share in the
range of $0.72 - $0.74.

On June 9, 1999, the Company announced an Organization 2005 restructuring
program that is an integral part of the broader 2005 initiative, which includes
a realignment of the organization structure, work processes and culture designed
to accelerate growth by streamlining management decision-making, manufacturing
and other work processes. These changes are intended to increase the Company's
ability to innovate and bring initiatives to global markets more quickly. In
order to implement the program's structural changes and achieve the benefits of
faster growth, the Company will make a number of structural changes to both its
administrative and manufacturing operations.

Charges related to Organization 2005 consist primarily of costs related to the
consolidation of manufacturing facilities (including accelerated depreciation,
asset write-downs and contract termination costs) and employee separation costs.
During the quarter ended December 31, 2000, the Company recorded expenses
totaling $152 million before tax related to Organization 2005, as detailed in
the following table:

                              Organization 2005 July-December, 2000 Charges (before tax)
                                                                                  For the July-December Period
                                                      Prior        Current
                                     Beginning       Quarter       Quarter                              Charged        Ending
                                     Reserves        Charges         New         Total       Cash       Against       Reserves
                                    at 6/30/00     Jul-Sep 00      Charges      Charges      Spent      Assets        12/31/00
                                    ----------     ----------      -------      -------      -----      ------        --------
Employee separations                    $88            $32           $26          $58        $(37)        $-            $109
Asset write-downs                        --              1            14           15           -        (15)            -
Accelerated depreciation                 --             52            66          118           -       (118)            -
Other                                    --             22            46           68         (68)         -             -
                                        ---            ---           ---          ---        -----      -----           ----
                                         88            107           152          259        (105)      (133)            109

During October-December, 2000, Organization 2005 costs charged against the
Company's cost of products sold amounted to $81 million, while charges included
in marketing, research and administrative expenses and other expenses amounted
to $71 million. Charges related to Organization 2005 are included in Corporate
in the Company's segment disclosures. The underlying plant closures and
consolidations will impact all regions and product segments. Planned plant
closures and consolidations will not all be executed immediately due to either
capacity or logistics constraints.

Employee separation charges in October-December, 2000 are associated with
severance packages for approximately 440 people, representing primarily
administrative employees in North America, Asia, and Europe. The predominantly
voluntary packages are formula-driven, based on salary levels and past service.
Severance costs related to voluntary separations are charged to earnings when
the employee accepts the offer in accordance with P&G policy for such programs.
On average, net enrollment is expected to decline by approximately 85% of total
separations, as some terminations will be partially offset through increased
enrollment at remaining sites. Of total separations expected through fiscal
2001, approximately half will take place in manufacturing with the balance in
administrative functions. Separation costs related to manufacturing employees
are included in cost of products sold, while those for administrative employees
are reported in marketing, research and administrative expenses.

Charges for accelerated depreciation relate to long-lived assets that will be
taken out of service prior to the end of their normal service period due to
manufacturing consolidations, technology standardization and closures that will
occur primarily over the next two years as a result of the Organization 2005
program. The Company has changed the estimated useful lives of such assets,
resulting in an acceleration of depreciation. Approximately 70% of the $66
million of accelerated depreciation recorded in the October-December, 2000
quarter is concentrated in the paper segment and reflects the standardization of
manufacturing and other work processes being undertaken in that segment. Most of
the remaining balance is concentrated in the fabric and home care, food and
beverage and beauty care segments.

Charges for other costs related to Organization 2005 amounted to $46 million
during the October-December, 2000 quarter, and consisted primarily of costs
associated with relocation, training and other Organization 2005-related


Item 6.  Exhibits and Reports on Form 8-K

(a)     Exhibits

        (3-1)    Amended Articles of Incorporation (Incorporated by reference to
                 Exhibit (3-1) of the Company's Annual Report on Form 10-K for
                 the year ended June 30, 1998).

        (3-2)    Regulations (Incorporated by reference to Exhibit (3-2) of the
                 Company's Quarterly Report on Form 10-Q for the quarter ended
                 September 30, 1998).

        (11)     Computation of Earnings per Share.

        (12)     Computation of Ratio of Earnings to Fixed Charges.

(b)     Reports on Form 8-K

        The Company filed Current Reports on Form 8-K containing information
        pursuant to Item 5 ("Other Events") dated October 31, 2000, relating
        to the announcement of earnings for the July-September 2000 quarter;
        dated November 20, 2000, relating to Bristol-Myers Squibb's
        announcement of its intention to sell its hair care business; and
        dated December 12, 2000, relating to confirmation of previously issued
        guidance for the October-December 2000 quarter and fiscal year 2001.

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.


D. R. Walker
D. R. Walker
Vice President and Comptroller
(Principal Accounting Officer)

Date:  February 1, 2001

                                  EXHIBIT INDEX

Exhibit No.                                                             Page No.

  (3-1) Amended Articles of Incorporation (Incorporated by reference to
        Exhibit (3-1) of the Company's Annual Report on Form 10-K for
        the year ended June 30, 1998).

  (3-2) Regulations (Incorporated by reference to Exhibit (3-2) of the
        Company's Quarterly Report on Form 10-Q for the quarter ended
        September 30, 1998).

   (11) Computation of Earnings per Share                                   12

   (12) Computation of Ratio of Earnings to Fixed Charges                   13