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, 2002, 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
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001
AND 2000 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, 2002 and 2001 2
Combined Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2002, 2001 and 2000 3
Notes to Combined Financial Statements for the Years
Ended December 31, 2002, 2001 and 2000 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, 2002 and 2001 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, 2002. 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 audit in accordance with auditing standards generally accepted
in the 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, 2002 and 2001 and the changes in net assets available for benefits
for each of the three years in the period ended December 31, 2002, 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, are 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
28 Muharram, 1424
March 31, 2003
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, 2002 AND 2001
(Expressed in Saudi Riyals)
---------------------------------------------------------------------------------------------
2002 2001
-----------------------------
ASSETS
Investment in Procter & Gamble securities at fair values
(cost of 2002: SR 32,493,550 and 2001: SR 37,284,391) 38,141,784 47,235,044
Investment in J.M. Smucker Company securities at fair values
(cost of 2002: SR 265,120 and 2001: SR Nil) 299,028 -
Loans to participants 681,342 1,084,005
Other receivable 387,697 244,475
Cash 4,700,456 6,530,758
-----------------------------
Total assets 44,210,307 55,094,282
LIABILITIES
Amounts due to employees 17,345 42,800
-----------------------------
NET ASSETS AVAILABLE FOR BENEFITS 44,192,962 55,051,482
=============================
The combined financial statements were approved on March 31, 2003.
Trustee:
Trustee:
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, 2002, 2001 AND 2000
(Expressed in Saudi Riyals)
------------------------------------------------------------------------------------------------------------
2002 2001 2000
--------------------------------------------
ADDITIONS
Basic employee contributions 2,211,841 2,637,659 2,808,388
Additional employee contributions 1,723,766 2,440,765 3,247,339
Companies' contributions 1,672,448 1,828,344 1,905,551
--------------------------------------------
Total contributions 5,608,055 6,906,768 7,961,278
--------------------------------------------
Investment income/(loss):
Smuckers share 363,246 - -
Dividends 608,561 672,849 590,382
Interest income 65,556 115,780 286,775
Unrealized gain/(loss) 1,938,332 (3,003,643) (17,211,651)
--------------------------------------------
Total investment income/(loss) 2,975,695 (2,215,014) (16,334,494)
--------------------------------------------
DEDUCTIONS
Distribution and withdrawals to participants
at market value (19,442,270 ) (10,387,149) (2,559,086)
--------------------------------------------
Total deductions (19,442,270) (10,387,149) (2,559,086)
--------------------------------------------
NET (DECREASE)/INCREASE (10,858,520) (5,695,395) 10,932,302
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 55,051,482 60,746,877 71,679,179
--------------------------------------------
End of year 44,192,962 55,051,482 60,746,877
============================================
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
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------
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 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.
The numbers of participating employees under each of the aforementioned
programs at December 31, 2002 were 279, 96 and 59 (2001: 343,91 and 62,
2000: 386,42 and 50), 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.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------
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 he
chooses to, up to the extent of his 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 schedule of investments. These are paid to the employee
on his separation from the Companies unless he 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.
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).
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------
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.
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 Plans invest in Procter & Gamble 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
Procter & Gamble securities, it is reasonably possible that changes in the
value of Procter & Gamble securities will occur in the near term and that
such changes could materially affect the amount reported in the statements
of net assets available for benefits.
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.
THE J.M. SMUCKER COMPANY COMMON STOCK
In May of 2002, the Jif peanut butter and Crisco shortening brands were
spun-off to The Procter & Gamble Company's ("P&G") shareholders and
subsequently merged into The J.M. Smucker Company ("Smuckers"). As a
result of the spin-off, participants holding P&G common stock received one
share of Smuckers stock for every fifty shares of P&G stock. The cost
basis of the P&G common stock prior to the Smuckers spin-off was allocated
between P&G common stock held and the Smuckers common stock received.
Participants are not permitted to purchase additional shares of Smuckers.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------
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 2002, 2001 and 2000 were not
significant.
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.
CLASS ACTION LAWSUIT
During March of 2000, a class action lawsuit was filed against P&G, the
Companies' parent company, by shareholders of P&G. The class was certified
on October 29, 2001 by the United States District Court for the Southern
District of Ohio, Western Division (the "Court"), and a settlement of
US$49,000,000 has been approved. The Plans joined the class of plaintiffs
on March 29, 2002. Once the allocation of the settlement is determined and
approved by the court, the Plans will receive their portion of the
settlement amount to allocate to employee accounts.
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, 2002, 2001 AND 2000
(Expressed in Saudi Riyals)
------------------------------------------------------------------------------------------------------------------------------------
2002 2001 2000
-------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET NUMBER OF MARKET NUMBER OF MARKET
SHARES COST VALUE SHARES COST VALUE SHARES COST VALUE
-------------------------------------------------------------------------------------------------------------
Procter & Gamble
securities 118,951 32,493,550 38,141,784 159,224 37,284,391 47,235,044 180,906 39,013,998 53,197,576
J.M. Smucker Company
securities 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 April 14, 2003.
Employee Savings and Thrift Plan (Saudi Arabia)
By: /s/FAHAD A. ABDULKARIM
----------------------------
Fahad A. Abdulkarim
By: /s/MOHAMMED M. AL-GHAMDI
-----------------------------
Mohammed M. Al-Ghamdi
EXHIBIT INDEX
Exhibit No. Page No.
23 Consent of Deloitte & Touche