Proctor and Gamble 2000 Annual Report Download - page 37

The Procter & Gamble Company and Subsidiaries
35
Millions of dollars except per share amounts
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes information about stock options
outstanding at June 30, 2000:
Options Outstanding
Number Weighted Avg.
Outstanding Weighted Avg. Remaining
Range of prices (Thousands) Exercise Price Contractual Life
$20 to 30 19,517 $25.61 2.2 years
33 to 46 15,124 37.89 5.1
57 to 85 28,044 75.52 7.3
86 to 107 20,059 95.59 13.5
The following table summarizes information about stock options
exercisable at June 30, 2000:
Options Exercisable
Number
Exercisable Weighted Avg.
Range of prices (Thousands) Exercise Price
$20 to 30 19,517 $25.61
33 to 46 15,124 37.89
57 to 85 19,547 73.41
86 to 107 479 91.14
NOTE 8 EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains The Procter & Gamble Profit Sharing Trust
and Employee Stock Ownership Plan (ESOP) to provide funding for
two primary postretirement benefits: a defined contribution profit
sharing plan and certain U.S. postretirement health care benefits.
The ESOP borrowed $1,000 in 1989, which has been guaranteed by
the Company. The proceeds were used to purchase Series A ESOP
Convertible Class A Preferred Stock to fund a portion of the
defined contribution plan. Principal and interest requirements are
$117 per year, paid by the trust from dividends on the preferred
shares and from cash contributions and advances from the
Company. The shares are convertible at the option of the holder
into one share of the Company’s common stock. Annual credits to
participants’ accounts are based on individual base salaries and
years of service, and do not exceed 15% of total participants’
annual salaries and wages. The liquidation value is equal to the
issue price of $13.75 per share.
Years ended June 30
2000 1999 1998
ESOP preferred shares allocated
at market value $313 $279 $235
Company contributions 118 35
Benefits earned 314 297 270
In 1991, the ESOP borrowed an additional $1,000, also guaranteed
by the Company. The proceeds were used to purchase Series B
ESOP Convertible Class A Preferred Stock to fund a portion of
retiree health care benefits. Debt service requirements are $94 per
year, funded by preferred stock dividends and cash contributions
from the Company. Each share is convertible at the option of the
holder into one share of the Company’s common stock. The liqui-
dation value is equal to the issue price of $26.12 per share.
Shares in Thousands
2000 1999 1998
Outstanding, June 30
Series A 55,925 58,342 60,635
Series B 37,085 37,485 37,805
Shares of the ESOP are allocated at original cost based on debt
service requirements, net of advances made by the Company to
the trust. Dividends on all preferred shares, net of related tax
benefit, are charged to retained earnings. The preferred shares
held by the ESOP are considered outstanding from inception for
purposes of calculating diluted net earnings per common share.
The fair value of the Series A shares serves to reduce the
Company’s cash contribution required to fund the profit sharing
plan contributions earned. The Series B shares are considered
plan assets of the other retiree benefits plan.
NOTE 9 POSTRETIREMENT BENEFITS
The Company offers various postretirement benefits to its employees.
Defined Contribution Retirement Plans
Within the U.S., the most significant retirement benefit is the
defined contribution profit sharing plan described in Note 8.
Other Retiree Benefits
The Company also provides certain health care and life insurance
benefits for substantially all U.S. employees who become eligible
for these benefits when they meet minimum age and service
requirements. Generally, the health care plans require contribu-
tions from retirees and pay a stated percentage of expenses,
reduced by deductibles and other coverages. Retiree contribu-
tions change annually in line with health care cost trends. These
benefits are partially funded by an ESOP, as well as certain other
assets contributed by the Company.
Certain other employees, primarily outside the U.S., are covered by
local defined benefit pension, health care and life insurance plans.