Proctor and Gamble 2003 Annual Report Download - page 51

Notes to Consolidated Financial Statements 49The Procter and Gamble Company and Subsidiaries
Under the defined contribution plans, the Company generally makes
annual contributions to participants’ accounts based on individual base
salaries and years of service. In the United States, the Company makes
annual contributions to participants’ accounts that do not exceed 15%
of total participants’ annual wages and salaries.
The Company maintains The Procter & Gamble Profit Sharing Trust
(Trust) and Employee Stock Ownership Plan (ESOP) to provide funding
for the U.S. defined contribution plan, as well as other retiree benefits.
Operating details of the ESOP are provided at the end of this Note. The
fair value of the ESOP Series A shares serves to reduce the Company’s
cash contribution required to fund the profit sharing plan contributions
earned. Under the American Institute of Certified Public Accountants
(AICPA) Statement of Position (SOP) 76-3, shares of the ESOP are allo-
cated at original cost based on debt service requirements, net of advan-
ces made by the Company to the Trust.
Defined contribution expense pursuant to this plan was $286, $279
and $303 in 2003, 2002 and 2001, respectively, which approximates
the amount funded by the Company.
Defined Benefit Retirement Plans and Other Retiree Benefits
Certain other employees, primarily outside the United States, are cov-
ered by local defined benefit pension, as well as other retiree benefit
plans.
The Company also provides certain other retiree benefits, primarily
health care and life insurance, 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. These benefits primarily are funded by
ESOP Series B shares as well as certain other assets contributed by the
Company.
Stock options outstanding at June 30, 2003 were in the following exer-
cise price ranges:
Stock options exercisable at June 30, 2003 were in the following exer-
cise price ranges:
As a component of its treasury share repurchase program, the Company
generally repurchases common shares to fund the stock options granted.
In limited cases, the Company also issues stock appreciation rights,
generally in countries where stock options are not permitted by local
governments. The obligations and associated compensation expense are
adjusted for changes in intrinsic value. The impact of these adjustments
is insignificant.
Note 9 Postretirement Benefits and
Employee Stock Ownership Plan
The Company offers various postretirement benefits to its employees.
Defined Contribution Retirement Plans
The most prevalent employee benefit plans offered are defined contri-
bution plans, which cover substantially all employees in the United
States as well as employees in certain other countries. These plans are
fully funded.
Millions of dollars except per share amounts
Range of Prices
Number
Exercisable
(Thousands)
15,847
7,938
16,826
18,490
$28 to 46
54 to 66
67 to 85
85 to 106
Weighted
Average
Exercise Price
$35.78
59.77
82.63
95.02
Exercisable Options
Range of Prices
Weighted Avg.
Remaining
Contractual
Life Years
2.0
10.2
9.7
10.0
Number
Outstanding
(Thousands)
15,847
36,470
40,575
36,907
$28 to 46
54 to 66
67 to 85
85 to 106
Weighted Avg.
Exercise Price
$35.78
61.35
74.85
93.17
Outstanding Options