Proctor and Gamble 2005 Annual Report Download - page 58

Management’s฀Discussion฀and฀AnalysisThe฀Procter฀&฀Gamble฀Company฀and฀Subsidiaries
54
Stock฀options฀outstanding฀at฀June฀30,฀2005฀were฀in฀the฀following฀
exercise฀price฀ranges:฀
Stock฀options฀exercisable฀at฀June฀30,฀2005฀were฀in฀the฀following฀exercise฀
price฀ranges:฀
Note฀8฀Postretirement฀Benefits฀and฀Employee฀Stock฀
Ownership฀Plan฀
The฀Company฀offers฀various฀postretirement฀benefits฀to฀its฀employees.
Defined฀Contribution฀Retirement฀Plans
The฀most฀prevalent฀employee฀pension฀plans฀offered฀are฀defined฀฀
contribution฀plans,฀which฀cover฀substantially฀all฀employees฀in฀the฀U.S.,฀฀
as฀well฀as฀employees฀in฀certain฀other฀countries.฀These฀plans฀are฀fully฀฀
funded.฀We฀generally฀make฀contributions฀to฀participants฀based฀on฀฀
individual฀base฀salaries฀and฀years฀of฀service.฀In฀the฀U.S.,฀the฀contribution฀฀
is฀set฀annually.฀Total฀contributions฀have฀approximated฀15%฀of฀total฀฀
participants’฀annual฀wages฀and฀salaries฀for฀2005,฀2004฀and฀2003.฀
The฀Company฀maintains฀The฀Procter฀&฀Gamble฀Profit฀Sharing฀Trust฀
(Trust)฀and฀Employee฀Stock฀Ownership฀Plan฀(ESOP)฀to฀provide฀a฀portion฀
of฀the฀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฀reduces฀our฀cash฀
contribution฀required฀to฀fund฀the฀U.S.฀defined฀contribution฀plan.฀Defined฀
contribution฀expense,฀which฀approximates฀our฀cash฀contribution฀to฀
the฀plan฀that฀is฀funded฀in฀the฀subsequent฀year,฀was฀$203,฀$274฀and฀฀
$286฀in฀2005,฀2004฀and฀2003,฀respectively.฀
Defined฀Benefit฀Retirement฀Plans฀and฀Other฀Retiree฀Benefits
Certain฀other฀employees,฀primarily฀outside฀the฀U.S.,฀are฀covered฀by฀local฀
defined฀benefit฀pension฀plans฀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฀cost฀฀
sharing฀with฀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.
The฀Medicare฀Prescription฀Drug,฀Improvement฀and฀Modernization฀Act฀
of฀2003฀introduced฀a฀Medicare฀prescription-drug฀benefit฀beginning฀in฀
2006฀as฀well฀as฀a฀federal฀subsidy฀to฀sponsors฀of฀retiree฀health฀care฀
plans฀that฀provide฀a฀benefit฀at฀least฀“actuarially฀equivalent”฀to฀the฀
Medicare฀benefit.฀The฀impact฀of฀this฀Act฀was฀included฀in฀the฀June฀30,฀
2004฀measurement฀process฀for฀other฀retiree฀benefit฀plans.฀The฀Act฀did฀
not฀have฀a฀material฀impact฀to฀the฀net฀periodic฀retiree฀medical฀benefit฀
cost฀or฀to฀expected฀benefit฀payments.฀
฀
Obligation฀and฀Funded฀Status.฀We฀use฀a฀June฀30฀measurement฀date฀for฀
our฀defined฀benefit฀retirement฀plans฀and฀other฀retiree฀benefit฀plans.฀The฀
following฀provides฀a฀reconciliation฀of฀benefit฀obligations,฀plan฀assets฀
and฀funded฀status฀of฀these฀plans:
Notes฀to฀Consolidated฀Financial฀StatementsThe฀Procter฀&฀Gamble฀Company฀and฀Subsidiaries
Millions฀of฀dollars฀except฀per฀share฀amounts฀or฀otherwise฀specified.
฀฀ Outstanding฀Options฀
฀฀฀ ฀ ฀ Weighted฀Avg.
฀฀฀ Number฀ ฀ Remaining
฀฀฀ Outstanding฀ Weighted฀Avg.฀ Contractual
฀Range฀of฀Prices฀ (Thousands)฀ Exercise฀Price฀ Life฀in฀Years
$20.29฀to฀31.02฀   
31.25฀to฀34.84฀   
35.10฀to฀46.24฀   
48.73฀to฀56.52฀   
฀฀ Exercisable฀Options฀
฀฀฀ ฀ Number฀ Weighted
฀฀฀ ฀ Exercisable฀ Average
฀Range฀of฀Prices฀฀ (Thousands)฀ Exercise฀Price
$20.29฀to฀31.02฀  
31.25฀to฀34.84฀฀  
35.10฀to฀46.24฀  
48.73฀to฀56.52฀  