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, 2005, 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, 2005, 2004,
AND 2003 AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Combined Statements of Net Assets Available for Plan Benefits
as of December 31, 2005 and 2004 2
Combined Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 2005, 2004 and 2003 3
Notes to Combined Financial Statements for the Years Ended
December 31, 2005, 2004 and 2003 4-7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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
plan 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, 2005
and 2004, and the related combined statements of changes in net assets available
for plan benefits for each of the three years in the period ended December 31,
2005. 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 audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). 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. The Plans are not
required to have, nor were we engaged to perform, audits of their internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the Plans' internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined financial statements, 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 plan benefits of the Plans as of
December 31, 2005 and 2004, and the changes in net assets available for plan
benefits for each of the three years in the period ended December 31, 2005, in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche
Bakr Abulkhair & Co.
/S/ AL-MUTAHHAR Y. HAMIDUDDIN
-----------------------------
Al-Mutahhar Y. Hamiduddin
License No. 296
March 18, 2006
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
COMBINED STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2005 AND 2004
(Expressed in Saudi Riyals)
-----------------------------------------------------------------------------------------
2005 2004
-------------------------
ASSETS
Investments, at fair value:
Cash 3,675,332 3,940,794
The Procter & Gamble Company common stock - 181,718
(cost $29,858,963) at December 31, 2005; 199,826 shares
shares (cost $29,202,627) at December 31, 2004 39,431,472 41,262,967
The J.M. Smucker Company common stock - 714 shares (cost
$96,135) at December 31, 2005; 971 shares (cost $130,739) at
December 31, 2004 117,820 171,343
Total investments 43,224,624 45,375,104
Loans to participants 390,962 661,201
Other receivable 502,482 512,729
-------------------------
Total assets 44,118,068 46,549,034
LIABILITIES
Amounts due to employees 34,743 271,075
-------------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS 44,083,325 46,277,959
=========================
The accompanying notes form an integral part of these combined 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 PLAN BENEFITS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------------------------------------------
2005 2004 2003
---------------------------------------------------------
ADDITIONS
Basic employee contributions 1,887,084 1,864,124 1,880,357
Additional employee contributions 1,884,656 2,434,885 1,269,062
Companies' contributions 1,503,964 1,591,323 1,516,176
---------------------------------------------------------
Total contributions 5,275,704 5,890,332 4,665,595
---------------------------------------------------------
Investment income
Dividends 559,672 529,592 508,199
Interest income 28,638 2,369 25,018
Net appreciation in fair value of
investments 626,345 2,724,551 7,053,752
---------------------------------------------------------
Total investment income 1,214,655 3,256,512 7,586,969
---------------------------------------------------------
Total additions 6,490,359 9,146,844 12,252,564
---------------------------------------------------------
DEDUCTIONS
Distribution and withdrawals to participants
at market value (8,638,303) (5,389,458) (13,108,607)
Deemed distributions of loans to participants (46,690) (325,449) (490,897)
---------------------------------------------------------
Total deductions (8,684,993) (5,714,907) (13,599,504)
---------------------------------------------------------
NET (DECREASE)/INCREASE (2,194,634) 3,431,937 (1,346,940)
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 46,277,959 42,846,022 44,192,962
---------------------------------------------------------
End of year 44,083,325 46,277,959 42,846,022
=========================================================
The accompanying notes form an integral part of these combined financial statements
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
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 The Procter & Gamble Company ("P&G")
securities.
o Invest the full amount in bank deposits.
o Invest 50% of the amount to purchase P&G securities, and 50% in bank
deposits.
The numbers of participating employees under each of the aforementioned
programs at December 31, 2005 were 150, 39 and 16 (2004: 159, 43 and 15;
2003: 198, 80 and 37), 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
P&G securities.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
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 P&G 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 vesting schedule. 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 COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
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 P&G
securities, it is reasonably possible that changes in the value of P&G
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.
VALUATION OF INVESTMENTS
Investments in P&G and J.M. Smucker Company securities are valued at the
closing price on the New York Stock Exchange. Bank deposits are stated at
cost.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
EMPLOYEE SAVINGS AND THRIFT PLANS -
MODERN INDUSTRIES COMPANY (JEDDAH),
MODERN INDUSTRIES COMPANY (DAMMAM)
AND MODERN PRODUCTS COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Expressed in Saudi Riyals)
--------------------------------------------------------------------------------
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 2005, 2004 and 2003 were not significant.
3. 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 P&G securities are received net of deduction of
withholding taxes by the Government of the United States of America.
4. THE J.M. SMUCKER COMPANY COMMON STOCK
In May of 2002, the Jif peanut butter and Crisco shortening brands were
spun-off to P&G shareholders and subsequently merged into The J.M. Smucker
Company ("Smucker"). As a result of the spin-off, participants holding P&G
common stock received one share of Smucker stock for every fifty shares of
P&G stock. The cost basis of the P&G common stock prior to the Smucker
spin-off was allocated between P&G common stock held and the Smucker common
stock received. Participants are not permitted to purchase additional
shares of Smucker.
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 March 30, 2006.
Employee Savings and Thrift Plan (Saudi Arabia)
By: /s/FAHAD A. ALSUKAIT
----------------------------
Fahad A. Alsukait
By: /s/JAMAL SHOWAIKHAT
-----------------------------
Jamal Showaikhat
EXHIBIT INDEX
Exhibit No.
23 Consent of Deloitte & Touche, Bahr Abulkhair & Co.