THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEETS
Amounts in millions

                                                                  December 31        June 30
ASSETS                                                               2004             2004
                                                                 -------------    ------------
CURRENT ASSETS
     Cash and cash equivalents                                        $ 7,676         $ 5,469
     Investment securities                                                494             423
     Accounts receivable                                                4,689           4,062
     Inventories
         Materials and supplies                                         1,476           1,191
         Work in process                                                  380             340
         Finished goods                                                 3,320           2,869
                                                                 -------------    ------------
     Total inventories                                                  5,176           4,400
     Deferred income taxes                                              1,017             958
     Prepaid expenses and other receivables                             1,944           1,803
                                                                 -------------    ------------

TOTAL CURRENT ASSETS                                                   20,996          17,115

PROPERTY, PLANT AND EQUIPMENT
     Buildings                                                          5,433           5,206
     Machinery and equipment                                           20,395          19,456
     Land                                                                 667             642
                                                                 -------------    ------------
                                                                       26,495          25,304
     Accumulated depreciation                                         (11,993)        (11,196)
                                                                 -------------    ------------

NET PROPERTY, PLANT AND EQUIPMENT                                      14,502          14,108

GOODWILL AND OTHER INTANGIBLE ASSETS
     Goodwill                                                          20,651          19,610
     Trademarks and other intangible assets, net                        4,655           4,290
                                                                 -------------    ------------

NET GOODWILL AND OTHER INTANGIBLE ASSETS                               25,306          23,900

OTHER NON-CURRENT ASSETS                                                2,228           1,925
                                                                 -------------    ------------

TOTAL ASSETS                                                         $ 63,032        $ 57,048
                                                                 =============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable                                                 $ 3,264         $ 3,617
     Accrued and other liabilities                                      8,083           7,689
     Taxes payable                                                      2,695           2,554
     Debt due within one year                                           9,861           8,287
                                                                 -------------    ------------

TOTAL CURRENT LIABILITIES                                              23,903          22,147

LONG-TERM DEBT                                                         13,385          12,554

DEFERRED INCOME TAXES                                                   2,307           2,261

OTHER NON-CURRENT LIABILITIES                                           3,553           2,808
                                                                 -------------    ------------

TOTAL LIABILITIES                                                      43,148          39,770

SHAREHOLDERS' EQUITY
     Preferred stock                                                    1,505           1,526
     Common stock - shares outstanding Dec 31   2,522.6                 2,523
                                       June 30  2,543.8                                 2,544
     Additional paid-in capital                                         2,779           2,425
     Reserve for ESOP debt retirement                                  (1,271)         (1,283)
     Accumulated other comprehensive income                              (366)         (1,545)
     Retained earnings                                                 14,714          13,611
                                                                 -------------    ------------

TOTAL SHAREHOLDERS' EQUITY                                             19,884          17,278
                                                                 -------------    ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $ 63,032        $ 57,048
                                                                 =============    ============

See accompanying Notes to Consolidated Financial Statements