Review the consolidated balance sheets and the related disclosures and respond to the following questions.

Debt:

1. As of June 30, 2015, what is the dollar amount of the current portion of the long-term debt that is due within a year following the June 30, 2015, issue date of the financial statement?
2. What is a debenture?
3. Has the company issued any debentures? If so, what is the dollar amount of debentures owed on the issue date of the financial statement?
4. The disclosures indicate that some of the long-term debt is denominated in theeuro rather than the U.S. dollar. Explain how the practice of issuing debt in a currency other than your domestic currency (assume the U.S. dollar is the domestic currency for Procter & Gamble) creates an exposure to gains and losses related to exchange fluctuations.

Go to... Toggle SGML Header (+) Section 1: 10K (10K) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10K (Mark one) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended June 30, 2015 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1434 THE PROCTER & GAMBLE COMPANY One Procter & Gamble Plaza, Cincinnati, Ohio 45202 Telephone (513) 9831100 IRS Employer Identification No. 310411980 State of Incorporation: Ohio Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, without Par Value New York Stock Exchange, NYSE EuronextParis Indicate by check mark if the registrant is a wellknown seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation SK is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10K or any amendment to this Form 10K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer or a smaller reporting company (as defined in Rule 12b2 of the Exchange Act). Large accelerated filer Accelerated filer Nonaccelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Exchange Act). Yes No The aggregate market value of the voting stock held by nonaffiliates amounted to $246 billion on December 31, 2014. There were 2,712,561,733 shares of Common Stock outstanding as of July 31, 2015. Documents Incorporated by Reference Portions of the Proxy Statement for the 2015 Annual Meeting of Shareholders which will be filed within one hundred and twenty days of the fiscal year ended June 30, 2015 (2015 Proxy Statement) are incorporated by reference into Part III of this report to the extent described herein. The Procter & Gamble Company 12 PART I Item 1. Business. Additional information required by this item is incorporated herein by reference to Management's Discussion and Analysis (MD&A) Note 1 to our Consolidated Financial Statements and Note 12 to our Consolidated Financial Statements. Unless the context indicates otherwise, the terms the "Company," "P&G," "we," "our" or "us" as used herein refer to The Procter & Gamble Company (the registrant) and its subsidiaries. The Procter & Gamble Company is focused on providing branded consumer packaged goods of superior quality and value to improve the lives of the world's consumers. The Company was incorporated in Ohio in 1905, having been built from a business founded in 1837 by William Procter and James Gamble. Today, we sell our products in more than 180 countries and territories. Throughout this Form 10K, we incorporate by reference information from other documents filed with the Securities and Exchange Commission (SEC). The Company's Annual Report on Form 10K, quarterly reports on Form 10Q and current reports on Form 8K, and amendments thereto, are filed electronically with the SEC. The SEC maintains an internet site that contains these reports at: www.sec.gov. You can also access these reports through links from our website at: www.pginvestor.com. Copies of these reports are also available, without charge, by contacting Computershare Inc., 250 Royall Street, Canton, MA 02021. Financial Information about Segments As of June 30, 2015 the Company has five reportable segments under U.S. GAAP: Beauty, Hair and Personal Care Grooming Health Care Fabric Care and Home Care and Baby, Feminine and Family Care. Many of the factors necessary for understanding these businesses are similar. Operating margins of the individual businesses vary due to the nature of materials and processes used to manufacture the products, the capital intensity of the businesses and differences in selling, general and administrative expenses as a percentage of net sales. Net sales growth by business is also expected to vary slightly due to the underlying growth of the markets and product categories in which they operate. While none of our reportable segments are highly seasonal, components within certain reportable segments, such as Appliances (Grooming) and Prestige Fragrances (Beauty, Hair and Personal Care) are seasonal. Additional information about our reportable segments can be found in the MD&A and Note 12 to our Consolidated Financial Statements. Narrative Description of Business Business Model. Our business model relies on the continued growth and success of existing brands and products, as well as the creation of new products. The markets and industry segments in which we offer our products are highly competitive. Our products are sold in more than 180 countries and territories around the world primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, ecommerce, highfrequency stores and pharmacies. We utilize our superior marketing and online presence to win with consumers at the "zero moment of truth" when they are searching for information about a brand or product. We work collaboratively with our customers to improve the instore presence of our products and win the "first moment of truth" when a consumer is shopping in the store. We must also win the "second moment of truth" when a consumer uses the product, evaluates how well it met his or her expectations and decides whether it was a good value. We believe we must continue to provide new, innovative products and branding to the consumer in order to grow our business. Research and product development activities, designed to enable sustained organic growth, continued to carry a high priority during the past fiscal year. While many of the benefits from these efforts will not be realized until future years, we believe these activities demonstrate our commitment to future growth. Key Product Categories. Information on key product categories can be found in Note 12 to our Consolidated Financial Statements. Key Customers. Our customers include mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, distributors, ecommerce and highfrequency stores. Sales to WalMart Stores, Inc. and its affiliates represent approximately 14% of our total revenue in 2015, 2014 and 2013. No other customer represents more than 10% of our net sales. Our top ten customers account for approximately 33% of our total sales in 2015, 2014 and 2013. The nature of our business results in no material backlog orders or contracts with the government. We believe our practices related to working capital items for customers and suppliers are consistent with the industry segments in which we compete. Sources and Availability of Materials. Almost all of the raw and packaging materials used by the Company are purchased from others, some of which are singlesource suppliers. We produce certain raw materials, primarily chemicals, for further use in the manufacturing process. In addition, fuel, natural gas and derivative products are important commodities consumed in our manufacturing process and in the distribution of input materials and finished product to customers. The prices we pay for materials and other commodities are subject to fluctuation. When prices for these items change, we may or may not pass the change to our customers. The Company purchases a substantial variety of other raw and packaging materials, none of which is material to our business taken as a whole. Trademarks and Patents. We own or have licenses under patents and registered trademarks which are used in connection with our activity in all businesses. Some of these patents or licenses cover significant product formulation and processes 13 The Procter & Gamble Company used to manufacture our products. The trademarks are important to the overall marketing and branding of our products. All major trademarks in each business are registered. In part, our success can be attributed to the existence and continued protection of these trademarks, patents and licenses. Competitive Condition. The markets in which our products are sold are highly competitive. Our products compete against similar products of many large and small companies, including well known global competitors. In many of the markets and industry segments in which we sell our products we compete against other branded products as well as retailers' privatelabel brands. We are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position. We support our products with advertising, promotions and other marketing vehicles to build awareness and trial of our brands and products in conjunction with an extensive sales force. We believe this combination provides the most efficient method of marketing for these types of products. Product quality, performance, value and packaging are also important differentiating factors. Research and Development Expenditures. Research and development expenditures enable us to develop technologies and obtain patents across all categories in order to meet the needs and improve the lives of our consumers. Total research and development expenses were $2.0 billion in 2015 and 2014 and $1.9 billion in 2013. Expenditures for Environmental Compliance. Expenditures for compliance with federal, state and local environmental laws and regulations are fairly consistent from year to year and are not material to the Company. No material change is expected in fiscal year 2016. Employees. Total number of employees is an estimate of total Company employees excluding interns, coops and employees of joint ventures as of the years ended June 30. The number of employees includes manufacturing and nonmanufacturing employees. A discussion of progress on nonmanufacturing enrollment objectives is included in Note 3 to our Consolidated Financial Statements. The number of employees includes employees of discontinued operations. Total Number of Employees 2015 110,000 2014 118,000 2013 121,000 2012 126,000 2011 129,000 2010 127,000 Financial Information about Foreign and Domestic Operations. Net sales in the U.S. account for approximately 37% of total net sales. No other individual country exceeds 10% of total net sales. Operations outside the U.S. are generally characterized by the same conditions discussed in the description of the business above and may be affected by additional factors including changing currency values, different rates of inflation, economic growth and political and economic uncertainties and disruptions. Our sales by geography for the fiscal years ended June 30 were as follows: 2015 2014 2013 North America (1) 40% 38% 39% Europe 26% 28% 27% Asia Pacific 8% 8% 9% Greater China 8% 8% 8% IMEA (2) 8% 8% 7% Latin America 10% 10% 10% (1) (2) North America includes results for the United States, Canada and Puerto Rico only. IMEA includes India, Middle East and Africa. Net sales and total assets in the United States and internationally were as follows (in billions): United States International 2015 $28.3 $48.0 2014 $28.3 $52.2 2013 $28.1 $52.0 2015 $65.0 $64.5 2014 $68.8 $75.5 2013 $68.3 $71.0 Net Sales (years ended June 30) Total Assets (years ended June 30) Item 1A. Risk Factors. We discuss our expectations regarding future performance, events and outcomes, such as our business outlook and objectives in this Form 10K, quarterly reports, press releases and other written and oral communications. All statements, except for historical and present factual information, are \"forwardlooking statements\" and are based on financial data and business plans available only as of the time the statements are made, which may become outdated or incomplete. We assume no obligation to update any forwardlooking statements as a result of new information, future events or other factors. Forwardlooking statements are inherently uncertain, and investors must recognize that events could significantly differ from our expectations. The following discussion of \"risk factors\" identifies significant factors that may adversely affect our business, operations, financial position or future financial performance. This information should be read in conjunction with the MD&A and the Consolidated Financial Statements and related Notes incorporated in this report. The following discussion of risks is not all inclusive, but is designed to highlight what we believe are important factors to consider when evaluating our expectations. These and other factors could cause our future results to differ from those in the forwardlooking statements and from historical trends. The Procter & Gamble Company 14 Our business is subject to numerous risks as a result of our having significant operations and sales in international markets, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility. We are a global company, with operations in approximately 70 countries and products sold in more than 180 countries and territories around the world. We hold assets, incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S. dollar, and our operations outside the U.S. generate a significant portion of our net revenue. Fluctuations in exchange rates for foreign currencies, such as the recent volatility in the Russian ruble, may reduce the U.S. dollar value of revenues, profits and cash flows we receive from nonU.S. markets, increase our supply costs (as measured in U.S. dollars) in those markets, or otherwise adversely impact our business results or financial condition. Moreover, discriminatory or conflicting fiscal policies in different countries could adversely affect our results. See also the Results of Operations and Cash Flow, Financial Condition and Liquidity sections of the MD&A and Note 5 to our Consolidated Financial Statements. We also have sizable businesses and maintain local currency cash balances in a number of foreign countries with exchange, import authorization, pricing or other controls, including Argentina, China, Egypt, Greece, India, Nigeria, Ukraine and Venezuela. Our results of operations and financial condition could be adversely impacted if we are unable to successfully manage such controls and repatriate earnings from overseas, or if new or increased tariffs, quotas, exchange or price controls, trade barriers or similar restrictions are imposed on our business outside the U.S., such as the current year impact of deconsolidating our Venezuelan subsidiaries as discussed in this Form 10K. Additionally, our business, operations or employees may be affected by political volatility, labor market disruptions or other crises or vulnerabilities in individual countries or regions, including political instability or upheaval, broad economic instability or sovereign risk related to a default by or deterioration in the credit worthiness of local governments, particularly in emerging markets, which could negatively impact our financial condition or results of operations. Uncertain global economic conditions, including disruptions in credit markets or changes to our credit rating, may adversely impact demand for our products, cause our customers and other business partners to suffer financial hardship or reduce our access to credit, all of which could adversely impact our business. Our business could be negatively impacted by reduced demand for our products related to one or more significant local, regional or global economic disruptions, such as: a slowdown in the general economy reduced market growth rates tighter credit markets for our suppliers, vendors or customers or the inability to conduct daytoday transactions through our financial intermediaries to pay funds to or collect funds from our customers, vendors and suppliers. Additionally, economic conditions may cause our suppliers, distributors, contractors or other third party partners to suffer financial difficulties that they cannot overcome, resulting in their inability to provide us with the materials and services we need, in which case our business and results of operations could be adversely affected. Customers may also suffer financial hardships due to economic conditions such that their accounts become uncollectible or are subject to longer collection cycles. If we are unable to generate sufficient income and cash flow, it could affect the Company's ability to achieve expected share repurchase and dividend payments. A disruption in the credit markets or a downgrade of our current credit rating could increase our future borrowing costs and impair our ability to access capital and credit markets on terms commercially acceptable to us, which could adversely affect our liquidity and capital resources or significantly increase our cost of capital. Disruption in our global supply chain may negatively impact our business results. Our ability to meet our customers' needs and achieve cost targets depends on our ability to maintain key manufacturing and supply arrangements, including execution of our previously announced supply chain simplifications and certain sole supplier or sole manufacturing plant arrangements. The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor disputes, loss or impairment of key manufacturing sites, inability to procure sufficient raw or input materials, natural disasters, acts of war or terrorism or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have an adverse impact on our business, financial condition or results of operations. Our businesses face cost fluctuations and pressures that could affect our business results. Our costs are subject to fluctuations, particularly due to changes in the prices of commodities and raw materials and the costs of labor, transportation, energy, pension and healthcare. Therefore, our business results are dependent, in part, on our continued ability to manage these fluctuations through pricing actions, cost saving projects and sourcing decisions, while maintaining and improving margins and market share. In addition, our financial projections include cost savings described in our announced productivity plan. Failure to manage these fluctuations and deliver the planned cost savings could adversely impact our financial results. Our ability to meet our growth targets depends on successful product, marketing and operations innovation and successful responses to competitive innovation. We are a consumer products company that relies on continued global demand for our brands and products. Achieving our business results depends, in part, on successfully developing, introducing and marketing new products and on making significant improvements to our equipment and manufacturing processes. The success of such innovation depends on our ability to correctly anticipate customer and consumer acceptance and trends, to obtain, maintain and enforce necessary intellectual property protections and to avoid 15 The Procter & Gamble Company infringing upon the intellectual property rights of others. We must also be able to successfully respond to technological advances made by, and intellectual property rights granted to, competitors. Failure to do so could compromise our competitive position and adversely impact our results. The ability to achieve our business objectives is dependent on how well we can compete with our local and global competitors in new and existing markets and channels. The consumer products industry is highly competitive. Across all of our categories, we compete against a wide variety of global and local competitors. As a result, we experience ongoing competitive pressures in the environments in which we operate, as well as challenges in maintaining profit margins. This includes, among other things, increasing competition from mid and lowertier value products, including privatelabel products, in both developed and developing markets. To address these challenges, we must be able to successfully respond to competitive factors, including pricing, promotional incentives and trade terms. In addition, the emergence of new sales channels and business models may affect customer and consumer preferences as well as market dynamics. Failure to successfully respond to competitive factors and effectively compete in new sales channels could negatively impact our results. A significant change in customer relationships or in customer demand for our products could have a significant impact on our business. We sell most of our products via retail customers, which include mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, distributors, ecommerce and highfrequency stores. Our success is dependent on our ability to successfully manage relationships with our retail trade customers, which includes our ability to offer trade terms that are mutually acceptable and are aligned with our pricing and profitability targets. Continued consolidation among our retail customers could create significant cost and margin pressure on our business, and our business performance could suffer if we cannot reach agreement with a key customer based on our trade terms and principles. Our business could also be negatively impacted if a key customer were to significantly reduce the inventory level of our products or experience a significant business disruption. If the reputation of the Company or one or more of our brands erodes significantly, it could have a material impact on our financial results. The Company's reputation, and the reputation of our brands, form the foundation of our relationships with key stakeholders and other constituencies, including consumers, customers and suppliers. The quality and safety of our products are critical to our business. Many of our brands have worldwide recognition, and our financial success is directly dependent on the success of our brands. The success of our brands can suffer if our marketing plans or product initiatives do not have the desired impact on a brand's image or its ability to attract consumers. Our results could also be negatively impacted if one of our brands suffers a substantial impediment to its reputation due to a significant product recall, productrelated litigation, allegations of product tampering or the distribution and sale of counterfeit products. Additionally, negative or inaccurate postings or comments on social media or networking websites about the Company or one of its brands could generate adverse publicity that could damage the reputation of our brands or the Company. If we are unable to effectively manage real or perceived issues, including concerns about safety, quality, efficacy or similar matters, sentiments toward the Company or our products could be negatively impacted and our financial results could suffer. Our Company also devotes significant time and resources to programs that are consistent with our corporate values and are designed to protect and preserve our reputation, such as social responsibility and environmental sustainability. If these programs are not executed as planned or suffer negative publicity, the Company's reputation and financial results could be adversely impacted. We rely on third parties in many aspects of our business, which creates additional risk. Due to the scale and scope of our business, we must rely on relationships with third parties, including our suppliers, distributors, contractors, joint venture partners or external business partners, for certain functions. If we are unable to effectively manage our third party relationships and the agreements under which our third party partners operate, our financial results could suffer. Additionally, while we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk. A breach of information security, including a cybersecurity breach or failure of one or more key information technology systems, networks, hardware, processes, associated sites or service providers could have a material adverse impact on our business or reputation. We rely extensively on information technology (IT) systems, networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by thirdparties or their vendors, to assist in conducting our business. The various uses of these IT systems, networks and services include, but are not limited to: ordering and managing materials from suppliers converting materials to finished products shipping products to customers marketing and selling products to consumers collecting, transmitting, transferring and storing customer, consumer, employee, vendor, investor and other stakeholder information and personal data summarizing and reporting results of operations hosting, processing and sharing, as appropriate, confidential and proprietary research, business plans and financial information complying with regulatory, legal and tax requirements The Procter & Gamble Company 16 providing data security and handling other processes necessary to manage our business. Numerous and evolving information security threats, including advanced persistent cybersecurity threats, pose a risk to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data. As cybersecurity threats rapidly evolve in sophistication and become more prevalent across the industry globally, the Company is continually increasing its sensitivity and attention to these threats. We continue to assess potential threats and make investments seeking to address these threats, including monitoring of networks and systems and upgrading skills, employee training and security policies for the Company and its thirdparty providers. However, because the techniques used in these attacks change frequently and may be difficult to detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative measures. Our IT systems have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyberattacks. To date, we have seen no material impact on our business or operations from these attacks however, we cannot guarantee that our security efforts will prevent breaches or breakdowns to our or our thirdparty providers' databases or systems. If the IT systems, networks or service providers we rely upon fail to function properly, or if we or one of our thirdparty providers suffer a loss, significant unavailability of or disclosure of our business or stakeholder information, due to any number of causes, ranging from catastrophic events or power outages to improper data handling or security breaches, and our business continuity plans do not effectively address these failures on a timely basis, we may be exposed to reputational, competitive and business harm as well as litigation and regulatory action. The costs and operational consequences of responding to breaches and implementing remediation measures could be significant. We must successfully manage compliance with legislation, regulation and enforcement, as well as pending legal matters in the U.S. and abroad. Our business is subject to a wide variety of laws and regulations across all of the countries in which we do business, including those laws and regulations involving intellectual property, product liability, marketing, antitrust, privacy, environmental, employment, antibribery or anti corruption (such as the U.S. Foreign Corrupt Practices Act) or other matters. Rapidly changing laws, regulations and related interpretations, including changes in accounting standards, as well as increased enforcement actions, create challenges for our compliance and ethics programs and may alter the environment in which we do business. If we are unable to continue to meet these challenges and comply with all laws, regulations and related interpretations, it could negatively impact our reputation and our business results. Failure to successfully manage regulatory and legal matters and resolve such matters without significant liability or damage to our reputation may materially adversely impact our results of operations and financial position. Furthermore, if pending legal matters result in fines or costs in excess of the amounts accrued to date, that may also materially impact our results of operations and financial position. Changes in applicable tax regulations could negatively affect our financial results. The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. Because the U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat interdependent. For example, certain income that is earned and taxed in countries outside the U.S. is not taxed in the U.S., provided those earnings are indefinitely reinvested outside the U.S. If those same foreign earnings are instead repatriated to the U.S., additional residual U.S. taxation will likely occur, due to the U.S.'s worldwide tax system and higher U.S. corporate tax rate. The U.S. is considering corporate tax reform that may significantly change the corporate tax rate and the U.S. international tax rules. Additionally, longstanding international tax norms that determine each country's jurisdiction to tax crossborder international trade are evolving, such as the Base Erosion and Profit Shifting project (\"BEPS") currently being undertaken by the G8, G20, and Organization for Economic Cooperation and Development ("OECD"). As these and other tax laws and related regulations change, our financial results could be materially impacted. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow, but such changes could adversely impact our financial results. If we are unable to successfully execute our portfolio optimization strategy, as well as successfully manage ongoing acquisition, joint venture and divestiture activities, it could adversely impact our business. In August 2014, the Company announced a plan to significantly streamline our product portfolio by divesting, discontinuing or consolidating about 100 nonstrategic brands, resulting in a portfolio of about 65 brands. The Company has announced a series of transactions that will substantially complete this plan. It will take time to execute this plan, and our ability to successfully do so could impact our results. In addition, as a company that manages a portfolio of consumer brands, our ongoing business model includes a certain level of acquisition, joint venture and divestiture activities. We must be able to successfully manage the impacts of these activities, while at the same time delivering against our business objectives. Specifically, our financial results could be adversely impacted by the dilutive impacts from the loss of earnings associated with divested brands. Our financial results could also be impacted in the event of acquisitions or joint venture activities if: 1) changes in the cash flows or other marketbased assumptions cause the value of acquired assets to fall below book value, or 2) we are not able to deliver the expected cost and growth synergies associated with such acquisitions and joint ventures, which could also have an impact on goodwill and intangible assets. 17 The Procter & Gamble Company Our business results depend on our ability to successfully manage ongoing organizational change. Our financial targets assume a consistent level of productivity improvement, including those described in our announced productivity plan and our portfoliooptimization strategy. If we are unable to deliver these expected productivity improvements, while continuing to invest in business growth, our financial results could be adversely impacted. We expect these types of changes, which will include staffing adjustments as well as employee departures, to continue for the foreseeable future. Successfully executing these changes, including effective management transitions at leadership levels of the Company and retention of key employees, is critical to our business success. We are generally a buildfromwithin company and our success is dependent on identifying, developing and retaining key employees to provide uninterrupted leadership and direction for our business. This includes developing and retaining organizational capabilities in key growth markets where the depth of skilled or experienced employees may be limited and competition for these resources is intense. It also includes continued development and execution of robust leadership succession plans, including successful execution of our recently announced CEO transition. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. In the U.S., we own and operate 29 manufacturing sites located in 21 different states or territories. In addition, we own and operate 100 manufacturing sites in 38 other countries. Many of the domestic and international sites manufacture products for multiple businesses. Beauty, Hair and Personal Care products are manufactured at 37 of these locations Grooming products at 18 Health Care products at 16 Fabric Care and Home Care products at 50 and Baby, Feminine and Family Care at 43. Management believes that the Company's manufacturing sites are adequate to support the business and that the properties and equipment have been well maintained. Item 3. Legal Proceedings. On February 10, 2015, the Sacramento County Environmental Management Department (Sacramento EMD) issued an Administrative Enforcement Order to The Procter & Gamble Manufacturing Company, a subsidiary of the Company, alleging violations of California's hazardous waste management regulations at the subsidiary's facility in Sacramento, California. On May 26, 2015, the subsidiary and Sacramento EMD agreed to a Final Stipulation and Order that includes no admission of liability, a release of all claims against the subsidiary, a $200,000 fine assessed against the subsidiary, and an agreement by the subsidiary to make certain plant modifications and have a third party conduct an integrity assessment of certain hazardous waste systems at its Sacramento, California facility. On August 25, 2014, \"Procuradura Federal de Proteccin al Ambiente\" (PROFEPA) issued a ruling to Procter & Gamble Manufactura, S. de R.L. de C.V. (Planta Vallejo), a subsidiary of the Company, citing violations of Mexico's air emissions regulations at the subsidiary's facility in Zona Industrial Vallejo, Mexico City, Mexico and requiring the subsidiary to perform certain corrective measures at the facility, most of which have been completed. On June 15, 2015, PROFEPA issued a final ruling to the subsidiary imposing monetary sanctions of $133,000. The proceedings are still pending as PROFEPA reviews compliance with additional terms of the subsidiary's environmental licenses. The Company is subject, from time to time, to certain other legal proceedings and claims arising out of our business, which cover a wide range of matters, including antitrust and trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters and tax. See Note 11 to our Consolidated Financial Statements for information on certain legal proceedings for which there are contingencies. This item should be read in conjunction with the Company's Risk Factors in Part I, Item 1A for additional information. Item 4. Mine Safety Disclosure. Not applicable. The Procter & Gamble Company 18 EXECUTIVE OFFICERS OF THE REGISTRANT The names, ages and positions held by the Executive Officers of the Company on August 7, 2015, are: Name Position Age First Elected to Officer Position A. G. Lafley Chairman of the Board, President and Chief Executive Officer Director since May 23, 2013 Jon R. Moeller Chief Financial Officer 51 2009 Giovanni Ciserani Group President Global Fabric and Home Care 53 2013 Martin Riant Group President Global Baby, Feminine and Family Care 56 2013 Carolyn M. Tastad Group President North America Selling and Market Operations 54 2014 David S. Taylor Group President Global Beauty, Grooming and Health Care Director 57 2013 Mark F. Biegger Chief Human Resources Officer 53 2012 Linda ClementHolmes Chief Information Officer 53 2014 Gary A. Coombe President Europe Selling and Market Operations 51 2014 Tarek N. Farahat President Latin America Selling and Market Operations 51 2014 Kathleen B. Fish Chief Technology Officer 58 2014 Hatsunori Kiriyama President Asia Pacific Selling and Market Operations 52 2014 Deborah P. Majoras Chief Legal Officer and Secretary 51 2010 Julio N. Nemeth President Global Business Services 54 2015 Matthew Price President Greater China Selling and Market Operations 49 2015 Marc S. Pritchard Chief Brand Officer 55 2008 Mohamed Samir President India, Middle East and Africa (IMEA) Selling and Market Operations 48 2014 Jeffrey K. Schomburger Global Sales Officer 53 2015 Valarie L. Sheppard Senior Vice President, Comptroller and Treasurer 51 2005 Yannis Skoufalos Global Product Supply Officer 58 2011 68 2013 All the Executive Officers named above, excluding Mr. Lafley, have been employed by the Company for more than the past five years. Mr. Lafley is Chairman of the Board, President and Chief Executive Officer of the Company and was reappointed to this position on May 23, 2013. Mr. Lafley originally joined the Company in 1977 and held positions of increasing responsibility, in the U.S. and internationally, until he was elected President and Chief Executive Officer in 2000, a position he held until June 30, 2009. On July 1, 2002, Mr. Lafley was elected Chairman of the Board, a position he held until January 2010, at which time he retired from the Company. During the past five years and prior to his return as CEO, Mr. Lafley served as a consultant to the Company and as a member of the boards of directors of public companies Dell, Inc. and General Electric Company, though he no longer serves on these boards. He also served as a Senior Advisor at Clayton, Dubilier & Rice, LLC, a private equity partnership, consulted with a number of Fortune 50 companies on business and innovation strategy, and advised on CEO succession and executive leadership development. He currently serves on the board of directors of Legendary Pictures, LLC (a film production company). 19 The Procter & Gamble Company PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) 4/1/2015 4/30/2015 (3) 5/1/2015 5/31/2015 (3) 6/1/2015 6/30/2015 4,420,851 $79.17 4,420,851 (3) Total 4,420,851 $79.17 4,420,851 (3) Approximate Dollar Value of Shares that May Yet Be Purchased Under Our Share Repurchase Program (1) The total number of shares purchased for the three months ended June 30, 2015 was 4,420,851. All transactions were made in the open market with large financial institutions. This table excludes shares withheld from employees to satisfy minimum tax withholding requirements on option exercises and other equitybased transactions. The Company administers cashless exercises through an independent third party and does not repurchase stock in connection with cashless exercises. (2) Average price paid per share is calculated on a settlement basis and excludes commission. (3) On April 23, 2015, the Company stated that fiscal year 2015 share repurchases to reduce Company shares outstanding were estimated to be approximately $5 billion, notwithstanding any purchases under the Company's compensation and benefit plans. The share repurchases were authorized pursuant to a resolution issued by the Company's Board of Directors and were financed through a combination of operating cash flows and issuance of longterm and shortterm debt. The total value of the shares purchased under the share repurchase plan was $4.6 billion. The share repurchase plan ended on June 30, 2015. Additional information required by this item can be found in Part III, Item 12 of this Form 10K. SHAREHOLDER RETURN PERFORMANCE GRAPHS Market and Dividend Information P&G has been paying a dividend for 125 consecutive years since its incorporation in 1890 and has increased its dividend for 59 consecutive years at an annual compound average rate of over 9%. (in dollars splitadjusted) Dividends per share 1956 $ 0.01 1966 $ 0.03 1976 $ 0.06 1986 $ 0.16 1996 $ 0.40 2006 $ 1.15 2015 $ 2.59 The Procter & Gamble Company 20 Quarterly Dividends Quarter Ended 2014 2015 September 30 $ 2013 2014 0.6436 $ 0.6015 December 31 0.6436 0.6015 March 31 0.6436 0.6015 June 30 0.6629 0.6436 Common Stock Price Range Quarter Ended 2014 2015 High September 30 $ 2013 2014 Low High Low 85.40 $ 77.29 $ 82.40 $ 73.61 December 31 93.89 81.57 85.82 75.20 March 31 91.78 80.82 81.70 75.26 June 30 84.20 77.10 82.98 78.43 P&G trades on the New York Stock Exchange and NYSE EuronextParis under the stock symbol PG. There were approximately 2.6 million common stock shareowners, including shareowners of record, participants in the P&G Shareholder Investment Program, participants in P&G stock ownership plans and beneficial owners with accounts at banks and brokerage firms, as of June 30, 2015. Shareholder Return The following graph compares the cumulative total return of P&G's common stock for the fiveyear period ended June 30, 2015, against the cumulative total return of the S&P 500 Stock Index (broad market comparison) and the S&P 500 Consumer Staples Index (line of business comparison). The graph and table assume $100 was invested on June 30, 2010, and that all dividends were reinvested. Cumulative Value of $100 Investment, through June 30 Company Name/Index P&G 2010 $ 2011 100 $ 2012 109 $ 2013 109 $ 2014 141 $ 2015 149 $ 153 S&P 500 Index 100 131 138 166 207 222 S&P 500 Consumer Staples Index 100 127 145 171 197 215 21 The Procter & Gamble Company Item 6. Selected Financial Data. The information required by this item is incorporated by reference to Note 1 and Note 12 to our Consolidated Financial Statements. Financial Summary (Unaudited) 2015 (2) Amounts in millions, except per share amounts Net sales $ 2014 2013 2012 2011 2010 76,279 $ 80,510 $ 80,116 $ 79,545 $ 76,982 $ 73,435 Gross profit 37,403 39,500 40,125 39,628 39,594 38,717 Operating income 11,790 14,740 13,817 12,611 14,779 14,801 8,930 11,318 10,953 8,874 11,197 10,201 (1,786) 467 449 2,030 730 2,645 11,643 11,312 10,756 11,797 12,736 Net earnings from continuing operations Net earnings from discontinued operations Net earnings attributable to Procter & Gamble 7,036 11.7% Net earnings margin from continuing operations Basic net earnings per common share: (1) Earnings from continuing operations $ Earnings from discontinued operations $ Diluted net earnings per common share: (1) $ Earnings from discontinued operations 14.1% 3.16 $ (0.66) Basic net earnings per common share Earnings from continuing operations 2.50 $ 3.06 $ 11.2% 14.5% 13.9% 4.03 $ 3.87 $ 3.08 $ 3.87 $ 3.41 0.16 0.17 0.74 0.25 0.91 4.19 $ 4.04 $ 3.82 $ 4.12 $ 4.32 (0.62) 13.7% 3.86 $ 3.71 $ 2.97 $ 3.69 $ 3.26 0.15 0.15 0.69 0.24 0.85 4.11 Diluted net earnings per common share $ 2.44 $ 4.01 $ 3.86 $ 3.66 $ 3.93 $ Dividends per common share $ 2.59 $ 2.45 $ 2.29 $ 2.14 $ 1.97 $ 1.80 Research and development expense $ 2,047 $ 1,984 $ 1,940 $ 1,947 $ 1,897 $ 1,851 Advertising expense Total assets Capital expenditures Longterm debt Shareholders' equity (1) $ 8,290 8,979 9,364 8,981 8,868 8,162 129,495 144,266 139,263 132,244 138,354 128,172 3,736 3,848 4,008 3,964 3,306 3,067 18,329 19,811 19,111 21,080 22,033 21,360 63,050 $ 69,976 $ 68,709 $ 64,035 $ 68,001 $ 61,439 Basic net earnings per common share and diluted net earnings per common share are calculated based on net earnings attributable to Procter & Gamble. (2) Our 2015 net sales were negatively impacted by approximately $4.8 billion of unfavorable foreign exchange fluctuation compared to 2014. Net earnings attributable to Procter & Gamble in 2015 were negatively impacted by approximately $1.4 billion due to foreign exchange, $2.1 billion of noncash impairment charges related to the Batteries business reported in discontinued operations and a $2.1 billion Venezuelan deconsolidation charge. These impacts are discussed more fully later in Item 7 "Summary of 2015 Results" and "Results of Operations" of the MD&A. The Procter & Gamble Company 22 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's Discussion and Analysis ForwardLooking Statements Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results and the assumptions upon which those statements are based, are \"forwardlooking statements\" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements may appear throughout this report, including, without limitation, in the following sections: \"Management's Discussion and Analysis\" and \"Risk Factors.\" These forwardlooking statements generally are identified by the words \"believe,\" \"project,\" \"expect,\" \"anticipate,\" \"estimate,\" \"intend,\" \"strategy,\" \"future,\" \"opportunity,\" \"plan,\" \"may,\" \"should,\" \"will,\" \"would,\" \"will be,\" \"will continue,\" \"will likely result\" and similar expressions. Forwardlooking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from those expressed or implied in the forwardlooking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward looking statements is included in the section titled "Economic Conditions and Uncertainties" and the section titled \"Risk Factors\" (Item 1A of this Form 10K). Forwardlooking statements are made as of the date of this report, and we undertake no obligation to update or revise publicly any forwardlooking statements, whether because of new information, future events or otherwise. The following Management's Discussion and Analysis (MD&A) is intended to provide the reader with an understanding of P&G's financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes. The MD&A is organized in the following sections: Overview Summary of 2015 Results Economic Conditions and Uncertainties Results of Operations Segment Results Cash Flow, Financial Condition and Liquidity Significant Accounting Policies and Estimates Other Information Throughout the MD&A, we refer to measures used by management to evaluate performance, including unit volume growth, net sales and net earnings. We also refer to a number of financial measures that are not defined under accounting principles generally accepted in the United States of America (U.S. GAAP), including organic sales growth, core earnings per share (Core EPS), free cash flow, adjusted free cash flow and adjusted free cash flow productivity. Organic sales growth is net sales growth excluding the impacts of foreign exchange, acquisitions and divestitures. Core EPS is diluted net earnings per share from continuing operations excluding certain specified charges and gains. Free cash flow is operating cash flow less capital spending. Adjusted free cash flow is free cash flow excluding tax payments for the Pet Care divestiture. Adjusted free cash flow productivity is the ratio of adjusted free cash flow to net earnings excluding impairment charges on the Batteries business and the Venezuelan deconsolidation charge. We believe these measures provide our investors with additional information about our underlying results and trends, as well as insight to some of the metrics used to evaluate management. The explanation at the end of the MD&A provides more details on the use and derivation of these measures. Management also uses certain market share and market consumption estimates to evaluate performance relative to competition despite some limitations on the availability and comparability of share and consumption information. References to market share and market consumption in the MD&A are based on a combination of vendorreported consumption and market size data, as well as internal estimates. All market share references represent the percentage of sales in dollar terms on a constant currency basis of our products, relative to all product sales in the category and are measured on an annual basis versus the prior 12month period. References to competitive activity include promotional and product initiatives from our competitors. OVERVIEW P&G is a global leader in fastmoving consumer goods, focused on providing branded consumer packaged goods of superior quality and value to our consumers around the world. Our products are sold in more than 180 countries and territories primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, distributors, ecommerce, highfrequency stores and pharmacies. We have ontheground operations in approximately 70 countries. Our market environment is highly competitive with global, regional and local competitors. In many of the markets and industry segments in which we sell our products, we compete against other branded products as well as retailers' privatelabel brands. Additionally, many of the product segments in which we compete are differentiated by price tiers (referred to as super premium, premium, midtier and valuetier products). We are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position. 23 The Procter & Gamble Company ORGANIZATIONAL STRUCTURE Our organizational structure is comprised of Global Business Units (GBUs), Selling and Market Operations (SMOs), Global Business Services (GBS) and Corporate Functions (CF). Global Business Units Our Global Business Units (GBUs) are organized into four industrybased sectors, comprised of 1) Global Beauty, 2) Global Health and Grooming, 3) Global Fabric and Home Care and 4) Global Baby, Feminine and Family Care. Under U.S. GAAP, the GBUs underlying the four sectors are aggregated into five reportable segments: Beauty, Hair and Personal Care Grooming Health Care Fabric Care and Home Care and Baby, Feminine and Family Care. The GBUs are responsible for developing overall brand strategy, new product upgrades and innovations and marketing plans. The following provides additional detail on our reportable segments and the key product categories and brand composition within each segment. Reportable Segment % of Net Sales* % of Net Earnings* GBUs (Categories) Billion Dollar Brands Beauty, Hair and Personal Care 24% 23% Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Head & Shoulders, Olay, Pantene, Care) Cosmetics Hair Care and Color Prestige Salon Professional SKII, Wella Grooming 10% 16% Shave Care (Female Blades & Razors, Male Blades & Razors, Pre and PostShave Fusion, Gillette, Mach3, Products, Other Shave Care) Electronic Hair Removal Prestobarba Health Care 10% 11% Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care) Oral Care Crest, OralB, Vicks (Toothbrush, Toothpaste, Other Oral Care) Fabric Care and Home Care 29% 24% Fabric Care (Laundry Additives, Fabric Enhancers, Laundry Detergents) Home Care Ariel, Dawn, Downy, Febreze, (Air Care, Dish Care, P&G Professional, Surface Care) Gain, Tide Baby, Feminine and Family Care 27% 26% Baby Care (Baby Wipes, Diapers and Pants) Feminine Care (Adult Incontinence, Always, Bounty, Charmin, Feminine Care) Family Care (Paper Towels, Tissues, Toilet Paper) Pampers * Percent of net sales and net earnings from continuing operations for the year ended June 30, 2015 (excluding results held in Corporate). Recent Developments: As of June 30, 2015, the Company deconsolidated our Venezuelan subsidiaries and began accounting for our investment in those subsidiaries using the cost method of accounting. This change resulted in a fourth quarter fiscal 2015 onetime aftertax charge of $2.1 billion ($0.71 per share). In future periods, our financial results will only include sales of finished goods to our Venezuela subsidiaries to the extent we receive cash payments from Venezuela (expected to be largely through the CENCOEX exchange market). Accordingly, we will no longer include the results of our local Venezuelan subsidiaries' operations in future reporting periods (see Note 1 to the Consolidated Financial Statements and additional discussion in this MD&A under "Venezuela Impacts" in Results of Operations). In August 2014, the Company announced a plan to significantly streamline our product portfolio by divesting, discontinuing or consolidating about 100 nonstrategic brands. The resulting portfolio of about 65 key brands will retain about 85% of sales and 95% of beforetax profit. On July 9, 2015, the Company announced the signing of a definitive agreement with Coty, Inc. to divest four product categories, including 43 of its beauty brands to Coty Inc. Coty's offer was $12.5 billion. While the final value of the transaction will be determined at closing, based on Coty's stock price and outstanding shares and equity grants as of the date of signing, the value of the transaction was approximately $15.0 billion. While the ultimate form of the transaction has not yet been decided, the Company's current preference is for a Reverse Morris Trust splitoff transaction in which P&G shareholders could elect to participate in an exchange offer to exchange P&G shares for Coty shares. The transaction includes P&G's global salon professional hair care and color, retail hair color, cosmetics and fine fragrance categories, along with select hair styling brands, all of which have historically been part of the Company's Beauty, Hair and Personal Care reportable segment and had net sales of $5.5 billion in fiscal year 2015. The Company expects to complete this beauty transaction by the end of calendar year 2016. For the period ended June 30, 2015, the results of the affected beauty categories and brands remain part of our continuing operations. Beginning with fiscal year 201516 reported results, the earnings, assets and liabilities from the affected beauty businesses will be reported as discontinued operations. On November 13, 2014, the Company announced that it plans to divest the Batteries business via a split transaction with Berkshire Hathaway valued at $2.9 billion, in which it will exchange a recapitalized Duracell Company for Berkshire Hathaway's shares of Procter & Gamble stock. The Company had previously sold its controlling interest in a Chinabased batteries joint venture, which represented the balance of the The Procter & Gamble Company 24 Company's Batteries business, during the quarter ended December 31, 2014. The Company expects to complete the Duracell transaction in the beginning of calendar year 2016, pending necessary regulatory approvals. The Batteries business had historically been part of the Company's Fabric Care and Home Care reportable segment. The results of the Batteries business are now presented as discontinued operations and, as such, are excluded from both continuing operations and segment results for all periods presented. Additionally, the Batteries balance sheet positions as of June 30, 2015 are presented as held for sale in the Consolidated Balance Sheets. are generated through the PGT Healthcare partnership with Teva Pharmaceuticals Ltd. During fiscal 2015, the Company completed the divestiture of its Pet Care business. The gain on the transaction was not material. The results of the Pet Care business are now presented as discontinued operations and, as such, are excluded from both continuing operations and segment results for all periods presented. Additionally, the Pet Care balance sheet positions as of June 30, 2014 are presented as held for sale in the Consolidated Balance Sheets. Baby, Feminine and Family Care: In baby care, we compete mainly in diapers, pants and baby wipes with over 30% global market share. We are the number one or number two baby care competitor in most of the key markets in which we compete, primarily behind Pampers, the Company's largest brand, with annual net sales of approximately $10 billion. We are the global market leader in the feminine care category with approximately 30% global market share, primarily behind Always. We have recently entered the adult incontinence category in certain markets, achieving nearly a 10% market share in those markets where we have entered. Our family care business is predominantly a North American business comprised largely of the Bounty paper towel and Charmin toilet paper brands. U.S. market shares are nearly 45% for Bounty and over 25% for Charmin. With these transactions and other recently completed and announced minor brand divestitures, the Company will have substantially completed the strategic portfolio reshaping program with 93 out of approximately 100 brands having been sold, discontinued or consolidated. Beauty, Hair and Personal Care: We are a global market leader in the beauty category. Most of the beauty markets in which we compete are highly fragmented with a large number of global and local competitors. We compete in beauty care, hair care and color and prestige. In beauty care, we offer a wide variety of products, ranging from deodorants to cosmetics to skin care, such as our Olay brand, which is the top facial skin care brand in the world with over 8% global market share. In hair care and color, we compete in both the retail and salon professional channels. We are the global market leader in the retail hair care and color market with over 20% global market share primarily behind our Pantene and Head & Shoulders brands. In the prestige channel, we compete primarily with our prestige fragrances behind Dolce & Gabbana, Gucci and Hugo Boss fragrance brands and the SKII brand. Grooming: We are the global market leader in the blades and razors market. Our global blades and razors market share is over 65%, primarily behind the Gillette franchise including Fusion, Mach3, Prestobarba and Venus. Our electronic hair removal devices, such as electric razors and epilators, are sold under the Braun brand in a number of markets around the world where we compete against both global and regional competitors. We hold over 20% of the male shavers market and nearly 50% of the female epilators market. Health Care: We compete in oral care and personal health care. In oral care, there are several global competitors in the market and we have the number two market share position with approximately 20% global market share. In personal health care, we are a top ten competitor in a large, highly fragmented industry behind respiratory treatments (Vicks brand) and nonprescription heartburn medications (Prilosec OTC brand). Nearly all of our sales outside the U.S. in personal health care Fabric Care and Home Care: This segment is comprised of a variety of fabric care products including laundry detergents, additives and fabric enhancers and home care products including dishwashing liquids and detergents, surface cleaners and air fresheners. In fabric care, we generally have the number one or number two share position in the markets in which we compete and are the global market leader with approximately 30% global market share, primarily behind our Tide, Ariel and Downy brands. Our global home care market share is approximately 20% across the categories in which we compete. Selling and Market Operations Our SMOs are responsible for developing and executing gotomarket plans at the local level. The SMOs include dedicated retail customer, trade channel and countryspecific teams. Our SMOs are organized under six regions comprised of North America, Europe, Latin America, Asia Pacific, Greater China and India, Middle East and Africa (IMEA). Throughout the MD&A, we reference business results in developed markets, which are comprised of North America, Western Europe and Japan, and developing markets which are all other markets not included in developed. Global Business Services GBS provides technology, processes and standard data tools to enable the GBUs and the SMOs to better understand the business and better serve consumers and customers. The GBS organization is responsible for providing worldclass solutions at a low cost and with minimal capital investment. Corporate Functions CF provides Companylevel strategy and portfolio analysis, corporate accounting, treasury, tax, external relations, governance, human resources and legal, as well as other centralized functional support. STRATEGIC FOCUS We are focused on strategies that we believe are right for the longterm health of the Company with the objective of delivering total shareholder return in the top onethird of our peer group. Our value creation progress is measured internally with the operating total shareholder return (O TSR) model. Over time, 25 The Procter & Gamble Company OTSR performance is highly correlated with market total shareholder returns. OTSR is a balanced measure that requires strong performance across the three primary drivers of value creation: sales growth, profit margin expansion and efficient utilization of assets to generate strong, reliable operating cash flow. We operationalize OTSR deep within the Company by defining tight linkages between business activities and the key drivers of value creation, from strategic choices of global business units, brands and country teams down to individual employees' daily work plans. innovations. We are also innovating to improve our category, brand and market business models to better serve consumers and customers. The Company has recently undertaken an effort to focus and strengthen its business portfolio to compete in categories and brands that are structurally attractive and that play to P&G strengths. This will enable us to al