UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K

(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, 20122013

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. 1-434
THE PROCTER & GAMBLE COMPANY
One Procter & Gamble Plaza, Cincinnati, Ohio 45202
Telephone (513) 983-1100
IRS Employer Identification No. 31-0411980
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 Euronext-Paris

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ

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 þ No o
    
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 S-T (§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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 10-K or any amendment to this Form 10-K. þ
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer þ      Accelerated filer o    Non-accelerated filer o    Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No þ

The aggregate market value of the voting stock held by non-affiliates amounted to $184$185 billionon December 31, 2011.2012.

There were 2,754,274,5362,738,760,542 shares of Common Stock outstanding as of July 31, 2012.2013.

Documents Incorporated by Reference
Portions of the Proxy Statement for the 20122013 Annual Meeting of Shareholders which will be filed within one hundred and twenty days of the fiscal year ended June 30, 2012 (20122013 (2013 Proxy Statement) are incorporated by reference into Part III of this report to the extent described herein.

The Procter & Gamble Company 213

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 ofto our Consolidated Financial Statements Summary of Significant Accounting Policies; and Note 11 of12 to our Consolidated Financial Statements, Segment Information.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 marketsell our products in more than 180 countries. countries and territories.
Throughout this Form 10-K, we incorporate by reference information from other documents filed with the Securities and Exchange Commission (SEC).
The Company's annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments thereto, are filed electronically with the SEC. The SEC maintains an internet site that contains these reports at: http://www.sec.gov. You can also access these reports through links from our website at: www.pg.com/investors.
Copies of these reports are also available, without charge, by contacting The Procter & Gamble Company, Shareholder Services Department, P.O. Box 5572, Cincinnati, Ohio 45201-5572.Computershare Inc., 250 Royall Street, Canton, MA 02021.
Financial Information about Segments
As of June 30, 2012,2013, the Company is organized into two Global Business Units (GBUs): Beauty and Grooming and Household Care. We havehas five reportable segments under U.S. GAAP: Beauty; Grooming; Health Care; Fabric Care and Home Care; and Baby Care 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 Batteries (Fabric Care and Home Care), Appliances (Grooming) and Prestige Fragrances (Beauty) are seasonal. In addition, anticipation or occurrence of natural disasters, such as hurricanes, can drive
unusually high demand for batteries.
Additional information about our reportable segments can be found in MD&A and Note 11 of12 to our Consolidated Financial Statements, Segment Information.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, e-commerce and in high-frequency stores, the neighborhood stores which serve many consumers in developing markets. We work collaboratively with our customers to improve the in-store 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 11 of12 to our Consolidated Financial Statements, Segment Information.Statements.
Key Customers. Our customers include mass merchandisers, grocery stores, membership club stores, drug stores, high-frequency stores, distributors and high-frequency stores.e-commerce retailers. Sales to Wal-Mart Stores, Inc. and its affiliates represent approximately 14%, 15% and 16% of our total revenue in 2013 and 2012, 2011 and 2010, respectively.15% in 2011. No other customer represents more than 10% of our net sales. Our top ten customers account for approximately 30%, 31% of our total unit volume in 2012, and 32% of our total unit volume in 2013, 2012 and 2011, and 2010.respectively. 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 whomwhich are single-source 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


3The Procter & Gamble Company

the distribution of input materials and finished product to customers. The prices we pay for materials and


14The Procter & Gamble Company

other commodities are subject to fluctuation. When prices for these items change, we may or may not pass the change to our customers, depending on the magnitude and expected duration of the change.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 used to manufacture our products. The trademarks are important to the overall marketing and branding of our products. All major products and 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' private-label brands. We are well positioned in the industry segments and markets in which we operate, -oftenoften holding a leadership or significant market share position. We support our products with advertising, promotions and other vehicles to build awareness of our brands 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 competitive 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 2013, 2012 and 2011, and $1.9 billion in 2010.2011.
 
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 2013.2014.
Employees. Total number of employees is an estimate of total Company employees excluding interns, co-ops and employees of joint ventures. The number of employees includes manufacturing and non-manufacturing employees. A discussion of progress on non-manufacturing enrollment objectives is included in Note 3 to our Consolidated Financial Statements. Historical numbers include employees of discontinued operations.
 
 
Total Number of EmployeesTotal Number of Employees
2013121,000
2012126,000
126,000
2011129,000
129,000
2010127,000
127,000
2009132,000
132,000
2008135,000
135,000
2007135,000
Financial Information about Foreign and Domestic Operations
Net sales in the United States account for approximately 35%36% of total net sales. No other individual country exceededexceeds 10% of total net sales. Operations outside the United States 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:
2012 2011 20102013 2012 2011
North America (1)
39% 41% 42%39% 39% 41%
Western Europe19% 20% 20%18% 19% 20%
Asia18% 16% 15%18% 18% 16%
Latin America10% 9% 9%10% 10% 9%
CEEMEA (2)
14% 14% 14%15% 14% 14%
(1) 
North America includes results for the United States and Canada only.
(2) 
CEEMEA includes Central and Eastern Europe, Middle East and Africa.
Net sales and assets in the United States and internationally were as follows (in billions):
United StatesInternationalUnited StatesInternational
Net Sales (for the year ended June 30)
2013$30.3$53.9
2012$29.5$54.2$29.5$54.2
2011$29.9$51.2$29.9$51.2
2010$29.5$48.1
  
Assets (as of June 30)
Assets (June 30)Assets (June 30)
2013$68.3$71.0
2012$68.0$64.2$68.0$64.2
2011$70.3$68.1$70.3$68.1
2010$70.1$58.1
Item 1A. Risk Factors.
We discuss our expectations regarding future performance, events and outcomes, such as our business outlook and objectives in this Form 10-K, other quarterly reports, press releases and other written and oral communications. All statements, except for historical and present factual information, are “forward-looking statements” and are based on financial data and business plans available only as of the


The Procter & Gamble Company15

time the statements are made, which may become out of date or incomplete. We assume no obligation to update any forward-looking statements as a result of new information, future events, or other factors. Forward-looking statements are inherently uncertain and investors must recognize that events could significantly differ from our expectations.
The following discussion of “risk factors” identifies the most significant factors that may adversely affect our business, operations, financial position or future financial performance. This information should be read in conjunction with MD&A and the consolidated financial statementsConsolidated Financial Statements and related notesNotes incorporated by reference intoin this report. The


The Procter & Gamble Company4

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 factors could cause our future results to differ from those in the forward-looking statements and from historical trends.
A material change in consumer demand for our products and/or lack of market growth could have a significant impact on our business.
    
We are a consumer products company and rely on continued global demand for our brands and products. To achieve business goals, we must develop and sell products that appeal to consumers. This is dependent on a number of factors, including our ability to develop effective sales, advertising and marketing programs. We expect to achieve our financial targets, in part, by shifting our portfolio towards faster growing, higher margin businesses and by focusing on the most profitable businesses, biggest innovations and most important emerging markets. We also expect to achieve our financial targets, in part, by achieving disproportionate growth in developing regions. If demand for our products and/or market growth rates in either developed or developing markets fallfalls substantially below expected levels or our market share declines significantly in these businesses, our volume, and consequently our results, could be negatively impacted. This could occur due to, among other things, unforeseen negative economic or political events, changes in consumer trends and habits or negative consumer responses to pricing actions.
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, there are 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 lower-tier value 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 such as sales made through the Internet directly to consumers, may affect customer and consumer preferences, as well as market dynamics. Failure to
effectively compete in these new channels could negatively impact results.
Our ability to meet our growth targets depends on successful product, marketing and operations innovation and our ability to successfully respond to competitive innovation.
Achieving our business results depends, in part, on the successful development, introduction and marketing of new products and improvements to our equipment and manufacturing processes. Successful innovation depends on
our ability to correctly anticipate customer and consumer acceptance, to obtain and maintain necessary intellectual property protections and to avoid infringing the intellectual property rights of others. We must also be able to successfully respond to technological advances made by competitors and intellectual property rights granted to competition, and failurecompetitors. Failure to do so could compromise our competitive position and impact our results.
Our businesses face cost fluctuations and pressures whichthat could affect our business results.
Our costs are subject to fluctuations, particularly due to changes in commodity prices, raw materials, labor costs, energy costs, pension and healthcare costs and foreign exchange and interest rates. Therefore, our success is dependent, in part, on our continued ability to forecast and manage these fluctuations through pricing actions, cost savingssaving projects (including outsourcing 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 deliver these savings could adversely impact our results.
ThereWe face risks that are risks inherent in global manufacturing whichthat could negatively impact our business results.
In the manufacturing and general overhead areas, weWe need to maintain key manufacturing and supply arrangements, including any key sole supplier and sole manufacturing plant arrangements, to achieve our targets on cost.cost targets. While we have business continuity and contingency plans for key manufacturing sites and the supply of raw materials, it may be impracticable to have a sufficient alternative source, particularly when the input materials are in limited supply. In addition, our strategy for global growth includes increased presence in emerging markets. Some emerging markets have greater political volatility and greater vulnerability to infrastructure and labor disruptions than established markets. Any significant disruption of manufacturing, such as labor disputes, loss or impairment of key manufacturing sites, natural disasters, acts of war or terrorism and other external factors over which we have no control, could interrupt product supply and, if not remedied, have an adverse impact on our business.




16The Procter & Gamble Company

We face risks associated with having significant international operations.
We are a global company, with manufacturing operations in more than 40 countries and a significant portion of our revenue is outside the U.S. Our international operations are subject to a number of risks, including, but not limited to:
compliance with U.S. laws affecting operations outside of the United States, such as the Foreign Corrupt Practices Act;
compliance with a variety of local regulations and laws;
changes in tax laws and the interpretation of those laws;
sudden changes in foreign currency exchange controls;controls and other limits on our ability to repatriate earnings from overseas;
discriminatory or conflicting fiscal policies;
difficulties enforcing intellectual property and


5The Procter & Gamble Company

contractual rights in certain jurisdictions;
greater risk of uncollectible accounts and longer collection cycles;
effective and immediate implementation of control environment processes across our diverse operations and employee base; and
imposition of moreincreased or new tariffs, quotas, trade barriers andor similar restrictions on our sales outside the United States.
We have sizable businesses and maintain local currency cash balances in a number of foreign countries with exchange, import authorization or pricing controls, including, but not limited to, Venezuela, Argentina, China, India and India. In addition, some countries where we have businesses, such as Argentina, have introduced import restrictions.Egypt. Our results of operations and/or financial condition could be adversely impacted if we are unable to successfully manage these and other risks of international operations in an increasingly volatile environment.
Fluctuations in exchange rates may have an adverse impact on our business results or financial condition.
We hold assets and incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S. dollar. Because our consolidated financial statements are presented in U.S. dollars, the financial statements of our subsidiaries outside the United States are translated into U.S. dollars. Our operations outside of the U.S. generate a significant portion of our net revenue. Fluctuations in exchange rates may therefore adversely impact our business results or financial condition. See also the Results of Operations and Cash Flow, Financial Condition and Results of Operations sectionLiquidity sections of the MD&A and Note 5 to our Consolidated Financial Statements.
We face risks related to changes in the global and political economic environment, including the global capital and credit markets.
Our business is impacted by global economic conditions, which have recently beencontinue to be volatile.  Our products are sold in more than 180 countries and territories around the world. If the global economy experiences significant disruptions, our business could be negatively impacted by reduced demand for our products related toto: a slow-down in the general economy,
economy; supplier, vendor or customer disruptions resulting from tighter credit markets,markets; and/or temporary interruptions in our ability to conduct day-to-day transactions through our financial intermediaries involving the payment to or collection of funds from our customers, vendors and suppliers and/or liquidity issues resulting from an inability to access credit markets to obtain cash to support operations.suppliers.
Our objective is to maintain credit ratings that provide us with ready access to global capital and credit markets. Any downgrade of our current credit ratings by a credit rating agency could increase our future borrowing costs and impair our ability to access capital and credit markets on terms commercially acceptable to us. 
We could also be negatively impacted by political issues or crises in individual countries or regions, including sovereign risk related to a default by or deterioration in the credit worthiness or a default byof local governments. For example, we could be adversely impacted by continued instability in the banking and governmental sectors of certain countries in the European Union such as Greece, or the negative impact on economic growth resulting fromdynamics associated with the combination of federal income tax increases and government spending restrictions potentially occurring at the end of calendar year 2012state debt and budget challenges in the United States (commonly referred to as the “fiscal cliff”).

States.
Consequently, our success will depend, in part, on our ability to manage continued global and/or economic uncertainty, especially in our significant geographical markets,geographies, as well as any political or economic disruption. These risks could negatively impact our overall liquidity and financing and borrowing costs, as well as our ability to collect receipts due from governments, including refunds of value added taxes, and/or create significant credit risks relative to our local customers and depository institutions.
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 is the foundation of our relationships with key stakeholders and other constituencies, such as customers and suppliers. In addition, many of our brands have worldwide recognition. This recognition is the result of the large investments we have made in our products over many years. The quality and safety of our products is critical to our business. Our Company also devotes significant time and resources to programs designed to protect and preserve our reputation, such as social responsibility and environmental sustainability. If we are unable to effectively manage real or perceived issues, including concerns about safety, quality, efficacy or similar matters, these issues could negatively impact sentiments toward the Company or our products, our ability to operate freely could be impaired and our financial results could suffer. Our financial success is directly dependent on the success of our brands and the success of these 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, product-related litigation, allegations of product tampering or the distribution and sale of counterfeit


The Procter & Gamble Company17

products. In addition, given the association of our individual products with the Company, an issue with one of our products could negatively affect the reputation of our other products, or the Company as a whole, thereby potentially hurting results.
Our ability to successfully manage ongoing organizational change could impact our business results.
We have executedrecently experienced a CEO transition, as well as other senior leadership changes, and we continue to execute a number of significant business


The Procter & Gamble Company6

and organizational changes, including acquisitions, divestitures and workforce optimization projects to support our growth strategies. We expect these types of changes, which may include many staffing adjustments as well as employee departures, to continue for the foreseeable future. Successfully managing these changes, including retention of particularly key employees, is critical to our business success. Further, ongoing business and organizational changes are likely to result in more reliance on third parties for various services and that reliance may increase reputational, operational and compliance risks, including the risk of corruption. We are generally a build-from-within 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 organization capabilities in key growth markets where the depth of skilled or experienced employees ismay be limited and competition for these resources is intense. Finally, our financial targets assume a consistent level of productivity improvement. If we are unable to deliver expected productivity improvements, while continuing to invest in business growth, our financial results could be adversely impacted.
Our ability to successfully manage ongoing acquisition, joint venture and divestiture activities could impact our business results.
As a company that manages a portfolio of consumer brands, our ongoing business model involves 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 if: 1) we are not able to deliver the expected cost and growth synergies associated with our acquisitions and joint ventures, 2) changes in the cash flows or other market-based assumptions cause the value of acquired assets to fall below book value, or 3)2) we are unable to offset the dilutive impacts from the loss of revenue associated with divested brands.brands, or 3) we are not able to deliver the expected cost and growth synergies associated with our acquisitions and joint ventures, which could also have an impact on goodwill and intangible assets. Additionally, joint ventures inherently involve a lesser degree of control over business operations, thereby potentially increasing the financial, legal, operational and/or compliance risks associated with each joint venture we enter into.venture.

Our business is subject to changes in legislation, regulation and enforcement, and our ability to manage and resolve pending legal matters in the United States and abroad.
Changes in laws, regulations and related interpretations, including changes in accounting standards, taxation requirements and increased enforcement actions and penalties may alter the environment in which we do business. As a U.S. based multinational company we are subject to tax regulations in the United States and multiple foreign jurisdictions, some of which are interdependent. For example, certain income that is earned and taxed in countries outside the United States is not taxed in the United States, provided those earnings are indefinitely reinvested outside
the United States. If these or other tax regulations should change, our financial results could be impacted.
In addition, our ability to manage regulatory, environmental, tax and legal matters (including, but not limited to, product liability, patent and other intellectual property matters), and to resolve pending legal matters without significant liability may materially impact our results of operations and financial position.  Furthermore, if pending legal matters, including the competition law and antitrust investigations described in Item 3 of this Form 10-K and Note 10 of11 to our Consolidated Financial Statements Commitments and Contingencies, result in fines or costs in excess of the amounts accrued to date, that could materially impact our results of operations and financial position.
There are increasing calls in the United States from members of leadership in both major U.S. political parties for “comprehensive tax reform” which may significantly change the income tax rules that are applicable to U.S. domiciled corporations, such as P&G.  It is very difficult to assess whether the overall effect of such potential legislation would be cumulatively positive or negative for P&G'sour earnings and cash flows.flows, but such changes could significantly impact our financial results.
A materialsignificant 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 consist of mass merchandisers, grocery stores, membership club stores, drug stores, high-frequency stores, distributors and high-frequency stores.e-commerce retailers. Our success is dependent on our ability to successfully manage relationships with our retail trade customers. This includes our ability to offer trade terms that are acceptable to our customers and are aligned with our pricing and profitability targets. Our business could suffer if we cannot reach agreement with a key customer based on our trade terms and principles. Our business would be negatively impacted if a key customer were to significantly reduce the range or inventory level of our products.products or experience a significant business disruption. 
Consolidation among our retail customers could also create significant cost and margin pressure and lead to more complex workcomplexity across broader geographic boundaries for both us


18The Procter & Gamble Company

and our key retailers. This would be particularly challenging if major customers are addressing local trade pressures, local law and regulation changes or financial distress.
A failure of one or more key information technology systems, networks, 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


7The Procter & Gamble Company

third-parties 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 productproducts to customers;
marketing and selling products to consumers;
collecting and storing customer, consumer, employee, investor and other stakeholder information and personal data;
processing transactions;
summarizing and reporting results of operations;
hosting, processing and sharing confidential and proprietary research, business plans and financial information;
complying with regulatory, legal or tax requirements;
providing data security; and
handling other processes necessary to manage our business.
Increased IT security threats and more sophisticated computer crime, including advanced persistent threats, pose a potential risk to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data. If the IT systems, networks or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of business or stakeholder information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively address these failures on a timely basis, we may suffer interruptions
in our ability to manage operations and reputational, competitive and/or business harm, which may adversely impact our results of operations and/or financial condition.

Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
In the U.S., we own and operate 3332 manufacturing facilitiessites located in 21 different states or territories. In addition, we own and operate 103102 manufacturing facilitiessites in 4140 other countries. Many of the domestic and international facilities producesites manufacture products for multiple businesses. Beauty products are manufactured at 4139 of these locations; Grooming products at 16;15; Fabric Care and Home Care products at 61;59; Baby Care and Family Care products at 31;36; and Health Care products at 33.35. Management believes that the Company's production facilities are adequate to support the business efficiently and that the properties and equipment have been well maintained.
Item 3. Legal Proceedings.
The Company is subject, from time to time, to certain 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.
As previously reported,In March 2013, the Republic of Turkey Ministry of Environmental and Urban Planning notified the Company has hadthat it was imposing a number of antitrust cases in Europe. The Company's policy is to comply with all laws and regulations, including all antitrust and competition laws, and to cooperate with the relevant regulatory authorities, whichfine on the Company is doing. In response to the actions of the regulatory authorities, the Company launched its own internal investigations into potentialbased on alleged waste management violations of competition laws.at a Wella facility in Turkey. The Company identified violationspaid the fine ($790,000) and the matter is currently on appeal.
This item should be read in certain European countries and appropriate actions were taken.
As a result of certain investigations that were previously disclosed, several authorities issued separate complaints alleging that the Company, alongconjunction with several other companies, engaged in violations of competition laws in the past. The Company resolved several of these matters prior to or during fiscal year 2012.

The Company has remaining antitrust matters at various stages of the regulatory process in Belgium, France, Germany and Greece, while other countries have issued decisions, many of which are on appeal. All of these matters involve a number of other consumer products companies and/or retail customers. Competition and antitrust violations often continue for several years and, if violations are found, can result in substantial fines. No non-monetary sanctions are being sought in these matters.

For certain of the remaining matters listed above, we have established accruals for potential fines and we do not expect any significant incremental fines or costs in excess of amounts accrued for these matters. For other remaining matters, we cannot reasonably estimate any fines to which the Company may be subject as a result of the investigations. Please refer to the Company's Risk Factors in Part I, Item 1A of this Form 10-K for additional information.

Item 4. Mine Safety DisclosureDisclosure.
Not Applicable.



The Procter & Gamble Company 819




Executive Officers of the Registrant
The names, ages and positions held by the Executive Officers of the Company on August 8, 2012,2013, are:
 
Name  Position  Age  
First Elected to
Officer Position
  Position  Age  
First Elected to
Officer Position
Robert A. McDonald  
Chairman of the Board, President and
Chief Executive Officer
  59
  1999
A. G. Lafley  
Chairman of the Board, President and
Chief Executive Officer
  66
  2013
  Director since July 1, 2009        Director since May 23, 2013      
   
Jon R. Moeller  Chief Financial Officer  48
  2009
      
Werner Geissler  Vice Chairman-Global Operations  59
  2007  Vice Chairman - Global Operations  60
  2007
      
E. Dimitri Panayotopoulos  Vice Chairman-Global Business Units  60
  2007
Giovanni Ciserani Group President - Global Fabric and Home Care 51
 2013
   
Melanie Healey Group President - North America and Global Hyper, Super and Mass Channel 52
 2013
   
Deborah A. Henretta Group President - Global Beauty 52
 2013
   
Martin Riant Group President - Global Baby, Feminine and Family Care 54
 2013
   
David Taylor Group President - Global Health and Grooming 55
 2013
   
Filippo Passerini  
Group President - Global Business Services and
Chief Information Officer
  56
  2003
   
Jon Moeller  Chief Financial Officer  49
  2009
      
Bruce Brown  Chief Technology Officer  54
  2008  Chief Technology Officer  55
  2008
      
Robert L. Fregolle, Jr.   Global Customer Business Development Officer  55
  2009  Global Customer Business Development Officer  56
  2009
      
Deborah P. Majoras  Chief Legal Officer and Secretary  48
  2010  Chief Legal Officer and Secretary  49
  2010
      
Moheet Nagrath  Global Human Resources Officer  53
  2008
   
Filippo Passerini  
Group President-Global Business Services and
Chief Information Officer
  55
  2003
Mark F. Biegger  Global Human Resources Officer  51
  2012
      
Marc S. Pritchard  Global Brand Building Officer  52
  2008  Global Brand Building Officer  53
  2008
      
Valarie L. Sheppard  Senior Vice President & Comptroller  48
  2005
Valarie Sheppard  Senior Vice President & Comptroller  49
  2005
      
Ioannis Skoufalos Global Product Supply Officer 55
 2011
Yannis Skoufalos Global Product Supply Officer 56
 2011

All of the Executive Officers named above, excluding Ms. Majoras,Mr. Lafley, have been employed by the Company for more than five years. Ms. Majoras held the following positions within the Company during the past five years: Chief Legal Officer and Secretary (February 1, 2010 - present), Vice President and General Counsel (June 24, 2008 - January 31, 2010). Ms. Majoras wasyears.  Mr. Lafley is Chairman of the Federal Trade Commission from 2004 until joiningBoard, President and Chief Executive Officer of the Company and was appointed to this position on May 23, 2013. Mr. Lafley originally joined the Company in 2008.1977 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. During the past five years, in addition to his roles as a Company employee, 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. He no longer serves on these boards. Since his retirement from the Company, he served as a Senior Advisor at Clayton, Dubilier & Rice, LLC, a private equity partnership, and was appointed by President Obama to serve on The President's Council on Jobs and Competitiveness.  Mr. Lafley consulted with a number of Fortune 50 companies on business and innovation strategy. He also advised on CEO succession and executive leadership development, and coached experienced, new and potential CEOs. He currently serves on the board of directors of Legendary Pictures, LLC (a film production company).




920 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)
  Approximate Dollar Value of Shares That May Yet be Purchased Under our Share Repurchase Program
4/1/2012 - 4/30/2012 235  $66.95 0 0
5/1/2012 - 5/31/2012 0  0 0 0
6/1/2012 - 6/30/2012 0  0 0 0
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)
  Approximate Dollar Value of Shares That May Yet be Purchased Under our Share Repurchase Program
4/1/2013 - 4/30/2013 4,408,128  $79.40 4,408,128  
5/1/2013 - 5/31/2013 4,435,478  $78.91 4,435,478 See note (3)
6/1/2013 - 6/30/2013 3,861,882  $77.68 3,861,882  
(1)
The total number of shares purchased was 23512,705,488 for the quarter.  This represents shares acquired byAll transactions were made in the Company under various compensation and benefit plans.open market with large financial institutions.  This table excludes shares withheld from employees to satisfy minimum tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless exercises through an independent third party broker and does not repurchase stock in connection with cashless exercise.exercises.


(2)Average price paid per share is calculated on a settlement basis and excludes commission.
(3)
On April 27, 2012,24, 2013, the Company stated that fiscal year 2011-122013 share repurchases to reduce Company shares outstanding were estimated to be approximately $4.0 billion, notwithstanding$6 billion. This does not include 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 by issuingthrough a combination of operating cash flows and issuance of long-term and short-term debt.  The total dollar value of shares purchased under the share repurchase plan was $4.0$6.0 billion.  The share repurchase plan expired on June 30, 2012.

2013.
Additional information required by this item can be found in Part III, Item 12 of this Form 10-K.
Shareholder Return Performance Graphs

Market and Dividend Information

P&G has been paying a dividend for 122123 consecutive years since its incorporation in 1890 and has increased its dividend for 5657 consecutive years at an annual compound average rate of approximately 9.5%over 9%.


(in dollars; split-adjusted)1956197019841998201219561970198419982013
Dividends per Share$0.01$0.04$0.15$0.51$2.14$0.01$0.04$0.15$0.51$2.29

The Procter & Gamble Company 1021

QUARTERLY DIVIDENDS
Quarter Ended2011 - 2012 2010 – 20112012-2013
 2011 - 2012
September 30$0.5250
 $0.4818
$0.5620
 $0.5250
December 310.5250
 0.4818
0.5620
 0.5250
March 310.5250
 0.4818
0.5620
 0.5250
June 300.5620
 0.5250
0.6015
 0.5620

COMMON STOCK PRICE RANGE
2011 - 2012  2010 – 20112012-2013  2011 - 2012
Quarter EndedHigh  Low  High  LowHigh  Low  High  Low
September 30$65.14
  $57.56
  $63.36
  $58.92
$69.97
  $60.78
  $65.14
  $57.56
December 3166.98
  61.00
  65.38
  59.68
70.99
  65.84
  66.98
  61.00
March 3167.95
  62.56
  66.95
  59.70
77.82
  68.35
  67.95
  62.56
June 3067.92
  59.08
  67.72
  61.47
82.54
  75.10
  67.92
  59.08


SHAREHOLDER RETURN

The following graph compares the cumulative total return of P&G’s common stock for the 5-year period ending June 30, 2012,2013, 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, 2007,2008, and that all dividends were reinvested.

Cumulative Value of $100 Investment, through June 30Cumulative Value of $100 Investment, through June 30
Company Name/Index200720082009201020112012200820092010201120122013
P&G$100
$102
$88
$106
$116
$116
$100
$86
$105
$114
$114
$148
S&P 500 Index100
87
64
73
96
101
100
74
84
110
116
140
S&P 500 Consumer Staples Index100
101
90
103
130
149
100
90
102
129
148
174

1122 The Procter & Gamble Company

Item 6. Selected Financial Data.
The information required by this item is incorporated by reference to Note 1 ofand Note 12 to our Consolidated Financial Statements, Summary of Significant Accounting Policies and Note 11 of our Consolidated Financial Statements, Segment Information.Statements.

Financial Summary (Unaudited)
Amounts in millions, except per share amounts2012 2011 2010 2009 2008 2007
Net Sales$83,680
 $81,104
 $77,567
 $75,295
 $77,714
 $71,095
Gross Profit41,289
 41,245
 40,525
 37,644
 39,534
 36,607
Operating Income13,292
 15,495
 15,732
 15,188
 15,743
 14,236
Net Earnings from Continuing Operations9,317
 11,698
 10,851
 10,645
 11,224
 9,562
Net Earnings from Discontinued Operations1,587
 229
 1,995
 2,877
 930
 847
Net Earnings attributable to Procter & Gamble10,756
 11,797
 12,736
 13,436
 12,075
 10,340
Net Earnings Margin from Continuing Operations11.1% 14.4% 14.0% 14.1% 14.4% 13.4%
Basic Net Earnings per Common Share (1):
           
Earnings from continuing operations$3.24
 $4.04
 $3.63
 $3.51
 $3.56
 $2.95
Earnings from discontinued operations0.58
 0.08
 0.69
 0.98
 0.30
 0.27
Basic Net Earnings per Common Share3.82
 4.12
 4.32
 4.49
 3.86
 3.22
Diluted Net Earnings per Common Share (1):
           
Earnings from continuing operations3.12
 3.85
 3.47
 3.35
 3.36
 2.79
Earnings from discontinued operations0.54
 0.08
 0.64
 0.91
 0.28
 0.25
Diluted Net Earnings per Common Share3.66
 3.93
 4.11
 4.26
 3.64
 3.04
Dividends per Common Share2.14
 1.97
 1.80
 1.64
 1.45
 1.28
Research and Development Expense$2,029
 $1,982
 $1,931
 $1,844
 $1,927
 $1,809
Advertising Expense9,345
 9,210
 8,475
 7,453
 8,426
 7,714
Total Assets132,244
 138,354
 128,172
 134,833
 143,992
 138,014
Capital Expenditures3,964
 3,306
 3,067
 3,238
 3,046
 2,945
Long-Term Debt21,080
 22,033
 21,360
 20,652
 23,581
 23,375
Shareholders' Equity64,035
 68,001
 61,439
 63,382
 69,784
 67,012
Amounts in millions, except per share amounts2013 2012 2011 2010 2009 2008
Net sales$84,167
 $83,680
 $81,104
 $77,567
 $75,295
 $77,714
Gross profit41,739
 41,289
 41,245
 40,525
 37,644
 39,534
Operating income14,481
 13,292
 15,495
 15,732
 15,188
 15,743
Net earnings from continuing operations11,402
 9,317
 11,698
 10,851
 10,645
 11,224
Net earnings from discontinued operations—
 1,587
 229
 1,995
 2,877
 930
Net earnings attributable to Procter & Gamble11,312
 10,756
 11,797
 12,736
 13,436
 12,075
Net Earnings margin from continuing operations13.5% 11.1% 14.4% 14.0% 14.1% 14.4%
Basic net earnings per common share (1):
           
Earnings from continuing operations$4.04
 $3.24
 $4.04
 $3.63
 $3.51
 $3.56
Earnings from discontinued operations—
 0.58
 0.08
 0.69
 0.98
 0.30
Basic net earnings per common share4.04
 3.82
 4.12
 4.32
 4.49
 3.86
Diluted net earnings per common share (1):
           
Earnings from continuing operations$3.86
 $3.12
 $3.85
 $3.47
 $3.35
 $3.36
Earnings from discontinued operations—
 0.54
 0.08
 0.64
 0.91
 0.28
Diluted net earnings per common share3.86
 3.66
 3.93
 4.11
 4.26
 3.64
Dividends per common share$2.29
 $2.14
 $1.97
 $1.80
 $1.64
 $1.45
Research and development expense$2,023
 $2,029
 $1,982
 $1,931
 $1,844
 $1,927
Advertising expense9,729
 9,345
 9,210
 8,475
 7,453
 8,426
Total assets139,263
 132,244
 138,354
 128,172
 134,833
 143,992
Capital expenditures4,008
 3,964
 3,306
 3,067
 3,238
 3,046
Long-term debt19,111
 21,080
 22,033
 21,360
 20,652
 23,581
Shareholders' equity68,709
 64,035
 68,001
 61,439
 63,382
 69,784
(1) Basic net earnings per common share and diluted net earnings per common share are calculated based on net earnings attributable to Procter & Gamble.



The Procter & Gamble Company 1223

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis
Forward-Looking 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 “forward-looking 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 forward-looking 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. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking 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, Challenges and Risks" and the section titled “Risk Factors” (Item 1A of this Form 10-K). Forward-looking statements are made as of the date of this report and we undertake no obligation to update or revise publicly any forward-looking 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. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying notes.Notes. MD&A is organized in the following sections:
Overview
Summary of 20122013 Results
Economic Conditions, Challenges and Risks
Results of Operations
Segment Results
Cash Flow, Financial Condition and Liquidity
Significant Accounting Policies and Estimates
Other Information 
Throughout 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 and 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.charges and gains. Free cash flow is operating cash flow less capital spending. Free cash flow productivity is the ratio of free cash flow to net earnings. We believe these measures provide our investors with importantadditional information that is useful in understandingabout our businessunderlying results and trends.trends, as well as insight to some of the metrics used to evaluate management. The explanation at the end of MD&A provides more details on the use and the 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 MD&A are based on a combination of vendor-reported 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 12 month period. References to competitive activity includesinclude promotional and product initiatives from our competitors.

OVERVIEW
P&G is a global leader in retail 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 and in high-frequency stores. We continue to expand our presence in other channels, including department stores, perfumeries, pharmacies salons and e-commerce. We have on-the-ground operations in approximately 7570 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' private-label brands. Additionally, many of the product segments in which we compete are differentiated by price tiers (referred to as super-premium, premium, mid-tier and value-tier products). We are well positioned in the industry segments and markets in which we operate, - often holding a leadership or significant market share position.




1324 The Procter & Gamble Company

ORGANIZATIONAL STRUCTURE
Our organizational structure is comprised of Global Business Units (GBUs), Global Operations, Global Business Services (GBS) and Corporate Functions (CF).
Global Business Units
Under U.S. GAAP, the business units comprising the GBUs are aggregated into five reportable segments: Beauty; Grooming; Health Care; Fabric Care and Home Care; and Baby Care 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 businesses and the key product categories and brand composition within each.each segment.
Reportable Segment
% of
Net Sales*
% of Net
Earnings*
CategoriesBillion Dollar Brands
% of
Net Sales*
% of Net
Earnings*
GBUs (Categories)Billion Dollar Brands
Beauty24%22%Antiperspirant and Deodorant, Cosmetics, Hair Care, Hair Color, Personal Cleansing, Prestige Products, Salon Professional, Skin CareHead & Shoulders, Olay, Pantene, SK-II, Wella24%21%Beauty Care (Antiperspirant and Deodorant, Cosmetics, Personal Cleansing, Skin Care); Hair Care and Color; Prestige (SK-II, Fragrances); Salon ProfessionalHead & Shoulders, Olay, Pantene, SK-II, Wella
Grooming10%16%Blades and Razors, Electronic Hair Removal Devices, Hair Care Appliances, Pre and Post Shave ProductsBraun, Fusion, Gillette, Mach39%16%Shave Care (Blades and Razors, Pre- and Post-Shave Products); Braun and AppliancesFusion, Gillette, Mach3, Prestobarba
Health Care15%17%Feminine Care, Gastrointestinal, Incontinence, Rapid Diagnostics, Respiratory, Toothbrush, Toothpaste, Other Oral Care, Other Personal Health Care, Vitamins/Minerals/SupplementsAlways, Crest, Oral-B, Vicks15%17%Feminine Care (Feminine Care, Incontinence); Oral Care (Toothbrush, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Other Personal Health Care, Vitamins/Minerals/Supplements)Always, Crest, Oral-B, Vicks
Fabric Care and Home Care32%26%Bleach and Laundry Additives, Air Care, Batteries, Dish Care, Fabric Enhancers, Laundry Detergents, Pet Care, Professional, Surface CareAce, Ariel, Dawn, Downy, Duracell, Febreze, Gain, Iams, Tide32%27%Fabric Care (Bleach and Laundry Additives, Fabric Enhancers, Laundry Detergents); Home Care (Air Care, Dish Care, Surface Care); Personal Power (Batteries); Pet Care; ProfessionalAce, Ariel, Dawn, Downy, Duracell, Febreze, Gain, Iams, Tide
Baby Care and Family Care19%19%Baby Wipes, Diapers and Pants, Paper Towels, Tissues, Toilet PaperBounty, Charmin, Pampers20%19%Baby Care (Baby Wipes, Diapers and Pants); Family Care (Paper Towels, Tissues, Toilet Paper)Bounty, Charmin, Pampers
* Percent of net sales and net earnings from continuing operations for the year ended June 30, 20122013 (excluding results held in Corporate).

Recent Developments: In Mayfiscal 2012, we completed the divestiture of our snacks business to The Kellogg Company. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of our snacks business are presented as discontinued operations in 2012 and, as such, have been excluded from continuing operations and from segment results for all periods presented. As a result of this change, the pet care business is now included in the Fabric Care and Home Care segment.
Effective during the quarter ending December 31, 2011, we implemented a number of changes to our organization structure within the Beauty and Grooming Global Business Unit (GBU), which resulted in changes to the components of the Beauty reportable segment and the Grooming reportable segment. We now manage these businesses based on the nature of the product rather than the consumer of the product. As a result, female blades and razors transitioned from Beauty to Grooming, while male personal care products, such as Old Spice and Gillette, moved from Grooming to Beauty. The GBU and segment discussions in MD&A and the accompanying Consolidated Financial Statements have been retrospectively revised to reflect the new organizational structure.

Beauty: 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 approximately 10% of the 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% of the global market share behind our Pantene and Head & Shoulders brands. In the prestige channel, we compete primarily with our prestige fragrances and the SK-II brand. We are one of the global market leadersleader in prestige fragrances, primarily behind our Dolce & Gabbana, Gucci and Hugo Boss fragrance brands.

Grooming: We are the global market leader in the blades and razors market globally and in nearly all of the geographies in which we compete. Our global blades and razors market share is approximately 70%, primarily behind the Gillette franchise including Fusion, Mach3, Prestobarba and Mach3.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 approximately 30%over 20% of the male shavers market and over 40% of the female epilators market.





The Procter & Gamble Company14

Health Care: We compete in oral care, feminine care and personal health.health care. In oral care, there are several global competitors in the market and we have the number two market share position with overapproximately 20% of the global market.market share. We are the global market leader in the feminine care category with over 30% of the global market share. In personal health care, we are the global market leader in nonprescription heartburn medications behind our Prilosec OTC brand and in respiratory treatments behind our Vicks brand. CertainNearly all of our sales outside the U.S in personal health are generated through the PGT Healthcare partnership.partnership with Teva Pharmaceuticals Ltd.
 


The Procter & Gamble Company25

Fabric Care and Home Care: This segment is comprised of a variety of fabric care products, includingincluding: laundry detergents, additives and fabric enhancers; home care products, including dishwashing liquids and detergents, surface cleaners and air fresheners; batteries; and pet care. 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 over 25% of the global market share, primarily behind our Tide, Ariel and Downy brands. Our global home care market share is over 15%approximately 20% across the categories in which we compete. In batteries, we have over 25% of the global battery market share, behind our Duracell brand. In pet care, we compete in several markets primarily in the premium pet care segment, with the Iams and Eukanuba brands. The vast majority of our pet care business is in North America, where we have approximately a 10% share of the market.over 5% market share.

Baby Care and Family Care:In baby care, we compete mainly in diapers, pants and baby wipes, with approximately 35% of the 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 approximatelymore than $10 billion. 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 over 40%approximately 45% for Bounty and over 25% for Charmin.
Fiscal Year 2014 Changes to Global Business Unit Structure
We recently announced a number of changes to our GBU structure, which will result in changes to our reportable segments. Effective July 1, 2013, as part of our plan to improve business performance, we organized our Global Business Units into four industry-based sectors, comprised of 1) Global Baby, Feminine and Family Care, 2) Global Beauty, 3) Global Health and Grooming, and 4) Global Fabric and Home Care. Under U.S. GAAP, the GBUs underlying these sectors will be aggregated into five reportable segments: 1) Global Baby, Feminine and Family Care, 2) Global Beauty, 3) Global Health, 4) Grooming and 5) Global Fabric and Home Care. As a result, Feminine Care will transition from Health Care to Global Baby, Feminine and Family Care. Additionally, Pet Care will transition from Fabric Care and Home Care to Global Health.
These changes will be reflected in our segment reporting beginning in fiscal year 2014, at which time our historical segment reporting will also be restated to reflect the new structure. The segment discussions in MD&A and the accompanying Consolidated Financial Statements reflect the organizational structure that existed through June 30, 2013.
Global Operations
Global Operations is comprised of our Market Development Organization (MDO), which is responsible for developing
go-to-market plans at the local level. The MDO includes dedicated retail customer, trade channel and country-specific teams. It is organized along five geographic units:regions: North America, Western Europe, Central & Eastern Europe/Middle East/Africa (CEEMEA), Latin America and Asia, which is comprised of Japan, Greater China and ASEAN/Australia/India/Korea (AAIK). Throughout MD&A, we reference business results in developing markets, which we define as the aggregate of CEEMEA, Latin America, AAIK and Greater China, and developed markets, which are comprised of North America, Western Europe and Japan.
Global Business Services
GBS provides technology, processes and standard data tools to enable the GBUs and the MDO to better understand the business and better serve consumers and customers. The GBS organization is responsible for providing world-class solutions at a low cost and with minimal capital investment.
Corporate Functions
CF provides Company-level 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 long-term health of the Company with the objective of delivering total shareholder return in the top one-third of our peer group. The Company's long-term financial targets are:
Grow organic sales 1%We are focusing our resources on our leading, most profitable categories and markets.
We will focus on our core markets, such as the U.S., to 2% faster than thestrengthen and grow these businesses.
We will focus our developing market grows ininvestments on the categories and geographies in whichcountries with the largest size of prize and highest likelihood of winning.
We will focus the portfolio, allocating resources to businesses where we compete,can create disproportionate value.
Deliver Core EPSTo create flexibility to fund our growth of high single digits to low double digits,efforts and
Generate free cash flow productivity of 90% or greater.
In order to achieve these targets, deliver our financial commitments, we are prioritizing the strategies and resources that willworking to make P&G more focused and fit to win over the near- and long-term.
Strengthening our Core Business
We are prioritizing resources on our biggest, most profitable businesses and on the innovations and developing markets that offer the greatest opportunityproductivity a core strength for growth.
Top 40 Businesses: We define our core business as the top 40 country/category combinations, 20 in Household Care and 20 in Beauty & Grooming, which generate the highest level of annual sales and profit.
Top 20 Innovations: Our 20 most important innovations offer significantly higher growth potential than the balance of the innovation portfolio. Therefore, the growth of the Company depends substantially on the success of our biggest innovations.
Top 10 Developing Markets: Maintaining the strong growth momentum we have established in developing markets is critical to delivering our near- and long-term growth objectives. We are focusing resources first on the markets that offer the greatest growth opportunity. We will assess the potential for further portfolio expansions beyond the top 10 developing markets based on the top- and bottom-line growth progress of the core business.


15The Procter & Gamble Company

Improving Productivity and Creating a Cost Savings Culture
P&G. We have taken significant steps to accelerate cost savings, and create a more cost-focused culture within the Company, including a five-year $10 billion cost savings initiative which was announced in February 2012. The cost savings program is based on:
Reduction in overhead spending, with a targetcovers all elements of approximately 5,700 non-manufacturing overhead positions by the end of fiscal year 2013.
Annual savings planned incosts including cost of goods across raw materials, manufacturingsold, marketing expense and transportation and warehousing expenses.
Generating efficiencies to enable us to grow marketing costs at a slightly slower rate than sales growth while still increasing consumer reach and effectiveness, saving approximately $1 billion over the five year period.

Strengthening our Upstream Innovation Program and Pipelinenon-manufacturing overhead.
Innovation has always been - and continues to be - P&G's lifeblood. To consistently win with consumers around the world across price tiers and preferences and to consistently win versus our best competitors, each P&G product category must haveneeds a full portfolio of innovation. The innovation, portfolios must includeincluding a mix of commercial programs, incremental product improvements and discontinuousgame-changing innovations. We have made


26The Procter & Gamble Company

Finally, we are focused on improving operating discipline in everything we do. Executing better than our competitors is how we win with customers and consumers and generate leadership returns for our shareholders.
Given current market growth rates, the creationCompany expects the consistent delivery of more discontinuous innovation athe following annual financial targets will result in total shareholder returns in the top priority, dedicating R&D resources and funding to develop new innovations aimed at changingthird of the gamecompetitive peer group:
Grow organic sales modestly above market growth rates in existing productthe categories and creating new ones.geographies in which we compete,
Deliver Core EPS growth of high single digits, and
Generate free cash flow productivity of 90% or greater.









SUMMARY OF 20122013 RESULTS
Amounts in millions, except per share amounts2012 Change vs. Prior Year 2011 Change vs. Prior Year 2010
Net Sales$83,680
 3% $81,104
 5% $77,567
Operating Income13,292
 (14)% 15,495
 (2)% 15,732
Net Earnings from Continuing Operations9,317
 (20)% 11,698
 8% 10,851
Net Earnings from Discontinued Operations1,587
 593% 229
 (89)% 1,995
Net Earnings attributable to Procter & Gamble10,756
 (9)% 11,797
 (7)% 12,736
Diluted Net Earnings per Common Share3.66
 (7)% 3.93
 (4)% 4.11
Diluted Net Earnings per Share from Continuing Operations3.12
 (19)% 3.85
 11% 3.47
Core Earnings per Common Share3.85
 (1)% 3.87
 7% 3.61
Amounts in millions, except per share amounts2013 Change vs. Prior Year 2012 Change vs. Prior Year 2011
Net sales$84,167
 1% $83,680
 3% $81,104
Operating income14,481
 9% 13,292
 (14)% 15,495
Net earnings from continuing operations11,402
 22% 9,317
 (20)% 11,698
Net earnings from discontinued operations—
 (100)% 1,587
 593% 229
Net earnings attributable to Procter & Gamble11,312
 5% 10,756
 (9)% 11,797
Diluted net earnings per common share3.86
 5% 3.66
 (7)% 3.93
Diluted net earnings per share from continuing operations3.86
 24% 3.12
 (19)% 3.85
Core earnings per common share4.05
 5% 3.85
 (1)% 3.87

Net sales increased 3%1% to $83.7$84.2 billion.
◦Organic sales increased 3%.
◦Unit volume was consistent with the prior year period as mid-single digit growth in developing regions was offset by aincreased 2% due to low single-digit declineincreases in both developing and developed regions.
Net earnings attributable to Procter & Gamble were $10.8$11.3 billion, a decreasean increase of $1.0 billion$556 million or 9%5% versus the prior year period.
◦Net earnings from continuing operations increased $2.1 billion, or 22%, to $11.4 billion. The decreasecombination of the net year-over-year impact of acquisition and divestiture gains and the net year-over-year decline in net earnings attributable to Procter & Gambleimpairment charges drove $1.9 billion of the increase. The remaining increase was largely due to impairment charges, incremental restructuring charges and gross margin contraction, partially offset by net sales growth and the gain on the sale of the snacks business. The impairment charges included $1.6 billion of before-tax non-cash goodwill and intangible asset impairment charges associated with the Appliances and Salon Professional businesses. The incremental restructuring charges totaled $721 million before tax, resulting from the Company's productivity and cost savings plan announced during the year. A 160-basis point decline in gross margin expansion.
margin was driven primarily by higher commodity costs and negative mix, partially offset by price increases and manufacturing cost savings.
◦Net earnings from discontinued operations increased $1.4decreased $1.6 billion due to the gain on the sale of the snacks business.business and the earnings of the snacks business prior to the divestiture in the prior year period.
Diluted net earnings per share from continuing operations decreased 19%increased 5% to $3.12.$3.86.
◦Diluted net earnings per share decreased 7%from continuing operations increased 24% to $3.66, including earnings from discontinued operations of $0.54 per share.$3.86.
◦Core EPS decreased 1%increased 5% to $3.85.$4.05.
Cash flow from operating activities was $13.3$14.9 billion.
◦Free cash flow was $9.3$10.9 billion.
◦Free cash flow productivity was 85%95%.
ECONOMIC CONDITIONS, CHALLENGES AND RISKS
We discuss expectations regarding future performance, events and outcomes, such as our business outlook and objectives, in annual and quarterly reports, press releases


The Procter & Gamble Company16

and other written and oral communications. All such statements, except for historical and present factual information, are "forward-looking statements" and are based on financial data and our business plans available only as of the time the statements are made, which may become out-of-date or incomplete. We assume no obligation to update any forward-looking statements as a result of new information, future events or other factors. Forward-looking statements are inherently uncertain and investors must recognize that events could be significantly different from our expectations. For more information on risks that could impact our results, refer to Item 1A Risk Factors in this 10-K.
Ability to Achieve Business Plans. We are a consumer products company and rely on continued demand for our brands and products. To achieve business goals, we must develop and sell products that appeal to consumers and retail


The Procter & Gamble Company27

trade customers. Our continued success is dependent on leading-edge innovation with respect to both products and operations, on the continued positive reputations of our brands and our ability to successfully maintain trademark protection. This means we must be able to obtain patents and trademarks, and respond to technological advances and patents granted to competition. Our success is also dependent on effective sales, advertising and marketing programs. Our ability to innovate and execute in these areas will determine the extent to which we are able to grow existing net sales and volume profitably, especially with respect to the product categories and geographic markets (including developing markets) in which we have chosen to focus. There are high levels of competitive activity in the environments in which we operate. To address these challenges, we must respond to competitive factors, including pricing, promotional incentives, trade terms and product initiatives. We must manage each of these factors, as well as maintain mutually beneficial relationships with our key customers, in order to effectively compete and achieve our business plans.
As a company that manages a portfolio of consumer brands, our ongoing business model involves a certain level of ongoing acquisition, divestiture and joint venture activities. We must be able to successfully manage the impacts of these activities, while at the same time delivering against base business objectives.
Daily conduct of our business also depends on our ability to maintain key information technology systems, including systems operated by third-party suppliers and to maintain security over our data.
Cost Pressures. Our costs are subject to fluctuations, particularly due to changes in commodity prices, raw materials, labor costs, foreign exchange and interest rates. Therefore, our success is dependent, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings projects, sourcing decisions and certain hedging transactions, as well as consistent productivity improvements. We also must manage our debt and currency exposure, especially in certain countries with
currency exchange controls, such as Venezuela, China, India, Egypt and India.Argentina. We need to maintain key manufacturing and supply arrangements, including sole supplier and sole manufacturing plant arrangements, and successfully manage any disruptions at Company manufacturing sites. We must implement, achieve and sustain cost improvement plans, including our outsourcing projects and those related to general overhead and workforce optimization. Successfully managing these changes, including identifying, developing and retaining key employees, is critical to our success.
Global Economic Conditions. Demand for our products has a correlation to global macroeconomic factors. The current macroeconomic factors remain dynamic. Economic changes, terrorist activity, political unrest and natural disasters may result in business interruption, inflation,
deflation or decreased demand for our products. Our success will depend, in part, on our ability to manage continued global political and/or economic uncertainty, especially in our significant geographic markets, due to terrorist and other hostile activities or natural disasters. We could also be negatively impacted by a global, regional or national economic crisis, including sovereign risk in the event of a deterioration in the credit worthiness of, or a default by local governments, resulting in a disruption of credit markets. Such events could negatively impact our ability to collect receipts due from governments, including refunds of value added taxes, create significant credit risks relative to our local customers and depository institutions and/or negatively impact our overall liquidity. Additionally, changes in exchange controls and other limits could impact our ability to repatriate earnings from overseas.
Regulatory Environment. Changes in laws, regulations and the related interpretations may alter the environment in which we do business. This includes changes in environmental, competitive and product-related laws, as well as changes in accounting standards and tax laws.laws or the enforcement thereof. Our ability to manage regulatory, tax and legal matters (including, but not limited to, product liability, patent and other intellectual property competition law matters and tax policy)matters) and to resolve pending legal matters within current estimates may impact our results.
RESULTS OF OPERATIONS
The key metrics included in our discussion of our consolidated results of operations include net sales, gross margin, selling, general and administrative expenses (SG&A), other non-operating items and income taxes. The primary factors driving year over yearyear-over-year changes in net sales include overall market growth in the categories in which we compete, product initiatives, and geographic expansion and acquisition and divestiture activity, all of which drive changes in our underlying unit volume, as well as pricing actions (which can also indirectly impact volume), changes in product and geographic mix and foreign currency impacts on sales outside the United States. U.S.
Most of our cost of products sold and SG&A expenses are to some extent variable in nature. Accordingly, our discussion of these operating costs focusfocuses primarily on relative margins rather than the absolute year over yearyear-over-year changes in total costs. The primary drivers of changes in gross margin are input costs (energy and other


17The Procter & Gamble Company

commodities), pricing impacts, product and geographic mix (for example, gross margins in developed markets are generally higher than in developing markets for similar products), the impacts of manufacturing savings projects and to a lesser extent scale impacts (for costs that are fixed or less variable in nature). The primary drivers of SG&A are marketing-related costs and overhead costs. Marketing-related costs are primarily variable in nature, although we do achieve some level of scale benefit over time due to overall growth and other marketing efficiencies. Overhead costs are also variable in nature, but on a relative basis, less so than marketing costs due to our


28The Procter & Gamble Company

ability to leverage our organization and systems infrastructures to support business growth. Accordingly, we generally experience more scale-related impacts for these costs.

In February and November 2012, the Company announcedmade announcements related to a $10 billion productivity and cost savings plan to reduce costs in the areas of supply chain, research and development, marketing and overhead expenses. The plan is designed to accelerate cost reductions by streamlining management decision making, manufacturing and other work processes in order to help fund the Company's growth strategy. The Company expects to incur approximatelyin excess of $3.5 billion in before-tax restructuring costs over a four-yearfive-year period (fiscal 2012 through fiscal 2016) as part of this plan. Overall, the costs are expected to deliver in excess of $2.0 billion in before-tax annual savings.
Net Sales
Fiscal year 2013 compared with fiscal year 2012
Net sales increased 1% to $84.2 billion in 2013 on a 2% increase in unit volume. Volume in Baby Care and Family Care grew mid-single digits. Volume in Fabric Care and Home Care and in Health Care grew low single digits. Beauty volume was in line with the prior year. Grooming volume decreased low single digits. Volume grew low single digits in both developed and developing regions. The impact of overall global market growth was partially offset by market share declines in certain categories. Price increases added 1% to net sales, driven by price increases across all business segments, primarily executed in prior
periods to offset cost increases and devaluing developing market currencies. Foreign exchange reduced net sales by 2%. Organic sales growth was 3% driven by both volume and price increases.
Fiscal year 2012 compared with fiscal year 2011
Net sales increased 3% to $83.7 billion in 2012 on unit volume that was consistent with the prior year period. Difficult macroeconomic conditions have caused a slowdown in market growth in fiscal 2012, particularly in developed markets. In addition, we have initiated a number of price increases across each reportable segment in fiscal 2012, in large part to recover the rising cost of commodities and currency devaluations. These factors have negatively impacted volume growth in 2012, but the price increases have led to higher overall sales. Volume grew low single digits in Beauty, Grooming, Health Care, and Baby Care and Family Care. Fabric Care and Home Care volume decreased low
single digits. Volume grew mid-single digits in developing regions and was down low single digits in developed regions. The impact of overall global market growth was partially offset by market share declines in certain categories. Price increases added 4% to net sales, driven by price increases across all business segments and regions, primarily to help offset commodity costs and devaluing currencies in certain developing markets. Mix reduced net sales by 1% due to unfavorable geographic mix across the Beauty, Grooming, Health Care and Fabric Care and Home Care reportable segments and unfavorable product mix. Foreign exchange was neutral to net sales. Organic sales growth was 3% driven by price increases.

Operating Costs
Comparisons as a percentage of net sales; Years ended June 302013 
Basis Point
Change
  2012 
Basis Point
Change
  2011
Gross margin49.6% 30
  49.3% (160)  50.9%
Selling, general and administrative expense32.0% 50
  31.5% (30)  31.8%
Goodwill and indefinite-lived intangible asset and impairment charges0.4% (150)  1.9% 190
  —%
Operating margin17.2% 130
  15.9% (320)  19.1%
Earnings from continuing operations before income taxes17.6% 230
  15.3% (320)  18.5%
Net earnings from continuing operations13.5% 240
  11.1% (330)  14.4%
Net earnings attributable to Procter & Gamble13.4% 50
 12.9% (170) 14.6%
Fiscal year 20112013 compared with fiscal year 20102012
Net sales increased 5%Gross margin expanded 30 basis points in 20112013 to $81.1 billion on a 6% increase in unit volume. Volume grew behind market and share growth. Global market growth, in categories that we compete, grew 3% on a constant currency basis. Volume increased low single digits in developed regions and double digits in developing regions. All geographic regions contributed to volume growth, led by double-digit growth in Asia, high single-digit growth in Latin America and mid-single-digit growth in CEEMEA and Western Europe. All five49.6% of the business segments contributed to volume growth with high single-digit growth in the Baby Care and Family Care and Fabric Care and Home Care segments, mid-single-digit growth in the Beauty and Health Care segments, and a low single-digit growth in the Grooming segment. Organic volume, which excludes acquisitions and divestitures, was up 5%. Mix reduced net sales, driven by 2% due mainly tohigher pricing and manufacturing cost savings, partially offset by negative mix and higher commodity costs. Gross margin was positively impacted by 70 basis points from higher pricing and approximately 160 basis points from manufacturing cost savings. Gross margin was negatively impacted by 160 basis points from negative geographic and product mix behind disproportionate growth
in developing regions and mid-tier products, both of which have lower gross margins than the Company average selling prices,average. Gross margin was also reduced by capacity investments and declines in the premium-priced professional salonto a lesser extent by foreign exchange impacts and prestige categories. Pricing added 1% to net sales behind price increases to offset higher commodity costscosts.
Total SG&A increased 2% to $27.0 billion in 2013, driven by a charge for the balance sheet impact from the devaluation of the official foreign exchange rate in Venezuela and foreign exchange. Foreign exchange was neutral to net sales. Organic sales were up 4%, led by high single-digit growthan increase in the Baby Care and Family Care segment, as well as mid-single-digit growth across the Grooming and Health Care segments.

Operating Costs
Comparisons as a percentage of net sales; Years ended June 302012 
Basis Point
Change
  2011 
Basis Point
Change
 2010
Gross margin49.3% (160)  50.9% (140) 52.3%
Selling, general and administrative expense31.5% (30)  31.8% (20) 32.0%
Operating margin15.9% (320)  19.1% (120) 20.3%
Earnings from continuing operations before income taxes15.3% (320)  18.5% (70) 19.2%
Net earnings from continuing operations11.1% (330)  14.4% 40
 14.0%
Net earnings attributable to Procter & Gamble12.9% (170) 14.6% (180) 16.4%

marketing spending, partially


The Procter & Gamble Company 1829

offset by reduced overhead costs as a result of the productivity and cost savings plan. SG&A as a percentage of net sales increased 50 basis points to 32.0% largely due to a 40 basis point impact from the Venezuela devaluation charge and a 10 basis point increase in marketing spending as a percentage of net sales. Overhead costs as a percentage of net sales declined 20 basis points, as a 70-basis point benefit from our productivity and cost savings plan and 20 basis points of lower restructuring costs were largely offset by the impact of foreign exchange. This was due to a higher portion of SG&A spending in strengthening currencies as compared to net sales, higher employee wages and benefit costs and increased merchandising investments.
In fiscal 2013 we incurred impairment charges of $308 million ($290 million after-tax) related to the carrying value of goodwill in our Appliances business and the related Braun trade name intangible asset. In fiscal 2012 we incurred impairment charges of $1.6 billion ($1.5 billion after-tax) related to the carrying values of goodwill in our Appliances and Salon Professional businesses and our Koleston Perfect and Wella indefinite-lived intangible assets, which are part of our Salon Professional business. See Note 2 to our Consolidated Financial Statements for more details, including factors leading to the impairment charges. Since goodwill is included in Corporate for internal management and segment reporting, the goodwill impairment charges are included in the Corporate segment. The indefinite-lived intangible asset impairments are also included in the Corporate segment for management and segment reporting.
Fiscal year 2012 compared with fiscal year 2011
Gross margin contracted 160 basis points in 2012 to 49.3% of net sales. The reduction in gross margin was driven mainly by a 230-basis point impact from higher commodity and energy costs. Gross margin was also negatively impacted by 200 basis points from negative geographic and product mix and by 30 basis points from the impact of increased restructuring spending due to the productivity and cost savings plan. The negative mix resulted from disproportionate growth in developing regions, as developing regions have lower relative gross margins than developed regions. These impacts were partially offset by a 200-basis point impact from increased pricing and a 140-basis point impact from manufacturing cost savings.
Total SG&A increased 3% to $26.4 billion in 2012, driven by higher marketing spending to support initiative activity and a $510 million increase in restructuring spending from our productivity and cost savings plan, partially offset by a reduction in competition law fines (see Item 3 of this Form 10-K and Note 10 of11 to our Consolidated Financial Statements, Commitments and Contingencies)Statements), which were $303 million in the prior year2011 compared to $75 million in the current year.2012. SG&A as a percentage of net sales decreased 30 basis points to 31.5%, as reduced competition law fines and the impact of increased scale leverage on marketing and overhead costs from higher sales were partially offset by 60 basis points of incremental restructuring costs.
We incurred impairment charges of $1.6 billion ($1.5 billion after tax) in 2012 related to the carrying values of goodwill in our Appliances and Salon Professional businesses and our Koleston Perfect and Wella indefinite lived intangible assets, which are part of our Salon Professional business. See Note 2 of our Consolidated Financial Statements for more details, including factors leading to the impairment charges. Since goodwill is included in Corporate for internal management and segment reporting, the goodwill impairment charges are included in the Corporate segment. The indefinite lived intangible asset impairments are also included in the Corporate segment for management and segment reporting.
Non-Operating Items
Fiscal year 20112013 compared with fiscal year 20102012
Gross margin contracted 140 basis pointsInterest expense decreased 13% in 20112013 to 50.9% of net sales. The reduction$667 million, due to lower interest rates on floating-rate debt. Interest income increased 13% in gross margin was driven mainly by a 225-basis point2013 to $87 million, due to an increase in commoditycash, cash equivalents and energy costs, along with negative product mixdebt securities. Other non-operating income, net primarily includes divestiture gains and investment income. Other non-operating income increased $757 million to $942 million in 2013 mainly due to net acquisition and divestiture activities. A holding gain of $631 million resulting from disproportionate growththe purchase of the balance of P&G's Baby Care and Feminine Care joint venture in developing regionsIberia and mid-tier products. These impactsa gain of approximately $250 million from the sale of our Italian bleach business, both in the current year, were partially offset by manufacturing cost savings anda $130 million divestiture gain from the favorable impact of volume scale leverage.
Total SG&A increased 4% to $25.8 billionPUR water filtration business in 2011 behind higher marketing and overhead spending, which was partially offset by the impact of lower foreign currency exchange costs. SG&A as a percentage of net sales decreased 20 basis points to 31.8% due to a reduction in overhead and other operating expenses as a percentage of net sales, partially offset by increased marketing investments.
Marketing spending as a percentage of net sales increased 60 basis points due to additional marketing investments to support innovation and expansion plans. Overhead spending as a percentage of net sales decreased 50 basis points due to sales leverage, partially offset by added spending to support growth. Other operating expenses as a percentage of net sales decreased 30 basis points mainly due to a decrease in Venezuela-related foreign currency exchange costs of $548 million (see further discussion below in "Venezuela Currency Impacts"). Charges for competition law fines increased to $303 million versus the prior year charge of $283 million.
Non-Operating Itemsperiod.
Fiscal year 2012 compared with fiscal year 2011
InterestIn 2012, interest expense decreased 7% in 2012 to $769 million, due to lower interest rates on floating ratefloating-rate debt and a decrease in average debt outstanding. Interest income increased 24% in 2012 to $77 million, due to an increase in cash, cash equivalents and debt securities. Other non-operating income, net primarily includes divestiture gains, interest and investment income. Other non-operating income decreased $71$86 million to $262$185 million in 2012 mainly behind the impact of minor brand divestitures. A divestiture gain from the sale of ourthe PUR water filtration brand in the current yearfiscal 2012 was less than the Zest and Infasil divestiture gains in the prior year.fiscal 2011.
Income Taxes
Fiscal year 20112013 compared with fiscal year 20102012
In 2011, interest expenseThe effective tax rate on continuing operations decreased 12%390 basis points to $831 million23.2% in 2013. The primary drivers of this rate decline were as follows:
Approximately 210 basis points due primarily to a reductionthe non-deductibility of impairment charges related to our Appliances and Salon Professional businesses, which were higher in interest ratesthe base period versus the current year.
Approximately 100 basis points due to the tax impacts from acquisition and divestiture activity (primarily the non-taxable gain on floating rate debt partially offset by an increasethe purchase of the balance of the Baby Care and Feminine Care joint venture in debt outstanding. Other non-operatingIberia).
Approximately 50 basis points due to the net impact of favorable discrete adjustments related to uncertain income tax positions. The current year net benefit was $275, or 180 basis points, versus a net benefit of $333 million130 basis points in 2011 versus $82 million in 2010. This $251 million increase was primarily due tothe prior year.
Approximately 20 basis points from the impact of gains on divestitures in 2011 (Zest brand in North America and Infasil brand in Western Europe) and incremental costs in the 2010 associated with exercising the call option on an outstanding bond, partially offset by a gain due to the acquisition of MDVIP in 2010.Venezuela currency devaluation.
Income Taxes




30The Procter & Gamble Company

Fiscal year 2012 compared with fiscal year 2011
TheIn 2012, the effective tax rate on continuing operations increased 510 basis points to 27.1% in 2012 primarily due to a 250-basis point impact from the non-deductibility of impairment charges in the current year periodfiscal 2012 and the net impact of favorable discrete adjustments related to uncertain income tax positions, which drove 250 basis points of the tax rate difference. The net benefit on the current yearfrom favorable discrete adjustments was $165 million in fiscal 2012, which netted to 130 basis points, versus 380 basis points of net benefits in the prior year.fiscal 2011.
Net Earnings
Fiscal year 20112013 compared with fiscal year 20102012
In 2011, the effective tax rate onNet earnings from continuing operations increased $2.1 billion or 22% to $11.4 billion in 2013. The combination of the net year-over-year impact of acquisition and divestiture gains and the net year-over-year decline in impairment charges drove $1.9 billion of the increase. Earnings also increased due to the increase in net sales and the 30-basis point gross margin expansion in the current year.
Net earnings from discontinued operations decreased 500 basis points$1.6 billion in 2013 due to 22.0%.  This was primarily driven by net favorable discrete adjustments (primarily driven by favorable auditthe gain on the divestiture of the snacks business and litigation settlements for uncertain tax positionsthe earnings from the snacks business prior to the divestiture in multiple jurisdictions relatingthe prior year period. Net earnings attributable to


19The Procter & Gamble Companyincreased $556 million, or 5% to $11.3 billion.

Diluted net earnings per share from continuing operations increased 24% to $3.86 due to the increase in net earnings and a reduction in shares outstanding. The number of shares outstanding decreased due to $6.0 billion of treasury share repurchases under our publicly announced share repurchase program, partially offset by shares issued under share-based compensation plans. Diluted net earnings per share from discontinued operations was $0.54 in the prior periods), which drove 410 basis pointsyear period (zero in the current period) due to the gain on the divestiture of the effective tax rate difference.  Net adjustmentssnacks business and earnings of the snacks business prior to tax balancesthe divestiture. Diluted net earnings per share increased 5% to $3.86.
Core EPS increased 5% to $4.05 primarily due to increased net sales, gross margin expansion and the reduction in shares outstanding. Core EPS represents diluted net earnings per share from continuing operations excluding the current period charge for uncertain tax positions in a number of jurisdictions resulted in a benefit of approximately $535 million in 2011, including a $252 million benefitthe balance sheet impact from the settlementdevaluation of U.S. tax litigation primarilythe official foreign exchange rate in Venezuela, the current year holding gain on the purchase of the balance of our Iberian joint venture and charges in both years for European legal matters, incremental restructuring related to the valuationour productivity and cost savings plan and impairments of technology donations.  The 2011 tax rate also benefited from the geographic mix of current year salesgoodwill and earnings, which drove a 50-basis point reduction as an increased proportion of earnings were generated in foreign markets with lower tax rates versus the United States.
Net Earningsindefinite-lived intangible assets.
Fiscal year 2012 compared with fiscal year 2011
NetIn 2012, net earnings from continuing operations decreased 20% to $9.3 billion in 2012 as an increase in net sales was more than
offset by the impact of impairment charges, incremental restructuring charges and an increase in income taxes. Operating margin declined 320 basis points due primarily to a 190-basis point impact from goodwill and intangible assets impairment charges in our Appliances and Salon Professional businesses and an 85-basis point impact from incremental restructuring charges. The impact of higher commodity costs and negative product mix werewas largely offset by higher pricing, manufacturing cost savings and increased scale leverage.
Net earnings from discontinued operations increased $1.4 billion in 2012 due to the gain on the divestiture of the snacks business. Net earnings attributable to Procter & Gamble declined 9% to $10.8 billion.
Diluted net earnings per share decreased 7% from the prior year to $3.66 in fiscal 2012 behind a decrease in net earnings from continuing operations, partially offset by an increase in net earnings from discontinued operations and a reduction in shares outstanding. Diluted net earnings per share from continuing operations decreased 19% in 2012 decreased 19% to $3.12.$3.12 due to the decline in net earnings, partially offset by a reduction in shares outstanding. The reduction in the number of shares outstanding was driven by treasury share repurchases of $4.0 billion, which were made under our publicly announced share repurchase program, partially offset by shares issued under share-based compensation plans. Diluted net earnings per share from discontinued operations increased $0.46 due to the gain on the divestiture of the snacks business, partially offset by a decrease in the earnings of the snacks business prior to the divestiture. The reductionDiluted net earnings per share decreased 7% from the prior year to $3.66 in the number of shares outstanding was driven by treasury share repurchases of $4.0 billion, which were made under our publicly announced share repurchase program.
fiscal 2012. Core EPS in 2012 decreased 1% to $3.85. Core EPS represents diluted net earnings per share from continuing operations excluding current-year impairment charges for goodwill and indefinite lived intangible assets, current year incremental restructuring charges due to the productivity and cost savings plan, charges in both 2012 and 2011 for European legal matters and a 2011 benefit from the settlement of U.S. tax litigation primarily related to the valuation of technology donations.
Fiscal year 2011 compared with fiscal year 2010
In 2011, net earnings from continuing operations were $11.7 billion, an increase of 8% versus the prior year due mainly to
net sales growth and a lower effective tax rate, partially offset by operating margin contraction. Operating margin decreased 120 basis points due to a decrease in gross margin, partially offset by a decrease in SG&A spending as a percentage of net sales. Gross margin declined behind higher commodity costs, partially offset by manufacturing cost savings. SG&A as a percentage of net sales declined due to reduced foreign currency exchange costs and a reduction in overhead spending as a percentage of net sales due to productivity improvements, partially offset by increased marketing investments.
In 2011, net earnings from discontinued operations decreased $1.8 billion mainly due to the impact of the gain on the divestiture of the global pharmaceuticals business in 2010.
Diluted net earnings per share from continuing operations in 2011 increased 11% to $3.85 behind higher net earnings from continuing operations and the reduction in shares outstanding. Diluted net earnings per share from discontinued operations declined $0.56. Diluted net earnings per share declined 4% to $3.93 driven by lower net earnings from discontinued operations, partially offset by higher net earnings from continuing operations and a reduction in weighted average shares outstanding resulting from share repurchase activity. The reduction in the number of shares outstanding was driven by treasury share repurchases of $7.0 billion, nearly all of which were made under our publicly announced share repurchase program. Core EPS increased 7% in 2011 to $3.87.

Venezuela Currency Impacts
Venezuela was determined to beis a highly inflationary economy under U.S. GAAP during fiscal 2010 and asGAAP. As a result, the U.S. dollar is the functional currency for our subsidiaries in Venezuela. CurrencyAny currency remeasurement adjustments for non-dollar denominated monetary assets and liabilities held by these subsidiaries and other transactional foreign exchange gains and losses are reflected in earnings.  During fiscal 2010,
The Venezuelan government has established one official exchange rate for qualifying dividends and imported goods and services. That rate was equal to 4.3 Bolivares Fuertes (VEF) to one U.S. dollar through February 12, 2013. Effective February 13, 2013, the Venezuelan government devalued the Bolivar Fuerteits currency relative to the U.S. dollar.dollar from 4.3 to 6.3 (official rate). The remeasurement of our local balance sheets in fiscal 20102013 to reflect the impact of the devaluation resulted in a net after-tax charge of $236 million ($0.08 per share).  There will also be an ongoing impact related to translating our income statement at the new exchange rates.  Moving from the 4.3 rate to the new6.3 rate will reduce future total Company reported net sales by less than 1% on a going basis.  This does not impact our organic sales growth rate, which excludes the impact of foreign currency changes.  Versus our existing business plans, the exchange rate change reduced our reported earnings per share by approximately $0.04 per share in 2013.


The Procter & Gamble Company31

Transactions at the official exchange rate (4.3 Bolivares Fuertesare subject to the U.S. dollar) did not materially impact our results.  This was due to the relatively small non-dollar denominated net monetary asset position in Venezuela.CADIVI (Venezuelan government's Foreign Exchange Administrative Commission). Our overall results in Venezuela are reflected in our Consolidated Financial Statements at the 4.3official rate, which is alsocurrently the rate expected to be applicable to dividend repatriations.
Foreign currency transactions in Venezuela are subject to an official government currency exchange rate. Transactions at the official exchange rate are subject to CADIVI (Venezuela government's Foreign Exchange Administrative Commission). During recent years, inIn addition to the official exchange rate, used for qualifying dividends and imports of goods and services, the Venezuelan government has had a number of currency controls for companies operating in


The Procter & Gamble Company20

Venezuela. Through most of fiscal 2010, payments for certain imported goods and services that did not qualify for the official exchange ratethere had been satisfied by exchanging Bolivares Fuertes for U.S. dollars through securities transactions in the parallel market rather than at the more favorable official exchange rate.  In fiscal 2010, the Venezuelan government enacted regulations that reduced the availability of foreign currency at the official exchange rate. That and an increased spread between the official anda parallel exchange rates during most of fiscal 2010 resulted in increased costs for exchange transactions executed using securities transactions in the parallel market during fiscal 2010. The parallel market is now(SITME) that was controlled by Thethe Central Bank of Venezuela as the only legal intermediary to execute foreign exchange transactions outside of CADIVI. This is doneThe published rate was 5.3 through the SITME rate, which was approximately 5.3 as of June 30, 2012.February 12, 2013. The notional amount of transactions that runran through this foreign exchange rate for non-essentialnonessential goods iswas restrictive, which hasfor us essentially eliminated our ability to access any foreign exchange rate other than through the official CADIVI rate to pay for imported goods and/or manage our local monetary asset balances. Finally,When the government devalued its currency in February, 2013, it also eliminated SITME, but established a new exchange rate market program, referred to as SICAD.  As of June 30, 2013, there is little official information available on the new auction process or the underlying auction rates. 
As of June 30, 2013, we had net monetary assets denominated in local currency of $913 million. Local currency balances decreased 14% since June 30, 2012 due to the impact of the February 2013 devaluation and an increase in payments by the government through CADIVI, partially offset by an increase in the net amount of indirect value added taxes (VAT) receivable from the government from goods receipts and shipments. Prior to the February 2013 devaluation, a portion of our net monetary assets denominated in local currency was remeasured using the SITME rate because we planned to use that amount of the net assets (largely cash) to satisfy U.S. dollar denominated liabilities that do not qualify for official rate dollars. The remaining net monetary asset balances had been reflected within our Consolidated Financial Statements at the 4.3 official exchange rate. However, as noted in the preceding paragraph, the parallel SITME market was eliminated at the time of the February 2013 devaluation, and there is little information available on the SICAD mechanism.  Accordingly, all of our net monetary assets are measured at the official 6.3 exchange rate at June 30, 2013.
Additionally, the Venezuelan government enacted a price control law during the second half of fiscal 2012 that negatively impacted the net selling prices of certain products sold in Venezuela. This impact was not significant for
Depending on the fiscal year.ultimate transparency and liquidity of the SICAD market, it is possible that we may remeasure a
As
portion of June 30, 2012, we hadour net monetary assets denominated in local currency of approximately $1.1 billion. Approximately $338 million of this balance has been remeasured using the SITME parallel rate because we plan to use thisbalances (the amount of the net monetary assets (largely cash)needed to satisfy U.S. dollar denominated liabilities that do not qualify for official rate dollars. However,dollars, approximately $240 million as noted in the preceding paragraph, the availability of the parallel market to settle these transactions is uncertain. The remaining net monetary asset balances are currently reflected within our Consolidated Financial StatementsJune 30, 2013) at the 4.3 official exchangeSICAD rate. Depending on the future availability of U.S. dollars at the official rate, our local U.S. dollar needs, our overall repatriation plans and the creditworthiness of the
local depository institutions and other creditors,This would result in an additional devaluation charge. Over time, we have exposure for our local monetary assets.  We also have devaluation exposure for the differential between the current and potential future official and parallel exchange rates.

Our abilityintend to effectively managerestore net sales and profit to levels in Venezuelaachieved prior to the devaluation. However, our ability to do so will be impacted by several factors. These include the Company's ability to mitigate the effect of the recently enacted price controls, any potential future devaluation, any further Venezuelan government price or exchange controls, economic conditions and the availability of raw materials and utilities. In addition, depending on the future availability of U.S. dollars at the official rate, our local U.S. dollar needs, our overall repatriation plans, the creditworthiness of the local depository institutions and other creditors and our ability to collect amounts due from customers and the government, including VAT receivable, we may have exposure for our local monetary assets. We also have devaluation exposure for the differential between the current and potential future official exchange rates.
SEGMENT RESULTS
Segment results reflect information on the same basis we use for internal management reporting and performance evaluation. The results of these reportable segments do not include certain non-business unit specific costs such as interest expense, investing activities and certain restructuring and asset impairment costs. These costs are reported in our Corporate segment and are included as part of our Corporate segment discussion. Additionally, as described in Note 1112 to the Consolidated Financial Statements, we have investments in certain companies over which we exert significant influence, but do not control the financial and operating decisions and, therefore, do not consolidate these companies for U.S. GAAP purposes ("unconsolidated entities"). Given that certain of these investments are managed as integral parts of the Company's business units, they are accounted for as if they were consolidated subsidiaries for management and segment reporting purposes. This means pre-tax earnings in the business units include 100% of each pre-tax income statement component. In determining after-tax earnings in the business units, we eliminate the share of earnings applicable to other ownership interests, in a manner similar to noncontrolling interest, and apply the statutory tax rates. Eliminations to adjust each line item to U.S. GAAP are included in our Corporate segment. All references to net earnings throughout the discussion of segment results refer to net earnings from continuing operations attributable tooperations.


32The Procter & Gamble.
Gamble Company


Net Sales Change Drivers (2013 vs. 2012)
 
Volume with
Acquisitions
& Divestitures
 
Volume
Excluding
Acquisitions
& Divestitures
 
Foreign
Exchange
 Price Mix Other 
Net Sales
Growth
Beauty0% 0% -2% 2% -1% -1% -2%
Grooming-1% 0% -4% 2% 0% -1% -4%
Health Care3% 3% -3% 1% 1% 1% 3%
Fabric Care and Home Care3% 3% -2% 1% -1% 0% 1%
Baby Care and Family Care4% 4% -2% 1% -1% 0% 2%
TOTAL COMPANY2% 2% -2% 1% 0% 0% 1%
Net Sales Change Drivers vs. Year Ago (2012 vs. 2011)
Volume with
Acquisitions
& Divestitures
 
Volume
Excluding
Acquisitions
& Divestitures
 
Foreign
Exchange
 Price Mix/Other 
Net Sales
Growth

Net Sales Change Drivers (2012 vs. 2011)
Volume with
Acquisitions
& Divestitures
 
Volume
Excluding
Acquisitions
& Divestitures
 
Foreign
Exchange
 Price Mix Other 
Net Sales
Growth
Beauty2 % 2 % 0 % 3% -3 % 2%2% 2% 0% 3% -3% 0% 2%
Grooming1 % 1 % -1 % 2% -1 % 1%1% 1% -1% 2% -1% 0% 1%
Health Care1 % 0 % 0 % 3% -1 % 3%1% 0% 0% 3% -1% 0% 3%
Fabric Care and Home Care-1 % -1 % 0 % 5% -1 % 3%-1% -1% 0% 5% -1% 0% 3%
Baby Care and Family Care1 % 1 % 0 % 5% 0 % 6%1% 1% 0% 5% 0% 0% 6%
TOTAL COMPANY0 % 0 % 0 % 4% -1 % 3%0% 0% 0% 4% -1% 0% 3%
Net sales percentage changes are approximations based on quantitative formulas that are consistently applied. Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.




21The Procter & Gamble Company

BEAUTY
($ millions)2012  
Change vs.
Prior Year
 2011  
Change vs.
Prior Year
2013  Change vs 2012 2012  
Change vs
2011
Volumen/a
  +2 % n/a
  +4 %n/a  0% n/a  +2%
Net sales$20,318
  +2 % $19,937
  +4 %$19,956  -2% $20,318  +2%
Net earnings$2,390
  -6 % $2,542
  -1 %$2,474  +4% $2,390  -6%
% of Net Sales12.4% 60 bps 11.8% (100) bps
Fiscal year 2013 compared with fiscal year 2012
Beauty net sales decreased 2% to $20.0 billion in 2013 on unit volume that was in line with the prior year period. Organic sales increased 1%. Price increases contributed 2% to net sales growth. Unfavorable geographic mix reduced net sales by 1% due to disproportionate growth in developing regions, which have lower than segment average selling prices. Unfavorable foreign exchange reduced net sales by 2%. The mix impact of minor brand divestitures reduced net sales by 1%. Global market share of the Beauty segment decreased 0.5 points. Volume increased low single digits in developing markets and decreased low single digits in developed regions. Volume in Hair Care and Color was in line with the prior year period due to a low single-digit increase in developing regions from market growth and innovation offset by a low single-digit decline in developed regions from reduced shipments as a result of price gaps versus competition. Global market share of the hair care and color category was down more than half a point. Volume in Beauty Care was in line with the prior year period. A low
single-digit volume increase in personal cleansing and a mid-single-digit increase in deodorants, driven by innovation and market growth in developing regions, was offset by a mid-single-digit decline in facial skin care, where global market share decreased about a point. Volume in Salon Professional was in line with the prior year period due to mid-single-digit growth in developing markets behind new innovations, offset by a low single-digit decline in developed regions from market contraction. Volume in Prestige was in line with the prior year period due to minor brand divestitures and market contraction in Western Europe, offset by innovation and market growth in developing markets. Organic volume in Prestige increased low single digits.
Net earnings increased 4% to $2.5 billion, as lower net sales were more than offset by a 60-basis point increase in net earnings margin. Net earnings margin increased due to gross margin expansion, a decrease in SG&A as a percentage of sales and a lower effective tax rate. Gross margin increased behind manufacturing cost savings and higher pricing. SG&A as a percentage of net sales declined largely due to reduced overhead spending. The effective tax rate declined due to the geographic mix of earnings.
Fiscal year 2012 compared with fiscal year 2011
Beauty net sales increased 2% to $20.3 billion in 2012 on unit volume growth of 2%. Organic sales also grew 2% on 2% organic volume growth. Price increases contributed 3% to net sales growth. Mix negatively impacted net sales by 3% behind a decrease in Salon Professional and a


The Procter & Gamble Company33

disproportionate growth in developing regions, which have lower than segment average selling prices. Global market share of the Beauty segment decreased 0.3 points. Volume increased mid-single digits in developing regions while developed region volume decreased low single digits. Volume in Retail Hair Care and Color grew mid-single digits behind high single-digit growth in developing regions led by Pantene initiatives and Head & Shoulders geographic expansion. Volume in developed regions was down low single digits due to competitive activity. Global market share of the hair care category was unchanged. Volume in Beauty Care decreased mid-single digits due to the Zest and Infasil divestitures and the impact of competitive activity in North America and Western Europe which contributed to about half a point of global share loss. Volume in Salon Professional was down high single digits mainly due to market contraction in Europe and the impact of competitive activity. Volume in Prestige Products increased mid-single-digitsmid-single digits driven by initiative activity, partially offset by minor brand divestitures.
Net earnings decreased 6% to $2.4 billion as higher net sales were more than offset by a 100-basis point decrease in net earnings margin. Net earnings margin decreased due to gross margin contraction partially offset by lower SG&A as a percentage of net sales. Gross margin decreased primarily due to an increase in commodity costs and unfavorable geographic and product mix, partially offset by manufacturing cost savings and higher pricing. SG&A as a percentage of net sales decreased due to scale leverage from increased sales.
GROOMING
($ millions)2013  Change vs 2012 2012  
Change vs
2011
Volumen/a  -1% n/a  +1%
Net sales$8,038  -4% $8,339  +1%
Net earnings$1,837  +2% $1,807  +2%
% of Net Sales22.9% 120 bps 21.7% 10 bps
Fiscal year 20112013 compared with fiscal year 20102012
BeautyGrooming net sales increaseddecreased 4% to $8.0 billion in 2011 to $19.9 billion2013 on a 1% decrease in unit volume growth of 4%.volume. Organic sales grew 3%were up 2% on organic volume of 5%. Mix negatively impactedthat was in line with the prior year period. Price increases contributed 2% to net sales growth. Unfavorable foreign exchange reduced net sales by 2% behind disproportionate growth in developing regions, which have lower than segment average selling prices and declines in4%. The impact of the premium-priced Prestige Products and Salon Professional categories. Favorable foreign exchange positively impactedBraun household appliances business divestiture reduced net sales growth by 1%. Volume in developing regions increased double digits, while volume in developed regions declined low single digits. Volume in Retail Hair Care grew mid-single digits behind growth in all regions except North America. Developing
regions grew double digits behind initiative activity on Pantene, Head & Shoulders and Rejoice, distribution expansions and market growth, which were partially offset by a mid-single-digit decline in North America due to competitive activity. Global market share of the hair care category was up slightly.Grooming segment increased 0.4 points. Volume in Beauty Care was up midincreased low single digits primarily due to higher shipments of Olay and Safeguard behind initiative activity and distribution expansion and market growth in developing markets. Volume in Salon Professional was down high singleregions and decreased mid-single digits mainly due to the planned exit of non-strategic businesses and market size contractions in developed regions. Volume in Prestige Products declined low single digits primarily due to the divestiture of minor brands and lower shipments in Western Europe. Excluding the minor brand divestitures,Shave Care volume increased low single digits due to low single-digit growth in developing regions, primarily behind market growth and innovation expansion, partially offset by a low single-digit decrease in developed regions primarily due to market contraction in Western Europe. Global market share of Dolce & Gabbanathe blades and Gucci fragrance brands behind initiative activity.razors category was up less than half a point. Volume in Appliances decreased double digits due to
the sale of the Braun household appliances business, competitive activity and market contraction. Organic volume in Appliances declined high single digits. Global market share of the appliances category decreased nearly half a point.
Net earnings decreased 1%increased 2% to $1.8 billion due to a 120-basis point increase in 2011 to $2.5 billion as higher net sales were more thanearnings margin, partially offset by a 60-basis pointthe decrease in net earnings margin.sales. Net earnings margin decreasedincreased primarily due to gross margin contraction and higher SG&A as a percentage of net sales.expansion. Gross margin decreased primarilyincreased due to an increase in commodity costs, partially offset bypricing and manufacturing cost savings and higher pricing.savings. SG&A as a percentage of net sales decreased nominally as increased due to higher marketing spending partiallywas offset by lowerreduced overhead spending as a percentage of net sales and reduced foreign currency exchange costs.
GROOMING
($ millions)2012  
Change vs.
Prior Year
 2011  
Change vs.
Prior Year
Volumen/a
  +1% n/a
  +3%
Net sales$8,339
  +1% $8,245
  +5%
Net earnings$1,807
  +2% $1,775
  +10%
Fiscal year 2012 compared with fiscal year 2011
Grooming net sales increased 1% to $8.3 billion in 2012 on a 1% increase in unit volume. Organic sales were up 2%. Price increases contributed 2% to net sales growth. Unfavorable geographic and product mix decreased net sales by 1% mainly due to disproportionate growth in developing markets, which have lower than segment average selling prices. Unfavorable foreign exchange decreased net sales growth by 1%. Global market share of the Grooming segment decreased 0.2 points. Volume grew mid-single digits in developing regions due to initiative activity and market growth and decreased low single digits in developed regions primarily due to competitive activity. Volume in Shave Care was up low single digits due to mid-single-digit growth in developing regions behind initiatives, Fusion ProGlide geographic expansion and market growth, partially offset by a low single-digit decrease in developed regions due to market contraction and the impact of competitive activity. Global market share of the blades and razors category was unchanged. Volume in Appliances decreased


The Procter & Gamble Company22

mid-single digits due to market contraction in Western Europe and the impact of competitive activity. Global market share of the dry shave category was down over 2 points.
Net earnings increased 2% to $1.8 billion due to higher net sales and a 10-basis point increase in net earnings margin. The net earnings margin increase was driven by a decrease in SG&A as a percentage of net sales, largely offset by gross margin contraction. SG&A as a percentage of net sales decreased due to reductions in both overhead and marketing spending. Gross margin decreased primarily due to an increase in commodity costs and unfavorable geographic and product mix, partially offset by price increases.








34The Procter & Gamble Company

HEALTH CARE
($ millions)2013  Change vs 2012 2012  
Change vs
2011
Volumen/a  +3% n/a  +1%
Net sales$12,830  +3% $12,421  +3%
Net earnings$1,898  +4% $1,826  +2%
% of Net Sales14.8% 10 bps 14.7% (20) bps
Fiscal year 20112013 compared with fiscal year 20102012
GroomingHealth Care net sales increased 5%3% to $12.8 billion in 2011 to $8.2 billion2013 on volume growth ofa 3%. increase in unit volume. Organic sales were up 5%. Price increases taken primarily across blades and razors in Latin America and developed regions, contributed 2%1% to net sales growth. Favorable product mix, partially offset by unfavorable geographic mix, increased net sales by 1%. Unfavorable foreign exchange reduced net sales by 3%. The mix impact from acquisitions and divestitures increased net sales by 1%. Global market share of the health care segment decreased 0.3 points. Volume grew high singleincreased mid-single digits in developing regions and decreasedincreased low single digits in developed regions. Volume for blades and razors was up low singleOral Care volume increased mid-single digits due to geographic expansion, innovation and market growth in developing regions, partially offset by reduced volume in the developed regions. Gillette Fusion and Venus shipments increased double digits behind distribution expansion and initiative activity; while Mach3 shipments increased low single digits due to growth in developing regions, partially offset by decreases in developed markets.growth. Global market share of the blades and razorsoral care category was down about half a point.slightly. Volume in Appliances decreasedPersonal Health Care increased mid-single digits partially due to a net increase from prior year acquisition and divestiture activity (the addition of the PGT Healthcare partnership and New Chapter VMS, partially offset by the divestiture of the PuR business). Organic volume increased low single digits primarily due to competitivethe launch of ZzzQuil and geographic expansion for Vicks. Volume in Feminine Care increased low single digits with mid-single-digit growth in developing markets behind market growth and innovation partially offset by a low single-digit decrease in developed regions due to increased promotional activity from competition and a shift from low-tier, high volume products to higher-tier product offerings.market contraction. Global market share of the dry shavefeminine care category was down half a point.
Net earnings increased 10%4% to $1.8$1.9 billion behinddue to higher net sales and a 90-basis10-basis point increase in net earnings margin. Net earnings margin increased due to a reduction in overhead spending, partially offset by an increase in marketing spending and gross margin expansion, a lower effective tax rate and a decrease in SG&A as a percentage of net sales.contraction. Gross margin increaseddecreased due to price increases, the favorable impact of volume scale leverageincreased commodity costs and supply chain investments, partially offset by higher pricing and manufacturing cost savings. The tax rate decrease was due to a shift in the geographic mix of earnings to countries with lower statutory tax rates. SG&A as a percentage of net sales was down due to lower foreign currency exchange costs and lower overhead spending as a percentage of net sales due to sales leverage, partially offset by higher marketing spending.
HEALTH CARE
($ millions)2012  
Change vs.
Prior Year
 2011  
Change vs.
Prior Year
Volumen/a
  +1% n/a
  +5 %
Net sales$12,421
  +3% $12,033
  +5 %
Net earnings$1,826
  +2% $1,796
  -3 %

Fiscal year 2012 compared with fiscal year 2011
Health Care net sales increased 3% to $12.4 billion in 2012 on 1% growth in unit volume. Organic sales were up 2% on flat organic volume. Price increases contributed 3% to net sales growth. Mix negatively impacted net sales by 1% due to disproportionate growth in certain developing countries and products with lower than segment average selling prices. Global market share of the Health Care segment decreased 0.1 points. Volume increased mid-single digits in developing regions and decreased low single digits in developed regions. Oral Care volume was in line with the
prior year period as the expansion of Oral-B toothpaste in Western Europe and Latin America werewas offset by the impact of competitive activity in developed markets and Asia and the lost volume following the price increases in Asia. Global market share of the oral care category was down slightly. Volume in Personal Health Care increased low single digits driven by the addition of the PGT Healthcare partnership. Organic volume was down low single digits as the benefits from market growth were more than offset by lower shipments of Prilosec OTC in North America. All-outlet value share of the U.S. personal health care market was down slightly. Volume in Feminine Care was up low single digits driven by mid-single digitmid-single-digit growth in developing markets due to market growth and initiative activity in India, Brazil and CEEMEA. Feminine Care global market share was down about half a point.
Net earnings increased 2% to $1.8 billion behind higher net sales partially offset by a 20-basis point decrease in net earnings margin. Net earnings margin decreased due to gross margin contraction, partially offset by lower SG&A as a percentage of net sales. Gross margin declined due to higher commodity costs and unfavorable product and geographic mix, partially offset by manufacturing cost savings and price increases. SG&A as a percentage of net sales decreased primarily due to scale leverage from increased sales.
FABRIC CARE AND HOME CARE
($ millions)2013  Change vs 2012 2012  
Change vs
2011
Volumen/a  +3% n/a  -1%
Net sales$27,448  +1% $27,254  +3%
Net earnings$3,126  +7% $2,915  -6%
% of Net Sales11.4% 70 bps 10.7% (100) bps
Fiscal year 20112013 compared with fiscal year 20102012
HealthFabric Care and Home Care net sales increased 5%1% in 20112013 to $12.0$27.4 billion on 5% growtha 3% increase in unit volume. Organic sales were up 5%3%. Price increases contributed 1% to net sales growth. Unfavorable product mix decreased net sales by 1% driven by a reduction in Pet Care volume, which has higher than segment average selling prices. Unfavorable foreign exchange reduced net sales by 2%. Global market share of the Fabric Care and Home Care segment decreased 0.3 points. Volume increased high singlemid-single digits in developing regions and low single digits in developed regions. Volume in OralFabric Care grew mid-singlevolume increased low single digits behind initiative activitylow single-digit growth in developed regions and incremental merchandising supportmid-single-digit growth in developing regions, driven primarily by Asia. Overall growth due to innovation and market growth was partially offset by the impacts of Crest and Oral-B.competitive activity. Global market share of the oralfabric care category decreased more than half a point. Home Care volume increased mid-single digits driven by a high single-digit increase in developing markets, behind innovation and distribution expansion, and a low single-digit increase in developed markets primarily due to the impact of reduced


The Procter & Gamble Company35

pricing in North America. Global market share of the home care category was up over half a point. Volume in Personal Health Care grewunchanged. Batteries volume increased low single digits behind higher shipments of Vicksdue to a mid-single-digit increase in North Americadeveloping regions from market growth and the developing regions,geographic expansion, partially offset by continuing declinea low single-digit decrease in developed markets due to market contraction and share losses, primarily behind higher pricing in Western Europe to improve the margin structure. Global market share of Prilosec OTC in North Americathe batteries category was unchanged. Pet Care volume decreased mid-single digits due to competitive activity. All-outlet value shareactivity and the impact of product recalls for Natura in developed markets. Volume was in line with the U.S. personal health care market increased about half a point. Volume in Feminine Care was up mid-single digits mainly due to higher shipments of Naturella, behind expansion into developing regions, and Always, behind initiative activityprior year in developing regions. Global market share of the femininepet care category was down less than half a point.


23The Procter & Gamble Company

Net earnings decreased 3%increased 7% to $1.8$3.1 billion as higher net sales were more than offset bydue to a 130-basis70-basis point decreaseincrease in net earnings margin.margin and the increase in net sales. Net earnings margin decreasedincreased mainly due to lower gross margin expansion. Gross margin increased due to higher pricing and manufacturing cost savings, partially offset by higher commodity costs and the impact from product recalls on the Natura brand. SG&A as a percentage of net sales and a higher effective tax rate. Gross margin declined due to higher commodity costs and unfavorable mix due to disproportionate growth in developing regions, partiallywas nearly unchanged, as increased marketing spending was largely offset by manufacturing cost savings. SG&A as a percentage of net sales increased behind higher marketing spending to support growth, partially offset by lower foreign currency exchangereduced overhead costs. The tax rate increase was due to a shift in the geographic mix of earnings to countries with higher statutory tax rates.

FABRIC CARE AND HOME CARE
($ millions)2012  
Change vs.
Prior Year
 2011  
Change vs.
Prior Year
Volumen/a
  -1 % n/a
  +6 %
Net sales$27,254
  +3 % $26,536
  +4 %
Net earnings$2,915
  -6 % $3,109
  -12 %
Fiscal year 2012 compared with fiscal year 2011
Fabric Care and Home Care net sales increased 3% to $27.3 billion in 2012. Unit volume decreased 1%. Organic sales were up 3%. Price increases contributed 5% to net sales growth. Mix negatively impacted net sales growth by 1% due to disproportionate growth of mid-tier product lines and developing regions, which have lower than segment average selling prices. Global market share of the Fabric Care and Home Care segment decreased 0.3 points. Volume in developing regions grew mid-single digits, while volume in developed regions decreased mid-single digits. Fabric Care volume decreased low single digits mainly due to the impact of price increases in North America, partially offset by growth in Asia. Global market share of the fabric care category decreased half a point. Home Care volume increased low single digits driven by initiative activity and distribution expansion in developing regions, partially offset by a low-single-digitlow single-digit decline in developed regions due to the impact of price increases. Global market share of the home care category was unchanged. Batteries volume decreased low single digits due to market contraction and distribution losses in developed markets, partially offset by market growth and distribution expansion in developing regions. Global market share of the batteries category increased about half a point. Pet Care volume decreased high single digits due mainly to market contraction and customer inventory reductions. Global market share of the pet care category was down about half a point.
Net earnings decreased 6% to $2.9 billion as net sales growth was more than offset by ana 100-basis point decrease in net earnings margin. Net earnings margin decreased primarily due to gross margin contraction. Gross margin decreased mainly due to higher commodity costs and
unfavorable product and geographic mix, partially offset by manufacturing cost savings and higher pricing. SG&A as a
percentage of net sales decreased nominally as higher marketing costs were largely offset by overhead scale leverage from increased sales.
BABY CARE AND FAMILY CARE
($ millions)2013  Change vs 2012 2012  
Change vs
2011
Volumen/a  +4% n/a  +1%
Net sales$16,790  +2% $16,493  +6%
Net earnings$2,242  +6% $2,123  +7%
% of Net Sales13.4% 50 bps 12.9% 20 bps
Fiscal year 20112013 compared with fiscal year 20102012
FabricBaby Care and HomeFamily Care net sales increased 2% to $16.8 billion in 2013 on 4% in 2011 to $26.5 billion on a 6% increase in unit volume.volume growth. Organic sales were up 2%4%. Organic volume, which excludes the impact of the Ambi Pur and Natura acquisitions, increased 5%. Mix negatively impactedPricing added 1% to net sales growthgrowth. Product mix reduced net sales by 2%1% due to disproportionate growth of mid-tier product lines and powdered laundry detergents,Family Care, which havehas lower than segment average selling prices. Volume in developing regions was up high single digits, while volume in developed regions grew mid-single digits. Fabric Care volume increased mid-single digits, ledUnfavorable foreign exchange reduced net sales by high single-digit growth in developing regions behind initiative activity, increased distribution and market growth.2%. Global market share of the fabric care categoryBaby Care and Family Care segment decreased 0.3 points. Volume increased slightly. Home Care volume increased doublemid-single digits due, in part, to the Ambi Pur acquisition. Organic volume in Home Care was up highdeveloping regions and low single digits driven mainlyin developed regions. Volume in Baby Care increased low single digits as a mid-single-digit increase in developing regions from market growth, distribution expansion and innovation, was partially offset by initiativea low single-digit decrease in developed regions due to market contraction and competitive promotional activity, including launches of Gain hand dishwashing liquid and Febreze Set & Refreshprimarily in North America, and geographic expansion of dish and air care product lines.Western Europe. Global market share of the homebaby care category was updecreased nearly 1half a point. Batteries volume grewVolume in Family Care increased mid-single digits primarily due to price reductions executed through pack count increases in North America, which were implemented in January 2010, initiative activity in Western Europe and market growth and distribution expansion in Asia. Global marketinnovation on Charmin and Bounty. In the U.S., all-outlet share of the batteriesfamily care category was flat.
Net earnings increased more than half a point. Pet Care volume was down mid-single digits mainly6% to $2.2 billion due to the impacts of the recall of select dry pet food products and the supply constraints resulting from restructuring the supply chain following the recalls, partially offset by the impact of the Natura acquisitionincrease in June 2010. Excluding the Natura acquisition, Pet Care volume decreased double digits. Global market share of the pet care category was down half a point.
Net earnings decreased 12% to $3.1 billion as net sales growth was more than offset byand a 220-basis50-basis point decreaseincrease in net earnings margin. Net earnings margin decreased mainlyincreased due to gross margin contraction. SG&A as a percentageexpansion. The increase in gross margin was driven by the impact of net saleshigher pricing and the effective tax rate also increased. Gross margin decreased mainly due to highermanufacturing and commodity costs and unfavorable product mix behind disproportionate growth of developing regions and mid-tier products,cost savings, partially offset by manufacturing cost savings. SG&A as a percentage of net sales increased behind higher overhead spending to support growthunfavorable product and due to costs related to the select dry pet food products recall. The tax rate increased due to a shift in the geographic mix of earnings to countries with higher statutory tax rates.


The Procter & Gamble Company24

BABY CARE AND FAMILY CARE
($ millions)2012  
Change vs.
Prior Year
 2011  
Change vs.
Prior Year
Volumen/a
  +1% n/a
  +8 %
Net sales$16,493
  +6% $15,606
  +6 %
Net earnings$2,123
  +7% $1,978
  -3 %
mix.
Fiscal year 2012 compared with fiscal year 2011
Baby Care and Family Care net sales increased 6% to $16.5 billion in 2012 on 1% volume growth. Organic sales were up 6%. Pricing added 5% to net sales growth. Global market share of the Baby Care and Family Care segment increased 0.2 points. Volume grew double digits in developing regions and decreased low single digits in developed regions. Volume in Baby Care was up mid-single digits behind market size growth and distribution expansion in developing regions, partially offset by declines in North America and Western Europe from diaper market contraction. Global market share of the baby care category increased more than half a point. Volume in Family Care decreased low single


36The Procter & Gamble Company

digits primarily due to competitive activity and the impact of a price increase in North America. In the U.S., all-outlet share of the family care category was down half a point.
Net earnings increased 7% to $2.1 billion due to sales growth and a 20-basis point increase in net earnings margin. Net earnings margin increased mainly due to a decrease in SG&A as a percentage of net sales, partially offset by a lower gross margin. The reduction in gross margin was driven primarily by higher commodity costs and unfavorable geographic and product mix, partially offset by the impact of higher pricing. SG&A as a percentage of net sales decreased due to scale leverage from increased sales.
Fiscal year 2011 compared with fiscal year 2010CORPORATE
Baby Care and Family Care net sales increased 6% in 2011 to $15.6 billion on 8% volume growth. Organic sales were up 7%. Mix reduced net sales by 2% driven mainly by disproportionate growth of mid-tier product lines, larger package sizes and developing regions, all of which have lower than segment average selling prices. Pricing added 1% to net sales growth primarily due to price increases executed in Baby Care to offset higher commodity costs and foreign exchange. Unfavorable foreign exchange negatively impacted net sales by 1%. Volume grew double digits in developing regions and mid-single digits in developed regions. Volume in Baby Care was up high single digits primarily due to double-digit growth in developing regions behind initiative activity, market growth and distribution expansion. Global market share of the baby care category increased over 1 point. Volume in Family Care increased high single digits driven by the continued impact of initiatives launched in prior periods, with high single-digit growth in North America. In the U.S., all-outlet share of the family care category increased half a point.
Net earnings decreased 3% to $2.0 billion as net sales growth was more than offset by a 120-basis point reduction
in net earnings margin. Net earnings margin declined mainly due to a lower gross margin, partially offset by a decrease in SG&A as a percentage of net sales. The reduction in gross margin was driven by higher commodity costs and unfavorable product mix, behind disproportionate growth of mid-tier product lines, larger package sizes and developing regions, which were only partially offset by the favorable impact of volume scale leverage and manufacturing cost savings. SG&A as a percentage of net sales declined due to lower foreign currency exchange costs.
CORPORATE
($ millions)2013  Change vs 2012 2012  
Change vs
2011
Net sales$(895)  -22% $(1,145)  -9%
Net earnings$(175)  N/A $(1,744)  N/A
Corporate includes certain operating and non-operating activities not allocated to specific business units. These include: the incidental businesses managed at the corporate level; financing and investing activities; other general corporate items; the historical results of certain divested brands and categories; certain asset impairment charges; and certain restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization. Corporate also includes reconciling items to adjust the accounting policies used in the segments to U.S. GAAP. The most significant reconciling items include income taxes (to adjust from statutory rates that are reflected in the segments to the overall Company effective tax rate), adjustments for unconsolidated entities (to eliminate net sales, cost of products sold and SG&A for entities that are consolidated in the segments but accounted for using the equity method for U.S. GAAP) and noncontrolling interest adjustments for subsidiaries where we do not have 100% ownership. Since certain unconsolidated entities and less than 100%-owned subsidiaries are managed as integral parts of the related segments, they are accounted for similar to a wholly-owned subsidiary for management and segment purposes. This means our segment results recognize 100% of each income statement component through before-tax earnings in the segments, with eliminations for unconsolidated entities and noncontrolling interests in Corporate. In determining segment net earnings, we apply the statutory tax rates (with adjustments to arrive at the Company's effective tax rate in Corporate) and eliminate the share of earnings applicable to other ownership interests, in a manner similar to noncontrolling interest.
Corporate net sales primarily reflect the adjustment to eliminate the sales of unconsolidated entities included in business segment results. Accordingly, Corporate net sales are generally negative. Negative net sales in Corporate for 2013 decreased by $250 million due to 1) the purchase of the balance of our Iberian joint venture (after which this business is consolidated for both segment and consolidated
results and the underlying sales no longer need to be eliminated) and 2) smaller adjustments required to eliminate reduced sales of the remaining unconsolidated entities. Corporate net earnings improved $1.6 billion primarily due to reduced net after-tax goodwill and intangible asset impairment charges (which totaled $1.5 billion in the prior year as compared to $290 million in the current period), along with the current year net after-tax holding gain related to the purchase of the balance of our Iberian joint venture, partially offset by the current year charge for the impact of the Venezuela devaluation. Additional discussion of the items impacting net earnings in Corporate are included in the Results of Operations section.
In 2012, negative net sales in Corporate decreased by $108 million due to adjustments required to eliminate the lower net sales of unconsolidated entities. Net Corporate expenses increasednet earnings declined $2.2 billion primarily due to the net after tax goodwill and intangiblesintangible asset impairment charges of $1.5 billion, incremental after-tax restructuring charges of $587 million and the impact of lower net discrete tax adjustments in the current year.2012. Additional discussion of the items impacting net earnings in Corporate are included in the Results of Operations section.


25The Procter & Gamble Company

In 2011, negative net sales in Corporate were down $101 million due to adjustments required to eliminate lower sales of unconsolidated entities. Net income from continuing operations increased $1.3 billion to $498 million. The increase was due to net discrete adjustments to reverse reserves for uncertain tax positions, lower interest expense, a reduction in restructuring-type charges, divestiture gains and prior-period charges for the taxation of certain future retiree prescription drug subsidy payments in the U.S. Additional discussion of the items impacting net income in Corporate are included in the Results of Operations section above.
Productivity and Cost Savings Plan
In February and November 2012, the Company announcedmade announcements related to a $10 billion productivity and cost savings plan to reduce costs and better leverage scale in the areas of supply chain, research and development, marketing and overheads.   The programplan was designed to accelerate cost reductions by streamlining management decision making, manufacturing and other work processes to fund the Company's growth strategy. 
As part of this plan, the Company expects to incur approximatelyin excess of $3.5 billion in before-tax restructuring costs over a four-yearfive-year period (from fiscal 2012 through fiscal 2015)2016). More than halfApproximately 55% of the costs will behave been incurred bythrough the end of fiscal 2013 and the remainder in fiscal years 2014 and 2015.2013. Savings generated from the restructuring costs are difficult to estimate, given the nature of the activities, the corollary benefits achieved, the timing of the execution and the degree of reinvestment.  Overall, the costs are expected to deliver approximatelyin excess of $2 billion in before-tax annual savings.  The cumulative before-tax savings in the current year are not material due to the timingrealized as a result of the plan. restructuring costs incurred through 2013 were approximately $940 million.
Restructuring accruals of $343$323 million as of June 30, 20122013, are classified as current liabilities.  Approximately 62%86% of the restructuring charges incurred during 2012fiscal 2013 either have been or will be settled with cash.  Consistent with our historical policies for ongoing restructuring-type activities, the resulting charges will beare funded by and included within Corporate for segment reporting. 
Refer to Note 3 into our Consolidated Financial Statements for more details on the productivity and cost savings plan.restructuring program.



The Procter & Gamble Company37


CASH FLOW, FINANCIAL CONDITION AND LIQUIDITY
We believe our financial condition continues to be of high quality, as evidenced by our ability to generate substantial cash from operations and ready access to capital markets at competitive rates.
Operating cash flow provides the primary source of fundscash to financefund operating needs and capital expenditures. Excess operating cash is used first to fund shareholder dividends. Other discretionary uses include acquisitionsshare repurchases and share repurchasesacquisitions to complement our portfolio of businesses, brands and geographies. As necessary, we may supplement
operating cash flow with debt to fund these activities. The overall cash position of the Company reflects our strong business results and a global cash management strategy that takes into account liquidity management, economic factors and tax considerations.
Operating Cash Flow
Fiscal year 2013 compared with fiscal year 2012
Operating cash flow was $14.9 billion in 2013, a 12% increase from the prior year. Operating cash flows resulted primarily from net earnings, adjusted for non-cash items (depreciation and amortization, stock-based compensation, asset impairments, deferred income taxes and gains on sale and purchase of businesses) and a decrease in working capital. Increased accounts receivable used $415 million of cash primarily to fund growth. In addition, accounts receivable days sales outstanding increased two days due to the timing and mix of sales late in the period and foreign exchange impacts. Increased inventory used $225 million of cash to support product initiatives and to build stock to support capacity expansions and manufacturing sourcing changes, partially offset by inventory management improvement efforts. Inventory days on hand increased by one day primarily due to foreign exchange impacts. Increased accounts payable, accrued and other liabilities generated $1.3 billion of cash primarily due to an increase in marketing accruals from increased advertising and other marketing costs.
Fiscal year 2012 compared with fiscal year 2011
Operating cash flow was $13.3 billion in 2012, in line with the prior year. Operating cash flows resulted primarily from net earnings, adjusted for non-cash items (depreciation and amortization, stock basedstock-based compensation, asset impairments, deferred income taxes and gains on sale of businesses), partially offset by working capital increases. Increased accounts receivable used $427 million of cash to fund growth. However, accounts receivable days sales outstanding were down 2two days primarily due to the impact of foreign exchange. Inventory generated $77 million of cash, mainly due to an increase in inventory management improvement efforts, partially offset by inventory to support product initiatives and to build stock to support capacity
expansions and manufacturing sourcing changes. Inventory days on hand declined by 10 days primarily due to inventory management improvement efforts and the impact of foreign exchange. Accounts payable, accrued and other liabilities used $22 million of cash, due primarily to the payment of fines related to violations of the European competition laws. Cash flow from discontinued operations contributed approximately $200 million to operating cash flow.
Fiscal year 2011 compared with fiscal year 2010
Operating cash flow was $13.3 billion in 2011, a 17% decrease versus the prior year. Operating cash flow resulted primarily from net earnings adjusted for non-cash items (depreciation and amortization, stock-based compensation, deferred income taxes and gain on the sale of businesses), partially offset by an increase in working capital. The net of accounts receivable, inventory and accounts payable consumed $569 million of operating cash flow in 2011 mainly due to increases in inventories and accounts receivables. Inventory consumed $501 million driven by higher commodity costs, business growth and increased stock levels in advance of initiatives and sourcing changes. Inventory days on hand increased by five days due to the impact of foreign exchange, higher commodity costs and increased safety stock levels. Accounts receivable used $426 million primarily to support business growth. Accounts receivable days sales outstanding were up three days due to timing of sales and the impact of foreign exchange. Inventory and accounts receivable increases were partially offset by accounts payable, accrued and other liabilities, which increased by $358 million to support business growth. Other operating assets and liabilities were also a significant use of operating cash flow due primarily to net reductions in reserves for uncertain tax positions and an increase in the amount of value added taxes due from various governmental authorities. In the prior year, working


The Procter & Gamble Company26

capital was a net source of cash.
Free Cash Flow. We view free cash flow as an important measure because it is a factor impacting the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investment. It is defined as operating cash flow less capital expenditures and is one of the measures used to evaluate senior management and determine their at-risk compensation.
Fiscal year 2013 compared with fiscal year 2012
Free cash flow was $10.9 billion in 2013, an increase of 17% versus the prior year. The increase was driven by the increase in operating cash flows. Free cash flow productivity, defined as the ratio of free cash flow to net earnings, was 95% in 2013.
Fiscal year 2012 compared with fiscal year 2011
Free cash flow was $9.3 billion in 2012, a decrease of 7% versus the prior year. Free cash flow decreased primarily due to higher capital spending to support geographic expansion. Free cash flow productivity, defined as the ratio of free cash flow to net earnings, was 85% in 2012.
Investing Cash Flows
Fiscal year 20112013 compared with fiscal year 20102012
In 2011, freeNet investing activities consumed $6.3 billion in cash flow was $10.0 billion, a decrease of 23% versus the prior year. Free cash flow decreasedin 2013 mainly due to lower operatingcapital spending, cash flowpaid for acquisitions and higher capital spending. Free cash flow productivity was 84%investments in 2011.
Investing Cash Flowsavailable-for-sale securities, partially offset by asset sales.
Fiscal year 2012 compared with fiscal year 2011
Net investing activities consumed $1.1 billion in cash in 2012 mainly due to capital spending, partially offset by proceeds from asset sales of $2.9 billion. These proceeds were primarily related to cash received from the sale of our snacks business in 2012.
Fiscal year 2011 compared with fiscal year 2010
In 2011, net investing activities consumed $3.5 billion of cash due to capital spending and acquisitions, partially offset by proceeds from asset sales.
Capital Spending. We view capital spending efficiency as a critical component of our overall cash management strategy. We manage capital spending to support our business growth plans and have cost controls to deliver our cash generation targets. Capital expenditures, primarily to support capacity expansion, innovation and cost savings, were $4.0 billion in 2012both 2013 and $3.3 billion2012. Capital spending as a percentage of net sales increased 10 basis points to 4.8% in 2011. The increase in capital spending resulted primarily from capacity expansions.2013. Capital spending as a percentage of net sales increased 60 basis points to 4.7% in 2012. Capital spending for our discontinued snacks business was approximately $60 million in 2012. As we continue to support growth, capital spending in total and as a percentage of net sales is expected to increase in fiscal 2013. Capital spending as a percentage of net sales increased 10 basis points to 4.1% in 2011.
Acquisitions.Acquisitions used $1.1 billion of cash in 2013 primarily for the acquisition of our partner's interest in a joint venture in Iberia. Acquisitions used $134 million of


38The Procter & Gamble Company

cash in 2012 primarily for the acquisition of New Chapter, a vitamins supplement business. In 2011, acquisitions used $474 million of cash primarily for the acquisition of Ambi Pur, an air freshener business.
Proceeds from Divestitures and Other Asset Sales. Proceeds from asset sales contributed $584 million in cash in 2013 mainly due to the divestitures of our bleach business in Italy and the Braun household appliances business. Proceeds from asset sales contributed $2.9 billion to cash in 2012 mainly due to the sale of our snacks business. In 2011, proceeds from asset sales contributed $225 million to cash mainly due to the sale of our Infasil brand in Western Europe and Zest brand in North America.

Financing Cash Flows
Dividend Payments. Our first discretionary use of cash is dividend payments. Dividends per common share increased 8%7% to $2.14$2.29 per share in 2012.2013. Total dividend payments to common and preferred shareholders were $6.5 billion in 2013 and $6.1 billion in 2012 and $5.8 billion in 2011. The increase in dividend payments resulted from increases in our quarterly dividends per share, partially offset by a reduction in the number of shares outstanding.2012. In April 2012,2013, the Board of Directors declared an increase in our quarterly dividend from $0.525$0.5620 to $0.562$0.6015 per share on Common Stock and Series A and B ESOP Convertible Class A Preferred Stock. This represents a 7% increase compared to the prior quarterly dividend and is the 56th57th consecutive year that our dividend has increased. We have paid a dividend in every year since our incorporation in 1890.
Long-Term and Short-Term Debt. We maintain debt levels we consider appropriate after evaluating a number of factors, including cash flow expectations, cash requirements for ongoing operations, investment and financing plans (including acquisitions and share repurchase activities) and the overall cost of capital. Total debt was $31.5 billion as of June 30, 2013 and $29.8 billion as of June 30, 2012 and $32.0 billion as of June 30, 2011.2012. Our total debt decreasedincreased in 20122013 mainly due to bonds reaching maturitydebt issuances and a reductionan increase in commercial paper outstanding, partially offset by debt issuances.bond maturities.
Treasury Purchases. Total share repurchases were $6.0 billion in 2013 and $4.0 billion in 2012 and $7.0 billion in 2011.2012.
Liquidity
At June 30, 20122013, our current liabilities exceeded current assets by $3.0$6.0 billion, largely due to short-term borrowings under our commercial paper program. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. Additionally, a portion of our cash is held off-shore by foreign subsidiaries. The Company regularly assesses its cash needs and the available sources to fund these needs and we do not expect restrictions or taxes on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. We utilize short- and long-term debt to fund discretionary items, such as acquisitions and share repurchases. We have strong short- and long-term debt ratings, which have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in commercial paper and bond markets. In addition, we have agreements with a diverse group of financial institutions that, if needed, should provide
sufficient credit funding to meet short-term financing requirements.
On June 30, 2012,2013, our short-term credit ratings were P-1 (Moody's) and A-1+ (Standard & Poor's), while our long-term credit ratings are Aa3 (Moody's) and AA- (Standard & Poor's), both with a stable outlook.


27The Procter & Gamble Company

We maintain bank credit facilities to support our ongoing commercial paper program. These facilities can be extended for certain periods of time as specified in, and in accordance with, the terms of each credit agreement. The current facility is an $11.0 billion facility split between a $7.0 billion 5-year facility and a $4.0 billion 364-day facility, which expire in August 20172018 and August 2013,2014, respectively. The 364-day facility can be extended for certain periods of time as specified in, and in accordance with, the terms of the credit agreement. These facilities are currently undrawn and we anticipate that they will remain largely undrawn for the foreseeable future. These credit facilities do not have cross-default or ratings triggers, nor do they have material adverse events clauses, except at
the time of signing. In addition to these credit facilities, we have an automatically effective registration statement on Form S-3 filed with the SEC that is available for registered offerings of short- or long-term debt securities.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we believe could have a material impact on financial condition or liquidity.
 


The Procter & Gamble Company39

Contractual Commitments
The following table provides information on the amount and payable date of our contractual commitments as of June 30, 2012.2013.
($ millions)Total  
Less Than
1 Year
  1-3 Years  3-5 Years  
After
5 Years
Total  
Less Than
1 Year
  1-3 Years  3-5 Years  
After
5 Years
RECORDED LIABILITIES                          
Total debt$29,490
  $8,672
 $6,927
 $3,356
 $10,535
$31,441
 $12,393
 $6,004
 $2,609
 $10,435
Capital leases45
  16
 14
 14
 1
31
 5
 18
 8
 —
Uncertain tax positions(1)
33
  33
  —
  —
  —
46
 46
 —
 —
 —
OTHER                      
Interest payments relating to long-term debt8,866
  909
 1,546
 1,170
 5,241
8,220
 865
 1,382
 1,169
 4,804
Operating leases(2)
1,817
  289
 498
 393
 637
1,512
 254
 437
 302
 519
Minimum pension funding(3)
1,032
  352
 680
 —
 —
722
 263
 459
 —
 —
Purchase obligations(4)
2,187
  1,094
 596
 215
 282
2,183
 1,114
 625
 210
 234
TOTAL CONTRACTUAL COMMITMENTS$43,470
  $11,365
  $10,261
  $5,148
  $16,696
44,155
 14,940
 8,925
 4,298
 15,992
(1) 
As of June 30, 2012,2013, the Company's Consolidated Balance Sheet reflects a liability for uncertain tax positions of $2.3$2.0 billion, including $505$447 million of interest and penalties. Due to the high degree of uncertainty regarding the timing of future cash outflows of liabilities for uncertain tax positions beyond one year, a reasonable estimate of the period of cash settlement beyond twelve months from the balance sheet date of June 30, 20122013, cannot be made.
(2) 
Operating lease obligations are shown net of guaranteed sublease income.
(3) 
Represents future pension payments to comply with local funding requirements. These future pension payments assume the Company continues to meet its future statutory funding requirements. These amounts do not include expected future discretionary contributions, including the July 2013 contribution to a foreign pension plan of approximately $1 billion. Considering the current economic environment in which the Company operates, the Company believes its cash flows are adequate to meet the above future statutory funding requirements. The projected payments beyond fiscal year 20152016 are not currently determinable.
(4) 
Primarily reflects future contractual payments under various take-or-pay arrangements entered into as part of the normal course of business. Commitments made under take-or-pay obligations represent future purchases in line with expected usage to obtain favorable pricing. Approximately 22%20% relates to service contracts for information technology, human resources management and facilities management activities that have been outsourced. While the amounts listed represent contractual obligations, we do not believe it is likely that the full contractual amount would be paid if the underlying contracts were canceled prior to maturity. In such cases, we generally are able to negotiate new contracts or cancellation penalties, resulting in a reduced payment. The amounts do not include obligations related to the put of our Spanish joint venture discussed further in Note 10 to the Consolidated Financial Statements (approximately $1 billion) and other contractual purchase obligations that are not take-or-pay arrangements. Such contractual purchase obligations are primarily purchase orders at fair value that are part of normal operations and are reflected in historical operating cash flow trends. We do not believe such purchase obligations will adversely affect our liquidity position.





The Procter & Gamble Company28

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
In preparing our financial statements in accordance with U.S. GAAP, there are certain accounting policies that may require a choice between acceptable accounting methods or may require substantial judgment or estimation in their application. These include income taxes, certain employee benefits and acquisitions, goodwill and intangible assets. We believe these accounting policies, and others set forth in Note 1 to the Consolidated Financial Statements, should be reviewed as they are integral to understanding the results of operations and financial condition of the Company.
The Company has discussed the selection of significant accounting policies and the effect of estimates with the Audit Committee of the Company's Board of Directors.

Income Taxes
Our annual tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes. Tax law requires certain items be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities.
Deferred tax assets generally represent the tax effect of items that can be used as a tax deduction or credit in future years for which we have already recorded the tax benefit in our income statement. Deferred tax liabilities generally represent tax expense recognized in our financial statements for which payment has been deferred, the tax effect of


40The Procter & Gamble Company

expenditures for which a deduction has already been taken in our tax return but has not yet been recognized in our financial statements or assets recorded at fair value in business combinations for which there was no corresponding tax basis adjustment.
Inherent in determining our annual tax rate are judgments regarding business plans, planning opportunities and expectations about future outcomes. Realization of certain deferred tax assets, primarily net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods. Although realization is not assured, management believes it is more likely than not that our deferred tax assets, net of valuation allowances, will be realized.
We operate in multiple jurisdictions with complex tax policy and regulatory environments. In certain of these jurisdictions, we may take tax positions that management believes are supportable, but are potentially subject to successful challenge by the applicable taxing authority. These interpretational differences with the respective governmental taxing authorities can be impacted by the local economic and fiscal environment. We evaluate our tax positions and establish liabilities in accordance with the
applicable accounting guidance on uncertainty in income taxes. We review these tax uncertainties in light of changing facts and circumstances, such as the progress of tax audits, and adjust them accordingly. We have a number of audits in process in various jurisdictions. Although the resolution of these tax positions is uncertain, based on currently available information, we believe that the ultimate outcomes will not have a material adverse effect on our financial position, results of operations or cash flows.
Because there are a number of estimates and assumptions inherent in calculating the various components of our tax provision, certain changes or future events such as changes in tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans could have an impact on those estimates and our effective tax rate. For additional details on the Company's income taxes, see Note 910 to the Consolidated Financial Statements.
Employee Benefits
We sponsor various post-employment benefits throughout the world. These include pension plans, both defined contribution plans and defined benefit plans, and other post-employment benefit (OPEB) plans, consisting primarily of health care and life insurance for retirees. For accounting purposes, the defined benefit pension and OPEB plans require assumptions to estimate the projected and accumulated benefit obligations, including the following variables: discount rate; expected salary increases; certain employee-related factors, such as turnover, retirement age and mortality; expected return on assets and health care cost trend rates. These and other assumptions affect the annual expense and obligations recognized for the underlying plans. Our assumptions reflect our historical experiences and
management's best judgment regarding future expectations. As permitted by U.S. GAAP, the net amount by which actual results differ from our assumptions is deferred. If this net deferred amount exceeds 10% of the greater of plan assets or liabilities, a portion of the deferred amount is included in expense for the following year. The cost or benefit of plan changes, such as increasing or decreasing benefits for prior employee service (prior service cost), is deferred and included in expense on a straight-line basis over the average remaining service period of the employees expected to receive benefits.
The expected return on plan assets assumption impacts our defined benefit expense, since many of our defined benefit pension plans and our primary OPEB plan are partially funded. The process for setting the expected rates of return is described in Note 89 to the Consolidated Financial Statements. For 2012,2013, the average return on assets assumptions for pension plan assets and OPEB assets were 7.4%7.3% and 9.2%8.3%, respectively. A change in the rate of return of 100 basis points for both pension and OPEB assets would impact annual after-tax benefit expense by approximately $90$100 million.
Since pension and OPEB liabilities are measured on a


29The Procter & Gamble Company

discounted basis, the discount rate impacts our plan obligations and expenses. Discount rates used for our U.S. defined benefit pension and OPEB plans are based on a yield curve constructed from a portfolio of high quality bonds for which the timing and amount of cash outflows approximate the estimated payouts of the plan. For our international plans, the discount rates are set by benchmarking against investment grade corporate bonds rated AA or better. The average discount rate on the defined benefit pension plans and OPEB plans of 4.2%4.0% and 4.3%4.8%, respectively, represents a weighted average of local rates in countries where such plans exist. A 100-basis point change in the pension discount rate would impact annual after-tax defined benefit pension expense by approximately $160 million. A change in the OPEB discount rate of 100 basis points would impact annual after-tax OPEB expense by approximately $70$65 million. For additional details on our defined benefit pension and OPEB plans, see Note 89 to the Consolidated Financial Statements.
Acquisitions, Goodwill and Intangible Assets
We account for acquired businesses using the acquisition method of accounting. Under the purchase method, ourOur Consolidated Financial Statements reflect the operations of an acquired business starting from the completion of the acquisition.transaction. In addition, the assets acquired and liabilities assumed are recorded at the date of acquisition at their respective estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired recorded as goodwill.
Significant judgment is required in estimatingto estimate the fair value of intangible assets and in assigning their respective useful lives. Accordingly, we typically obtain the assistance of third-party valuation specialists for significant tangible and intangible assets. The fair value estimates are based on available historical information and on future expectations


The Procter & Gamble Company41

and assumptions deemed reasonable by management, but are inherently uncertain.
We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product or technology life cycles, economic barriers to entry, a brand's relative market position and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.
Determining the useful life of an intangible asset also requires judgment. Certain brand intangiblesintangible assets are expected to have indefinite lives based on their history and our plans to continue to support and build the acquired brands. Other acquired intangible assets (e.g., certain trademarks or brands, customer relationships, patents and technologies) are
expected to have determinable useful lives. Our assessment as to brands that have an indefinite life and those that have a determinable life is based on a number of factors including competitive environment, market share, brand history, underlying product life cycles, operating plans and the macroeconomic environment of the countries in which the brands are sold. Our estimates of the useful lives of determinable-lived intangiblesintangible assets are primarily based on these same factors. All of our acquired technology and customer-related intangiblesintangible assets are expected to have determinable useful lives.
 
The costs of determinable-lived intangiblesintangible assets are amortized to expense over their estimated life.lives. The value of indefinite-lived intangible assets and residual goodwill is not amortized, but is tested at least annually for impairment. Our impairment testing for goodwill is performed separately from our impairment testing of indefinite-lived intangibles.intangible assets. We test goodwill for impairment by reviewing the book value compared to the fair value at the reportablereporting unit level. We test individual indefinite-lived intangiblesintangible assets by reviewingcomparing the individual book values comparedof each asset to the estimated fair value. We determine the fair value of our reporting units and indefinite-lived intangible assets based on the income approach. Under the income approach, we calculate the fair value of our reporting units and indefinite-lived intangible assets based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows to measure fair value. Assumptions used in our impairment evaluations, such as forecasted growth rates and cost of capital, are consistent with internal projections and operating plans. We believe such assumptions and estimates are also comparable to those that would be used by other marketplace participants. When certain events or changes in operating conditions occur, an impairment test is performed and
indefinite-lived intangible assetsbrands may be reclassifiedadjusted to a determinable life asset and an additional impairment assessment may be performed.life.

DuringWith the second quarter of fiscal 2012, we changed our annual goodwill impairment testing date from July 1 to October 1 of each year. This change was made to better align the timing of our annual impairment testing with the timing of the Company's annual strategic planning process. We tested goodwill for impairment as of July 1, 2011 (the testing date under our previous policy) and no impairments were indicated. The results of our impairment testing during the quarter ended December 31, 2011, indicated that the estimated fair values of our Appliances and Salon Professional reporting units were less than their respective carrying amount therefore we recorded a non-cash before and after tax impairment charge of $1.3 billion. Additionally, our impairment testing for indefinite lived intangible assets during the quarter ended December 31, 2011 indicated a decline in the fair value of our Koleston Perfect and Wella trade name intangible assets below their respective carrying values. This resulted in a non-cash before tax impairment charge of $246 million ($173 million


The Procter & Gamble Company30

after tax) to reduce the carrying amounts of these assets to their respective fair values.

The Appliances business was acquired as part of the Gillette acquisition and is a stand-alone goodwill reporting unit. The Salon Professional business consists primarily of operations acquired in the Wella acquisition in 2004. These businesses represent some of our more discretionary consumer spending categories. As of June 30, 2012, the Appliances business has remaining goodwill of $586 million, while the Salon Professional business has remaining goodwill of $397 million. As a result of the current year impairments, the estimated fair valuesexception of our Appliances and Salon Professional businesses, approximate their carrying values. Because purchases in these categories are more discretionary in nature, their operations and underlyingall of our reporting units have fair values were disproportionately impacted by the economic downturn that began in fiscal 2009, which led to a reduction in home and personal grooming appliance purchases and in visits to hair salons. Our valuation of the Appliances and Salon Professional businesses has them returning to sales and earnings growth rates consistent with our long-term business plans. Failure to achieve these business plans or a further deterioration of the macroeconomic conditions could result in a valuation that would trigger an additional impairment of the goodwill and intangible assets of these businesses. For additional details on the timing and results of our goodwill impairment testing, see Note 2 to the Consolidated Financial Statements.

Other than as discussed in the preceding paragraphs, our annual impairment testing for both goodwill and indefinite-lived intangible assets indicated that all other reporting unit and indefinite-lived intangible asset fair values significantly exceeded their respectiveexceed recorded values. However, future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets, including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values. A significant reduction in the estimated fair values could result in additional impairment charges that could materially affect the financial statements in any given year. The recorded value of goodwill and intangible assets from recently impaired businesses and recently acquired businesses are derived from more recent business operating plans and macroeconomic environmental conditions and therefore are more susceptible to an adverse change that could require an impairment charge.

For example, the Gillette intangible and goodwill amounts represent values as of a relatively more recent acquisition date and, as such, the amounts are more susceptible to an impairment risk if business operating results or macroeconomic conditions deteriorate. Gillette indefinite-lived intangible assets represent approximately 90%89% of the $26.7$26.8 billion of indefinite-lived intangible assets at June 30, 2012.2013. Goodwill allocated to stand-alone reporting units consisting primarily of businesses purchased as part of the Gillette acquisition represents 43%42% of the $53.8$55.2 billion of
goodwill at June 30, 2012.2013. This includes the Shave Care and ApplianceAppliances businesses, which are components of the Grooming segment, and the Batteries business, which is part of the Fabric Care and Home Care segment.
The results of our impairment testing during fiscal 2012 indicated that the estimated fair values of our Appliances and Salon Professional reporting units were less than their respective carrying amounts. Therefore, we recorded a non-cash before- and after-tax impairment charge of $1.3 billion in fiscal 2012. Additionally, our impairment testing for indefinite-lived intangible assets during fiscal 2012 indicated a decline in the fair value of our Koleston Perfect and Wella trade name intangible assets below their respective carrying values. This resulted in a non-cash, before-tax impairment charge of $246 million ($173 million after-tax) to reduce the carrying amounts of these assets to their estimated fair values.
During the fourth quarter of fiscal 2013, the estimated fair value of our Appliances reporting units declined further, below the carrying amount resulting from the fiscal 2012 impairment. Therefore, we recorded an additional non-cash before and after-tax impairment charge of $259 million in fiscal 2013. Additionally, our fourth quarter 2013 impairment testing for Appliances indicated a decline in the fair value of our Braun trade name intangible asset below its carrying value. This resulted in a non-cash, before-tax impairment charge of $49 million ($31 million after-tax) to reduce the carrying amount of this asset to its estimated fair value.


42The Procter & Gamble Company

The Appliances business was acquired as part of the Gillette acquisition in 2005 and the Salon Professional business consists primarily of operations acquired in the Wella acquisition in 2004. Both businesses are stand-alone reporting units. These businesses represent some of our more discretionary consumer spending categories. Because of this, their operations and underlying fair values were disproportionately impacted by the economic downturn that began in fiscal 2009, which led to a reduction in home and personal grooming appliance purchases and in visits to hair salons that drove the fiscal 2012 impairment. The additional impairment of the Appliances business in fiscal 2013 was due to the devaluation of currency in Japan, a key country that generates a significant portion of the earnings of the Appliances business, relative to the currencies in which the underlying net assets are recorded. As of June 30, 2013, the Appliances business has remaining goodwill of $313 million, while the Salon Professional business has remaining goodwill of $424 million. As a result of the impairments, the estimated fair value of our Appliances business approximates its carrying value, while the estimated fair value of the Salon Professional business now slightly exceeds its carrying value. Our fiscal 2013 valuations of the Appliances and Salon Professional businesses has them returning to sales and earnings growth rates consistent with our long-term business plans. Failure to achieve these business plans or a further deterioration of the macroeconomic conditions could result in a valuation that would trigger an additional impairment of the goodwill and intangible assets of these businesses.
New Accounting Pronouncements

There are no new accounting pronouncements issued or effective that will have a material impact on our Consolidated Financial Statements. However, we will be presentingDuring fiscal 2013, the Company adopted ASU 2011-05, "Comprehensive Income (Topic 220) - Presentation of Comprehensive Income" (ASU 2011-05), and ASU 2013-02, “Comprehensive Income in a new format beginning with the first quarter(Topic 220) - Reporting of fiscal year 2013, in accordance with new accountingAmounts Reclassified out of Accumulated Other Comprehensive Income” (ASU 2013-02). This guidance that will eliminateeliminates the option of presentingto present the components of other comprehensive earningsincome as part of the statement of shareholders' equity. For additional details, seeequity and requires entities to present the components of net earnings and other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. We chose to present net earnings and other comprehensive income in two separate but consecutive statements. This guidance also requires entities to provide information about the amounts reclassified out of accumulated other comprehensive income by component and to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. We chose to present the requirements in the notes to the financial statements (see Note 16 to the Consolidated Financial Statements). The adoption of this guidance had no impact on our consolidated financial position, results of operations or cash flows.
No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on the Consolidated Financial Statements.
OTHER INFORMATION
Hedging and Derivative Financial Instruments
As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. We evaluate exposures on a centralized basis to take advantage of natural exposure correlation and netting. Except within financing operations, we leverage the Company's broadly diversified portfolio of exposures as a natural hedge and prioritize operational hedging activities over financial market instruments. To the extent we choose to further manage volatility associated with the net exposures, we enter into various financial transactions which we account for using the applicable accounting guidance for derivative instruments and hedging activities. These financial transactions are governed by our policies covering acceptable counterparty exposure, instrument types and other hedging practices. Note 5 to the Consolidated Financial Statements includes a detailed discussion of our accounting policies for financial instruments.
Derivative positions can be monitored using techniques including market valuation, sensitivity analysis and value-at-risk modeling. The tests for interest rate, currency rate and commodity derivative positions discussed below are based on the CorporateManager™ value-at-risk model using a one-year horizon and a 95% confidence level. The model incorporates the impact of correlation (the degree to which exposures move together over time) and diversification (from holding multiple currency, commodity and interest rate instruments) and assumes that financial returns are normally distributed. Estimates of volatility and correlations of market factors are drawn from the RiskMetrics™ dataset as of June 30, 2012.2013. In cases where data is unavailable in RiskMetrics™, a reasonable proxy is included.
Our market risk exposures relative to interest rates, currency rates and commodity prices, as discussed below, have not changed materially versus the previous reporting period. In addition, we are not aware of any facts or circumstances that


31The Procter & Gamble Company

would significantly impact such exposures in the near term.
Interest Rate Exposure on Financial Instruments. Interest rate swaps are used to hedge exposures to interest rate movement on underlying debt obligations. Certain interest rate swaps denominated in foreign currencies are designated to hedge exposures to currency exchange rate movements on our investments in foreign operations. These currency interest rate swaps are designated as hedges of the Company's foreign net investments.
Based on our interest rate exposure as of and during the year ended June 30, 2012,2013, including derivative and other instruments sensitive to interest rates, we believe a near-term change in interest rates, at a 95% confidence level based on


The Procter & Gamble Company43

historical interest rate movements, would not materially affect our financial statements.
Currency Rate Exposure on Financial Instruments. Because we manufacture and sell products and finance operations in a number of countries throughout the world, we are exposed to the impact on revenue and expenses of movements in currency exchange rates. Corporate policy prescribes the range of allowable hedging activity. To manage the exchange rate risk associated with our financing operations, we primarily use forward contracts with maturities of less than 18 months. In addition, we enter into certain currency swaps with maturities of up to five years to hedge our exposure to exchange rate movements on intercompany financing transactions.
Based on our currency rate exposure on derivative and other instruments as of and during the year ended June 30, 2012,2013, we believe, at a 95% confidence level based on historical currency rate movements, the impact of a near-term change in currency rates would not materially affect our financial statements.
Commodity Price Exposure on Financial Instruments. We use raw materials that are subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors. In addition to fixed price contracts, we may use futures, options and swap contracts to manage the volatility related to the above exposures.
As of and during the year ended June 30, 2012,2013, we did not have material commodity hedging activity.
Measures Not Defined By U.S. GAAP
Our discussion of financial results includes several "non-GAAP" financial measures. 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. When used in MD&A, we have provided the comparable GAAP measure in the discussion. These measures include:


Organic Sales Growth. Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. We believe this provides investors with a more complete understanding of underlying sales trends by providing sales growth on a consistent basis. Organic sales is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.





The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth:
 
Year ended June 30, 2013
Net Sales
Growth
 
Foreign
Exchange
Impact
 
Acquisition/
Divestiture
Impact*
 
Organic
Sales
Growth
Beauty-2 % 2% 1 % 1%
Grooming-4 % 4% 2 % 2%
Health Care3 % 3% -1 % 5%
Fabric Care and Home Care1 % 2% 0 % 3%
Baby Care and Family Care2 % 2% 0 % 4%
TOTAL COMPANY1 % 2% 0 % 3%
       
Year ended June 30, 2012
Net Sales
Growth
 
Foreign
Exchange
Impact
 
Acquisition/
Divestiture
Impact*
 
Organic
Sales
Growth
Net Sales
Growth

 
Foreign
Exchange
Impact

 
Acquisition/
Divestiture
Impact*

 
Organic
Sales
Growth

Beauty2% 0 % 0 % 2%2 % 0% 0 % 2%
Grooming1% 1 % 0 % 2%1 % 1% 0 % 2%
Health Care3% 0 % -1 % 2%3 % 0% -1 % 2%
Fabric Care and Home Care3% 0 % 0 % 3%3 % 0% 0 % 3%
Baby Care and Family Care6% 0 % 0 % 6%6 % 0% 0 % 6%
TOTAL P&G3% 0 % 0 % 3%
       
Year ended June 30, 2011
Net Sales
Growth

 
Foreign
Exchange
Impact

 
Acquisition/
Divestiture
Impact*

 
Organic
Sales
Growth

Beauty4% -1 % 0 % 3%
Grooming5% 0 % 0 % 5%
Health Care5% 0 % 0 % 5%
Fabric Care and Home Care4% 0 % -2 % 2%
Baby Care and Family Care6% 1 % 0 % 7%
TOTAL P&G5% 0 % -1 % 4%
TOTAL COMPANY3 % 0% 0 % 3%

* Acquisition/Divestiture Impact includes rounding impacts necessary to reconcile net sales to organic sales.

Core EPS. This is a measure of the Company's diluted net earnings per share from continuing operations excluding certain items that are not judged to be part of the Company's sustainable results or trends. This includes current yeara charge in 2013 for the balance sheet impact from the devaluation of the official foreign exchange rate in Venezuela, a holding gain in 2013 on the purchase of the balance of our Iberian joint venture, impairment charges in 2013 and 2012 for goodwill and indefinite livedindefinite-lived intangible assets, current year charges in 2013 and 2012 related to incremental restructuring charges due to increased focus on productivity and cost savings, a significant benefit in 2011 from the settlement of U.S. tax litigation primarily related to the valuation of technology donations and charges in 2013, 2012 2011 and 20102011 related to pending European legal matters, and a 2010 charge related to a tax provision for retiree healthcare subsidy payments in the U.S. healthcare reform legislation.


The Procter & Gamble Company32

matters. We do not view these items to be part of our sustainable results. We believe the Core EPS measure provides an important perspective of underlying business trends and results and provides a more comparable measure of year-on-year earnings per share growth. Core EPS is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.


44The Procter & Gamble Company

The table below provides a reconciliation of reported diluted net earnings per share from continuing operations to Core EPS:
Years ended June 302013 2012 2011
Diluted net earnings per share - continuing operations$3.86
 $3.12
 $3.85
Venezuela balance sheet devaluation Impacts0.08
 —
 —
Gain on purchase of balance of Iberian JV(0.21)    
Impairment charges0.10
 0.51
 —
Incremental restructuring charges0.18
 0.20
 —
Settlement from U.S. tax litigation—
 —
 (0.08)
Charges for pending European legal matters0.05
 0.03
 0.10
Rounding(0.01) (0.01) —
CORE EPS4.05
 3.85
 3.87
Core EPS Growth5% (1)%  
Years ended June 302012 2011 2010
Diluted Net Earnings Per Share - Continuing Operations$3.12
 $3.85
 $3.47
Impairment Charges0.51
 —
 —
Incremental Restructuring Charges0.20
 —
 —
Settlement from U.S. Tax Litigation—
 (0.08) —
Charges for Pending European Legal Matters0.03
 0.10
 0.09
Charge for Taxation of Retiree Healthcare Subsidy—
 —
 0.05
Rounding(0.01) —
 —
CORE EPS$3.85
 $3.87
 $3.61
Core EPS Growth(1)% 7%  
Note - All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the underlying transaction. The significant adjustment to an income tax reserve was tax expense. There was no tax impact on EPS due to the charges for pending European legal matters.
Free Cash Flow. Free cash flow is defined as operating cash flow less capital spending. We view free cash flow as an important measure because it is one factor in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investment. Free cash flow is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.
Free Cash Flow Productivity. Free cash flow productivity is defined as the ratio of free cash flow to net earnings. Free cash flow productivity is also one of the measures used to evaluate senior management and is a factor in determining their at-risk compensation.
The following table provides a numerical reconciliation of free cash flow and free cash flow productivity ($ millions):
 
 
Operating
Cash Flow
Capital
Spending
Free
Cash Flow
Net
Earnings
Free
Cash Flow
Productivity
2013$14,873
$(4,008)$10,865
$11,402
95%
201213,284
(3,964)9,320
10,904
85%
201113,330
(3,306)10,024
11,927
84%
 
Operating
Cash Flow
Capital
Spending
Free
Cash Flow
Net
Earnings
Free
Cash Flow
Productivity
2012$13,284
$(3,964)$9,320
$10,904
85%
201113,330
(3,306)10,024
11,927
84%
201016,131
(3,067)13,064
12,846
102%


 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is incorporated by reference to the section entitled Other Information under Management's Disclosure and Analysis, and Note 5 ofto the Consolidated Financial Statements, Risk Management Activities and Fair Value Measurements.


33The Procter & Gamble Company



Statements.


The Procter & Gamble Company 3445

Item 8. Financial Statements and Supplementary DataData.

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
At The Procter & Gamble Company, we take great pride in our long history of doing what's right. If you analyze what's made our Company successful over the years, you may focus on our brands, our marketing strategies, our organization design and our ability to innovate. But if you really want to get at what drives our Company's success, the place to look is our people. Our people are deeply committed to our Purpose, Values and Principles. It is this commitment to doing what's right that unites us.
This commitment to doing what's right is embodied in our financial reporting. High-quality financial reporting is our responsibility-oneresponsibility, one we execute with integrity, and within both the letter and spirit of the law.
High-quality financial reporting is characterized by accuracy, objectivity and transparency. Management is responsible for maintaining an effective system of internal controls over financial reporting to deliver those characteristics in all material respects. The Board of Directors, through its Audit Committee, provides oversight. We have engaged Deloitte & Touche LLP to audit our Consolidated Financial Statements, on which they have issued an unqualified opinion.
Our commitment to providing timely, accurate and understandable information to investors encompasses:
Communicating expectations to employees. Every employee-fromemployee, from senior management on down-isdown, is required to be trained on the Company's Worldwide Business Conduct Manual, which sets forth the Company's commitment to conduct its business affairs with high ethical standards. Every employee is held personally accountable for compliance and is provided several means of reporting any concerns about violations of the Worldwide Business Conduct Manual, which is available on our website at www.pg.com.
Maintaining a strong internal control environment. Our system of internal controls includes written policies and procedures, segregation of duties and the careful selection and development of employees. The system is designed to provide reasonable assurance that transactions are executed as authorized and appropriately recorded, that assets are safeguarded and that accounting records are sufficiently reliable to permit the preparation of financial statements conforming in all material respects with accounting principles generally accepted in the United States of America. We monitor these internal controls through control self-assessments conducted by business unit management. In addition to performing financial and compliance audits around the world, including unannounced audits, our Global Internal Audit organization provides training and continuously improves internal control processes. Appropriate actions are taken by management to correct any identified control deficiencies.
 
Executing financial stewardship. We maintain specific programs and activities to ensure that employees understand their fiduciary responsibilities to shareholders. This ongoing effort encompasses financial discipline in strategic and daily business decisions and brings particular focus to maintaining accurate financial reporting and effective controls through process improvement, skill development and oversight.
Exerting rigorous oversight of the business. We continuously review business results and strategic choices. Our Global Leadership Council is actively involved-frominvolved - from understanding strategies to reviewing key initiatives, financial performance and control assessments. The intent is to ensure we remain objective, identify potential issues, continuously challenge each other and ensure recognition and rewards are appropriately aligned with results.
Engaging our Disclosure Committee. We maintain disclosure controls and procedures designed to ensure that information required to be disclosed is recorded, processed, summarized and reported timely and accurately. Our Disclosure Committee is a group of senior-level executives responsible for evaluating disclosure implications of significant business activities and events. The Committee reports its findings to the CEO and CFO, providing an effective process to evaluate our external disclosure obligations.
Encouraging strong and effective corporate governance from our Board of Directors. We have an active, capable and diligent Board that meets the required standards for independence, and we welcome the Board's oversight. Our Audit Committee comprises independent directors with significant financial knowledge and experience. We review significant accounting policies, financial reporting and internal control matters with them and encourage their independent discussions with external auditors. Our corporate governance guidelines, as well as the charter of the Audit Committee and certain other committees of our Board, are available on our website at www.pg.com.
P&G has a strong history of doing what's right. Our employees embrace our Purpose, Values and Principles. We take responsibility for the quality and accuracy of our financial reporting. We present this information proudly, with the expectation that those who use it will understand our Company, recognize our commitment to performance with integrity and share our confidence in P&G's future.
/s/ Robert A. McDonaldG. Lafley
Robert A. McDonaldG. Lafley
Chairman of the Board, President and Chief Executive Officer
/s/ Jon R. Moeller
Jon R. Moeller
Chief Financial Officer


3546 The Procter & Gamble Company

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting of The Procter & Gamble Company (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.
Strong internal controls is an objective that is reinforced through our Worldwide Business Conduct Manual, which sets forth our commitment to conduct business with integrity, and within both the letter and the spirit of the law. The Company's internal control over financial reporting includes a Control Self-Assessment Program that is conducted annually for critical financial reporting areas of the Company and is audited by the internal audit function. Management takes the appropriate action to correct any identified control deficiencies. Because of its inherent limitations, any system of internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements due to the possibility that a control can be circumvented or overridden or that misstatements due to error or fraud may occur that are not detected. Also, because of changes in conditions, internal control effectiveness may vary over time.
Management assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2012,2013, using criteria established in Internal Control-IntegratedControl - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and concluded that the Company maintained effective internal control over financial reporting as of June 30, 2012,2013, based on these criteria.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the effectiveness of the Company's internal control over financial reporting as of June 30, 2012,2013, as stated in their report which is included herein.
/s/ Robert A. McDonaldG. Lafley
Robert A. McDonaldG. Lafley
Chairman of the Board, President and Chief Executive Officer

/s/ Jon R. Moeller

Jon R. Moeller
Chief Financial Officer
August 8, 20122013



 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
The Procter & Gamble Company
We have audited the accompanying Consolidated Balance Sheets of The Procter & Gamble Company and subsidiaries (the "Company") as of June 30, 20122013 and 2011,2012, and the related Consolidated Statements of Earnings, Comprehensive Income, Shareholders' Equity and Cash Flows for each of the three years in the period ended June 30, 2012.2013.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the 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 financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at June 30, 20122013 and 2011,2012, and the results of its operations and cash flows for each of the three years in the period ended June 30, 2012,2013, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the Consolidated Financial Statements, the Company adopted the new accounting guidance in ASU 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income, and ASU 2013-02, Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of June 30, 2012,2013, based on the criteria established in Internal Control-IntegratedControl - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 8, 20122013 expressed an unqualified opinion on the Company's internal control over financial reporting.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 8, 20122013


The Procter & Gamble Company 3647

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
The Procter & Gamble Company
We have audited the internal control over financial reporting of The Procter & Gamble Company and subsidiaries (the "Company") as of June 30, 2012,2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.  The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting.  Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the 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 effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.  Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2012,2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Consolidated Financial Statements of the Company as of and for the year ended June 30, 20122013 and our report dated August 8, 20122013 expressed an unqualified opinion on those financial statements.statements and included an explanatory paragraph regarding the Company's adoption of the new accounting guidance in ASU 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income, and ASU 2013-02, Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 8, 20122013




3748 The Procter & Gamble Company

Consolidated Statements of Earnings
Amounts in millions except per share amounts; Years ended June 302012 2011  20102013 2012  2011
NET SALES$83,680
 $81,104
  $77,567
$84,167
 $83,680
  $81,104
Cost of products sold42,391
 39,859
  37,042
42,428
 42,391
  39,859
Selling, general and administrative expense26,421
 25,750
  24,793
26,950
 26,421
  25,750
Goodwill and indefinite lived intangible asset impairment charges1,576
 —
 —
Goodwill and indefinite-lived intangible asset impairment charges308
 1,576
 —
OPERATING INCOME13,292
 15,495
  15,732
14,481
 13,292
  15,495
Interest expense769
 831
  946
667
 769
  831
Interest income87
 77
 62
Other non-operating income, net262
 333
  82
942
 185
  271
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES12,785
 14,997
  14,868
14,843
 12,785
  14,997
Income taxes on continuing operations3,468
 3,299
  4,017
3,441
 3,468
  3,299
NET EARNINGS FROM CONTINUING OPERATIONS9,317
 11,698
  10,851
11,402
 9,317
  11,698
NET EARNINGS FROM DISCONTINUED OPERATIONS1,587
 229
  1,995
—
 1,587
  229
NET EARNINGS10,904
 11,927
  12,846
11,402
 10,904
  11,927
Less: Net earnings attributable to noncontrolling interests148
 130
 110
90
 148
 130
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE$10,756
 $11,797
 $12,736
$11,312
 $10,756
 $11,797
    
BASIC NET EARNINGS PER COMMON SHARE (1):
            
Earnings from continuing operations$3.24
 $4.04
  $3.63
$4.04
 $3.24
  $4.04
Earnings from discontinued operations0.58
 0.08
  0.69
—
 0.58
  0.08
BASIC NET EARNINGS PER COMMON SHARE3.82
 4.12
  4.32
4.04
 3.82
  4.12
DILUTED NET EARNINGS PER COMMON SHARE (1):
            
Earnings from continuing operations3.12
 3.85
  3.47
$3.86
 $3.12
  $3.85
Earnings from discontinued operations0.54
 0.08
  0.64
—
 0.54
  0.08
DILUTED NET EARNINGS PER COMMON SHARE3.66
 3.93
  4.11
3.86
 3.66
  3.93
DIVIDENDS PER COMMON SHARE$2.14
 $1.97
  $1.80
$2.29
 $2.14
  $1.97
 
(1) 
Basic net earnings per common share and diluted net earnings per common share are calculated on net earnings attributable to Procter & Gamble.



See accompanying Notes to Consolidated Financial Statements.
The Procter & Gamble Company 3849

Consolidated Balance SheetsStatements of Comprehensive Income

Amounts in millions; June 30   
Assets2012 2011
CURRENT ASSETS   
Cash and cash equivalents$4,436
 $2,768
Accounts receivable6,068
 6,275
INVENTORIES   
Materials and supplies1,740
 2,153
Work in process685
 717
Finished goods4,296
 4,509
Total inventories6,721
 7,379
Deferred income taxes1,001
 1,140
Prepaid expenses and other current assets3,684
 4,408
TOTAL CURRENT ASSETS21,910
 21,970
PROPERTY, PLANT AND EQUIPMENT   
Buildings7,324
 7,753
Machinery and equipment32,029
 32,820
Land880
 934
Total property, plant and equipment40,233
 41,507
Accumulated depreciation(19,856) (20,214)
NET PROPERTY, PLANT AND EQUIPMENT20,377
 21,293
GOODWILL AND OTHER INTANGIBLE ASSETS   
Goodwill53,773
 57,562
Trademarks and other intangible assets, net30,988
 32,620
NET GOODWILL AND OTHER INTANGIBLE ASSETS84,761
 90,182
OTHER NONCURRENT ASSETS5,196
 4,909
TOTAL ASSETS$132,244
 $138,354
   
Liabilities and Shareholders' Equity2012 2011
CURRENT LIABILITIES   
Accounts payable$7,920
 $8,022
Accrued and other liabilities8,289
 9,290
Debt due within one year8,698
 9,981
TOTAL CURRENT LIABILITIES24,907
 27,293
LONG-TERM DEBT21,080
 22,033
DEFERRED INCOME TAXES10,132
 11,070
OTHER NONCURRENT LIABILITIES12,090
 9,957
TOTAL LIABILITIES68,209
 70,353
SHAREHOLDERS' EQUITY   
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)
1,195
 1,234
Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized)
—
 —
Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2012 - 4,008.4, 2011 - 4,007.9)
4,008
 4,008
Additional paid-in capital63,181
 62,405
Reserve for ESOP debt retirement(1,357) (1,357)
Accumulated other comprehensive income/(loss)(9,333) (2,054)
Treasury stock, at cost (shares held: 2012 - 1,260.4, 2011 - 1,242.2)
(69,604) (67,278)
Retained earnings75,349
 70,682
Noncontrolling interest596
 361
TOTAL SHAREHOLDERS' EQUITY64,035
 68,001
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$132,244
 $138,354
Amounts in millions; Years ended June 30 2013 2012 2011
NET EARNINGS $11,402
 $10,904
 $11,927
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX      
Financial statement translation 710
 (5,990) 6,493
Unrealized gains/(losses) on cash flow hedges (net of $92, $441 and $713 tax, respectively) 144
 724
 (1,181)
Unrealized gains/(losses) on investment securities (net of $5, $3 and $2 tax, respectively) (24) (3) 3
Defined benefit retirement plans (net of $637, $993 and $302 tax, respectively) 1,004
 (2,010) 453
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX 1,834
 (7,279) 5,768
TOTAL COMPREHENSIVE INCOME 13,236
 3,625
 17,695
Less: Total comprehensive income attributable to noncontrolling interests 94
 124
 143
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE $13,142
 $3,501
 $17,552

See accompanying Notes to Consolidated Financial Statements.
3950The Procter & Gamble Company

Consolidated Balance Sheets
Amounts in millions; June 30   
Assets2013 2012
CURRENT ASSETS   
Cash and cash equivalents$5,947
 $4,436
Accounts receivable6,508
 6,068
INVENTORIES   
Materials and supplies1,704
 1,740
Work in process722
 685
Finished goods4,483
 4,296
Total inventories6,909
 6,721
Deferred income taxes948
 1,001
Prepaid expenses and other current assets3,678
 3,684
TOTAL CURRENT ASSETS23,990
 21,910
    
PROPERTY, PLANT AND EQUIPMENT, NET21,666
 20,377
GOODWILL55,188
 53,773
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET31,572
 30,988
OTHER NONCURRENT ASSETS6,847
 5,196
TOTAL ASSETS$139,263
 $132,244
   
Liabilities and Shareholders' Equity   
CURRENT LIABILITIES   
Accounts payable$8,777
 $7,920
Accrued and other liabilities8,828
 8,289
Debt due within one year12,432
 8,698
TOTAL CURRENT LIABILITIES30,037
 24,907
LONG-TERM DEBT19,111
 21,080
DEFERRED INCOME TAXES10,827
 10,132
OTHER NONCURRENT LIABILITIES10,579
 12,090
TOTAL LIABILITIES70,554
 68,209
SHAREHOLDERS' EQUITY   
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)1,137
 1,195
Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized)—
 —
Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2013 - 4,009.2, 2012- 4,008.4)4,009
 4,008
Additional paid-in capital63,538
 63,181
Reserve for ESOP debt retirement(1,352) (1,357)
Accumulated other comprehensive income/(loss)(7,499) (9,333)
Treasury stock, at cost (shares held: 2013 - 1,266.9, 2012 - 1,260.4)(71,966) (69,604)
Retained earnings80,197
 75,349
Noncontrolling interest645
 596
TOTAL SHAREHOLDERS' EQUITY68,709
 64,035
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$139,263
 $132,244

See accompanying Notes to Consolidated Financial Statements.
The Procter & Gamble Company51

Consolidated Statements of Shareholders' Equity
Dollars in millions/Shares in thousands
Common
Shares
Outstanding

Common Stock
Preferred
Stock

Additional
Paid-In
Capital

Reserve 
for
ESOP  Debt
Retirement

Accumulated
Other
Comprehensive
Income/ (loss)

Treasury
Stock

Retained
Earnings

Non-
controlling
Interest

Total
BALANCE JUNE 30, 20102,843,471
$4,008
$1,277
$61,697
$(1,350)$(7,822)$(61,309)$64,614
$324
$61,439
Net earnings       11,797
130
11,927
Other comprehensive income     5,768
   5,768
Dividends to shareholders:          
Common       (5,534) (5,534)
Preferred, net of tax benefits       (233) (233)
Treasury purchases(112,729)     (7,039)  (7,039)
Employee plan issuances29,729

 702
  1,033
  1,735
Preferred stock conversions5,266
 (43)6
  37
  —
ESOP debt impacts    (7)  38
 31
Noncontrolling interest, net   

    (93)(93)
BALANCE JUNE 30, 20112,765,737
4,008
1,234
62,405
(1,357)(2,054)(67,278)70,682
361
68,001
Net earnings       10,756
148
10,904
Other comprehensive loss     (7,279)   (7,279)
Dividends to shareholders:          
Common       (5,883) (5,883)
Preferred, net of tax benefits       (256) (256)
Treasury purchases(61,826)     (4,024)  (4,024)
Employee plan issuances39,546

 550
  1,665
  2,215
Preferred stock conversions4,576
 (39)6
  33
  —
ESOP debt impacts    

  50
 50
Noncontrolling interest, net   220
    87
307
BALANCE JUNE 30, 20122,748,033
4,008
1,195
63,181
(1,357)(9,333)(69,604)75,349
596
64,035
Net earnings       11,312
90
11,402
Other comprehensive income     1,834
   1,834
Dividends to shareholders:          
Common       (6,275) (6,275)
Preferred, net of tax benefits       (244) (244)
Treasury purchases(84,234)     (5,986)  (5,986)
Employee plan issuances70,923
1
 352
  3,573
  3,926
Preferred stock conversions7,605
 (58)7
  51
  —
ESOP debt impacts    5
  55
 60
Noncontrolling interest, net   (2)    (41)(43)
BALANCE JUNE 30, 20132,742,327
$4,009
$1,137
$63,538
$(1,352)$(7,499)$(71,966)$80,197
$645
$68,709


See accompanying Notes to Consolidated Financial Statements.
52 The Procter & Gamble Company

Consolidated Statements of Shareholders' EquityCash Flows
Dollars in millions/Shares in thousands
Common
Shares
Outstanding

Common Stock
Preferred
Stock

Additional
Paid-In
Capital

Reserve 
for
ESOP  Debt
Retirement

Accumulated
Other
Comprehensive
Income/ (loss)

Treasury
Stock

Retained
Earnings

Non-
controlling
Interest

Total
BALANCE JUNE 30, 20092,917,035
$4,007
$1,324
$61,118
$(1,340)$(3,358)$(55,961)$57,309
$283
$63,382
Net earnings       12,736
110
12,846
Other comprehensive income:          
Financial statement translation     (4,194)   (4,194)
Hedges and investment securities, net of $520 tax     867
   867
Defined benefit retirement plans, net of $465 tax     (1,137)   (1,137)
Total comprehensive income         $8,382
Dividends to shareholders:          
Common       (5,239) (5,239)
Preferred, net of tax benefits       (219) (219)
Treasury purchases(96,759)     (6,004)  (6,004)
Employee plan issuances17,616
1
 574
  616
  1,191
Preferred stock conversions5,579
 (47)7
  40
  —
ESOP debt impacts    (10)  27
 17
Noncontrolling interest, net   (2)    (69)(71)
BALANCE JUNE 30, 20102,843,471
4,008
1,277
61,697
(1,350)(7,822)(61,309)64,614
324
61,439
Net earnings       11,797
130
11,927
Other comprehensive income:          
Financial statement translation     6,493
   6,493
Hedges and investment securities, net of $711 tax     (1,178)   (1,178)
Defined benefit retirement plans, net of $302 tax     453
   453
Total comprehensive income         $17,695
Dividends to shareholders:          
Common       (5,534) (5,534)
Preferred, net of tax benefits       (233) (233)
Treasury purchases(112,729)     (7,039)  (7,039)
Employee plan issuances29,729

 702
  1,033
  1,735
Preferred stock conversions5,266
 (43)6
  37
  —
ESOP debt impacts    (7)  38
 31
Noncontrolling interest, net   
    (93)(93)
BALANCE JUNE 30, 20112,765,737
4,008
1,234
62,405
(1,357)(2,054)(67,278)70,682
361
68,001
Net earnings       10,756
148
10,904
Other comprehensive income:          
Financial statement translation     (5,990)   (5,990)
Hedges and investment securities, net of $438 tax     721
   721
Defined benefit retirement plans, net of $993 tax     (2,010)   (2,010)
Total comprehensive income         $3,625
Dividends to shareholders:          
Common       (5,883) (5,883)
Preferred, net of tax benefits       (256) (256)
Treasury purchases(61,826)     (4,024)  (4,024)
Employee plan issuances39,546

 550
  1,665
  2,215
Preferred stock conversions4,576
 (39)6
  33
  —
ESOP debt impacts    

  50
 50
Noncontrolling interest, net   220
    87
307
BALANCE JUNE 30, 20122,748,033
$4,008
$1,195
$63,181
$(1,357)$(9,333)$(69,604)$75,349
$596
$64,035
Amounts in millions; Years ended June 302013 2012 2011
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR$4,436
 $2,768
 $2,879
OPERATING ACTIVITIES     
Net earnings11,402
 10,904
 11,927
Depreciation and amortization2,982
 3,204
 2,838
Share-based compensation expense346
 377
 414
Deferred income taxes(307) (65) 128
Gain on sale and purchase of businesses(916) (2,106) (203)
Goodwill and indefinite-lived intangible asset impairment charges308
 1,576
 —
Change in accounts receivable(415) (427) (426)
Change in inventories(225) 77
 (501)
Change in accounts payable, accrued and other liabilities1,253
 (22) 358
Change in other operating assets and liabilities68
 (444) (1,221)
Other377
 210
 16
TOTAL OPERATING ACTIVITIES14,873
 13,284
 13,330
INVESTING ACTIVITIES     
Capital expenditures(4,008) (3,964) (3,306)
Proceeds from asset sales584
 2,893
 225
Acquisitions, net of cash acquired(1,145) (134) (474)
Purchases of available-for-sale investment securities(1,605) —
 —
Change in other investments(121) 112
 73
TOTAL INVESTING ACTIVITIES(6,295) (1,093) (3,482)
FINANCING ACTIVITIES     
Dividends to shareholders(6,519) (6,139) (5,767)
Change in short-term debt3,406
 (3,412) 151
Additions to long-term debt2,331
 3,985
 1,536
Reductions of long-term debt(3,752) (2,549) (206)
Treasury stock purchases(5,986) (4,024) (7,039)
Impact of stock options and other3,449
 1,729
 1,203
TOTAL FINANCING ACTIVITIES(7,071) (10,410) (10,122)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS4
 (113) 163
CHANGE IN CASH AND CASH EQUIVALENTS1,511
 1,668
 (111)
CASH AND CASH EQUIVALENTS, END OF YEAR$5,947
 $4,436
 $2,768
    
SUPPLEMENTAL DISCLOSURE     
Cash payments for:     
   Interest$683
 $740
 $806
   Income taxes3,780
 4,348
 2,992
Assets acquired through non-cash capital leases are immaterial for all periods.

 

 




See accompanying Notes to Consolidated Financial Statements.
The Procter & Gamble Company 40

Consolidated Statements of Cash Flows
Amounts in millions; Years ended June 302012 2011 2010
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR$2,768
 $2,879
 $4,781
OPERATING ACTIVITIES     
Net earnings10,904
 11,927
 12,846
Depreciation and amortization3,204
 2,838
 3,108
Share-based compensation expense377
 414
 453
Deferred income taxes(65) 128
 36
Gain on sale of businesses(2,106) (203) (2,670)
Goodwill and indefinite lived intangible asset impairment charges1,576
 —
 —
Change in accounts receivable(427) (426) (14)
Change in inventories77
 (501) 86
Change in accounts payable, accrued and other liabilities(22) 358
 2,446
Change in other operating assets and liabilities(444) (1,221) (356)
Other210
 16
 196
TOTAL OPERATING ACTIVITIES13,284
 13,330
 16,131
INVESTING ACTIVITIES     
Capital expenditures(3,964) (3,306) (3,067)
Proceeds from asset sales2,893
 225
 3,068
Acquisitions, net of cash acquired(134) (474) (425)
Change in investments112
 73
 (173)
TOTAL INVESTING ACTIVITIES(1,093) (3,482) (597)
FINANCING ACTIVITIES     
Dividends to shareholders(6,139) (5,767) (5,458)
Change in short-term debt(3,412) 151
 (1,798)
Additions to long-term debt3,985
 1,536
 3,830
Reductions of long-term debt(2,549) (206) (8,546)
Treasury stock purchases(4,024) (7,039) (6,004)
Impact of stock options and other1,729
 1,203
 662
TOTAL FINANCING ACTIVITIES(10,410) (10,122) (17,314)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(113) 163
 (122)
CHANGE IN CASH AND CASH EQUIVALENTS1,668
 (111) (1,902)
CASH AND CASH EQUIVALENTS, END OF YEAR$4,436
 $2,768
 $2,879
    
SUPPLEMENTAL DISCLOSURE     
Cash payments for:     
   Interest$740
 $806
 $1,184
   Income taxes4,348
 2,992
 4,175
Assets acquired through non-cash capital leases24
 13
 20



See accompanying Notes to Consolidated Financial Statements.
41The Procter & Gamble Company53

Notes to Consolidated Financial Statements

NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Procter & Gamble Company's (the "Company," "Procter & Gamble," "we" or "us") business is focused on providing branded consumer packaged goods of superior quality and value. Our products are sold in more than 180 countries and territories primarily through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, high-frequency stores and high-frequency stores.e-commerce. We have on-the-ground operations in approximately 7570 countries.
Basis of Presentation
The Consolidated Financial Statements include the Company and its controlled subsidiaries. Intercompany transactions are eliminated.
Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, consumer and trade promotion accruals, restructuring reserves, pensions, post-employment benefits, stock options, valuation of acquired intangible assets, useful lives for depreciation and amortization of long-lived assets, future cash flows associated with impairment testing for goodwill, indefinite-lived intangible assets and other long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the financial statements in any individual year. However, in regard to ongoing impairment testing of goodwill and indefinite-lived intangible assets, significant deterioration in future cash flow projections or other assumptions used in estimating fair values versus those anticipated at the time of the initial valuations, could result in impairment charges that may materially affect the financial statements in a given year.
Revenue Recognition
Sales are recognized when revenue is realized or realizable and has been earned. Revenue transactions represent sales of inventory. The revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. The revenue includes shipping and handling
costs, which generally are included in the list price to the customer. Our policy is to recognize revenue when title to the product,
ownership and risk of loss transfer to the customer, which can be on the date of shipment or the date of receipt by the customer. A provision for payment discounts and product return allowances is recorded as a reduction of sales in the same period that the revenue is recognized.
Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are offered through various programs to customers and consumers. Sales are recorded net of trade promotion spending, which is recognized as incurred, generally at the time of the sale. Most of these arrangements have terms of approximately one year. Accruals for expected payouts under these programs are included as accrued marketing and promotion in the accrued and other liabilities line item in the Consolidated Balance Sheets.
Cost of Products Sold
Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of product, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity.
Selling, General and Administrative Expense
Selling, general and administrative expense (SG&A) is primarily comprised of marketing expenses, selling expenses, research and development costs, administrative and other indirect overhead costs, depreciation and amortization expense on non-manufacturing assets and other miscellaneous operating items. Research and development costs are charged to expense as incurred and were $2,0292.0 billion in 20122013, $1,982 in 20112012 and $1,931 in 20102011. Advertising costs, charged to expense as incurred, include worldwide television, print, radio, internet and in-store advertising expenses and were $9,3459.7 billion in 2013, $9.3 billion in 2012, and $9,2109.2 billion in 2011 and $8,475 in 2010. Non-advertising related components of the Company's total marketing spending include costs associated with consumer promotions, product sampling and sales aids, all of which are included in SG&A, as well as coupons and customer trade funds, which are recorded as reductions to net sales.
Other Non-Operating Income, Net
Other non-operating income, net, primarily includes net acquisition and divestiture gains interest and investment income.




Amounts in millions of dollars except per share amounts or as otherwise specified.
54The Procter & Gamble Company

Currency Translation
Financial statements of operating subsidiaries outside the U.S. generally are measured using the local currency as the functional currency. Adjustments to translate those


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company42

statements into U.S. dollars are recorded in other comprehensive income (OCI). Currency translation adjustments in accumulated OCI were a gain of $353 at June 30, 2013 and a loss of $357 at June 30, 2012 and a gain of $5,633 at June 30, 2011. For subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. RemeasurementRe-measurement adjustments for financial statements in highly inflationary economies and other transactional exchange gains and losses are reflected in earnings.

Cash Flow Presentation
The Consolidated Statements of Cash Flows are prepared using the indirect method, which reconciles net earnings to cash flow from operating activities. The reconciliation adjustments include the removal of timing differences between the occurrence of operating receipts and payments and their recognition in net earnings. The adjustments also remove cash flows arising from investing and financing activities, which are presented separately from operating activities. Cash flows from foreign currency transactions and operations are translated at an average exchange rate for the period. Cash flows from hedging activities are included in the same category as the items being hedged. Cash flows from derivative instruments designated as net investment hedges are classified as financing activities. Realized gains and losses from non-qualifying derivative instruments used to hedge currency exposures resulting from intercompany financing transactions are also classified as financing activities. Cash flows from other derivative instruments used to manage interest, commodity or other currency exposures are classified as operating activities. Cash payments related to income taxes are classified as operating activities. Cash flows from the Company's discontinued operations are included in the Consolidated Statements of Cash Flows.
Cash Equivalents
Highly liquid investments with remaining stated maturities of three months or less when purchased are considered cash equivalents and recorded at cost.
Investments
Investment securities consist of readily marketable debt and equity securities. Unrealized gains or losses are charged to earnings for investments classified as trading.trading are charged to earnings. Unrealized gains or losses on securities classified as available-for-sale are generally recorded in shareholders' equity.OCI. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or shareholders' equityOCI depending on our intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. Investment securities are
included as other current assets or other noncurrent assets in the Consolidated Balance Sheets.
Investments in certain companies over which we exert significant influence, but do not control the financial and operating decisions, are accounted for as equity method investments. Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost method. Both
equity and cost method investments are included as other noncurrent assets in the Consolidated Balance Sheets.
Inventory Valuation
Inventories are valued at the lower of cost or market value. Product-related inventories are primarily maintained on the first-in, first-out method. Minor amounts of product inventories, including certain cosmetics and commodities, are maintained on the last-in, first-out method. The cost of spare part inventories is maintained using the average-cost method.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets' estimated useful lives using the straight-line method. Machinery and equipment includes office furniture and fixtures (15-year life), computer equipment and capitalized software (3- to 5-year lives) and manufacturing equipment (3- to 20-year lives). Buildings are depreciated over an estimated useful life of 40 years. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
Goodwill and Other Intangible Assets
Goodwill and indefinite-lived brandsintangible assets are not amortized, but are evaluated for impairment annually or more often if indicators of a potential impairment are present. Our annual impairment testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles.intangible assets. The annual evaluation for impairment of goodwill and indefinite-lived intangiblesintangible assets is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. We believe such assumptions are also comparable to those that would be used by other marketplace participants.
We have acquired brands that have been determined to have indefinite lives due to the nature of our business.lives. We evaluate a number of factors to determine whether an indefinite life is appropriate, including the competitive environment, market share, brand history, product life cycles, operating plans and the macroeconomic environment of the countries in which the brands are sold. When certain events or changes in operating conditions occur, an impairment assessment is performed and


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company55

indefinite-lived brands may be adjusted to a determinable life.
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangiblesintangible assets with contractual terms are generally amortized over their respective legal or contractual lives. Customer relationships, brands and other non-contractual


Amounts in millions of dollars except per share amounts or as otherwise specified.
43The Procter & Gamble Company

intangible assets with determinable lives are amortized over periods generally ranging from 5 to 30 years. When certain events or changes in operating conditions occur, an impairment assessment is performed and remaining lives of intangible assets with determinable lives may be adjusted.
Fair Values of Financial Instruments
Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial instruments, including cash equivalents, other investments and short-term debt, are recorded at cost, which approximates fair value. The fair values of long-term debt and financial instruments are disclosed in Note 5.



 
New Accounting Pronouncements and Policies
Other than as described below, no new accounting pronouncement issued or effective during the fiscal year has had or is expected to have a material impact on the Consolidated Financial Statements.

In June 2011,During fiscal 2013, the Financial Accounting Standards Board (FASB) issued authoritativeCompany adopted ASU 2011-05, "Comprehensive Income (Topic 220) - Presentation of Comprehensive Income", and ASU 2013-02, “Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income”. This guidance that will eliminateeliminates the option of presentingto present the components of OCI as part of the statement of shareholders' equity. The guidance will instead requireequity and requires entities to present the reportingcomponents of net earnings and OCI in either a single continuous statement of comprehensive income or two separate but consecutive statements. We chose to present net earnings and OCI in two separate but consecutive statements. This guidance also requires entities to provide information about the amounts reclassified out of accumulated other comprehensive income (AOCI) by component and to present, either on the face of the statement where net income is presented or in a separate statement immediately following the statementnotes, significant amounts reclassified out of earnings.AOCI by the respective line items of net income. We chose to present the requirements in the notes to the financial statements (see Note 6). The standard is effective for the Company asadoption of July 1, 2012 and willthis guidance had no impact on our consolidated financial statement presentation, but will not impact ourposition, results of operations or cash flows or financial condition.flows.


NOTE 2
GOODWILL AND INTANGIBLE ASSETS
The change in the net carrying amount of goodwill by reportable segment was as follows:
BeautyGroomingHealth CareFabric Care and Home CareBaby Care and Family CareCorporateTotal CompanyBeautyGroomingHealth CareFabric Care and Home CareBaby Care and Family CareCorporateTotal Company
GOODWILL at JUNE 30, 2010$16,631
$21,328
$7,859
$6,360
$1,445
$389
$54,012
Acquisitions and divestitures(7)(7)(7)115
(1)11
104
Translation and other1,415
1,329
327
260
109
6
3,446
GOODWILL at JUNE 30, 201118,039
22,650
8,179
6,735
1,553
406
57,562
GOODWILL at JUNE 30, 2011 - Gross$18,039
$22,650
$8,179
$6,735
$1,553
$406
$57,562
Accumulated impairment losses at June 30, 2011—
—
—
—
—
—
—
GOODWILL at JUNE 30, 2011 - Net18,039
22,650
8,179
6,735
1,553
406
57,562
Acquisitions and divestitures(3)(12)474
34
—
(92)401
(3)(12)474
34
—
(92)401
Goodwill impairment charges(431)(899)—
—
—
—
(1,330)(431)(899)—
—
—
—
(1,330)
Translation and other(1,176)(1,059)(314)(212)(94)(5)(2,860)(1,176)(1,059)(314)(212)(94)(5)(2,860)
GOODWILL at JUNE 30, 201216,429
20,680
8,339
6,557
1,459
309
53,773
GOODWILL at JUNE 30, 2012 - Gross16,860
21,579
8,339
6,557
1,459
309
55,103
Accumulated impairment losses at June 30, 2012(431)(899)—
—
—
—
(1,330)
GOODWILL at JUNE 30, 2012 - Net16,429
20,680
8,339
6,557
1,459
309
53,773
Acquisitions and divestitures(21)(40)624
(11)463
—
1,015
Goodwill impairment charges—
(259)—
—
—
—
(259)
Translation and other255
236
96
40
32
—
659
GOODWILL at JUNE 30, 2013 - Gross17,094
21,775
9,059
6,586
1,954
309
56,777
Accumulated impairment losses at June 30, 2013(431)(1,158)—
—
—
—
(1,589)
GOODWILL at JUNE 30, 2013 - Net16,663
20,617
9,059
6,586
1,954
309
55,188

Amounts in millions of dollars except per share amounts or as otherwise specified.
On May 31,
56The Procter & Gamble Company

In October 2012, the Company soldacquired our partner's interest in a joint venture in Iberia that operates in our Baby Care and Family Care and Health Care reportable segments. We paid $1.1 billion for our partner's interest and the global snacks business.transaction was accounted for as a business combination. The total enterprise value of $1.9 billion was allocated to indefinite-lived intangible assets of $0.2 billion, defined-life intangible assets of $0.9 billion and goodwill of $1.1 billion. These were partially offset by $0.3 billion of deferred tax liabilities on the intangible assets. The Company recognized a $0.6 billion holding gain on its previously held investment, which was included in other non-operating income, net in the Consolidated Statement of Earnings in fiscal 2013. In addition to these items and the impairment discussed below, the remaining net increase in goodwill since June 30, 2012 was primarily due to currency translation across all reportable segments.
During the fourth quarter of fiscal 2013, the estimated fair value of our Appliances reporting unit declined below its carrying amount. As a result, we recorded a non-cash before and after-tax impairment charge of $259 in fiscal 2013 to reduce the Snacks and Pet Care segment was eliminated. carrying amount of goodwill to estimated fair value.
The snacks goodwill priorsame factors that led to the divestiture date is includeddecline in the Corporate segment andfair value of the pet care goodwill is includedreporting unit led to a decline in the Fabric Care and Home Care segment for all periods presented.fair value of our Braun trade name intangible asset below its respective carrying value. This resulted in a non-cash before-tax impairment charge of $49 ($31 after-tax) to reduce the carrying amount of this asset to its fair value.
During the second quarterThe results of fiscal 2012, we changed our annual goodwill impairment testing date from July 1 to October 1 of each year. This change was made to better align the timing of our annual impairment testing with the timing of the Company's annual strategic planning process. We believe this change is preferable because it allows us to more efficiently utilize the reporting units' long-term financial projections, which are generated from the annual strategic planning process, as the basis for performing our annual impairment testing. This change did not result in any delay, acceleration or avoidance of impairment, nor did this change result in adjustments to previously issued financial statements. This change was applied prospectively
beginning on October 1, 2011; retrospective application to prior periods was impracticable as the Company was unable to objectively determine, without the use of hindsight, the assumptions that would have been used in those earlier periods. We test our indefinite-lived intangibles for impairment during the second fiscal quarter of each year, and accordingly performed this testing during the quarter ended December 31, 2011.
We tested goodwill for impairment as of July 1, 2011 (the testing date under our previous policy) and no impairments were indicated. Our goodwill impairment testing as of October 1, 2011 (the testing date under our new policy)2012 determined that certain goodwill was impaired. Specifically, the results of our impairment testing during the quarter ended December 31, 2011 indicated that the estimated fair values of our Appliances and Salon Professional reporting units were less than their respective carrying amounts. The test to evaluate goodwill for impairment is a two-step process. In the first step, we compare the estimated fair


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company44

value of each reporting unit to its carrying value. If the estimated fair value of any reporting unit is less than its carrying value, we perform a second step to determine the implied fair value of the reporting unit's goodwill. The second step of the impairment analysis requires a valuation of a reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the resulting implied fair value of the reporting unit's goodwill is less than its carrying value, that difference represents an impairment. The second step of the goodwill impairment evaluations for the Appliances and Salon Professional reporting units were finalized during the quarter ended March 31, 2012. As a result, of our impairment testing, we recorded a non-cash before and after taxafter-tax impairment charge of $1.3 billion billionin fiscal 2012 to reduce the carrying amount of goodwill to estimated fair value -value; $899 of the impairment related to Appliances and $431 related to Salon Professional. As of June 30, 2012, the carrying values of the Appliances and Salon Professional goodwill were $586 and $397, respectively.
Our impairment testing for indefinite livedindefinite-lived intangible assets during the quarter ended December 31, 2011fiscal 2012 also indicated a decline in the fair value of our Koleston Perfect and Wella trade name intangible assets below their respective carrying values. This resulted in a non-cash before taxbefore-tax impairment charge of $246 ($173 after tax)after-tax) to reduce the carrying amounts of these assets to their respective fair values. As of June 30, 2012, the carrying values
All of the Koleston Perfectfiscal 2013 and Wella trade names were $280 and $554, respectively. All of the2012 goodwill and indefinite-lived intangible asset impairment charges are included in Corporate for segment reporting.
To estimate the fair value of our reporting units and indefinite-lived intangibles, we use a discounted cash flow approach, which we believe is the most reliable indicator of fair value of the businesses, and is most consistent with the approach a marketplace participant would use. Under this approach, we estimate the future cash flows of the respective reporting units and indefinite-lived intangible assets and discount those cash flows at a rate of return that reflects the relative risk of each business.
The declines in the fair value of the Appliances and Salon Professional reporting units and the underlying Koleston Perfect and Wella trade name intangibles were driven by a combination of similar competitive and economic factors, which resulted in a reduction in the forecasted growth rates and cash flows used to estimate fair value. These factors include: (1) a more prolonged and deeper deterioration of the macroeconomic environment than was previously expected which, due to the more discretionary nature of the Appliances and Salon Professional businesses, led to a reduction in the overall market size in the short term and a more significant and prolonged reduction in the expected underlying market growth rates and resulting sales levels in the longer term. This is particularly evident in Europe, which is where we have historically generated a majority of
the Appliances and Salon Professional sales; (2) increasing competitive levels of innovation in Salon Professional negatively impacting our current and nearer-term projected market share progress; and, (3) an increasing level of competitive pricing activities negatively impacting pricing levels and lowering overall category profitability. As a result of these factors, we reduced our current and longer-term sales and earnings forecasts for these businesses.
The goodwill and intangible asset valuations are dependent on a number of significant estimates and assumptions, including macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion and Company business plans. We believe these estimates and assumptions are reasonable. However, actual events and results could differ substantially from those used in our valuations. To the extent such factors result in a failure to achieve the level of projected cash flows
used to estimate fair value, we may need to record additional non-cash impairment charges in the future.

The fiscal 2013 declines in fair values of the Appliances reporting unit and the Braun trade name intangible asset were primarily driven by currency impacts. Specifically, currency in Japan, a country that generates a significant portion of the Appliances earnings, devalued approximately 20% in the second half of fiscal 2013 relative to the currencies in which the underlying net assets are recorded. This sustained reduction in the yen reduced the underlying category market size and the projected future cash flows of the business, which in turn triggered the impairment.

The fiscal 2012 declines in the fair values of the Appliances and Salon Professional reporting units and the underlying Koleston Perfect and Wella trade name intangible assets were driven by a combination of similar competitive and economic factors, which resulted in a reduction in the forecasted growth rates and cash flows used to estimate fair value. The factors included: (1) a more prolonged and deeper deterioration of the macroeconomic environment than was previously expected which, due to the more discretionary nature of the Appliances and Salon Professional businesses, led to a reduction in the overall market size in the short term and a more significant and prolonged reduction in the expected underlying market growth rates and resulting sales levels in the longer term. This was particularly evident in Europe, where we have historically generated a majority of the Appliances and Salon Professional sales; (2) increasing competitive levels of innovation in Salon Professional, which negatively impacted our current and nearer-term projected market share progress; and, (3) an increasing level of competitive pricing activities, which negatively impacted overall category profitability. As a result of these factors, we reduced our current and long-term sales and earnings forecasts for these businesses.
In addition to the impairment chargecharges discussed above, goodwill also decreased from June 30, 2011 primarily as a result ofin fiscal 2012 due to currency translation across all reportablereporting segments partially offset by the establishment of goodwill related to the business combination with Teva Pharmaceuticals Industries Ltd. in our Health Care reportable segment.
Identifiable intangible assets were comprised of:
 20122011
June 30
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
INTANGIBLE ASSETS WITH DETERMINABLE LIVES
Brands$3,297
$1,687
$3,392
$1,553
Patents and technology3,164
2,021
3,195
1,840
Customer relationships2,048
642
2,121
602
Other352
218
335
217
TOTAL8,861
4,568
9,043
4,212
     
INTANGIBLE ASSETS WITH INDEFINITE LIVES
Brands$26,695
$—
$27,789
$—
TOTAL35,556
4,568
36,832
4,212
The amortization of intangible assets was as follows:
Years ended June 302012  2011  2010
Intangible asset amortization$500
  $546
  $601


Amounts in millions of dollars except per share amounts or as otherwise specified.
45The Procter & Gamble Company57

Identifiable intangible assets were comprised of:
 2013 2012
June 30
Gross
Carrying
Amount
Accumulated
Amortization
 
Gross
Carrying
Amount
Accumulated
Amortization
INTANGIBLE ASSETS WITH DETERMINABLE LIVES
Brands$4,251
$2,020
 $3,297
$1,687
Patents and technology2,976
2,032
 3,164
2,021
Customer relationships2,118
703
 2,048
642
Other348
168
 352
218
TOTAL9,693
4,923
 8,861
4,568
      
INTANGIBLE ASSETS WITH INDEFINITE LIVES
Brands26,802
—
 26,695
—
TOTAL36,495
4,923
 35,556
4,568
Amortization expense of intangible assets was as follows:
Years ended June 302013  2012  2011
Intangible asset amortization$528
  $500
  $546

Estimated amortization expense over the next five fiscal years is as follows:
Years ended June 30201320142015201620172014 2015 2016 2017 2018
Estimated amortization expense$481
$448
$419
$381
$345
$504
 $485
 $442
 $405
 $380
Such estimates do not reflect the impact of future foreign exchange rate changes.
NOTE 3
SUPPLEMENTAL FINANCIAL INFORMATION
The components of property, plant and equipment were as follows:
June 302013  2012
PROPERTY, PLANT AND EQUIPMENT   
Buildings$7,829
  $7,324
Machinery and equipment31,070
  29,342
Land878
 880
Construction in progress3,235
  2,687
TOTAL PROPERTY, PLANT AND EQUIPMENT43,012
 40,233
Accumulated depreciation(21,346)  (19,856)
PROPERTY, PLANT AND EQUIPMENT, NET21,666
  20,377
The June 30, 2012 construction in progress balance, which was included in machinery and equipment in fiscal 2012, is shown separately to conform with the fiscal 2013 presentation.
Selected components of current and noncurrent liabilities were as follows:
June 302012  20112013  2012
ACCRUED AND OTHER LIABILITIES - CURRENT        
Marketing and promotion$2,880
  $3,058
$3,122
  $2,880
Compensation expenses1,660
  1,753
1,665
  1,660
Restructuring reserves343
 151
323
 343
Taxes payable414
  786
817
  414
Legal and environmental264
 885
374
 264
Other2,728
  2,657
2,527
  2,728
TOTAL8,289
  9,290
8,828
  8,289
    
OTHER NONCURRENT LIABILITIES        
Pension benefits$5,684
  $4,388
$6,027
  $5,684
Other postretirement benefits3,270
  1,887
1,713
  3,270
Uncertain tax positions2,245
  2,326
2,002
  2,245
Other891
  1,356
837
  891
TOTAL12,090
  9,957
10,579
  12,090
RESTRUCTURING PROGRAM
The Company has historically incurred an ongoing annual level of restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization. Before taxBefore-tax costs incurred under the ongoing program have generally ranged from $250$250 to $500 annually.$500 annually. In February and November 2012, the Company announcedmade announcements regarding an incremental restructuring program as part of a productivity and cost savings plan to reduce costs in the areas of supply chain, research and development, marketing and overheads. The programproductivity and cost savings plan was designed to accelerate cost reductions by streamlining management decision making, manufacturing and other work processes in order to help fund the Company's growth strategy. The Company expects to incur approximatelyin excess of $3.5 billion billion in before-tax restructuring costs over a fourfive year period (from fiscal 2012 through fiscal 2016), including costs incurred as part of this plan and the ongoing plan.and incremental restructuring program. The Company expects to incur more than halfhas incurred approximately 55% of the costs under this plan byas of the end of fiscal 2013, with the remainder
expected to be incurred in fiscal years 2014 and 2015.through 2016.
The restructuring activities will beprogram is being executed across the Company's centralized organization as well as across virtually all of its MDOMarket Development Organizations (MDO) and GBU organizations. TheseGlobal Business Units (GBU). The restructuring activities include a plan for aprogram plans included an initial targeted net reduction in non-manufacturing overhead personnelenrollment of


Amounts in millions of dollars except per share amounts or as otherwise specified.
58The Procter & Gamble Company

approximately 5,700 by the end of fiscal 2013. Through fiscal 2013, the Company has reduced non-manufacturing enrollment by approximately 7,000, which is 1,300 positions above the initial target. In addition to the reduction of 5,700 employees, the restructuring program includes plans for a further non-manufacturing overhead personnel reduction of approximately 2% - 4% annually from fiscal 2014 through fiscal 2016, roughly doubling the size of the initial enrollment reduction target. This is being done via the elimination of duplicate work, simplification through the use of technology and the optimization of the various functional and business organizations the number of business units and of the Company's global footprint. In addition, the plan includes integration of newly acquired companies and the optimization of the supply chain and other manufacturing processes.
CostsRestructuring costs incurred under the plan will consist primarily of costs to separate employees and asset-related costs to exit facilities. The Company willis also incurincurring other types of costs as outlined below as a direct result of the plan. For the year ended June 30, 2012, thebelow. The Company incurred total restructuring charges of approximately $956 million and $1.1 billion. for the years ended June 30, 2013 and June 30, 2012, respectively. Approximately $600 and $746 of these charges were recorded in selling, generalSG&A for the years ended June 30, 2013 and administrative expense.June 30, 2012, respectively. The remainder is included in cost of products sold. Since the inception of this restructuring program, the Company has incurred charges of approximately $
2.0 billion. Approximately $1.1 billion of these charges were related to separations, $487 million were asset-related and $431 million were related to other restructuring-type costs. The following table presents accrued restructuring activity for the yearyears ended June 30, 2013 and 2012:
 Separations Asset-Related Costs Other Total
RESERVE JUNE 30, 2011$121
 $—
 $30
 $151
        
Charges495
 378
 179
 1,052
Cash spent(300) —
 (182) (482)
Charges against assets—
 (378) —
 (378)
RESERVE JUNE 30, 2012316
 —
 27
 343
        
Charges595
 109
 252
 956
Cash spent(615) —
 (252) (867)
Charges against assets—
 (109) —
 (109)
RESERVE JUNE 30, 2013296
 —
 27
 323
 Separations Asset Related Costs Other Total
Reserve Balance June 30, 2011$121
 $—
 $30
 $151
Charges495
 378
 179
 1,052
Cash Spent(300) —
 (182) (482)
Charges against Assets—
 (378) —
 (378)
Reserve Balance June 30, 2012316
 —
 27
 343
Separation Costs
Employee separation charges for the yearyears ended June 30, 2013 and June 30, 2012 relate to severance packages for approximately 3,450 and 3,300 employees, of which respectively. For
1,600 will exit the Company afteryears ended June 30, 2012. These2013 and June 30, 2012, these severance packages include approximately 2,390 and 2,250 related to non-manufacturing overhead personnel, occurringemployees, respectively. These separations are primarily in North America and Western Europe. The packages are predominantly voluntary and the amounts are calculated based on salary levels and past years of service.service periods. Severance costs related to voluntary separations are generally charged to earnings when the employee accepts the offer. Since its inception, the restructuring program has incurred separation charges related to approximately 6,750 employees, of which approximately 4,640 are non-manufacturing overhead personnel.
Asset-Related Costs
Asset-related costs consist of both asset write downswrite-downs and accelerated depreciation. Asset write downswrite-downs relate to the establishment of a new fair value basis for assets held-for-sale or disposal. These assets were written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less minor disposal costs.


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company46

Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period. These shortened-lived assets relate primarily to manufacturing consolidations and technology standardization. The asset-related charges will not have a significant impact on future depreciation charges. The majority of asset-related charges for the year ended June 30, 2012 are related to the decision to relocate operations from the Company's offices in Kobe, Japan.

Other Costs
Other restructuring-type charges are incurred as a direct result of the productivity and cost savings plan.restructuring program. Such charges primarily include employee relocation related to separations and office consolidations, termination of contracts related to supply chain redesign and the cost to change internal systems and processes to support the underlying organizational changes.
Consistent with our historical policies for ongoing restructuring-type activities, the restructuring program charges will beare funded by and included within Corporate for both management and segment reporting. Accordingly, 100% of the charges under the program are included within the Corporate reportable segment. However, for informative purposes, the following table summarizes the total restructuring costs related to our reportable segments.segments:
Year Ended
June 30, 2012
Years Ended June 302013 2012
Beauty$120
$132
 $120
Grooming20
50
 20
Health Care25
58
 25
Fabric Care and Home Care184
148
 184
Baby Care and Family Care63
88
 63
Corporate (1)
640
480
 640
Total Company1,052
956
 1,052
(1) Corporate includes costs related to allocated overheads, including charges related to our MDO, GBSGlobal Business Services and Corporate Functions activities.



Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company59

NOTE 4
SHORT-TERM AND LONG-TERM DEBT 
June 302012 20112013 2012
DEBT DUE WITHIN ONE YEAR      
Current portion of long-term debt$4,083
 $2,994
$4,506
 $4,083
Commercial paper4,574
 6,950
7,642
 4,574
Other41
 37
284
 41
TOTAL8,698
 9,981
12,432
 8,698
      
Short-term weighted average interest rates(1)
0.6% 0.9%0.5% 0.6%
(1) Weighted average short-term interest rates include the effects of interest rate swaps discussed in Note 5.
June 302012 20112013 2012
LONG-TERM DEBT      
1.38% USD note due August 2012$1,250
 $1,250
Floating rate note due November 2012500
 500
3.38% EUR note due December 20121,761
 2,031
Floating rate note due February 20141,000
 —
Floating rate USD notes due February 2014$2,000
 $1,000
4.50% EUR note due May 20141,887
 2,176
1,960
 1,887
4.95% USD note due August 2014900
 900
900
 900
0.70% USD note due August 20141,000
 —
1,000
 1,000
3.50% USD note due February 2015750
 750
750
 750
0.95% JPY note due May 20151,261
 1,243
1,012
 1,261
3.15% USD note due September 2015500
 500
500
 500
1.80% USD note due November 20151,000
 1,000
1,000
 1,000
4.85% USD note due December 2015700
 700
700
 700
1.45% USD note due August 20161,000
 —
1,000
 1,000
5.13% EUR note due October 20171,383
 1,596
1,437
 1,383
4.70% USD note due February 20191,250
 1,250
1,250
 1,250
4.13% EUR note due December 2020755
 871
784
 755
9.36% ESOP debentures due 2012-2021(1)
757
 808
9.36% ESOP debentures due 2013-2021(1)
701
 757
2.30% USD note due February 20221,000
 —
1,000
 1,000
2.00% EUR note due August 20221,307
 —
4.88% EUR note due May 20271,258
 1,451
1,307
 1,258
6.25% GBP note due January 2030780
 805
764
 780
5.50% USD note due February 2034500
 500
500
 500
5.80% USD note due August 2034600
 600
600
 600
5.55% USD note due March 20371,400
 1,400
1,400
 1,400
Capital lease obligations45
 407
31
 45
All other long-term debt1,926
 4,289
1,714
 5,437
Current portion of long-term debt(4,083) (2,994)(4,506) (4,083)
TOTAL21,080
 22,033
19,111
 21,080
    
Long-term weighted average interest rates(2)
3.3% 3.4%3.3% 3.3%
 
(1) 
Debt issued by the ESOP is guaranteed by the Company and must be recorded as debt of the Company as discussed in Note 8.9.
(2) 
Weighted average long-term interest rates include the effects of interest rate swaps discussed in Note 5.
Long-term debt maturities during the next five fiscal years are as follows:
June 30201320142015201620172014 2015 2016 2017 2018
Debt maturities$4,083
$3,013
$4,082
$2,404
$1,093
$4,506
 $3,798
 $2,379
 $1,085
 $1,531
The Procter & Gamble Company fully and unconditionally guarantees the registered debt and securities issued by its 100% owned finance subsidiaries.


Amounts in millions of dollars except per share amounts or as otherwise specified.
47The Procter & Gamble Company

NOTE 5
RISK MANAGEMENT ACTIVITIES AND FAIR VALUE MEASUREMENTS
As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. We evaluate exposures on a centralized basis to take advantage of natural exposure correlation and netting. To the extent we choose to manage volatility associated with the net exposures, we enter into various financial transactions that we account for using the applicable accounting guidance for derivative instruments and hedging activities. These financial transactions are governed by our policies covering acceptable counterparty exposure, instrument types and other hedging practices.
At inception, we formally designate and document qualifying instruments as hedges of underlying exposures. We formally assess, at inception and at least quarterly, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair value or cash flows of the related underlying exposures. Fluctuations in the value of these instruments generally are offset by changes in the value or cash flows of the underlying exposures being hedged. This offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument. The ineffective portion of a change in the fair value of a qualifying instrument is immediately recognized in earnings. The amount of ineffectiveness recognized iswas immaterial for all years presented.
Credit Risk Management
We have counterparty credit guidelines and normally enter into transactions with investment grade financial institutions. Counterparty exposures are monitored daily and downgrades in counterparty credit ratings are reviewed on a timely basis. We have not incurred, and do not expect to incur, material credit losses on our risk management or other financial instruments.
Certain of the Company's financial instruments used in hedging transactions are governed by industry standard netting and collateral agreements with counterparties. If the Company's credit rating were to fall below the levels stipulated in the agreements, the counterparties could demand either collateralization or termination of the


Amounts in millions of dollars except per share amounts or as otherwise specified.
60The Procter & Gamble Company

arrangements. The aggregate fair value of the instruments covered by these contractual features that are in a net liability position as of June 30, 20122013, was $52.not material. The Company has not been required to post collateral as a result of these contractual features.

Interest Rate Risk Management
Our policy is to manage interest cost using a mixture of fixed-rate and variable-rate debt. To manage this risk in a cost-efficient manner, we enter into interest rate swaps whereby we agree to exchange with the counterparty, at
specified intervals, the difference between fixed and variable interest amounts calculated by reference to a notional amount.
Interest rate swaps that meet specific accounting criteria are accounted for as fair value or cash flow hedges. For fair value hedges, the changes in the fair value of both the hedging instruments and the underlying debt obligations are immediately recognized in interest expense. For cash flow hedges, the effective portion of the changes in fair value of the hedging instrument is reported in OCI and reclassified into interest expense over the life of the underlying debt obligation. The ineffective portion for both cash flow and fair value hedges, which iswas not material for any year presented, iswas immediately recognized in earnings.interest expense.
Foreign Currency Risk Management
We manufacture and sell our products and finance operations in a number of countries throughout the world. As a result, we are exposed to movements in foreign currency exchange rates.
To manage the exchange rate risk primarily associated with our financing operations, we have historically used a combination of forward contracts, options and currency swaps. As of June 30, 20122013, we had currency swaps with maturities up to five years, which are intended to offset the effect of exchange rate fluctuations on intercompany loans denominated in foreign currencies. These swaps are accounted for as cash flow hedges. The effective portion of the changes in fair value of these instruments is reported in OCI and reclassified into earnings in the same financial statement line itemSG&A and interest expense in the same period or periods during which the related hedged transactions affect earnings. The ineffective portion, which iswas not material for any year presented, iswas immediately recognized in earnings.SG&A.
The change in fair values of certain non-qualifying instruments used to manage foreign exchange exposure of intercompany financing transactions and certain balance sheet items subject to revaluation are immediately recognized in earnings, substantially offsetting the foreign currency mark-to-market impact of the related exposures.
Net Investment Hedging
We hedge certain net investment positions in foreign subsidiaries. To accomplish this, we either borrow directly in foreign currencies and designate all or a portion of the
foreign currency debt as a hedge of the applicable net investment position or we enter into foreign currency swaps that are designated as hedges of net investments. Changes in the fair value of these instruments are recognized in OCI to offset the change in the value of the net investment being hedged. Currency effects of these hedges reflected in OCI were an after-tax gaingains of$156 and $740 and an after-tax loss of $1,176in 20122013 and 20112012, respectively. Accumulated net balances were after-tax losses of $3,7063,550 and $4,4463,706 as of June 30, 20122013 and 20112012, respectively. The ineffective portion, which was not material in any year presented, was immediately recognized in interest expense.


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company48

Commodity Risk Management
Certain raw materials used in our products or production processes are subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors. To manage the volatility related to anticipated purchases of certain of these materials, we may,have historically, on a limited basis, useused futures and options with maturities generally less than one year and swap contracts with maturities up to five years. These market instruments generally are designated as cash flow hedges. The effective portion of the changes in fair value for these instruments is reported in OCI and reclassified into earnings in the same financial statement line item and in the same period or periods during which the hedged transactions affect earnings. The ineffective and non-qualifying portions, which are not material for any year presented, are immediately recognized in earnings. As of and during the year ended June 30, 2012,2013, we did not have material commodity hedging activity.
Insurance
We self-insure for most insurable risks. However, we purchase insurance for Directors and Officers Liability and certain other coverage in situations where it is required by law, by contract or deemed to be in the best interest of the Company.
Fair Value Hierarchy
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following categories:
Level 1:     Quoted market prices in active markets for identical assets or liabilities.

Level 2:     Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:     Unobservable inputs reflecting the reporting entity's own assumptions or external inputs from inactive markets.
When applying fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company has not changed its valuation techniques used in measuring the fair value of any financial assets or liabilities during the year. Our fair value estimates take into consideration the credit risk of both the Company and our counterparties.

When active market quotes are not available for financial assets and liabilities, we use industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company61

using market-based observable inputs including credit risk, interest rate curves, foreign currency raterates and forward and spot prices for currencies. In circumstances where market-
basedmarket-based observable inputs are not available, management
judgment is used to develop assumptions to estimate fair value.

Generally, the fair value of our Level 3 instruments is estimated as the net present value of expected future cash flows based on external inputs.



Amounts in millions of dollars except per share amounts or as otherwise specified.
49The Procter & Gamble Company

The following table sets forth the Company's financial assets and liabilities as of June 30, 20122013 and 20112012 that were measured at fair value on a recurring basis during the period, segregated by level within the fair value hierarchy:
Level 1  Level 2  Level 3  TotalLevel 1  Level 2  Level 3  Total
As of June 302012  2011  2012  2011  2012  2011  2012  2011
June 302013  2012  2013  2012  2013  2012  2013  2012
ASSETS RECORDED AT FAIR VALUE                                            
Investment securities$9
  $16
  $—
  $—
  $24
  $23
  $33
  $39
Investments:               
U.S. government securities$—
  $—
  $1,571
  $—
  $—
  $—
  $1,571
  $—
Other investments23
 9
 —
 —
 24
 24
 47
 33
Derivatives relating to:                                            
Foreign currency hedges—
 —
 —
 1
 —
 —
 —
 1
—
 —
 168
 —
 —
 —
 168
 —
Other foreign currency instruments(1)
—
  —
  86
  182
  —
  —
  86
  182
—
  —
  19
  86
  —
  —
  19
  86
Interest rates—
  —
  298
  163
  —
  —
  298
  163
—
  —
  191
  298
  —
  —
  191
  298
Net investment hedges—
  —
  32
  —
  —
 —
 32
  —
—
  —
  233
  32
  —
 —
 233
  32
Commodities—
  —
  3
  4
  —
  —
  3
  4
—
  —
  —
  3
  —
  —
  —
  3
TOTAL ASSETS RECORDED AT FAIR VALUE(2)
9
  16
  419
  350
  24
  23
  452
  389
23
  9
  2,182
  419
  24
  24
  2,229
  452
    
LIABILITIES RECORDED AT FAIR VALUE                                            
Derivatives relating to:                                            
Foreign currency hedges$—
  $—
 $142
  $119
 $—
  $—
 $142
  $119
$—
  $—
 $—
  $142
 $—
  $—
 $—
  $142
Other foreign currency instruments(1)
—
  —
 23
  43
 —
  —
 23
  43
—
  —
 90
  23
 —
  —
 90
  23
Interest rates—
 —
 59
 —
 —
 —
 59
 —
Net investment hedges—
  —
 19
  138
 —
  —
 19
  138
—
  —
 —
  19
 —
  —
 —
  19
Commodities—
  —
 2
  1
 —
  —
 2
  1
—
  —
 —
  2
 —
  —
 —
  2
TOTAL LIABILITIES AT FAIR VALUE(3)
—
  —
 186
  301
  —
  —
 186
  301
—
  —
 149
  186
  —
  —
 149
  186
LIABILITIES NOT RECORDED AT FAIR VALUE                              
Long-term debt (4)
25,829
 24,940
 2,119
 1,486
 —
 —
 27,948
 26,426
22,671
 25,829
 3,022
 2,119
 —
 —
 25,693
 27,948
TOTAL LIABILITIES RECORDED AND NOT RECORDED AT FAIR VALUE25,829
 24,940
 2,305
 1,787
 —
 —
 28,134
 26,727
22,671
 25,829
 3,171
 2,305
 —
 —
 25,842
 28,134
(1) 
Other foreign currency instruments are comprised of foreign currency financial instruments that do not qualify as hedges.
(2) 
Investment securities are presented in other noncurrent assets and all derivative assets are presented in prepaid expenses and other current assets orand other noncurrent assets. The amortized cost of the U.S. government securities was $1,604 as of June 30, 2013. All U.S. government securities have contractual maturities between one and five years. Fair values are generally estimated based upon quoted market prices for similar instruments.
(3) 
All liabilities are presented in accrued and other liabilities or other noncurrent liabilities.
(4) 
Long-term debt includes the current portion ($4,0954,540 and $3,0084,095 as of June 30, 20122013 and 2011,2012, respectively) of debt instruments. Long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure purposes. Fair values are generally estimated based on quoted market prices for identical or similar instruments.
The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During fiscal 2013, the Company transferred long-term debt instruments with a fair value of $455 from Level 1 to Level 2. The transferred instruments represent the Company's investment in industrial development bonds which are infrequently traded in an observable market. There were no additional transfers between levels during the yearsperiods presented. In addition, there was no significant activity within the Level 3 financial assets and liabilities during the yearsperiods presented.


Amounts in millions of dollars except per share amounts or as otherwise specified.
62The Procter & Gamble Company

During fiscal 2013 and 2012, we recorded impairments of certain goodwill and intangible assets. Also, during fiscal 2013, we applied purchase accounting and re-measured assets and liabilities at fair value related to the purchase of the balance of a joint venture in Iberia (see Note 2 for additional details on these items). In addition, the Company re-measured certain operating real estate assets to an estimated fair value of $$8 during the year ended June 30, 2012, using comparable prices for similar assets, resulting in a $$220 impairment. Except for this and the goodwill and intangible assets discussed in Note 2,these items, there were no additional significant assets or liabilities that were re-measured at fair value on a non-recurring basis during the years presented.




Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company50

Disclosures about Derivative Instruments
The notional amounts and fair values of qualifying and non-qualifying financial instruments used in hedging transactions as of June 30, 20122013 and 20112012 are as follows:
Notional Amount  Fair Value Asset/(Liability)Notional Amount  Fair Value Asset/(Liability)
As of June 302012  2011  2012 2011
June 302013  2012  2013 2012
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest rate contracts$—
  $—
  $—
 $—
Foreign currency contracts831
  831
  (142) (118)$951
  $831
  $168
 $(142)
Commodity contracts—
  16
  —
 4
TOTAL831
  847
  (142) (114)
        
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$10,747
  $10,308
  $298
 $163
$9,117
  $10,747
  $132
 $298
        
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Net investment hedges$1,768
  $1,540
  $13
 $(138)$1,303
  $1,768
  $233
 $13
        
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$13,210
  $14,957
  $63
 $139
$7,080
  $13,210
  $(71) $63
Commodity contracts125
  39
  1
 (1)—
  125
  —
 1
TOTAL13,335
  14,996
  64
 138
7,080
  13,335
  (71) 64
The total notional amount of contracts outstanding at the end of the period is indicative of the level of the Company's derivative activity during the period.
 
Amount of Gain/(Loss)
Recognized in
AOCI
on Derivatives
(Effective Portion)
June 302013 2012
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest rate contracts$7
 $11
Foreign currency contracts14
 22
TOTAL21
 33
    
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Net investment hedges$145
 $6
 
Amount of Gain/(Loss)
Recognized in
Accumulated OCI
on Derivatives
(Effective Portion)
As of June 302012 2011
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest rate contracts$11
 $15
Foreign currency contracts22
 32
Commodity contracts—
 3
TOTAL33
 50
    
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Net investment hedges$6
 $(88)

 
The effective portion of gains and losses on derivative instruments that was recognized in OCI during the years ended June 30, 20122013 and 20112012 iswas not material. During the next 12 months, the amount of the June 30, 20122013, accumulated OCI balance that will be reclassified to earnings is expected to be immaterial.
The amounts of gains and losses on qualifying and non-qualifying financial instruments used in hedging transactions for the years ended June 30, 20122013 and 20112012 arewere as follows:
Amount of Gain/(Loss)
Reclassified  from
Accumulated
OCI into  Income(1)
Amount of Gain/(Loss)
Reclassified from
AOCI into Income
Years ended June 302012 20112013 2012
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest rate contracts$6
 $7
$6
 $6
Foreign currency contracts5
 (77)215
 5
Commodity contracts3
 20
—
 3
TOTAL14
 (50)221
 14
Amount of Gain/(Loss)
Recognized in Income
Amount of Gain/(Loss)
Recognized in Income
Years ended June 302012 20112013 2012
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS(2)
Interest rate contracts$135
 $(28)$(167) $135
Debt(137) 31
171
 (137)
TOTAL(2) 3
4
 (2)
      
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS(2)
Net investment hedges$(1) $—
$(2) $(1)
      
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS(3)
Foreign currency contracts(4)(1)
$(1,121) $1,359
$(34) $(1,121)
Commodity contracts2
 3
—
 2
TOTAL(1,119) 1,362
(34) (1,119)
(1)
The gain or loss on the effective portion of cash flow hedging relationships is reclassified from accumulated OCI into net income in the same period during which the related items affect earnings. Such amounts are included in the Consolidated Statements of Earnings as follows: interest rate contracts in interest expense, foreign currency contracts in selling, general and administrative and interest expense, and commodity contracts in cost of products sold.
(2)
The gain or loss on the ineffective portion of interest rate contracts, debt and net investment hedges, if any, is included in the Consolidated Statements of Earnings in interest expense.
(3)
The gain or loss on contracts not designated as hedging instruments is included in the Consolidated Statements of Earnings as follows: foreign currency contracts in selling, general and administrative expense and commodity contracts in cost of products sold.
(4) 
The gain or loss on non-qualifying foreign currency contracts substantially offsets the foreign currency mark-to-market impact of the related exposure.


Amounts in millions of dollars except per share amounts or as otherwise specified.
51The Procter & Gamble Company63

NOTE 6
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The tables below present the changes in accumulated other comprehensive income/(loss) by component and the reclassifications out of accumulated other comprehensive income/(loss):
 Changes in Accumulated Other Comprehensive Income/(Loss) by Component
 
  Hedges Investment Securities Pension and Other Retiree Benefits Financial Statement Translation Total
 Balance at June 30, 2012$(3,673) $(3) $(5,300) $(357) $(9,333)
 
OCI before reclassifications (1)
363
 (24) 731
 710
 1,780
 Amounts reclassified from AOCI(219) —
 273
 —
 54
 Net current period OCI144
 (24) 1,004
 710
 1,834
 Balance at June 30, 2013(3,529) (27) (4,296) 353
 (7,499)
(1) Net of tax of $94, $5 and $496 for gains and losses on hedges, investment securities and pension and other retiree benefit items, respectively.
Reclassifications out of Accumulated Other Comprehensive Income/(Loss)
Year ended June 302013
HEDGES (1)
 
Interest rate contracts$6
Foreign exchange contracts215
Total before-tax221
Tax (expense)/benefit(2)
Net of tax219
  
 PENSION AND OTHER RETIREE BENEFITS (2)
 
Amortization of deferred amounts2
Recognized net actuarial gains/(losses)(412)
Curtailments and settlements(4)
Total before-tax(414)
Tax (expense)/benefit141
Net of tax(273)
TOTAL RECLASSIFICATIONS, NET OF TAX(54)
(1) See Note 5 for classification of these items in the Consolidated Statement of Earnings.
(2) Reclassified from AOCI into costs of products sold and SG&A. These components are included in the computation of net periodic pension cost (see Note 9 for additional details).
NOTE 7
EARNINGS PER SHARE
Net earnings attributable to Procter & Gamble less preferred dividends (net of related tax benefits) are divided by the weighted average number of common shares outstanding during the year to calculate basic net earnings per common share. Diluted net earnings per common share are calculated to give effect to stock options and other stock-based awards (see Note 7)8) and assume conversion of preferred stock (see Note 8)9).




Amounts in millions of dollars except per share amounts or as otherwise specified.
64The Procter & Gamble Company

Net earnings attributable to Procter & Gamble and common shares used to calculate basic and diluted net earnings per share were as follows:
Years ended June 30Years ended June 302012 2011 2010Years ended June 302013 2012 2011
NET EARNINGS FROM CONTINUING OPERATIONSNET EARNINGS FROM CONTINUING OPERATIONS$9,317
 $11,698
 $10,851
NET EARNINGS FROM CONTINUING OPERATIONS$11,402
 $9,317
 $11,698
Net earnings from discontinued operationsNet earnings from discontinued operations1,587
 229
 1,995
Net earnings from discontinued operations—
 1,587
 229
NET EARNINGSNET EARNINGS10,904
 11,927
 12,846
NET EARNINGS11,402
 10,904
 11,927
Net earnings attributable to noncontrolling interestsNet earnings attributable to noncontrolling interests(148) (130) (110)Net earnings attributable to noncontrolling interests(90) (148) (130)
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE (Diluted)NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE (Diluted)10,756
 11,797
 12,736
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE (Diluted)11,312
 10,756
 11,797
Preferred dividends, net of tax benefitPreferred dividends, net of tax benefit(256) (233) (219)Preferred dividends, net of tax benefit(244) (256) (233)
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (Basic)NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (Basic)10,500
 11,564
 12,517
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (Basic)11,068
 10,500
 11,564
           
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (Basic)NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (Basic)$8,913
 $11,335
 $10,522
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (Basic)$11,068
 $8,913
 $11,335
           
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE (Diluted)NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE (Diluted)$9,169
 $11,568
 $10,741
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE (Diluted)$11,312
 $9,169
 $11,568
           
Shares in millions; Years ended June 30Shares in millions; Years ended June 302012 2011 2010Shares in millions; Years ended June 302013 2012 2011
Basic weighted average common shares outstandingBasic weighted average common shares outstanding2,751.3
 2,804.0
 2,900.8
Basic weighted average common shares outstanding2,742.9
 2,751.3
 2,804.0
Effect of dilutive securitiesEffect of dilutive securities     Effect of dilutive securities     
Conversion of preferred shares(1)
Conversion of preferred shares(1)
123.9
 128.5
 134.0
Conversion of preferred shares(1)
116.8
 123.9
 128.5
Exercise of stock options and other unvested equity awards(2)
Exercise of stock options and other unvested equity awards(2)
66.0
 69.4
 64.5
Exercise of stock options and other unvested equity awards(2)
70.9
 66.0
 69.4
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGDILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING2,941.2
 3,001.9
 3,099.3
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING2,930.6
 2,941.2
 3,001.9
(1) 
Despite being included currently in diluted net earnings per common share, the actual conversion to common stock occurs when the preferred shares are sold. Shares may only be sold after being allocated to the ESOP participants pursuant to the repayment of the ESOPs'ESOP's obligations through 2035.
(2) 
Approximately 12 million in 2013, 67 million in 2012, and 93 million in 2011 and 101 million in 2010 of the Company's outstanding stock options were not included in the diluted net earnings per share calculation because the options were out of the money or to do so would have been antidilutive (i.e., the total proceeds upon exercise would have exceeded the market value of the underlying common shares).
NOTE 78
STOCK-BASED COMPENSATION
We have stock-based compensation plans under which we annually grant stock option, restricted stock, restricted stock unit (RSU) and performance stock unit (PSU) awards to key managers and directors. Exercise prices on options granted have been, and continue to be, set equal to the market price of the underlying shares on the date of the grant. Since September 2002, the key manager stock option awards granted are vestedvest after three years and have a 10-year life. The key manager stock option awards granted from July 1998 through August 2002 vested after three years and have a 15-year life. Key managers can elect to receive up to 50%100% of the value of their option award in RSUs. Key manager RSUs vest and are settled in shares of common stock five years from the grant date. The awards provided to the
Company's directors are in the form of restricted stock and RSUs.
In addition to our key manager and director grants, we make other minor stock option and RSU grants to employees for which the terms are not substantially different.different than those
described in the preceding paragraph. In 2011, we implemented a performance stock program (PSP) and granted PSUs to senior level executives. Under this program, the number of PSUs that will vest three years after the respective grant date is based on the Company's performance relative to pre-established performance goals during that three year period.
A total of 180 million shares of common stock were authorized for issuance under stock-based compensation plans approved by shareholders in 2003 and 2009. A total of 8756 million shares remain available for grant under the 2003 and 2009 plans.
Total stock-based compensation expense for stock option grants was $249, $317 and $358 for 2013, 2012 and 2011, respectively. Total compensation expense for restricted stock, RSUs and PSUs was $97, $60 and $56 in 2013, 2012 and 2011, respectively. The total income tax benefit recognized in the income statement for stock options, restricted stock, RSUs and PSUs was $96, $102 and $117 in 2013, 2012 and 2011, respectively.
In calculating the compensation expense for stock options granted, we utilize a binomial lattice-based valuation model.


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 5265

Total stock-based compensation expense for stock option grants was $317, $358 and $417 for 2012, 2011 and 2010, respectively. Total compensation cost for restricted stock, RSUs and PSUs was $60, $56 and $36 in 2012, 2011 and 2010, respectively. The total income tax benefit recognized in the income statement for stock options, restricted stock, RSUs and PSUs was $102, $117 and $118 in 2012, 2011 and 2010, respectively.
In calculating the compensation expense for stock options granted, we utilize a binomial lattice-based valuation model. Assumptions utilized in the model, which are evaluated and revised, as necessary, to reflect market conditions and experience, were as follows:
Years ended June 302012
 2011
 2010
2013 2012 2011
Interest rate0.2-2.1%
 0.3-3.7%
 0.3-4.0%
0.2-2.0%
 0.2-2.1%
 0.3-3.7%
Weighted average interest rate1.9% 3.4% 3.7%1.8% 1.9% 3.4%
Dividend yield2.6% 2.4% 2.2%2.9% 2.6% 2.4%
Expected volatility12-18%
 14-18%
 15-20%
14-15%
 12-18%
 14-18%
Weighted average volatility15% 16% 18%15% 15% 16%
Expected life in years8.5
 8.8
 8.8
8.9
 8.5
 8.8
Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
A summary of options, RSUs and PSUs outstanding under the plans as of June 30, 20122013, and activity during the year then ended is presented below:
Options in thousandsOptions
Weighted Avg.
Exercise 
Price

Weighted Avg.
Remaining
Contract-ual Life in 
Years

Aggregate
Intrinsic Value
(in 
millions)

Outstanding, beginning of year363,174
$51.75
  
Granted30,225
67.05
  
Exercised(38,967)44.53
  
Canceled(1,339)59.12
  
OUTSTANDING, END OF YEAR353,093
53.83
5.0
$3,125
EXERCISABLE268,131
50.52
3.8
3,109
Options in thousandsOptions
Weighted Avg.
Exercise 
Price

Weighted Avg.
Remaining
Contract-ual Life in 
Years

Aggregate
Intrinsic Value
(in 
millions)

Outstanding, beginning of year353,093
$53.83
  
Granted24,818
75.41
  
Exercised(69,933)47.09
  
Canceled(1,739)60.97
  
OUTSTANDING, END OF YEAR306,239
57.07
4.9
$6,100
EXERCISABLE223,154
52.97
3.6
5,367
The weighted average grant-date fair value of options granted was $8.058.19, $11.098.05 and $13.4711.09 per share in 20122013, 20112012 and 20102011, respectively. The total intrinsic value of options exercised was $8201,759, $628820 and $342628 in 20122013, 20112012 and 20102011, respectively. The total grant-date fair value of options that vested during 20122013, 20112012 and 20102011 was $435352, $445435 and $563445, respectively. We have no specific policy to repurchase common shares to mitigate the dilutive impact of options; however, we have historically made adequate discretionary purchases, based on cash availability, market trends and other factors, to satisfy stock option exercise activity.
At June 30, 20122013, there was $297233 of compensation cost that has not yet been recognized related to stock option grants. That cost is expected to be recognized over a remaining weighted average period of 1.8 years. Cash received from options exercised was $3,294, $1,735 and $1,237 in 2013, 2012 and 2011, respectively.
The actual tax benefit realized for the tax deductions from option exercises totaled $575, $239 and $188 in 2013, 2012 and 2011, respectively.
 RSUs PSUs
Other Stock-Based Awards in thousandsUnits Weighted-Average Grant-Date Fair Value
 Units Weighted-Average Grant-Date Fair Value
Non-vested at July 1, 20123,670
 $55.53
 1,261
 $58.79
Granted1,951
 62.69
 626
 67.70
Vested(952) 59.50
 —
 —
Forfeited(79) 55.31
 —
 —
Non-vested at June 30, 20134,590
 56.88
 1,887
 61.75
At June 30, 20122013, there was $125195 of compensation cost that has not yet been recognized related to restricted stock, RSUs and PSUs. That cost is expected to be recognized over a remaining weighted average period of 3.1 years.
Cash received from options exercised The total fair value of shares vested was $1,73551, $1,23738 and $70330 in 2013, 2012, 2011 and 2011, respectively.2010, respectively. The actual tax benefit realized for
We have no specific policy to repurchase common shares to mitigate the tax deductions from option exercises totaled $239, $188dilutive impact of options, RSUs and $89 in 2012, 2011PSUs. However, we have historically made adequate discretionary purchases, based on cash availability, market trends and 2010, respectively.other factors, to offset the impacts of such activity.
NOTE 89
POSTRETIREMENT BENEFITS AND EMPLOYEE STOCK OWNERSHIP PLAN
We offer various postretirement benefits to our employees.
Defined Contribution Retirement Plans
We have defined contribution plans which cover the majority of our U.S. employees, as well as employees in certain other countries. These plans are fully funded. We generally make contributions to participants' accounts based on individual base salaries and years of service. Total global defined contribution expense was $353314, $347353 and $344347 in 20122013, 20112012 and 20102011, respectively.
The primary U.S. defined contribution plan (the U.S. DC plan) comprises the majority of the expense for the Company's defined contribution plans. For the U.S. DC plan, the contribution rate is set annually. Total contributions for this plan approximated 15% of total participants' annual wages and salaries in 20122013, 20112012 and 20102011.
We maintain The Procter & Gamble Profit Sharing Trust (Trust) and Employee Stock Ownership Plan (ESOP) to provide a portion of the funding for the U.S. DC plan and other retiree benefits (described below). Operating details of the ESOP are provided at the end of this Note. The fair value of the ESOP Series A shares allocated to participants reduces our cash contribution required to fund the U.S. DC plan.


Amounts in millions of dollars except per share amounts or as otherwise specified.
5366 The Procter & Gamble Company

reduces our cash contribution required to fund the U.S. DC plan.

Defined Benefit Retirement Plans and Other Retiree Benefits
We offer defined benefit retirement pension plans to certain employees. These benefits relate primarily to local plans outside the U.S. and, to a lesser extent, plans assumed in previous acquisitions covering U.S. employees.
We also provide certain other retiree benefits, primarily health care and life insurance, for the majority of our 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 are primarily funded by ESOP Series B shares and certain other assets contributed by the Company.

Obligation and Funded Status. The following provides a reconciliation of benefit obligations, plan assets and funded status of these defined benefit plans:
Pension  Benefits(1)
 
Other Retiree Benefits(2)
Pension  Benefits(1)
 
Other Retiree Benefits(2)
Years ended June 302012 2011 2012 20112013 2012 2013 2012
CHANGE IN BENEFIT OBLIGATION              
Benefit obligation at beginning of year(3)
$12,229
 $11,245
 $4,886
 $4,778
$13,573
 $12,229
 $6,006
 $4,886
Service cost267
 270
 142
 146
300
 267
 190
 142
Interest cost611
 588
 276
 270
560
 611
 260
 276
Participants' contributions22
 21
 68
 67
20
 22
 66
 68
Amendments(44) 93
 —
 7
104
 (44) —
 —
Actuarial loss/(gain)1,911
 (633) 957
 (235)473
 1,911
 (1,022) 957
Acquisitions/(divestitures)(17) —
 —
 —
51
 (17) —
 —
Special termination benefits—
 —
 27
 3
39
 —
 18
 27
Currency translation and other(847) 1,137
 (95) 89
(4) (847) 5
 (95)
Benefit payments(559) (492) (255) (239)(602) (559) (234) (255)
BENEFIT OBLIGATION AT END OF YEAR(3)
13,573
 12,229
 6,006
 4,886
14,514
 13,573
 5,289
 6,006
Pension  Benefits(1)
 
Other Retiree Benefits(2)
2012 2011 2012 2011
CHANGE IN PLAN ASSETS              
Fair value of plan assets at beginning of year$7,962
 $6,562
 $2,975
 $2,843
7,974
 7,962
 2,713
 2,975
Actual return on plan assets459
 685
 (126) 253
796
 459
 954
 (126)
Acquisitions/(divestitures)59
 —
 —
 —
Employer contributions485
 555
 24
 29
391
 485
 23
 24
Participants' contributions22
 21
 68
 67
20
 22
 66
 68
Currency translation and other(395) 631
 —
 2
(77) (395) —
 —
ESOP debt impacts(4)
—
 —
 27
 20
—
 —
 31
 27
Benefit payments(559) (492) (255) (239)(602) (559) (234) (255)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR7,974
 7,962
 2,713
 2,975
8,561
 7,974
 3,553
 2,713
FUNDED STATUS(5,599) (4,267) (3,293) (1,911)(5,953) (5,599) (1,736) (3,293)
(1) 
Primarily non-U.S.-based defined benefit retirement plans.
(2) 
Primarily U.S.-based other postretirement benefit plans.
(3) 
For the pension benefit plans, the benefit obligation is the projected benefit obligation. For other retiree benefit plans, the benefit obligation is the accumulated postretirement benefit obligation.
(4) 
Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.
The underfunding of pension benefits is primarily a function of the different funding incentives that exist outside of the U.S. In certain countries, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations prior to their due date. In these instances, benefit payments are typically paid directly from the Company's cash as they become due. 

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 5467

 Pension Benefits Other Retiree Benefits
Years ended June 302012 2011 2012 2011
CLASSIFICATION OF NET AMOUNT RECOGNIZED       
Noncurrent assets$128
 $168
 $—
 $—
Current liability(43) (47) (23) (24)
Noncurrent liability(5,684) (4,388) (3,270) (1,887)
NET AMOUNT RECOGNIZED(5,599) (4,267) (3,293) (1,911)
     
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)       
Net actuarial loss$4,010
 $2,315
 $3,565
 $2,181
Prior service cost /(credit)261
 354
 (75) (92)
NET AMOUNTS RECOGNIZED IN AOCI4,271
 2,669
 3,490
 2,089
     
CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)       
Net actuarial loss /(gain) - current year$2,009
 $(827) $1,516
 $(60)
Prior service cost/(credit) - current year(44) 93
 —
 7
Amortization of net actuarial loss(102) (154) (99) (96)
Amortization of prior service (cost) / credit(21) (18) 20
 18
Settlement / curtailment cost(6) —
 —
 —
Currency translation and other(234) 262
 (36) 20
TOTAL CHANGE IN AOCI1,602
 (644) 1,401
 (111)
NET AMOUNTS RECOGNIZED IN PERIODIC BENEFIT COST AND AOCI2,036
 (106) 1,417
 (124)
 Pension Benefits Other Retiree Benefits
June 302013 2012 2013 2012
CLASSIFICATION OF NET AMOUNT RECOGNIZED       
Noncurrent assets$114
 $128
 $—
 $—
Current liability(40) (43) (23) (23)
Noncurrent liability(6,027) (5,684) (1,713) (3,270)
NET AMOUNT RECOGNIZED(5,953) (5,599) (1,736) (3,293)
        
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)       
Net actuarial loss$4,049
 $4,010
 $1,772
 $3,565
Prior service cost /(credit)353
 261
 (54) (75)
NET AMOUNTS RECOGNIZED IN AOCI4,402
 4,271
 1,718
 3,490

The accumulated benefit obligation for all defined benefit retirement pension plans was $11,76312,652 and $10,43611,763 as of June 30, 20122013 and 20112012, respectively. Pension plans with accumulated benefit obligations in excess of plan assets and plans with projected benefit obligations in excess of plan assets consist of the following:
Accumulated Benefit
Obligation Exceeds the
Fair Value of Plan  Assets
  
Projected Benefit
Obligation Exceeds the
Fair Value of Plan  Assets
Accumulated Benefit
Obligation Exceeds the
Fair Value of Plan  Assets
  
Projected Benefit
Obligation Exceeds the
Fair Value of Plan  Assets
June 302012  2011  2012  20112013  2012  2013  2012
Projected benefit obligation$11,623
  $6,817
  $12,310
  $10,650
$12,024
  $11,623
  $12,962
  $12,310
Accumulated benefit obligation10,009
  5,923
  10,533
  8,940
10,406
  10,009
  11,149
  10,533
Fair value of plan assets6,013
  2,845
  6,583
  6,214
6,086
  6,013
  6,895
  6,583
Net Periodic Benefit Cost. Components of the net periodic benefit cost were as follows:
 Pension Benefits Other Retiree Benefits
Years ended June 302012 2011 2010 2012 2011 2010
Service cost$267
 $270
 $218
 $142
 $146
 $103
Interest cost611
 588
 579
 276
 270
 253
Expected return on plan assets(573) (492) (437) (434) (431) (429)
Prior service cost /(credit) amortization21
 18
 15
 (20) (18) (21)
Net actuarial loss amortization102
 154
 91
 99
 96
 20
Curtailments, settlements and other6
 —
 3
 27
 3
 14
GROSS BENEFIT COST/(CREDIT)434
 538
 469
 90
 66
 (60)
Dividends on ESOP preferred stock—
 —
 —
 (74) (79) (83)
NET PERIODIC BENEFIT COST/(CREDIT)434
 538
 469
 16
 (13) (143)


Amounts in millions of dollars except per share amounts or as otherwise specified.
5568 The Procter & Gamble Company

Net Periodic Benefit Cost. Components of the net periodic benefit cost were as follows:
 Pension Benefits Other Retiree Benefits
Years ended June 302013 2012 2011 2013 2012 2011
AMOUNTS RECOGNIZED IN NET PERIODIC BENEFIT COST          
Service cost$300
 $267
 $270
 $190
 $142
 $146
Interest cost560
 611
 588
 260
 276
 270
Expected return on plan assets(587) (573) (492) (382) (434) (431)
Prior service cost /(credit) amortization18
 21
 18
 (20) (20) (18)
Net actuarial loss amortization213
 102
 154
 199
 99
 96
Special termination benefits39
 —
 —
 18
 27
 3
Curtailments, settlements and other4
 6
 —
 —
 —
 —
GROSS BENEFIT COST547
 434
 538
 265
 90
 66
Dividends on ESOP preferred stock—
 —
 —
 (70) (74) (79)
NET PERIODIC BENEFIT COST/(CREDIT)547
 434
 538
 195
 16
 (13)
            
CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN AOCI           
Net actuarial loss /(gain) - current year264
 2,009
   (1,594) 1,516
  
Prior service cost/(credit) - current year104
 (44)   —
 —
  
Amortization of net actuarial loss(213) (102)   (199) (99)  
Amortization of prior service (cost) / credit(18) (21)   20
 20
  
Settlement / curtailment cost(4) (6)   —
 —
  
Currency translation and other(2) (234)   1
 (36)  
TOTAL CHANGE IN AOCI131
 1,602
   (1,772) 1,401
  
NET AMOUNTS RECOGNIZED IN PERIODIC BENEFIT COST AND AOCI678
 2,036
   (1,577) 1,417
  
Amounts expected to be amortized from accumulated OCIAOCI into net periodic benefit cost during the year ending June 30, 2013,2014, are as follows:
Pension Benefits  Other Retiree BenefitsPension Benefits  Other Retiree Benefits
Net actuarial loss$212
  $199
$210
  $118
Prior service cost/(credit)18
  (20)24
  (20)
Assumptions. We determine our actuarial assumptions on an annual basis. These assumptions are weighted to reflect each country that may have an impact on the cost of providing retirement benefits. The weighted average assumptions for the defined benefit and other retiree benefit calculations, as well as assumed health care trend rates, were as follows:
Pension Benefits Other Retiree BenefitsPension Benefits Other Retiree Benefits
Years ended June 302012 2011 2012 20112013 2012 2013 2012
ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATIONS(1)
              
Discount rate4.2% 5.3% 4.3% 5.7%4.0% 4.2% 4.8% 4.3%
Rate of compensation increase3.3% 3.5% —% —%3.2% 3.3% —% —%
ASSUMPTIONS USED TO DETERMINE NET PERIODIC BENEFIT COST(2)
       
ASSUMPTIONS USED TO DETERMINE NET PERIODIC BENEFIT COST(2)
      
Discount rate5.3% 5.0% 5.7% 5.4%4.2% 5.3% 4.3% 5.7%
Expected return on plan assets7.4% 7.0% 9.2% 9.2%7.3% 7.4% 8.3% 9.2%
Rate of compensation increase3.5% 3.5% —% —%3.3% 3.5% —% —%
ASSUMED HEALTH CARE COST TREND RATES              
Health care cost trend rates assumed for next year—
 —
 8.0% 8.5%—% —% 7.3% 8.0%
Rate to which the health care cost trend rate is assumed to decline (ultimate trend rate)—
 —
 5.0% 5.0%—% —% 5.0% 5.0%
Year that the rate reaches the ultimate trend rate—
 —
 2019
 2018
—% —% 2020
 2019
 
(1) 
Determined as of end of year.
(2) 
Determined as of beginning of year and adjusted for acquisitions.

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company69

Several factors are considered in developing the estimate for the long-term expected rate of return on plan assets. For the defined benefit retirement plans, these factors include historical rates of return of broad equity and bond indices and projected long-term rates of return obtained from pension investment consultants. The expected long-term rates of return for plan assets are 8 - 9% for equities and 5 - 6% for bonds. For other retiree benefit plans, the expected long-term rate of return reflects the fact that the assets are comprised primarily of Company stock. The expected rate of return on Company stock is based on the long-term projected return of 9.5%8.5% and reflects the historical pattern of favorable returns.
Assumed health care cost trend rates could have a significant effect on the amounts reported for the other retiree benefit plans. A one-one percentage point change in assumed health care cost trend rates would have the following effects:
 
One-Percentage
Point Increase
 
One-Percentage
Point Decrease
Effect on total of service and interest cost components$76
 $(59)
Effect on postretirement benefit obligation942
 (724)
 
One-Percentage
Point Increase
 
One-Percentage
Point Decrease
Effect on the total service and interest cost components$91
 $(70)
Effect on the accumulated postretirement benefit obligation806
 (643)

Plan Assets. Our target asset allocation for the year ended June 30, 2012, and actual asset allocation by asset category as of June 30, 2012 and 2011, were as follows:
 Target Asset Allocation Actual Asset Allocation at June 30
     Pension Benefits 
Other Retiree 
Benefits
Asset CategoryPension Benefits 
Other Retiree
Benefits
 2012 2011 2012 2011
Cash2% 2% 1% 2% 1% 1%
Debt securities51% 8% 52% 52% 9% 8%
Equity securities47% 90% 47% 46% 90% 91%
TOTAL100% 100% 100% 100% 100% 100%

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company56


The following tables set forth the fair value of the Company's plan assets as of June 30, 2012 and 2011 segregated by level within the fair value hierarchy (refer to Note 5 for further discussion on the fair value hierarchy and fair value principles). Common collective funds are valued using the net asset value reported by the managers of the funds and as supported by the unit prices of actual purchase and sale transactions. Company stock listed as Level 2 in the hierarchy represents preferred shares which are valued based on the value of Company common stock. Insurance contracts represent the majority of our Level 3 pension instruments and are based on their cash equivalent or models that project future cash flows and discount the future amounts to a present value using market-based observable inputs including credit risk and interest rate curves.
 Pension Benefits
  Level 1  Level 2  Level 3  Total
 2012  2011  2012  2011  2012  2011  2012  2011
ASSETS AT FAIR VALUE:                      
Cash and cash equivalents$60
  $189
  $—
  $—
  $—
  $—
  $60
  $189
Government bonds4
  68
  —
  —
  —
  —
  4
  68
Company stock—
 11
 —
 —
 —
 —
 —
 11
Common collective fund - equity—
  —
  3,727
  3,612
  —
  —
  3,727
  3,612
Common collective fund - fixed income—
  —
  4,112
  4,027
  —
  —
  4,112
  4,027
Other—
  —
  —
  —
  71
 55
 71
  55
TOTAL ASSETS AT FAIR VALUE64
  268
  7,839
  7,639
  71
  55
  7,974
  7,962
 Other Retiree Benefits
  Level 1  Level 2  Level 3  Total
 2012  2011  2012  2011  2012  2011  2012  2011
ASSETS AT FAIR VALUE:                      
Cash and cash equivalents$16
  $43
  $—
  $—
  $—
  $—
  $16
  $43
Company stock—
 —
 2,418
 2,655
 —
 —
 2,418
 2,655
Common collective fund - equity—
  —
  30
  41
  —
  —
  30
  41
Common collective fund - fixed income—
  —
  247
  232
  —
  —
  247
  232
Other—
  —
  —
  —
  2
 4
 2
  4
TOTAL ASSETS AT FAIR VALUE16
  43
  2,695
  2,928
  2
  4
  2,713
  2,975

There was no significant activity within the Level 3 pension and other retiree benefits plan assets during the years presented.
Our investment objective for defined benefit retirement plan assets is to meet the plans' benefit obligations, while minimizing the potential for future required Company plan contributions. The investment strategies focus on asset class diversification, liquidity to meet benefit payments and an appropriate balance of long-term investment return and risk. Target ranges for asset allocations are determined by matching the actuarial projections of the plans' future liabilities and benefit payments with expected long-term rates of return on the assets, taking into account investment return volatility and correlations across asset classes. Plan assets are diversified across several investment managers and are generally invested in liquid funds that are selected to track broad market equity and bond indices. Investment risk is carefully controlled with plan assets rebalanced to target allocations on a periodic basis and with continual monitoring of
investment managers' performance relative to the investment guidelines established with each investment manager.
Our target asset allocation for the year ended June 30, 2013, and actual asset allocation by asset category as of June 30, 2013 and 2012, were as follows:
 Target Asset Allocation Actual Asset Allocation at June 30
     Pension Benefits 
Other Retiree 
Benefits
Asset CategoryPension Benefits 
Other Retiree
Benefits
 2013 2012 2013 2012
Cash1% 2% 1% 1% 2% 1%
Debt securities54% 8% 52% 52% 6% 9%
Equity securities45% 90% 47% 47% 92% 90%
TOTAL100% 100% 100% 100% 100% 100%
The following tables set forth the fair value of the Company's plan assets as of June 30, 2013 and 2012 segregated by level within the fair value hierarchy (refer to Note 5 for further discussion on the fair value hierarchy and fair value principles). Common collective funds are valued using the net asset value reported by the managers of the funds and as supported by the unit prices of actual purchase and sale transactions. Company stock listed as Level 2 in the hierarchy represents preferred shares which are valued based on the value of Company common stock. The majority of our Level 3 pension instruments are insurance contracts. Their fair values are based on their cash equivalent or models that project future cash flows and discount the future amounts to a present value using market-based observable inputs including credit risk and interest rate curves.
 Pension Benefits
  Level 1  Level 2  Level 3  Total
June 302013  2012  2013  2012  2013  2012  2013  2012
ASSETS AT FAIR VALUE                      
Cash and cash equivalents$71
  $60
  $—
  $—
  $—
  $—
  $71
  $60
Common collective fund - equity—
  —
  3,993
  3,727
  —
  —
  3,993
  3,727
Common collective fund - fixed income—
  —
  4,361
  4,112
  —
  —
  4,361
  4,112
Other4
  4
  —
  —
  132
 71
 136
  75
TOTAL ASSETS AT FAIR VALUE75
  64
  8,354
  7,839
  132
  71
  8,561
  7,974

Amounts in millions of dollars except per share amounts or as otherwise specified.
70The Procter & Gamble Company

 Other Retiree Benefits
  Level 1  Level 2  Level 3  Total
June 302013  2012  2013  2012  2013  2012  2013  2012
ASSETS AT FAIR VALUE                      
Cash and cash equivalents$56
  $16
  $—
  $—
  $—
  $—
  $56
  $16
Company stock—
 —
 3,270
 2,418
 —
 —
 3,270
 2,418
Common collective fund - equity—
  —
  16
  30
  —
  —
  16
  30
Common collective fund - fixed income—
  —
  200
  247
  —
  —
  200
  247
Other—
  —
  —
  —
  11
 2
 11
  2
TOTAL ASSETS AT FAIR VALUE56
  16
  3,486
  2,695
  11
  2
  3,553
  2,713

There was no significant activity within the Level 3 pension and other retiree benefits plan assets during the years presented.
Cash Flows.Management's best estimate of cash requirements and discretionary contributions for the defined benefit retirement plans and other retiree benefit plans for the year ending June 30, 2013,2014, is approximately $4521,463 and $2531, respectively. For the defined benefit retirement plans, this is comprised of $14490 in expected benefit payments from the Company directly to participants of unfunded plans and $3081,373 of expected contributions to funded plans. This estimate includes a discretionary contribution made to a foreign pension plan for approximately $1.0 billion in July 2013. For other retiree benefit plans, this is comprised of expected contributions that will be used directly for benefit payments. Expected contributions are dependent on many variables, including the variability of the market value of the plan assets as compared to the benefit obligation and other market or regulatory conditions. In addition, we take into consideration our business investment opportunities and resulting cash requirements. Accordingly, actual funding may differ significantly from current estimates.


Amounts in millions of dollars except per share amounts or as otherwise specified.
57The Procter & Gamble Company

Total benefit payments expected to be paid to participants, which include payments funded from the Company's assets, as discussed above, as well as payments from the plans, are as follows:
Years ending June 30
Pension
Benefits
  
Other Retiree
Benefits
Pension
Benefits
  
Other Retiree
Benefits
EXPECTED BENEFIT PAYMENTS
2013$546
  $207
2014516
  225
$553
  $208
2015525
  242
545
  224
2016553
  258
568
  237
2017567
  275
596
  251
2018 - 20223,133
  1,614
2018602
  266
2019 - 20233,392
  1,549
Employee Stock Ownership Plan
We maintain the ESOP to provide funding for certain employee benefits discussed in the preceding paragraphs.
The ESOP borrowed $1.0 billion in 1989 and the proceeds were used to purchase Series A ESOP Convertible Class A Preferred Stock to fund a portion of the U.S. DC plan. Principal and interest requirements of the borrowing were paid by the Trust from dividends on the preferred shares and from advances provided by the Company. The original borrowing of $1.0$1.0 billion has been repaid in full, and advances from the Company of $127112 remain outstanding at June 30, 20122013. Each share is convertible at the option of the holder into one share of the Company's common stock. The dividend for the current year was equal to the common stock dividend of $2.142.29 per share. The liquidation value is $6.82 per share.
In 1991, the ESOP borrowed an additional $1.0 billion. The proceeds were used to purchase Series B ESOP Convertible Class A Preferred Stock to fund a portion of retiree health care benefits. These shares, net of the ESOP's debt, are considered plan assets of the other retiree benefits plan discussed above. Debt service requirements are funded by preferred stock dividends, cash contributions and advances provided by the Company, of which $473539 is outstanding at June 30, 20122013. Each share is convertible at the option of the holder into one share of the Company's common stock. The dividend for the current year was equal to the common stock dividend of $2.142.29 per share. The liquidation value is $12.96 per share.
Our ESOP accounting practices are consistent with current ESOP accounting guidance, including the permissible continuation of certain provisions from prior accounting guidance. ESOP debt, which is guaranteed by the Company, is recorded as debt (see Note 4) with an offset to the reserve for ESOP debt retirement, which is presented within shareholders' equity. Advances to the ESOP by the Company are recorded as an increase in the reserve for ESOP debt retirement. Interest incurred on the ESOP debt is recorded as interest expense. Dividends on all preferred shares, net of related tax benefits, are charged to retained earnings.
The series A and B preferred shares of the ESOP are allocated to employees based on debt service requirements, net of advances made by the Company to the Trust. The


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company71

number of preferred shares outstanding at June 30 was as follows:
Shares in thousands2012  2011  20102013  2012  2011
Allocated50,668
  52,281
  54,542
45,535
  50,668
  52,281
Unallocated11,348
  13,006
  14,762
9,843
  11,348
  13,006
TOTAL SERIES A62,016
  65,287
  69,304
55,378
  62,016
  65,287
    
Allocated20,802
  20,759
  20,752
21,278
  20,802
  20,759
Unallocated38,743
  40,090
  41,347
37,300
  38,743
  40,090
TOTAL SERIES B59,545
  60,849
  62,099
58,578
  59,545
  60,849
For purposes of calculating diluted net earnings per common share, the preferred shares held by the ESOP are considered converted from inception.
NOTE 910
INCOME TAXES
Income taxes are recognized for the amount of taxes payable for the current year and for the impact of deferred tax assets and liabilities, which represent future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using the enacted statutory tax rates and are adjusted for any changes in such rates in the period of change.
Earnings from continuing operations before income taxes consisted of the following:
Years ended June 30  2012  2011  2010  2013  2012  2011
United States  $7,584
  $8,858
  $8,258
  $8,351
  $7,584
  $8,858
International  5,201
  6,139
  6,610
  6,492
  5,201
  6,139
TOTAL  12,785
  14,997
  14,868
  14,843
  12,785
  14,997
Income taxes on continuing operations consisted of the following:
Years ended June 302012 2011  2010
CURRENT TAX EXPENSE      
U.S. federal$1,913
 $1,770
  $2,118
International1,374
 1,149
  1,581
U.S. state and local246
 256
  285
 3,533
 3,175
  3,984
DEFERRED TAX EXPENSE      
U.S. federal83
 200
  250
International and other(148) (76)  (217)
 (65) 124
  33
TOTAL TAX EXPENSE3,468
 3,299
  4,017
Years ended June 302013 2012  2011
CURRENT TAX EXPENSE      
U.S. federal$1,885
 $1,913
  $1,770
International1,584
 1,374
  1,149
U.S. state and local279
 246
  256
 3,748
 3,533
  3,175
DEFERRED TAX EXPENSE      
U.S. federal180
 83
  200
International and other(487) (148)  (76)
 (307) (65)  124
TOTAL TAX EXPENSE3,441
 3,468
  3,299



Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company58

A reconciliation of the U.S. federal statutory income tax rate to our actual income tax rate on continuing operations is provided below:
Years ended June 302012 2011 20102013 2012 2011
U.S. federal statutory income tax rate35.0 % 35.0 % 35.0 %35.0 % 35.0 % 35.0 %
Country mix impacts of foreign operations(8.1)% (8.2)% (7.7)%(7.6)% (8.1)% (8.2)%
Changes in uncertain tax positions(1.3)% (3.6)% (0.4)%(1.8)% (1.3)% (3.6)%
Patient Protection and Affordable Care Act— % — % 1.0 %
Impairment Adjustments3.7 % — % — %
Impairment adjustments0.6 % 3.7 % — %
Holding gain on joint venture buy-out(1.4)% — % — %
Other(2.2)% (1.2)% (0.9)%(1.6)% (2.2)% (1.2)%
EFFECTIVE INCOME TAX RATE27.1 % 22.0 % 27.0 %23.2 % 27.1 % 22.0 %
Changes in uncertain tax positions represent changes in our net liability related to prior year tax positions.
In March 2010,Tax costs charged to shareholders' equity totaled $503 for the Patient Protection and Affordable Care Act (PPACA) was signed into law. Oneyear ended June 30, 2013. This primarily relates to the impact of the provisions of the PPACA changed the taxability of federal subsidies received by plan sponsors that provide retiree prescription drug benefits at least equivalent to Medicare Part D coverage. As a result of the change in taxability of the federal subsidy, we were required to makecertain adjustments to deferredpension obligations recorded in shareholders' equity, partially offset by excess tax asset balances, resulting in a $152 charge to income tax expense in 2010.
benefits from the exercise of stock options. Tax benefits credited to shareholders' equity totaled $661 and $510for the yearsyear ended June 30, 2012 and 2011, respectively.2012. These primarily relate to the tax effects of net investment hedges, excess tax benefits from the exercise of stock options and the impacts of certain adjustments to pension and other retiree benefit obligations recorded in shareholders' equity.
We have undistributed earnings of foreign subsidiaries of approximately $3942.0 billion at June 30, 20122013, for which deferred taxes have not been provided. Such earnings are considered indefinitely invested in the foreign subsidiaries. If such earnings were repatriated, additional tax expense may result, althoughresult. However, the calculation of such additional taxesthe amount of deferred U.S. income tax on these earnings is not practicable.practicable because of the large number of assumptions necessary to compute the tax. 













Amounts in millions of dollars except per share amounts or as otherwise specified.
72The Procter & Gamble Company

A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:
2012 2011 2010
Years ended June 302013 2012 2011
BEGINNING OF YEAR$1,848
 $1,797
 $2,003
$1,773
 $1,848
 $1,797
Increases in tax positions for prior years166
 323
 128
162
 166
 323
Decreases in tax positions for prior years(188) (388) (146)(225) (188) (388)
Increases in tax positions for current year178
 222
 193
188
 178
 222
Settlements with taxing authorities(49) (168) (216)(195) (49) (168)
Lapse in statute of limitations(81) (94) (45)(98) (81) (94)
Currency translation(101) 156
 (120)(5) (101) 156
END OF YEAR1,773
 1,848
 1,797
1,600
 1,773
 1,848
The Company is present in overapproximately 150 taxable jurisdictions and, at any point in time, has 40-50 jurisdictional audits underway at various stages of completion. We evaluate our tax positions and establish liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite our belief that the underlying tax positions are fully supportable. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, developments in case law and closing of statute of limitations. Such adjustments are reflected in the tax provision as appropriate. The Company is making a concerted effort to bring its audit inventory to a more current position. We have done this by working with tax authorities to conduct audits for several open years at once. We have tax years open ranging from 2002 and forward. We are generally not able to reliably estimate the ultimate settlement amounts until the close of the audit. While we do not expect material changes, it is possible that the amount of unrecognized benefit with respect to our uncertain tax positions will significantly increase or decrease within the next 12 months related to the audits described above. At this time, we are not able to make a reasonable estimate of the range of impact on the balance of uncertain tax positions or the impact on the effective tax rate related to these items.
Included in the total liability for uncertain tax positions at June 30, 20122013, is $1.41.2 billion that, depending on the ultimate resolution, could impact the effective tax rate in future periods.
WeAccounting pronouncements require that, without discretion, we recognize accruedthe additional accrual of any possible related interest and penalties relatedrelating to the underlying uncertain tax positionsposition in income tax expense.expense, unless the Company qualifies for a specific exception. As of June 30, 20122013, 20112012 and 20102011, we had accrued interest of $413, $439, and $475 and $622 andaccrued penalties of $6634, $8066 and $8980, respectively, that are not included in the above table. During the fiscal years ended June 30, 20122013, 20112012 and 20102011, we recognized $(2)24, $(197)2
and $197 in interest benefit and $32, $10 and $38 in interest expense/(benefit) and $(10) , $(16) and $(8)16 in penalties expense/(benefit),benefit, respectively. The net benefits recognized resulted primarily from the favorable resolution of tax positions for prior years.


Amounts in millions of dollars except per share amounts or as otherwise specified.
59The Procter & Gamble Company

Deferred income tax assets and liabilities were comprised of the following:
June 302012 20112013 2012
DEFERRED TAX ASSETS      
Pension and postretirement benefits$2,366
 $1,406
$1,777
 $2,366
Stock-based compensation1,304
 1,284
1,125
 1,304
Loss and other carryforwards853
 874
1,062
 853
Goodwill and other intangible assets78
 298
60
 78
Accrued marketing and promotion238
 217
285
 238
Fixed assets165
 111
135
 165
Unrealized loss on financial and foreign exchange transactions363
 770
324
 363
Accrued interest and taxes28
 28
15
 28
Inventory58
 52
46
 58
Other761
 834
879
 761
Valuation allowances(375) (293)(341) (375)
TOTAL5,839
 5,581
5,367
 5,839
    
DEFERRED TAX LIABILITIES      
Goodwill and other intangible assets$11,816
 $12,206
$11,941
 $11,816
Fixed assets1,719
 1,742
1,718
 1,719
Other286
 211
315
 286
TOTAL13,821
 14,159
13,974
 13,821
Net operating loss carryforwards were $2.83.1 billion and $2.72.8 billion at June 30, 20122013 and 20112012, respectively. If unused, $1.21.4 billion will expire between 20132014 and 2032.2033. The remainder, totaling $1.61.7 billion at June 30, 20122013, may be carried forward indefinitely.
NOTE 1011
COMMITMENTS AND CONTINGENCIES
Guarantees
In conjunction with certain transactions, primarily divestitures, we may provide routine indemnifications (e.g., indemnification for representations and warranties and retention of previously existing environmental, tax and employee liabilities) for which terms range in duration and, in some circumstances, are not explicitly defined. The maximum obligation under some indemnifications is also not explicitly stated and, as a result, the overall amount of these obligations cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss on any of these matters, the loss would not have a material effect on our financial position, results of operations or cash flows.


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company73

In certain situations, we guarantee loans for suppliers and customers. The total amount of guarantees issued under such arrangements is not material.
Off-Balance Sheet Arrangements
We do not have off-balance sheet financing arrangements, including variable interest entities, that have a material impact on our financial statements.
Purchase Commitments and Operating Leases
We have purchase commitments for materials, supplies, services and property, plant and equipment as part of the normal course of business. Commitments made under take-or-pay obligations are as follows: 
June 3020132014201520162017Thereafter
Years ended June 302014
 2015
 2016
 2017
 2018
 Thereafter
Purchase obligations$1,094
$333
$263
$119
$96
$282
$1,114
 $383
 $242
 $136
 $74
 $234
Such amounts represent future purchases in line with expected usage to obtain favorable pricing. Approximately 22%20% of our purchase commitments relate to service contracts for information technology, human resources management and facilities management activities that have been outsourced to third-party suppliers. Due to the proprietary nature of many of our materials and processes, certain supply contracts contain penalty provisions for early termination. We do not expect to incur penalty payments under these provisions that would materially affect our financial position, results of operations or cash flows.
Our partner in a joint venture that holds a portion of our business in Spain has informed us of their intent to exercise their rights to put their interest in the joint venture to us.  The put price is based on a formula tied to the venture's earnings and approximates fair value.  Upon closing of the transaction, which is subject to regulatory approvals, we would account for the transaction as a purchase, whereby we would record the entire underlying business at fair value and recognize a holding gain for the portion of the venture currently held by us. The purchase price for the partner's interest would be approximately $1 billion based on current exchange rates, and the resulting holding gain on our current interest in the venture would be approximately $400 to $600.
We also lease certain property and equipment for varying periods. Future minimum rental commitments under non-cancelable operating leases, net of guaranteed sublease income, are as follows: 
June 3020132014201520162017Thereafter
Years ended June 302014 2015 2016 2017 2018
 Thereafter
Operating leases$289
$263
$235
$223
$170
$637
$254
 $241
 $196
 $161
 $141
 $519
Litigation
We are subject to various legal proceedings and claims arising out of our business which cover a wide range of matters such as antitrust, trade and other governmental regulations, product liability, patent and trademark matters, advertising, contracts, environmental issues, labor and employments matters and income and other taxes.



Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company60

As previously disclosed, the Company has had a number of antitrust matters in Europe. These matters involve a number of other consumer products companies and/or retail customers. The Company's policy is to comply with all laws and regulations, including all antitrust and competition laws, and to cooperate with investigations by relevant regulatory authorities, which the Company is doing. Competition and antitrust law inquiries often continue for several years and, if violations are found, can result in substantial fines.

In response to the actions of the regulatory authorities, the Company launched its own internal investigations into potential violations of competition laws. The Company identified violations in certain European countries and appropriate actions were taken.

Several regulatory authorities in Europe have issued separate decisions pursuant to their investigations alleging that the Company, along with several other companies, engaged in violations of competition laws in those countries. The Company has accrued the assessed fines for each of the decisions, of which all but $15$16 has been paid as of June 30, 2012. Most2013. Some of those are on appeal. As a
result of our initial and on-going analyses of other formal complaints, the Company has accrued liabilities for competition law violations totaling $18$139 as of June 30, 2012.2013. While the ultimate resolution of these matters for which we have accrued liabilities may result in fines or costs in excess of the amounts reserved, we do not expect any such incremental losses to materially impact our financial statements in the period in which they are accrued and paid, respectively. The remaining authorities' investigations are in various stages of the regulatory process. For these other remaining competition law matters, we cannot reasonably estimate any additional fines to which the Company may be subject as a result of the investigations. We will continue to monitor developments for all of these investigations and will record additional charges as appropriate.

With respect to other litigation and claims, while considerable uncertainty exists, in the opinion of management and our counsel, the ultimate resolution of the various lawsuits and claims will not materially affect our financial position, results of operations or cash flows.

We are also subject to contingencies pursuant to environmental laws and regulations that in the future may require us to take action to correct the effects on the environment of prior manufacturing and waste disposal practices. Based on currently available information, we do not believe the ultimate resolution of environmental remediation will have a material effect on our financial position, results of operations or cash flows.





NOTE 1112
SEGMENT INFORMATION
Effective during the quarter ended December 31, 2011, we implemented a number of changes to our organization structure for the Beauty & Grooming Global Business Unit (GBU), which resulted in changes to the components of the Beauty reportable segment and the Grooming reportable segment. As a result of these changes, female blades and razors transitioned from the Beauty segment to the Grooming segment, while male personal care products such as Old Spice and Gillette, moved from the Grooming segment to the Beauty segment. In May 2012, we completed the divestiture of the snacks business to The Kellogg Company. As a result of this transaction, the snacks business, which was previously included in the Snacks and Pet Care segment, is reported as discontinued operations. Additionally, as a result of this change, the pet care business is now included in the Fabric Care and Home Care segment. The segment information provided below reflects these changes for all periods presented.
The Company has two GBUs: the Beauty & Grooming GBU and the Household Care GBU.
Under U.S. GAAP, we havethe GBUs (Categories) are aggregated into five reportable segments:
Beauty: AntiperspirantBeauty Care (Antiperspirant and Deodorant, Cosmetics, Personal Cleansing, Skin Care); Hair Care Hair Color, Personal Cleansing,and Color; Prestige Products,(SKII, fragrances); Salon Professional and Skin Care;Professional;
Grooming: BladesShave Care (Blades and Razors, Electronic Hair Removal Devices, Hair Care Appliances and Pre- and Post-Shave Products;Products); Braun and Appliances;
Health Care: Feminine Care Gastrointestinal, Incontinence,(Feminine Care, Incontinence); Oral Care (Toothbrush, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Toothbrush, Toothpaste, Other Oral Care, Other Personal Health Care, and Vitamins/Minerals/Supplements;Supplements);
Fabric Care and Home Care: BleachFabric Care (Bleach and Laundry Additives, Air Care, Batteries, Dish Care, Fabric Enhancers, Laundry Detergents,Detergents); Home Care (Air Care, Dish Care, Surface Care); Personal Power (Batteries); Pet Care, Professional and Surface Care; Professional;
Baby Care and Family Care: Baby Care (Baby Wipes, Diapers Paperand Pants); Family Care (Paper Towels, Tissues, and Toilet Paper.Paper).
The accounting policies of the businesses are generally the same as those described in Note 1. Differences between these policies and U.S. GAAP primarily reflect income taxes, which are reflected in the businesses using applicable blended statutory rates, and the treatment of certain unconsolidated investees. Certain unconsolidated investees are managed as integral parts of our business unitsbusinesses for


Amounts in millions of dollars except per share amounts or as otherwise specified.
74The Procter & Gamble Company

management reporting purposes. Accordingly, these partially owned operations are reflected as consolidated subsidiaries in segment results, with full recognition of the individual income statement line items through before-tax earnings. Eliminations to adjust these line items to U.S. GAAP are


Amounts in millions of dollars except per share amounts or as otherwise specified.
61The Procter & Gamble Company

included in Corporate. In determining after-tax earnings for the businesses, we eliminate the share of earnings applicable to other ownership interests, in a manner similar to noncontrolling interest, and apply statutory tax rates. Adjustments to arrive at our effective tax rate are also included in Corporate.
Corporate includes certain operating and non-operating activities that are not reflected in the operating results used internally to measure and evaluate the businesses, as well as eliminations to adjust management reporting principles to U.S. GAAP. Operating activities in Corporate include the results of incidental businesses managed at the corporate level along with the elimination of individual revenues and expenses generated by certain unconsolidated investees, discussed in the preceding paragraph, over which we exert significant influence, but do not control. Operating elements also include certain employee benefit costs, the costs of certain restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce rationalization,optimization and other general Corporate items. The non-operating elements in Corporate primarily include interest expense, acquisition and divestiture gains and interest and investing income. In addition, Corporate includes the historical results of certain divested businesses.
Total assets for the reportable segments include those assets managed by the reportable segment, primarily inventory, fixed assets and intangible assets. Other assets, primarily including cash, accounts receivable, investment securities and goodwill, are included in Corporate.
Our business units are comprised of similar product categories. In 2013, 2012 and 2011, and 2010, nine product categoriesbusiness units individually accounted for 5% or more of consolidated net sales as follows:
 % of Sales by Business Unit
Years ended June 302013 2012 2011
Fabric Care20% 20% 20%
Baby Care13% 13% 12%
Hair Care and Color11% 11% 11%
Shave Care8% 9% 9%
Beauty Care7% 7% 7%
Home Care7% 7% 7%
Family Care7% 6% 7%
Oral Care6% 6% 6%
Feminine Care6% 6% 6%
All Other15% 15% 15%
 Total100% 100% 100%
 % of Sales by Product Category
 201220112010
Fabric Care20%20%20%
Baby Care13%12%12%
Hair Care11%11%11%
Male Grooming9%9%9%
Beauty Care7%7%7%
Home Care7%7%7%
Family Care6%7%7%
Oral Care6%6%6%
Feminine Care6%6%6%
All Other15%15%15%
 Total100%100%100%
The Company had net sales in the U.S. of $29.530.3 billion, $29.929.5 billion and $29.529.9 billion for the years ended June 30, 20122013, 20112012 and 20102011, respectively. Assets in the U.S. totaled $68.068.3 billion and $70.368.0 billion as of June 30, 20122013 and 20112012, respectively. No other country's net sales or assets exceed 10% of the Company.Company totals.
Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 14%, 15%14% and 16%15% of consolidated net sales in 2013, 2012 and 2011, and 2010, respectively.



Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 6275

Global Segment Results   Net Sales
 
Earnings 
from
Continuing
Operations
Before
Income Taxes

 Net Earnings from Continuing Operations
 
Depreciation
and
Amortization

  
Total
Assets

  
Capital
Expenditures

   Net Sales 
Earnings 
from
Continuing
Operations
Before
Income Taxes
 Net Earnings from Continuing Operations 
Depreciation
and
Amortization
  
Total
Assets
  
Capital
Expenditures
BEAUTY2012
  $20,318
  $3,196
 $2,390
 $379
  $8,357
  $569
2013  $19,956
  $3,215
 $2,474
 $375
  $8,396
  $541
2011
  19,937
  3,415
 2,542
 387
  9,544
  504
2012  20,318
  3,196
 2,390
 379
  8,357
  569
2010
  19,258
  3,444
 2,568
 448
  8,516
  510
2011  19,937
  3,415
 2,542
 387
  9,544
  504
GROOMING2012
  8,339
  2,395
 1,807
 623
  24,518
  392
2013  8,038
  2,458
 1,837
 603
  23,971
  378
2011
  8,245
  2,375
 1,775
 645
  24,866
  373
2012  8,339
  2,395
 1,807
 623
  24,518
  392
2010
  7,864
  2,211
 1,621
 680
  24,568
  283
2011  8,245
  2,375
 1,775
 645
  24,866
  373
HEALTH CARE2012
  12,421
  2,718
 1,826
 353
  7,501
  496
2013  12,830
  2,769
 1,898
 380
  8,400
  529
2011
  12,033
  2,720
 1,796
 359
  7,796
  409
2012  12,421
  2,718
 1,826
 353
  7,501
  496
2010
  11,493
  2,809
 1,860
 385
  7,142
  383
2011  12,033
  2,720
 1,796
 359
  7,796
  409
FABRIC CARE AND HOME CARE2012
  27,254
  4,645
 2,915
 679
  11,419
  1,036
2013  27,448
  4,825
 3,126
 695
  12,018
  1,115
2011
  26,536
  4,867
 3,109
 633
  12,060
  950
2012  27,254
  4,645
 2,915
 679
  11,419
  1,036
2010
  25,570
  5,405
 3,547
 643
  10,411
  817
2011  26,536
  4,867
 3,109
 633
  12,060
  950
BABY CARE AND FAMILY CARE2012
  16,493
  3,351
 2,123
 586
  7,535
  1,250
2013  16,790
  3,509
 2,242
 648
  8,460
  1,278
2011
  15,606
  3,181
 1,978
 549
  7,184
  912
2012  16,493
  3,351
 2,123
 586
  7,535
  1,250
2010
  14,736
  3,270
 2,049
 612
  6,406
  852
2011  15,606
  3,181
 1,978
 549
  7,184
  912
CORPORATE(1)
2012
  (1,145) (3,520) (1,744) 584
  72,914
  221
2013  (895) (1,933) (175) 281
  78,018
  167
2011
  (1,253) (1,561) 498
 265
  76,904
  158
2012  (1,145) (3,520) (1,744) 584
  72,914
  221
2010
  (1,354) (2,271) (794) 340
  71,129
  222
2011  (1,253) (1,561) 498
 265
  76,904
  158
TOTAL COMPANY2012
  83,680
  12,785
 9,317
 3,204
  132,244
  3,964
2013  84,167
  14,843
 11,402
 2,982
  139,263
  4,008
2011
  81,104
  14,997
 11,698
 2,838
  138,354
  3,306
2012  83,680
  12,785
 9,317
 3,204
  132,244
  3,964
2010
  77,567
  14,868
 10,851
 3,108
  128,172
  3,067
2011  81,104
  14,997
 11,698
 2,838
  138,354
  3,306
 
(1) 
The Corporate reportable segment includes the total assets and capital expenditures of the snacks business prior to its divestiture effective May 31, 2012.
NOTE 1213
DISCONTINUED OPERATIONS
In Mayfiscal 2012, the Company completed the divestiture of our global snacks business to The Kellogg Company (Kellogg) for $2.7 billion of cash. Under the terms of the agreement, Kellogg acquired our branded snacks products, our manufacturing facilities in Belgium and the United States and the majority of the employees working on the snacks business. The Company recorded an after-tax gain on the
transaction of $1.4 billion billion,, which is included in net earnings from discontinued operations in the Consolidated Statement of Earnings for the year ended June 30, 2012.
The snacks business had historically been part of the Company's Snacks and Pet Care reportable segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of the snacks business are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all years presented.


In October 2009, the Company completed the divestiture of our global pharmaceuticals business to Warner Chilcott plc (Warner Chilcott) for $2.8 billion of cash, net of assumed and transferred liabilities. Under the terms of the agreement, Warner Chilcott acquired our portfolio of branded pharmaceutical products, our prescription drug product pipeline and our manufacturing facilities in Puerto Rico and Germany. In addition, the majority of the employees working on the pharmaceuticals business were transferred to Warner Chilcott. The Company recorded an after-tax gain on the transaction of $1.5 billion, whichFollowing is selected financial information included in net earnings from discontinued operations in the Consolidated Statement of Earnings for the year ended June 30, 2010.snacks business:
The pharmaceuticals business had historically been part of the Company's Health Care reportable segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of the pharmaceuticals business are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all years presented.
  Net sales
 Earnings from discontinued operations
 Income tax expense
 Gain on sale of discontinued operations
 Income tax benefit/(expense) on sale
 Net earnings from discontinued operations
Snacks2013$—
 $—
 $—
 $—
 $—
 $—
 20121,440
 266
 (96) 1,899
 (482) 1,587
 20111,455
 322
 (93) —
 —
 229




Amounts in millions of dollars except per share amounts or as otherwise specified.
6376 The Procter & Gamble Company

Following is selected financial information included in net earnings from discontinued operations for the snacks and pharmaceuticals businesses:
  Net sales
Earnings from discontinued operations
Income tax expense
Gain on sale of discontinued operations
Income tax benefit/(expense) on sale
Net earnings from discontinued operations
Snacks2012$1,440
$266
$(96)$1,899
$(482)$1,587
 20111,455
322
(93)—
—
229
 20101,372
289
(84)—
—
205
Pharmaceuticals2012—
—
—
—
—
—
 2011—
—
—
—
—
—
 2010751
306
(101)2,632
(1,047)1,790
Total20121,440
266
(96)1,899
(482)1,587
 20111,455
322
(93)—
—
229
 20102,123
595
(185)2,632
(1,047)1,995
The net gain on the sale of the pharmaceuticals business for the year ended June 30, 2010, also includes an after-tax gain on the sale of the Actonel brand in Japan. This transaction occurred prior to the divestiture to Warner Chilcott.

NOTE 1314
QUARTERLY RESULTS (UNAUDITED)
Quarters Ended   Sept 30 Dec 31 Mar 31 Jun 30 Total Year   Sept 30 Dec 31 Mar 31 Jun 30 Total Year
NET SALES2011-2012  $21,530
 $21,744
 $20,194
 $20,212
 $83,680
2012-2013  $20,739
 $22,175
 $20,598
 $20,655
 $84,167
2010-2011  19,784
 20,976
 19,893
 20,451
 81,104
2011-2012  21,530
 21,744
 20,194
 20,212
 83,680
OPERATING INCOME2011-2012  4,250
 2,680
(2) 
3,299
 3,063
 13,292
2012-2013  3,951
 4,492

3,405
 2,633
(3)14,481
2010-2011  4,425
 4,186
 3,705
 3,179
 15,495
2011-2012  4,250
 2,680
(3)3,299
 3,063
 13,292
GROSS MARGIN2011-2012  49.8% 50.1% 49.3% 48.1% 49.3%2012-2013  50.1% 50.9% 49.8% 47.5% 49.6%
2010-2011  52.0% 52.1% 50.8% 48.5% 50.9%2011-2012  49.8% 50.1% 49.3% 48.1% 49.3%
NET EARNINGS:                        
Earnings from continuing operations2011-2012  $2,999
 $1,672
(2) 
$2,433
 $2,213
 $9,317
Net earnings from continuing operations2012-2013  $2,853
 $4,076
(2)$2,591
 $1,882
(3)$11,402
2010-2011  3,065
 3,306
 2,859
 2,468
 11,698
2011-2012  2,999
 1,672
(3)2,433
 2,213
 9,317
Earnings from discontinued operations2011-2012  58
 41
 34
 1,454
(3) 
1,587
Net earnings from discontinued operations2012-2013  —
 —
 —
 —

—
2010-2011  55
 56
 47
 71
 229
2011-2012  58
 41
 34
 1,454
(4)1,587
Net earnings attributable to Procter & Gamble2011-2012  3,024
 1,690
(2) 
2,411
 3,631
 10,756
2012-2013  2,814
 4,057
(2)2,566
 1,875
(3)11,312
2010-2011  3,081
 3,333
 2,873
 2,510
 11,797
2011-2012  3,024
 1,690
(3)2,411
 3,631
 10,756
DILUTED NET EARNINGS PER COMMON SHARE: (1)
                        
Earnings from continuing operations2011-2012  $1.01
 $0.56
 $0.81
 $0.74
 $3.12
2012-2013  $0.96
 $1.39
 $0.88
 $0.64
 $3.86
2010-2011  1.00
 1.09
 0.94
 0.82
 3.85
2011-2012  1.01
 0.56
 0.81
 0.74
 3.12
Earnings from discontinued operations2011-2012  0.02
 0.01
 0.01
 0.50
 0.54
2012-2013  —
 —
 —
 —
 —
2010-2011  0.02
 0.02
 0.02
 0.02
 0.08
2011-2012  0.02
 0.01
 0.01
 0.50
 0.54
Diluted net earnings per common share2011-2012  1.03
 0.57
 0.82
 1.24
 3.66
Net earnings2012-2013  0.96
 1.39
 0.88
 0.64
 3.86
2010-2011  1.02
 1.11
 0.96
 0.84
 3.93
2011-2012  1.03
 0.57
 0.82
 1.24
 3.66
(1) 
Diluted net earnings per share is calculated on earnings attributable to Procter & Gamble.
(2) 
The Company acquired the balance of its Baby Care and Feminine Care joint venture in Iberia in October 2012 resulting in a non-operating gain of $623.
(3)
During the fourth quarter of fiscal year 2013 and the second quarter of fiscal year 2012, the Company recorded goodwill and indefinite lived intangiblesindefinite-lived intangible assets impairment charges of $308 million and $1.6 billion., respectively. For additional details, see Note 2 to the Consolidated Financial Statements.2.
(3)(4) 
The Company divested of its snacks business in May 2012. See Note 12 to the Consolidated Financial Statements13 for details of the transaction.


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 6477




65The Procter & Gamble Company

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.

Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
The Company's President and Chief Executive Officer, Robert A. McDonald,G. Lafley, and the Company's Chief Financial Officer, Jon R. Moeller, performed an evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by this Annual Report on Form 10-K.
Messrs. McDonaldLafley and Moeller have concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed
 
in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to our management, including Messrs. McDonaldLafley and Moeller, to allow their timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the Company's fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Item 9B. Other Information.
Not applicable.



78The Procter & Gamble Company66


PART III

Item 10. Directors, Executive Officers and Corporate Governance.
The Board of Directors has determined that the following members of the Audit Committee are independent and are Audit Committee financial experts as defined by SEC rules: Ms. Patricia A. Woertz (Chair) and Mr. Kenneth I. Chenault.
The information required by this item is incorporated by reference to the following sections of the 20122013 Proxy Statement filed pursuant to Regulation 14A: the sectionssection entitled Election of Directors, up to and including the subsection entitled Nominees for Election of Directors with Terms Expiring in 2013,2014, Corporate Governance, up to but not including the subsection entitled Board Engagement and Attendance; the section entitled Code of Ethics; and the section entitled Section 16(a) Beneficial Ownership Reporting Compliance. Pursuant to Instruction 3 of Item 401(b) of Regulation S-K, Executive Officers of the Registrant are reported in Part I of this report.
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to the following sections of the2013 Proxy
 
2012 Proxy Statement filed pursuant to Regulation 14A: the portion of the Corporate Governance section entitled Committees of the Board and the portion beginning with Director Compensation up to but not including the section entitled Security Ownership of Management and Certain Beneficial Owners.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table gives information about the Company's common stock that may be issued upon the exercise of options, warrants and rights under all of the Company's equity compensation plans as of June 30, 2012.2013. The table includes the following plans: The Procter & Gamble 1992 Stock Plan; The Procter & Gamble 1992 Stock Plan (Belgian Version); The Procter & Gamble 1993 Non-Employee Directors' Stock Plan; The Procter & Gamble Future Shares Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan; The Procter & Gamble 2003 Non-Employee Directors' Stock Plan; The Gillette Company 1971 Stock Option Plan; The Gillette Company 2004 Long-Term Incentive Plan; and The Procter & Gamble 2009 Stock and Incentive Compensation Plan.



67The Procter & Gamble Company

Plan Category
(a)
Number of securities to be issued upon exercise of outstanding options,
warrants and rights
 
(b)
Weighted-average exercise
price of outstanding
options, warrants and
rights
 
(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(a)
Number of securities to be issued upon exercise of outstanding options,
warrants and rights
 
(b)
Weighted-average exercise
price of outstanding
options, warrants and
rights
 
(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
Equity compensation plans approved by security holders (1)
        
Options326,369,977
 
$54.0810
 (2)291,021,000
 
$57.1208
 (2)
Restricted Stock Units (RSUs) / Performance Stock Units (PSUs)8,449,554
 N/A
 (2)10,081,890
 N/A
 (2)
Equity compensation plans not approved by security holders (3)
        
Options26,722,810
 50.7101
 (4)15,217,784
 56.1637
 (4)
Restricted Stock Units (RSUs)95,361
 N/A
 (4)42,995
 N/A
 (4)
        
GRAND TOTAL361,637,702
 
$53.8259
(5)86,671,516
316,363,669
 57.0733
(5)56,253,893
(1) Includes The Procter & Gamble 1992 Stock Plan; The Procter & Gamble 1993 Non-Employee Directors Stock Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan; The Procter & Gamble 2003 Non-Employee Directors Stock Plan; and The Procter & Gamble 2009 Stock and Incentive Compensation Plan.
(2) Of the plans listed in (1), only The Procter & Gamble 2009 Stock and Incentive Compensation Plan and The 2003 Non- Employee Directors Stock Plan allow for future grants of securities. The maximum number of shares that may be granted under these plans is 180 million shares. Stock options and stock appreciation rights are counted on a one for one basis while full value awards (such as RSUs and PSUs) will be counted as 2.88 shares for each share awarded. Total shares available for future issuance under these plans is 8756 million.
(3) Includes The Procter & Gamble 1992 Stock Plan (Belgian version); The Procter & Gamble Future Shares Plan; The Gillette Company 1971 Stock Option Plan; and The Gillette Company 2004 Long-Term Incentive Plan.
(4) None of the plans listed in (3) allow for future grants of securities.
(5) Weighted average exercise price of outstanding options only.


The Procter & Gamble Company 6879


The Procter & Gamble 1992 Stock Plan (Belgian Version)
No further grants can be made under the plan, although unexercised stock options previously granted under this plan remain outstanding. This plan was approved by the Company's Board of Directors on February 14, 1997. Although the plan has not been submitted to shareholders for approval, it is nearly identical to The Procter & Gamble 1992 Stock Plan, approved by the Company's shareholders on October 13, 1992, except for a few minor changes designed to comply with the Belgian tax laws.
The plan was designed to attract, retain and motivate key Belgian employees. Under the plan, eligible participants were: (i) granted or offered the right to purchase stock options, (ii) granted stock appreciation rights and/or (iii) granted shares of the Company's common stock. Except in the case of death of the recipient, all stock options and stock appreciation rights must vest in no less than one year from the date of grant and must expire no later than fifteen years from the date of grant. The exercise price for all stock options granted under the plan is the average price of the Company's stock on the date of grant. If a recipient of a grant leaves the Company while holding an unexercised option or right, any unexercisable portions immediately become void, except in the case of death, and any exercisable portions become void within one month of departure, except in the case of death or retirement. Any
common stock awarded under the plan may be subject to restrictions on sale or transfer while the recipient is employed, as the committee administering the plan may determine.
The Procter & Gamble Future Shares Plan
On October 14, 1997, the Company's Board of Directors approved The Procter & Gamble Future Shares Plan pursuant to which options to purchase shares of the Company's common stock may be granted to employees worldwide. The purpose of this plan is to advance the interests of the Company by giving substantially all employees a stake in the Company's future growth and success and to strengthen the alignment of interests between employees and the Company's shareholders through increased ownership of shares of the Company's stock. The plan has not been submitted to shareholders for approval.
Subject to adjustment for changes in the Company's capitalization, the number of shares to be granted under the plan is not to exceed 17 million shares. Under the plan's regulations, recipients are granted options to acquire 100 shares of the Company's common stock at an exercise price equal to the average price of the Company's common stock on the date of the grant. These options vest five years after the date of grant and expire ten years following the date of grant. If a recipient leaves the employ of the Company prior


69The Procter & Gamble Company

to the vesting date for a reason other than disability, retirement or special separation (as defined in the plan), then the award is forfeited.
At the time of the first grant following Board approval of the plan, each employee of the Company not eligible for an award under the 1992 Stock Plan was granted options for 100 shares. From the date of this first grant through June 30, 2003, each new employee of the Company has also received options for 100 shares. Following the grant of options on June 30, 2003, the Company suspended this part of the plan. The plan terminated on October 13, 2007.
The Gillette Company 1971 Stock Option Plan
No further grants can be made under the plan after April 25, 2005, although unexercised stock options previously granted under this plan remain outstanding. The plan was approved by shareholders of The Gillette Company and assumed by the Company upon the merger between The Procter & Gamble Company and The Gillette Company. All options became immediately vested and exercisable on October 1, 2005 as a result of the merger. After the merger, all outstanding options became options to purchase shares of The Procter & Gamble Company subject to an exchange ratio of .975 shares of P&G stock per share of Gillette stock.
The plan was designed to attract, retain and motivate key salaried employees of The Gillette Company and non-employee members of its Board of Directors. Under the plan, eligible participants receive the option to purchase Company stock at a pre-determined price which cannot be less than 100% of the fair market value per share at the time that the option is granted. The period of any option may not exceed ten years from the date of grant. Subject to adjustment for changes in the Company's capitalization, the number of shares granted under the plan was not to exceed 198,000,000 shares.
If a recipient leaves the employ of the Company for any reason other than death or discharge for cause, the recipient is permitted to exercise any vested options granted under the plan for a period between thirty days and five years after termination, depending on the circumstances of his/her departure. If a participant is discharged for cause, all options are immediately cancelled. If a participant dies while holding options, the options are exercisable for a period of one to three years depending on the date of grant. In addition, the plan allows Gillette employees whose employment is terminated for "Good Reason" within two years after the effective date of the merger the ability to exercise remaining options for the shorter of five years following their termination date or the original life of the grant. Employees terminated for "Good Reason" who are also eligible to retire under a Company plan are allowed to exercise their options subject to the original terms of the grant.

The Gillette Company 2004 Long-Term Incentive Plan
Shareholders of The Gillette Company approved The Gillette Company 2004 Long-Term Incentive Plan on May 20, 2004, and the plan was assumed by the Company upon the merger between The Procter & Gamble Company and The Gillette Company. All options became immediately vested and exercisable on October 1, 2005 as a result of the merger. After the merger, all outstanding options became options to purchase shares of The Procter & Gamble Company subject to an exchange ratio of .975 shares of P&G stock per share of Gillette stock. Only employees previously employed by The Gillette Company prior to October 1, 2005 are eligible to receive grants under this plan.
The plan was designed to attract, retain and motivate employees of The Gillette Company, and until the effective date of the merger between The Gillette Company and The Procter & Gamble Company, non-employee members of the Gillette Board of Directors. Under the plan, eligible participants are: (i) granted or offered the right to purchase stock options, (ii) granted stock appreciation rights and/or (iii) granted shares of the Company's common stock or restricted stock units (and dividend equivalents). Subject to adjustment for changes in the Company's capitalization and the addition of any shares authorized but not issued or redeemed under The Gillette Company 1971 Stock Option Plan, the number of shares to be granted under the plan is not to exceed 19,000,000 shares.
Except in the case of death of the recipient, all stock options and stock appreciation rights must expire no later than ten years from the date of grant. The exercise price for all stock options granted under the plan must be equal to or greater than the fair market value of the Company's stock on the date of grant. Any common stock awarded under the plan may be subject to restrictions on sale or transfer while the recipient is employed, as the committee administering the plan may determine.
 
If a recipient of a grant leaves the Company while holding an unexercised option or right: (1) any unexercisable portions immediately become void, except in the case of death, retirement, special separation (as those terms are defined in the plan) or any grants as to which the Compensation Committee of the Board of Directors has waived the termination provisions; and (2) any exercisable portions immediately become void, except in the case of


80The Procter & Gamble Company

death, retirement, special separation, voluntary resignation that is not for Good Reason (as those terms are defined in the plan) or any grants as to which the Compensation Committee of the Board of Directors has waived the termination provisions.
Additional information required by this item is incorporated by reference to the 20122013 Proxy Statement filed pursuant to Regulation 14A, beginning with the section entitled Security Ownership of Management and Certain Beneficial Owners and up to but not including the section


The Procter & Gamble Company70

entitled Section 16(a) Beneficial Ownership Reporting Compliance.
Item 13. Certain Relationships and Related Transactions and Director Independence.
The information required by this item is incorporated by reference to the following sections of the 20122013 Proxy Statement filed pursuant to Regulation 14A: the sections entitled Director Independence and Review and Approval of Transactions with Related Persons.
Item 14. Principal Accounting Fees and Services.
The information required by this item is incorporated by reference to the 20122013 Proxy Statement filed pursuant to Regulation 14A, beginning with the section entitled Report of the Audit Committee and ending with the section entitled Services Provided by Deloitte.




71The Procter & Gamble Company


PART IV


Item 15. Exhibits and Financial Statement Schedules.
 

1.Financial Statements:

The following Consolidated Financial Statements of The Procter & Gamble Company and subsidiaries, management's report and the reports of the independent registered public accounting firm are incorporated by reference in Part II, Item 8 of this Form 10-K.

•Management's Report on Internal Control over Financial Reporting
•Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
•Report of Independent Registered Public
Accounting Firm on Consolidated Financial Statements
•Consolidated Statements of Earnings - for years ended June 30, 2013, 2012 2011 and 20102011
•Consolidated Statements of Other Comprehensive Income - for years ended June 30, 2013, 2012 and 2011
•Consolidated Balance Sheets - as of June 30, 20122013 and 20112012
•Consolidated Statements of Shareholders' Equity - for years ended June 30, 2013, 2012 2011 and 20102011
•Consolidated Statements of Cash Flows - for years ended June 30, 2013, 2012 2011 and 20102011
•Notes to Consolidated Financial Statements

2.Financial Statement Schedules:

These schedules are omitted because of the absence of the conditions under which they are required or because the information is set forth in the financial statementsConsolidated Financial Statements or notesNotes thereto.



The Procter & Gamble Company72

Exhibits:
Exhibit     (3-1) -
  Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 14, 2008)11, 2011) (Incorporated by reference to Exhibit (3-1) of the Company's Form 10-Q for the quarter ended September 30, 2011).
  
(3-2) -
Regulations (as amended by the Board of Directors on April 18, 2010January 16, 2012 pursuant to authority granted by shareholders at the annual meeting on October 13, 2009) (Incorporated by reference to Exhibit (3-2) of the Company's Form 10-Q for the quarter ending December 31, 2011).

  
Exhibit        (4) -
  Registrant agrees to file a copy of documents defining the rights of holders of long-term debt upon request of the Commission.
  
Exhibit   (10-1) -
  The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended on August 17, 2007), which was originally adopted by shareholders at the annual meeting on October 9, 2001 (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2008)2013), and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2008).*
  
(10-2) -
  The Procter & Gamble 1992 Stock Plan (as amended December 11, 2001), which was originally adopted by the shareholders at the annual meeting on October 12, 1992 (Incorporated by reference to Exhibit (10-2) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).1992.* +
  
(10-3) -
  The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).Policy.* +
   

The Procter & Gamble Company81

(10-4) -
The Procter & Gamble Deferred Compensation Plan for Directors (as amended December 12, 2006), which was originally adopted by the Board of Directors on September 9, 1980.1980 (Incorporated by reference to Exhibit (10-4) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*+
  
(10-5) -
  The Procter & Gamble 1993 Non-Employee Directors' Stock Plan (as amended September 10, 2002), which was originally adopted by the shareholders at the annual meeting on October 11, 1994 (Incorporated by reference to Exhibit (10-5) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).1994.* +
  
(10-6) -
  The Procter & Gamble 1992 Stock Plan (Belgian Version) (as amended December 11, 2001), which was originally adopted by the Board of Directors on February 14, 1997 (Incorporated by reference to Exhibit (10-6) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).1997.* +
  
(10-7) -
  The Procter & Gamble Future Shares Plan (as adjusted for the stock split effective May 21, 2004), which was originally adopted by the Board of Directors on October 14, 1997 (Incorporated by reference to Exhibit (10-7) of the Company's Annual Report on Form 10-K for the year ended June 30, 2010).*
  
(10-8) -
  The Procter & Gamble 2003 Non-Employee Directors' Stock Plan (as amended in August 2007) which was originally adopted by the shareholders at the annual meeting on October 14, 2003, and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-3)(10-1) of the Company's Form 10-Q for the quarter ended September 30, 2007)2012).*
   
(10-9) -
  The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended December 31, 2008).*
  
(10-10) -
  Summary of the Company's Short Term Achievement Reward Program (Incorporated by reference to Exhibit (10-2) of the Company’s Form 10-Q for the quarter ended September 30, 2012) and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-10)(10-4) of the Company's Annual Report on Form 10-K10-Q for the yearquarter ended June 30, 2010)December 31, 2012).
   
(10-11) -
  Company's Form of Separation Agreement & Release (Incorporated by reference to Exhibit (10-2)(10-3) of the Company's Form 10-Q for the quarter ended December 31, 2011)2012).
  
(10-12) -
  Summary of personal benefits available to certain officers and non-employee directors (Incorporated by reference to Exhibit (10-3) of the Company's Form 10-Q for the quarter ended September 30, 2008).
   
(10-13) -The Gillette Company 1971 Stock Option Plan.* (Incorporated by reference to Exhibit (10-13) of the Company's Form 10-K for the year ended June 30, 2011).


73The Procter & Gamble Company

(10-14) -  The Gillette Company 2004 Long-Term Incentive Plan (as amended on August 14, 2007) (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended September 30, 2007)2012).*
(10-14) -
The Gillette Company Executive Life Insurance Program (Incorporated by reference to Exhibit (10-15) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-15) -
The Gillette Company Executive Life Insurance Program.* +
(10-16) -
  
The Gillette Company Personal Financial Planning Reimbursement Program.* +
Program (Incorporated by reference to Exhibit (10-16) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012) .*
   
(10-17)(10-16) -
  
The Gillette Company Senior Executive Financial Planning Program.Program (Incorporated by reference to Exhibit (10-17) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*+
(10-17) -
The Gillette Company Estate Preservation (Incorporated by reference to Exhibit (10-18) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-18) -
The Gillette Company Estate Preservation.Deferred Compensation Plan (Incorporated by reference to Exhibit (10-19) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*+
  
(10-19) -
The Gillette Company Deferred Compensation Plan.
Senior Executive Recoupment Policy (Incorporated by reference to Exhibit (10-20) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*+
  
(10-20) -
Senior Executive Recoupment Policy.* +
(10-21) -
  
The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through August 21, 2006.2006 (Incorporated by reference to Exhibit (10-21) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*+
  

82The Procter & Gamble Company

(10-22)
(10-21) -
  The Procter & Gamble 2009 Stock and Incentive Compensation Plan which was originally adopted by shareholders at the annual meeting on October 13, 2009 (Incorporated by reference to Exhibit (10-1)(10-3) of the Company's Form 10-Q for the quarter ended December 31, 2009)2011), and the Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2009 Stock and Incentive Compensation Plan, The Procter & Gamble 2001 Stock and Incentive Compensation Plan, The Procter & Gamble 1992 Stock Plan, The Procter & Gamble 1992 Stock Plan (Belgium Version), The Gillette Company 2004 Long-Term Incentive Plan and the Gillette Company 1971 Stock Option Plan (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended MarchDecember 31, 2011)2012).*
  
(10-23)(10-22) -
 The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions +(Incorporated by reference to Exhibit (10-2) of the Company’s Form 10-Q for the quarter ended December 31, 2012) and related correspondence (Incorporated by reference to Exhibit (10-1)(10-5) of the Company Form 10-Q for the quarter ended MarchDecember 31, 2012).*
   
(10-24)(10-23) -
 
The Procter & Gamble Performance Stock Program Summary (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended March 31, 2012) and related terms and conditions.conditions (Incorporated by reference to Exhibit (10-24) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012). *+
   
Exhibit      (11) -
Computation of earnings per share. Earnings Per Share. +
   
Exhibit      (12) -
Computation of ratioRatio of earningsEarnings to fixed charges. Fixed Charges. +
   
Exhibit      (21) -
Subsidiaries of the registrant. Registrant. +
  
Exhibit      (23) -
Consent of Independent Registered Public Accounting Firm. +
  
Exhibit      (31) -
Rule 13a-14(a)/15d-14(a) Certifications. +
  
Exhibit      (32) -
Section 1350 Certifications. +
  
Exhibit   (99-1) -
Summary of Directors and Officers Insurance Program. +
   
101.INS (1)           
  XBRL Instance Document
  
101.SCH (1)          
  XBRL Taxonomy Extension Schema Document
  
101.CAL (1)          
  XBRL Taxonomy Extension Calculation Linkbase Document
  
101.DEF (1)          
  XBRL Taxonomy Definition Linkbase Document
   
101.LAB (1)          
  XBRL Taxonomy Extension Label Linkbase Document
  
101.PRE (1)          
  XBRL Taxonomy Extension Presentation Linkbase Document
(1)Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
*
Compensatory plan or arrangement
+
Filed herewith.



The Procter & Gamble Company 7483

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Cincinnati, State of Ohio.
THE PROCTER & GAMBLE COMPANY
  
By/s/    ROBERT A. MCDONALD        A.G. LAFLEY
 
(Robert A. McDonald)A.G. Lafley)
Chairman of the Board, President and Chief Executive Officer
August 8, 20122013
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.
Signature  Title Date
   
/S/   ROBERT A. MCDONALDA.G. LAFLEY ___       
(Robert A. McDonald)A.G. Lafley)
  Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) August 8, 20122013
   
/S/    JON R. MOELLER        
(Jon R. Moeller)
  
Chief Financial Officer
(Principal Financial Officer)
 August 8, 20122013
   
/S/    VALARIE L. SHEPPARD        
(Valarie L. Sheppard)
  Senior Vice President & Comptroller (Principal Accounting Officer) August 8, 20122013
   
/S/    ANGELA F. BRALY        
(Angela F. Braly)
  Director August 8, 20122013
   
/S/    KENNETH I. CHENAULT        
(Kenneth I. Chenault)
  Director August 8, 20122013
/S/    SCOTT D. COOK__  
(Scott D. Cook)
DirectorAugust 8, 2013
   
/S/    SUSAN DESMOND-HELLMANN      
(Susan Desmond-Hellmann)
  Director August 8, 20122013
/S/    TERRY J. LUNDGREN        
(Terry J. Lundgren)
DirectorAugust 8, 2013
/S/    W. JAMES MCNERNEY, JR.  
(W. James McNerney, Jr.)
DirectorAugust 8, 2013
   
/S/    JOHNATHAN A. RODGERS        
(Johnathan A. Rodgers)
  Director August 8, 20122013
    
/S/    MARGARET C. WHITMAN      
(Margaret C. Whitman)
  Director August 8, 20122013
   
/S/    MARY AGNES WILDEROTTER        
(Mary Agnes Wilderotter)
  Director August 8, 20122013
    
/S/    PATRICIA A. WOERTZ        
(Patricia A. Woertz)
  Director August 8, 20122013
   
/S/    ERNESTO ZEDILLO        
(Ernesto Zedillo)
  Director August 8, 20122013


7584 The Procter & Gamble Company

EXHIBIT INDEX
Exhibit     (3-1) -
  Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 14, 2008)11, 2011) (Incorporated by reference to Exhibit (3-1) of the Company's Form 10-Q for the quarter ended September 30, 2011).
  
(3-2) -
Regulations (as amended by the Board of Directors on April 18, 2010January 16, 2012 pursuant to authority granted by shareholders at the annual meeting on October 13, 2009) (Incorporated by reference to Exhibit (3.ii)(3-2) of the Company's Form 10-Q for the quarter ending December 31, 2011).

  
Exhibit        (4) -
  Registrant agrees to file a copy of documents defining the rights of holders of long-term debt upon request of the Commission.
  
Exhibit   (10-1) -
  The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended on August 17, 2007) which was originally adopted by shareholders at the annual meeting on October 9, 2001 (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2008)2013), and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2008).*
  
(10-2) -
  The Procter & Gamble 1992 Stock Plan (as amended December 11, 2001), which was originally adopted by the shareholders at the annual meeting on October 12, 1992 (Incorporated by reference to Exhibit (10-2) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).1992.*
  
(10-3) -
  The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).Policy.*
  
(10-4) -
The Procter & Gamble Deferred Compensation Plan for Directors (as amended December 12, 2006), which was originally adopted by the Board of Directors on September 9, 1980. +1980 (Incorporated by reference to Exhibit (10-4) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-5) -
  The Procter & Gamble 1993 Non-Employee Directors' Stock Plan (as amended September 10, 2002), which was originally adopted by the shareholders at the annual meeting on October 11, 1994 (Incorporated by reference to Exhibit (10-5) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).1994.*
  
(10-6) -
  The Procter & Gamble 1992 Stock Plan (Belgian Version) (as amended December 11, 2001), which was originally adopted by the Board of Directors on February 14, 1997 (Incorporated by reference to Exhibit (10-6) of the Company's Annual Report on Form 10-K for the year ended June 30, 2008).1997.*
  
(10-7) -
  The Procter & Gamble Future Shares Plan (as adjusted for the stock split effective May 21, 2004), which was originally adopted by the Board of Directors on October 14, 1997 (Incorporated by reference to Exhibit (10-7) of the Company's Annual Report on Form 10-K for the year ended June 30, 2010).*
  
(10-8) -
  The Procter & Gamble 2003 Non-Employee Directors' Stock Plan (as amended in August 2007), which was originally adopted by the shareholders at the annual meeting on October 14, 2003, and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-3)(10-1) of the Company's Form 10-Q for the quarter ended September 30, 2007)2012).*
  
(10-9) -
  The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended December 31, 2008).*
  
(10-10) -
  Summary of the Company's Short Term Achievement Reward Program (Incorporated by reference to Exhibit (10-2) of the Company’s Form 10-Q for the quarter ended September 30, 2012) and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-10)(10-4) of the Company's Annual Report on Form 10-K10-Q for the yearquarter ended June 30, 2010)December 31, 2012).
   
(10-11) -
  Company's Form of Separation Agreement & Release (Incorporated by reference to Exhibit (10-2)(10-3) of the Company's Form 10-Q for the quarter ended December 31, 2011)2012).
  
(10-12) -
  Summary of personal benefits available to certain officers and non-employee directors (Incorporated by reference to Exhibit (10-3) of the Company's Form 10-Q for the quarter ended September 30, 2008).
  
(10-13) -The Gillette Company 1971 Stock Option Plan. (Incorporated by reference to Exhibit (10-13) of the Company's Form 10-K for the year ended June 30, 2011).
(10-14) -
  The Gillette Company 2004 Long-Term Incentive Plan (as amended on August 14, 2007) (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended September 30, 2007)2012).*
  
(10-15)(10-14) -
  
The Gillette Company Executive Life Insurance Program. +
Program (Incorporated by reference to Exhibit (10-15) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*

The Procter & Gamble Company 7685


Exhibit (10-16)(10-15) -
  
The Gillette Company Personal Financial Planning Reimbursement Program. +
Program (Incorporated by reference to Exhibit (10-16) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012) .*
(10-16) -
The Gillette Company Senior Executive Financial Planning Program (Incorporated by reference to Exhibit (10-17) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-17) -
The Gillette Company Senior Executive Financial Planning Program. +Estate Preservation (Incorporated by reference to Exhibit (10-18) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-18) -
The Gillette Company Estate Preservation Plan. +Deferred Compensation Plan (Incorporated by reference to Exhibit (10-19) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-19) -
The Gillette Company Deferred Compensation Plan. +
Senior Executive Recoupment Policy (Incorporated by reference to Exhibit (10-20) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-20) -
Senior Executive Recoupment Policy. +
(10-21) -
  
The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through August 21, 2006. +
2006 (Incorporated by reference to Exhibit (10-21) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012).*
  
(10-22)(10-21) -
  The Procter & Gamble 2009 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at the annual meeting on October 13, 2009 (Incorporated by reference to Exhibit (10-1)(10-3) of the Company's Form 10-Q for the quarter ended December 31, 2009)2011), and the Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2009 Stock and Incentive Compensation Plan, The Procter & Gamble 2001 Stock and Incentive Compensation Plan, The Procter & Gamble 1992 Stock Plan, The Procter & Gamble 1992 Stock Plan (Belgium Version), The Gillette Company 2004 Long-Term Incentive Plan and the Gillette Company 1971 Stock Option Plan (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended MarchDecember 31, 2011)2012).*
  
(10-23)(10-22) -
 The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions +(Incorporated by reference to Exhibit (10-2) of the Company’s Form 10-Q for the quarter ended December 31, 2012) and related correspondence (Incorporated by reference to Exhibit (10-1)(10-5) of the Company Form 10-Q for the quarter ended MarchDecember 31, 2012).*
   
(10-24)(10-23) -
 
The Procter & Gamble Performance Stock Program Summary (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended March 31, 2012) and related terms and conditions. +
conditions (Incorporated by reference to Exhibit (10-24) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2012). *
   
Exhibit      (11) -
Computation of earnings per share. +
Exhibit (12) -
  
Computation of ratio of earnings to fixed charges. +
Exhibit (21) -
Subsidiaries of the registrant. +
Earnings per Share.
   
Exhibit      (23)(12) -
  
ConsentComputation of Independent Registered Public Accounting Firm. +
Ratio of Earnings to Fixed Charges.
   
Exhibit      (21) -
Subsidiaries of the Registrant.
Exhibit      (23) -
Consent of Independent Registered Public Accounting Firm.
Exhibit      (31) -
Rule 13a-14(a)/15d-14(a) Certifications.+
  
Exhibit      (32) -
Section 1350 Certifications.+
  
Exhibit   (99-1) -
Summary of Directors and Officers Insurance Program.+
   
101.INS (1)           
  XBRL Instance Document.Document
  
101.SCH (1)          
  XBRL Taxonomy Extension Schema Document.Document
  
101.CAL (1)          
  XBRL Taxonomy Extension Calculation Linkbase Document.Document
  
101.DEF (1)          
  XBRL Taxonomy Definition Linkbase Document.Document
  
101.LAB (1)          
  XBRL Taxonomy Extension Label Linkbase Document.Document
  
101.PRE (1)          
  XBRL Taxonomy Extension Presentation Linkbase Document.
Document
(1)Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
+*
Filed herewith.Compensatory plan or arrangement