Statements of Net Assets Available for Plan Benefits as of June 30, 2016 and 2015,
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of the Employee Stock Purchase Plan (Japan)
We have audited the accompanying statements of net assets available for plan benefits of the Employee Stock Purchase Plan (Japan) (the "Plan") as of June 30, 2016 and 2015, and the related statements of changes in net assets available for plan benefits for the periods ended June 30, 2016, 2015 and 2014. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of June 30, 2016 and 2015 and the changes in net assets available for plan benefits for the periods ended June 30, 2016, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.
Our audits comprehended the translation of Japanese Yen amounts into U.S. Dollar amounts and, in our opinion; such translation has been made in conformity with the basis stated in Note 12. The translation of the financial statement amounts into U.S. Dollars has been made solely for the convenience of the readers of these financial statements.
/s/Navarro Amper & Co.
Taguig City, Philippines
September 21, 2016
EMPLOYEE STOCK PURCHASE PLAN (JAPAN)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF JUNE 30, 2016 AND 2015
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Japanese Yen
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U.S. Dollars
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2016 |
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2015 |
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2016 |
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ASSETS, At fair value:
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Cash
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¥ 221,447
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¥ 331,189
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$ 2,153
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The Procter & Gamble Company common stock
2016: 1,407,234 shares, cost ¥13.42 billion ($130.44 million)
2015: 1,405,113 shares, cost ¥11.48 billion ($93.83 million)
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12,261,778,241
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13,461,668,235
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119,222,330
|
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Total Asset
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12,261,999,688 |
13,461,999,424 |
119,224,483
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LIABILITIES
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|
|
|
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Payable to a related party
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-
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1,754,190
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-
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Accrued professional fees
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4,785,012
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4,933,211
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46,523
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Total Liabilities
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4,785,012
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6,687,401
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46,523
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NET ASSETS AVAILABLE FOR PLAN BENEFITS
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¥12,257,214,676
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¥13,455,312,023
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$119,177,960
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See Notes to Financial Statements.
EMPLOYEE STOCK PURCHASE PLAN (JAPAN)
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE PERIODS ENDED JUNE 30, 2016, 2015 AND 2014
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Japanese Yen
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U.S. Dollars
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2016
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2015
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2014 |
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2016 |
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ADDITIONS:
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|
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Investment income (loss):
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|
|
|
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Unrealized fair value gain (loss) on investments
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¥ 926,271,183
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(¥ 169,899,904)
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¥ 192,088,478
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$ 9,006,215
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Realized fair value gain on investments
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6,901,160
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238,006,782
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93,494,008
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67,101
|
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Unrealized foreign exchange gain (loss) - net
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(2,080,141,332)
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2,154,795,252
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290,695,654
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(20,225,394)
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Realized foreign exchange gain (loss) - net
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(61,386,153)
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335,230,431
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50,584,694
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(596,863)
|
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Dividend income
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313,728,027
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322,792,362
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300,838,323
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3,050,405
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Total investment income (loss)
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(894,627,115)
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2,880,924,923
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927,701,157
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(8,698,536)
|
| |
|
|
|
|
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Contributions:
|
|
|
|
|
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Participant contributions
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967,926,881
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948,111,000
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921,902,000
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9,411,237
|
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Employer contributions
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193,257,247
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193,504,019
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186,250,957
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1,879,057
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Total contributions
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1,161,184,128
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1,141,615,019
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1,108,152,957
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11,290,294
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Total additions
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266,557,013
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4,022,539,942
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2,035,854,114
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2,591,758
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|
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|
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DEDUCTIONS:
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|
|
|
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Withdrawals from participants
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(1,459,855,308)
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(3,030,069,913)
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(2,234,359,970)
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(14,194,299)
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Bank and administrative charges
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(4,799,052)
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(4,945,415)
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(9,025,623)
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(46,662)
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Total deductions
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(1,464,654,360)
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(3,035,015,328)
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(2,243,385,593)
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(14,240,961)
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|
|
|
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NET INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
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(1,198,097,347)
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987,524,614
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(207,531,479)
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(11,649,203)
|
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|
|
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NET ASSETS AVAILABLE FOR PLAN BENEFITS:
|
|
|
|
|
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Beginning of year
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13,455,312,023
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12,467,787,409
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12,675,318,888
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130,827,163
|
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End of year
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¥12,257,214,676
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¥13,455,312,023
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¥12,467,787,409
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$119,177,960
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See Notes to Financial Statements.
EMPLOYEE STOCK PURCHASE PLAN (JAPAN)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2016 AND 2015, AND FOR THE PERIODS ENDED JUNE 30, 2016, 2015 AND 2014
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1.
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DESCRIPTION OF THE PLAN
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The following brief description of the Employee Stock Purchase Plan (Japan) (the "Plan") is provided for general information purposes only. Participants should refer to the Plan agreement for more information.
General
The Plan included the Employees' Shareholding Association of P&G Group for employees and executives of all P&G affiliates in Japan. The Plan covers the employees of Procter & Gamble Japan KK and P&G Max Factor GK (collectively the "Companies").
The purpose of the Plan is to contribute to the formation of assets by its participants by facilitating their acquisition of ordinary shares of The Procter & Gamble Company (the "Stock"), the Companies' parent company. The Plan is administered by IBM Business Services (IBM) as a subcontractor for Human Resources Service & Solutions (HRSS). Daiwa Securities Co. Ltd. has been engaged by the Plan to provide the services of purchasing, selling and safekeeping of P&G stocks.
Eligibility
Regular employees hired by the Companies may, at any time, apply for the membership in the plan.
Contributions
Participants may contribute a portion of their base pay in units of 1,000 yen, up to 150 units monthly, and three times the monthly base pay contributions limit from bonus pay. The Companies match 20% of participants' contributions up to 30 units monthly (90 units of bonus pay contributions). All contributions are invested in the Stock.
Members' monthly contributions derived from salary deductions shall be in units of 1,000 yen, and the maximum monthly contribution from a Member's salary shall be 100,000 yen per Member who gets paid semi-annual bonuses, and 150,000 yen per Member who does not get paid semi-annual bonuses. Member Contributions derived from semi-annual bonuses shall be 3 times the monthly Member Contributions: in units of 3,000 yen, and the maximum contribution from a Member's bonus shall be 300,000 yen per Member. Subject to the monthly and annual limits, there is no limit on the total amount of Member Contributions that a Member can make during his or her participation in the Plan.
Participant accounts
Individual accounts are maintained for each Plan participant. Each participant's account is credited with the participant's contribution and allocations of: (a) the Companies' contributions, and (b) realized earnings or losses of the Plan. Participant accounts are also charged with withdrawals and an allocation of administrative expenses that are paid by the Plan. Allocations are based on participant earnings or account balances, as defined by the Plan. The benefit to which a participant is entitled to is the benefit that can be provided from the participant's vested account.
Investments
Participants are only permitted to invest in Stock. Any dividends on shares of Stock are invested to additional shares of Stock.
Vesting
Participants are immediately vested in their contributions, the Companies' matching contributions and earnings.
Withdrawal
Participants may withdraw the allotted shares of Stock in multiples of 100 shares at any time. In the event that participants withdraw from the Plan either on termination of service or by their request, the allotted shares of Stock in multiples of one share plus cash at the amount of the residual share at fair value shall be returned to them.
Plan termination
Although it has not expressed any intent to do so, the Companies have the right under the Plan to discontinue their contributions to the Plan at any time and to terminate the Plan subject to the provisions set forth in the Plan agreement.
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2.
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FINANCIAL REPORTING FRAMEWORK
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Statement of Compliance
The accompanying financial statements of the Plan have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Basis of Preparation and Presentation
The financial statements have been prepared on the historical cost basis, except for the Plan's investment in stock which is measured at fair value.
These financial statements are presented in Japanese Yen, the currency of the primary economic environment in which the Plan operates. The U.S. Dollar amounts presented in these financial statements are included solely for the convenience of the reader and should not be construed as the Plan's presentation currency.
Impact of Recently Issued Accounting Pronouncements
In May 2015, the Financial Accounting Standard Board issued Accounting Standard Update (ASU) 2015-07 to eliminate the requirement to categorize investments for which fair values are measured using the net asset value as a practical expedient within the fair value hierarchy. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share.
The amendments did not have a significant impact on the Plan's financial statements.
In June 2015, the Financial Accounting Standard Board issued Accounting Standard Update (ASU) 2015-10 to amend the definition of "readily determinable fair value" to include equity securities that are investments in structures similar to a mutual fund.
The amendment did not have a significant impact on the Plan's financial statements.
In July 2015, the Financial Accounting Standard Board issued Accounting Standard Update (ASU) 2015-12 to simplify the reporting requirements for fully benefit-responsive investment contracts and plan investment disclosures. The amendment also simplifies the measurement of investments for entities that have fiscal years not coinciding with month-end.
The amendment did not have a significant impact on the Plan's financial statements.
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3.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Cash in bank
Amounts shown as cash in bank are uninvested funds held by the Plan that are to be invested in Stock the following month.
Investment in stock
Investment is recognized and derecognized on trade date accounting when the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned.
At the end of each reporting period, investment in stock is stated at fair value, with any resultant gain or loss recognized in the statements of changes in net assets available for plan benefits. Fair value is determined using quoted market prices.
The Plan derecognizes its investment is stock when the contractual rights to the cash flows from that investment expire; or when the Plan transfers all the risks and rewards of ownership of the Plan asset to another entity. The difference between the carrying amount of the financial asset derecognized and the consideration received or receivable is recognized in the statements of changes in net assets available for plan benefits.
Dividend income
Dividend income from investments is recognized when the shareholders' rights to receive payment have been established. Dividends are recorded on the ex-dividend date, net of any U.S. withholding taxes.
Expenses of the plan
Investment administrative expenses and all other fees and expenses are recognized in the statements of changes in net assets available for plan benefits when incurred.
Foreign currency transactions and translation
Transactions in currencies other than Japanese Yen are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets that are denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary assets carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date the fair value was determined.
| 4. |
CRITICAL ACCOUNTING JUDGMENTS |
In the application of the Plan's accounting policies, management is required to make judgments and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Critical Judgments in Applying Accounting Policies
Below is a critical judgment that management have made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognized in financial statements.
Functional currency