Consolidated Statements of Earnings
Amounts in millions except per share amounts; Years ended June 30 2011 2010 2009
NET SALES $82,559 $78,938 $76,694
Cost of products sold 40,768 37,919 38,690
Selling, general and administrative expense 25,973 24,998 22,630
OPERATING INCOME 15,818 16,021 15,374
Interest expense 831 946 1,358
Other non-operating income/(expense), net 202 (28) 397
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 15,189 15,047 14,413
Income taxes on continuing operations 3,392 4,101 3,733
NET EARNINGS FROM CONTINUING OPERATIONS 11,797 10,946 10,680
NET EARNINGS FROM DISCONTINUED OPERATIONS 1,790 2,756
NET EARNINGS $11,797 $12,736 $13,436
BASIC NET EARNINGS PER COMMON SHARE:      
Earnings from continuing operations $ 4.12 $ 3.70 $ 3.55
Earnings from discontinued operations 0.62 0.94
BASIC NET EARNINGS PER COMMON SHARE 4.12 4.32 4.49
DILUTED NET EARNINGS PER COMMON SHARE:      
Earnings from continuing operations 3.93 3.53 3.39
Earnings from discontinued operations 0.58 0.87
DILUTED NET EARNINGS PER COMMON SHARE 3.93 4.11 4.26
DIVIDENDS PER COMMON SHARE $ 1.97 $ 1.80 $ 1.64
Consolidated Balance Sheets

Amounts in millions; June 30

Assets 2011 2010
CURRENT ASSETS    
Cash and cash equivalents $ 2,768 $ 2,879
Accounts receivable 6,275 5,335
INVENTORIES    
Materials and supplies 2,153 1,692
Work in process 717 604
Finished goods 4,509 4,088
Total inventories 7,379 6,384
Deferred income taxes 1,140 990
Prepaid expenses and other current assets 4,408 3,194
TOTAL CURRENT ASSETS 21,970 18,782
PROPERTY, PLANT AND EQUIPMENT    
Buildings 7,753 6,868
Machinery and equipment 32,820 29,294
Land 934 850
Total property, plant and equipment 41,507 37,012
Accumulated depreciation (20,214) (17,768)
NET PROPERTY, PLANT AND EQUIPMENT 21,293 19,244
GOODWILL AND OTHER INTANGIBLE ASSETS    
Goodwill 57,562 54,012
Trademarks and other intangible assets, net 32,620 31,636
NET GOODWILL AND OTHER INTANGIBLE ASSETS 90,182 85,648
OTHER NONCURRENT ASSETS 4,909 4,498
TOTAL ASSETS $138,354 $128,172
Liabilities and Shareholders’ Equity 2011 2010
CURRENT LIABILITIES    
Accounts payable $ 8,022 $ 7,251
Accrued and other liabilities 9,290 8,559
Debt due within one year 9,981 8,472
TOTAL CURRENT LIABILITIES 27,293 24,282
LONG-TERM DEBT 22,033 21,360
DEFERRED INCOME TAXES 11,070 10,902
OTHER NONCURRENT LIABILITIES 9,957 10,189
TOTAL LIABILITIES 70,353 66,733
SHAREHOLDERS’ EQUITY    
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) 1,234 1,277
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: 2011—4,007.9, 2010—4,007.6) 4,008 4,008
Additional paid-in capital 62,405 61,697
Reserve for ESOP debt retirement (1,357) (1,350)
Accumulated other comprehensive income (loss) (2,054) (7,822)
Treasury stock, at cost (shares held: 2011—1,242.2, 2010—1,164.1) (67,278) (61,309)
Retained earnings 70,682 64,614
Noncontrolling interest 361 324
TOTAL SHAREHOLDERS’ EQUITY 68,001 61,439
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $138,354 $128,172

See accompanying Notes to Consolidated Financial Statements.

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 Accumu- lated Other Compre- hensive Income (loss) Non- controlling Interest Treasury Stock Retained Earnings Total
BALANCE
JUNE 30, 2008
3,032,717 $4,002 $1,366 $60,307 $(1,325) $3,746 $290 $(47,588) $48,986 $69,784
Net earnings                 13,436 13,436
Other comprehensive income:                    
Financial statement translation           (6,151)       (6,151)
Hedges and investment securities, net of $452 tax           748       748
Defined benefit retirement plans, net of $879 tax           (1,701)       (1,701)
Total comprehensive income                   $ 6,332
Cumulative impact for adoption of new accounting guidance(1)                 (84) (84)
Dividends to shareholders:                    
Common                 (4,852) (4,852)
Preferred, net of tax benefits                 (192) (192)
Treasury purchases (98,862)             (6,370)   (6,370)
Employee plan issuances 16,841 5   804       428   1,237
Preferred stock conversions 4,992   (42) 7       35  
Shares tendered for Folgers coffee subsidiary (38,653)             (2,466)   (2,466)
ESOP debt impacts         (15)       15
Noncontrolling interest             (7)     (7)
BALANCE
JUNE 30, 2009
2,917,035 4,007 1,324 61,118 (1,340) (3,358) 283 (55,961) 57,309 63,382
Net earnings                 12,736 12,736
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                   $ 8,272
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 issuances 17,616 1   574       616   1,191
Preferred stock conversions 5,579   (47) 7       40  
ESOP debt impacts         (10)       27 17
Noncontrolling interest       (2)     41     39
BALANCE
JUNE 30, 2010
2,843,471 4,008 1,277 61,697 (1,350) (7,822) 324 (61,309) 64,614 61,439
Net earnings                 11,797 11,797
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                   $17,565
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 issuances 29,729   702       1,033   1,735
Preferred stock conversions 5,266   (43) 6       37  
ESOP debt impacts         (7)       38 31
Noncontrolling interest           37     37
BALANCE
JUNE 30, 2011
2,765,737 $4,008 $1,234 $62,405 $(1,357) $(2,054) $361 $(67,278) $70,682 $68,001

(1) Cumulative impact of adopting new accounting guidance relates to split-dollar life insurance arrangements.

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows
Amounts in millions; Years ended June 30 2011 2010 2009
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 2,879 $ 4,781 $ 3,313
OPERATING ACTIVITIES      
Net earnings 11,797 12,736 13,436
Depreciation and amortization 2,838 3,108 3,082
Share-based compensation expense 414 453 516
Deferred income taxes 128 36 596
Gain on sale of businesses (203) (2,670) (2,377)
Change in accounts receivable (426) (14) 415
Change in inventories (501) 86 721
Change in accounts payable, accrued and other liabilities 358 2,446 (742)
Change in other operating assets and liabilities (1,190) (305) (758)
Other 16 196 30
TOTAL OPERATING ACTIVITIES 13,231 16,072 14,919
INVESTING ACTIVITIES      
Capital expenditures (3,306) (3,067) (3,238)
Proceeds from asset sales 225 3,068 1,087
Acquisitions, net of cash acquired (474) (425) (368)
Change in investments 73 (173) 166
TOTAL INVESTING ACTIVITIES (3,482) (597) (2,353)
FINANCING ACTIVITIES      
Dividends to shareholders (5,767) (5,458) (5,044)
Change in short-term debt 151 (1,798) (2,420)
Additions to long-term debt 1,536 3,830 4,926
Reductions of long-term debt (206) (8,546) (2,587)
Treasury stock purchases (7,039) (6,004) (6,370)
Impact of stock options and other 1,302 721 681
TOTAL FINANCING ACTIVITIES (10,023) (17,255) (10,814)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 163 (122) (284)
CHANGE IN CASH AND CASH EQUIVALENTS (111) (1,902) 1,468
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,768 $ 2,879 $ 4,781
SUPPLEMENTAL DISCLOSURE      
Cash payments for:      
Interest $ 806 $ 1,184 $ 1,226
Income taxes 2,992 4,175 3,248
Assets acquired through non-cash capital leases 13 20 8
Divestiture of coffee business in exchange for shares of P&G stock 2,466

See accompanying Notes to Consolidated Financial Statements.