Jon R. Moeller - Chief Financial Officer

Christopher Ferrara - Wells Fargo Securities LLC William G. Schmitz - Deutsche Bank Securities, Inc. John A. Faucher - JPMorgan Securities LLC Dara W. Mohsenian - Morgan Stanley & Co. LLC Stephen R. Powers - UBS Securities LLC Wendy C. Nicholson - Citigroup Global Markets, Inc. (Broker) Lauren Rae Lieberman - Barclays Capital, Inc. Joseph Nicholas Altobello - Raymond James & Associates, Inc. Olivia Tong - Bank of America Merrill Lynch Javier Escalante - Consumer Edge Research LLC Ali Dibadj - Sanford C. Bernstein & Co. LLC Jason M. English - Goldman Sachs & Co. William B. Chappell - SunTrust Robinson Humphrey, Inc. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc. Alicia A. Forry - Canaccord Genuity Ltd.

Good morning and welcome to Procter & Gamble's quarter end conference call. P&G would like to remind you that today's discussion will include a number of forward-looking statements. If you will refer to P&G's most recent 10-K, 10-Q, and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections. Also, as required by Regulation G, Procter & Gamble needs to make you aware that during the discussion the company will make a number of references to non-GAAP and other financial measures. Procter & Gamble believes these measures provide investors with valuable information on the underlying growth trends of the business and has posted on its website, www.PG.com, a full reconciliation of non-GAAP and other financial measures. Now I will turn the call over to P&G's Chief Financial Officer, Jon Moeller. Jon R. Moeller - Chief Financial Officer: Good morning. The quarter we just completed was a strong one from both a cash flow and underlying earnings perspective. Adjusted free cash flow productivity was very strong at 101%. Constant currency core earnings per share increased double digits, with meaningful triple-digit basis point improvements in both gross and operating margins on both a constant currency and all-in basis. All-in GAAP earnings per share were up 32%. Organic sales were down a point, reflecting deliberate choices to exit some structurally unprofitable business lines, volatile market conditions, and the early stage we are at in our strengthening and improvement plans on large categories and markets. We're bringing innovations to market and are making investments in value equations, sampling and in trial of our products and brands, as well as in selling coverage. We expect organic top line growth to resume in Q2, with further strengthening in the back half. We do continue to operate in a challenging and volatile macro environment. Market growth rates on both a volume and value basis are decelerating, due mainly to slower growth in developing markets. We entered the year expecting the market to grow close to 4% globally. We now expect 3%. There are more flashpoints across the globe than at any time in recent memory. Currencies are weakening pretty much across the board, a $300 million after-tax impact since the start of the fiscal year and $600 million after-tax versus year ago. This, as you know, comes on top of a $1.5 billion impact last fiscal year and a $1.1 billion impact the year before. P&G has leading positions in some of the toughest markets. Versus the next multinational competitor, our business is over three times larger in Russia and the Ukraine. In Japan, where devaluations had a significant impact, the business is six times larger than the next largest non-Japanese competitor. We're almost three times larger in China, where the market has recently slowed. In the Middle East, which has been heavily impacted by political instability, war, crashing oil prices, our business is two times larger than the next multinational competitor. These tough markets represent over $14 billion in sales or roughly 20% of the company, so they're not trivial. The relative strength of the dollar has made it tougher for us than our euro and yen functional currency competitors. We're facing, for example, a 40% devaluation in Russia, while our euro functional competitors are facing half of that. Each of these items are realities, not excuses, and many of these dynamics will continue. Against this backdrop, we're staying focused on big opportunities in our control, executing what is the largest transformation in our company's history, step-changing productivity, transforming our supply chain, focusing our portfolio, and strengthening category business model and innovation plans. This transformation strategy is ultimately a growth strategy. We're dramatically improving productivity, with a lot of upside still ahead. In February 2012, we announced that we would reduce non-manufacturing overhead by 10% over five years. As of September 30, we've reduced these roles by 23%, more than double the original target, and are on track to meet a revised target of 25% to 30% by the end of fiscal 2017. Our original cost of goods savings target was $6 billion. We expect to deliver over $7 billion by the end of this year, 15% above our initial target. We've reduced manufacturing enrollment by 15% over the last three years. This includes new staffing necessary to support capacity additions. On a same-site basis, manufacturing enrollment is down nearly 20%. As with overhead, we're targeting a 25% to 30% cumulative reduction by the end of fiscal 2017. We are strengthening marketing, greater reach, higher frequency, greater effectiveness, at less overall cost. Last year we reduced the number of agencies we work with by nearly 40% and cut agency and production spending by $300 million. We're aiming for an additional $200 million of agency-related savings this year. These are non-working savings that enable us to invest in working media and sampling dollars. We're also driving balance sheet productivity. Inventory days are down year on year. Payables days are up. The moves we made here have enabled us to extend our long track record of strong adjusted free cash flow productivity, 102% last fiscal year, 101% last quarter, despite the investments we're making in our supply chain. We continue to maintain our position as one of the strongest cash generators among competitive peers and comparable mega-cap companies. We're also among the top companies in returning cash to shareholders. In fiscal 2015 we increased our dividend for the 59th consecutive year and returned $11.9 billion in cash to shareholders, 105% of adjusted net earnings. Over the past five years we've returned $60 billion to shareholders and intend to pay dividends, retire shares, and repurchase shares worth up to $70 billion over just the next four years. We're transforming our supply chain to lower cost, reduce inventory, improve customer service levels, and increase product quality and process reliability. We're re-siting manufacturing capacity closer to major consumer populations and our new distribution hubs. We're shutting down older, more remote single-category production sites and building new multi-category facilities. We continue to localize manufacturing and sourcing, reducing costs and currency exposure. We're upgrading, automating, and standardizing our operations, improving manufacturing process reliability and asset utilization rates. As you know, we are transforming our portfolio. We're centered 10 category-based business units where P&G has leading market positions, strong brands, and consumer-meaningful product technologies. These 10 categories have been growing faster with higher margins than the balance of the company. These are categories with clear consumer jobs to be done, where product functionality and efficacy matters. They are products that consumers purchase in our channels and use on a daily basis. We will be a company of superior brands and products in these 10 product categories. Within these core businesses, we're also focusing our portfolios to maximize value creation. We're making smart choices for short, mid, and long-term value creation or going-bad business, even when these choices create short-term top line pressure. In the Mexico tissue business, for example, we're shifting our focus from low-tier conventional tissue products to premium-tier differentiated products. This will reduce sales by nearly $75 million, over 1% of global category sales, but profit will increase by more than $30 million. We've made similar choices in Fabric Care. We are deprioritizing less profitable non-strategic brands and product lines and low-price offerings to improve the profitability of the business at a trade-off of about a point of sales growth in the category. We've also accepted trade-off of top line for value creation at the market level. In India, for example, we've accepted a reduction in top line growth from mid-teens to high singles, improving local profit margins more than 700 basis points last year. We'll continue to grow, but now the growth will be worth something. We've been strengthening business unit strategies, business models, and product innovation, but in particular priority against the four largest categories, Baby Care, Fabric Care, Hair Care and Grooming, and the two largest markets, the U.S. and China. We're focusing our Laundry business on consumer preferred brands and product innovations like our premium performance and premium priced unit-dosed detergents, our market-leading and market-expanding scent bead fabric enhancers. And we're launching better performing and more profitable new compact liquid detergents in Russia, Turkey, Mexico, Brazil, and China. The Fabric Care results in the U.S. demonstrate what is possible when we get the strategy balanced and the innovation program focused on what matters most to consumers, superior value and best-in-class performance at a modest price premium. The U.S. laundry category is growing again, up three points on a value basis across all outlets over the last six-month period. Within this, P&G share is growing. U.S. laundry detergent value share was up more than a point last fiscal year and grew again this quarter. Fabric enhancer share is up nearly a point over the same period. In U.S. Baby Care, strong innovation, consumer communication, trial programs, and a robust online presence have led to strong growth. P&G value share of U.S. diapers was up more than 1.5 points last fiscal year and was up 0.5 point again this quarter. We just launched our latest Pampers premium tier innovation, and we expect it to help us sustain this strong momentum. Baby Care results have been soft in other markets. To address this, we've accelerated premium innovations on both taped and pull-on diapers to restore our competitiveness at the top end of the market. We're strengthening our selling resources and programs for baby stores, and we're improving our point-of-market entry programs to deliver higher awareness and trial of Pampers among new moms. The largest male and female grooming brands, Gillette's Fusion and Venus, have proven to be and will continue to be huge platforms for our blade and razor innovation. We've continued the growth of Fusion with the big, obvious, and preferred FlexBall innovation that launched in the U.S. last year. We began rolling out the FlexBall technology in parts of Europe and Asia at the beginning of this calendar year. In less than 18 months, we've put 25 million Fusion FlexBall razors into the hands of men around the world, and we've recently launched into markets in Latin America and Central and Eastern Europe. We've also extended the FlexBall technology to Venus, the best-selling women's razor in the world, with the Venus Swirl innovation. We're continuing to innovate at the top end of the market to extend the product performance advantage we already enjoy over all competitors. Our new cartridge upgrade will launch in just a few months. We're supporting a broader range of our product ladder, from our best product, Fusion FlexBall, to MACH3 systems, to premium-priced and superior performance disposables with strong consumer value communication. We're innovating in store, helping retailers move out of the lock boxes on the shelves and at checkout with the use of hard tags. Hard tags make Gillette much easier to shop. They take up less space on shelves so more product can be put on a peg, reducing out-of-stocks and improving sales closure rates, and they're very effective at reducing shrink. We've already made the change in several hundred stores with excellent results, and we'll be rolling out hard tags as fast as we can in the year ahead. We're also innovating online. With more men purchasing their blades and razors through e-commerce, it's critical that Gillette establishes itself as the online leader. Gillette's online Shave Club launched in June and is off to a very good start, with e-commerce share of blades and razors up four points since launch. We're building partnerships with e-tailers and retailers. We're offering our shoppers subscription tie-ins for the Gillette Shave Club. Gillette is now consistently number one in paid search and has gone from number 50 to number two in organic shave club search. Importantly, Gillette's product is significantly consumer preferred over any and all shave club competition, winning on closeness, smoothness, comfort, and 18 other attributes tested, including importantly, overall better shaves. We have a strong innovation plan coming to market in China to capture more of the fast-growing premium tier segment. We're leveraging premium Baby Care innovations in both the taped and pull-on segments. We're launching compact Ariel liquid detergents that consumers prefer over competition, and we have new upgrades coming soon on Tide. We've made meaningful product and packaging improvements in Hair Care that launched last quarter on both Head & Shoulders and Pantene. And we're investing to improve the capabilities of our go-to-market operations, strengthening our relationships and presence with key e-commerce and specialty retailers, the fastest-growing segments of the Chinese retail market. We're increasing our investment in consumer awareness, point-of-market entry sampling, and trial across product categories. These moves take time to fully implement, but we're confident they will result in stronger growth over time, just as they've done in U.S. Baby Care and the Fabric Care business. So it continues to be a challenging environment. Against this backdrop, we continue to improve productivity, to transform our supply chain, to focus our portfolios, and to invest in superior consumer preferred brands and products. Cash flow is very strong as are underlying economics. We're investing in the future and are confident we'll return to positive organic top line growth next quarter. While it's not yet complete and it's only one month and while we face our toughest comp in December, we're off to a good start, with our October organic sales growth at 3% so far. With that, let me get into the details of the quarter we just completed and the fiscal year outlook; two housekeeping items before I begin. First, the organic sales and core earnings results we're reporting today are based on our 10 core product categories. The results of the Beauty and Batteries businesses that we're in the process of exiting are reported as discontinued operations. In September we provided an informational 8-K presenting historical results on this same basis. Second, starting this period we are no longer consolidating the results of our Venezuelan subsidiaries into our reported numbers. As I mentioned previously, organic sales were down 1% for the quarter versus the prior year. China and Brazil were large drivers of the sales decline, accounting for one point of total company sales growth headwind. We estimate that category and SKU cleanup efforts drove up to another point of sales decline. All-in sales were down 12%, including a nine point headwind from foreign exchange and two points from the Venezuela deconsolidation and other minor brand divestitures. Core gross margin and core operating margin both improved on both an all-in and ex-currency basis, driven by productivity savings. Core gross margin increased 250 basis points versus the prior year. Excluding foreign exchange, core gross margin was up 310 basis points. Core operating margin was up 270 points versus the prior year behind 260 basis points of productivity savings. On a constant currency basis, core operating margin was up 320 basis points. The core effective tax rate was 24%, up 1.5 points versus the prior year, a $0.02 per share drag on core earnings per share. Core earnings per share were $0.98, down 1% versus the prior quarter. This includes a 13 percentage point foreign exchange headwind, nearly $400 million after tax. On a constant currency basis, core earnings per share grew 12%. On an all-in GAAP basis, earnings per share were $0.91 for the quarter, up 32% versus the prior year. We generated $3 billion in free cash flow, yielding 101% adjusted free cash flow productivity. We returned approximately $2.4 billion to shareholders through a combination of $1.9 billion in dividend and $0.5 billion in share repurchase. Moving to guidance, as we said last quarter, we expect fiscal 2016 to be a year, given market volatility, FX headwinds, and pricing, of modest top line growth, solid core operating income growth, robust constant currency core earnings per share growth, and strong 90% to 100% adjusted free cash flow productivity. We're maintaining our outlook for organic sales growth of in line to up low single digits versus fiscal 2015. We've been investing to increase awareness and trial of our brands and products in North America, which is a key catalyst for growth in categories like Fabric Care and Grooming. We're starting to see the benefits, and this should improve in the second half of the year. We're launching a number of new consumer-preferred premium innovations over the next few months and early in the second half of the fiscal year in both developed and developing markets. We're investing in selling coverage to capitalize on opportunities in the fastest growing channels and strengthen our presence in our most important markets. All these efforts along with annualizing some of the most significant impacts from last fiscal year give us confidence in a stronger second quarter and second half. The headwind from foreign exchange has increased since the start of year. We now expect FX will have a five to six percentage point impact on all-in sales growth. Also, the combined impact of the Venezuela deconsolidation and minor brand divestures will have a two to three percentage point drag on all-in sales growth. Taken together, we expect all-in sales to be down high single digits versus restated fiscal 2015 results. Bottom line outcomes are, frankly, much more difficult to assess given the market and foreign exchange rate volatility. For now, we're maintaining our outlook for core earnings per share growth of slightly below to up mid-single digits versus year ago. We will invest where it's appropriate to do so. We will not cut smart investment to offset foreign exchange impacts, which means we could very well end up below the guidance range. On the other hand, we're working to accelerate and enhance productivity, and commodities have generally been a help. We'll see how things develop, and we'll update you as needed. We're also maintaining our all-in GAAP earnings per share growth outlook of up 53% to 63%. With continued strong operating margin expansion, we expect to deliver core operating income growth of mid to high single digits. This includes the $0.05 to $0.06 per share drag on operating earnings from the deconsolidation of results in our Venezuelan business, and it includes $0.02 to $0.03 per share of Beauty deal transition costs that will remain in our core earnings results. So strong underlying operating earnings progress, which excluding the $0.08 impact from these items should be up high singles to low double digits. Our key assumptions on items below the core operating profit line have not changed. We continue to expect non-operating income will be a two to three percentage point drag on core earnings per share growth, mainly impacting the fourth quarter. The core effective tax rate should be about 24% for fiscal 2016, about three points higher than last year. Combined, non-operating income and tax will be a six to seven percentage point impact on core earnings per share growth. Finally and importantly, we expect to retire shares at a value of approximately $8 billion to $9 billion through a combination of direct share repurchase and shares that will be exchanged in the Duracell transaction. In addition to the shares we expect to retire, we expect dividend payments of more than $7 billion, in total $15 billion to $16 billion in dividend payments, share exchanges, and share repurchase. Going forward, we are committed to balanced top and bottom line growth and strong free cash flow productivity to drive total shareholder return. We will address gaps if and when they emerge. We will defend our positions. And we will invest behind trial and awareness programs, and of course consumer-preferred innovation. We'll do everything we can from a productivity standpoint. We'll smartly invest to accelerate top line growth, and we'll continue delivering on our commitment of strong cash return to shareholders. That concludes our prepared remarks for this morning. As a reminder, business segment information is provided in our press release and will be available in slides, which will be posted on our website, www.PG.com, following the call. With that, I'd be happy to take your questions.

Your first question comes from the line of Chris Ferrara, Wells Fargo. Christopher Ferrara - Wells Fargo Securities LLC: Hey, thanks. Jon, I guess can you quantify the gross margin impact maybe of some of that category SKU cleanup that you're doing? And then I guess as a follow-up to that, how long does it last? I think the three examples you gave were maybe 10 basis points each. You said 100 basis points, which is a pretty big deal. I guess how long has that been going on? How long do think it lasts? What's the gross margin impact of it? And then if you can, the outlook into October, what's been going on? How much of that is maybe some of this going away? What drives the confidence in October being sticky? Thank you. Jon R. Moeller - Chief Financial Officer: So I would say that we are midway through the portfolio cleanup of the core businesses. For example, the Mexico tissue towel move really was just effective in July. The Laundry moves span the end of last fiscal year and the beginning of this fiscal year. So we're about in the middle of that with still some more work to do, so that will continue to have an impact on the top line. Obviously, as you point out, that's a gross margin accretive endeavor. I honestly haven't worked to calculate that specifically, Chris, so we'll have to give you some perspective offline on that. Relative to confidence in Q2 and going forward, there are several things that drive us from where we are to where we'll be. The big core businesses that we've been working on are continuing to strengthen. So I talked about Fabric Care and Baby Care in the U.S., where market growth has improved as a result of innovation in the category, where our shares are continuing to increase. Baby Care actually we're selling through our capacity currently and are on allocation, so that will come off over time and that will be a help. Importantly, some of the other structural items we've been working to address, we've talked Mexico. We've talked China. Mexico is progressing very nicely. They had a quarter that I think indexed 98 versus a year ago, which is up pretty significantly from where it's been, and we expect that to turn to a positive index next quarter. China we also expect progress as we bring these premium innovations to market, as I described, and as we continue to draw down some of the inventory that's in the trade. And also, as I mentioned, we're increasing investment where it makes sense in smart ways to drive trial and sampling of our products, particularly at points of market entry and points of market change, and the early returns on those are encouraging. So that's the simple story going forward. Again, we're fairly confident that the second quarter will be a quarter of growth organically on the top line. And we're fairly confident that the growth will strengthen as we move through the fiscal year.

Your next question comes from the line of Bill Schmitz, Deutsche Bank. William G. Schmitz - Deutsche Bank Securities, Inc.: Hey, Jon. Good morning. Jon R. Moeller - Chief Financial Officer: Good morning, Bill. William G. Schmitz - Deutsche Bank Securities, Inc.: Hey, can we talk about the EM versus developed market growth, so what the two growth rates were? And then how much do you think of the market share softness is you guys deciding to exit categories versus just losing to competitors? And then how long do you think that is going to last? So are we a point at P&G where the big negative mix from emerging markets will be cleaned up in the not too distant future because you've exited a lot of this low-end stuff, which was horribly gross margin dilutive, because obviously historically some of the low-margin mix stuff in emerging markets on that business grew so rapidly, had a huge onerous impact on the company broadly? So have you made significant progress on that front where the negative mix on the emerging markets business will be a lot less going forward? Jon R. Moeller - Chief Financial Officer: So the split of organic sales growth developed/developing, developed was minus 1%, developing was minus 2%. I mentioned in the prepared remarks that Brazil and China were significant impacts in driving that minus 2% in developing, as was, as you rightly point out, some of the portfolio cleanup efforts, which are disproportionately developing market activities. Yes, as Chris asked, they will improve gross margin. They will improve operating margin. And yes, that will help reduce negative mix impact from disproportionate growth should it resume in developing markets. As I mentioned in my response to Chris's answer, there is still work to do. So if this was a quarter or next quarter was a quarter where developing markets grew faster than developed markets, we would still have a negative mix on the margin line, but it is getting better.

Your next question comes line from the line of John Faucher, JPMorgan. John A. Faucher - JPMorgan Securities LLC: Thanks. Jon, you guys talk a lot about competitive activity in the press release and it's mentioned for each GBU, which I guess relates to your view of FX-related pricing versus your competitors' view of FX-related pricing. So can you talk a little bit about why you guys feel the need to maybe take more pricing than what you're seeing? Is that just simply okay, European-based companies see less of a need, what have you? Because I guess it seems like you might be better off maybe taking less pricing and delivering 100 basis points of gross margin expansion versus 250 basis points. So how should we think about that balance and why you guys maybe need to take more pricing than your competitors? Jon R. Moeller - Chief Financial Officer: We start from a position of a stronger currency than many of our competitors. So I mentioned in the prepared remarks, Russia is an example of what we're dealing with, 40% devaluation. Both euro and yen functional currency competitors are dealing with about 20%. So that dollar dynamic against all currencies, including the euro and the yen, drives a bigger issue. That doesn't mean that we will necessarily price more. We need to be pragmatic in what we do. I've talked before about recovering less through pricing this time around and recovering more through a combination of mix and cost savings, which we are doing. We're in the period of the cycle where we have made our moves. We're typically first in that endeavor just because of the fact that we're the market leaders in many of these markets, and competitors are beginning to respond. I obviously can't talk in a lot of granularity about pricing from a competitive standpoint. But what I will tell you is that the moves in the market are generally constructive, not all constructive and not all well understood. This is something we'll continue to work against every day, every week, and we'll do it very pragmatically. I'm not interested in price levels that are not sustainable. Obviously, our consumers are not interested in those levels of pricing either. But for example, in Russia where we had negative gross margins as a result of currency devaluation, we simply have to make a move. Making a choice to maintain stronger top line growth with negative margins is just a value-destructive activity.

Your next question comes the line of Dara Mohsenian with Morgan Stanley. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Hey, good morning. So, Jon, I'm still struggling a bit with the emerging markets trends. Obviously, the rationalization on the lower end is having some impact, but it's a business with nearly $25 billion in sales in aggregate. It's still kind of hard for me to understand conceptually how you guys are posting declines when most of your peers at least so far this quarter are more in the high single-digit or double-digit type of growth range. So I was just hoping you could give us a bit more detail on what you think is driving the underperformance. How much of it is the portfolio rationalization? Is there a greater macro impact, or what are the key factors behind it, again, on a relative basis, and then the plans to close that gap going forward? Thanks. Jon R. Moeller - Chief Financial Officer: Sure. The biggest – let's just talk BRIC markets. China, our second largest market, so it makes a significant difference both from a top line and bottom line standpoint, we have not fully accessed the opportunity that the market is presenting in terms of growth in the premium price tiers as consumers look for better, more differentiated solutions, and frankly, higher product quality. We are bringing those items to market now, but our absence in those price tiers has, frankly, hurt us fairly significantly. Diapers is a good example that I mentioned, where we're still the market leader with Pampers, but we're really not present in the portions of the market that are growing, which are the top tier, which will now be with both a pants and a taped offering. We've also talked about some trade channel and inventory cleanup that has been ongoing, and that work continues as well. So China was down 8% on the quarter on an organic basis. Russia is the next largest big developing market for us, and we've talked a little bit both in the prepared remarks and in the Q&A on some of the challenges that presents us. And we're the largest player again by a factor of three in both Russia and the Ukraine. So the impacts there are disproportional. Having said that, Russia is actually holding up fairly well, 2% organic sales growth in the quarter. When you consider everything that's going on, that's a pretty good number, but obviously well below the numbers that we were posting a year ago or two years ago. Brazil is very volatile. We just took some pricing there. It's hard to sort through the trends. Last quarter we were up 7%. This quarter we were down 12%. But if you look at consumption in the marketplace, it's essentially flat. So I think that's another one of those items that should reverse itself as we move forward here. And India, I've talked about the moves that we've made to increase profitability, albeit at some cost to the top line. I realize that's not an exhaustive comparison across the competitive set. But just with those four dynamics that I've described in those four big markets, I think it at least helps understand why our results in developing may not be as strong as some of the others and why that has a large impact on the company.

Your next question comes from the line of Steve Powers with UBS. Stephen R. Powers - UBS Securities LLC: Thanks, so I guess just a question on guidance. Versus the outlook a quarter ago, it looks like you're now expecting your overall top line three to four points worse than in early August, and obviously you held your EPS guidance for now. So I guess really two things. First, the two to three point headwind from minor brand divestitures and the deconsolidation of Venezuela, how much of that wasn't known a few months ago because Venezuela itself wasn't new this quarter, unless I'm mistaken? And then second, the new guidance seems to imply EBIT margins about 100 basis points better rough math versus the guidance a quarter ago when you factor in that top line reduction, which is $600 million – $700 million. So where is that margin being sourced from? I know you mentioned commodities. But planned productivity has to be a big role, and I'm just curious where that's going to be targeted. Jon R. Moeller - Chief Financial Officer: Thanks, Steve. The two to three points on Venezuela and divestitures is not new. You're absolutely right about that. We didn't explicitly talk it in the last call. We wanted to make sure that was clear, so we put it in this call. There's an implicit assumption that one has to make when one tries to determine how much more EBIT we're expecting, and that assumption is where we actually are in the guidance range. So while we've retained our range, that doesn't mean that we're necessarily at the top or the middle of that range. And there is a ton of moving pieces, as I indicated. There is some good news there relative to the productivity savings that you saw come through in the first quarter. Frankly, those were larger than we were expecting, and also there has been some commodity help. But honestly, as I tried to indicate in my prepared remarks, I'm not overly fixated right now on guidance or updating guidance simply because it's very difficult to do. What I'm fixated on is getting the right choices made, being as productive as we possibly can in doing that, and the guidance will be what it will be, but at this point no change.

Your next question comes from the line of Wendy Nicholson with Citi. Wendy C. Nicholson - Citigroup Global Markets, Inc. (Broker): Hi. I have just a couple quick follow-ups and then a real question. My first follow-up is in terms of the gross margin specifically, I have to go back five years to find a first quarter that has a gross margin as strong as the one you've put up. And are you saying, just in terms of net of investments, was the gross margin you put up a function of product mix and the pricing you've taken, et cetera, et cetera? Is this a new base for the first quarter gross margin, or do you feel like if you could turn the clock back, you should have spent more and maybe this gross margin is going to prove to have been inflated? My second follow-up is just, again, I hear you say that your outlook for global category growth has gone from 4% to 3%. If that's the case, why do you still feel like you can put up the same organic growth that you did before? I don't understand why you wouldn't have brought that down in concert with that change. And then sorry for the last question, but over the last month we've seen the news that Tarek [Farahat] is leaving from Brazil, and Martin [Riant] is leaving. And the last time we had a really new CEO when Bob came in, there was an enormous amount of transition in management. And I think my take was that that led to an enormous amount of volatility and disruption across the organization. So the question is do you expect – is the number of management transitions and changes to continue? Do you think there are going to be more? And if that's the case, how is David going to manage this transition and period of change better than Bob [McDonald] did because it seems like more change is not what you need right now? Thank you. Jon R. Moeller - Chief Financial Officer: On gross margin, we've mentioned productivity. We've mentioned pricing. We've mentioned commodities. All of those impacted the gross margin results we delivered. John [Chevalier] can give you the details offline. But within the gross margin number of 250 basis points, 170 basis points of that is savings, there's 80 basis points of pricing benefit, there's 110 basis points of commodity benefit, and then there are of course some offsets to that. So how much of that is sustainable going forward? The commodities will sustain itself until it annualizes, obviously, and so that's probably as big as it's going to get. And pricing will also annualize itself over time. We would hope that some level of productivity savings in cost of goods would continue as we continue to localize production and sourcing and as we continue to increase the efficiency of our manufacturing operations. In terms of the organic top line, again, this is a question of ranges in a sense. Our guidance is flat to up low singles. The quarter we just posted was minus 1%. We're talking about improvement in Q2, with strengthening beyond that. So even if Q2 was zero, which we're not anticipating, and the back half was plus 1%, we'd still be within that guidance range. So we just don't see a reason to change the guidance range. Where we come out within that is a matter that we'll have to work against and a matter that you'll have to assess. In terms of organization change, I really don't want to speak for David. He'll begin interacting with this group shortly, and I'll let him communicate his view on that. My view is we have a very strong team. I believe we have made changes. We've both made changes and individuals have made changes relative to their own plans as a result of the announcements that have been made and as a result of the situation in the business. So I don't see a period personally of very high volatility in management staffing going forward. I think this period will be characterized by a lot more continuity than, frankly, either when the transition with Bob occurred or has been the case over the last year.

Your next question comes from the line of Lauren Lieberman with Barclays. Lauren Rae Lieberman - Barclays Capital, Inc.: Thanks, good morning, so a couple things, two follow-ups just like Wendy had, and then a separate one. So first was just on the Venezuela deconsolidation and product exits. I got a little more confused, Jon. You had said that you guys had always included in the guidance but we weren't aware of it, so you're just being more explicit this quarter. But yet the net sales guidance did get worse, so I'm just a little confused. Why call it out now? Jon R. Moeller - Chief Financial Officer: Yes. Lauren Rae Lieberman - Barclays Capital, Inc.: Something did change. Okay, so that's one. Two is you mentioned in the introduction in your first bit of prepared remarks about making value investments and then nothing afterward. So I was curious where you've maybe adjusted pricing a little bit, maybe in Russia went a little bit too far, so anything there. And then finally, it was also in the press release. I thought the language was interesting about we will invest smartly, like future tense, not currently. So you gave some examples I think of where you're already maybe investing at a full load, like Fabric and Baby in the U.S. But where are areas that you're not yet investing at what you would call a full level? And does that imply that maybe marketing spending starts to climb up again in the second half as you have more of this innovation or product plans in place that you're comfortable supporting? Thanks. Jon R. Moeller - Chief Financial Officer: Okay. On the top line, the change quarter to quarter is really FX in terms of what causes us to take that all-in number down. And again, John can take you through the details there, but that's the primary driver of the change. In terms of investments in consumer value equation, you're right that we did roll back some of the price increases that we took in Russia, consistent with our ongoing dialogue about how we'll manage that situation. I want to be very careful about price signaling, so I can't really talk about decisions that have been made to address additional price gaps, but those decisions have been made. And that's the case both in developing markets but also some developed market price gaps that need to be addressed. And on the question of investment, yes, we expect marketing to increase this year on both an absolute basis and a percentage of sales basis. By marketing, I mean working dollars, so we're going to continue to fund increases in spending that matters with reduction in spending that doesn't. And look, if I was asked to spend an additional $1 billion tomorrow, I could obviously do that, but that's not the question. The question is can we earn a return on that and create value through that investment. And as we have more to invest behind, and you rightly mentioned the product portfolio, for example, as we're bringing these innovations to market, we will do that. I think you saw – I don't have the numbers right in front of me. But in your conference in Boston in the fall, we showed pretty significant increases in marketing support where we did have a reason to invest behind unit dose in Laundry in the U.S., behind the Hair Care innovations, et cetera. So look, let me just be as clear as I can about this. We don't like the top line situation. We don't accept the top line situation. We will fix the top line situation, but we need to do that in ways that are smart and sustainable.

Your next question comes from the line of Joe Altobello with Raymond James. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Hey, guys. Good morning. First question I guess for you, Jon, in terms of the EPS guide for this year, I'm just trying to bridge it from last year $3.76 because if you look at the headwinds you guys have, I know you're well aware of this, they add up to about somewhere between $0.60 and $0.65 by our math. So I'm just trying to figure out what the positives are here. Obviously, the cost of goods savings you guys have called out is $1.2 billion, but I'm not sure if you guys have talked about the tailwind from commodities this year. I've got roughly $400 million in my notes here and maybe what kind of overhead savings you guys are expecting to try to bridge that $0.65 gap, if you will, number one. And then number two, if you look at Duracell and the Beauty brands you guys are selling, obviously you are selling them but they're still part of your business. So how much of a distraction are they in terms of your day-to-day operations until you do divest those businesses? Thanks. Jon R. Moeller - Chief Financial Officer: So the other drivers of improvement, you mentioned commodities. You're in the order, right order of magnitude, probably $450 million. It's gotten a little better. There are overhead savings. We had pretty significant reductions in enrollment last year. There are non-working marketing savings I mentioned in the prepared remarks, another $200 million reduction in marketing, and those are all things that are helping us. In terms of the distraction on the businesses that we're running through discontinued operations, I wouldn't label it in any way a distraction. We're fully committed to optimize and manage those businesses just as if we still own them because, guess what, we do. What we haven't been able to do and what I look forward to being able to do, I know we all look forward to being able to do, is as those divestitures close, being able to focus all of our energy and effort on these 10 product categories where we feel very confident we can make a difference. So that is not fully activated, if you will, as we continue managing the business, frankly, much as we did last year.

Your next question comes to the line of Olivia Tong with Bank of America Merrill Lynch. Olivia Tong - Bank of America Merrill Lynch: Great, thank you. First on the savings, you had a very good start to the year and probably better than you guys had expected. So first, can you talk about the sustainability of that? Because in past years you've tended to see the savings build as the year progresses. So has the cadence of that changed or could we even see more in terms of a savings acceleration there? And then just on the top line, I understand clearly there has been a ton of change over the last, let's call it, 24 months, the productivity improvements, the transformation of the portfolio, the exit of less profitable businesses. But even if you add back those minor divestitures, you still would have probably put up an organic sales decline or you would have put up an organic sales decline in three of the five segments. So you gave some examples about Brazil and China and a couple of other geographies. But can you talk through what's underlying that? Maybe what are you factoring in terms of macros when you look for that acceleration in growth as the year progresses? Thank you. Jon R. Moeller - Chief Financial Officer: Sure. So the savings number was indeed significant. And as I said, it was more actually than we were expecting to see. We were very happy to see that, and that gives us more confidence in our savings objectives going forward. As with past years, the incremental savings should build as the year goes on. The area that there will be less sequential progress is in overhead, simply because the reduction this year is not as significant as it was last year. And from a marketing standpoint, we're going to be spending those savings back behind the things that we've been talking about. So I actually haven't looked at the quarter-by-quarter cadence. I've been working to get this quarter wrapped up, but I know John can give you some perspective on that. In terms of the top line, the simple way to look at it, I would argue that on an adjusted basis or an underlying basis, top line is currently growing at about 1%, which again is nothing we're happy with. How do I get from minus 1% to 1%? There's about a point of the portfolio cleanup. There's also about a point of one-time impacts. So for example, I mentioned that we're selling through our capacity on Baby Care in the U.S., and that's constraining the amount of growth that's possible. We're making adjustments, for example, in inventory levels. We're through that in Mexico. We're getting through that in China. So if you take all of that out, and by the way, I'm not suggesting one should, I'm just trying to answer your question, you get to about a plus 1% running rate. And from there, as I mentioned, when we're able to fully activate the things that are working and address some of the things that aren't working, that should accelerate. There's no reason that we should be comfortable with growth that's any less than the rate of the market growth over time. I'm not talking about a quarter here or quarter there but in total, and that's what we're committed to work towards.

Your next question comes from the line of Javier Escalante with Consumer Edge Research. Javier Escalante - Consumer Edge Research LLC: Hello. Good morning, everyone. I wanted to come back to this issue of volatility in emerging markets because there is an internal element to it, meaning pricing decisions. And I'm glad to learn that Russia and Mexico are normalizing, but there were deep contractions in the prior quarter, and they were caused either because too much promotions or too heavy price increases. Now China is down 8%, baby and diapers are down 3% – 4% at a time that they should have benefited from big launches that A.G. [Lafley] has spoken being rolled out in July. So why this volatility is not self-inflicted, if you will, and is not a byproduct of head count reductions and changes in the role of the GBUs and local markets that you now call SMOs [Sales and Market Operations]? Thank you. Jon R. Moeller - Chief Financial Officer: First of all, to address specifically the point of minus 3% in Babies and Family, that's driven by a couple things. One, in Feminine Care, we're comping the big launch of Discreet, the adult incontinence product, so that has an impact. Two, I mentioned the Family Care choices and I mentioned their one point impact on that category. Three, I mentioned Baby Care softness outside the U.S. and the fact that we're really just getting the products in the marketplace in China that will allow us to compete with effectiveness in the premium tier. So really it's not self-induced volatility. It's those things that I just described. In terms of pricing for FX in an uncertain competitive and consumer environment, there will be volatility. We need to work to get that as right as we can and reduce the volatility, but I don't think it's just a realistic expectation that there won't be any of that volatility. I think we also confuse ourselves a little bit when we look quarter to quarter. These things always have big impacts, usually first positive, and then negative; positive as you announce a price increase and volume sells in ahead of that price increase, negative afterwards as that inventory is drawn down and as consumers adjust to the new pricing in the marketplace. So this is somewhat of just a reality of our times, if you will. Again, I don't excuse the need to be as proficient and effective and efficient in this area as we need to be. That's certainly what we're striving for.

Your next question comes from the line of Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey, guys. I have a few things. One is just to know if Dave Taylor will be on these quarterly calls or just on the fiscal year-end call. Two, why are you not buying back more stock if you think things will improve? It only looks like $0.5 billion. And then on that improvement story, we've had false starts on the same kind of discourse or soliloquy before, I think. Correct me if I'm wrong, but you guys haven't been happy with your top line for a while. So why should investors believe you this time that things will improve? And specifically on this volume point, again, we've seen that every segment says competitive activity and price increases were negative on volume. What tactically are you doing differently? What are you bringing to bear differently now to get out of that situation? And specifically, I want to know if it's finally, finally, finally closing some of these price gaps versus your competition where you're losing share, this tight fisted (53:40) image that we at least have, or are you just waiting and hoping for competition to go away as FX eases? Because you do say building awareness, you do say sometimes closing value gaps, but I really want to know if we should expect your price gaps to close where you're losing share and what you're modeling for your competitive response in that instance. Jon R. Moeller - Chief Financial Officer: Thanks, Ali. Honestly, David and I have not had a chance to talk about how we're going to proceed going forward with the totality of investor interaction. But he will be certainly well represented, is already interacting with investors. We have a day scheduled here November 4, I think some of you know – November 5, and he'll join us for that as well. So we will get David fully involved, and we'll update you on just exactly how that's going to work when we have a better view of that. In terms of your comment on dialogue versus soliloquy, I certainly hope that this is a dialogue. That's what I look forward to. I get no value out of a soliloquy. And you've been good in this regard in terms of maintaining a very active dialogue, which I appreciate. On the question on price gaps and where we're losing share, I would say things fall into three or four buckets, and it's not one solution solves everything. There are some places like the bad businesses I've described where losing share is the right thing to do. And so those share losses we're going to work to get behind us and get to a profitable position so that growth is worth something. There are cases, as I've mentioned, where we do need to adjust pricing, and we will do that. There are other cases where improvement in the value equation that's required to reverse share loss comes through a much better product offering, where the benefits of that offering are much more clearly communicated to consumers. And it comes with getting that preferred, better product in consumers' hands, not just telling them about it, but allowing them to experience it. I talked about investments in sampling and trial. We frankly haven't been as strong as we need to be at key sampling and trial opportunities, specifically points of market entry and points of market change, and we're strengthening our programs there. I mentioned putting 25 million FlexBall razors in the hands of men across the world. Telling them about that product is one thing. Putting it in their hands changes the dynamic pretty significantly. And another example where we're working to strengthen that is in Laundry, where we're increasing our washing machine sampling, and importantly, we're doing that for the first time with unit dose. So consumers get to experience our best, most convenient product as they set up their household. So it's really across the board. But yes, where we do need to address value gaps, we will. Again, how you do that is going to differ by individual situation. On share repurchase, we're committed to the same amount of repurchase that I described on the last call. That hasn't changed. Recall that with the Duracell transaction, there's a significant cash component. And so we've been managing our share repurchase pattern, if you will, with full knowledge of that. That is coming up in the first part of the year, and also with an eye towards what our credit metrics are. But we will repurchase shares on an increasing rate as we move forward here.

Your next question comes the line of Jason English with Goldman Sachs. Jason M. English - Goldman Sachs & Co.: Hey. Good morning, Jon. Jon R. Moeller - Chief Financial Officer: Hi, Jason. Jason M. English - Goldman Sachs & Co.: Thanks for squeezing me in. I wanted to touch on a couple of questions that others have already touched on. It was encouraging to hear your comments in regards to John Faucher's question about competitors generally beginning to follow your lead on pricing. But I think a few other instances you've referenced, you may be positioning to go the other way on a go-forward. And I was intrigued by your comment of increasing investment at points of market entry and points of market change. That sounded like a fancy way of saying more promotions, more sampling, more couponing. So A), is that the right interpretation? And B), back to Ali's question, what do you expect competitors to do on a go-forward, and could that even create more problems down the road? And the second part, sticking with point of sale and execution, you're fairly far in now to the change in merchandising in the U.S. with the partnership with Acosta and Kraft. Can you update us on what you've learned, how it's progressed, and maybe how it's changing as you evolve with those learnings, and of course, Kraft changes ownership hands? Thank you. Jon R. Moeller - Chief Financial Officer: We will not, in most cases, be looking to promotion as a way to strengthen our business. We will be competitive where we need to be, but that is not going to be something that we proactively increase. We may increase trade spending at any point in time as a mechanism of adjusting price, but generally that's not our game. If you look at price, which includes promotion as a driver of top line, it had a two point – it was a two point positive impact in the quarter we just completed. It's been a positive impact for the last 20 quarters and a positive impact for the last 11 years. So we are not going to be using that as a way to improve our situation, but we will remain competitive. The reason for that is fairly straightforward. There's nothing that is really proprietary in that. So as you rightly indicated, that's the mechanism we use to adjust every value equation. That can be undone very quickly and very easily. We'd much prefer to establish superior value equations with superior products that are adequately supported. And that's also the reason why maybe the top line isn't turning as quickly as certainly we would like or understandably as you would like because we're not going to spend money just to spend money. We're not going to spend money in ways that are not sustainable in terms of generating growth in a profitable way on our business. And I apologize, Jason, I'm just not that familiar with the Acosta/Kraft dynamics at a granular level, so I need to pass on that one. But again, we can try to get you that perspective offline.

Your next question comes from the line of Bill Chappell with SunTrust. William B. Chappell - SunTrust Robinson Humphrey, Inc.: Thanks, good morning. Hey, Jon, just to follow up on David Taylor, who will start in 10 days, should we view everything you've been saying and the state of the state as part of the way he's thinking, or is there a timeframe beyond the November meeting or sometime by year end that he's going to lay out any kind of different path? I'm just trying to understand that. And then just as a follow-up, is the timing on Duracell still March-ish? Is that what you were saying? Jon R. Moeller - Chief Financial Officer: The timing on Duracell should be the January – March quarter. And within that, I don't have a month nailed down, but it should be in that quarter. Obviously, from a substance standpoint, I don't want to front-run David and so do not want to be representing his point of view. I want him to represent his point of view. We will look for opportunities to do that as soon as it's practical. Obviously, he starts November 1. We get pretty quickly into the holiday season then. And so at minimum, what we've said is that David will join us when we're all together at CAGNY. And I think also by that time, you can have some more conviction on what he indicates the path forward is simply because he'll have had the appropriate amount of time to develop that thinking. But as I said, we'll look for any opportunity we can to increase exposure as time goes on.

Your next question comes from the line of Mark Astrachan with Stifel. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Thanks and good morning, everybody. Jon, I wanted to understand a little bit – vet maybe the balance of the price and volume going forward. Just broadly, what is in your expectations for the year, and then perhaps if that's changed along with expectations for global growth rates? Jon R. Moeller - Chief Financial Officer: We do expect improvement in volume as we go through the year. It will be lower than sales, so pricing will be a bigger driver for the balance of the year. Obviously, that gap will narrow as we go through quarter by quarter. I apologize, I forgot the second part of your question. But you can feel free to call me, I apologize.

Your final question comes the line of Alicia Forry with Canaccord. Alicia A. Forry - Canaccord Genuity Ltd.: Hi, thanks for squeezing me in. Most of my questions have been answered here. But just to press you a bit more on the competitive activity that we've all been focusing on, I was wondering if you could give us any color on whether that has intensified at all versus recent trends, or if it's more of the same, just a bit weaker generally around the world, but some more color. And then, if you could, possibly contrast the competitive activity that you're seeing in emerging markets versus mature markets, if there are any significant differences in the nature of that competition. And then just finally, on disposals, I know that at the Coty call you guys said that basically you've completed your intended major disposals. But I was just wondering if maybe could we see a handful of the larger non-core brands being sold over the next 12 to 18 months because it looks to me like there are still possible areas that could be considered non-core to the strategy. Thanks. Jon R. Moeller - Chief Financial Officer: Thanks, Alicia. The competitive activity we're seeing is actually pretty constructive, as I mentioned earlier, both on the pricing front and on the product front. So the big driver of competition, for example, in China in Baby Care, is product-based innovation at the premium end. That's very constructive from a market standpoint. If we look at competitive activity, for instance, in the Laundry market in the U.S., take Personal as an example, that's product-based innovation at the premium end. We haven't been as well positioned as we need to be to respond to some of that, some of those moves, like for instance in Baby Care in China. But it's generally constructive. There are pockets here and there where things happen that we wouldn't have chosen, but broadly good competition.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.