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
[x]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRUE
For the Fiscal Year Ended June 30, 20172023
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 False
For the transition period from  to
Commission File No. 1-434
Cincinnati
THE PROCTER & GAMBLE COMPANYOH
One Procter & Gamble PlazaOne Procter & Gamble Plaza, Cincinnati, Ohio 4520245202
513Telephone (513) 983-1100983-1100
IRS Employer Identification No. 31-041198031-0411980
State of Incorporation: OhioOH
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, without Par ValuePGNew York Stock Exchange NYSE Euronext-Paris
1.125% Notes due 2023PG23ANew York Stock Exchange
0.500% Notes due 2024PG24ANew York Stock Exchange
0.625% Notes due 2024PG24BNew York Stock Exchange
1.375% Notes due 2025PG25New York Stock Exchange
0.110% Notes due 2026PG26DNew York Stock Exchange
3.250% EUR Notes due 2026PG26ENew York Stock Exchange
4.875% EUR Notes due May 2027PG27ANew York Stock Exchange
1.200% Notes due 2028PG28New York Stock Exchange
1.250% Notes due 2029PG29BNew York Stock Exchange
1.800% Notes due 2029PG29ANew York Stock Exchange
6.250% GBP Notes due January 2030PG30New York Stock Exchange
0.350% Notes due 2030PG30CNew York Stock Exchange
0.230% Notes due 2031PG31ANew York Stock Exchange
3.250% EUR Notes due 2031PG31BNew York Stock Exchange
5.250% GBP Notes due January 2033PG33New York Stock Exchange
1.875% Notes due 2038PG38New York Stock Exchange
0.900% Notes due 2041PG41New York Stock Exchange
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, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filed," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filer¨Emerging growth company¨
Non-accelerated filer¨(Do not check if smaller reporting company)
Smaller reporting company¨FALSE
Emerging growth company¨FALSE
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    Yes þ No o TRUE
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þFalse
The aggregate market value of the voting stock held by non-affiliates amounted to $215$357 billion on December 31, 2016.2022.
There were 2,550,014,2302,357,306,187 shares of Common Stock outstanding as of July 31, 2017.2023.

Documents Incorporated by Reference
Portions of the Proxy Statement for the 20172023 Annual Meeting of Shareholders, which waswill be filed on August 1, 2017 (2017within one hundred and twenty days of the fiscal year ended June 30, 2023 (2023 Proxy Statement), are incorporated by reference into Part III of this report to the extent described herein.




FORM 10-K TABLE OF CONTENTSPage
PART IItem 1.
1
Item 1A.2
3
Item 1B.6
9
Item 2.6
9
Item 3.6
9
Item 4.6
9
7
10
PART IIItem 5.8
11
Item 6.10
12
Item 7.11
12
Item 7A.32
30
Item 8.33
31
33
31
36
35
37
35
38
36
39
37
40
38
41
39
Note 1: Summary of Significant Accounting Policies
41
39
Note 2: Segment Information
44
41
Note 3: Supplemental Financial Information
46
44
Note 4: Goodwill and Intangible Assets
48
45
Note 5: Income Taxes
49
46
Note 6: Earnings Per Share
51
48
Note 7: Stock-basedShare-based Compensation
52
49
Note 8: Postretirement Benefits and Employee Stock Ownership Plan
53
51
Note 9: Risk Management Activities and Fair Value Measurements
58
56
Note 10: Short-term and Long-term Debt
61
59
Note 11: Accumulated Other Comprehensive Income/(Loss)
62
60
Note 12: Leases
60
Note 13: Commitments and Contingencies
62
61
Item 9.63
Note 14: Quarterly Results (Unaudited)
66
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
67
62
Item 9A.67
62
Item 9B.67
62
Item 9C.
62
PART IIIItem 10.67
63
Item 11.67
63
Item 12.68
63
Item 13.69
63
Item 14.69
63
PART IVItem 15.69
64
Item 16.71
66
72
Exhibit Index67
73


The Procter & Gamble Company 1

PART I

Item 1. Business.
The Procter & Gamble Company (the Company) is focused on providing branded products of superior quality and value to improve the lives of the world's consumers, now and for generations to come. The Company was incorporated in Ohio in 1905, having first been established as a New Jersey corporation in 1890, and was built from a business founded in Cincinnati in 1837 by William Procter and James Gamble.
Additional information required by this item is incorporated herein by reference to Management's Discussion and Analysis (MD&A); and Notes 1 and 2 to our Consolidated Financial Statements. Unless the context indicates otherwise, the terms the "Company," "P&G," "we," "our" or "us" as used herein refer to The Procter & Gamble Company (the registrant) and its subsidiaries.
The Procter & Gamble Company is focused on providing branded consumer packaged goods of superior quality and value to improve the lives of the world's consumers. The Company was incorporated in Ohio in 1905, having been built from a business founded in 1837 by William Procter and James Gamble. Today, our products are sold in more than 180 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: www.sec.gov. YouReports can also access these reportsbe accessed through links from our website at: www.pginvestor.com. P&G includes the website link solely as a textual reference and the information on our website is not incorporated by reference into this report.
Copies of these reports are also available, without charge, by contacting Wells Fargo,EQ Shareowner Services, 1100 Centre Pointe Curve, Suite 101, Mendota, MN 55120-4100.
Financial Information about Segments
As of June 30, 2017, the Company has five reportable segments under U.S. GAAP: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. Many of the factors necessary for understanding these businesses are similar. Operating margins of the individual businesses vary due to the nature of materials and processes used to manufacture the products, the capital intensity of the businesses and differences in selling, general and administrative expenses as a percentage of net sales. Net sales growth by business is also expected to vary slightly due to the underlying growth of the markets and product categories in which they operate. While none of our reportable segments are highly seasonal, components within certain reportable segments, such as Appliances (Grooming) and Personal Health Care (Health), are seasonal.
Additional informationInformation about our reportable segments can be found in the MD&A and Note 2 to our Consolidated Financial Statements.
Narrative Description of Business
Business Model. Our business model reliesis built to deliver balanced top- and bottom-line growth and value creation. We rely on the continued growth and success of existing brands and products, as well as the creation of new products. Theinnovative products and brands. We offer products in markets and industry segments in which we offer our productsthat are highly competitive. Our products are sold in more thanapproximately 180 countries and territories primarily through mass merchandisers, grocery
stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, e-commerce, high-frequency storesnumerous channels as well as direct-to-consumer. Our growth strategy is to deliver meaningful and pharmacies.noticeable superiority across five key vectors of our consumer proposition - product performance, packaging, brand communication, retail execution and consumer and customer value. We use our research and development (R&D) and consumer insights to provide superior products and packaging. We utilize our superior marketing and online presence to win with consumers at the "zero moment of truth" - when they are searching for information about adeliver superior brand or product.messaging to our consumers. We work collaborativelypartner with our customers to improve thedeliver superior retail execution, both in-store and online presenceonline. In conjunction with the above vectors, we provide superior value to consumers and our retail customers in each price tier in which we compete. Productivity improvement is also critical to delivering our objectives of our productsbalanced top- and win the "first moment of truth" - when a consumer is shopping in the store or online. We must also win the "second moment of truth" - when a consumer uses the product, evaluates how well it met his or her expectationsbottom-line growth 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. Accordingly, marketing and research and product development activities, designed to enable sustained organic growth, continued to carry a high priority during the past fiscal year.value creation.
Key Product Categories. Information on key product categories can be found in the MD&A and Note 2 to our Consolidated Financial Statements.
Key Customers. Our customers include mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores e-commerce,(including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and pharmacies.professional channels. We also sell direct to consumers. Sales to Wal-Mart Stores,Walmart Inc. and its affiliates represent approximately 16%15% of our total sales in 2017,2023, 2022 and 15% in 2016 and 2015.2021. No other customer represents more than 10% of our total sales. Our top ten customers accounted for approximately 35%40% of our total net sales in 2017, 20162023 and 2015. The nature of our business results39% in no material backlog orders or contracts with the government. We believe our practices related to working capital items for customers2022 and suppliers are consistent with the industry segments in which we compete.2021.
Sources and Availability of Materials. Almost all of the raw and packaging materials used by the Company are purchased from others,third parties, some of whichwhom 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 processprocesses and in the transportation of input materials and of finished product to customers.products. The prices we pay for materials and other commodities are subject to fluctuation. When prices for these items change, we may or may not pass the change to our customers. The Company purchases a substantial variety of other raw and packaging materials, none of which isare 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 trademarks in each business are registered.

2 The Procter & Gamble Company

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 offrom 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, often holding a leadership or significant market share position. We support our products with advertising, promotions and other marketing vehicles to build awareness and trial of our brands and products in conjunction with an extensiveour sales force. We believe this combination provides the

2 The Procter & Gamble Company
most efficient method of marketing for these types of products. Product quality, performance, value and packaging are also important differentiating factors.
ResearchGovernment Regulation. Our Company is subject to a wide variety of laws and Development Expenditures. Research and development (R&D) expenditures enable us to develop technologies and obtain patentsregulations across all categoriesthe countries in order to meetwhich we do business. In the needs and improve the livesUnited States, many of our consumers. Researchproducts and development expenses were $1.9 billionmanufacturing operations are subject to one or more federal or state regulatory agencies, including the U.S. Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Federal Trade Commission (FTC) and the Consumer Product Safety Commission (CPSC). We are also subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act, and antitrust and competition laws and regulations that govern our dealings with suppliers, customers, competitors and government officials.
In addition, many foreign jurisdictions in 2017which we do business have regulations and 2016regulatory bodies that govern similar aspects of our operations and $2.0 billionproducts, in 2015 (reportedsome cases to an even more significant degree. We are also subject to expanding laws and regulations related to environmental protection and other sustainability-related matters, non-financial reporting and diligence, labor and employment, trade, taxation and data privacy and protection, including the European Union’s General Data Protection Regulation (GDPR) and similar regulations in Net earnings from continuing operations).states within the United States and in countries around the world.
Expenditures for Environmental Compliance.ExpendituresThe Company has in place compliance programs and internal and external experts to help guide our business in complying with these and other existing laws and regulations that apply to us around the globe; and we have made, and plan to continue making, necessary expenditures for compliance with federal, state and local environmentalthese laws and regulations. We also expect that our many suppliers, consultants and other third parties working on our behalf share our commitment to compliance, and we have policies and procedures in place to manage these relationships, though they inherently involve a lesser degree of control over operations and governance. We do not expect that the Company’s expenditures for compliance with current government regulations, are fairly consistent from year to year and are notincluding current environmental regulations, will have a material to the Company. No material change is expectedeffect on our total capital expenditures, earnings or competitive position in fiscal year 2018.2024 as compared to prior periods.
EmployeesHuman Capital. TotalOur employees are a key source of competitive advantage. Their actions, guided by our Purpose, Values and Principles (PVPs), are critical to the long-term success of our business. We aim to retain our talented employees by offering competitive compensation and benefits, strong career development and a respectful and inclusive culture that provides equal opportunity for all.
Our Board of Directors, through the Compensation and Leadership Development Committee (C&LD Committee), provides oversight of the Company’s policies and strategy relating to talent including diversity, equality and inclusion as well as the Company’s compensation principles and practices. The C&LD Committee also evaluates and approves the Company’s compensation plans, policies and programs applicable to our senior executives.
Employees
As of June 30, 2023, the Company had approximately 107,000 employees, an increase of 1% versus the prior year due primarily to business growth. The total number of employees is an estimate of total Company employees excluding interns, co-ops, contractors and employees of joint ventures asventures. 49% of the years ended June 30. The numberour employees are in manufacturing roles and 27% of our 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. The number of employees includes employees of discontinued operations.
 Total Number of Employees
201795,000
2016105,000
2015110,000
2014118,000
2013121,000
2012126,000
Financial Information about Foreign and Domestic Operations. Net sales in the U.S. account for 42% of total net sales. No other individual country exceeds 10% of total net sales. Operations outside the U.S. are generally characterized by the same conditions discussed in the description of the business above and may be affected by additional factors including changing currency values, different rates of inflation, economic growth and political and economic uncertainties and disruptions.
Our sales by geography for the fiscal years ended June 30 were as follows:
 2017 2016 2015
North America (1)
45% 44% 41%
Europe23% 23% 24%
Asia Pacific9% 9% 8%
Greater China8% 8% 9%
Latin America8% 8% 10%
IMEA (2)
7% 8% 8%
(1)
North America includes results for the United States, Canada and Puerto Rico only.
(2)
IMEA includes India, Middle East and Africa.
Net sales and total assetslocated in the United StatesStates. 41% of our global employees are women and internationally were30% of our U.S. employees identify as follows (in billions):multicultural.
Training and Development
We focus on attracting, developing and retaining skilled and diverse talent, both from universities and the broader market. We recruit from among the best universities across markets in which we compete and are generally able to select from the top talent. We focus on developing our employees by providing a variety of job experiences, training programs and skill development opportunities. Given our develop-from-within model for staffing most of our senior leadership positions, it is particularly important for us to ensure holistic growth and full engagement of our employees.
Diversity, Equality and Inclusion
As a consumer products company, we believe that it is important for our workforce to reflect the diversity of our consumers worldwide. We also seek to foster an inclusive work environment where each individual can bring their authentic self, which helps drive innovation and enables us to better serve our consumers. We aspire to achieve equal gender representation globally and at key management and leadership levels. Within the U.S. workforce, our aspiration is to achieve 40% multicultural representation overall as well as at management and leadership levels.
Compensation and Benefits
Market-competitive compensation and reward programs are critical elements of our employee value equation to attract and retain the best talent. Our total rewards programs are based on the principles of paying for performance, paying competitively versus peer companies that we compete with for talent in the marketplace and focusing on long-term success through a combination of short-term and long-term incentive programs. We also offer competitive benefit programs, including retirement plans and health insurance in line with local country practices with flexibility to accommodate the needs of a diverse workforce.
Sustainability. Environmental sustainability is integrated into our business strategy to offer consumers irresistibly superior products that are more sustainable. Our aim is to deliver balanced top- and bottom-line growth, value creation and key sustainability objectives. In 2021, the Company announced a 2040 net zero ambition and published a Climate Transition Action

The Procter & Gamble Company 3
Net Sales (years ended June 30)United States International
2017$27.3 $37.8
2016$27.0 $38.3
2015$26.8 $43.9
Total Assets (years ended June 30)
2017$59.8 $60.6
2016$64.4 $62.7
2015$65.0 $64.5
Plan, which describes the Company’s ongoing efforts toward reducing greenhouse gas emissions across scopes 1 and 2 and elements of scope 3. This includes a long-term objective of net zero emissions for scopes 1 and 2, elements of scope 3 and interim goals to help us pace our progress. The Company has also declared goals towards using renewable electricity for our operations, reducing use of virgin petroleum-based plastic in packaging, increasing the recyclability or reusability of packaging, responsible sourcing of key forest-based commodities, improving efficiency of water usage in our operations and driving a global portfolio of water restoration projects to address water scarcity.

We use the standards and guidelines of the Global Reporting Initiative, Sustainability Accounting Standards Board (SASB) industry specific standards and the Task Force on Climate-related Financial Disclosures (TCFD) to inform our sustainability and related disclosures included in this Annual Report, our Proxy Statement and our sustainability reports. The “materiality” thresholds in those standards and guidelines may differ from the concept of “materiality” for purposes of the federal securities laws and disclosures required by the Commission’s rules in this Annual Report. References to our sustainability reports and website are for informational purposes only and neither the sustainability reports nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K. Additional detailed information on our sustainability efforts can be found on our website at https://pginvestor.com/esg.
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, as well as in our quarterly and annual reports, current reports on Form 8-K, 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 time the statements are made, which may become outdated or incomplete. We assume no obligation to update any forward-looking statements as a result of new information, future events or other factors.factors, except to the extent required by law. 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 significant factors that may adversely affect our business, operations, financial position or future financial performance. This information should be read in conjunction with the MD&AManagement's Discussion and Analysis and the Consolidated Financial Statements and related Notes incorporated in this report. The following discussion of risks is not all inclusive but is designed to highlight what we believe are important factors to consider when evaluating our expectations. These and other factors could cause our future results to differ from those in the forward-looking statements and from historical trends.
trends, perhaps materially.

MACROECONOMIC CONDITIONS AND RELATED FINANCIAL RISKS
The Procter & Gamble Company 3

Our business is subject to numerous risks as a result of our having significant operations and sales in international markets, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility.
We are a global company, with operations in approximately 70 countries and products sold in more thanapproximately 180 countries and territories around the world. We hold assets, incur liabilities, earn revenuesgenerate sales and pay expenses in a variety of currencies other than the U.S. dollar, and our operations outside the U.S. generate a significant portionmore than 50% of our annual net revenue.sales. Fluctuations in exchange rates for foreign currencies mayhave and could continue to reduce the U.S. dollar value of revenues, profitssales, earnings and cash flows we receive from non-U.S. markets, increase our supply costs (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in those markets or otherwise adversely impact our business results or financial condition. Further, we have a significant amount of foreign currency debt and derivatives as part of our capital markets activities. The maturity cash outflows of these instruments could be adversely impacted by significant appreciation of foreign currency exchange rates (particularly the Euro), which could adversely impact our overall cash flows. Moreover, discriminatory or conflicting fiscal or trade policies in different countries, including changes to tariffs and existing trade policies and agreements, could adversely affect our results. See also the Results of Operations and Cash Flow, Financial Condition and Liquidity sections of the MD&A and Note 9 to ourthe Consolidated Financial Statements.Statements and related Notes.
We also have businesses and maintain local currency cash balances in a number of countries with currency exchange, import authorization, pricing or other controls or restrictions, including Nigeriasuch as Egypt, Argentina and Ukraine.Pakistan. Our results of operations, and financial condition and cash flows could be adversely impacted if we are unable to successfully manage such controls and restrictions, continue existing business operations and repatriate earnings from overseas, or if new or increased tariffs, quotas, exchange or price controls, trade barriers or similar restrictions are imposed on our business.
Additionally, our business, operations or employees mayhave been and could continue to be adversely affected (including by the need to de-consolidate or even exit certain businesses in particular countries) by geopolitical conflicts, political volatility, trade controls, labor market disruptions or other crises or vulnerabilities in individual countries or regions, includingregions. This could include political instability, upheaval or upheaval,acts of war (such as the Russia-Ukraine War) and the related government and other entity responses, broad economic instability or sovereign risk related to a default by or deterioration in the credit worthinesscreditworthiness of local governments, particularly in emerging markets.
Uncertain global economic or social conditions may adversely impact demand for our products or cause our customers and other business partners to suffer financial hardship, which could adversely impact our business.
Our business could be negatively impacted by reduced demand for our products related to one or more significant local, regional or global economic or social disruptions. These disruptions such as:have included and may in the future include: a slow-down,

4 The Procter & Gamble Company
recession or inflationary pressures in the general economy; reduced market growth rates; tighter credit markets for our suppliers, vendors or customers; a significant shift in government policies; significant social unrest; the deterioration of economic relations between countries or regions; potential negative consumer sentiment toward non-local products or sources; or the inability to conduct day-to-day transactions through our financial intermediaries to pay funds to or collect funds from our customers, vendors and suppliers. Additionally, these and other economic conditions may cause our suppliers, distributors, contractors or other third partythird-party partners to suffer financial or operational difficulties that they cannot overcome, resulting in their inability to provide us with the materials and services we need, in which case our business and results of operations could be adversely affected. Customers may also suffer financial hardships due to economic
conditions such that their accounts become uncollectible or are subject to longer collection cycles. In addition, if we are unable to generate sufficient sales, income and cash flow, it could affect the Company’s ability to achieve expected share repurchase and dividend payments.
Disruptions in credit markets or to our banking partners or changes to our credit ratings may reduce our access to credit.credit or overall liquidity.
A disruption in the credit markets or a downgrade of our current credit rating could increase our future borrowing costs and impair our ability to access capital and credit markets on terms commercially acceptable to us, which could adversely affect our liquidity and capital resources or significantly increase our cost of capital. In addition, we rely on top-tier banking partners in key markets around the world, who themselves face economic, societal, political and other risks, for access to credit and to facilitate collection, payment and supply chain finance programs. A disruption to one or more of these top-tier partners could impact our ability to draw on existing credit facilities or otherwise adversely affect our cash flows or the cash flows of our customers and vendors.
DisruptionChanging political and geopolitical conditions could adversely impact our business and financial results.
Changes in the political conditions in markets in which we manufacture, sell or distribute our products, as well as changing geopolitical conditions, may be difficult to predict and may adversely affect our business and financial results. Results of elections, referendums, sanctions or other political processes and pressures in certain markets in which our products are manufactured, sold or distributed could create uncertainty regarding how existing governmental policies, laws and regulations may change, including with respect to sanctions, taxes, tariffs, import and export controls and the general movement of goods, materials, services, capital, data and people between countries. The potential implications of such uncertainty, which include, among others, exchange rate fluctuations, new or increased tariffs, trade barriers and market contraction, could adversely affect the Company’s results of operations and cash flows.
The Company operates a global business with sales, manufacturing, distribution and research and development organizations globally that contribute to our overall growth. If geopolitical tensions and trade controls were to increase or disrupt our business in markets where we have significant sales or operations, including disruptions due to governmental responses to such conflicts (such as the imposition of sanctions, retaliatory tariffs, increased business licensing requirements or limitations on profits), such disruptions could adversely impact our business, financial condition, results of operations and cash flows.
The war between Russia and Ukraine has adversely impacted and could continue to adversely impact our business and financial results.
The war between Russia and Ukraine has negatively impacted, and the situation it generates may continue to negatively impact, our operations. Beginning in March 2022, the Company reduced its product portfolio, discontinued new capital investments and suspended media, advertising and promotional activity in Russia. Future impacts to the Company are difficult to predict due to the high level of uncertainty as to how the overall situation will evolve. Within Ukraine, there is a possibility of physical damage and destruction of our two manufacturing facilities, our distribution centers or those of our customers. We may not be able to operate our manufacturing sites and source raw materials from our suppliers or ship finished products to our customers. Within Russia, we may reduce further or discontinue our operations due to sanctions and export controls and counter-sanctions, monetary, currency or payment controls, restrictions on access to financial institutions, supply and transportation challenges or other circumstances and considerations. Ultimately, these could result in loss of assets or impairments of our manufacturing plants and fixed assets or write-downs of other operating assets and working capital.
The war between Russia and Ukraine could also amplify or affect the other risk factors set forth in this Part I, Item 1A, including, but not limited to, foreign exchange volatility, disruptions to the financial and credit markets, energy supply and supply chain disruptions, increased risks of an information security or operational technology incident, cost fluctuations and commodity cost increases and increased costs to ensure compliance with global and local laws and regulations. The occurrence of any of these risks, combined with the increased impact from the war between Russia and Ukraine, could adversely impact our business and financial results.
More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation worsen, including, among other potential impacts, economic recessions in certain neighboring countries or globally due to inflationary pressures, energy and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe.
BUSINESS OPERATIONS RISKS
Our business results depend on our ability to manage disruptions in our global supply chain may negatively impact our business results.chain.
Our ability to meet our customers’ needs and achieve cost targets depends on our ability to maintain key manufacturing and supply arrangements, including execution of supply chain optimizations and certain sole supplier or sole manufacturing plant

The Procter & Gamble Company 5
arrangements. The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor disputes or controversies, loss or impairment of key manufacturing sites, discontinuity or disruptions in our internal information and data systems or those of our suppliers, cybersecurity incidents, inability to procure sufficient raw or input materials (including water, recycled materials and materials that meet our labor standards), significant changes in trade policy, natural disasters, increasing severity or frequency of extreme weather events due to climate change or otherwise, acts of war or terrorism, disease outbreaks or other external factors over which we have no control, have at times interrupted and could, in the future, interrupt product supply and, if not effectively managed and remedied, could have an adverse impact on our business, financial condition, or results of operations.operations or cash flows.
Our businesses face cost fluctuations and pressures that could affect our business results.
Our costs are subject to fluctuations, particularly due to changes in the prices of commodities (including certain petroleum-derived materials like resins and paper-based materials like pulp) and raw and packaging materials and the costs of labor, transportation (including trucks and containers), energy, pension and healthcare. Inflation pressures could also result in increases in these input costs. Therefore, our business results are dependent,depend, in part, on our continued ability to manage these fluctuations through pricing actions, cost saving projects and sourcing decisions, while maintaining and improving margins and market share. Failure to manage these fluctuations and to anticipate consumer reaction to our management of these fluctuations could adversely impact our financial results.
Our ability to meet our growth targets depends on successful product, marketing andresults of operations innovation and successful responses to competitive innovation and changing consumer habits.
We are a consumer products company that relies on continued global demand for our brands and products. Achieving our business results depends, in part, on successfully developing, introducing and marketing new products and on making significant improvements to our equipment and manufacturing processes. The success of such innovation depends on our ability to correctly anticipate customer and consumer acceptance and trends, to obtain, maintain and enforce necessary intellectual property protections and to avoid infringing upon the intellectual property rights of others. We must also successfully respond to technological advances made by, and intellectual property rights granted to, competitors. Failure to continually innovate, improve and

4 The Procter & Gamble Company

respond to competitive moves and changing consumer habits could compromise our competitive position and adversely impact our results.or cash flows.
The ability to achieve our business objectives is dependentdepends on how well we can compete with our local and global competitors in new and existing markets and channels.
The consumer products industry is highly competitive. Across all of our categories, we compete against a wide variety of global and local competitors. As a result, we experience ongoing competitive pressures in the environments in which we operate, as well aswhich may result in challenges in maintaining sales and profit margins. To address these challenges, we must be able to successfully respond to competitive factors and emerging retail trends, including pricing, promotional incentives, product delivery windows and trade terms. In addition, evolving sales channels and business models may affect customer and consumer preferences as well as market dynamics, which, for example, may be seen in the growing consumer preference for shopping online.online, ease of competitive entry into certain categories and growth in hard discounter channels. Failure to successfully respond to competitive factors and emerging retail trends and effectively compete in growing sales channels and business models, particularly e-commerce and mobile or social commerce applications, could negatively impact our results.results of operations or cash flows.
A significant change in customer relationships or in customer demand for our products could have a significant impact on our business.
We sell most of our products via retail customers, which include mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores e-commerce,(including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and pharmacies.professional channels. Our success is dependentdepends on our ability to successfully manage relationships with our retail trade customers, which includes our ability to offer trade terms that are mutually acceptable and are aligned with our pricing and profitability targets. Continued concentration among our retail customers could create significant cost and margin pressure on our business, and our business performance could suffer if we cannot reach agreement with a key customer on trade terms and principles. Our business could also be negatively impacted if a key customer were to significantly reduce the inventory level of or shelf space allocated to our products as a result of increased offerings of other branded manufacturers, private label brands and generic non-branded products or for other reasons, significantly tighten product delivery windows or experience a significant business disruption.
If the reputation of the Company or one or more of our brands erodes significantly, it could have a material impact on our financial results.
The Company's reputation, and the reputation of our brands, form the foundation of our relationships with key stakeholders and other constituencies, including consumers, customers and suppliers. The quality and safety of our products are critical to our business. Many of our brands have worldwide recognition and our financial success is directly dependentdepends on the success of our brands. The success of our brands can suffer if our marketing plans or product initiatives do not have the desired impact on a brand's image or its ability to attract consumers. Our results of operations or cash flows could also be negatively impacted if the Company or one of our brands suffers substantial harm to its reputation due to a significant product recall, product-related litigation, defects or impurities in our products, product misuse, changing consumer perceptions of certain ingredients, negative perceptions of packaging (such as plastic and other petroleum-based materials), lack of recyclability or other environmental impacts, concerns about actual or alleged labor or equality and inclusion practices, privacy lapses or data breaches, allegations of product tampering or the distribution and sale of
counterfeit products. Additionally, negative or inaccurate postings or comments on social media or networking websites about the Company or one of its brands could generate adverse publicity that could damage the reputation of our brands or the Company. If we are unable to effectively manage real or perceived issues, including concerns about safety, quality, ingredients, efficacy, environmental or social impacts or similar matters, sentiments toward the Company or our products could be negatively impacted, and our financial results of operations or cash flows could suffer. Our Company also devotes significant time and resources to programscitizenship efforts that are consistent with our corporate values and are designed to strengthen our business and protect and preserve our reputation, such as socialincluding programs driving ethics and corporate responsibility, strong communities, equality and inclusion and environmental sustainability. While the Company has many programs and

6 The Procter & Gamble Company
initiatives to further these goals, our ability to achieve these goals is impacted in part by the actions and efforts of third parties including local and other governmental authorities, suppliers, vendors and customers. Consumer or broader stakeholder perceptions of these programs and initiatives widely vary and could adversely affect our business. If these programs are not executed as planned or suffer negative publicity, the Company's reputation and financial results of operations or cash flows could be adversely impacted.
We rely on third parties in many aspects of our business, which creates additional risk.
Due to the scale and scope of our business, we must rely on relationships with third parties, including our suppliers, contract manufacturers, distributors, contractors, commercial banks, joint venture partners and external business partners, for certain functions. If we are unable to effectively manage our third partythird-party relationships and the agreements under which our third partythird-party partners operate, our results of operations and cash flows could be adversely impacted. Further, failure of these third parties to meet their obligations to the Company or substantial disruptions in the relationships between the Company and these third parties could adversely impact our operations and financial results could suffer.results. Additionally, while we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk.
AnA significant information security or operational technology incident, including a cybersecurity breach, or the failure of one or more key information or operations technology systems, networks, hardware, processes and/or associated sites owned or operated by the Company or one of its service providers could have a material adverse impact on our business or reputation.
We rely extensively on information and operational technology (IT)(IT/OT) systems, networks and services, including internet and intranet sites, data hosting and processing facilities and tools,technologies, physical security systems and other hardware, software and technical applications and platforms, many of which are managed, hosted, provided and/or used by third parties or their vendors, to assist in conducting our business. The various uses of these ITIT/OT systems, networks and services include, but are not limited to:
•ordering and managing materials from suppliers;
•converting materials to finished products;
•shipping products to customers;
•marketing and selling products to consumers;
•collecting, transferring, storing and/or processing customer, consumer, employee, vendor, investor and other stakeholder information and personal data;data, including such data from persons covered by an expanding landscape of privacy and data regulations, such as citizens of the European Union who are covered by the General Data Protection Regulation (GDPR), residents of California covered by the California Consumer Privacy Act (CCPA), citizens of China covered by the Personal Information Protection Law (PIPL) and citizens of Brazil covered by the General Personal Data Protection Law (LGPD);
•summarizing and reporting results of operations, including financial reporting;
•managing our banking and other cash liquidity systems and platforms;
•hosting, processing and sharing, as appropriate, confidential and proprietary research, business plans and financial information;

The Procter & Gamble Company 5

•collaborating via an online and efficient means of global business communications;
•complying with regulatory, legal and tax requirements;
•providing data security; and
•handling other processes necessary to manage our business.
Numerous and evolving information security threats, including advanced persistent cybersecurity threats, pose a risk to the security of our ITservices, systems, networks and services,supply chain, as well as to the confidentiality, availability and integrity of our data and of our critical business operations. As cybersecurity threats rapidly evolve in sophistication and become more prevalent across the industry globally, the Company is continually increasing its attention to these threats. We continue to assess potential threats and vulnerabilities and make investments seeking to address them, including monitoring of networks and systems, increasing information security skills, deploying employee security training, and updating security policies for the Company and its third-party providers. However,In addition, because the techniques, tools and tactics used in cyber attackscyber-attacks frequently change frequently and may be difficult to detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative measures or fully mitigating harms after such an attack.
Our ITIT/OT databases and systems and our third-party providers’ databases and systems have been, and will likely continue to be, subject to advanced computer viruses or other malicious codes, ransomware, unauthorized access attempts, denial of service attacks, phishing, social engineering, hacking and other cyber-attacks. To date, we have seen no material impact on our businessSuch attacks may originate from outside parties, hackers, criminal organizations or operations from these attacks; however, weother threat actors, including nation states. In addition, insider actors - malicious or otherwise - could cause technical disruptions and/or confidential data leakage. We cannot guarantee that our security efforts or the security efforts of our third-party providers will prevent material breaches, operational incidents or other breakdowns to our or our third-party providers’ IT/OT databases or systems.
A breach of our data security systems or failure of our IT/OT databases and systems may have a material adverse impact on our business operations and financial results. If the ITIT/OT systems, networks or service providers we rely upon fail to function properly or cause operational outages or aberrations, or if we or one of our third-party providers suffer a loss, significant unavailability of key operations, or inadvertent disclosure of, lack of integrity of, or loss of our sensitive business or stakeholder information,

The Procter & Gamble Company 7
including personal information, due to any number of causes, ranging fromincluding catastrophic events, ornatural disasters, power outages, tocomputer and telecommunications failures, improper data handling, orviruses, phishing attempts, cyber-attacks, malware and ransomware attacks, security breaches, security incidents or employee error or malfeasance, 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 be exposed to reputational, competitive, operational, financial and business harm as well as litigation and regulatory action. If our critical IT systems or back-up systems or those of our third-party vendors are damaged or cease to function properly, we may have to make a significant investment to repair or replace them.
In addition, if a ransomware attack or other cybersecurity incident occurs, either internally or at our third-party technology service providers, we could be prevented from accessing our data or systems, which may cause interruptions or delays in our business operations, cause us to incur remediation costs, subject us to demands to pay a ransom or damage our reputation. In addition, such events could result in unauthorized disclosure of confidential information or stakeholder information, including personal information, and we may suffer financial and reputational damage because of lost or misappropriated information belonging to us or to our partners, our employees, customers and suppliers. Additionally, we could be exposed to potential liability, litigation, governmental inquiries, investigations or regulatory enforcement actions; and we could be subject to payment of fines or other penalties, legal claims by our suppliers, customers or employees and significant remediation costs.
Periodically, we also upgrade our IT/OT systems or adopt new technologies. If such a new system or technology does not function properly or otherwise exposes us to increased cybersecurity breaches and failures, it could affect our ability to order materials, make and ship orders and process payments in addition to other operational and information integrity and loss issues. The costs and operational consequences of responding to the above items and implementing remediation measures could be significant and could adversely impact our results.results of operations and cash flows.
Changing political conditions couldWe must successfully manage the demand, supply and operational challenges associated with the effects of any future disease outbreak, including epidemics, pandemics or similar widespread public health concerns.
Our business may be negatively impacted by the fear of exposure to or actual effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern. These impacts may include, but are not limited to:
•Significant reductions in demand or significant volatility in demand for one or more of our products, which may be caused by, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine or other travel restrictions or financial hardship, shifts in demand away from one or more of our more discretionary or higher priced products to lower priced products, or stockpiling or similar pantry-loading activity. If prolonged, such impacts can further increase the difficulty of business or operations planning and may adversely impact our businessresults of operations and financial results.cash flows; or
Changes•Significant changes in the political conditions in markets in which we manufacture, sell or distribute our products, including quarantines, import/export restrictions, price controls, or governmental or regulatory actions, closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our employees’ ability to travel or perform necessary business functions, or otherwise prevent our third-party partners, suppliers or customers from sufficiently staffing operations.
Despite efforts to manage and remedy these impacts, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of any such outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects.
BUSINESS STRATEGY & ORGANIZATIONAL RISKS
Our ability to meet our growth targets depends on successful product, marketing and operations innovation and successful responses to competitive innovation, evolving digital marketing and selling platforms and changing consumer habits.
We are a consumer products company that relies on continued global demand for our brands and products. Achieving our business results depends, in part, on successfully developing, introducing and marketing new products and on making significant improvements to our equipment and manufacturing processes. The success of such innovation depends on our ability to correctly anticipate customer and consumer acceptance and trends, to obtain, maintain and enforce necessary intellectual property protections and to avoid infringing upon the intellectual property rights of others and to continue to deliver efficient and effective marketing across evolving media and mobile platforms with dynamic and increasingly more restrictive privacy requirements. We must also successfully respond to technological advances made by, and intellectual property rights granted to, competitors, customers and vendors. Failure to continually innovate, improve and respond to competitive moves, platform evolution and changing consumer habits could compromise our competitive position and adversely impact our financial condition, results of operations or cash flows.
We must successfully manage ongoing acquisition, joint venture and divestiture activities.
As a company that manages a portfolio of consumer brands, our ongoing business model includes a certain level of acquisition, joint venture and divestiture activities. We must be able to successfully manage the impacts of these activities, while at the same time delivering against our business objectives. Specifically, our financial results have been, and in the future could be, adversely impacted by the dilutive impacts from the loss of earnings associated with divested brands or dissolution of joint ventures. Our results of operations and cash flows have been, and in the future could also be, impacted by acquisitions or joint

8 The Procter & Gamble Company
venture activities, if: 1) changes in the cash flows or other market-based assumptions cause the value of acquired assets to fall below book value, or 2) we are not able to deliver the expected cost and growth synergies associated with such acquisitions and joint ventures, including as a result of integration and collaboration challenges, which could also result in an impairment of goodwill and intangible assets.
Our business results depend on our ability to successfully manage productivity improvements and ongoing organizational change, including attracting and retaining key talent as part of our overall succession planning.
Our financial projections assume certain ongoing productivity improvements and cost savings, including staffing adjustments and employee departures. Failure to deliver these planned productivity improvements and cost savings, while continuing to invest in business growth, could adversely impact our results of operations and cash flows. Additionally, successfully executing organizational change, management transitions at leadership levels of the Company and motivation and retention of key employees is critical to our business success. Factors that may affect our ability to attract and retain sufficient numbers of qualified employees include employee morale, our reputation, competition from other employers and availability of qualified individuals. Our success depends on identifying, developing and retaining key employees to provide uninterrupted leadership and direction for our business. This includes developing and retaining organizational capabilities in key growth markets where the depth of skilled or experienced employees may be difficult to predictlimited and may adversely affect our businesscompetition for these resources is intense as well as continuing the development and financial results. For example, the United Kingdom’s decision to leave the European Union has created uncertainty regarding, among other things, the U.K.'s future legal and economic framework and how the U.K. will interact with other countries, including with respect to the free movementexecution of goods, services and people. In addition, results of elections, referendums or other
robust leadership succession plans.
political processes in certain markets in which our products are manufactured, sold or distributed could create uncertainty regarding how existing governmental policies, laws and regulations may change, including with respect to sanctions, taxes, the movement of goods, services and people between countries and other matters. The potential implications of such uncertainty, which include, among others, exchange rate fluctuations and market contraction, could adversely affect the Company’s business and financial results.LEGAL & REGULATORY RISKS
We must successfully manage compliance with current and expanding laws and regulations, as well as manage new and pending legal and regulatory matters in the U.S. and abroad.
Our business is subject to a wide variety of laws and regulations across all of the countries in which we do business, including those laws and regulations involving intellectual property, product liability, product composition or formulation, packaging content or corporate responsibility for packaging and product disposal, marketing, antitrust and competition, privacy, data protection, environmental (including increasing focus on the climate, water and waste impacts of consumer packaged goods companies' operations and products), employment, healthcare, anti-bribery and anti-corruption (including interactions with health care professionals and government officials as well as corresponding internal controls and record-keeping requirements), trade (including tariffs, sanctions and export controls), tax, accounting and financial reporting or other matters. RapidlyIn addition, increasing governmental and societal attention to environmental, social and governance (ESG) matters, including expanding mandatory and voluntary reporting, diligence and disclosure on topics such as climate change, waste production, water usage, human capital, labor and risk oversight, could expand the nature, scope and complexity of matters that we are required to control, assess and report. These and other rapidly changing laws, regulations, policies and related interpretations as well as increased enforcement actions by various governmental and regulatory agencies, create challenges for the Company, including our compliance and ethics programs, and may alter the environment in which we do business, may increase the ongoing costs and complexities of compliance including by requiring investments in technology or other compliance systems, and may ultimately result in the need to cease manufacturing, sales or other business activities in certain jurisdictions, which could adversely impact our financial results.results of operations and cash flows. If we are unable to continue to meet these challenges and comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results. Additionally, we are currently, and in the future may be, subject to a number of inquiries, investigations, claims, proceedings and requests for information from governmental agencies or private parties, the adverse outcomes of which could harm our business. Failure to successfully manage these new or pending regulatory and legal matters and resolve such matters without significant liability or damage to our reputation may materially adversely impact our financial condition, results of operations and financial position.cash flows. Furthermore, if new or pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also materially impact our results of operations and financial position.
Changes in applicable tax laws and regulations and resolutions of tax disputes could negatively affect our financial results.
The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. BecauseChanges in the various tax laws can and do occur. For example, in December 2017, the U.S. maintains a worldwide corporategovernment enacted comprehensive tax system,legislation commonly referred to as the foreignTax Cuts and Jobs Act (the U.S. tax systems are somewhat interdependent. For example, certain income that is earned and taxedTax Act). The changes included in countries outside the U.S. is not taxedTax Act were broad and complex. Under the current U.S. presidential administration, comprehensive federal income tax reform has been proposed, including an increase in the U.S., provided those earnings are indefinitely reinvested outside the U.S. If those same foreign earnings are instead repatriated to the U.S., additional residual Federal corporate income tax rate, elimination of certain investment incentives and an increase in U.S. taxation willof non-U.S. earnings. While these proposals are controversial, likely occur, due to change during the U.S.’s worldwide tax systemlegislative process and highermay prove difficult to enact as proposed in the current closely divided U.S. corporate tax rate. The U.S. is considering corporate tax reform that may significantly change the corporate tax rate and the U.S. international tax rules. Congress, their impact could nonetheless be significant.
Additionally, longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international trade are evolvingas a resultsubject to potential evolution. An outgrowth of the original Base Erosion and Profit Shifting reporting requirements (“BEPS") recommended(BEPS) project is a project undertaken by the G8, G20 and Organizationapproximately 140 member countries of the expanded Organisation for Economic CooperationCo-operation and Development ("OECD"). As(OECD) Inclusive Framework focused on "Addressing the Challenges of the Digitalization of the Economy." The breadth of this project extends beyond pure digital businesses and, as proposed, would likely impact a large portion of multinational businesses by potentially redefining jurisdictional taxation rights in market countries and establishing a global minimum tax. In December 2022, the European Union (EU) approved a directive requiring member states to incorporate a 15% global minimum tax into their respective domestic laws effective for fiscal years beginning on or after December 31, 2023.In

The Procter & Gamble Company 9
addition, several non-EU countries have recently proposed and/or adopted legislation consistent with the global minimum tax framework. Important details of these minimum tax developments are still to be determined and, in some cases, enactment and timing remain uncertain.
While it is too early to assess the overall impact of these potential changes, as these and other tax laws and related regulations change,are revised, enacted and implemented, our financial condition, results of operations and cash flows could be materially impacted. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess whether the overall effect of such potential tax changes would be

6 The Procter & Gamble Company

cumulatively positive or negative for our earnings and cash flow, but such changes could adversely impact our financial results.
Furthermore, we are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation, including maintaining our intended tax treatment of divestiture transactions such as the fiscal 2017 Beauty Brands transaction with Coty, may differ materially from the tax amounts recorded in our Consolidated Financial Statements, which could adversely impact our results of operations and cash flows and financial results.flows.
We must successfully manage ongoing acquisition, joint venture and divestiture activities.
As a company that manages a portfolio of consumer brands, our ongoing business model includes a certain level of acquisition, joint venture and divestiture activities. We must be able to successfully manage the impacts of these activities, while at the same time delivering against our business objectives. Specifically, our financial results could be adversely impacted by the dilutive impacts from the loss of earnings associated with divested brands. Our financial results could also be impacted in the event of acquisitions or joint venture activities if: 1) changes in the cash flows or other market-based assumptions cause the value of acquired assets to fall below book value, or 2) we are not able to deliver the expected cost and growth synergies associated with such acquisitions and joint ventures, which could also have an impact on goodwill and intangible assets.
Our business results depend on our ability to successfully manage productivity improvements and ongoing organizational change.
Our financial projections assume certain ongoing productivity improvements and cost savings, including staffing adjustments as well as employee departures. Failure to deliver these planned productivity improvements and cost savings, while continuing to invest in business growth, could adversely impact our financial results. Additionally, successfully executing management transitions at leadership levels of the Company and retention of key employees is critical to our business success. 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 and retaining organizational capabilities in key growth markets where the depth of skilled or experienced employees may be limited and competition for these resources is intense, as well as continuing the development and execution of robust leadership succession plans.

Item 1B. Unresolved Staff Comments.
None.

Item 2. Properties.
In the U.S., we own and operate 24 manufacturing sites located in 18 different states or territories.states. In addition, we own and operate 8980 manufacturing sites in 3834 other countries. Many of the domestic and international sites manufacture products for multiple businesses. Beauty products are manufactured at 2423 of these locations; Grooming products at 21;17; Health Care products at 17;20; Fabric & Home Care products at 43;37; and Baby, Feminine & Family Care products at 41.37. We own our Corporate headquarters in Cincinnati, Ohio. We own or lease our principal regional general offices in Switzerland, Panama, Singapore, China and the United Arab Emirates. We own or lease our principal regional shared service centers in Costa Rica, the United Kingdom and the Philippines. Management believes that the Company's manufacturing sites are adequate to support the business and that the properties and equipment have been well maintained.

Item 3. Legal Proceedings.
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. In addition, SEC regulations require that we disclose certain environmental proceedings arising under Federal, State or local law when a governmental authority is a party and such proceeding involves potential monetary sanctions that the Company reasonably believes will exceed a certain threshold ($1 million or more). There are no relevant matters to disclose under this Item for this period. See Note 1213 to our Consolidated Financial Statements for information on certain legal proceedings for which there are contingencies.
This item should be read in conjunction with the Company's Risk Factors in Part I, Item 1A for additional information.

Item 4. Mine Safety Disclosure.
Not applicable.



10 The Procter & Gamble Company 7

INFORMATION ABOUT OUR EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions held by the Executive Officers of the Company on August 7, 2017,4, 2023, are:
Name Position Age 
First Elected to
Officer Position
       
David S. Taylor Chairman of the Board, President and Chief Executive Officer 59 2013
       
Jon R. Moeller Vice Chairman and Chief Financial Officer 53 2009
       
Steven D. Bishop Group President - Global Health Care 53 2016
       
Giovanni Ciserani Group President - Global Fabric and Home Care and Global Baby and Feminine Care 55 2013
       
Mary Lynn Ferguson-McHugh Group President - Global Family Care and P&G Ventures 57 2016
       
Charles E. Pierce Group President - Global Grooming 60 2016
       
Carolyn M. Tastad Group President - North America Selling and Market Operations 56 2014
       
Mark F. Biegger Chief Human Resources Officer 55 2012
       
Gary A. Coombe President - Europe Selling and Market Operations 53 2014
       
Kathleen B. Fish Chief Technology Officer 60 2014
       
R. Alexandra Keith President - Global Hair Care and Beauty Sector 49 2017
       
Deborah P. Majoras Chief Legal Officer and Secretary 53 2010
       
Juan Fernando Posada President - Latin America Selling and Market Operations 55 2015
       
Matthew Price President - Greater China Selling and Market Operations 51 2015
       
Marc S. Pritchard Chief Brand Officer 57 2008
       
Mohamed Samir President - India, Middle East and Africa (IMEA) Selling and Market Operations 50 2014
       
Jeffrey K. Schomburger Global Sales Officer 55 2015
       
Valarie L. Sheppard Senior Vice President, Comptroller and Treasurer 53 2005
       
Yannis Skoufalos Global Product Supply Officer 60 2011
       
Magesvaran Suranjan President - Asia Pacific Selling and Market Operations 47 2015
NamePositionAgeFirst Elected to
Officer Position
Jon R. MoellerChairman of the Board, President and Chief Executive Officer59
2009 (1)
Shailesh JejurikarChief Operating Officer56
2018 (2)
Andre SchultenChief Financial Officer52
2021 (3)
Gary A. CoombeChief Executive Officer - Grooming59
2014 (4)
Jennifer L. DavisChief Executive Officer - Health Care52
2022 (5)
Ma. Fatima D. FranciscoChief Executive Officer - Baby, Feminine and Family Care and Executive Sponsor for Gender Equality55
2018 (6)
R. Alexandra KeithChief Executive Officer - Beauty and Executive Sponsor for Corporate Sustainability55
2017 (7)
Sundar RamanChief Executive Officer - Fabric and Home Care48
2021 (8)
Victor AguilarChief Research, Development and Innovation Officer56
2020 (9)
Marc S. PritchardChief Brand Officer63
2008 (( )
Balaji PurushothamanChief Human Resources Officer54
2023 (10)
Susan Street WhaleyChief Legal Officer and Secretary49
2022 (11)
All the Executive Officers named above have been employed by the Company for more than the past five years.

(1)Mr. Moeller previously served as President and Chief Executive Officer (2021 - 2022), Vice Chairman, Chief Operating Officer and Chief Financial Officer (2019 - 2021), Vice Chairman and Chief Financial Officer (2017 - 2019) and as Chief Financial Officer (2009 - 2017).
(2)Mr. Jejurikar previously served as Chief Executive Officer - Fabric and Home Care (2019 - 2021), President - Global Fabric, Home Care and P&G Professional (2018 - 2019), and President - Global Fabric Care and Brand-Building Officer Global Fabric & Home Care (2015 - 2018).
(3)Mr. Schulten previously served as Senior Vice President - Baby Care, North America (2018 - 2021) and Senior Vice President - Finance & Accounting, Global Baby, Feminine and Family Care (2014 - 2018).
(4)Mr. Coombe previously served as President - Europe Selling & Market Operations (2014 - 2018).
(5)Ms. Davis previously served as President - Feminine Care (2019 - 2022), President - Global Feminine Care (2018 - 2019), and Vice President - Feminine Care, North America and Brand Franchise Leader, Tampax (2016 - 2018).
(6)Ms. Francisco previously served as Chief Executive Officer - Baby and Feminine Care (2019 - 2021), President - Global Baby Care and Baby & Feminine Care Sector (2018 - 2019), and President - Global Feminine Care (2015 - 2018).
(7)Ms. Keith previously served as Chief Executive Officer - Beauty (2017 - 2022).
(8)Mr. Raman previously served as President - Home Care and P&G Professional (2020 - 2021), President - Fabric Care, North America and P&G Professional (2019 - 2020), and Vice President - Fabric Care, North America (2015 - 2019).
(9)Mr. Aguilar previously served as Senior Vice President - Research & Development, Corporate Function Research & Development (2020), Senior Vice President - Research & Development, Corporate Function Research & Development and Global Fabric Care (2019), and Senior Vice President - Research & Development Global Fabric Care; and Sector Leader, Research & Development Global Fabric and Home Care (2014 - 2019).
(10)Mr. Purushothaman previously served as Senior Vice President - Human Resources, Global Total Rewards, Employee and Labor Relations and Corporate Services (2020 - 2022) and as Senior Vice President - Human Resources, Beauty, Grooming, and Family Care (2015 - 2020).
(11)Ms. Whaley previously served as Senior Vice President and General Counsel - North America, Practice Groups and Sector Business Units (2019 - 2022), and Vice President and General Counsel - North America, Global Go-To-Market and Practice Groups, and Global Business Units (2016 - 2019).


8 The Procter & Gamble Company 11

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
4/1/2023 - 4/30/2023———(3)
5/1/2023 - 5/31/2023———(3)
6/1/2023 - 6/30/2023914,324$149.95—(3)
Total914,324$149.95—(3)
(1)All transactions are reported on a trade date basis and were made in the open market with large financial institutions. This table excludes shares withheld from employees to satisfy minimum tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless exercises through an independent third party and does not repurchase stock in connection with cashless exercises.
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
4/1/2017 - 4/30/2017 5,568,038 89.80 5,568,038 
(3) 
5/1/2017 - 5/31/2017 2,315,036 86.39 2,315,036 
(3) 
6/1/2017 - 6/30/2017 — — — 
(3) 
Total 7,883,074 $88.80 7,883,074 
(3) 
(2)Average price paid per share for open market transactions excludes commission.
(3)On April 21, 2023, the Company stated that in fiscal year 2023 the Company expected to reduce outstanding shares through direct share repurchases at a value of $7.4 to $8.0 billion, notwithstanding any purchases under the Company's compensation and benefit plans. The share repurchases were authorized pursuant to a resolution issued by the Company's Board of Directors and were financed through a combination of operating cash flows and issuance of debt. The total value of the shares purchased under the share repurchase plan was $7.4 billion. The share repurchase plan ended on June 30, 2023.
(1)
All transactions were made in the open market with large financial institutions. This table excludes shares withheld from employees to satisfy minimum tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless exercises through an independent third party and does not repurchase stock in connection with cashless exercises.
(2)
Average price paid per share is calculated on a settlement basis and excludes commission.
(3)
On April 26, 2017, the Company stated that in fiscal year 2017 the Company expected to reduce outstanding shares at a value of approximately $15 billion, through a combination of direct share repurchase and shares exchanged in the Beauty Brands transaction, notwithstanding any purchases under the Company's compensation and benefit plans. The share repurchases were authorized pursuant to a resolution issued by the Company's Board of Directors and were financed through a combination of operating cash flows and issuance of long-term and short-term debt. The total value of the shares purchased under the share repurchase plan and exchanged in the Beauty Brands transaction was $14.9 billion. The share repurchase plan ended on June 30, 2017.
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 127133 consecutive years since its original incorporation in 1890 and has increased its dividend for 6167 consecutive years.years since 1956. Over the past fiveten years, the dividend has increased at an annual compound average rate of 5%. Nevertheless, as in the past, further dividends will be considered after reviewing dividend yields, profitability and cash flow expectations and financing needs and will be declared at the discretion of the Company's Board of Directors.

Dividend History_07.13.2023.jpg

(in dollars; split-adjusted)19561963197319831993200320132023
Dividends per share$0.01$0.02$0.05$0.14$0.28$0.82$2.29$3.68

(in dollars; split-adjusted)1957196719771987199720072017
Dividends per share$0.01$0.03$0.08$0.17$0.45$1.28$2.70

12 The Procter & Gamble Company 9

Quarterly Dividends
Quarter Ended2016 - 2017 2015 - 2016
September 30$0.6695
 $0.6629
December 310.6695
 0.6629
March 310.6695
 0.6629
June 300.6896
 0.6695

Common Stock Price RangeInformation
Quarter Ended2016 - 2017 2015 - 2016
 High Low High Low
September 30$90.22
 $84.32
 $82.55
 $65.02
December 3190.32
 81.18
 81.23
 71.30
March 3192.00
 83.24
 83.87
 74.46
June 3091.13
 85.52
 84.80
 79.10
P&G trades on the New York Stock Exchange and NYSE Euronext-Paris under the stock symbol PG. ThereAs of June 30, 2023, there were approximately 3.0five million common stock shareowners, including shareowners of record, participants in the P&G Shareholder Investment Program, participants in P&G stock ownership plans and beneficial owners with accounts at banks and brokerage firms, as ofJune 30, 2017.
firms.
Shareholder Return
The following graph compares the cumulative total return of P&G’s common stock for the five-year period ended June 30, 2017,2023, 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, 2012,2018, and that all dividends were reinvested.

Shareholder Return_07.13.2023.jpg

Cumulative Value of $100 Investment, through June 30Cumulative Value of $100 Investment, through June 30
Company Name/Index201220132014201520162017Company Name/Index201820192020202120222023
P&G$100
$130
$137
$140
$157
$167
P&G$100 $145 $162 $188 $205 $222 
S&P 500 Index100
121
150
161
168
198
S&P 500 Consumer Staples Index100
117
135
148
176
181
S&P 500S&P 500100 110 119 167 149 179 
S&P 500 Consumer StaplesS&P 500 Consumer Staples100 116 121 149 159 169 
10 The Procter & Gamble Company

Item 6. Selected Financial Data.
The information required by this item is incorporated by reference to Note 1 and Note 2 to our Consolidated Financial Statements. For further details behind the business drivers for recent results presented below, see the Management's Discussion and Analysis.
Financial Summary (Unaudited)
Amounts in millions, except per share amounts2017 2016 2015 2014 2013 2012
Net sales$65,058
 $65,299
 $70,749
 $74,401
 $73,910
 $73,138
Gross profit32,523
 32,390
 33,693
 35,371
 35,858
 35,254
Operating income13,955
 13,441
 11,049
 13,910
 13,051
 12,495
Net earnings from continuing operations10,194
 10,027
 8,287
 10,658
 10,346
 8,864
Net earnings/(loss) from discontinued operations5,217
 577
 (1,143) 1,127
 1,056
 2,040
Net earnings attributable to Procter & Gamble15,326
 10,508
 7,036
 11,643
 11,312
 10,756
Net earnings margin from continuing operations15.7% 15.4% 11.7% 14.3% 14.0% 12.1%
Basic net earnings per common share: (1)
           
Earnings from continuing operations$3.79
 $3.59
 $2.92
 $3.78
 $3.65
 $3.08
Earnings/(loss) from discontinued operations2.01
 0.21
 (0.42) 0.41
 0.39
 0.74
Basic net earnings per common share$5.80
 $3.80
 $2.50
 $4.19
 $4.04
 $3.82
Diluted net earnings per common share: (1)
           
Earnings from continuing operations$3.69
 $3.49
 $2.84
 $3.63
 $3.50
 $2.97
Earnings/(loss) from discontinued operations1.90
 0.20
 (0.40) 0.38
 0.36
 0.69
Diluted net earnings per common share$5.59
 $3.69
 $2.44
 $4.01
 $3.86
 $3.66
Dividends per common share$2.70
 $2.66
 $2.59
 $2.45
 $2.29
 $2.14
Research and development expense$1,874
 $1,879
 $1,991
 $1,910
 $1,867
 $1,874
Advertising expense7,118
 7,243
 7,180
 7,867
 8,188
 7,839
Total assets120,406
 127,136
 129,495
 144,266
 139,263
 132,244
Capital expenditures3,384
 3,314
 3,736
 3,848
 4,008
 3,964
Long-term debt18,038
 18,945
 18,327
 19,807
 19,111
 21,080
Shareholders' equity$55,778
 $57,983
 $63,050
 $69,976
 $68,709
 $64,035
(1)
Basic net earnings per common share and Diluted net earnings per common share are calculated based on Net earnings attributable to Procter & Gamble.


Intentionally Omitted.
The Procter & Gamble Company 11

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”Analysis,” “Risk Factors” and “Risk Factors.”"Notes 4, 8 and 13 to the Consolidated Financial Statements." 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, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. A detailed discussion of risks and uncertainties that could cause results and events to differ materially from such forward-looking statements is included in the section titled "Economic Conditions and Uncertainties" and the section titled “Risk Factors” (Item 1A of this Form 10-K). Forward-looking statements are made as of the date of this report, and weWe undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise.otherwise, except to the extent required by law.

The Procter & Gamble Company 13
Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (4) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war (including the Russia-Ukraine War) or terrorism or disease outbreaks; (5) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pension and healthcare; (6) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving digital marketing and selling platform requirements and technological advances attained by, and patents granted to, competitors; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third-party information and operational technology systems, networks and services and maintain the security and functionality of such systems, networks and services and the data contained therein; (12) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations and market contraction; (13) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, product and packaging composition, intellectual property, labor and employment, antitrust, privacy and data protection, tax, the environment, due diligence, risk oversight, accounting and financial reporting) and to resolve new and pending matters within current estimates; (14) the ability to manage changes in applicable tax laws and regulations; (15) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company’s overall business strategy and financial objectives, without impacting the delivery of base business objectives; (16) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited; (17) the ability to successfully manage the demand, supply and operational challenges, as well as governmental responses or mandates, associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns; (18) the ability to manage the uncertainties, sanctions and economic effects from the war between Russia and Ukraine; and (19) the ability to successfully achieve our ambition of reducing our greenhouse gas emissions and delivering progress towards our environmental sustainability priorities. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section titled "Economic Conditions and Uncertainties" and the section titled "Risk Factors" (Part I, Item 1A) of this Form 10-K.
Purpose, Approach and Non-GAAP Measures
The purpose of Management's Discussion and Analysis (MD&A) is to provide an understanding of Procter & Gamble's financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying notes.Notes. The MD&A is organized in the following sections:
•Overview
•Summary of 20172023 Results
•Economic Conditions and Uncertainties
•Results of Operations
•Segment Results
•Cash Flow, Financial Condition and Liquidity
Significant•Critical Accounting Policies and Estimates
•Other Information
Throughout the MD&A we refer to measures used by management to evaluate performance, including unit volume growth, net sales, net earnings, diluted net earnings per common share (diluted EPS) and net earnings.operating cash flow. 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), includingconsisting of organic sales growth, core earnings per share (Core EPS), adjusted free cash flow and adjusted free
cash flow productivity. Organic sales growth is net sales growth excluding the impacts of the Venezuela deconsolidation, acquisitions and divestitures and foreign exchange from year-over-year comparisons. Core EPS is diluted net earnings per share from continuing operationsEPS excluding certain items that are not judged by management to be part of the Company's sustainable results or trends. Adjusted free cash flow is operating cash flow less

14 The Procter & Gamble Company
capital spending and certain divestiture impacts.excluding payments for the transitional tax resulting from the U.S. Tax Act. Adjusted free cash flow productivity is the ratio of adjusted free cash flow to net earnings excluding certain one-time items. We believe these measuresmeasures provide our investors with additional information about our underlying results and trends as well as insight to some of the metrics used to evaluate management. The explanation at the end of the MD&A provides more details on the use and the derivation of these measures.measures as well as reconciliations to the most directly comparable U.S. GAAP measure.
Management also uses certain market share and market consumption estimates to evaluate performance relative to competition despite some limitations on the availability and comparability of share and consumption information. References to market share and market consumption in the MD&A are based on a combination of vendor-reported consumptionvendor-purchased traditional brick-and-mortar and market sizeonline data in key markets as well as internal estimates. All market share references represent the percentage of sales of our products in dollar terms on a constant currency basis of our products, relative to all product sales in the category. The Company measures quarter and fiscal year-to-date market shares through the most recent period for which market share data is available, which typically reflects a lag time of one or two months as compared to the end of the reporting period. Management also uses unit volume growth to evaluate drivers of changes in net sales. Organic volume growth reflects year-over-year changes in unit volume excluding the impacts of acquisitions, divestitures and certain one-time items, if applicable, and is used to explain changes in organic sales.
OVERVIEW
P&GProcter & Gamble is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods of superior quality and value to our consumers around the world. Our products are sold in more thanapproximately 180 countries and territories primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores,wholesalers, specialty beauty stores e-commerce,(including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and pharmacies.professional channels. We also sell direct to individual consumers. We have on-the-ground operations in approximately 70 countries.
Our market environment is highly competitive with global, regional and local competitors. In many of the markets and industry segments in which we sell our products, we compete against other branded products, as well as retailers' 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 believe we are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position.


12 The Procter & Gamble Company

ORGANIZATIONAL STRUCTUREOrganizational Structure
Our organizational structure is comprised of GlobalSector Business Units (GBUs)(SBUs), SellingEnterprise Markets (EMs), Corporate Functions (CF) and Market Operations (SMOs), Global Business Services (GBS) and Corporate Functions (CF).
GlobalSector Business Units
Our GBUs are organized into ten product categories. Under U.S. GAAP, the GBUs underlying theThe Company's ten product categories are aggregatedorganized into five SBUs and five reportable segments:segments (under U.S. GAAP): Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The GBUsSBUs are responsible for developing overallglobal brand strategy, new product upgrades and innovationsinnovation, marketing plans and marketing plans. supply chain. They have direct profit responsibility for markets (referred to as Focus Markets) representing the large majority of the Company's sales and earnings and are also responsible for innovation plans, supply plans and operating frameworks to drive growth and value creation in the remaining markets (referred to as Enterprise Markets). Throughout the MD&A, we reference business results by region, which are comprised of North America, Europe, Greater China, Latin America, Asia Pacific and India, Middle East and Africa (IMEA).

The Procter & Gamble Company 15
The following provides additional detail on our reportable segments and the ten product categories and brand composition within each segment.
Reportable Segments
% of
Net Sales (1)
% of Net
Earnings (1)
Product Categories (Sub-Categories)Major Brands
Beauty18%21%
Hair Care (Conditioners, Shampoos, Styling Aids, Treatments)
Head & Shoulders, Herbal Essences, Pantene, Rejoice
Skin and Personal Care (Antiperspirants and Deodorants, Personal Cleansing, Skin Care)
Olay, Old Spice, Safeguard, Secret, SK-II
Grooming (2)
8%10%
Grooming (Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Grooming)
Braun, Gillette, Venus
Health Care14%14%
Oral Care (Toothbrushes, Toothpastes, Other Oral Care)
Crest, Oral-B
Personal Health Care (Gastrointestinal, Pain Relief, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care)
Metamucil, Neurobion, Pepto-Bismol, Vicks
Fabric & Home Care35%32%
Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents)
Ariel, Downy, Gain, Tide
Home Care (Air Care, Dish Care, P&G Professional, Surface Care)
Cascade, Dawn, Fairy, Febreze, Mr. Clean, Swiffer
Baby, Feminine & Family Care25%23%
Baby Care (Baby Wipes, Taped Diapers and Pants)
Luvs, Pampers
Feminine Care (Adult Incontinence, Feminine Care)
Always, Always Discreet, Tampax
Family Care (Paper Towels, Tissues, Toilet Paper)
Bounty, Charmin, Puffs
(1)Percent of Net sales and Net earnings for the fiscal year ended June 30, 2023 (excluding results held in Corporate).
Reportable Segments
% of
Net Sales (1)
% of Net
Earnings (1)
Product Categories (Sub-Categories)Major Brands
Beauty18%19%
Hair Care (Conditioner, Shampoo, Styling Aids, Treatments)
Head & Shoulders, Pantene, Rejoice
Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care)
Olay, Old Spice, Safeguard, SK-II
Grooming10%16%
Grooming (2) (Shave Care - Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care; Appliances)
Braun, Fusion, Gillette, Mach3, Prestobarba, Venus
Health Care12%13%
Oral Care (Toothbrushes, Toothpaste, Other Oral Care)
Crest, Oral-B
Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care)
Prilosec, Vicks
Fabric & Home Care32%27%
Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents)
Ariel, Downy, Gain, Tide
Home Care (Air Care, Dish Care, P&G Professional, Surface Care)
Cascade, Dawn, Febreze, Mr. Clean, Swiffer
Baby, Feminine & Family Care28%25%
Baby Care (Baby Wipes, Diapers and Pants)
Luvs, Pampers
Feminine Care (Adult Incontinence, Feminine Care)
Always, Tampax
Family Care (Paper Towels, Tissues, Toilet Paper)
Bounty, Charmin
(1)
Percent of Net sales and Net earnings from continuing operations for the year ended June 30, 2017 (excluding results held in Corporate).
(2)
The Grooming product category is comprised of the Shave Care and Appliances GBUs.
Recent Developments: During fiscal 2017,(2)Effective July 1, 2022, the CompanyGrooming Sector Business Unit completed the previously announced planfull integration of its Shave Care and Appliances categories to significantly streamline our product portfolio by divesting, discontinuing or consolidating about 100 non-strategic brands. The resulting portfolio of about 65 key brands are in 10 category-based businesses where P&G has leading market positions, strong brands and consumer-meaningful product technologies.
During fiscal 2017,cohesively serve consumers' grooming needs. This transition included the Company completed the divestiture of four product categories, which included 43integration of the Company'smanagement team, strategic decision-making, innovation plans, financial targets, budgets and internal management reporting.
Organization Design:
Sector Business Units
Beauty: We are a global market leader amongst the beauty brands ("Beauty Brands"),categories in which we compete, including the global salon professional hair care and color, retail hair color, cosmeticsskin and the fine fragrance businesses, along with select hair styling brands. The Beauty Brands had historically been part of the Company’s Beauty reportable segment. The results of the Beauty Brands are presented as discontinued operations and, as such, are excluded from both continuing operations and segment results for all periods presented. Additionally, the Beauty Brands balance sheet positions as of June 30, 2016 are presented as held for sale in the Consolidated Balance Sheets. The Company recorded an after-tax gain on the final transaction of $5.3 billion ($1.95 per share), net of transaction and related costs.
During fiscal 2016, the Company completed the divestiture of its Batteries business. The Batteries business had historically been part of the Company’s Fabric & Home Care reportable segment. The results of the Batteries business are presented as discontinued operations and, as such, are excluded from both continuing operations and segment results for all periods presented.
During fiscal 2015, the Company completed the divestiture of its Pet Care business. The gain on the transaction was not material. The results of the Pet Care business are presented as discontinued operations and, as such, are excluded from both continuing operations and segment results for all periods presented.
Refer to Note 13 to our Consolidated Financial Statements for more details on each of these divestiture transactions.
While our ongoing business model may include a certain level of acquisition and divestiture activity, with the aforementioned transactions and other recent minor brand divestitures, the Company has completed the strategic portfolio reshaping program.

The Procter & Gamble Company 13

As of June 30, 2015, the Company deconsolidated our Venezuelan subsidiaries and began accounting for our investment in those subsidiaries using the cost method of accounting. This change resulted in a fiscal 2015 one-time after-tax charge of $2.1 billion ($0.71 per share). Beginning in fiscal 2016, our financial results only include sales of finished goods to our Venezuelan subsidiaries to the extent we receive cash payments from Venezuela (expected to be largely through the DIPRO and DICOM exchange market). Accordingly, we no longer include the results of our Venezuelan subsidiaries' operations in reporting periods following fiscal 2015 (see Note 1 to the Consolidated Financial Statements and additional discussion in the MD&A under "Venezuela Impacts" in Results of Operations).
Beauty:personal care. We are a global market leader in the beauty category. Most of the beauty markets in which we compete are highly fragmentedretail hair care market with a large number ofnearly 20% global market share primarily behind our Pantene and local competitors. We compete in skin and personal care and in hair care.Head & Shoulders brands. In skin and personal care, we offer a wide variety of products, ranging from deodorants to personal cleansing to skin care, such as our Olay brand, which is one of the top facial skin care brands in the world with nearly 6%5% global market share.
Grooming: We are the global market leader in the retail hair care market with over 20% global market share primarily behind our Pantene and Head & Shoulders brands.
Grooming: We compete in Shave Care and Appliances. In Shave Care, we are the global market leader in the blades and razors market. Our global blades and razors market share is nearly 65%more than 60%, primarily behind theour Gillette franchise including our Fusion, Mach3, Prestobarba and Venus brands. Our appliances, such as electric razorsshavers and epilators, are sold primarily under the Braun brand in a number of markets around the world where we compete against both global and regional competitors. We hold nearly 25% of the male electric shavers market and over 50% of the female epilators market.
Health Care: We compete in oral care and personal health care. In oral care, there are several global competitors in the market, and we have the number two market share position with nearly 20% global market share behind our Oral-BCrest and CrestOral-B brands. In personal health care, we are a top ten competitorglobal market leader among the categories in a large, highly fragmented industry, primarily behindwhich we compete, including respiratory treatments, (Vicks brand), non-prescription heartburn medications (Prilosec OTC brand) and digestive wellness, products (Metamucil, Pepto Bismol,vitamins and Align brands). Nearly all ofanalgesics behind our sales outside the U.S. in personal health care are generated through the PGT Healthcare partnership with Teva Pharmaceuticals Ltd.Vicks, Metamucil, Pepto-Bismol and Neurobion brands.
Fabric & Home Care: This segment is comprised of a variety of fabric care products, including laundry detergents, additives and fabric enhancers; and home care products, including dishwashing liquids and detergents, surface cleaners and air fresheners. In fabric care, we generally have the number one or number two market share position in the markets in which we compete and are the global market leader with over 25%35% global market share, primarily behind our Tide, Ariel and Downy brands. Our global home care market share is over 20%about 25% across the categories in which we compete.
compete, primarily behind our Cascade, Dawn, Febreze and Swiffer brands.
Baby, Feminine & Family Care: In baby care, we are thea global market leader and compete mainly in taped diapers, pants and baby wipes, with over 25%more than 20% global market share. We arehave the number one or number two baby care competitormarket share position in most of the key markets in which we compete, primarily behind our Pampers the Company's largest brand, with annual net sales of more than $8 billion.brand. We are thea global market leader in the feminine care category with over 25% global market share, primarily behind Always.our Always and Tampax brands. We also compete in the adult incontinence category in certain markets achievingbehind Always Discreet, with over 10% market share in the key markets wherein which we compete. Our family care business is predominantly a North American business comprised largelyprimarily of the Bounty paper towel and Charmin toilet paper brands. U.S.North America market shares are over 40% for Bounty and over 25% for Charmin.
Selling and Market Operations
Our SMOs

16 The Procter & Gamble Company
Enterprise Markets
Enterprise Markets are responsible for developingsales and executing go-to-marketprofit delivery in specific countries, supported by SBU-agreed innovation and supply chain plans, at the local level. The SMOs include dedicated retailalong with scaled services like planning, distribution and customer trade channel and country-specific teams. Our SMOs are organized under six regions comprised of North America, Europe, Latin America, Asia Pacific, Greater China and India, Middle East and Africa (IMEA). Throughout the MD&A, we reference business results in developed markets, which are comprised of North America, Western Europe and Japan, and developing markets which are all other markets not included in developed.management.
Corporate Functions
CFCorporate Functions provides company-level strategy and portfolio analysis, corporate accounting, treasury, tax, external relations, governance, human resources, information technology and legal as well as other centralized functional support.services.
Global Business Services
GBSGlobal Business Services provides scaled services in technology, processesprocess and standard data tools to enable the GBUs,SBUs, the SMOsEMs and Corporate FunctionsCF to better understand the business and better serve consumers and customers. The GBS organization is responsible for providing world-class services and solutions at a low cost and with minimal capital investment.that drive value for P&G.
STRATEGIC FOCUSStrategic Focus
P&GProcter & Gamble aspires to serve the world’s consumers better than our best competitors in every category and in every country in which we compete and, as a result, deliver total shareholder return in the top one-third of our peer group. Delivering and sustaining leadership levels of shareholder value creation requires balanced top-line growth,top- and bottom-line growth and strong cash generation.
The Company competes in daily-use product categories where performance plays a significant role in the consumer's choice of brands, and therefore, play to P&G's strengths. Our focused portfolio of businesses consists of ten product categories where P&G has leading market positions, strong brands and consumer-meaningful product technologies.
Within these categories, our strategic choices are focused on delighting and winning with consumers. TheOur consumers who purchase and use our products are at the center of everything we do. We increase the number of userswin with consumers by delivering irresistible superiority across five key vectors - product performance, packaging, brand communication, retail execution and the usage - of our brands when we win at the zero, first and second moments of truth:  when consumers research our categories and brands, purchase them in a store or online and use them in their homes.
value. Winning with consumers around the world and against our best competitors requires superior innovation. Innovation has always been, and continues to be, P&G’s lifeblood. Innovation requires
Superior products delivered with superior execution drive market growth, value creation for retailers and build share growth for P&G.

14 The Procter & Gamble Company

consumer insights and technology advancements that lead to product improvements, improved marketing and merchandising programs and game-changing inventions that create new brands and categories. 
ProductivityOngoing productivity improvement is criticalcrucial to delivering our balanced top-linetop- and bottom-line growth, bottom-line growthcash generation and value creation objectives. Productivity improvement enables investments to strengthen the superiority of our brands via product and packaging innovation, more efficient and effective supply chains, equity and awareness-building brand advertising and other programs and expansion of sales growth reinforcecoverage and fuel each other.  We are drivingR&D programs. Productivity improvements also enable us to mitigate challenging cost environments (including periods of increasing commodity and negative foreign exchange impacts). Our objective is to drive productivity improvementimprovements across all elements of cost,the statement of earnings and balance sheet, including cost of goods sold, marketing and promotional expensesspending, overhead costs and non-manufacturing overhead.  Productivity improvementscapital spending.
We act with agility and cost savings are being reinvested in productconstructively disrupting our highly competitive industry and packaging improvements, brand awareness-building advertisingthe way we do business, including how we innovate, communicate and trial-building sampling programs, increased sales coverage and R&D programs.leverage new technologies, to create more value.
We are improving operational effectiveness and organizational culture through enhanced clarity of roles and responsibilities, accountability and incentive compensation programs.
The Company has undertaken an effortAdditionally, within this strategy of superiority, productivity, constructive disruption and organization, we have declared four focus areas to focus and strengthen its business portfolio to compete in categories and with brands that are structurally attractive and that play to P&G's strengths.
The ongoing portfolio of businesses consists of 10 product categories.our performance going forward. These are categories where P&G has leading market positions, strong brands1) leveraging environmental sustainability as an additional driver of superior performing products and consumer-meaningful product technologies.packaging innovations, 2) increasing digital acumen to drive consumer and customer preference, reduce cost and enable rapid and efficient decision making, 3) developing next-level supply chain capabilities to enable flexibility, agility, resilience and a new level of productivity and 4) delivering employee value equation for all gender identities, races, ethnicities, sexual orientations, ages and abilities for all roles to ensure we continue to attract, retain and develop the best talent.
We believe these strategies arethis strategy is right for the long-term health of the Company and our objective of delivering total shareholder return in the top one-third of our peer group.
The Company expects the delivery of the following long-term annual financial targetsgrowth algorithm will result in total shareholder returns in the top third of the competitive, fast-moving consumer goods peer group:
•Organic sales growth above market growth rates in the categories and geographies in which we compete;
•Core EPS growth of mid-to-high single digits; and
•Adjusted free cash flow productivity of 90% or greater.
InWhile periods withof significant macroeconomic pressures may cause short-term results to deviate from the long-term growth algorithm, we intend to maintain a disciplined approach to investing so as not to sacrifice the long-term health ofin our businesses to meet short-term objectives in any given year.business.


The Procter & Gamble Company 17
SUMMARY OF 20172023 RESULTS
Amounts in millions, except per share amounts20232022Change vs. Prior Year
Net sales$82,006 $80,187 2 %
Operating income18,134 17,813 2 %
Net earnings14,738 14,793 — %
Net earnings attributable to Procter & Gamble14,653 14,742 (1)%
Diluted net earnings per common share5.90 5.81 2 %
Core earnings per share5.90 5.81 2 %
Cash flow from operating activities16,848 16,723 1 %
Amounts in millions, except per share amounts2017 Change vs. Prior Year 2016 Change vs. Prior Year 2015
Net sales$65,058
 — % $65,299
 (8)% $70,749
Operating income13,955
 4 % 13,441
 22 % 11,049
Net earnings from continuing operations10,194
 2 % 10,027
 21 % 8,287
Net earnings/(loss) from discontinued operations5,217
 804 % 577
 N/A
 (1,143)
Net earnings attributable to Procter & Gamble15,326
 46 % 10,508
 49 % 7,036
Diluted net earnings per common share5.59
 51 % 3.69
 51 % 2.44
Diluted net earnings per share from continuing operations3.69
 6 % 3.49
 23 % 2.84
Core earnings per share3.92
 7 % 3.67
 (2)% 3.76
Cash flow from operating activities12,753
 (17)% 15,435
 6 % 14,608

•Net sales were unchanged at $65.1increased 2% to $82.0 billion includingversus the prior year. The net sales growth was driven by a negative 2%mid-single-digit increase in Health Care, low single-digit increases in Fabric & Home Care, Baby, Feminine & Family Care and Beauty, partially offset by a low single-digit decrease in Grooming. Organic sales, which excludes the impact fromof acquisitions and divestitures and foreign exchange.
◦Organic sales increased 2% on a 2% increase in organic volume.
◦Unit volume increased 1%. Volume increased low single digits in Grooming, Health Care, Fabric & Home Care and Baby, Feminine & Family Care. Volume decreased low single digits in Beauty.
Net earnings from continuing operationsexchange, increased $1677%. Organic sales increased high single digits in Health Care and Fabric & Home Care and mid-single digits in Baby, Feminine & Family Care, Beauty and Grooming.
•Operating income increased $321 million, or 2%, to $18.1 billion versus year ago due to the increase in fiscal 2017, driven by higher operating income and a lower effective tax rate,net sales, partially offset by ana modest decrease in operating margin.
•Net earnings decreased modestly by $55 million to $14.7 billion versus year ago as the increase in other non-operating expense.operating income was more than fully offset by a higher effective tax rate. Foreign exchange impacts negatively affectedreduced net earnings from continuing operations by approximately $420 million or 4%$1.4 billion.
Net earnings from discontinued operations increased $4.6 billion primarily due to the net impact of a gain on the sale of our Beauty business in fiscal 2017, partially offset by
the base period results, which included the net earnings of the Batteries and Beauty Brands businesses prior to divestiture, a gain on the sale of the Batteries business and impairment charges on the Batteries business prior to divestiture.
•Net earnings attributable to Procter & Gamble were $15.3decreased $89 million, or 1%, to $14.7 billion an increase of $4.8 billion or 46% versus the prior year due primarily due to the aforementioned increasesdecrease in net earnings.
•Diluted EPS increased 2% to $5.90 as the decrease in net earnings from both continuing and from discontinued operations.was more than offset by a reduction in shares outstanding.
Diluted net earnings per share increased 51% to $5.59.
◦Diluted net earnings per share from continuing operations increased 6% to $3.69.
◦Core EPS increased 7% to $3.92.
•Cash flow from operating activities was $12.8$16.8 billion.
◦Adjusted free cash flow was $9.8 billion.
◦Adjusted free cash flow productivity was 94%.

◦    Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $14.0 billion.
◦    Adjusted free cash flow productivity, which is the ratio of adjusted free cash flow to net earnings, was 95%.
The Procter & Gamble Company 15

ECONOMIC CONDITIONS AND UNCERTAINTIES
We discuss expectations regarding future performance, events and outcomes, such as our business outlook and objectives, in annual and quarterly reports, press releases 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.factors, except as required by law. Forward-looking statements are inherently uncertain and investors must recognize that events could be significantly different from our expectations. For more information on risksrisk factors that could impact our results, please refer to “Risk Factors” in Part I, Item 1A Risk Factors inof this Form 10-K.
Global Economic Conditions.CurrentOur products are sold in numerous countries across North America, Europe, Latin America, Asia, Australia and Africa, with more than half our sales generated outside the United States. Our largest international markets are Greater China, the United Kingdom, Canada, Japan and Germany and collectively comprise more than 20% of our net sales in fiscal 2023. As such, we are exposed to and impacted by global macroeconomic factors, remain dynamic,geopolitical tensions, U.S. and any causes offoreign government policies and foreign exchange fluctuations. We are also exposed to market size contraction, such as reduced GDPrisks from operating in commodity-dependent economies, greaterchallenging environments including unstable economic, political and social conditions, civil unrest, in the Middle Eastnatural disasters, debt and Central & Eastern Europe, further economic instability in the European Union, political instability in certain Latin American markets, further economic slowdowns in Japancredit issues and China and changes to international trade agreements in North America and elsewhere, couldcurrency controls or fluctuations. These risks can reduce our net sales or erode our operating margin, in either case reducingmargins and consequently reduce our earnings.net earnings and cash flows.
Changes in Costs.Our costs are subject to fluctuations, particularly due to changes in commodity and input material prices, transportation costs, other broader inflationary impacts and our own productivity efforts. We have significant exposures to certain commodities and input materials, in particular certain oil-derived materials like resins and volatilitypaper-based materials like pulp. Volatility in the market price of these commoditycommodities and input materials has a direct impact on our costs. If we are unableDisruptions in our manufacturing, supply and distribution operations due to manage commodity fluctuations through pricing actions, cost savings projectsenergy shortages, natural disasters, labor or freight constraints have impacted our costs and sourcing decisions as well as through consistent productivity improvements, it may adversely impactcould do so in the future. New or increased legal or regulatory requirements, along with initiatives to meet our gross margin, operating margin and net earnings. Salessustainability goals, could also be adversely impacted following pricing actions if there is a negative impact on consumption of our products.result in increased costs due to higher material costs and investments in facilities and equipment. We strive to implement, achieve and sustain cost improvement plans, including outsourcing projects, supply chain optimization and general overhead and workforce optimization. As discussed laterIncreased pricing in this MD&A, we initiatedresponse to certain non-manufacturing overhead reduction projects along with manufacturing and other supply chaininflationary or cost improvements projects in fiscal 2012. In fiscal 2017, we announced an additional multi-yearincreases may also offset portions of the cost reduction program. These programs are resulting in significant enrollment and other savings.impacts; however, such price increases may impact product consumption. If we are not successful in executingunable to manage cost impacts through pricing actions and sustaining these changes, there could be a negativeconsistent productivity improvements, it may adversely impact on our net sales, gross margin, operating margin, net earnings and net earnings.cash flows.

18 The Procter & Gamble Company
Foreign Exchange.We have bothsignificant translation and transaction exposure to the fluctuation of exchange rates. Translation exposures relate to exchange rate impacts of measuring income statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency. Transaction exposures relate to 1) the impact from input costs that are denominated in a currency other than the local reporting currency and 2) the revaluation of transaction-related working capital balances
denominated in currencies other than the functional currency. OverIn the past fourthree years, weakening of certain foreign currencies versus the U.S. dollar has strengthened versus a number ofresulted in significant foreign currenciesexchange impacts leading to lower net sales, net earnings and earnings from these foreign exchange impacts.cash flows. Certain countries that recently had and are currently experiencing significant exchange rate fluctuations likeinclude Argentina, Egypt, Nigeria, andBrazil, the United Kingdom, Japan, Russia and Turkey. These fluctuations have had,significantly impacted our historical net sales, net earnings and cash flows and could continue to have, a significant impact on our sales, costs and earnings.do so in the future. Increased pricing in response to thesecertain fluctuations in foreign currency exchange rates may offset portions of the currency impacts but could also have a negative impact on the consumption of our products, which would negatively affect our sales.net sales, gross margin, operating margin, net earnings and cash flows.
Government Policies.Our net sales, gross margin, operating margin, net earnings and cash flows could be affected by changes in U.S. or foreign government taxlegislative, regulatory or enforcement policies. For example, our net earnings and cash flows could be affected by any future legislative or regulatory changes in U.S. or non-U.S. tax policy, including changes resulting from the current work being led by the OECD/G20 Inclusive Framework focused on "Addressing the Challenges of the Digitalization of the Economy." The breadth of the OECD project extends beyond pure digital businesses and, as proposed, is likely to impact most large multinational businesses by both redefining jurisdictional taxation rights and establishing a 15% global minimum tax. Our net sales, gross margin, operating margin, net earnings and cash flows may also be impacted by changes in U.S. is considering corporate tax reform that may significantly impact the corporate tax rate and foreign government policies related to environmental and climate change the U.S. tax treatment of international earnings.matters. Additionally, we attempt to carefully manage our debt, currency and currency exposureother exposures in certain countries with currency exchange, import authorization and pricing controls, such as NigeriaEgypt, Argentina and Ukraine. Pakistan. Further, our net sales, gross margin, operating margin, net earnings and cash flows could be affected by changes to international trade agreements in North America and elsewhere.Changes in government policies in thesethe above areas might cause an increase or decrease in our net sales, gross margin, operating margin, net earnings and cash flows.
Russia-Ukraine War. The war between Russia and Ukraine has negatively impacted our operations. Our Ukraine business includes two manufacturing sites and accounted for less than 1% of consolidated net earnings. For example, duringsales and consolidated net earnings in the fiscal 2015,year ended June 30, 2023. Net assets of our Ukraine business accounted for less than 1% of consolidated net assets as of June 30, 2023. Our Russia business includes two manufacturing sites. Beginning in March 2022, the Company deconsolidatedreduced its Venezuelan subsidiariesproduct portfolio, discontinued new capital investments and suspended media, advertising and promotional activity in Russia. The Russia business accounted for approximately 2% of consolidated net sales and consolidated net earnings in the fiscal year ended June 30, 2023. Net assets of our Russia business accounted for less than 2% of consolidated net assets as of June 30, 2023.
Future impacts to the Company are difficult to predict due to evolving conditions that resulted in an other-than-temporary lackthe high level of exchangeability betweenuncertainty related to the Venezuelan bolivarwar's duration, evolution and U.S. dollarultimate resolution. Within Ukraine, there is a possibility of physical damage and restricteddestruction of our two manufacturing facilities. We may not be able to operate our manufacturing sites and source raw materials from our suppliers or ship finished products to our customers.
Within Russia, we may not be able to continue our reduced operations at current levels due to sanctions and counter-sanctions, monetary, currency or payment controls, legislative restrictions or policies, restrictions on access to financial institutions and supply and transportation challenges. Our suppliers, distributors and retail customers are also impacted by the war and their ability to pay dividendssuccessfully maintain their operations could also impact our operations or negatively impact the sales of our products.
More broadly, there could be additional negative impacts to our net sales, earnings and satisfycash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain other obligations denominatedneighboring countries or globally due to inflationary pressures and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe.
For additional information on risk factors that could impact our business results, please refer to “Risk Factors” in U.S. dollars.Part I, Item 1A of this Form 10-K.

RESULTS OF OPERATIONS
The key metrics included in ourthe discussion of our consolidated results of operations include net sales, gross margin, selling, general and administrative costs (SG&A), operating margin, other non-operating items, income taxes and income taxes.net earnings. The primary factors driving year-over-year changes in net sales include overall market growth in the categories in which we compete, product initiatives, competitive activities (the level of initiatives, pricing and other activities by competitors), geographic expansionmarketing spending, retail executions (both in-store and online) and acquisition and divestiture activity, all of which drive changes in our underlying unit volume, as well as our pricing actions (which can also indirectly impact volume), changes in product and geographic mix and foreign currencyexchange impacts on sales outside the U.S.
MostFor most of our categories, our cost of products sold and SG&A are variable in nature to some extent variable in nature.extent. Accordingly, our discussion of these operating costs focuses primarily on relative margins rather than the absolute year-over-year changes in total costs. The primary drivers of changes in gross margin are input costs (energy and other commodities), pricing impacts, geographic mix (for example, gross margins in developed marketsNorth America are generally higher than in developing marketsthe Company average for similar products), product mix (for example, the Beauty segment has higher gross margins than the Company average), foreign

The Procter & Gamble Company 19
exchange rate fluctuations (in situations where certain input costs may be tied to a different functional currency than the underlying sales), the impacts of manufacturing savings projects and reinvestments (for example, product or package improvements) and, to a lesser extent, scale impacts (for costs

16 The Procter & Gamble Company

that are fixed or less variable in nature). The primary driverscomponents of SG&A are marketing-related costs and non-manufacturing overhead costs. Marketing-related costs are primarily variable in nature, although we may achieve some level of scale benefit over time due to overall growth and other marketing efficiencies. OverheadWhile overhead costs are also variable in nature, but on a relative basis, less so than marketingto some extent, we generally experience more scale-related impacts for these costs due to our ability to leverage our organization and systemssystems' infrastructures to support business growth. Accordingly, we generally experience more scale-related impacts for these costs.
The Company ismain drivers of changes in the midstSG&A as a percentage of a productivitynet sales are overhead and marketing cost savings, planreinvestments (for example, increased advertising), inflation, foreign exchange fluctuations and scale impacts.
For a detailed discussion of the fiscal 2022 year-over-year changes, please refer to reduce coststhe MD&A in the areasPart II, Item 7 of supply chain, certain marketing activities and overhead expenses. The plan is designed to accelerate cost reductions by streamlining management decision making, manufacturing and other work processes to fund the Company's growth strategy.Form 10-K for the fiscal year ended June 30, 2022.
Net Sales
Fiscal year 2017 compared with fiscal year 2016
Net sales were unchanged at $65.1increased 2% to $82.0 billion in 2017 on a 1%fiscal 2023. The increase in unit volume versus the prior year period. Volume increased low single digits in Grooming, Health Care, Fabric & Home Carenet sales was driven by higher pricing of 9% and Baby, Feminine & Family Care. Volume decreased low single digits in Beauty.
Volume increased low single digits in developed regions and was unchanged in developing regions. Organic volume increased low single digits in both developed and developing markets. Unfavorablea favorable mix of 1%, partially offset by unfavorable foreign exchange reduced net sales by 2%. Neither pricing nor mix had any net impact on net sales for the year. Organic sales grew 2% driven by a 2% increase in organic volume.
Fiscal year 2016 compared with fiscal year 2015
Net sales decreased 8% to $65.3 billion in 2016 onof 5% and a 3% decrease in unit volume versus the prior year period. Volume decreasedyear. Favorable mix was driven by a higher proportion of sales in North America (with higher than Company-average selling prices) and decline in Europe (with lower than Company-average selling prices). Excluding the impacts of foreign exchange and acquisitions and divestitures, organic sales grew 7%.
Net sales increased mid-single digits in Health Care, increased low single digits in Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care and Beauty and decreased low single digits in Grooming. On a regional basis, volume decreased double digits in Europe, mid-single digits in Beauty.Greater China and low single digits in Asia Pacific, IMEA and North America. Volume increased low single digits in developed regions and declined high single digits in developing regions, in part due to increased pricing to address foreign exchange devaluations and due to the Venezuela deconsolidation and minor brand divestitures. Organic volume declined mid-single digits in developing markets. Unfavorable foreign exchange reduced net sales by 6%, while higher pricing drove a 1% favorable impact on net sales. Organic volume decreased 1% and organic sales grew 1% driven by higher pricing.Latin America.

Operating Costs
Comparisons as a percentage of net sales; Years ended June 302017 Basis Point Change 2016 Basis Point Change 2015
Gross margin50.0% 40
 49.6% 200
 47.6%
Selling, general and administrative expense28.5% (50) 29.0% (10) 29.1%
Operating margin21.5% 90
 20.6% 500
 15.6%
Earnings from continuing operations before income taxes20.4% (10) 20.5% 490
 15.6%
Net earnings from continuing operations15.7% 30
 15.4% 370
 11.7%
Net earnings attributable to Procter & Gamble23.6% 750
 16.1% 620
 9.9%

Fiscal year 2017 compared with fiscal year 2016
Comparisons as a percentage of net sales; fiscal years ended June 3020232022Basis Point Change
Gross margin47.9 %47.4 %50 bps
Selling, general and administrative expense25.7 %25.2 %50 bps
Operating margin22.1 %22.2 %(10) bps
Earnings before income taxes22.4 %22.4 %0 bps
Net earnings18.0 %18.4 %(40) bps
Net earnings attributable to Procter & Gamble17.9 %18.4 %(50) bps
Gross margin increased 4050 basis points (bps) to 50.0%47.9% of net salessales. The increase in 2017. Grossgross margin increased primarilywas due to:
•a 230430 basis-point positive impactincrease from totalhigher pricing and
•a 150 basis-point increase from manufacturing cost savings (210productivity savings.
These increases were partially offset by
•320 basis points netof increased commodity and input material costs,
•a 110 basis-point decline from unfavorable mix due to the launch and growth of premium products (which have lower than Company-average gross margins) and the disproportionate decline of the super-premium SK-II brand,
•a 50 basis-point decline from unfavorable foreign exchange impacts,
•30 basis points due to capacity start-up costs and other manufacturing impacts and
•20 basis points of product and packaging reinvestments),investments.
a 20 basis-point benefit from lower restructuring charges and
a 10 basis-point benefit from positive scale impactsTotal SG&A increased 4% to $21.1 billion due primarily to higher volume.
These impacts were partially offset by:
a 90 basis-point decrease from unfavorable product mix between segments (caused primarily by the lower relative proportion of salesan increase in Grooming, which has higher than company-average gross margins) and within segments (due to disproportionate growth of lower margin products, forms and package sizes in certain businesses),
a 40 basis-point negative impact from unfavorable foreign exchange and
a combined 70 basis-point impact due to higher commoditiesoverhead costs and other costs.
Total SG&A decreased 2% to $18.6 billion as increased overhead and advertising spending were more than offset by a reduction in othernet operating expenses, primarily due to a reduction in net foreign exchange transactional costs and gains on real estate sales.costs. SG&A as a percentage of net sales decreasedincreased 50 basis points to 28.5%25.7% due to an increase in overhead and other net operating costs as a resultpercentage of the declinenet sales, partially offset by a decrease in other operating expenses.marketing spending as a percentage of net sales.
•Marketing spending as a percentage of net sales increased 10decreased 40 basis points due to anthe positive scale impacts of the net sales increase in marketing activities,and increased productivity savings, partially offset by productivity savings.increased media reinvestments.
•Overhead costs as a percentage of net sales increased 2040 basis points primarily driven bydue to wage inflation and increased sales personnel in certain businesses,other cost increases, partially offset by 20 basis pointsthe positive scale impacts of the net sales increase and productivity savings.
•Other net operating expenses as a percentpercentage of net sales declined 80increased 60 basis points. Lowerpoints due primarily to higher foreign exchange transactional charges reducedcharges.
Productivity-driven cost savings delivered 90 basis points of benefit to SG&A as a percentage of net sales.
Operating margin decreased 10 basis points to 22.1% as the increase in gross margin was more than fully offset by the increase in SG&A as a percentage of net sales byas discussed above.



20 The Procter & Gamble Company 17

approximately 20 basis points. The balance of the reduction is primarily driven by gains on sales of real estate.
Fiscal year 2016 compared with fiscal year 2015
Gross margin increased 200 basis points to 49.6% of net sales in 2016. Gross margin increased primarily due to:
a 210 basis-point positive impact from manufacturing cost savings,
a 110 basis-point benefit from lower commodity costs and
a 70 basis-point benefit of higher pricing.
These impacts were partially offset by:
a 70 basis-point negative impact from unfavorable foreign exchange,
a 70 basis-point decrease due to unfavorable product mix caused by the disproportionate decline of higher margin segments like Beauty and by product form mix within the segments,
a 20 basis-point decrease from negative scale impacts due to lower volume and
a 20 basis-point decline due to incremental restructuring activity.
Total SG&A decreased 8% to $18.9 billion in 2016 primarily due to reduced overhead spending and a decrease in foreign exchange transaction charges. SG&A as a percentage of net sales declined 10 basis points to 29.0%, as negative scale impacts of lower net sales and inflationary impacts were more than offset by cost savings efforts, mainly in overhead spending, and lower foreign exchange transactional charges.
Marketing spending as a percentage of net sales increased 90 basis points due to the negative scale impacts from reduced sales.
Overhead costs as a percentage of net sales decreased 20 basis points, as 90 basis points of productivity savings were partially offset by wage inflation, increased sales personnel in certain businesses and investments in research and development.
Lower foreign exchange transactional charges reduced SG&A as a percentage of net sales by approximately 70 basis points. A pre-deconsolidation balance sheet remeasurement charge in Venezuela in fiscal year 2015 drove 20 basis points of this decline. The balance of the reduction relates to lower transactional charges from revaluing receivables and payables from transactions denominated in a currency other than a local entity’s functional currency.
In addition to the gross margin expansion and decrease in SG&A as a percent of net sales discussed above, operating margin also increased by 290 basis points in 2016 due to a $2.0 billion charge in 2015 related to the deconsolidation of the Company's Venezuelan subsidiaries.
Non-Operating Items
Fiscal year 2017 compared with fiscal year 2016
•Interest expense was $465$756 million, in 2017, a decreasean increase of $114$317 million versus the prior year due to a decreasehigher interest rates and an increase in weighted average interest rates.
short-term debt in the current year.
•Interest income was $171$307 million, in 2017, comparable to 2016.
Other non-operating income/(expense), which consists primarilyan increase of divestiture gains, investment income, and other non-operating items, was a net expense of $404 million in 2017 versus a net income of $325 million in 2016, a $729 million year-over-year decrease. This change is due to a $543 million current-year charge related to early extinguishment of long-term debt and a reduction in gains on minor brand divestitures. In 2017, we had approximately $110 million in minor brand divestiture gains, including Hipoglos (a baby care brand sold primarily in Brazil) and other minor brands. The prior year divestiture activities included approximately $300 million in minor brand divestiture gains, including Escudo and certain hair care brands in Europe and IMEA.
Fiscal year 2016 compared with fiscal year 2015
Interest expense was $579 million in 2016, a decrease of $47$256 million versus the prior year due to lower average debt balances.higher interest rates.
Interest•Other non-operating income was $182increased $98 million in 2016, an increaseto $668 million due primarily to a prior year unrealized loss on equity investments and a current year gain on divestiture of $33 millionminor brands.
Income Taxes
The effective tax rate increased 190 basis points versus the prior year primarily dueperiod to increasing cash, cash equivalents and investment securities balances.19.7% due to:
Other non-operating income, which primarily includes divestiture gains and investment income, decreased $115 million to $325 million in 2016, due primarily to•a 100 basis-point increase from lower gains on minor brand divestitures. In 2016, we had approximately $300 million in minor brand divestiture gains, including Escudo and certain hair care brands in Europe and IMEA. The prior year acquisition and divestiture activities included approximately $450 million in divestiture gains, including Zest, Camay, Fekkai and Wash & Go hair care brands and Vaposteam.
Income Taxes
Fiscal year 2017 compared with fiscal year 2016
The effective tax rate on continuing operations decreased 190 basis points to 23.1%. The rate declined due to:
a 130 basis-points impact from excess tax benefits associated withof share-based payments due to the adoption of FASB Accounting Standards Update (ASU) 2016-09 Improvements to Employee Share-based Payment Accounting in 2017,compensation,
•a 15050 basis-point benefitincrease from discrete impacts related to uncertain income tax positions (which netted to approximately 205 basis points in theand
•a 40 basis-point increase primarily from lower current year deductions for foreign-derived intangible income versus 55 basis pointsprior year.
Net Earnings
Operating income increased $321 million, or 2%, to $18.1 billion due to the increase in the prior year),
a 50 basis-point benefit from the tax impact of the early extinguishment of long-term debt, and
a 130 basis-point benefit from the prior year establishment of a valuation allowance on deferred tax assets related to net operating loss carryforwards.
These benefits weresales, partially offset by a 230 basis-point increase from unfavorable geographic mix, primarily due to a greater proportionmodest decrease in operating margin, both of totalwhich are discussed above.
Earnings before income taxed in the U.S. and a 40 basis-point increase due to the impact of minor brand divestitures.

18 The Procter & Gamble Company

Fiscal year 2016 compared with fiscal year 2015
The effective tax rate on continuing operationstaxes increased 30 basis points to 25.0% in 2016 mainly due to:
a 260 basis-point negative impact from the unfavorable geographic mix of earnings, and
a 130 basis-point impact in 2016 from the establishment of valuation allowances on deferred tax assets related to net operating loss carryforwards and the impact of favorable discrete adjustments related to uncertain income tax positions (which netted to 55 basis points in 2016 versus 85 basis points in 2015).
These benefits were partially offset by a 400 basis point decrease related to the non-deductibility of the Venezuelan deconsolidation charge in 2015.
Net Earnings
Fiscal year 2017 compared with fiscal year 2016
Net earnings from continuing operations increased $167$358 million, or 2%, to $10.2 billion. Operating$18.4 billion due primarily to the increase in operating income improved $514. Net earnings declined modestly by $55 million or 4%,to $14.7 billion due to improved gross margin and reduced SG&A costs. Netthe increase in earnings also benefitted from a lower tax rate in 2017. These benefits were partiallybefore income taxes, more than fully offset by the increase in net non-operating expenses,the effective income tax rate discussed above. Foreign exchange impacts reduced net earnings by approximately $420 million in 2017$1.4 billion due to a weakening of certain currencies against the U.S. dollar, including those in Argentina, Nigeria, Egypt and the United Kingdom.dollar. This impact includes both transactional charges as discussed above in Operating Costs and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars.
Net earnings from discontinued operations increased $4.6 billion in 2017 to $5.2 billion. This change was driven by the $5.3 billion gain on the sale of the Beauty Brands in the current year, partially offset by the impact of the base period results, which included the net earnings of the Batteries and Beauty Brands businesses prior to divestiture, a gain on the sale of the Batteries business and impairment charges on the Batteries business prior to divestiture (see Note 13 to the Consolidated Financial Statements).
Net earnings attributable to Procter & Gamble increased $4.8 billion,decreased $89 million, or 46%1%, to $15.3$14.7 billion.
Diluted net earnings per share from continuing operationsEPS increased $0.20,$0.09, or 6%2%, to $3.69 due to$5.90 as the increasedecrease in net earnings from continuing operations andwas more than fully offset by a reduction in the number of weighted average shares outstanding following the shares tendered in the sale of the Beauty Brands to Coty (see Note 13 to the Consolidated Financial Statements), along with ongoing share repurchases.
Diluted net earnings per share from discontinued operations were $1.90. This was an increase of $1.70 per share versus the prior year primarily resulting from the gain on the sale of the Beauty Brands. Diluted net earnings per share increased $1.90, or 51%, to $5.59.
Core EPS increased 7% to $3.92. Core EPS in fiscal year 2017 represents diluted net earnings per share from continuing operations excluding the charge related to early extinguishment of long-term debt and incremental
restructuring charges related to our productivity and cost savings plan. The increase was driven by operating margin expansion, lower effective tax rate and the reduction in the number of weighted average shares outstanding discussed above.
Fiscal year 2016 compared with fiscal year 2015
Net earnings from continuing operations increased $1.7 billion, or 21%, to $10.0 billion in 2016 primarily due to the base period charge of $2.1 billion after-tax related to the deconsolidation of Venezuelan subsidiaries. Earnings also declined due to the impact of the decline in net sales in fiscal 2016, partially offset by improved gross margin and the reduction in SG&A. Foreign exchange impacts reduced net earnings by about $880 million in 2016 due to weakening of certain key currencies against the U.S. dollar, primarily in Argentina, Brazil, Canada, Mexico and Russia. This impact includes both transactional charges as discussed above in Operating Costs and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars.
Net earnings from discontinued operations improved $1.7 billion in 2016 to $577 million. Batteries drove a $2.1 billion improvement due primarily to a $1.8 billion reduction in after-tax impairment charges in the Batteries business ($350 million in 2016 compared to $2.1 billion in 2015) and a $422 million after-tax gain in 2016 from the sale of the Batteries business. This was partially offset by a decrease in the earnings of the Beauty Brands in 2016 (see Notes 4 and 13 to the Consolidated Financial Statements).
Net earnings attributable to Procter & Gamble increased $3.5 billion, or 49% to $10.5 billion.
Diluted net earnings per share from continuing operations increased $0.65, or 23%, to $3.49 in 2016 due to the increase in net earnings and a decline in the average number of shares outstanding. Diluted net earnings per share from discontinued operations were $0.20 primarily resulting from the gain on the sale of the Batteries business. This was an improvement of $0.60 per share versus the prior year. Diluted net earnings per share increased $1.25, or 51%, to $3.69.
Core EPS decreased 2% to $3.67 in 2016. Core EPS in fiscal year 2016 represents diluted net earnings per share from continuing operations excluding charges for certain European legal matters and incremental restructuring related to our productivity and cost savings plan. The decline was driven by reduced net sales and foreign exchange impacts, partially offset by gross margin expansion.
Venezuela Impacts
There are a number of currency and other operating controls and restrictions in Venezuela, which have evolved over time and may continue to evolve in the future. These evolving conditions resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and U.S. dollar and restricted our Venezuelan operations’ ability to pay dividends or pay for certain raw and package materials, finished goods and services denominated in U.S. dollars. For accounting purposes, this resulted in a lack of control over our Venezuelan subsidiaries. Therefore, in accordance with the applicable accounting standards for consolidation, effective

The Procter & Gamble Company 19

June 30, 2015, we deconsolidated our Venezuelan subsidiaries and began accounting for our investment in those subsidiaries using the cost method of accounting. This resulted in a write-off of all of the net assets of our Venezuelan subsidiaries, along with Venezuela related assets held by other subsidiaries. Beginning in fiscal 2016, our financial results only include
sales of finished goods to our Venezuelan subsidiaries to the extent we receive payments from Venezuela. Accordingly, we no longer include the results of our Venezuelan subsidiaries’ operations in our financial results.

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 costswhich are reported in our Corporate segment and are included as part of our Corporate segment discussion. Additionally, as described in Note 2 to the Consolidated Financial Statements, we apply blended statutory tax rates in the segments. Eliminations to adjust segment results to arrive at our consolidated effective tax rate are included in Corporate. All referencesSee Note 2 to the Consolidated Financial Statements for additional information on items included in the Corporate segment.
Net Sales Change Drivers 2023 vs. 2022 (1)
Volume with Acquisitions & DivestituresVolume Excluding Acquisitions & DivestituresForeign ExchangePriceMix
Other (2)
Net Sales Growth
Beauty(1)%(2)%(5)%8 %(1)%1 %2 %
Grooming(3)%(3)%(7)%9 %(2)%— %(3)%
Health Care(1)%(1)%(4)%5 %4 %— %4 %
Fabric & Home Care(4)%(4)%(5)%11 %1 %— %3 %
Baby, Feminine & Family Care(3)%(3)%(4)%8 %1 %— %2 %
TOTAL COMPANY(3)%(3)%(5)%9 %1 %— %2 %
(1)Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.
(2)Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net earnings throughout the discussion of segment results refer to net earnings from continuing operations.sales.

Net Sales Change Drivers 2017 vs. 2016 (1)
 Volume with Acquisitions & Divestitures Volume Excluding Acquisitions & Divestitures Foreign Exchange Price Mix 
Other (2)
 Net Sales Growth
Beauty(2)% 1% (2)% 1 % 2 % 1% — %
Grooming2 % 3% (2)% (1)% (2)% —% (3)%
Health Care3 % 4% (2)% — % 1 % —% 2 %
Fabric & Home Care1 % 2% (2)% — % 1 % —% — %
Baby, Feminine & Family Care2 % 2% (2)% (1)% — % —% (1)%
TOTAL COMPANY1 % 2% (2)% — % — % 1% — %
 
Net Sales Change Drivers 2016 vs. 2015 (1)
 Volume with Acquisitions & Divestitures Volume Excluding Acquisitions & Divestitures Foreign Exchange Price Mix 
Other (2)
 Net Sales Growth
Beauty(5)% (2)% (6)% 2% — % —% (9)%
Grooming(2)% (2)% (9)% 5% (2)% —% (8)%
Health Care(2)% (2)% (6)% 2% 1 % —% (5)%
Fabric & Home Care(1)% 1 % (6)% —% — % —% (7)%
Baby, Feminine & Family Care(3)% (2)% (6)% —% — % —% (9)%
TOTAL COMPANY(3)% (1)% (6)% 1% — % —% (8)%
(1)
Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.
(2)
Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.

BEAUTY
($ millions)2017 Change vs. 2016 2016 Change vs. 2015
VolumeN/A (2)% N/A (5)%
Net sales$11,429 —% $11,477 (9)%
Net earnings$1,914 (3)% $1,975 (9)%
% of net sales16.7% (50) bps 17.2% (10) bps
Fiscal year 2017 compared with fiscal year 2016
($ millions)20232022Change vs. 2022
VolumeN/AN/A(1)%
Net sales$15,008$14,7402%
Net earnings$3,178$3,1601%
% of net sales21.2%21.4%(20) bps
Beauty net sales increased 2% to $15.0 billion as the positive impacts of higher pricing of 8% and benefit from acquisitions of 1% were unchanged at $11.4 billion in 2017 on a 2% decrease in unit volume. Unfavorablepartially offset by unfavorable foreign exchange
reduced net sales by 2%. Price increases had a of 5%, unfavorable mix of 1% positive impact on net sales. Favorable product mix added 2%(due primarily to net sales, primarily due to growththe decline of the super-premium SK-II brand, which has higher than segment averagesegment-average selling prices. Organicprices) and a 1% decrease in unit volume.

The Procter & Gamble Company 21
Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 3% on organic volume that increased 1%6%. Global market share of the Beauty segment decreased 0.6increased 0.3 points. Volume decreased low single digits in developed regions. Volume decreased low single digits in developing regions. Excluding minor brand divestitures, organic volume in developing regions
•Hair Care net sales increased low single digits.
Volume Positive impacts of higher pricing (driven by all regions) and benefit from acquisitions were partially offset by the negative impacts of unfavorable foreign exchange and a decrease in Hair Care decreased lowunit volume. Mix had a neutral impact on net sales. The volume decrease was driven primarily by declines in Europe (due to portfolio reduction in Russia and increased pricing), Greater China (due to market contraction and pandemic-related disruptions) and Asia Pacific (due to increased pricing). Organic sales increased high single digits due to minor brand divestitures. Organic volume increased low single digits. Developed regions decreased low single

20 The Procter & Gamble Company

digits mainly due to competitive activity. Developing regions decreased low single digits due to minor brand divestitures. Organic volume increased low single digitsdriven by 20% growth in developing regions behind product innovationLatin America and market growth.double-digit growth in Europe and North America, partially offset by a mid-single-digit decline in Greater China. Global market share of the hair care category decreased more than half a point.
Volume in •Skin and Personal Care was unchanged including the impact of minor brand divestitures. Organic volumenet sales increased low single digits. Developed marketPositive impacts of higher pricing (across all regions), a unit volume decreased low single digits following increased pricingincrease and a benefit from acquisitions were partially offset by the negative impacts from unfavorable mix (due primarily to the decline of the super-premium SK-II brand) and unfavorable foreign exchange. The volume increase was driven primarily by growth in North America, Latin America and Greater China (all due to competitive activity. Volumeinnovation), partially offset by a decline in Asia Pacific (due to the decline of the super-premium SK-II brand in the travel retail channel). Organic sales increased low singlemid-single digits as more than 20% increases in developing regions behind innovationLatin America and market growth.Europe and a double-digit increase in North America were partially offset by a double-digit decrease in Asia Pacific. Global market share of the skin and personal care category decreased halfincreased nearly a point.
Net earnings decreased 3%increased 1% to $1.9$3.2 billion due to a 50 basis point decrease in net earnings margin, behind anthe increase in SG&A as a percentage of net sales. SG&A as a percentage of net sales increased due to increased overhead spending including investments in sales resources and incremental marketing activity. Gross margin decreased slightly as the benefits from productivity savings and higher pricing were more than offset by higher commodity costs and unfavorable mix impacts (driven by Hair Care from an increase in the proportion of lower margin forms and categories, and unfavorable geographic mix, which more than offset benefit from Skin and Personal Care, driven by the growth of SK-II).
Fiscal year 2016 compared with fiscal year 2015
Beauty net sales decreased 9% to $11.5 billion in fiscal 2016 on a 5% decrease in unit volume. Unfavorable foreign exchange reduced net sales by 6%. Price increases had a 2% positive impact on net sales. Organic sales were unchanged on organic volume that decreased 2%. Global market share of the Beauty segment decreased 1.0 points. Volume decreased low single digits in developed markets and decreased high single digits in developing markets.
Volume in Hair Care was down mid-single digits. Developed markets declined mid-single digits due to competitive activity while developing markets declined mid-single digits driven by increased pricing, the Venezuela deconsolidation and minor brand divestitures. Global market share of the hair care category decreased more than a point.
Volume in Skin and Personal Care decreased high single digits, while organic volume decreased low single digits, with the difference attributable to the Camay and Zest brand divestitures and the Venezuela deconsolidation. Organic volume was unchanged in developed regions as commercial innovation was offset by ongoing competitive activity. Organic volume declined mid-single digits in developing regions primarily due to increased pricing and competitive activity. Global market share of the skin and personal care category decreased nearly a point.
Net earnings decreased 9% to $2.0 billion in 2016 primarily due to the reduction in net sales, along withpartially offset by a 1020 basis-point decrease in net earnings margin. Net earnings margin decreased due to an increasea reduction in gross margin, partially offset by a reduction in SG&A as a percentage of net sales, largely offset bysales. The gross margin expansion. Gross margin
improved duereduction was driven by negative product mix (due to productivity savings,the decline of the super-premium SK-II brand), increased pricingcommodity costs and lower commodity costs,unfavorable foreign exchange, partially offset by negative mix. SG&A as a percentage of net sales increased as lower marketing and overhead spending from the Company's focus on efficiencies was more than offset by the negative scale impacts from the reduction in sales.
GROOMING
($ millions)2017 Change vs. 2016 2016 Change vs. 2015
VolumeN/A 2% N/A (2)%
Net sales$6,642 (3)% $6,815 (8)%
Net earnings$1,537 (1)% $1,548 (13)%
% of net sales23.1% 40 bps 22.7% (130) bps
Fiscal year 2017 compared with fiscal year 2016
Grooming net sales decreased 3% to $6.6 billion in 2017 on a 2% increase in unit volume. Unfavorable foreign exchange reduced net sales by 2%. Unfavorable mix reduced net sales by 2% driven by disproportionate growth in emerging markets, where average selling prices are lower than in developed regions, in part due to a higher relative proportion of disposable razors in those markets. Price reductions in the U.S. during the second half of the year taken to address consumer price-competitiveness drove a 1% reduction in net sales. Organic sales were unchanged on organic volume that increased 3%. Global market share of the Grooming segment decreased 0.7 points. Volume increased low single digits in developed and developing regions.
Shave Care volume increased low single digits. Shave Care volume decreased low single digits in developed regions due to competitive activity and increased low single digits in developing regions behind product innovation. Global market share of the shave care category decreased half a point.
Volume in Appliances increased double digits. Volume increased double digits in developed regions and increased low single digits in developing regions due to product innovation. Global market share of the appliances category increased nearly half a point.
Net earnings decreased 1% to $1.5 billion due to the reduction in net sales, partially offset by an increase in net earnings margin. Net earnings margin increased 40 basis points due to a decrease in SG&A as a percent of net sales and improved gross margin. SG&A as a percent of net sales decreased due to a gain on the sale of real estate, partially offset by increased overhead spending. Gross margin increased as the benefits of productivity efforts were only partially offset by unfavorable foreign exchange impacts, reduced pricing and negative mix driven by growth in emerging markets, where average selling prices are lower than in developed regions, in part due to a higher relative proportion of disposable razors in those markets.

The Procter & Gamble Company 21

Fiscal year 2016 compared with fiscal year 2015
Grooming net sales decreased 8% to $6.8 billion in 2016 on a 2% decrease in unit volume. Unfavorable foreign exchange reduced net sales by 9%. Price increases in Shave Care contributed 5% to net sales. Unfavorable product mix decreased net sales by 2% due to a higher relative mix of disposable razors, which have lower than segment average selling prices compared to system razor cartridges. Organic sales increased 2%. Global market share of the Grooming segment decreased 1.1 points. Volume decreased low single digits in developed and developing regions.
Shave Care volume decreased low single digits in both developed and developing regions due to competitive activity and increased pricing. Global market share of the shave care category decreased more than half a point.
Volume in Appliances was up mid-single digits due to a mid-single-digit increase in developed regions from product innovation. Volume in developing regions increased low single digits due to growth from product innovation, partially offset by reductions due to increased pricing. Global market share of the Appliances category decreased more than half a point.
Net earnings decreased 13% to $1.5 billion in 2016 due to the reduction in net sales and a 130 basis-point decrease in net earnings margin. Net earnings margin decreased due to increased SG&A as a percentage of net sales partially offset by a lower tax rate. Gross margin was unchanged as the benefits of increased pricing and productivity efforts were largely offset by unfavorable foreign exchange impacts and negative product mix caused by an increase in the proportion of disposable razor sales compared to system razor cartridges. SG&A as a percentage of net sales increased due to increased marketing spending and the negative scale impact of lower net sales. The tax rate declined due to the geographic mix of earnings.
HEALTH CARE
($ millions)2017 Change vs. 2016 2016 Change vs. 2015
VolumeN/A 3% N/A (2)%
Net sales$7,513 2% $7,350 (5)%
Net earnings$1,280 2% $1,250 7%
% of net sales17.0% — 17.0% 190 bps
Fiscal year 2017 compared with fiscal year 2016
Health Care net sales increased 2% to $7.5 billion in 2017 on a 3% increase in unit volume. Unfavorable foreign exchange reduced net sales by 2%. Favorable product mix contributed 1% to net sales due primarily to an increase in power toothbrushes in Oral Care, which have higher than segment-average selling prices. Organic sales increased 5% on organic volume that increased 4%. Global market share of the Health Care segment decreased 0.2 points. Volume increased low single digits in developed regions and increased mid-single digits in developing regions.
Oral Care volume increased mid-single digits. Volume increased low single digits in developed regions and
increased mid-single digits in developing regions driven by market growth and product innovation. Global market share of the oral care category decreased slightly.
Volume in Personal Health Care increased low single digits. Volume increased low single digits in both developed and developing regions behind a stronger cough/cold season relative to prior year, product innovation and expanded distribution. Global market share of the personal health care category was unchanged.
Net earnings increased 2% to $1.3 billion due to the increase in net sales. Operating margin was unchanged as a higher gross margin was offset by increased SG&A as a percentage of net sales. Gross margin increased due to productivity cost savings, partially offset by unfavorable geographic mix driven by the disproportionate growth of developing regions, which have lower than segment-average margins. SG&A increased as a percentage of net sales due to increased overhead spending, partially offset by reduced marketing spending.
Fiscal year 2016 compared with fiscal year 2015
Health Care net sales were down 5% to $7.4 billion in 2016 on a 2% decrease in unit volume. Unfavorable foreign exchange reduced net sales by 6%. Price increases contributed 2% to net sales, mainly in developing markets. Favorable geographic mix increased net sales 1%, primarily driven by a decline in Oral Care volume in developing regions, which have lower than segment average selling prices. Organic sales increased 2%. Global market share of the Health Care segment decreased 0.7 points. Volume was up low single digits in developed regions and declined high single digits in developing regions.
Oral Care volume declined low single digits due to a high single-digit decrease in developing regions caused by increased pricing, competitive activity and reduced customer inventory. Volume in developed regions increased low single digits driven by product innovation. Global market share of the oral care category was down less than a point.
Volume in Personal Health Care decreased mid-single digits primarily due to a mid-single-digit decrease in developed regions driven by competitive activity and a weak cough/cold season. Volume in developing markets decreased low single digits due to increased pricing. Global market share of the personal health care category decreased half a point.
Net earnings increased 7% to $1.3 billion in 2016 as the reduction in net sales was more than offset by a 190 basis-point increase in net earnings margin. Gross margin increased primarily due to manufacturing cost savings and increased pricing. SG&A as a percentage of net sales decreased primarily due to reduceda decrease in marketing spending fromspending.
GROOMING
($ millions)20232022Change vs. 2022
VolumeN/AN/A(3)%
Net sales$6,419$6,587(3)%
Net earnings$1,461$1,490(2)%
% of net sales22.8%22.6%20 bps
Grooming net sales decreased 3% to $6.4 billion driven by unfavorable foreign exchange of 7%, a 3% decrease in unit volume and unfavorable mix of 2% (due to decline of appliances, which have higher than segment-average selling prices), partially offset by higher pricing of 9% (driven by all regions). The volume decrease was primarily driven by decreases in Europe (due to portfolio reduction in Russia and increased pricing) and North America (due to market contraction and increased pricing). Excluding the focus onimpact of acquisitions and divestitures and foreign exchange, organic sales increased 5% driven by growth in all regions led by a more than 20% growth in Latin America and a double-digit growth in Asia Pacific. Global market share of the Grooming segment increased 1 point.
Net earnings decreased 2% to $1.5 billion due to the decrease in net sales, partially offset by a 20 basis-point increase in net earnings margin. Net earnings margin increased as a decrease in gross margin was more than fully offset by a decrease in SG&A as a percentage of net sales. The gross margin decrease was driven by unfavorable product mix (due to a disproportionate decline of higher gross margin appliances such as premium shavers), commodity cost increases and unfavorable foreign exchange, partially offset by higher pricing and productivity savings. SG&A as a percentage of net sales decreased due primarily to a decrease in marketing spending.
HEALTH CARE
($ millions)20232022Change vs. 2022
VolumeN/AN/A(1)%
Net sales$11,226$10,8244%
Net earnings$2,125$2,0066%
% of net sales18.9%18.5%40 bps
Health Care net sales increased 4% to $11.2 billion driven by higher pricing of 5% and cost savings efforts.favorable mix of 4% (due to growth in North America and the Personal Health Care category, both of which have higher than segment-average selling prices), partially offset by unfavorable foreign exchange of 4% and a 1% decrease in unit volume. Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales increased 8%. Global market share of the Health Care segment decreased 0.2 points.


22 The Procter & Gamble Company

•Oral Care net sales decreased low single digits. Negative impacts of unfavorable foreign exchange and a unit volume decrease were partially offset by increased pricing (driven primarily by North America and Europe) and favorable premium product mix. Volume decline was primarily driven by Europe (due to portfolio reduction in Russia and increased pricing), North America (due to increased pricing) and Greater China (due to market contraction, especially in the power brush market). Organic sales increased low single digits driven by a more than 20% growth in Latin America and a low single-digit growth in North America. Global market share of the oral care category was unchanged.
•Personal Health Care net sales increased double digits. Positive impacts of favorable mix (due to the disproportionate growth of North America and respiratory products, both of which have higher than category-average selling prices), higher pricing (driven primarily by North America, Europe and Latin America) and a unit volume increase were partially offset by unfavorable foreign exchange. Volume increase was primarily driven by growth in North America (due to innovation and a stronger respiratory season) and Latin America, partially offset by a decline in IMEA (versus a prior year impacted by pandemic-related consumption increases in certain markets). Organic sales increased mid-teens driven by a high teens increase in North America, a mid-teens increase in Europe and a low teens increase in Latin America. Global market share of the personal health care category was unchanged.
Net earnings increased 6% to $2.1 billion due to the increase in net sales and a 40 basis-point increase in net earnings margin. Net earnings margin increased as a decrease in gross margin was more than fully offset by a decrease in SG&A as a percentage of net sales. The decrease in gross margin was driven by unfavorable product mix (due to the growth of products such as manual brushes, which have lower gross margins) and increased commodity and input material costs, partially offset by increased pricing. SG&A as a percentage of net sales decreased due to the positive scale impacts of the net sales increase and lower marketing spending, partially offset by increased overhead spending.
FABRIC & HOME CARE
($ millions)2017 Change vs. 2016 2016 Change vs. 2015
VolumeN/A 1% N/A (1)%
Net sales$20,717 —% $20,730 (7)%
Net earnings$2,713 (2)% $2,778 5%
% of net sales13.1% (30) bps 13.4% 160 bps
Fiscal year 2017 compared with fiscal year 2016
($ millions)20232022Change vs. 2022
VolumeN/AN/A(4)%
Net sales$28,371$27,5563%
Net earnings$4,828$4,38610%
% of net sales17.0%15.9%110 bps
Fabric & Home Care net sales were unchangedincreased 3% to $28.4 billion driven by higher pricing of 11% and favorable mix of 1% (due to a disproportionate volume decline in 2017 at $20.7 billion onEurope, which has lower than segment-average selling prices), partially offset by unfavorable foreign exchange of 5% and a 1% increase4% decrease in unit volume. UnfavorableExcluding the impact of foreign exchange reduced net sales by 2%. Favorable geographic mix increased net sales 1%, primarily driven by increased volume in developed regions, which have higher than segment-average selling prices. Organicand acquisitions and divestitures, organic sales increased 3% on organic volume that increased 2%8%. Global market share of the Fabric & Home Care segment decreased 0.1 points. Volumewas unchanged.
•Fabric Care net sales increased low single digitsdigits. Positive impacts of higher pricing (driven by all regions) and favorable geographic mix (due to decline in developed regions and decreased low single digits in developing regions. Excluding minor brand divestitures, organic volume increased mid-single digits in developed regions and decreased low single digits in developing regions.
Fabric Care volume increased low single digits as a mid-single digit volume increase in developed regions, due primarily to product innovation, wasEurope, which has lower than category-average selling prices) were partially offset by unfavorable foreign exchange and a decrease in unit volume. The volume decrease was primarily driven by declines in Europe (due to increased pricing and portfolio reduction in Russia), North America (due to increased pricing and market contraction) and Greater China (due to portfolio reductions and market contraction). Organic sales increased high single digits driven by more than 20% increases in Latin America and IMEA, high single-digit increases in Asia Pacific and Europe and a low single-digit decreaseincrease in developing regions, driven by competitive activity and reduced distribution of less profitable brands.North America. Global market share of the fabric care category was unchanged.decreased nearly a point.
•Home Care net sales increased mid-single digits. Positive impacts of higher pricing (driven primarily by Europe and North America) and favorable product mix were partially offset by unfavorable foreign exchange and a decrease in unit volume. The volume decrease was driven by declines in Europe (due to market contraction and increased lowpricing) and North America (due to market contraction). Organic sales increased high single digits driven by a lowmid-teens growth in Europe and a high single-digit increasegrowth in both developed and developing regions due to market growth and product innovation.North America. Global market share of the home care category was unchanged.increased more than a point.
Net earnings decreased 2%increased 10% to $2.7$4.8 billion due to the increase in net sales and a 30110 basis-point decreaseincrease in net earnings margin. Net earnings margin decreasedincreased due to an increase in the effective tax rate driven by the geographic mix of earnings. Grossgross margin, expanded slightly, driven by manufacturing cost savings, partially offset by unfavorable foreign exchange impacts and increased commodity costs. SG&A as a percentage of net sales increased slightly due to increased overhead spending.
Fiscal year 2016 compared with fiscal year 2015
Fabric & Home Care net sales in 2016 were down 7% to $20.7 billion on unit volume that declined 1%. Unfavorable foreign exchange reduced net sales by 6%. Organic sales increased 1% on a 1%an increase in organic volume, which excludes minor brand divestitures and the Venezuela deconsolidation. Global market share of the Fabric & Home Care segment decreased 0.2 points. Volume increased mid-single digits in developed regions and was down high single digits in developing regions.
Fabric Care volume declined low single digits due to a double-digit decrease in developing regions driven by increased pricing, reduced distribution of less profitable brands, minor brand divestitures and the Venezuela
deconsolidation. Organic volume in developing regions decreased high single digits. Volume in developed markets increased mid-single digits due to innovation and increased marketing. Global market share of the fabric care category was flat.
Home Care volume increased low single digits. Developed market volume increased low single digits as benefits from product innovation more than offset impacts from competitive activity. This was partially offset by a low single-digit decrease in developing regions following increased pricing. Global market share of the home care category was down slightly.
Net earnings increased 5% to $2.8 billion in 2016 behind a 160 basis-point increase in net earnings margin, which more than offset the reduction in net sales. Net earnings margin increased due to gross margin expansion, partially offset by increased SG&A as a percentage of net sales. IncreasedThe gross margin increase was driven by manufacturing cost savingsincreased pricing, partially offset by an increase in commodity and lower commodity costs.input material costs, unfavorable foreign exchange and unfavorable product mix. SG&A as a percentage of net sales increased due to an increase in marketingmedia spending, andpartially offset by the negativepositive scale impacts fromeffects of the reduction in net sales.sales increase.


The Procter & Gamble Company 23
BABY, FEMININE & FAMILY CARE
($ millions)2017 Change vs. 2016 2016 Change vs. 2015
VolumeN/A 2% N/A (3)%
Net sales$18,252 (1)% $18,505 (9)%
Net earnings$2,503 (6)% $2,650 (10)%
% of net sales13.7% (60) bps 14.3% (20) bps
Fiscal year 2017 compared with fiscal year 2016
($ millions)20232022Change vs. 2022
VolumeN/AN/A(3)%
Net sales$20,217$19,7362%
Net earnings$3,545$3,2669%
% of net sales17.5%16.5%100 bps
Baby, Feminine & Family Care net sales decreasedincreased 2% to $20.2 billion as the positive impacts of higher pricing of 8% and favorable mix of 1% (due to $18.3 billiona higher proportion of sales in 2017 onNorth America, which has higher than segment-average selling prices) were partially offset by unfavorable foreign exchange of 4% and a 2% increase3% decrease in unit volume. UnfavorableExcluding the impact of foreign exchange reduced net sales by 2%. Lower pricing had a negative 1% impact on net sales. Organicand acquisitions and divestitures, organic sales increased 1% on organic volume that increased 2%6%. Global market share of the Baby, Feminine & Family Care segment decreased 0.1 points. Volume increased low single digits in developed regions and was unchanged in developing regions.unchanged.
Volume in •Baby Care was unchanged. Volume in developed regionsnet sales decreased low single digits. Negative impacts of a decrease in unit volume and unfavorable foreign exchange were partially offset by higher pricing (across all regions) and favorable product and geographic mix (due to a higher proportion of sales in North America). The volume decrease was driven primarily by declines in Europe (due to increased pricing and portfolio reduction in Russia), North America (due to increased pricing) and Greater China. Organic sales increased mid-single digits primarily due to competitive activity,driven by a more than 30% growth in Latin America, high single-digit growth in IMEA and volumemid-single-digit growth in developing regions increased low single digits, due to market growthNorth America and product innovation.Europe, partially offset by a double-digit decline in Greater China. Global market share of the baby care category decreased more than half a point.was unchanged.
Volume in •Feminine Care net sales increased low singlemid-single digits. VolumePositive impacts of higher pricing (driven by all regions) and favorable product and geographic mix (due to a decline in developed regionsEurope, which has lower than category-average selling prices) were partially offset by unfavorable foreign exchange and a decrease in unit volume. The volume decrease was driven primarily by declines in Europe (due to portfolio reduction in Russia and increased low singlepricing) and IMEA (due to increased pricing). Organic sales increased double digits driven by product innovation,growth in all regions led by a mid-teens increase in Europe and volumea double-digit increase in developing regions decreased low single digits due to competitive activity and reduced exports to our Venezuelan subsidiaries. Global marketNorth America. Market share of the feminine care category was unchanged.increased nearly half a point.
Volume•Net sales in Family Care, which is predominantly a North American business, increased mid-singlelow single digits driven by product innovation and increased merchandising. In the U.S., all-outlet share of the family care category increased less thanhigher pricing. Unit volume had a point.

The Procter & Gamble Company 23

Net earnings decreased 6% to $2.5 billion due to the reduction inneutral impact on net sales and a 60 basis point decrease in net earnings margin. Net earnings margin decreased as increased SG&A as a percent of net sales was only partially offset by an increase in gross margin. SG&A as a percentage of netsales. Organic sales increased due to increased marketing and overhead spending. Gross margin increased driven by manufacturing cost savings partially offset by unfavorable foreign exchange impacts, lower pricing and unfavorable product mix across business units due to increased net sales in product forms and larger package sizes with lower than segment-average margins.
Fiscal year 2016 compared with fiscal year 2015
Baby, Feminine & Family Care net sales decreased 9% to $18.5 billion in 2016 on a 3% decline in unit volume. Unfavorable foreign exchange reduced net sales by 6%. Organic sales declined 1% on a 2% decline in organic volume. Global market share of the Baby, Feminine & Family Care segment decreased 1.1 points. Volume increased low single digits in developed regions and decreased double digits in developing regions.
Volume in Baby Care was down mid-single digits due to a high single-digit decrease in developing regions caused by price increases in the previous fiscal year, the Venezuela deconsolidation and competitive activity. Organic volume in developing markets was down mid-single digits. Volume was up low single digits in developed regions as product innovation and market growth more than offset competitive activity. Global market share of the baby care category decreased less than two points, primarily attributable to developing markets.
Volume in Feminine Care declined low single digits due to a mid-single-digit decrease in developing regions caused by competitive activity and price increases in the previous fiscal year, partially offset by market growth. In developed regions, volume was unchanged. Global market share of the feminine care category decreased more than half a point.
Volume in Family Care decreased low single digits due to a double-digit decline in developing regions driven by the discontinuation of non-strategic products. Volume in developed regions increased low single digits due to product innovation and increased merchandising. In the U.S., all-outletNorth America's share of the family care category decreased nearly half a point.
Net earnings decreased 10%increased 9% to $2.7$3.5 billion due to the increase in 2016net sales and a 100 basis-point increase in net earnings margin. Net earnings margin increased primarily due to the reductionan increase in net sales. Net earnings margin decreased 20 basis points as higher gross margin was more than offset by an increaseand a modest decrease in SG&A as a percentage of net sales and a higher tax rate.sales. Gross margin increased driven by manufacturing cost savings and lower commodity costs,due to increased pricing, partially offset by negative product mix.an increase in commodity and input material costs. SG&A as a percentage of net sales increaseddecreased due to the negativepositive scale impact fromeffects of the reductionnet sales increase partially offset by an increase in net sales. The higher tax rate versus the prior year was due to the geographic mix of earnings.other operating expense.
CORPORATE
($ millions)2017 Change vs. 2016 2016 Change vs. 2015($ millions)20232022Change vs. 2022
Net sales$505 20% $422 (9)%Net sales$765$7443%
Net earnings/(loss)$247 N/A $(174) N/ANet earnings/(loss)$(399)$485N/A
Corporate includes certain operating and non-operating activities not allocated to specific business segments. These include: theinclude but are not limited to incidental businesses managed at the corporate level; financing and investing activities; certain employee benefit costs; other general corporate items;level, gains and losses related to certain divested brands or businesses, impacts from various financing and categories;investing activities, impacts related to employee benefits, asset impairments and certain restructuring-typerestructuring activities to maintain a competitive cost structure, including manufacturing and workforce optimization. Corporate also includes reconciling items to adjust the accounting policies used inwithin the reportable segments to U.S. GAAP. The most significantnotable ongoing reconciling item is income taxes, to adjust fromwhich adjusts the blended statutory rates that are reflected in the reportable segments to the overall Company effective tax rate.
Fiscal year 2017 compared with fiscal year 2016
Corporate net sales increased 20%, or $833% to $765 million to $505 million in 2017 primarily due to an increase in net sales of the incidental businesses managed at the corporate level. Corporate net earnings from continuing operations improved by approximately $421decreased $884 million in 2017,to a loss of $399 million primarily due to:
to higher interest expense, lower restructuring charges in 2017 compared to the prior year,
a gain on the saleexcess tax benefits of real estate in the current fiscal year,
lowershare-based compensation and higher foreign exchange transactional charges,
a reduction in the proportion of corporate overhead spending not allocated to the segments, consisting in part of reduced stranded overheads following divestitures, and
current year tax benefits resulting from the adoption of a new accounting standard on the tax impacts of share-based payments to employees (see Note 1 to the Consolidated Financial Statements).
These benefits were partially offset by a $345 million after-tax charge on the early extinguishment of long-term debtincrease in fiscal 2017 and lower gains from minor brand divestitures compared to 2016.
Fiscal year 2016 compared with fiscal year 2015
Corporate net sales decreased $44 million in 2016of the incidental businesses and higher interest income.
Restructuring Program to $422 million. Corporate net earnings from continuing operations improved by approximately $2.2 billion in 2016, primarily due to the $2.1 billion Venezuela deconsolidation charge in the prior fiscal year and lower foreign currency transactional charges. Additional discussion of these items impacting net earnings in Corporate are included in the Results of Operations section.
Deliver Productivity and Cost Savings Plan
In 2012, theThe Company initiated a productivity and cost savings plan to reduce costs and better leverage scalehas historically had an ongoing restructuring program with annual spending in the areasrange of supply chain, research and development, marketing and overheads. The plan was designed$250 to accelerate cost reductions by streamlining management decision making, manufacturing

24 The Procter & Gamble Company

and other work processes to fund the Company's growth strategy. In 2016 the Company communicated additional multi-year productivity and cost savings targets. In 2017, the Company communicated specific elements of the productivity and cost savings targets.
As part of the original plan, the Company incurred approximately $5.6 billion in before-tax restructuring costs over a six-year period (from fiscal 2012 through fiscal 2017).$500 million. Savings generated from the Company's restructuring costsprogram are difficult to estimate, given the nature of the activities, the timing of the execution and the degree of reinvestment. Through 2017, these costs and other non-manufacturing enrollment reductions delivered approximately $2.9 billion in annual before-tax gross savings.
The additional productivity and cost savings plan will further reduce costs in the areas of supply chain, certain marketing activities and overhead expenses. As part of this plan,In fiscal 2023, the Company expects to incur approximately $1.2 billion in total before-taxincurred before tax restructuring costs in fiscal 2018 and 2019. This program is expectedwithin the range of our historical annual ongoing level of $250 to result in meaningful non-manufacturing enrollment reductions, along with further optimization of the supply chain and other manufacturing processes.$500 million.

24 The Procter & Gamble Company
Restructuring accruals of $277$174 million as of June 30, 20172023, are classified as current liabilities. During fiscal 2017, 48%Approximately 87% of the restructuring charges incurred in fiscal 2023 either have been or will be settled with cash. Consistent with our historical policies for ongoing restructuring-type activities, the resulting charges are funded by and included within Corporate for segment reporting.
In addition to our restructuring programs, we have additional ongoing savings efforts in our supply chain, marketing and overhead areas that yield additional benefits to our operating margins.
Refer to Note 3 to the Consolidated Financial Statements for more details on the restructuring program and to the Operating Costs section of the MD&A for more information about the total benefit to operating margins from our total savings efforts.

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 to readily access capital markets at competitive rates.
Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures. Excess operating cash is used first to fund shareholder dividends. Other discretionary uses include share repurchases and acquisitions 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.
Cash Flow Analysis
($ millions)20232022
Net cash provided by operating activities$16,848 $16,723 
Net cash used in investing activities(3,500)(4,424)
Net cash used in financing activities(12,146)(14,876)
Adjusted Free Cash Flow14,011 13,792 
Adjusted Free Cash Flow Productivity95 %93 %
Operating Cash Flow
Fiscal year 2017 compared with fiscal year 2016
Operating cash flow was $12.8$16.8 billion in 2017,2023, a 17% decrease from1% increase versus the prior year. Net earnings, adjusted for non-cash items (depreciation and amortization, share-based compensation, deferred income taxes loss/(gain)and gain on sale of assets and impairment charges) and the loss on early extinguishment of debtassets) generated $13.0approximately $17.5 billion of operating cash flow. Working capital and other impacts used $281$656 million of operating cash flow.flow as summarized below.
•An increase in accountsAccounts receivable used $322$307 million of cash primarily due to higher relative sales late in the period as compared to the prior period, partially offset by collection of approximately $150 million of retained receivables from the Beauty Brands business. In addition, thegrowth. The number of days sales outstanding increased approximately 1 day due in part to foreign exchange impacts.versus prior year.
Lower•Higher inventory generated $71used $119 million of cash mainly due to increased safety stock levels to strengthen supply chain optimizations, partially offset by increases to support business growth and increased commodity costs.sufficiency. Inventory days on hand decreased approximately 1 day primarily due to supply chain optimizations.was flat versus year ago.
•Accounts payable accruedand Accrued and other liabilities decreased, using $149 million in operating cash flow. This was caused by reduced accruals from lower fourth quarter marketing and overhead activities as compared to the base period, as well as the payment of approximately $595provided $313 million of accountscash, primarily driven by increases in taxes payable and accrued liabilities related to the divestiture of the Beauty Brands business, including liabilities retained by the Company pursuant to the terms of the agreement. These impacts werecompensation expense, partially offset by approximately $700 million relateda reduction in trade payables. The reduction in trade payables was due to lower supply chain payables from a decrease in commodity and transportation costs, partially offset by the impact of extended payment terms with oursuppliers (see Extended Payment Terms and Supply Chain Financing below). Days payable outstanding decreased approximately 3 days versus prior year.
•Other net operating assets and liabilities used $543 million of cash primarily driven by pension-related contributions.
Adjusted Free Cash Flow. We view adjusted free cash flow as an important non-GAAP measure because it is a factor impacting the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments. It is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S. Tax Act. Adjusted free cash flow is one of the measures used to evaluate senior management and determine their at-risk compensation.
Adjusted free cash flow was $14.0 billion in 2023, an increase of 2% versus the prior year. The increase was primarily driven by the increase in operating cash flows as discussed above. Adjusted free cash flow productivity, defined as the ratio of adjusted free cash flow to net earnings, was 95% in 2023.
Extended Payment Terms and Supply Chain Financing. Beginning in fiscal 2014, in response to evolving market practices, the Company began a program to negotiate extended payment terms with its suppliers. At the same time, the Company initiated a Supply Chain Finance program (the "SCF") with a number of global financial institutions (the "SCF Banks"). Under the SCF, qualifying suppliers may elect to sell their receivables from the Company to an SCF Bank. These factors, alongparticipating suppliers negotiate their receivables sales arrangements directly with the impactrespective SCF Bank. While the Company is not party to those agreements, the SCF Banks allow the participating suppliers to utilize the Company’s creditworthiness in establishing credit spreads and associated costs. This generally provides the suppliers with more favorable terms than they would be able to secure on their own. The Company has no economic interest in a supplier’s decision to sell a receivable. Once a qualifying supplier elects to participate in the SCF and reaches an agreement with an SCF Bank, they elect which individual Company invoices they sell to the SCF bank. However, all the Company’s payments to participating suppliers are paid to the SCF Bank on the invoice due date, regardless of foreign exchange, drovewhether the individual invoice is sold by the supplier to the SCF Bank. The SCF Bank pays the supplier on the invoice due date for any invoices that were not previously sold to the SCF Bank under the SCF.

The Procter & Gamble Company 25
The terms of the Company’s payment obligation are not impacted by a 4 day increasesupplier’s participation in the SCF. Our payment terms with our suppliers for similar services and materials within individual markets are consistent between suppliers that elect to participate in the SCF and those that do not participate. Accordingly, our average days outstanding are not significantly impacted by the portion of suppliers or related input costs that are included in the SCF. In addition, the SCF is available to both material suppliers, where the underlying costs are largely included in Cost of goods sold, and to service suppliers, where the underlying costs are largely included in SG&A. As of June 30, 2023, approximately 3% of our global suppliers have elected to participate in the SCF. Payments to those suppliers during fiscal year 2023 were approximately $18 billion, which equals approximately 29% of our total Cost of goods sold and SG&A for the year. For participating suppliers, we believe substantially all of their receivables with the Company are sold to the SCF Banks. Accordingly, we would expect that at each balance sheet date, a similar proportion of amounts originally due to suppliers would instead be payable outstanding. to SCF Banks. All outstanding amounts related to suppliers participating in the SCF are recorded within Accounts payable in our Consolidated Balance Sheets, and the associated payments are included in operating activities within our Consolidated Statements of Cash Flows. As of June 30, 2023 and 2022, the amounts due to suppliers participating in the SCF and included in Accounts payable were approximately $6 billion.
Although difficult to project due to market and other dynamics, we anticipate incremental cash flow benefits from the extended payment terms with suppliers could decline slightly overincrease at a slower rate in fiscal 2024. Future changes in our suppliers’ financing policies or economic developments, such as changes in interest rates, general market liquidity or the next fiscal year.
Other operating assets and liabilities used $43 million of cash.
Fiscal year 2016 compared with fiscal year 2015
Operating cash flow was $15.4 billionCompany’s credit-worthiness relative to participating suppliers, could impact suppliers’ participation in 2016, a 6% increase from the prior year. Net earnings, adjusted for non-cash items (depreciation and amortization, share-based compensation, deferred income taxes, loss/(gain) on sale of assets and impairment charges) generated $13.6 billion of operating cash flow. Working capital and other impacts generated $1.8 billion of operating cash flow.
Reduced accounts receivable generated $35 million of cash dueSCF and/or our ability to improved collection results partially offset by sales mix. The number of days sales outstanding increased 1 day due to foreign exchange impacts.
Lower inventory generated $116 million of cash mainly due to supply chain optimizations and lower commodity costs. Inventory days on hand increased 4 days primarily due to foreign exchange impacts.

The Procter & Gamble Company 25

Accounts payable, accrued and other liabilities increased, generating $1.3 billion in operating cash flow, of which approximately $0.8 billion was driven bynegotiate extended payment terms with our suppliers. The balance was primarily driven by an increase in fourth quarter marketing activity versus the prior year. These items, along with the impact of foreign exchange, drove a 24 day increase in days payable outstanding.
Other operating assets and liabilities generated $204 million of cash.
Adjusted Free Cash Flow. We view adjusted 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 excluding tax payments relatedHowever, any such impacts are difficult to certain divestitures and is one of the measures used to evaluate senior management and determine their at-risk compensation.
Fiscal year 2017 compared with fiscal year 2016
Adjusted free cash flow was $9.8 billion in 2017, a decrease of 19% versus the prior year. The decrease was primarily driven by the decrease in operating cash flows. Adjusted free cash flow productivity, defined as the ratio of adjusted free cash flow to net earnings, excluding the loss on debt extinguishment and impacts of the sale of the Beauty Brands, was 94% in 2017.
Fiscal year 2016 compared with fiscal year 2015
Adjusted free cash flow was $12.1 billion in 2016, an increase of 4% versus the prior year. The increase was driven by the increase in operating cash flows and decrease in capital spending. Adjusted free cash flow productivity, defined as the ratio of adjusted free cash flow to net earnings excluding the impairment charges and gain on the sale of the Batteries business, was 115% in 2016.predict.
Investing Cash Flow
Fiscal year 2017 compared with fiscal year 2016
Net investing activities consumed $5.7used $3.5 billion inof cash in 2017 mainly2023, primarily due to capital spending and purchases of short-term investments, partially offset by proceeds from asset sales, transactions related to the close of the Beauty Brands divestiture and sales and maturities of short-term investments.acquisitions.
Fiscal year 2016 compared with fiscal year 2015
Net investing activities consumed $5.6 billion in cash in 2016 mainly due to capital spending, divestiture transactions and purchases of short-term investments, partially offset by sales and maturities of short-term investments.
Capital Spending.Capital expenditures, primarily to support capacity expansion, innovation and cost efficiencies, were $3.4$3.1 billion in 2017 and $3.3 billion in 2016.2023. Capital spending as a percentage of net sales increased 10decreased 20 basis points to 5.2%3.7% in 2017. Capital spending as a percentage of net sales was 5.1% in 2016.2023.
Acquisitions. Acquisition activity was not material in 2017 or 2016.
Proceeds from Divestitures and Other Asset Sales. Proceeds from asset sales in 2017 contributed $571used cash of $765 million in cash,2023, primarily from real estate sales and other minor brand divestitures. Proceeds from asset sales contributed $432 million in cash in 2016 primarily from plant asset sales and other minor brand divestitures. In fiscal 2016, the Company invested $1.0 billion of cash, received from the pre-Beauty Brands divestiture issuance of transaction-related debt, in restricted cash. In fiscal 2017, the Company invested an additional $874 million of cash, received from the issuance of debt, in restricted cash. At the closing of therelated to a Beauty Brands transaction, $1.9 billion of restricted cash was released and returned to cash and cash equivalents and $475 million of cash was transferred to the discontinued Beauty Brands business.acquisition.
Financing Cash Flow
Net financing activities consumed $12.1 billion of cash in 2023, mainly due to dividends to shareholders and treasury stock purchases, partially offset by a net debt increase and the impact of stock options and other.
Dividend Payments.Our first discretionary use of cash is dividend payments. Dividends per common share increased 1.5%4% to $2.70$3.6806 per share in 2017.2023. Total dividend payments to common and preferred shareholders were $7.2$9.0 billion in 2017 and $7.4 billion in 2016.2023. In April 2017,2023, the Board of Directors declared ana 3% increase in our quarterly dividend from $0.6695$0.9133 to $0.6896$0.9407 per share on Common Stock and Series A and B ESOPEmployee Stock Ownership Plan (ESOP) Convertible Class A Preferred Stock. This represents a 3% increase compared to the prior quarterly dividend and is the 61st67th consecutive year that our dividend has increased. We have paid a dividend for 127133 consecutive years, 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 $31.6$34.6 billion as of June 30, 20172023. We generated $2.9 billion from net debt issuances in short-term debt and $30.6 billion as of June 30, 2016.long-term debt markets.
Treasury Purchases.Total share repurchases were $5.2$7.4 billion in 20172023.
Impact of Stock Options and $4.0Other. The exercise of stock options and other financing activities generated $1.3 billion of cash in 2016. In addition, the cash infusion of $1.7 billion in the Batteries divestiture was reflected as a purchase of treasury stock in 2016.2023.
Liquidity
At June 30, 2017,2023, our current liabilities exceeded current assets by $3.7$13.1 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. The Company regularly assesses its cash needs and the available sources to fund these needs. As of June 30, 2017, $15.02023, the Company had $5.1 billion of the Company’s cash and cash equivalents and marketable securities is held off-shore by foreign subsidiaries. Amounts held byrelated to foreign subsidiaries, are generallyprimarily in various European and Asian countries. We did not have material cash and cash equivalents related to any country subject to U.S. income taxation upon repatriationexchange controls that significantly restrict our ability to access or repatriate the U.S.funds. Under current law, we do not expect restrictions or taxes on repatriation of cash held outside of the U.S. to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future. Of the June 30, 2017 balance of off-shore cash, cash equivalents and marketable securities, the majority relates to various Western European countries. As of June 30, 2017, we did not have material cash, cash equivalents and

26 The Procter & Gamble Company

marketable securities balances in any country subject to exchange controls that significantly restrict our ability to access or repatriate the funds.
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, 2017,2023, our short-term credit ratings were P-1 (Moody's) and A-1+ (Standard & Poor's), while our long-term credit ratings were Aa3 (Moody's) and AA- (Standard & Poor's), all with a stable outlook.
We maintain bank credit facilities to support our ongoing commercial paper program. The current facility is an $8.0
billion facility split between a $3.2 billion five-year facility and a $4.8 billion 364-day facility, which expire in November 20212027 and

26 The Procter & Gamble Company
November 2017,2023, respectively. Both facilities can be extended for certain periods of time as specified in the terms of the credit agreement. These facilities are currently undrawn and we anticipate that they will remain undrawn. 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. For additional details on debt, see Note 10 to the Consolidated Financial Statements.
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 our financial condition or liquidity.
Contractual Commitments
The following table provides information on the amount and payable date of our contractual commitments as of June 30, 2017.2023.
($ millions)TotalLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
RECORDED LIABILITIES
Total debt$35,248 $10,316 $5,328 $5,899 $13,705 
Leases911 222 322 171 196 
U.S. Tax Act transitional charge (1)
1,575 421 1,154 — — 
OTHER
Interest payments relating to long-term debt5,727 713 1,245 946 2,823 
Minimum pension funding (2)
591 192 399 — — 
Purchase obligations (3)
2,989 1,169 976 482 362 
TOTAL CONTRACTUAL COMMITMENTS$47,041 $13,033 $9,424 $7,498 $17,086 
(1)Represents the U.S. federal tax liability associated with the repatriation provisions of the U.S. Tax Act.
(2)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. Considering the current economic environment in which the Company operates, the Company believes its cash flows are adequate to meet the future statutory funding requirements. The projected payments beyond fiscal year 2026 are not currently determinable.
(3)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 minimum commitments with suppliers and are in line with expected usage. This includes 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 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.
Amounts in millionsTotal Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
RECORDED LIABILITIES         
Total debt$31,455
 $13,543
 $3,101
 $4,236
 $10,575
Capital leases51
 13
 20
 10
 8
Uncertain tax positions (1)
18
 18
 —
 —
 —
OTHER         
Interest payments relating to long-term debt5,220
 594
 1,014
 887
 2,725
Operating leases (2)
1,493
 261
 510
 354
 368
Minimum pension funding (3)
378
 123
 255
 —
 —
Purchase obligations (4)
1,607
 843
 393
 169
 202
TOTAL CONTRACTUAL COMMITMENTS$40,222
 $15,395
 $5,293
 $5,656
 $13,878
(1)
As of June 30, 2017, the Company's Consolidated Balance Sheet reflects a liability for uncertain tax positions of $585 million, including $120 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, 2017, 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. Considering the current economic environment in which the Company operates, the Company believes its cash flows are adequate to meet the future statutory funding requirements. The projected payments beyond fiscal year 2020 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 represents minimum commitments under take-or-pay agreements with suppliers and are in line with expected usage. This includes service contracts for information technology, human resources management and facilities management activities that have been outsourced. Such amounts also include arrangements with suppliers that qualify as embedded operating leases. 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 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.

SIGNIFICANTCRITICAL 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 revenue recognition, income taxes, certain employee benefits and goodwill and intangible assets. We believe these accounting

The Procter & Gamble Company 27

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 significantcritical accounting policies and the effect of estimates with the Audit Committee of the Company's Board of Directors.
Revenue Recognition
Our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer, which can be on the date of shipment or the date of receipt by the customer. Trade promotions, consisting primarily of customer pricing allowances, in-store merchandising funds, advertising and other promotional activities 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 at the time of the sale. Amounts accrued for trade promotions at the end of a period require estimation, based on contractual terms, sales volumes and historical utilization and redemption rates. The actual amounts paid may be different from such estimates. These differences, which have historically not been significant, are recognized as a change in management estimate in a subsequent period.
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. Also inherent in determining our annual tax rate are judgmentsjudgements and

The Procter & Gamble Company 27
assumptions regarding the recoverability of
certain deferred tax balances, primarily net operating loss and other carryforwards, and our ability to uphold certain tax positions.
Realization of net operating losses and other carryforwards is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods, which involves business plans, planning opportunities and expectations about future outcomes. 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.
A core operating principle is that our tax structure is based on our business operating model, such that profits are earned in line with the business substance and functions of the various legal entities.entities in the jurisdictions where those functions are performed. However, because of the complexity of transfer pricing concepts, we may have income tax uncertainty related to the determination of intercompany transfer prices for our various cross-border transactions. We have obtained and continue to prioritize the strategy of seeking advance rulings with tax authorities to reduce this uncertainty. We estimate that our current portfolio of advance rulings reduces this uncertainty with respect to over 70% of our global earnings. 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 ofconsidering changing facts and circumstances, such as the progress of tax audits, and adjust them accordingly. We have a number ofseveral 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 ofseveral 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. ForSee Note 5 to the Consolidated Financial Statements for additional details on the Company's income taxes, see Note 5 to the Consolidated Financial Statements.taxes.
Employee Benefits
We sponsor various post-employmentpostretirement benefits throughout the world. These include pension plans, both defined contribution plans and defined benefit plans, and other post-employmentpostretirement benefit (OPEB)(OPRB) plans consisting primarily of health care and life insurance for retirees. For accounting purposes, the defined benefit pension and OPEBOPRB plans require assumptions to estimate the net 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 net 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 OPEBOPRB plan are partially funded. The process for setting the expected rates of return is described in Note 8 to the Consolidated Financial Statements. For 2017,2023, the average return on assets assumptions for pension plan assets and OPEBOPRB assets was 6.9%5.9% and 8.3%8.4%, respectively. A change in the rate of return of 100 basis points for both pension and OPEBOPRB assets would impact annual after-tax benefit benefit/expense by approximately $100$135 million.
Since pension and OPEBOPRB liabilities are measured on a discounted basis, the discount rate impacts our plan obligations and expenses. Discount rates used for our U.S. defined benefit pension and OPEBOPRB plans are based on a yield curve constructed from a portfolio of high qualityhigh-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 of 2.4%4.2% represents a weighted average of local rates in countries where such plans exist. A 1.0%100 basis-point change in the discount rate would impact annual after-tax benefit expense by approximately $200$130 million. The average discount rate on the OPEBOPRB plan of 3.9%5.6% reflects the higher interest rates generally applicable in the U.S., which is where a majoritymost of the plan participants receive benefits. A 1.0%100 basis-point change in the discount rate would impact annual after-tax OPEBOPRB expense by approximately $70$30 million. ForSee Note 8 to the Consolidated Financial Statements for additional details on our defined benefit pension and OPEB plans, see Note 8 to the Consolidated Financial Statements.OPRB plans.

28 The Procter & Gamble Company

Goodwill and Intangible Assets
Significant judgment is required to estimate the fair value of our goodwill reporting units and intangible assets. Accordingly, we typically obtain the assistance of third-party valuation specialists for significant goodwill reporting units and intangible assets. The fair value estimates are based on available historical information and on future expectations. We typically estimate the fair value of these assets using the income method, which is based on the present value of estimated future cash flows attributable to the respective assets. The valuations used to test goodwill and intangible assets for impairment are dependent on a number of significant estimates and assumptions, including macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion, Company business plans and the discount rate applied to cash flows.
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 these estimates and assumptions are reasonable and comparable to those that would be used by other marketplace participants. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. For example, 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. In addition, changes to, or a failure to, achieve business plans or deterioration of macroeconomic conditions could result in reduced cash flows or higher discount rates, leading to a lower valuation that would trigger an impairment of the goodwill and intangible assets of these businesses.
We test individual indefinite lived intangible assets by comparing the book value of each asset to the estimated fair value. Our impairment testing for goodwill is performed separately from our impairment testing of indefinite lived intangible assets. The test to evaluate goodwill for impairment is a two step process. In the first step, we compare the fair value of the reporting unit to its carrying value. If the fair value of the 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.
Determining the useful life of an intangible asset also requires judgment. Certain brand intangible 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 brands, all customer relationships, patents and technologies) are expected to have determinable

28 The Procter & Gamble Company
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. Determinable-lived intangible assets are amortized to expense over their estimated lives. ImpairmentAn impairment assessment for determinable-lived intangibles is only required when an event or change in circumstances indicates that the carrying amount of the asset may not be recoverable. Indefinite-lived
Goodwill and indefinite-lived intangible assets and goodwill are not amortized but are tested separately at least annually for impairment. We use the income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. If the resulting fair value is less than the asset's carrying value, that difference represents an impairment. Our annual impairment testing for goodwill and indefinite-lived intangible assets occurs during the three months ended December 31.
Most of our goodwill reporting units are comprised of a combination of legacy and acquired businesses and as a result have fair value cushions that at a minimum,significantly exceed two times their underlying carrying values. Certain of our goodwill reporting units,In connection with the Grooming operating segment integration as described further in particularNote 2, we concluded that the Shave Care and Appliances are comprised entirelycategories now operate as one reporting unit for goodwill impairment testing. Based on our annual impairment testing during the three months ended December 31, 2022, our Grooming reporting unit goodwill has a fair value cushion of acquired businesses and as a resultover 30%. As of June 30, 2023, the carrying value of the Grooming reporting unit goodwill was $12.7 billion.
Most of our indefinite-lived intangible assets have fair value cushions that are not as high. Both of these wholly-acquired reporting units havesignificantly exceed their underlying carrying value. Based on our annual impairment testing during the three months ended December 31, 2022, the Gillette indefinite-lived intangible asset's fair value cushions that currently exceedexceeded its carrying value by approximately 5%. As of June 30, 2023, the underlying carrying values. However,value of the Shave Care cushion, as well as the related Gillette indefinite-lived intangible asset cushion,was $14.1 billion. While we have been reduced to below 10% due in large part to an increased competitive market environment inconcluded that no triggering event has occurred during the U.S., a deceleration of category growth caused by changing grooming habits and significant currency devaluations in a number of countries relative tofiscal year ended June 30, 2023, the U.S. dollar that have occurred in recent years and resulted in reduced cash flow projections. As a result, this unitGillette indefinite-lived intangible asset is moremost susceptible to future impairment risk from adverse changes in business operating plans, category development and macroeconomic environment conditions, including any further significant devaluation of major currencies relative to the U.S. dollar. While management has implemented strategies to address these events, adverserisk. Adverse changes in the futurebusiness or in the macroeconomic environment, including foreign currency devaluation, increasing global inflation, market contraction from an economic recession and the Russia-Ukraine War, could reduce the underlying cash flows used to estimate the fair valuesvalue of the Gillette indefinite-lived intangible asset and trigger a future impairment charge. Further reduction of the Gillette business activities in Russia could reduce the estimated fair value by up to 5%.
The most significant assumptions utilized in the determination of the estimated fair value of the Gillette indefinite-lived intangible asset are the net sales growth rates (including residual growth rates), discount rate and royalty rates.
Net sales growth rates could be negatively impacted by reductions or changes in demand for our Gillette products, which may be caused by, among other things: changes in the use and frequency of grooming products, shifts in demand away from one or more of our higher priced products to lower priced products or potential supply chain constraints. In addition, relative global and country/regional macroeconomic factors, including the Russia-Ukraine War, could result in a declineadditional and prolonged devaluation of other countries’ currencies relative to the U.S. dollar. The residual growth rates represent the expected rate at which the Gillette brand is expected to grow beyond the shorter-term business planning period. The residual growth rates utilized in our fair value estimates are consistent with the brand operating plans and approximates expected long-term category market growth rates. The residual growth rates depend on overall market growth rates, the competitive environment, inflation, relative currency exchange rates and business activities that impact market share. As a result, the residual growth rates could trigger future impairment chargesbe adversely impacted by a sustained deceleration in category growth, grooming habit changes, devaluation of currencies against the U.S. dollar or an increased competitive environment.
The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the business unit's goodwillcapital structure. Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and indefinite-lived intangibles (carrying valuesdebt markets or other country specific factors, such as further devaluation of Shave Care goodwillcurrencies against the U.S. dollar. Spot rates as of the fair value measurement date are utilized in our fair value estimates for cash flows outside the U.S.
The royalty rates are driven by historical and estimated future profitability of the underlying Gillette business. The royalty rate may be impacted by significant adverse changes in long-term operating margins.
We performed a sensitivity analysis for the Gillette indefinite-lived intangible asset as part of June 30, 2017 are $19 billionour annual impairment testing during the three months ended December 31, 2022, utilizing reasonably possible changes in the assumptions for the discount rate, the short-term and $16 billion, respectively).residual growth rates and the royalty rates to demonstrate the potential impacts to the estimated fair values. The table below provides, in isolation, the estimated fair value impacts related to a 25 basis-point increase in the discount rate, a 25 basis-point decrease in our shorter-term and residual growth rates, or a 50 basis-point decrease in our royalty rates, which may result in an impairment of the Gillette indefinite-lived intangible asset.
Approximate Percent Change in Estimated Fair Value
+25 bps Discount Rate-25 bps
Growth Rate		-50 bps Royalty Rate
Gillette indefinite-lived intangible asset(6)%(6)%(4)%
See Note 4 to the Consolidated Financial Statements for additional discussion on goodwill and intangible asset impairment testing results.assets.


The Procter & Gamble Company 29
New Accounting Pronouncements
Refer to Note 1 to the Consolidated Financial Statements for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of June 30, 2017.

2023.
The Procter & Gamble Company 29

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, weWe leverage the Company's 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,within our financing operations, as discussed below, 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. See Note 9 to the Consolidated Financial Statements for a discussion of our accounting policies for derivative instruments.
Derivative positions are 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™RiskManager™ 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, 2017.2023. 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 would significantly impact such exposures in the near term.
Interest Rate Exposure on Financial Instruments.Interest rate swaps are used to hedgemanage exposures to interest rate movementrates 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 fiscal year ended June 30, 2017,2023, 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 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 the financing of our operations, we primarily use forward contracts and currency swaps with maturities of less than 18 months. In addition, we have entered 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 fiscal year ended June 30, 2017,2023, we believe, at a 95% confidence level based on historical currency rate movements, the impact on such instruments 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. We may use futures, options and swap contracts to manage the volatility related to the above exposures.
As of and during During the fiscal years ended June 30, 20172023 and June 30, 2016,2022, we did not have any financial commodity hedging activity.
Measures Not Defined By U.S. GAAP
Our discussionIn accordance with the SEC's Regulation S-K Item 10(e), the following provides definitions of financial results includes several "non-GAAP" financial measures.the non-GAAP measures and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective ofon underlying business trends (i.e., trends excluding non-recurring or unusual items) and results and provide a supplemental measure of year-on-year results. The non-GAAP measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors, as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measure,measures but rather as supplemental information to our business results. These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted. These measures include:
Organic Sales Growth.Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of the Venezuela deconsolidation, acquisitions, divestitures and foreign exchange from year-over-year comparisons. We believe this measure provides investors with a

30 The Procter & Gamble Company
supplemental understanding of underlying sales trends by providing sales growth on a consistent basis, and thisbasis. This measure is used in assessing the achievement of management goals for at-risk compensation.

30 The Procter & Gamble Company

The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth:
Fiscal year ended June 30, 2023Net Sales GrowthForeign Exchange Impact
Acquisition & Divestiture
Impact/Other (1)
Organic Sales Growth
Beauty2 %5 %(1)%6 %
Grooming(3)%7 %1 %5 %
Health Care4 %4 %— %8 %
Fabric & Home Care3 %5 %— %8 %
Baby, Feminine & Family Care2 %4 %— %6 %
TOTAL COMPANY2 %5 %— %7 %
(1)Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures and rounding impacts necessary to reconcile net sales to organic sales.
Year ended June 30, 2017Net Sales GrowthForeign Exchange Impact
Acquisition/Divestiture Impact (1)
Organic Sales Growth
Beauty— %2%1%3 %
Grooming(3)%2%1%— %
Health Care2 %2%1%5 %
Fabric & Home Care— %2%1%3 %
Baby, Feminine & Family Care(1)%2%—%1 %
TOTAL COMPANY— %2%—%2 %
     
Year ended June 30, 2016Net Sales GrowthForeign Exchange Impact
Acquisition/Divestiture Impact (1)
Organic Sales Growth
Beauty(9)%6%3%— %
Grooming(8)%9%1%2 %
Health Care(5)%6%1%2 %
Fabric & Home Care(7)%6%2%1 %
Baby, Feminine & Family Care(9)%6%2%(1)%
TOTAL COMPANY(8)%6%3%1 %
(1)
Acquisition/Divestiture Impact also includes the impact of the Venezuela deconsolidation and the rounding impacts necessary to reconcile net sales to organic sales.
Adjusted Free Cash Flow.Adjusted free cash flow is defined as operating cash flow less capital spending and excluding certain divestiture impacts (tax payments related to certain divestitures).for the transitional tax resulting from the U.S. Tax Act. Adjusted free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. We view adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investment.investments.
The following table provides a numerical reconciliation of adjusted free cash flow ($ millions):
Operating Cash FlowCapital Spending
Adjustments to Operating Cash Flow (1)
Adjusted Free Cash Flow
2023$16,848 $(3,062)$225 $14,011 
2022$16,723 $(3,156)$225 $13,792 
 
Operating
Cash Flow
Capital
Spending
Divestiture impacts (1)
Adjusted Free
Cash Flow
2017$12,753
$(3,384)$418
$9,787
201615,435
(3,314)—
12,121
201514,608
(3,736)729
11,601
(1)Adjustments to Operating Cash Flow include transitional tax payments resulting from the U.S. Tax Act of $225 in 2023 and 2022.
(1)
Divestiture impacts relate to tax payments for the Beauty Brands divestiture in fiscal 2017 and the Pet Care divestiture in fiscal 2015.
Adjusted Free Cash Flow Productivity.Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding Batteries impairments, the gain on the sale of the Batteries and Beauty Brands businesses, the loss on early debt extinguishment and the Venezuela deconsolidation charges.earnings. We view adjusted free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions, in allocating financial resources and for budget planning purposes. This measure is used in assessing the achievement of management goals for at-risk compensation. The Company's long-term target is to generate annual adjusted free cash flow productivity at or above 90 percent.
The following table provides a numerical reconciliation of adjusted free cash flow productivity ($ millions):
Adjusted Free
Cash Flow		Net EarningsAdjusted Free
Cash Flow Productivity
2023$14,011 $14,738 95 %
2022$13,792 $14,793 93 %
 
Net
Earnings
Adjustments to Net Earnings (1)
Net Earnings Excluding AdjustmentsAdjusted Free Cash Flow
Adjusted Free
Cash Flow
Productivity
2017$15,411
$(4,990)$10,421
$9,787
94%
201610,604
(72)10,532
12,121
115%
20157,144
4,187
11,331
11,601
102%
(1)
Adjustments to Net Earnings relate to the loss on early debt extinguishment and gain on the sale of the Beauty Brands business in fiscal 2017, the gain on the sale of the Batteries business and the Batteries impairment in fiscal 2016, and the Batteries impairment and Venezuela deconsolidation charges in fiscal 2015.


The Procter & Gamble Company 31

Core EPS.Core EPS is a measure of the Company's diluted net earnings per share from continuing operations adjusted as indicated.EPS excluding items that are not judged by management to be part of the Company's sustainable results or trends. Management views thesethis non-GAAP measuresmeasure as a useful supplemental measure of Company performance over time. The table below provides a reconciliationThis measure is also used in assessing the achievement of diluted net earnings per share to Core EPS, includingmanagement goals for at-risk compensation. For the following reconciling items:
Incremental restructuring: The Company has had and continues to have an ongoing level of restructuring activities. Such activities have resulted in ongoing annual restructuring related charges of approximately $250 - $500 million before tax. Beginning in 2012 Procter & Gamble began a $10 billion strategic productivity and cost savings initiative that includes incremental restructuring activities. In 2017, the company announced elements of an additional multi-year productivity and cost savings plan. These plans result in incremental restructuring charges to accelerate productivity efforts and cost savings. The adjustment to Core earnings includes only the restructuring costs above what we believe are the normal recurring level of restructuring costs.
Early debt extinguishment charges: During fiscal 2017, the Company recorded a charge of $345 million after tax due to the early extinguishment of certain long-term debt. This charge represents the difference between the reacquisition price and the par value of the debt extinguished.
Charges for certain European legal matters: Several countries in Europe issued separate complaints alleging that the Company, along with several other companies, engaged in violations of competition laws in prior periods. The Company established Legal Reserves related to these charges.
Venezuela deconsolidation charge: For accounting purposes, evolving conditions resulted in a lack of control over our Venezuelan subsidiaries. Therefore, in accordance with the applicable accounting standards for consolidation, effectiveyears ended June 30, 2015, we deconsolidated our Venezuelan subsidiaries2023 and began accounting2022, there were no adjustments to or reconciling items for our investment in those subsidiaries using the cost method of accounting. The charge was incurred to write off our net assets related to Venezuela.
Venezuela balance sheet remeasurement & devaluation impacts: Venezuela is a highly inflationary economy under U.S. GAAP. Prior to deconsolidation, the government enacted episodic changes to currency exchange mechanisms and rates, which resulted in currency remeasurement charges for non-dollar denominated monetary assets and liabilities held by our Venezuelan subsidiaries.
We do not view the above items to be indicative of underlying business results and their exclusion from Core earnings measures provides a more comparable measure of year-on-year results. These items are also excluded when evaluating senior management in determining their at-risk compensation.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Twelve Months Ended June 30, 2017
 AS REPORTED (GAAP) DISCONTINUED OPERATIONS INCREMENTAL RESTRUCTURING EARLY DEBT EXTINGUISHMENT ROUNDING NON-GAAP (CORE)
COST OF PRODUCTS SOLD$32,535
 $—
 $(498) $—
 $—
 $32,037
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE18,568
 —
 99
 —
 —
 18,667
OPERATING INCOME13,955
 —
 399
 —
 —
 14,354
INCOME TAX ON CONTINUING OPERATIONS3,063
 —
 120
 198
 —
 3,381
NET EARNINGS ATTRIBUTABLE TO P&G15,326
 (5,217) 279
 345
 (1) 10,732
   —
 —
 —
 —
  Core EPS
DILUTED NET EARNINGS PER COMMON SHARE*$5.59
 $(1.90) $0.10
 $0.13
 $—
 $3.92
* Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.
CHANGE VERSUS YEAR AGO
CORE EPS7%

diluted EPS.
32 The Procter & Gamble Company

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Twelve Months Ended June 30, 2016
 AS REPORTED (GAAP) DISCONTINUED OPERATIONS INCREMENTAL RESTRUCTURING CHARGES FOR EUROPEAN LEGAL MATTERS ROUNDING NON-GAAP (CORE)
COST OF PRODUCTS SOLD$32,909
 $—
 $(624) $—
 $—
 $32,285
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE18,949
 —
 31
 (13) —
 18,967
OPERATING INCOME13,441
 —
 593
 13
 —
 14,047
INCOME TAX ON CONTINUING OPERATIONS3,342
 —
 94
 2
 (1) 3,437
NET EARNINGS ATTRIBUTABLE TO P&G10,508
 (577) 499
 11
 —
 10,441
            Core EPS
DILUTED NET EARNINGS PER COMMON SHARE*$3.69
 $(0.20) $0.18
 $—
 $—
 $3.67
* Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.
CHANGE VERSUS YEAR AGO
CORE EPS(2)%
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Twelve Months Ended June 30, 2015
 AS REPORTED (GAAP) DISCON-TINUED OPERATIONS INCRE-MENTAL RESTRUC-TURING VENEZUELA BALANCE SHEET DEVALUA-TION VENEZUELA DECONSOL-IDATION CHARGES FOR EUROPEAN LEGAL MATTERS ROUND-ING NON-GAAP (CORE)
COST OF PRODUCTS SOLD$37,056
 $—
 $(518) $—
 $—
 $—
 $(1) $36,537
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE20,616
 —
 (103) (138) —
 (28) 1
 20,348
OPERATING INCOME11,049
 —
 621
 138
 2,028
 28
 —
 13,864
INCOME TAX ON CONTINUING OPERATIONS2,725
 —
 145
 34
 (24) —
 (1) 2,879
NET EARNINGS ATTRIBUTABLE TO P&G7,036
 1,153
 476
 104
 2,052
 28
 1
 10,850
                Core EPS
DILUTED NET EARNINGS PER COMMON SHARE*$2.44
 $0.40
 $0.17
 $0.04
 $0.71
 $0.01
 $(0.01) $3.76
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,in the MD&A and Note 9 to the Consolidated Financial Statements.


The Procter & Gamble Company 3331

Item 8. Financial Statements and Supplementary Data.
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. Our people are deeply committed to our Purpose, Values and Principles, which unite us in doing what’s right. Our system of internal controls includes written policies and procedures, segregation of duties and the careful selection and development of employees. Additional key elements of our internal control structure include our Global Leadership Council, which is actively involved in oversight of the business strategies, initiatives, results and controls, our Disclosure Committee, which is responsible for evaluating disclosure implications of significant business activities and events, our Board of Directors, which provides strong and effective corporate governance, and our Audit Committee, which reviews significantcritical accounting policies and estimates, financial reporting and internal control matters.
Global Internal Audit performs audits of internal controls over financial reporting as well as broader financial, operational and compliance audits around the world, provides training and continually improves our internal control processes. The Company'sCompany’s internal control over financial reporting also includes a robust Control Self-Assessment Program that is conducted annually foron critical financial reporting areas of the Company and is audited by our Global Internal Audit organization.Company. Management takes the appropriate action to correct any identified control deficiencies. Global Internal Audit also performs financial and compliance audits around the world, provides training, and continuously improves our internal control processes.
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, 2017,2023, using criteria established in Internal Control - Integrated Framework (2013) 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, 2017,2023, 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, 2017,2023, as stated in their report which is included herein.
/s/ Jon R. Moeller
/s/ David S. Taylor(Jon R. Moeller)
David S. Taylor
Chairman of the Board, President and Chief Executive Officer
/s/ Jon R. MoellerAndre Schulten
Jon R. Moeller(Andre Schulten)
Vice Chairman and Chief Financial Officer
August 7, 20174, 2023




3432 The Procter & Gamble Company

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors and Stockholders of The Procter & Gamble Company
Cincinnati, OhioOpinion on the Financial Statements
We have audited the accompanying Consolidated Balance Sheets of The Procter & Gamble Company and subsidiaries (the "Company") as of June 30, 20172023 and 2016, and2022, the related Consolidated Statements of Earnings, Comprehensive Income, Shareholders'Shareholders’ Equity and Cash Flows, for each of the three years in the period ended June 30, 2017. 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 4, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesethe Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. 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 includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.
InCritical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion such Consolidated Financial Statements present fairly, in all material respects,on the financial positionstatements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Intangible Assets — Gillette Indefinite Lived Intangible Asset — Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of the Gillette indefinite lived intangible asset (the "Gillette Brand") for impairment involves the comparison of the fair value to its carrying value. The Company estimates fair value using the income method, which is based on the present value of estimated future cash flows attributable to the respective asset. This requires management to make significant estimates and assumptions related to forecasts of future net sales and earnings, including growth rates beyond a 10-year time period, royalty rates, and discount rate. Changes in the assumptions could have a significant impact on either the fair value, the amount of any impairment charge, or both. The Company performed their annual impairment assessment of the Gillette Brand as of December 31, 2022. Because the estimated fair value exceeds the carrying value, no impairment was recorded. As of June 30, 2023, the carrying value of the Gillette Brand was $14.1 billion.
We identified the Company’s impairment evaluation of the Gillette Brand as a critical audit matter because of the significant judgments made by management to estimate the fair value of the indefinite lived intangible asset. A high degree of auditor judgment and an increased extent of effort was required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts of future net sales and earnings as well as the selection of royalty rates and discount rate, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of future net sales and earnings and the selection of the royalty rates and discount rate for the Gillette Brand included the following, among others:
•We tested the effectiveness of controls over the Gillette Brand, including those over the determination of fair value, such as controls related to management’s development of forecasts of future net sales and earnings, and the selection of royalty rates and discount rate.
•We evaluated management’s ability to accurately forecast net sales and earnings by comparing actual results to management’s historical forecasts.

The Procter & Gamble Company 33
•We evaluated the reasonableness of management’s forecast of net sales and subsidiaries at June 30, 2017earnings by comparing the forecasts to:
•Historical net sales and 2016,earnings.
•Underlying analysis detailing business strategies and growth plans.
•Internal communications to management and the resultsBoard of their operationsDirectors.
•Forecasted information included in analyst and their cash flowsindustry reports for eachthe Company and certain of its peer companies.
•With the assistance of our fair value specialists, we evaluated the net sales and earnings growth rates, royalty rates, and discount rate by:
•Testing the source information underlying the determination of net sales and earnings growth rates, royalty rates, and discount rate and the mathematical accuracy of the three years incalculations.
•Developing a range of independent estimates for the period ended June 30, 2017, in conformity with accounting principles generally accepted indiscount rate and comparing the United States of America.
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, 2017, based on the criteria established in Internal Control - Integrated Framework (2013) issueddiscount rate selected by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 7, 2017 expressed an unqualified opinion on the Company's internal control over financial reporting.
management to that range.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 4, 2023
August 7, 2017
We have served as the Company’s auditor since 1890.




34 The Procter & Gamble Company 35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors and Stockholders of The Procter & Gamble Company
Cincinnati, OhioOpinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of The Procter & Gamble Company and subsidiaries (the "Company") as of June 30, 2017,2023, based on criteria established in Internal Control -— Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission. Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2023, of the Company and our report dated August 4, 2023, expressed an unqualified opinion on those financial statements.
Basis for Opinion
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 the accompanying Management'sManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company'sCompany’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. 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.
Definition and Limitations of Internal Control over Financial Reporting
A company'scompany’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'scompany’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'scompany’s assets that could have a material effect on the financial statements.
Because of theits 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 preventedprevent or detected on a timely basis.detect misstatements. 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, 2017, based on the criteria established in Internal Control - Integrated Framework (2013) 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 as of and for the year ended June 30, 2017 of the Company and our report dated August 7, 2017 expressed an unqualified opinion on those financial statements.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 7, 20174, 2023






36 The Procter & Gamble Company 35

Consolidated Statements of Earnings
Amounts in millions except per share amounts; fiscal years ended June 30202320222021
NET SALES$82,006 $80,187 $76,118 
Cost of products sold42,760 42,157 37,108 
Selling, general and administrative expense21,112 20,217 21,024 
OPERATING INCOME18,134 17,813 17,986 
Interest expense(756)(439)(502)
Interest income307 51 45 
Other non-operating income, net668 570 86 
EARNINGS BEFORE INCOME TAXES18,353 17,995 17,615 
Income taxes3,615 3,202 3,263 
NET EARNINGS14,738 14,793 14,352 
Less: Net earnings attributable to noncontrolling interests85 51 46 
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE$14,653 $14,742 $14,306 
NET EARNINGS PER COMMON SHARE (1)
Basic$6.07 $6.00 $5.69 
Diluted$5.90 $5.81 $5.50 
(1)Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.


Consolidated Statements of Comprehensive Income
Amounts in millions; fiscal years ended June 30202320222021
NET EARNINGS$14,738 $14,793 $14,352 
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
Foreign currency translation (net of tax (benefit)/expense of $(197), $515 and $(266), respectively)(71)(1,450)1,023 
Unrealized gains/(losses) on investment securities
(net of tax (benefit)/expense of $(2), $1 and $5, respectively)
(7)5 16 
Unrealized gains on defined benefit postretirement plans
(net of tax expense of $9, $1,022 and $445, respectively)
40 2,992 1,386 
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX(38)1,547 2,425 
TOTAL COMPREHENSIVE INCOME14,700 16,340 16,777 
Less: Comprehensive income attributable to noncontrolling interests78 43 50 
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE$14,622 $16,297 $16,727 
Amounts in millions except per share amounts; Years ended June 302017 2016 2015
NET SALES$65,058
 $65,299
 $70,749
Cost of products sold32,535
 32,909
 37,056
Selling, general and administrative expense18,568
 18,949
 20,616
Venezuela deconsolidation charge—
 —
 2,028
OPERATING INCOME13,955
 13,441
 11,049
Interest expense465
 579
 626
Interest income171
 182
 149
Other non-operating income/(expense), net(404) 325
 440
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES13,257
 13,369
 11,012
Income taxes on continuing operations3,063
 3,342
 2,725
NET EARNINGS FROM CONTINUING OPERATIONS10,194
 10,027
 8,287
NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS5,217
 577
 (1,143)
NET EARNINGS15,411
 10,604
 7,144
Less: Net earnings attributable to noncontrolling interests85
 96
 108
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE$15,326
 $10,508
 $7,036
      
BASIC NET EARNINGS PER COMMON SHARE: (1)
     
Earnings from continuing operations$3.79
 $3.59
 $2.92
Earnings/(loss) from discontinued operations2.01
 0.21
 (0.42)
BASIC NET EARNINGS PER COMMON SHARE$5.80
 $3.80
 $2.50
DILUTED NET EARNINGS PER COMMON SHARE: (1)
     
Earnings from continuing operations$3.69
 $3.49
 $2.84
Earnings/(loss) from discontinued operations1.90
 0.20
 (0.40)
DILUTED NET EARNINGS PER COMMON SHARE$5.59
 $3.69
 $2.44
DIVIDENDS PER COMMON SHARE$2.70
 $2.66
 $2.59
(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.
36 The Procter & Gamble Company 37

Consolidated Balance Sheets
Amounts in millions except stated values; as of June 3020232022
Assets
CURRENT ASSETS
Cash and cash equivalents$8,246 $7,214 
Accounts receivable5,471 5,143 
INVENTORIES
Materials and supplies1,863 2,168 
Work in process956 856 
Finished goods4,254 3,900 
Total inventories7,073 6,924 
Prepaid expenses and other current assets1,858 2,372 
TOTAL CURRENT ASSETS22,648 21,653 
PROPERTY, PLANT AND EQUIPMENT, NET21,909 21,195 
GOODWILL40,659 39,700 
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET23,783 23,679 
OTHER NONCURRENT ASSETS11,830 10,981 
TOTAL ASSETS$120,829 $117,208 
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable$14,598 $14,882 
Accrued and other liabilities10,929 9,554 
Debt due within one year10,229 8,645 
TOTAL CURRENT LIABILITIES35,756 33,081 
LONG-TERM DEBT24,378 22,848 
DEFERRED INCOME TAXES6,478 6,809 
OTHER NONCURRENT LIABILITIES7,152 7,616 
TOTAL LIABILITIES73,764 70,354 
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)819 843 
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: 2023 - 4,009.2, 2022 - 4,009.2)4,009 4,009 
Additional paid-in capital66,556 65,795 
Reserve for ESOP debt retirement(821)(916)
Accumulated other comprehensive loss(12,220)(12,189)
Treasury stock (shares held: 2023 - 1,647.1; 2022 - 1,615.4)(129,736)(123,382)
Retained earnings118,170 112,429 
Noncontrolling interest288 265 
TOTAL SHAREHOLDERS' EQUITY47,065 46,854 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$120,829 $117,208 
Consolidated Statements of Comprehensive Income
Amounts in millions; Years ended June 302017 2016 2015
NET EARNINGS$15,411
 $10,604
 $7,144
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX     
Financial statement translation239
 (1,679) (7,220)
Unrealized gains/(losses) on hedges (net of $(186), $5 and $739 tax, respectively)(306) 1
 1,234
Unrealized gains/(losses) on investment securities (net of $(6), $7 and $0 tax, respectively)(59) 28
 24
Unrealized gains/(losses) on defined benefit retirement plans (net of $551, $(621) and $328 tax, respectively)1,401
 (1,477) 844
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX1,275
 (3,127) (5,118)
TOTAL COMPREHENSIVE INCOME16,686
 7,477
 2,026
Less: Total comprehensive income attributable to noncontrolling interests85
 96
 108
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE$16,601
 $7,381
 $1,918

See accompanying Notes to Consolidated Financial Statements.
38 The Procter & Gamble Company 37

Consolidated Statements of Shareholders' Equity
Dollars in millions except per share amounts;
shares in thousands		Common StockPreferred StockAdditional Paid-In CapitalReserve for ESOP Debt RetirementAccumulated
Other
Comprehensive
Income/(Loss)		Treasury StockRetained EarningsNoncontrolling InterestTotal Shareholders' Equity
SharesAmount
BALANCE JUNE 30, 20202,479,746 $4,009 $897 $64,194 ($1,080)($16,165)($105,573)$100,239 $357 $46,878 
Net earnings14,306 46 14,352 
Other comprehensive income/(loss)2,421 4 2,425 
Dividends and dividend equivalents ($3.2419 per share):
 Common(8,020)(8,020)
 Preferred(271)(271)
Treasury stock purchases(81,343)(11,009)(11,009)
Employee stock plans28,001 650 1,586 2,236 
Preferred stock conversions3,302 (27)4 23 — 
ESOP debt impacts74 120 194 
Noncontrolling interest, net(131)(131)
BALANCE JUNE 30, 20212,429,706 $4,009 $870 $64,848 ($1,006)($13,744)($114,973)$106,374 $276 $46,654 
Net earnings14,742 51 14,793 
Other comprehensive income/(loss)1,555 (8)1,547 
Dividends and dividend equivalents ($3.5227 per share):
 Common(8,514)(8,514)
 Preferred(281)(281)
Treasury stock purchases(67,088)(10,003)(10,003)
Employee stock plans28,042 945 1,571 2,516 
Preferred stock conversions3,217 (27)4 23 — 
ESOP debt impacts90 108 198 
Noncontrolling interest, net(2)(54)(56)
BALANCE JUNE 30, 20222,393,877 $4,009 $843 $65,795 ($916)($12,189)($123,382)$112,429 $265 $46,854 
Net earnings14,653 85 14,738 
Other comprehensive income/(loss)(31)(7)(38)
Dividends and dividend equivalents ($3.6806 per share):
 Common(8,742)(8,742)
 Preferred(282)(282)
Treasury stock purchases(52,021)(7,353)(7,353)
Employee stock plans17,424 758 978 1,736 
Preferred stock conversions2,840 (24)3 21 — 
ESOP debt impacts95 112 207 
Noncontrolling interest, net— (55)(55)
BALANCE JUNE 30, 20232,362,120 $4,009 $819 $66,556 ($821)($12,220)($129,736)$118,170 $288 $47,065 
Consolidated Balance Sheets

Amounts in millions; As of June 302017 2016
Assets   
CURRENT ASSETS   
Cash and cash equivalents$5,569
 $7,102
Available-for-sale investment securities9,568
 6,246
Accounts receivable4,594
 4,373
INVENTORIES   
Materials and supplies1,308
 1,188
Work in process529
 563
Finished goods2,787
 2,965
Total inventories4,624
 4,716
Deferred income taxes—
 1,507
Prepaid expenses and other current assets2,139
 2,653
Current assets held for sale—
 7,185
TOTAL CURRENT ASSETS26,494
 33,782
PROPERTY, PLANT AND EQUIPMENT, NET19,893
 19,385
GOODWILL44,699
 44,350
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET24,187
 24,527
OTHER NONCURRENT ASSETS5,133
 5,092
TOTAL ASSETS$120,406
 $127,136
    
Liabilities and Shareholders' Equity   
CURRENT LIABILITIES   
Accounts payable$9,632
 $9,325
Accrued and other liabilities7,024
 7,449
Current liabilities held for sale—
 2,343
Debt due within one year13,554
 11,653
TOTAL CURRENT LIABILITIES30,210
 30,770
LONG-TERM DEBT18,038
 18,945
DEFERRED INCOME TAXES8,126
 9,113
OTHER NONCURRENT LIABILITIES8,254
 10,325
TOTAL LIABILITIES64,628
 69,153
SHAREHOLDERS' EQUITY   
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)1,006
 1,038
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: 2017 - 4,009.2, 2016 - 4,009.2 )4,009
 4,009
Additional paid-in capital63,641
 63,714
Reserve for ESOP debt retirement(1,249) (1,290)
Accumulated other comprehensive income/(loss)(14,632) (15,907)
Treasury stock, at cost (shares held: 2017 -1,455.9, 2016 - 1,341.2)(93,715)
(82,176)
Retained earnings96,124
 87,953
Noncontrolling interest594
 642
TOTAL SHAREHOLDERS' EQUITY55,778
 57,983
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$120,406
 $127,136


See accompanying Notes to Consolidated Financial Statements.
38 The Procter & Gamble Company 39

Consolidated Statements of Shareholders' EquityCash Flows
Amounts in millions; fiscal years ended June 30202320222021
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR$7,214 $10,288 $16,181 
OPERATING ACTIVITIES
Net earnings14,738 14,793 14,352 
Depreciation and amortization2,714 2,807 2,735 
Loss on early extinguishment of debt— — 512 
Share-based compensation expense545 528 540 
Deferred income taxes(453)(402)(258)
Loss/(gain) on sale of assets(40)(85)(16)
Change in accounts receivable(307)(694)(342)
Change in inventories(119)(1,247)(309)
Change in accounts payable and accrued and other liabilities313 1,429 1,391 
Change in other operating assets and liabilities(1,107)(635)(369)
Other564 229 135 
TOTAL OPERATING ACTIVITIES16,848 16,723 18,371 
INVESTING ACTIVITIES
Capital expenditures(3,062)(3,156)(2,787)
Proceeds from asset sales46 110 42 
Acquisitions, net of cash acquired(765)(1,381)(34)
Other investing activity281 3 (55)
TOTAL INVESTING ACTIVITIES(3,500)(4,424)(2,834)
FINANCING ACTIVITIES
Dividends to shareholders(8,999)(8,770)(8,263)
Additions to short-term debt with original maturities of more than three months17,168 10,411 7,675 
Reductions in short-term debt with original maturities of more than three months(13,031)(11,478)(7,577)
Net additions/(reductions) to other short-term debt(3,319)917 (3,431)
Additions to long-term debt3,997 4,385 4,417 
Reductions in long-term debt (1)
(1,878)(2,343)(4,987)
Treasury stock purchases(7,353)(10,003)(11,009)
Impact of stock options and other1,269 2,005 1,644 
TOTAL FINANCING ACTIVITIES(12,146)(14,876)(21,531)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH(170)(497)101 
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH1,032 (3,074)(5,893)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR$8,246 $7,214 $10,288 
SUPPLEMENTAL DISCLOSURE
Cash payments for interest$721 $451 $531 
Cash payments for income taxes4,278 3,818 3,822 
(1)Includes early extinguishment of debt costs of $512 in 2021.
Dollars in millions; shares in thousandsCommon Shares Outstanding Common StockPreferred StockAdd-itional Paid-In CapitalReserve for ESOP Debt Retirement
Accumu-lated
Other
Comp-rehensive
Income/(Loss)
Treasury StockRetained EarningsNon-controlling InterestTotal Share-holders' Equity
BALANCE JUNE 30, 20142,710,806
 
$4,009

$1,111

$63,911

($1,340)
($7,662)
($75,805)
$84,990

$762

$69,976
Net earnings        7,036
108
7,144
Other comprehensive loss      (5,118)   (5,118)
Dividends to shareholders:           
 Common        (7,028) (7,028)
 Preferred, net of tax benefits        (259) (259)
Treasury purchases(54,670)      (4,604)  (4,604)
Employee plan issuances54,100
   156
  3,153
  3,309
Preferred stock conversions4,335
  (34)4
  30
  —
ESOP debt impacts     20
  68
 88
Noncontrolling interest, net    (219)    (239)(458)
BALANCE JUNE 30, 20152,714,571
 
$4,009

$1,077

$63,852

($1,320)
($12,780)
($77,226)
$84,807

$631

$63,050
Net earnings        10,508
96
10,604
Other comprehensive loss      (3,127)   (3,127)
Dividends to shareholders:           
 Common        (7,181) (7,181)
 Preferred, net of tax benefits        (255) (255)
Treasury purchases (1)
(103,449)      (8,217)  (8,217)
Employee plan issuances52,089
   (144)  3,234
  3,090
Preferred stock conversions4,863
  (39)6
  33
  —
ESOP debt impacts     30
  74
 104
Noncontrolling interest, net         (85)(85)
BALANCE JUNE 30, 20162,668,074
 
$4,009

$1,038

$63,714

($1,290)
($15,907)
($82,176)
$87,953

$642

$57,983
Net earnings        15,326
85
15,411
Other comprehensive loss      1,275
   1,275
Dividends to shareholders:           
 Common        (6,989) (6,989)
 Preferred, net of tax benefits        (247) (247)
Treasury purchases (2)
(164,866)      (14,625)  (14,625)
Employee plan issuances45,848
   (77)  3,058
  2,981
Preferred stock conversions4,241
  (32)4
  28
  —
ESOP debt impacts     41
  81
 122
Noncontrolling interest, net         (133)(133)
BALANCE JUNE 30, 20172,553,297
 
$4,009

$1,006

$63,641

($1,249)
($14,632)
($93,715)
$96,124

$594

$55,778
(1)
Includes $4,213 of treasury shares acquired in the divestiture of the Batteries business (see Note 13).
(2)
Includes $9,421 of treasury shares received as part of the share exchange in the Beauty Brands transaction (see Note 13).




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

Consolidated Statements of Cash Flows
Amounts in millions; Years ended June 302017 2016 2015
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR$7,102
 $6,836
 $8,548
OPERATING ACTIVITIES     
Net earnings15,411
 10,604
 7,144
Depreciation and amortization2,820
 3,078
 3,134
Loss on early extinguishment of debt543
 —
 —
Share-based compensation expense351
 335
 337
Deferred income taxes(601) (815) (803)
Gain on sale of assets(5,490) (41) (766)
Venezuela deconsolidation charge—
 —
 2,028
Goodwill and intangible asset impairment charges—
 450
 2,174
Change in accounts receivable(322) 35
 349
Change in inventories71
 116
 313
Change in accounts payable, accrued and other liabilities(149) 1,285
 928
Change in other operating assets and liabilities(43) 204
 (976)
Other162
 184
 746
TOTAL OPERATING ACTIVITIES12,753
 15,435
 14,608
INVESTING ACTIVITIES     
Capital expenditures(3,384) (3,314) (3,736)
Proceeds from asset sales571
 432
 4,498
Cash related to deconsolidated Venezuela operations—
 —
 (908)
Acquisitions, net of cash acquired(16) (186) (137)
Purchases of short-term investments(4,843) (2,815) (3,647)
Proceeds from sales and maturities of short-term investments1,488
 1,354
 1,203
Pre-divestiture addition of restricted cash related to the Beauty Brands divestiture(874) (996) —
Cash transferred at closing related to the Beauty Brands divestiture(475) —
 —
Release of restricted cash upon closing of the Beauty Brands divestiture1,870
 —
 —
Cash transferred in Batteries divestiture—
 (143) —
Change in other investments(26) 93
 (163)
TOTAL INVESTING ACTIVITIES(5,689) (5,575) (2,890)
FINANCING ACTIVITIES     
Dividends to shareholders(7,236) (7,436) (7,287)
Change in short-term debt2,727
 (418) (2,580)
Additions to long-term debt3,603
 3,916
 2,138
Reductions of long-term debt(4,931)
(1) 
(2,213) (3,512)
Treasury stock purchases(5,204) (4,004) (4,604)
Treasury stock from cash infused in Batteries divestiture—
 (1,730) —
Impact of stock options and other2,473
 2,672
 2,826
TOTAL FINANCING ACTIVITIES(8,568) (9,213) (13,019)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(29) (381) (411)
CHANGE IN CASH AND CASH EQUIVALENTS(1,533) 266
 (1,712)
CASH AND CASH EQUIVALENTS, END OF YEAR$5,569
 $7,102
 $6,836
SUPPLEMENTAL DISCLOSURE     
Cash payments for interest$518
 $569
 $678
Cash payment for income taxes3,714
 3,730
 4,558
Divestiture of Batteries business in exchange for shares of P&G stock (2)
—
 4,213
 —
Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt11,360
 —
 —
Assets acquired through non-cash capital leases are immaterial for all periods.     
(1)
Includes $543 of costs related to early extinguishment of debt.
(2)
Includes $1,730 from cash infused into the Batteries business pursuant to the divestiture agreement (see Note 13).

See accompanying Notes to Consolidated Financial Statements.
The Procter & Gamble Company 4139

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 thanapproximately 180 countries and territories primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores,wholesalers, specialty beauty stores e-commerce,(including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and pharmacies.professional channels. We also sell direct to consumers. We have on-the-ground operations in approximately 70 countries.
Basis of Presentation
The Consolidated Financial Statements include the Company and its controlled subsidiaries. Intercompany transactions are eliminated.
There areBecause of a lack of control over Venezuelan subsidiaries caused by a number of currency and other operating controls and restrictions, in Venezuela, which have evolved over time and may continue to evolve in the future. These evolving conditions resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and U.S. dollar and restricted our Venezuelan operations’ ability to pay dividends and satisfy certain other obligations denominated in U.S. dollars. For accounting purposes, this resulted in a lack of control over our Venezuelan subsidiaries. Therefore, in accordance with the applicable accounting standards for consolidation, effective June 30, 2015, we deconsolidated our Venezuelan subsidiaries and began accountingare not consolidated for our investment inany year presented. We account for those subsidiaries usingat cost, less impairments, plus or minus observable price changes.
Beginning in fiscal year 2022, the cost methodCompany began to present increases and reductions in short-term debt with maturities of accounting. This resulted in a write-offmore than three months separately within the Consolidated Statements of all ofCash Flows. The presentation for the net assets of our Venezuelan subsidiaries, along with Venezuela related assets held by other subsidiaries. Beginningfiscal year ended June 30, 2021, has been revised to align with the first quarter of fiscal 2016, our financial results only include sales of finished goods to our Venezuelan subsidiaries tocurrent period presentation. This change had no impact on total financing activities, and we have concluded the extent we receive payments from Venezuela. Accordingly, we no longer include the results of our Venezuelan subsidiaries’ operations in our financial results.change is not material.
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-employmentpostretirement 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 and liabilities, 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 toregarding 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 materially affect the financial statements in a given year.
Revenue Recognition
Sales are recognized whenOur revenue is realized or realizableprimarily generated from the sale of finished product to customers. Those sales predominantly contain a single performance obligation and has been earned. Revenue transactions represent sales of inventory. The revenue recorded is presented net of salesrecognized at a single point in time when ownership, risks 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 lossrewards 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 the revenue is recognized. 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.
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 manufacturing of product, as well as manufacturing labor, depreciation expense and direct overhead expenseexpenses necessary to acquire and convert the purchased materials and supplies into finished product.products. 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 $2.0 billion in 2023 and 2022 and $1.9 billion in 2017, $1.9 billion in 2016 and $2.0 billion in 2015 (reported in Net earnings from continuing operations).2021. Advertising costs, charged to expense as incurred, include worldwide television, print, radio, internetdigital and in-store advertising expenses and were $7.1$8.0 billion in 2017, $7.22023, $7.9 billion in 20162022 and $7.2 billion in 2015 (reported in Net earnings from continuing operations). Non-advertising related components of the Company's total

Amounts in millions of dollars except per share amounts or as otherwise specified.
4240 The Procter & Gamble Company

$8.2 billion in 2021. Non-advertising related components of the Company's total marketing spending reported in SG&A include costs associated with consumer promotions, product sampling and sales aids.
Other Non-Operating Income/(Expense),Income, Net
Other non-operating income/(expense),income, net primarily includes net acquisition and divestiture gains, net non-service impacts related to postretirement benefit plans, investment income and other non-operating items.
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 statements into U.S. dollars are recorded in Other comprehensive income (OCI). For subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Re-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 flowflows from operating activities. Cash flows from foreign currency transactions and operations are translated at an averagemonthly exchange raterates for theeach 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 financinginvesting 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 rates, 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. See Note 13 for significant cash flow items related to discontinued operations.
Investments
Investment securities consist of readily marketable debt andThe Company holds minor equity securities. Unrealized gains or losses from investments classified as trading, if any, are charged to earnings. Unrealized gains or losses on securities classified as available-for-sale are generally recorded in OCI. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or OCI 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 Available-for-sale investment securities and 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,decisions. These are accounted for as equity method investments. Other equity investments that are not controlled, and over which we do not have the ability to exercise significant influence, and for which there is a readily determinable market value, are accounted for under therecorded at fair value, with gains and losses recorded through net earnings. Equity investments without readily determinable fair values are measured at cost, method. Both equity
and cost methodless impairments, plus or minus observable price changes. Equity investments are included as Other noncurrent assets in the Consolidated Balance Sheets.
The Company also holds highly liquid investments, primarily money market funds and time deposits. Such investments are considered cash equivalents and are included within Cash and cash equivalents in the Consolidated Balance Sheets.
Inventory Valuation
Inventories are valued at the lower of cost or marketnet realizable value. Product-related inventories are maintained on the first-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 intangible 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 intangible assets.
We have acquired brands that have been determined to have indefinite lives. Those assets are evaluated annually for impairment. We evaluate a number ofseveral factors to determine whether an indefinite life is appropriate, including the 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. In addition, when certain events or changes in operating conditions occur, an additional impairment assessment is performed and indefinite-lived assets 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 intangible assets with contractual terms are generally amortized over their respective legal or contractual lives. Customer relationships, brands and other non-contractual 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.
For additional details on goodwill and intangible assets see Note 4.


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 4341

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, certain investments and certain 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 9.
New Accounting Pronouncements and Policies
In May 2014,September 2022, the FASBFinancial Accounting Standards Board (FASB) issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)Accounting Standards Update (ASU) 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations".” This guidance outlines a single, comprehensive modelrequires annual and interim disclosures for accountingentities that use supplier finance programs in connection with the purchase of goods and services. These amendments are effective for revenue from contracts with customers. We plan to adoptfiscal years beginning after December 15, 2022, except for the standardamendment on July 1, 2018. While we are currently assessing the impact of the new standard, our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. The timing of revenue recognition is not impacted by the new standard. The provisions of the new standard may impact the classification of certain payments to customers, moving an immaterial amount of such payments from expense to a deduction from net sales. The impact would reduce net sales by less than 1%. We are still assessing the impact on financial disclosures related to the new standard. We do not expect this new guidance to have any other material impacts on our Consolidated Financial Statements.
In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." This guidance simplifies the presentation of deferred taxes on the balance sheet by requiring that all deferred tax assets and liabilities be classified as non-current. The new standardrollforward information, which is effective for usfiscal years beginning July 1, 2017, with early adoption permitted. We elected to early adopt the new guidance on a prospective basis in the first quarter of fiscal year 2017. The impact was not significant.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." The standard requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. We plan to adopt the standard on July 1, 2019. We are currently assessing the impact that the new standard will have on our Consolidated Financial Statements, which will consist primarily of a balance sheet gross up of our operating leases to show equal and offsetting lease assets and lease liabilities. For additional details on operating leases, see Note 12.
In March 2016, the FASB issued ASU 2016-09, "Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits (which represent the excess of actual tax benefits received at vest or settlement over the benefits recognized at issuance of share-based payments) and tax deficiencies (which represent the amount by which actual tax benefits received at vest or settlement is lower than
the benefits recognized at issuance of share-based payments) to be recorded in the income statement when the awards vest or are settled. The amended guidance also requires excess tax benefits to be classified as an operating activity in the statement of cash flows, rather than a financing activity. The standard further provides an accounting policy election to account for forfeitures as they occur rather than utilizing the estimated amount of forfeitures at the time of issuance. The new standard is effective for us beginning July 1, 2017, with early adoption permitted. We elected to early adopt the new guidance on a prospective basis in the first quarter of fiscal year 2017. The primary impact of adoption was the recognition of excess tax benefits in our Income taxes on continuing operations rather than in Additional paid-in capital for fiscal year 2017. As a result, we recognized excess tax benefits of $169 in Income taxes on continuing operations during fiscal year 2017. We also elected to adopt the cash flow presentation of the excess tax benefits prospectively commencing in the first quarter of fiscal 2017. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The adoption of this amended guidance did not have a material impact on our Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The standard simplifies the accounting for goodwill impairment by requiring a goodwill impairment to be measured using a single step impairment model, whereby the impairment equals the difference between the carrying amount and the fair value of the specified reporting units in their entirety. This eliminates the second step of the current impairment model that requires companies to first estimate the fair value of all assets in a reporting unit and measure impairments based on those fair values and a residual measurement approach. It also specifies that any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.after December 15, 2023. We will adopt the standard no later thanguidance effective July 1, 2020. The impact of the new standard2023. Additional disclosures will be dependent on the specific facts and circumstances of future individual impairments, if any.
In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715).”  This guidance requires an entity to disaggregate the current service cost component from the other components of net benefit costsincluded in the face ofNotes to the income statement.  It requires the service cost component to be presented with other current compensation costs for the related employees in the operating section of the income statement, with other components of net benefit cost presented outside of income from operations.   We will adopt the standard retrospectively no later than July 1, 2018.  The adoption of ASU 2017-07 is not expected to have a material impact on our Consolidated Financial Statements. We currently classify all net periodic pension costs within operating costs (as part of Cost of products sold and Selling, general and administrative expense).  Had this standard been effective and adopted during fiscal 2017, Cost of products sold

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

and Selling, general and administrative costs would have increased approximately $104 and $85, respectively, for the year ended June 30, 2017 with a corresponding increase in Other non-operating income/(expense), net.
No other new accounting pronouncementpronouncements issued or effective during the fiscal year or in future years had, or isare expected to have, a material impact on our Consolidated Financial Statements.
NOTE 2
SEGMENT INFORMATION
During fiscal 2017, the Company completed the divestiture of four product categories, comprised of 43 of its beauty brands. The transactions included the global salon professional hair care and color, retail hair color, cosmetics and the fragrance businesses, along with select hair styling brands. In fiscal 2016, the Company completed the divestiture of its Batteries business to Berkshire Hathaway. The Company completed the divestiture of its Pet Care business in fiscal year 2015. Each of these businesses are reported as discontinued operations for all periods presented (see Note 13).
Under U.S. GAAP, our remaining Global Business Units (GBUs)operating segments are aggregated into five reportable segments: 1) Beauty, 2) Grooming, 3) Health Care, 4) Fabric & Home Care and 5) Baby, Feminine & Family Care. Our five reportable segments are comprised of:
•Beauty: Hair Care (Conditioner, Shampoo,(Conditioners, Shampoos, Styling Aids, Treatments); Skin and Personal Care (Antiperspirant(Antiperspirants and Deodorant,Deodorants, Personal Cleansing, Skin Care);
•Grooming: Shave Care (FemaleGrooming (Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care)Grooming); Appliances
•Health Care: Oral Care (Toothbrushes, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, Pain Relief, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care);
•Fabric & Home Care: Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents); Home Care (Air Care, Dish Care, P&G Professional, Surface Care );Care); and
•Baby, Feminine & Family Care: Baby Care (Baby Wipes, Taped Diapers and Pants); Feminine Care (Adult Incontinence, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).
While none of our reportable segments are highly seasonal, components within certain reportable segments, such as Appliances (Grooming) and Personal Health Care (Health), are seasonal.
The accounting policies of the segments 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 segments using applicable blended statutory rates. Adjustments to arrive at our effective tax rate are included in Corporate. In addition, capital expenditures in the segments are on an accrual basis consistent with the balance sheet. Adjustments to move from an accrual to cash basis, for purposes of the cash flow statement, are reflected 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 items to adjust management reporting principles to U.S. GAAP. Operating activities in Corporate include the results of incidental businesses managed at the corporate level. 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 optimization, certain significant asset impairment and deconsolidation charges certain balance sheet impacts from significant foreign exchange devaluations and other general Corporate items. The non-operating elements in Corporate primarily include interest expense, certain pension and other postretirement benefit costs, certain acquisition and divestiture gains, and interest and investing income.income and other financing costs.
Total assets for the reportable segments include those assets managed by the reportable segment, primarily inventory, fixed assets and intangible assets. Other assets, primarily cash, accounts receivable, investment securities and goodwill, are included in Corporate.
Our business units are comprised of similar product categories. Nine business units individually accounted for 5% or more of consolidated net sales as follows:
% of Sales by Business Unit (1)
Years ended June 302017 2016 2015
Fabric Care22% 22% 22%
Baby Care14% 14% 15%
Hair Care10% 10% 11%
Home Care10% 10% 9%
Shave Care9% 9% 9%
Family Care8% 8% 8%
Oral Care8% 8% 8%
Skin and Personal Care8% 8% 7%
Feminine Care6% 6% 6%
All Other5% 5% 5%
TOTAL100% 100% 100%
(1)
% of sales by business unit excludes sales held in Corporate.
The Company had net sales in the U.S. of $27.3 billion, $27.0 billion and $26.8 billion for the years ended June 30, 2017, 2016 and 2015, respectively. Long-lived assets in the U.S. totaled $8.8 billion and $8.5 billion as of June 30, 2017 and 2016, respectively. Long-lived assets consists of property, plant and equipment. No other country's net sales or long-lived assets exceed 10% of the Company totals.
Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 16% of consolidated net sales in 2017, and 15% of consolidated net sales in 2016 and 2015. No other customer represents more than 10% of our consolidated net sales.


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

Our operating segments are comprised of similar product categories. Operating segments that individually accounted for 5% or more of consolidated net sales are as follows:
% of Net sales by operating segment (1)
Fiscal years ended June 30202320222021
Fabric Care23%23%22%
Home Care12%12%12%
Baby Care10%10%10%
Skin and Personal Care9%9%10%
Hair Care9%9%9%
Family Care8%9%9%
Grooming (2)
8%6%7%
Oral Care8%8%8%
Feminine Care7%6%6%
Personal Health Care6%6%5%
Other (2)
—%2%2%
TOTAL100%100%100%
(1)% of Net sales by operating segment excludes sales recorded in Corporate.
Global Segment Results  Net Sales 
Earnings/(Loss)
from
Continuing
Operations
Before
Income Taxes
 Net Earnings/(Loss) from Continuing Operations 
Depreciation
and
Amortization
 
Total
Assets
 
Capital
Expenditures
BEAUTY2017 $11,429
 $2,546
 $1,914
 $220
 $4,184
 $599
 2016 11,477
 2,636
 1,975
 218
 3,888
 435
 2015 12,608
 2,895
 2,181
 247
 4,004
 411
GROOMING2017 6,642
 1,985
 1,537
 433
 22,759
 341
 2016 6,815
 2,009
 1,548
 451
 22,819
 383
 2015 7,441
 2,374
 1,787
 540
 23,090
 372
HEALTH CARE2017 7,513
 1,898
 1,280
 209
 5,194
 283
 2016 7,350
 1,812
 1,250
 204
 5,139
 240
 2015 7,713
 1,700
 1,167
 202
 5,212
 218
FABRIC & HOME CARE2017 20,717
 4,249
 2,713
 513
 6,886
 797
 2016 20,730
 4,249
 2,778
 531
 6,919
 672
 2015 22,274
 4,059
 2,634
 547
 7,155
 986
BABY, FEMININE & FAMILY CARE2017 18,252
 3,868
 2,503
 874
 9,920
 1,197
 2016 18,505
 4,042
 2,650
 886
 9,863
 1,261
 2015 20,247
 4,317
 2,938
 924
 10,109
 1,337
CORPORATE (1)
2017 505
 (1,289) 247
 571
 71,463
 167
 2016 422
 (1,379) (174) 788
 78,508
 323
 2015 466
 (4,333) (2,420) 674
 79,925
 412
TOTAL COMPANY2017 $65,058
 $13,257
 $10,194
 $2,820
 $120,406
 $3,384
 2016 65,299
 13,369
 10,027
 3,078
 127,136
 3,314
 2015 70,749
 11,012
 8,287
 3,134
 129,495
 3,736
(2)Effective July 1, 2022, the Grooming Sector Business Unit completed the full integration of its Shave Care and Appliances categories to cohesively serve consumers' grooming needs. This transition included the integration of the management team, strategic decision-making, innovation plans, financial targets, budgets and internal management reporting. For the fiscal years ended June 30, 2022 and 2021, Appliances was presented in Other.
Net sales and long-lived assets in the United States and internationally were as follows (in billions):
Fiscal years ended June 30202320222021
NET SALES
United States$38.7 $36.5 $33.7 
International$43.3 $43.7 $42.4 
LONG-LIVED ASSETS (1)
United States$11.4 $10.7 $10.1 
International$10.5 $10.5 $11.6 
(1)Long-lived assets consists of property, plant and equipment.
No country, other than the United States, exceeds 10% of the Company's consolidated net sales or long-lived assets.
Our largest customer, Walmart Inc. and its affiliates, accounted for consolidated net sales of approximately 15% in 2023, 2022 and 2021. No other customer represents more than 10% of our consolidated net sales.
(1)
The Corporate reportable segment includes depreciation and amortization, total assets and capital expenditures of the Beauty Brands, Batteries and Pet Care businesses prior to their divestiture.

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 43
Global Segment ResultsNet SalesEarnings/(Loss)
Before
Income Taxes		Net Earnings/(Loss)Depreciation
and
Amortization		Total
Assets		Capital
Expenditures
BEAUTY2023$15,008 $4,009 $3,178 $376 $6,196 $287 
202214,740 3,946 3,160 348 6,055 331 
202114,417 4,018 3,210 333 5,587 386 
GROOMING20236,419 1,806 1,461 335 20,601 300 
20226,587 1,835 1,490 361 20,482 260 
20216,440 1,728 1,427 378 20,668 291 
HEALTH CARE202311,226 2,759 2,125 352 8,480 466 
202210,824 2,618 2,006 376 7,888 410 
20219,956 2,398 1,851 372 7,976 364 
FABRIC & HOME CARE202328,371 6,303 4,828 675 8,669 979 
202227,556 5,729 4,386 672 8,567 988 
202126,014 5,986 4,622 646 8,334 1,006 
BABY, FEMININE & FAMILY CARE202320,217 4,623 3,545 804 8,517 994 
202219,736 4,267 3,266 826 8,443 932 
202118,850 4,723 3,629 846 8,666 814 
CORPORATE2023765 (1,147)(399)172 68,366 36 
2022744 (400)485 224 65,773 235 
2021441 (1,238)(387)160 68,076 (74)
TOTAL COMPANY2023$82,006 $18,353 $14,738 $2,714 $120,829 $3,062 
202280,187 17,995 14,793 2,807 117,208 3,156 
202176,118 17,615 14,352 2,735 119,307 2,787 

46
Amounts in millions of dollars except per share amounts or as otherwise specified.
44 The Procter & Gamble Company

NOTE 3
SUPPLEMENTAL FINANCIAL INFORMATION
The components of property, plant and equipment were as follows:
As of June 3020232022
PROPERTY, PLANT AND EQUIPMENT
Buildings$8,277 $8,087 
Machinery and equipment36,521 35,098 
Land867 756 
Construction in progress2,980 2,756 
TOTAL PROPERTY, PLANT AND EQUIPMENT48,645 46,697 
Accumulated depreciation(26,736)(25,502)
PROPERTY, PLANT AND EQUIPMENT, NET$21,909 $21,195 
As of June 302017 2016
PROPERTY, PLANT AND EQUIPMENT
Buildings$6,943
 $6,885
Machinery and equipment29,505
 29,506
Land765
 769
Construction in progress2,935
 2,706
TOTAL PROPERTY, PLANT AND EQUIPMENT40,148
 39,866
Accumulated depreciation(20,255) (20,481)
PROPERTY, PLANT AND EQUIPMENT, NET$19,893
 $19,385
Selected components of current and noncurrent liabilities were as follows:
As of June 302017 2016
ACCRUED AND OTHER LIABILITIES - CURRENT
Marketing and promotion$2,792
 $2,820
Compensation expenses1,344
 1,457
Restructuring reserves277
 315
Taxes payable449
 397
Legal and environmental168
 158
Other1,994
 2,302
TOTAL$7,024
 $7,449
OTHER NONCURRENT LIABILITIES
Pension benefits$5,487
 $6,761
Other postretirement benefits1,333
 1,808
Uncertain tax positions564
 952
Other870
 804
TOTAL$8,254
 $10,325
As of June 3020232022
ACCRUED AND OTHER LIABILITIES - CURRENT
Marketing and promotion$3,894 $3,878 
Compensation expenses2,030 1,797 
Taxes payable828 587 
Derivative liabilities631 1 
Leases222205
Restructuring reserves174 147 
Other3,150 2,939 
TOTAL$10,929 $9,554 
OTHER NONCURRENT LIABILITIES
Pension benefits$3,116 $3,139 
U.S. Tax Act transitional tax payable1,154 1,661 
Other retiree benefits690 672 
Uncertain tax positions622 752 
Long term operating leases595 595 
Derivative liabilities445 307 
Other530 490 
TOTAL$7,152 $7,616 
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 programprograms have generally ranged from $250 to $500 annually. In fiscal 2012, the Company initiated 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 productivity 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 incurred $5.6 billion in before-tax restructuring costs over a six year period (from fiscal 2012 through fiscal 2017), including costs incurred as part of the incremental restructuring program. The program included a non-
manufacturing overhead enrollment reduction target of approximately 25% - 30% by the end of fiscal year 2017. Through fiscal 2017, the Company reduced non-manufacturing enrollment by approximately 26%. The reductions were enabled by the elimination of duplicate work, simplification through the use of technology and optimization of various functional and business organizations and the Company's global footprint. In addition, the plan included integration of newly acquired companies and the optimization of the supply chain and other manufacturing processes.
In fiscal 2017 the Company announced specific elements of an additional multi-year productivity and cost savings plan to further reduce costs in the areas of supply chain, certain marketing activities and overhead expenses. Over the next two fiscal years (fiscal 2018 and 2019), the Company expects to incur approximately $1.2 billion total before-tax restructuring costs under the plan. This program is expected to result in meaningful additional non-manufacturing enrollment reductions, along with further optimization of the supply chain and other manufacturing processes.
Restructuring costs incurred consist primarily of costs to separate employees, asset-related costs to exit facilities and other costs. The Company incurred total restructuring charges of approximately $754 and $977 for the years ended June 30, 2017 and 2016, respectively. Approximately $137 and $202 of these charges were recorded in SG&A for the years ended June 30, 2017 and 2016, respectively and approximately $593 and $718 of these charges were recorded in Cost of products sold for the years ended June 30, 2017 and 2016, respectively. The remainder of the charges were included in Net earnings from discontinued operations. Of the total costs incurred since the inception of this restructuring program, $2.5 billion were related to separations, $1.8 billion were asset-related and $1.3 billion were related to other restructuring-type costs. The following table presents restructuring activity for the years ended June 30, 2017 and 2016:
Amounts in millionsSeparationsAsset-Related CostsOtherTotal
RESERVE JUNE 30, 2015$362
$—
$27
$389
Charges262
432
283
977
Cash spent(381)—
(238)(619)
Charges against assets—
(432)—
(432)
RESERVE JUNE 30, 2016243
—
72
315
Charges206
397
151
754
Cash spent (1)
(221)—
(174)(395)
Charges against assets—
(397)—
(397)
RESERVE JUNE 30, 2017$228
$—
$49
$277
(1)
Includes liabilities transferred to Coty related to our Beauty Brands divestiture.

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

Separation Costs
Employee separation charges for the years ended June 30, 2017 and 2016, relatedcosts relate to severance packages for approximately 2,120 and 2,770 employees, respectively. For the years ended June 30, 2017 and 2016, these severance packages included approximately 380 and 920 non-manufacturing employees, respectively. The packages were predominantlythat are primarily voluntary and the amounts were calculated are based on salary levels and past 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 19,190 employees, of which approximately 9,920 are non-manufacturing overhead personnel.
Asset-Related Costs
Asset-related costs consist of both asset write-downs and accelerated depreciation. Asset write-downs relate to the establishment of a new fair value basis for assets held-for-sale or for disposal. These assets wereare written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less minor disposal costs. 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 assets relate primarily to manufacturing consolidations and technology standardizations. The asset-related charges will not have a significant impact on future depreciation charges.
Other Costs
Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include asset removal and termination of contracts related to supply chain and overhead optimization. The Company incurred total restructuring charges of $329 and $253 for the fiscal years ended June 30, 2023 and 2022. Of the charges incurred for fiscal year 2023, $160 were recorded in Costs of products sold, $160 in SG&A and $9 in Other non-operating income, net. Of the
Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 45
charges incurred in fiscal year 2022, $182 were recorded in Costs of products sold, $67 in SG&A, and $4 in Other non-operating income, net. The following table presents restructuring activity for the fiscal years ended June 30, 2023 and 2022:
SeparationsAsset-Related CostsOtherTotal
RESERVE JUNE 30, 2021$176 $— $102 $278 
Cost incurred and charged to expense88 87 78 253 
Cost paid/settled(143)(87)(154)(384)
RESERVE JUNE 30, 2022121 — 26 147 
Cost incurred and charged to expense175 43 111 329 
Cost paid/settled(141)(43)(118)(302)
RESERVE JUNE 30, 2023$155 $— $19 $174 
Consistent with our historical policies for ongoing restructuring-type activities, the restructuring program charges are funded by and included within Corporate for both management and segment reporting. Accordingly, all of the charges under the program are included within the Corporate reportable segment.
However, for informativeinformation purposes, the following table summarizes the total restructuring costs related to our reportable segments:
Fiscal years ended June 30202320222021
Beauty$15 $11 $13 
Grooming17 14 25 
Health Care28 32 51 
Fabric & Home Care87 42 22 
Baby, Feminine & Family Care21 83 29 
Corporate (1)
161 71 190 
Total Company$329 $253 $330 
Years ended June 30201720162015
Beauty$90
$72
$63
Grooming45
42
57
Health Care15
26
32
Fabric & Home Care144
250
197
Baby, Feminine & Family Care231
225
192
Corporate (1)
229
362
527
Total Company$754
$977
$1,068
(1)
Corporate includes costs related to allocated overheads, including charges related to our Sales and Market Operations, Global Business Services and Corporate Functions activities and costs related to discontinued operations from our Batteries and Beauty Brands businesses.
(1)Corporate includes costs related to allocated overheads, including charges related to our Enterprise Markets, Global Business Services and Corporate Functions activities.

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

NOTE 4
GOODWILL AND INTANGIBLE ASSETS
The change in the net carrying amount of goodwill by reportable segment was as follows:
BeautyGroomingHealth CareFabric & Home CareBaby, Feminine & Family CareTotal Company
Balance at June 30, 2021 - Net (1)
$13,257 $13,095 $8,046 $1,873 $4,653 $40,924 
Acquisitions and divestitures781 — 1 — — 782 
Translation and other(742)(524)(458)(65)(217)(2,006)
Balance at June 30, 2022 - Net (1)
13,296 12,571 7,589 1,808 4,436 39,700 
Acquisitions and divestitures405 — — — 33 438 
Translation and other187 132 129 13 60 521 
Balance at June 30, 2023 - Net (1)
$13,888 $12,703 $7,718 $1,821 $4,529 $40,659 
 BeautyGroomingHealth CareFabric & Home CareBaby, Feminine & Family CareCorporateTotal Company
Balance at June 30, 2015 - Net (1) (2)
12,704
19,619
5,876
1,874
4,549
—
44,622
Acquisitions and divestitures(2)—
(2)—
—
—
(4)
Translation and other(57)(142)(34)(18)(17)—
(268)
Balance at June 30, 2016 - Net (1)
12,645
19,477
5,840
1,856
4,532
—
44,350
Acquisitions and divestitures—
—
(10)(3)(24)—
(37)
Translation and other146
150
48
4
38
—
386
Balance at June 30, 2017 - Net (1)
$12,791
$19,627
$5,878
$1,857
$4,546
$—
$44,699
(1)
Grooming goodwill balance is net of $1.2 billion accumulated impairment losses.
(2)
The Batteries goodwill at June 30, 2015, net of $2.1 billion accumulated impairment losses, was reported in Current assets held for sale in the Consolidated Balance Sheet. The Batteries business was divested in February 2016.

(1)Grooming goodwill balance is net of $7.9 billion accumulated impairment losses.

During fiscal 2017,Goodwill and indefinite-lived intangibles are tested for impairment at least annually by comparing the Company completedestimated fair values of our reporting units and indefinite-lived intangible assets to their respective carrying values. We use the divestitureincome method to estimate the fair value of four product categories, comprised of 43 of its beauty brands ("Beauty Brands"). The transactions included the global salon professional hair care and color, retail hair color and cosmetics businesses and the fine fragrances business, along with select hair styling brands (see Note 13). The Beauty Brands have historically been partthese assets, which is based on forecasts of the Company's Beauty reportable segment. In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Beauty Brands are presented as discontinued operations. As a result, the goodwillexpected future cash flows attributable to the Beauty Brands as of June 30, 2016 and 2015 is excluded from the preceding table and is reported as Current assets held for sale in the Consolidated Balance Sheets as of June 30, 2016.
In February 2016, the Company completed the divestiture of its Batteries business to Berkshire Hathaway (BH). Prior to the transaction, the Company recorded a non-cash, before-tax impairment charge of $402 ($350 after tax) during fiscal 2016, which reflected the value of BH's shares in P&G stock as of the date of the impairment charges (see Note 13). This impairment charge as well as accumulated Batteries impairment charges totaling $2.1 billion through fiscal 2015 were included as part of discontinued operations.
The change in goodwill during fiscal 2017 and the remaining change during fiscal 2016 was primarily due to currency translation across all reportable segments.
All of the goodwill and indefinite-lived intangible asset impairment charges that are not reflected in discontinued operations are included in Corporate for segment reporting.
The goodwill and intangible asset valuations are dependent on a number of significantrespective 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). Significant judgement by management is required to estimate the impact of macroeconomic and other factors on future cash flows, including those related to the Russia-Ukraine War. Estimates utilized in the projected cash flows include consideration of macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion, and Company business plans. plans, 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.
Amounts in millions of dollars except per share amounts or as otherwise specified.
46 The Procter & Gamble Company
We believe thesethe estimates and assumptions utilized in our impairment testing are reasonable and are comparable to those that would be used by other marketplace participants. 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 initially used to estimate fair value for purposes of establishing or subsequently impairing the carrying amount of goodwill and related intangible assets, we may need to record additional non-cash impairment charges in the future.
Goodwill increased during fiscal 2023 primarily due to an acquisition in the Beauty segment, other minor brand acquisitions in the Baby, Feminine & Family Care segment and currency translation across all reportable segments.
Goodwill decreased during fiscal 2022 due to currency translation across all reportable segments, partially offset by three acquisitions (Farmacy Beauty, Ouai and TULA) in the Beauty reportable segment.
Identifiable intangible assets were comprised of:
 2017 2016
As of June 30
Gross
Carrying
Amount
Accumulated
Amortization
 
Gross
Carrying
Amount
Accumulated
Amortization
INTANGIBLE ASSETS WITH DETERMINABLE LIVES
Brands$3,094
$(1,898) $3,409
$(2,032)
Patents and technology2,617
(2,261) 2,624
(2,164)
Customer relationships1,377
(564) 1,382
(514)
Other239
(132) 246
(130)
TOTAL$7,327
$(4,855) $7,661
$(4,840)
      
INTANGIBLE ASSETS WITH INDEFINITE LIVES
Brands21,715
—
 21,706
—
TOTAL$29,042
$(4,855) $29,367
$(4,840)
Due to the divestiture of the Beauty Brands, intangible assets specific to this business as of June 30, 2016 are reported in Current assets held for sale in accordance with the accounting principles for assets held for sale.
20232022
As of June 30Gross Carrying AmountAccumulated
Amortization		Gross Carrying AmountAccumulated
Amortization
INTANGIBLE ASSETS WITH DETERMINABLE LIVES
Brands$4,352 $(2,540)$4,299 $(2,628)
Patents and technology2,775 (2,649)2,769 (2,609)
Customer relationships1,847 (1,039)1,797 (939)
Other73 (28)147 (97)
TOTAL$9,047 $(6,256)$9,012 $(6,273)
INTANGIBLE ASSETS WITH INDEFINITE LIVES
Brands20,992 — 20,940 — 
TOTAL INTANGIBLE ASSETS$30,039 $(6,256)$29,952 $(6,273)
Amortization expense of intangible assets was as follows:
Fiscal years ended June 30202320222021
Intangible asset amortization$327 $312 $318 
Years ended June 302017 2016 2015
Intangible asset amortization$325
 $388
 $457

Estimated amortization expense over the next five fiscal years is as follows:
Years ending June 3020182019202020212022
Estimated amortization expense$292
$275
$249
$201
$185
Fiscal years ending June 3020242025202620272028
Estimated amortization expense$340 $320 $297 $287 $247 

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

NOTE 5
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.
We have elected to account for the tax effects of Global Intangible Low-Taxed Income (GILTI) as a current period expense when incurred.
Earnings from continuing operations before income taxes consisted of the following:
Fiscal years ended June 30202320222021
United States$12,107 $11,698 $10,858 
International6,246 6,297 6,757 
TOTAL$18,353 $17,995 $17,615 

Amounts in millions of dollars except per share amounts or as otherwise specified.
Years ended June 302017 2016 2015
United States$9,031
 $8,788
 $8,496
International4,226
 4,581
 2,516
TOTAL$13,257
 $13,369
 $11,012
The Procter & Gamble Company 47
Income taxes on continuing operations consisted of the following:
Fiscal years ended June 30202320222021
CURRENT TAX EXPENSE
U.S. federal$2,303 $1,916 $1,663 
International1,412 1,333 1,534 
U.S. state and local353 355 324 
TOTAL4,068 3,604 3,521 
DEFERRED TAX EXPENSE/(BENEFIT)
U.S. federal(224)(320)(65)
International and other(229)(82)(193)
TOTAL(453)(402)(258)
TOTAL TAX EXPENSE$3,615 $3,202 $3,263 
Years ended June 302017 2016 2015
CURRENT TAX EXPENSE
U.S. federal$1,531
 $1,673
 $2,127
International1,243
 1,483
 1,142
U.S. state and local241
 224
 252
 3,015
 3,380
 3,521
DEFERRED TAX EXPENSE
U.S. federal28
 33
 (607)
International and other20
 (71) (189)
 48
 (38) (796)
TOTAL TAX EXPENSE$3,063
 $3,342
 $2,725
A reconciliation of the U.S. federal statutory income tax rate to our actual effective income tax rate on continuing operations is provided below:
Years ended June 302017 2016 2015
U.S. federal statutory income tax rate35.0 % 35.0 % 35.0 %
Country mix impacts of foreign operations(6.8)% (9.1)% (14.0)%
Changes in uncertain tax positions(2.0)% (0.5)% (0.9)%
Excess tax benefits from the exercise of stock options(1.3)% — % — %
Venezuela deconsolidation charge— % — % 6.6 %
Other(1.8)% (0.4)% (2.0)%
EFFECTIVE INCOME TAX RATE23.1 % 25.0 % 24.7 %
Fiscal years ended June 30202320222021
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
Country mix impacts of foreign operations(0.5)%(0.3)%(0.5)%
State income taxes, net of federal benefit1.6 %1.5 %1.3 %
Excess tax benefits from the exercise of stock options(1.0)%(2.0)%(1.6)%
Foreign derived intangible income deduction (FDII)(0.8)%(1.1)%(1.0)%
Changes in uncertain tax positions0.1 %(0.4)%(0.1)%
Other(0.7)%(0.9)%(0.6)%
EFFECTIVE INCOME TAX RATE19.7 %17.8 %18.5 %
Country mix impacts of foreign operations includes the effects of foreign subsidiaries' earnings taxed at rates other than the
U.S. statutory rate, the U.S. tax impacts of non-U.S. earnings repatriation and any net impacts of intercompany transactions. Changes in uncertain tax positions represent changes in our net liability related to prior year tax positions. Excess tax benefits from the exercise of stock options reflect the impactexcess of adopting ASU 2016-09, "Stock Compensation (Topic 718): Improvementsactual tax benefits received on employee exercises of stock options and other share-based payments (which generally equals the income taxable to Employee-Share-Based Payment Accounting)."the employee) over the amount of tax benefits that were calculated and recognized based on the grant date fair values of such instruments.
Tax benefits credited to shareholders' equity totaled $190 for the fiscal year ended June 30, 2023. This primarily relates to the tax effects of net investment hedges. Tax costs charged to shareholders' equity totaled $333$1,538 for the fiscal year ended June 30, 2017.2022. This primarily relates to the impacttax effects of certain adjustments to pension obligations recorded in stockholders'shareholders' equity partially offset byand the tax effects of net investment hedges. Tax benefits credited to shareholders' equity totaled $899 for the year ended June 30, 2016. This primarily relates
Prior to the impactpassage of certain adjustments to pension obligations recorded in stockholders' equity and the impactU.S. Tax Act, the Company asserted that substantially all of excess tax benefits from the exercise of stock options.
We have undistributed earnings of its foreign subsidiaries of approximately $49 billion at June 30, 2017, for whichwere considered indefinitely invested and, accordingly, no deferred taxes were provided. Pursuant to the provisions of the U.S. Tax Act, these earnings were subjected to a one-time transition tax. This charge included taxes for all U.S. income taxes and for the related foreign withholding taxes for the portion of those earnings which are no longer considered indefinitely invested. We have not been provided. Suchprovided deferred taxes on approximately $24 billion of earnings that are considered indefinitely invested in the foreign subsidiaries. If such earnings were repatriated, additional tax expense may result. However, the calculation of the amount of deferred U.S. income tax on these earnings is not practicable because of the large number of assumptions necessary to compute the tax. invested.
A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:
Fiscal years ended June 30202320222021
BEGINNING OF YEAR$583 $627 $485 
Increases in tax positions for prior years113 102 157 
Decreases in tax positions for prior years(119)(118)(34)
Increases in tax positions for current year60 53 60 
Settlements with taxing authorities(108)(42)(26)
Lapse in statute of limitations(7)(17)(24)
Currency translation(7)(22)9 
END OF YEAR$515 $583 $627 
Amounts in millions of dollars except per share amounts or as otherwise specified.
Years ended June 302017 2016 2015
BEGINNING OF YEAR$857
 $1,096
 $1,437
Increases in tax positions for prior years87
 124
 87
Decreases in tax positions for prior years(147) (97) (146)
Increases in tax positions for current year75
 97
 118
Settlements with taxing authorities(381) (301) (250)
Lapse in statute of limitations(22) (39) (27)
Currency translation(4) (23) (123)
END OF YEAR$465
 $857
 $1,096
48 The Procter & Gamble Company
Included in the total liability for uncertain tax positions at June 30, 2017,2023, is $284$354 that, depending on the ultimate resolution, could impact the effective tax rate in future periods.
The Company is present in approximately 14070 countries and over 150 taxable jurisdictions and, at any point in time, has 50-6030-40 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 the closing of statutes of

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

limitation. Such adjustments are reflected in the tax provision as appropriate. We have tax years open ranging from 20082010 and forward. We are generally not able to reliably estimate the ultimate settlement amounts until the close of the audit. WhileBased on information currently available, we do not expect material changes, it is possibleanticipate that over the amount of unrecognized benefit with respectnext 12-month period, audit activity could be completed related to our uncertain tax positions could increase or decrease within the next 12 months. At this time,in multiple jurisdictions for which we are not able to make a reasonable estimatehave accrued existing liabilities of the range of impact on the balance of uncertain tax positions or the impact on the effective tax rate related to these items.approximately $40, including interest and penalties.
We recognize the additional accrual of any possible related interest and penalties relating to the underlying uncertain tax position in income tax expense. As of June 30, 2017, 20162023, 2022 and 2015,2021, we had accrued interest of $100, $323$143, $179 and $347$166 and accrued penalties of $20, $20$12, $12 and $19,$10, respectively, which are not included in the above table. During the fiscal years ended June 30, 2017, 20162023, 2022 and 2015,2021, we recognized $62,$23, $21 and $38 in interest expense and $1, $2 and $15 in interest benefit/(expense) and $0, $(2) and $13$6 in penalties benefit/(expense),expense, respectively. The net benefits recognized resulted primarily from the favorable resolution of tax positions for prior years.
Deferred income tax assets and liabilities were comprised of the following:
As of June 3020232022
DEFERRED TAX ASSETS
Loss and other carryforwards$1,014 $914 
Capitalized research & development930 646 
Pension and other retiree benefits737 740 
Accrued marketing and promotion421 420 
Stock-based compensation412 386 
Unrealized loss on financial and foreign exchange transactions282 138 
Fixed assets223 209 
Lease liabilities197 185 
Other874 862 
Valuation allowances(403)(409)
TOTAL$4,687 $4,091 
DEFERRED TAX LIABILITIES
Goodwill and other intangible assets$5,811 $5,783 
Fixed assets1,556 1,542 
Other retiree benefits1,101 1,031 
Unrealized gain on financial and foreign exchange transactions198 439 
Lease right-of-use assets191 179 
Foreign withholding tax on earnings to be repatriated96 70 
Other381 244 
TOTAL$9,334 $9,288 
As of June 302017 2016
DEFERRED TAX ASSETS   
Pension and postretirement benefits$1,775
 $2,226
Loss and other carryforwards1,516
 1,077
Stock-based compensation732
 845
Unrealized loss on financial and foreign exchange transactions259
 122
Fixed assets212
 216
Accrued marketing and promotion210
 240
Advance payments121
 515
Inventory75
 61
Accrued interest and taxes30
 55
Other709
 764
Valuation allowances(505) (467)
TOTAL$5,134
 $5,654
    
DEFERRED TAX LIABILITIES   
Goodwill and other intangible assets$9,403
 $9,461
Fixed assets1,495
 1,533
Unrealized gain on financial and foreign exchange transactions314
 387
Other26
 105
TOTAL$11,238
 $11,486
Net operating loss carryforwards were $3.3 billion and $3.2$2.9 billion at June 30, 20172023, and 2016, respectively. If unused, $1.1 billion will expire between 2017 and 2036. The remainder, totaling $2.2$2.5 billion at June 30, 2017,2022. If unused, approximately $300 will expire between 2023 and 2042. The remainder, totaling $2.6 billion at June 30, 2023, may be carried forward indefinitely.

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

NOTE 6
EARNINGS PER SHARE
Basic net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble less preferred dividends (net of related tax benefits) by the weighted average number of common shares outstanding during the year. Diluted net earnings per common share are calculated onby dividing Net earnings attributable to Procter & Gamble by the basis of thediluted weighted average number of common shares outstanding plusduring the year. The diluted shares include the dilutive effect of stock options and other stock-basedshare-based awards based on the treasury stock method (see Note 7) and the assumed conversion of preferred stock (see Note 8).
Net earnings per share were as follows:
Years ended June 302017 2016 2015
CONSOLIDATED AMOUNTSContinuing OperationsDis-continued OperationsTotal Continuing OperationsDis-continued OperationsTotal Continuing OperationsDis-continued OperationsTotal
Net earnings/(loss)$10,194
$5,217
$15,411
 $10,027
$577
$10,604
 $8,287
$(1,143)$7,144
Net earnings attributable to noncontrolling interests(85)—
(85) (96)—
(96) (98)(10)(108)
Net earnings/(loss) attributable to P&G (Diluted)10,109
5,217
15,326
 9,931
577
10,508
 8,189
(1,153)7,036
Preferred dividends, net of tax(247)—
(247) (255)—
(255) (259)—
(259)
Net earnings/(loss) attributable to P&G available to common shareholders (Basic)$9,862
$5,217
$15,079
 $9,676
$577
$10,253
 $7,930
$(1,153)$6,777
SHARES IN MILLIONS           
Basic weighted average common shares outstanding2,598.1
2,598.1
2,598.1
 2,698.9
2,698.9
2,698.9
 2,711.7
2,711.7
2,711.7
Add: Effect of dilutive securities           
Conversion of preferred shares(1)
99.3
99.3
99.3
 103.9
103.9
103.9
 108.6
108.6
108.6
Impact of stock options and other unvested equity awards (2)
43.0
43.0
43.0
 41.6
41.6
41.6
 63.3
63.3
63.3
Diluted weighted average common shares outstanding2,740.4
2,740.4
2,740.4
 2,844.4
2,844.4
2,844.4
 2,883.6
2,883.6
2,883.6
PER SHARE AMOUNTS           
Basic net earnings/(loss) per common share (3)
$3.79
$2.01
$5.80
 $3.59
$0.21
$3.80
 $2.92
$(0.42)$2.50
Diluted net earnings/(loss) per common share (3)
$3.69
$1.90
$5.59
 $3.49
$0.20
$3.69
 $2.84
$(0.40)$2.44
(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 ESOP's obligations through 2035.
(2)
Weighted average outstanding stock options of approximately 20 million in 2017, 55 million in 2016 and 8 million in 2015 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).
(3)
Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings/(loss) attributable to Procter & Gamble.


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

Net earnings per common share were calculated as follows:
Fiscal years ended June 30202320222021
CONSOLIDATED AMOUNTS
Net earnings$14,738 $14,793 $14,352 
Less: Net earnings attributable to noncontrolling interests85 51 46 
Net earnings attributable to P&G14,653 14,742 14,306 
Less: Preferred dividends282 281 271 
Net earnings attributable to P&G available to common shareholders (Basic)$14,371 $14,461 $14,035 
Net earnings attributable to P&G available to common shareholders (Diluted)$14,653 $14,742 $14,306 
SHARES IN MILLIONS
Basic weighted average common shares outstanding2,368.22,410.32,465.8
Add effect of dilutive securities:
Stock options and other unvested equity awards (1)
39.449.552.5
Convertible preferred shares (2)
76.379.382.7
Diluted weighted average common shares outstanding2,483.92,539.12,601.0
NET EARNINGS PER COMMON SHARE (3)
Basic$6.07 $6.00 $5.69 
Diluted$5.90 $5.81 $5.50 
(1)Excludes 19 million, 11 million and 9 million in 2023, 2022 and 2021, respectively, of weighted average stock options outstanding because the exercise price of these options was greater than the average market value of the Company's stock or their effect was antidilutive.
(2)An overview of preferred shares can be found in Note 8.
(3)Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.
NOTE 7
STOCK-BASEDSHARE-BASED COMPENSATION
We haveThe Company has two primary stock-basedshare-based compensation programs under which we annually grant stock option, restricted stock unit (RSU) and performance stock unit (PSU) awards to keycertain managers and directors.
In our main long-term incentive program, key managers can elect to receive stock options or RSUs. All options granted vest after three years.years and have a 10-year life. Exercise prices on options granted have been, and continue to be,are set equal to the market price of the underlying shares on the date of the grant. The stock options granted from July 1998 through August 2002 had a 15-year life and expired during fiscal year 2017. The options granted since September 2002 have a 10-year life.
RSUs granted in February 2017 vest and settle in shares of common stock three years from the grant date. RSUs granted prior to February 2017 vest and settle in shares of common stock five years from the grant date.
Senior-level executives participate in an additional long-term incentive program that awards PSUs, which are paid in shares after the end of a three-year performance period. Under thisperiod subject to pre-established performance goals. The program includes a Relative Total Shareholder Return (R-TSR) modifier under which the number of PSUs that will vestshares ultimately granted is based onalso impacted by the Company's performanceactual shareholder return relative to pre-established performance goals during that three year period.our consumer products competitive peer set.
In addition to these long-term incentive programs, we award RSUs to the Company's non-employee directors and make other minor stock option and RSU grants to employees for which the terms are not substantially different thanfrom our long-term incentive awards.
A totalThe Company's share-based compensation plan was approved by shareholders in 2019. Under the 2019 plan, a maximum of 185150 million shares of common stock werewas authorized for issuance under the stock-based compensation plan approved by shareholders in 2014. Aand a total of 9596 million shares remain available for grant under the 2014 plan.grant.
The Company recognizes stock-basedshare-based compensation expense based on the fair value of the awards at the date of grant. The fair valueexpense is amortizedrecognized on a straight-line basis over the requisite service period. Awards to employees eligible for retirement prior to the award becoming fully vested are recognized as compensation expense ratably from the grant date through the date the employee first becomes eligible to retire andand/or is no longer required to provide services to earn the award. Stock-basedShare-based compensation expense which is included as part of Cost of products sold and SG&A in the Consolidated Statement of Earnings and theincludes an estimate of forfeitures, which is based on historical data.
Amounts in millions of dollars except per share amounts or as otherwise specified.
50 The Procter & Gamble Company
Total expense and related tax benefit were as follows:
Fiscal years ended June 30202320222021
Stock options$303 $271 $279 
RSUs and PSUs242 257 261 
Total share-based expense$545 $528 $540 
Income tax benefit$103 $88 $102 
Years ended June 302017 2016 2015
Stock options$216
 $199
 $223
RSUs and PSUs150
 143
 114
Total stock-based expense (1)
$366
 $342
 $337
      
Income tax benefit (1)
$111
 $85
 $109
(1)
Includes amounts related to discontinued operations, which are not material in any period presented.
We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:
Years ended June 302017 2016 2015
Fiscal years ended June 30Fiscal years ended June 30202320222021
Interest rate0.8-2.6% 0.7-1.9% 0.1-2.1%Interest rate3.7-4.1 %0.1-1.6 %0.1-0.7 %
Weighted average interest rate2.6% 1.8% 2.0%Weighted average interest rate3.7 %1.5 %0.6 %
Dividend yield3.2% 3.2% 3.1%Dividend yield2.6 %2.4 %2.4 %
Expected volatility12-16% 15-17% 11-15%Expected volatility21 %19 %20 %
Weighted average volatility15% 16% 15%
Expected life in years9.6  8.3  8.3 Expected life in years8.89.19.2
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.
We utilize a Monte-Carlo simulation model to estimate the fair value of performance stock units granted. Assumptions utilized in the model are not substantially different from those used for stock options.
A summary of options RSUs and PSUs outstanding under the plans as of June 30, 20172023, and activity during the year then ended is presented below:
OptionsOptions
(in thousands)		Weighted Average Exercise PriceWeighted Average Contractual Life in YearsAggregate Intrinsic Value
Outstanding at July 1, 2022126,715 $99.59 
Granted9,672 131.26 
Exercised(14,667)81.07 
Forfeited/expired(515)128.40 
Outstanding at June 30, 2023121,205 $104.18 5.1$5,770 
Exercisable86,336 $90.46 3.9$5,291 
The following table provides additional information on stock options:
Fiscal years ended June 30202320222021
Weighted average grant-date fair value of options granted$29.58 $21.55 $20.94 
Intrinsic value of options exercised979 1,886 1,401 
Grant-date fair value of options that vested219 177 236 
Cash received from options exercised1,189 1,930 1,705 
Actual tax benefit from options exercised207 399 292 
OptionsOptions (in thousands)Weighted Average Exercise PriceWeighted Average Contract-ual Life in YearsAggregate Intrinsic Value
Outstanding, beginning of year230,397
$68.02
  
Granted21,425
90.70
  
Exercised(44,070)59.11
  
Canceled(1,267)69.76
  
OUTSTANDING, END OF YEAR206,485
$72.46
5.4$3,109
EXERCISABLE140,803
$66.71
3.9$2,878
The weighted average grant-date fair value of options granted was $10.45, $8.48 and $9.38 per share in 2017, 2016 and 2015, respectively. The total intrinsic value of options exercised was $1,334, $1,388 and $1,814 in 2017, 2016 and 2015, respectively. The total grant-date fair value of options that vested during 2017, 2016 and 2015 was $246, $200 and $241, respectively. At June 30, 2017, there was $2082023, $159 of compensation cost that hashad not yet been recognized related to stock option grants. That cost is expected to be recognized over a remaining weighted average period of 2.01.6 years. Cash received from options exercised was $2,630, $2,332 and $2,631 in 2017, 2016 and 2015, respectively. The actual tax


Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 5351

A summary of non-vested RSUs and PSUs outstanding under the plans as of June 30, 2023, and activity during the year then ended is presented below:
benefit for the tax deductions from option exercises totaled $421, $433 and $519 in 2017, 2016 and 2015, respectively.
RSUsPSUs
RSUs PSUs
Other stock-based awardsUnits (in thousands)Weighted Average Grant Date Fair Value Units (in thousands)Weighted Average Grant Date Fair Value
Non-vested at July 1, 20165,274
$65.53
 1,146
$75.25
RSU and PSU awardsRSU and PSU awardsUnits (in thousands)Weighted Average Grant Date Fair ValueUnits (in thousands)Weighted Average Grant Date Fair Value
Non-vested at July 1, 2022Non-vested at July 1, 20222,832 $130.37 928 $152.94 
Granted1,730
89.74
 623
91.03
Granted1,727 128.78 569 133.21 
Vested(1,586)66.70
 (575)77.55
Vested(1,286)116.89 (453)152.90 
Forfeited(59)69.21
 —
—
Forfeited(101)131.22 (33)140.68 
Non-vested at June 30, 20175,359
$74.98
 1,194
$82.40
Non-vested at June 30, 2023Non-vested at June 30, 20233,172 $134.94 1,011 $142.40 
At June 30, 2017, there was $2552023, $218 of compensation cost that hashad 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 2.51.7 years. The total grant date fair value of shares vested was $163, $97$220, $248 and $79$266 in 2017, 20162023, 2022 and 2015,2021, respectively.
The Company settles equity issuances with treasury shares. We have no specific policy to repurchase common shares to mitigate the dilutive impact of options, RSUs and PSUs. However, we have historically made adequate discretionary purchases, based on cash availability, market trends and other factors, to offset the impacts of such activity.


NOTE 8
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 $270, $292$392, $366 and $305$340 in 2017, 20162023, 2022 and 2015,2021, 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 14%13% of total participants' annual wages and salaries in 20172023 and 14% in 20162022 and 2015.2021.
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.
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,benefits 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 careThe plans require cost sharing with retirees and pay a stated percentage of expenses, reduced by deductibles and other coverages. Thesethe benefits are primarily funded by ESOP Series B shares and certain other assets contributed by the Company.


Amounts in millions of dollars except per share amounts or as otherwise specified.
5452 The Procter & Gamble 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)
Years ended June 302017 2016 2017 2016
CHANGE IN BENEFIT OBLIGATION       
Benefit obligation at beginning of year (3)
$17,285

$15,951

$5,632

$4,904
Service cost310
 314
 133
 124
Interest cost300
 466
 175
 219
Participants' contributions14
 17
 74
 74
Amendments2
 8
 —
 (40)
Net actuarial loss/(gain)(643) 1,927
 (554) 589
Acquisitions/(divestitures) (4)
(413) (21) (31) (7)
Curtailments(132) —
 (37) —
Special termination benefits4
 6
 21
 12
Currency translation and other35
 (826) 16
 (14)
Benefit payments(602) (557) (242) (229)
BENEFIT OBLIGATION AT END OF YEAR (3)
$16,160
 $17,285
 $5,187
 $5,632
Pension Benefits (1)
Other Retiree Benefits (2)
Fiscal years ended June 302023202220232022
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year (3)
$12,608 $18,469 $3,070 $4,206 
Service cost173 253 71 86 
Interest cost430 253 142 99 
Participants' contributions13 14 50 67 
Amendments (4)
8 5 — (586)
Net actuarial loss/(gain)(550)(4,067)(208)(586)
Special termination benefits5 4 4 1 
Currency translation and other363 (1,720)31 51 
Benefit payments(551)(603)(227)(268)
BENEFIT OBLIGATION AT END OF YEAR (3)
$12,499 $12,608 $2,933 $3,070 
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year$10,173 $13,041 $6,889 $6,444 
Actual return on plan assets37 (1,233)482 526 
Employer contributions392 222 42 37 
Participants' contributions13 14 50 67 
Currency translation and other310 (1,268)1 1 
ESOP debt impacts (5)
— — 87 82 
Benefit payments(551)(603)(227)(268)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR$10,374 $10,173 $7,324 $6,889 
FUNDED STATUS$(2,125)$(2,435)$4,391 $3,819 
CHANGE IN PLAN ASSETS       
Fair value of plan assets at beginning of year$10,269
 $10,605
 $3,787
 $3,470
Actual return on plan assets884
 630
 136
 408
Acquisitions/(divestitures) (4)
(34) (13) —
 —
Employer contributions316
 306
 36
 32
Participants' contributions14
 17
 74
 74
Currency translation and other(18) (719) (4) (8)
ESOP debt impacts (5)
—
 —
 44
 40
Benefit payments(602) (557) (242) (229)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR$10,829
 $10,269
 $3,831
 $3,787
Reclassification of net obligation to held for sale liabilities—
 402
 —
 16
FUNDED STATUS$(5,331) $(6,614) $(1,356) $(1,829)
(1)Primarily non-U.S.-based defined benefit retirement plans.
(2)Primarily U.S.-based other postretirement benefit plans.
(1)
(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)For the other retiree benefits, the amendment primarily relates to adjustments in the self-insured U.S. retiree health care program to utilize fully-insured Medicare Advantage Programs impacting fiscal year 2022.
(5)Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.
The actuarial gain for pension plans in 2023 was primarily related to increases in discount rates, offset by inflation-related pension benefit increases. The actuarial gain for other retiree benefits in 2023 was primarily related to increases in discount rates and a decrease in assumptions for medical claims costs. The actuarial gain for pension plans in 2022 was primarily related to increases in discount rates. The actuarial gain for other retiree benefits in 2022 was primarily related to increases in discount rates, partially offset by unfavorable medical claim experience.
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)
For the year ended June 30, 2017, this represents the obligations and plans which were classified as held for sale at June 30, 2016.
(5)
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.
Pension BenefitsOther Retiree Benefits
As of June 302023202220232022
CLASSIFICATION OF NET AMOUNT RECOGNIZED
Noncurrent assets$1,085 $765 $5,119 $4,525 
Current liabilities(94)(61)(38)(34)
Noncurrent liabilities(3,116)(3,139)(690)(672)
NET AMOUNT RECOGNIZED$(2,125)$(2,435)$4,391 $3,819 
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE (INCOME)/LOSS (AOCI)
Net actuarial loss/(gain)$1,818 $1,906 $(1,160)$(1,093)
Prior service cost/(credit)156 170 (787)(907)
NET AMOUNTS RECOGNIZED IN AOCI$1,974 $2,076 $(1,947)$(2,000)
 Pension Benefits Other Retiree Benefits
Years ended June 302017 2016 2017 2016
CLASSIFICATION OF NET AMOUNT RECOGNIZED       
Noncurrent assets$196
 $180
 $—
 $—
Current liabilities(40) (33) (23) (21)
Noncurrent liabilities(5,487) (6,761) (1,333) (1,808)
NET AMOUNT RECOGNIZED$(5,331) $(6,614) $(1,356) $(1,829)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)  
Net actuarial loss$4,548
 $6,088
 $1,819
 $2,247
Prior service cost/(credit)245
 270
 (293) (334)
NET AMOUNTS RECOGNIZED IN AOCI$4,793
 $6,358
 $1,526
 $1,913

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 5553

The accumulated benefit obligation for all defined benefit pension plans, which differs from the projected obligation in that it excludes the assumption of future salary increases, was $14,512$11.8 billion and $15,546$11.9 billion as of June 30, 20172023 and 2016,2022, respectively. Pension plans with accumulated benefit obligations in excessInformation related to the funded status of plan assetsselected pension and plans with projected benefit obligations in excess of plan assets consisted of the following:other retiree benefits at June 30 is as follows:
As of June 3020232022
PENSION PLANS WITH A PROJECTED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS
Projected benefit obligation$7,967 $7,989 
Fair value of plan assets4,758 4,789 
PENSION PLANS WITH AN ACCUMULATED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS
Accumulated benefit obligation$7,442 $7,191 
Fair value of plan assets4,677 4,433 
OTHER RETIREE BENEFIT PLANS WITH AN ACCUMULATED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS
Accumulated benefit obligation$818 $808 
Fair value of plan assets89 102 
 Accumulated Benefit Obligation  Exceeds the Fair Value of Plan Assets Projected Benefit Obligation  Exceeds the Fair Value of Plan Assets
As of June 302017 2016 2017 2016
Projected benefit obligation$13,699
 $15,233
 $14,181
 $15,853
Accumulated benefit obligation12,276
 13,587
 12,630
 14,149
Fair value of plan assets8,279
 8,082
 8,654
 8,657
Net Periodic Benefit Cost. Components of the net periodic benefit cost were as follows:
Pension BenefitsOther Retiree Benefits
Fiscal years ended June 30202320222021202320222021
AMOUNTS RECOGNIZED IN NET PERIODIC BENEFIT COST/(CREDIT)
Service cost$173 $253 $275 $71 $86 $94 
Interest cost430 253 240 142 99 114 
Expected return on plan assets(591)(684)(783)(611)(564)(508)
Amortization of net actuarial loss/(gain)133 337 423 (7)11 47 
Amortization of prior service cost/(credit)26 28 25 (125)(107)(60)
Amortization of net actuarial loss/(gain) due to settlements— (5)5 — — — 
Special termination benefits5 4 17 4 1 2 
GROSS BENEFIT COST/(CREDIT)176 186 202 (526)(474)(311)
Dividends on ESOP preferred stock— — — — — (8)
NET PERIODIC BENEFIT COST/(CREDIT)$176 $186 $202 $(526)$(474)$(319)
CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN AOCI
Net actuarial loss/(gain) - current year$4 $(2,150)$(79)$(548)
Prior service cost/(credit) - current year8 5 — (586)
Amortization of net actuarial loss/(gain)(133)(337)7 (11)
Amortization of prior service (cost)/credit(26)(28)125 107 
Amortization of net actuarial loss/(gain) due to settlements— 5 — — 
Currency translation and other45 (486)— 13 
TOTAL CHANGE IN AOCI(102)(2,991)53 (1,025)
NET AMOUNTS RECOGNIZED IN PERIODIC BENEFIT COST/(CREDIT) AND AOCI$74 $(2,805)$(473)$(1,499)
 Pension Benefits Other Retiree Benefits
Years ended June 302017 2016 2015 2017 2016 2015
AMOUNTS RECOGNIZED IN NET PERIODIC BENEFIT COST
Service cost (1)
$310
 $314
 $317
 $133
 $124
 $156
Interest cost300
 466
 545
 175
 219
 240
Expected return on plan assets(675) (731) (732) (431) (416) (406)
Amortization of net actuarial loss375
 265
 275
 122
 78
 105
Amortization of prior service cost/(credit)28
 29
 30
 (45) (52) (20)
Amortization of net actuarial loss/ prior service cost due to settlements and curtailments186
(2) 
—
 —
 16
(2) 
—
 —
Special termination benefits4
 6
 11
 21
(2) 
12
 23
GROSS BENEFIT COST/(CREDIT)528
 349
 446
 (9) (35) 98
Dividends on ESOP preferred stock—
 —
 —
 (45) (52) (58)
NET PERIODIC BENEFIT COST/(CREDIT)$528
 $349
 $446
 $(54) $(87) $40
CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN AOCI
Net actuarial loss/(gain) - current year$(852) $2,028
   $(259) $597
  
Prior service cost/(credit) - current year2
 8
   —
 (40)  
Amortization of net actuarial loss(375) (265)   (122) (78)  
Amortization of prior service (cost)/credit(28) (29)   45
 52
  
Amortization of net actuarial loss/prior service costs due to settlements and curtailments(186) —
   (16) —
  
Reduction in net actuarial losses resulting from curtailment(132) —
   (37) —
  
Currency translation and other6
 (172)   2
 (3)  
TOTAL CHANGE IN AOCI(1,565) 1,570
   (387) 528
  
NET AMOUNTS RECOGNIZED IN PERIODIC BENEFIT COST AND AOCI$(1,037) $1,919
   $(441) $441
  
(1)
Service cost includes amounts related to discontinued operations, which are not material for any period.
(2)
Amortization of net actuarial loss / prior service cost due to settlement and curtailments and $18The service cost component of the special termination benefits are included in Net earnings from discontinued operations.
Amounts expected to be amortized from AOCI into net periodic benefit cost duringis included in the year ending June 30, 2018,Consolidated Statements of Earnings in Cost of products sold and SG&A. All other components are as follows:included in the Consolidated Statements of Earnings in Other non-operating income/(expense), net, unless otherwise noted.

 Pension Benefits Other Retiree Benefits
Net actuarial loss$289
 $67
Prior service cost/(credit)28
 (35)

Amounts in millions of dollars except per share amounts or as otherwise specified.
5654 The Procter & Gamble Company

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 used to determine benefit obligations recorded on the Consolidated Balance Sheets as of June 30, 2023 and 2022, were as follows: (1)
Pension BenefitsOther Retiree Benefits
As of June 302023202220232022
Discount rate4.2 % 3.7 % 5.6 % 5.0 %
Rate of compensation increase2.9 %2.8 %N/AN/A
Interest crediting rate for cash balance plans4.3 %4.3 %N/AN/A
Health care cost trend rates assumed for next yearN/AN/A6.1 %6.4 %
Rate to which the health care cost trend rate is assumed to decline (ultimate trend rate)N/AN/A4.5 %4.5 %
Year that the rate reaches the ultimate trend rateN/AN/A20282028
 Pension Benefits Other Retiree Benefits
As of June 302017 2016 2017 2016
Discount rate2.4% 2.1% 3.9% 3.6%
Rate of compensation increase3.0% 2.9% N/A
 N/A
Health care cost trend rates assumed for next yearN/A
 N/A
 6.4% 7.2%
Rate to which the health care cost trend rate is assumed to decline (ultimate trend rate)N/A
 N/A
 4.9% 4.9%
Year that the rate reaches the ultimate trend rateN/A
 N/A
 2022
 2021
(1)Determined as of end of fiscal year.
(1)
Determined as of end of year.
The weighted average assumptions used to determine net benefit cost recorded on the Consolidated Statement of Earnings for the fiscal years ended June 30 were as follows: (1)
Pension BenefitsOther Retiree Benefits
Fiscal years ended June 30202320222021202320222021
Discount rate3.7 %1.7 %1.5 %5.0 %3.2 %3.1 %
Expected return on plan assets5.9 %5.5 %6.5 %8.4 %8.4 %8.4 %
Rate of compensation increase2.8 %2.7 %2.5 %N/AN/AN/A
Interest crediting rate for cash balance plans4.3 %4.4 %4.4 %N/AN/AN/A
 Pension Benefits Other Retiree Benefits
Years ended June 302017 2016 2015 2017 2016 2015
Discount rate2.1% 3.1% 3.5% 3.6% 4.5% 4.4%
Expected return on plan assets6.9% 7.2% 7.2% 8.3% 8.3% 8.3%
Rate of compensation increase2.9% 3.1% 3.2% N/A
 N/A
 N/A
(1)
(1)Determined as of beginning of year.
For the fiscal year 2017, the Company changed its method of determining service and interest costs foryear.

For plans that make up the majority of our obligation, from the Company calculates the benefit obligation and the related impacts on service and interest costs using specific spot rates along the corporate bond yield curve. For the remaining plans, the Company determines these amounts utilizing a single weighted average discount rate approach to specific spot rates along the yield curve, which management has concluded is a more precise estimate. Prior to this change in methodology, the Company measured service and interest costs utilizing a single weighted-average discount rate derived from the corporate bond yield curve used to measure the plan obligations. The Company has accounted for this change as a change in accounting estimate and, accordingly, has accounted for it on a prospective basis. This change does not impact the benefit obligation and did not have a material impact on fiscal year 2017 results.
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 53 - 6%5% for bonds. For other retiree benefit plans, the expected long-term rate of return reflects 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 8.5% and reflects the historical pattern of returns.
Assumed health care cost trend rates could have a significant effect on the amounts reported for the other retiree benefit plans. A 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 the total service and interest cost components$74
 $(55)
Effect on the accumulated postretirement benefit obligation950
 (697)
Plan Assets. Our investment objective for defined benefit retirement plan assets is to meet the plans' benefit obligations and to improve plan self-sufficiency for future benefit obligations. 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 assessing different investment risks and matching the actuarial projections of the plans' future liabilities and benefit payments with current as well as 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.

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

Our target asset allocation for the fiscal year ended June 30, 2017,2023, and actual asset allocation by asset category as of June 30, 20172023 and 2016,2022, were as follows:
 Target Asset Allocation Actual Asset Allocation at June 30
 Pension Benefits 
Other Retiree
Benefits
 Pension Benefits Other Retiree Benefits
Asset Category  2017 2016 2017 2016
Cash2% 2% 2% 2% 1% 2%
Debt securities57% 3% 53% 55% 4% 4%
Equity securities41% 95% 45% 43% 95% 94%
TOTAL100% 100% 100% 100% 100% 100%
Target Asset AllocationActual Asset Allocation at June 30
Pension BenefitsOther Retiree
Benefits		Pension BenefitsOther Retiree Benefits
Asset Category2023202220232022
Cash1 %2 %1 %1 %2 %2 %
Debt securities59 %— %60 %58 %1 %1 %
Equity securities40 %98 %39 %41 %97 %97 %
TOTAL100 %100 %100 %100 %100 %100 %
The following tables settable sets forth the fair value of the Company's plan assets as of June 30, 20172023 and 20162022, segregated by level within the fair value hierarchy (refer to Note 9 for further discussion on the fair value hierarchy and fair value principles).
Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble 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 assets 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. There was no significant activity within the Level 3 pension and other retiree benefits plan assets during the years presented. 55
Investments valued using net asset value as a practical expedient are primarily equity and fixed income collective funds. These assets are not valued using the fair value hierarchy, but rather 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. For additional details
Pension BenefitsOther Retiree Benefits
As of June 30Fair Value Hierarchy Level20232022Fair Value Hierarchy Level20232022
ASSETS AT FAIR VALUE
Cash and cash equivalents1$54 $78 1$148 $130 
Company common stock— — 1368 319 
Company preferred stock (1)
— — 26,721 6,340 
Fixed income securities (2)
21,190 1,545 — — 
Insurance contracts (3)
393 94 — — 
TOTAL ASSETS IN THE FAIR VALUE HIERARCHY1,337 1,717 7,237 6,789 
Investments valued at net asset value (4)
9,037 8,456 87 100 
TOTAL ASSETS AT FAIR VALUE$10,374 10,173 $7,324 6,889 
(1)Company preferred stock is valued based on the fair value hierarchy, see Note 9.of Company common stock and is presented net of ESOP debt discussed below.
(2)Fixed income securities are estimated by using pricing models or quoted prices of securities with similar characteristics.
 Pension Benefits Other Retiree Benefits
As of June 30Fair Value Hierarchy Level 2017 2016 Fair Value Hierarchy Level 2017 2016
ASSETS AT FAIR VALUE           
Cash and cash equivalents1 $134
 $151
 1 $6
 $70
Company stock (1)
  —
 —
 2 3,643
 3,545
Other (2)
1, 2 & 3 165
 166
 1 7
  —
TOTAL ASSETS IN THE FAIR VALUE HEIRARCHY  $299
 $317
   $3,656
 $3,615
Investments valued at net asset value  $10,530
  9,952
   $175
  172
TOTAL ASSETS AT FAIR VALUE  $10,829
 10,269
   $3,831
  3,787
(1)
Company stock is net of ESOP debt discussed below.
(2)
The Company's other pension plan assets measured at fair value are generally classified as Level 3 within the fair value hierarchy. There are no material other pension plan asset balances classified as Level 1 or Level 2 within the fair value hierarchy.
(3)Fair values of insurance contracts are valued based on either their cash equivalent value 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. The activity for Level 3 assets is not significant for all years presented.
(4)Investments valued using net asset value as a practical expedient are primarily equity and fixed income collective funds.
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 fiscal year ending June 30, 2018,2024, is $125$206 and $39,$52, respectively. For the defined benefit retirement plans, this is comprised of $75 in expected benefit payments from the Company directly to participants of unfunded plans and $50 of expected contributions to funded plans. For other retiree benefit plans, this is comprised of $24 in expected benefit payments from the
Company directly to participants of unfunded plans and $15 of expected contributions to funded plans. 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.
58 The Procter & Gamble Company

Total benefit payments expected to be paid to participants, which include payments funded from the Company's assets and payments from the plans are as follows:
Years ending June 30
Pension
Benefits
 
Other Retiree
Benefits
EXPECTED BENEFIT PAYMENTS  
2018$524
 $198
2019530
 211
2020539
 222
2021575
 232
2022596
 242
2023 - 20273,221
 1,334
Fiscal years ending June 30Pension BenefitsOther Retiree Benefits
EXPECTED BENEFIT PAYMENTS
2024$648 $179 
2025633 186 
2026632 189 
2027652 196 
2028704 202 
2029 - 20333,800 1,102 
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 billion has been repaid in full, and advances from the Company of $62$8 remain outstanding at June 30, 2017.2023. 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 $2.70$3.68 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. The original borrowings of $1.0 billion were repaid in 2021. Debt service requirements arewere funded by preferred stock dividends, cash contributions and advances provided by the Company, of which $770$814 are outstanding at June 30, 2017.2023. 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 $2.70$3.68 per share. The liquidation value is $12.96 per share.
Amounts in millions of dollars except per share amounts or as otherwise specified.
56 The Procter & Gamble Company
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 iswas guaranteed by the Company, iswas recorded as debt (see Note 10) 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 iswas 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. The number of preferred shares outstanding at June 30 was as follows:
Shares in thousands2017 2016 2015Shares in thousands202320222021
Allocated36,488
 39,241
 42,044
Allocated24,449 25,901 27,759 
Unallocated5,060
 6,095
 7,228
Unallocated535 1,123 1,769 
TOTAL SERIES A41,548
 45,336
 49,272
TOTAL SERIES A24,984 27,024 29,528 
  
Allocated25,378
 23,925
 23,074
Allocated32,172 30,719 29,203 
Unallocated30,412
 32,319
 34,096
Unallocated17,867 20,120 22,349 
TOTAL SERIES B55,790
 56,244
 57,170
TOTAL SERIES B50,039 50,839 51,552 
For purposes of calculating diluted net earnings per common share, the preferred shares held by the ESOP are considered converted from inception.
NOTE 9
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 designateIf the Company elects to do so and document qualifyingif the instrument meets certain specified accounting criteria, management designates derivative instruments as cash flow hedges, of underlying exposures. We formally assess, at inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair value hedges or cash flows ofnet investment hedges. We record derivative instruments at fair value and the related underlying exposures. Fluctuations in the value of these instruments generally are offset byaccounting for changes in the fair value or cash flowsdepends on the intended use of the underlying exposures being hedged. Thisderivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is driven by thedesigned to hedge. We generally have a 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 was immaterial for all years presented.
Credit Risk Management
We have counterparty credit guidelines and normally enter into transactions with investment grade financial institutions, to the extent commercially viable. 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.
Substantially all of the Company's financial instruments used in hedging transactions are governed by industry standard

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

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 arrangements. The aggregate fair value of the instruments covered by these contractual features that are in a net liability position was $1,088 and $219 as of June 30, 2017, was not material.2023 and 2022, respectively. 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.
InterestWe designate certain interest rate swaps on fixed rate debt 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 was not material for any year presented, was immediately recognized in Interest expense.earnings.
Foreign Currency Risk Management
We manufacture and sell our products and finance our operations in a number of countries throughout the world. As a result, we are exposed to movements in foreign currency exchange rates.
To manage We leverage the exchange rate risk primarily associated with the financingCompany’s diversified portfolio of our operations,exposures as a natural hedge. In certain cases, we have historically used a combination of forwardenter into non-qualifying foreign currency contracts options and currency swaps. Historically, we have had currency swaps with original maturities up to five years, which were intendedhedge certain balance sheet items subject to offset the effect of exchange rate fluctuations on intercompany loans denominated in foreign currencies. These swaps were accounted for as cash flow hedges.revaluation. The effective portion of the changeschange in fair value of these instruments was reported in OCI and reclassified into SG&A and Interest expense in the same period or periods during which the related hedged transactions affected earnings. The ineffective portion, which was not material for any year presented, wasunderlying exposure are both immediately recognized in SG&A.earnings.
Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 57
To manage exchange rate risk related to our intercompany financing, we primarily use forward contracts and currency swaps. The change in fair valuesvalue of certainthese non-qualifying instruments used to manage foreign exchange exposure of intercompany financing transactions and certain balance sheet items subject to revaluation areis immediately recognized in earnings, substantially offsetting the foreign currency mark-to-market impact of the related exposures.exposure.
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. The time value component of the net investment hedge currency swaps is excluded from the assessment of hedge effectiveness. Changes in the fair value of these instrumentsthe swap, including changes in the fair value of the excluded time value component, are recognized in OCI toand offset the change in the value of the net investment being hedged. The ineffective portion of these hedges, which was not materialtime value component is subsequently reported in any year presented, was immediately recognized in Interest expense.income on a systematic basis.
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 have historically, on a limited basis, used futures and options with maturities generally less than one year and swap contracts with maturities up to five years. As of and during the fiscal years ended June 30, 20172023 and 2016,2022, we did not have any financial commodity hedging activity.
Insurance
We self-insure for most insurable risks. However, we purchase insurance for Directors and Officers Liability and certain other coverage where it is required by law or by contract.
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.
The Company had no significant activity with Level 3 assets and liabilities during the periods presented. 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 using market-based observable inputs including credit risk, interest rate curves foreign currency rates and forward and spot prices for currencies. In circumstances where market-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.

Assets and Liabilities Measured at Fair Value
Amounts in millions of dollars except per share amounts or as otherwise specified.
60 The Procter & Gamble Company

The following table sets forth the Company's financial assetsCash equivalents were $6.8 billion and $6.0 billion as of June 30, 20172023 and 2016 that were measured at fair value on a recurring basis during the period:
 Fair Value Asset
As of June 302017 2016
Investments:   
U.S. government securities$6,297
 $4,839
Corporate bond securities3,271
 1,407
Other investments132
 28
TOTAL$9,700
 $6,274
Investment securities2022, respectively, and are presented in Available-for-sale investment securities and Other noncurrent assets. The amortized cost of the U.S. government securities with maturities less than one year was $2,494 and $292 as of June 30, 2017 and 2016, respectively. The amortized cost of the U.S. government securities with maturities between one and five years was $3,824 and $4,513 as of June 30, 2017 and 2016, respectively. The amortized cost of corporate bond securities with maturities of less than a year was $730 and $382 as of June 30, 2017 and 2016, respectively. The amortized cost of corporate bond securities with maturities between one and five years was $2,547 and $1,018 as of June 30, 2017 and 2016, respectively. The Company's investments measured at fair value are generally classified as Level 21 within the fair value hierarchy. There areThe Company had no other material investment balances classified as Level 1investments in debt or Level 3 withinequity securities during the fair value hierarchy, or using net asset value as a practical expedient. Fair values are generally estimated based upon quoted market prices for similar instruments.periods presented.
The fair value of long-term debt was $21,396$26.9 billion and $24,362$25.7 billion as of June 30, 20172023 and 2016,2022, respectively. This includes the current portion of long-term debt instruments ($1,694 and $2,7613.9 billion as of June 30, 20172023, and 2016, respectively)$3.6 billion as of June 30, 2022). Certain long-term debt approximates(debt designated as a fair value hedge) is recorded at fair value. CertainAll other long-term debt is not recorded at fair value on a recurring basis,amortized cost but is measured at fair value for disclosure purposes. Long-termWe consider our debt with fair value of $1,716 and $2,331 as of June 30, 2017 and 2016, respectively, is classified asto be Level 2 within the fair value hierarchy. All remaining long-term debt is classified as Level 1 withinin the fair value hierarchy. Fair values are generally estimated based on quoted market prices for identical or similar instruments.

Amounts in millions of dollars except per share amounts or as otherwise specified.
58 The Procter & Gamble Company
Disclosures about DerivativeFinancial Instruments
The notional amounts and fair values of qualifying and non-qualifying derivativefinancial instruments used in hedging transactions as of June 30, 20172023 and 20162022, are as follows:
Notional AmountFair Value AssetFair Value (Liability)
As of June 30202320222023202220232022
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$4,044 $4,972 $— $3 $(445)$(307)
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Foreign currency interest rate contracts$11,005 $7,943 $26 $561 $(631)$(1)
TOTAL DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS$15,049 $12,915 $26 $564 $(1,076)$(308)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$3,489 $5,625 $7 $6 $(42)$(61)
TOTAL DERIVATIVES AT FAIR VALUE$18,538 $18,540 $33 $570 $(1,118)$(369)
As of June 30Notional Amount Fair Value Asset Fair Value (Liability)
2017 2016 2017 2016 2017 2016
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS        
Foreign currency contracts$—
 $798
 $—
 $94
 $—
 $(63)
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS        
Interest rate contracts$4,552
 $4,993
 $180
 $371
 $(2) $—
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS    
Net investment hedges$6,102
 $3,013
 $14
 $28
 $(177) $(115)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS        
Foreign currency contracts$4,969
 $6,482
 $25
 $28
 $(7) $(38)
AllThe fair value of the interest rate derivative assets are presented in Prepaid expenses and other current assets or Other noncurrent assets. All derivative liabilities are presented in Accrued and other liabilities or Other noncurrent liabilities. The decreaseasset/liability directly offsets the cumulative amount of the fair value hedging adjustment included in the notional balancecarrying amount of the underlying debt obligation. The carrying amount of the underlying debt obligation, which includes the unamortized discount or premium and the fair value adjustment, was $3.6 billion and $4.7 billion as of June 30, 2023 and 2022, respectively. In addition to the foreign currency cash flowderivative contracts designated as net investment hedges, is reflectivecertain of our foreign currency denominated debt instruments are designated as net investment hedges. The carrying value of those debt instruments designated as net investment hedges, which includes the decrease inadjustment for the underlying intercompany loans.foreign currency transaction gain or loss on those instruments, was $11.8 billion and $11.2 billion as of June 30, 2023 and 2022, respectively. The increase in the notional balance of derivative instruments designated as net investment hedges is primarily reflects a movement into lower yieldingdriven by the Company’s decision to leverage favorable interest rate spreads in the foreign currency swaps.swap market. The decrease in the notional balance of foreign currency contracts not designated as hedging instruments reflects changes in the level of intercompany financing activity during the period.
Derivative assets are presented in Prepaid expenses and other current assets or Other noncurrent assets. Derivative liabilities are presented in Accrued and other liabilities or Other noncurrent liabilities. Changes in the fair value of net investment hedges are recognized in the Foreign currency translation component of Other comprehensive income (OCI). All of the Company's derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy.
The Company recognizes transfers between levels withinBefore tax gains/(losses) on our financial instruments in hedging relationships are categorized as follows:
Amount of Gain/(Loss) Recognized in OCI on Derivatives
Fiscal years ended June 3020232022
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS (1) (2)
Foreign currency interest rate contracts$(544)$1,033 
(1)For the fair value hierarchy, if any, atderivatives in net investment hedging relationships, the endamount of each quarter. There were no transfers between levels during the periods presented. In addition, theregain excluded from effectiveness testing, which was no significant activity within the Level 3 assetsrecognized in earnings, was $238 and liabilities during the periods presented. Except$73 for the impairment charges related to our Batteries business (see Note 4), there were no significant assets or liabilities that were re-measured at fair value on a non-recurring basis during thefiscal years ended June 30, 20172023 and 2016.2022, respectively.

(2)In addition to the foreign currency derivative contracts designated as net investment hedges, certain of our foreign currency denominated debt instruments are designated as net investment hedges. The amount of gain/(loss) recognized in AOCI for such instruments was $(315) and $1,639, for the fiscal years ended June 30, 2023 and 2022, respectively.
Amount of Gain/(Loss) Recognized in Earnings
Fiscal years ended June 3020232022
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$(141)$(450)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$(97)$(149)
The loss on the derivatives in fair value hedging relationships is fully offset by the mark-to-market impact of the related exposure. These are both recognized in the Consolidated Statement of Earnings in Interest Expense. The loss on derivatives not designated as hedging instruments is substantially offset by the currency mark-to-market of the related exposure. These are both recognized in the Consolidated Statements of Earnings in SG&A.
Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 6159

 
Amount of Gain/(Loss)
Recognized in AOCI
on Derivatives (Effective Portion)
Years ended June 302017 2016
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest rate contracts$(2) $(2)
Foreign currency contracts—
 —
TOTAL$(2) $(2)
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Net investment hedges$(104) $(53)
During the next 12 months, the amount of the June 30, 2017 AOCI balance that will be reclassified to earnings is expected to be immaterial. The amounts of gains and losses included in earnings from qualifying and non-qualifying financial instruments used in hedging transactions for the years ended June 30, 2017 and 2016 were as follows:
 
Amount of Gain/(Loss)
Reclassified from
AOCI into Earnings
Years ended June 302017 2016
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
Interest rate contracts$—
 $3
Foreign currency contracts69
 (106)
TOTAL$69
 $(103)
 
Amount of Gain/(Loss)
Recognized in Earnings
Years ended June 302017 2016
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$(193) $212
Debt193
 (212)
TOTAL$—
 $—
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Net investment hedges$6
 $(2)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts (1)
$59
 $(120)
(1)
The gain or loss on non-qualifying foreign currency contracts substantially offsets the foreign currency mark-to-market impact of the related exposure.








NOTE 10
SHORT-TERM AND LONG-TERM DEBT
As of June 3020232022
DEBT DUE WITHIN ONE YEAR
Current portion of long-term debt$3,951$3,647
Commercial paper6,2364,805
Other42193
TOTAL$10,229$8,645
Weighted average interest rate of debt due within one year (1)
4.2 %0.8 %
As of June 302017 2016
DEBT DUE WITHIN ONE YEAR
Current portion of long-term debt$1,676
 $2,760
Commercial paper11,705
 8,690
Other173
 203
TOTAL$13,554
 $11,653
Short-term weighted average interest rates (1)
0.5% 0.2%
(1)
Short-term weighted average interest rates include the effects of interest rate swaps discussed in Note 9.
(1)Weighted average interest rate of debt due within one year includes the effects of interest rate swaps discussed in Note 9.
As of June 302017 2016
LONG-TERM DEBT   
5.13% EUR note due October 20171,078
 1,221
1.60% USD note due November 20181,000
 1,000
1.90% USD note due November 2019550
 550
0.28% JPY note due May 2020894
 973
4.13% EUR note due December 2020686
 666
9.36% ESOP debentures due 2017-2021 (1)
417
 498
1.85% USD note due February 2021600
 600
1.70% USD note due November 2021875
 —
2.00% EUR note due November 2021858
 833
2.30% USD note due February 20221,000
 1,000
2.00% EUR note due August 20221,144
 1,110
3.10% USD note due August 20231,000
 1,000
1.13% EUR note due November 20231,430
 1,388
2.70% USD note due February 2026600
 600
2.45% USD note due November 2026875
 —
4.88% EUR note due May 20271,144
 1,110
5.55% USD note due March 20371,130
 1,400
Capital lease obligations51
 45
All other long-term debt4,382
 7,711
Current portion of long-term debt(1,676) (2,760)
TOTAL$18,038 $18,945
Long-term weighted average interest rates (2)
2.6% 3.1%
As of June 3020232022
LONG-TERM DEBT
3.10% USD note due August 2023$1,000$1,000
1.13% EUR note due November 20231,3591,306
0.50% EUR note due October 2024544523
0.63% EUR note due October 2024870836
0.55% USD note due October 20251,0001,000
4.10% USD note due January 2026650—
2.70% USD note due February 2026600600
1.00% USD note due April 20261,0001,000
3.25% EUR note due August 2026707—
2.45% USD note due November 2026875875
1.90% USD note due February 20271,0001,000
2.80% USD note due March 2027500500
4.88% EUR note due May 20271,0871,045
2.85% USD note due August 2027750750
3.95% USD note due January 2028600—
1.20% EUR note due October 2028870836
1.25% EUR note due October 2029544523
3.00% USD note due March 20301,5001,500
0.35% EUR note due May 2030544523
1.20% USD note due October 20301,2501,250
1.95% USD note due April 20311,0001,000
3.25% EUR note due August 2031707—
2.30% USD note due February 2032850850
4.05% USD note due January 2033850—
5.55% USD note due March 2037716716
1.88% EUR note due October 2038544523
3.55% USD note due March 2040516516
0.90% EUR note due November 2041652627
All other long-term debt5,2447,196
Current portion of long-term debt(3,951)(3,647)
TOTAL$24,378$22,848
Weighted average interest rate of long-term debt (1)
2.9%2.2%
(1)
Debt issued by the ESOP is guaranteed by the Company and is recorded as debt of the Company, as discussed in Note 8.
(2)
Long-term weighted average interest rates include the effects of interest rate swaps discussed in Note 9.
Long-term(1)Weighted average interest rate of long-term debt maturities duringincludes the next five fiscal years are as follows:effects of interest rate swaps discussed in Note 9.

Years ending June 3020182019202020212022
Debt maturities$1,676$1,111$2,010$1,411$2,890
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.
6260 The Procter & Gamble Company

Long-term debt maturities during the next five fiscal years are as follows:
Fiscal years ending June 3020242025202620272028
Debt maturities$3,951$1,954$3,364$4,368$1,380
NOTE 11
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The table below presents the changes in Accumulated other comprehensive income/(loss) attributable to Procter & Gamble (AOCI), including the reclassifications out of Accumulated other comprehensive income/(loss)AOCI by component:
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
Investment SecuritiesPost-retirement Benefit PlansForeign Currency TranslationTotal AOCI
BALANCE at JUNE 30, 2021$15 $(2,963)$(10,796)$(13,744)
OCI before reclassifications (1)
4 2,797 (1,451)1,350 
Amounts reclassified to the Consolidated Statement of Earnings (2)
1 195 1 197 
Net current period OCI5 2,992 (1,450)1,547 
Less: OCI attributable to non-controlling interests— 2 (10)(8)
BALANCE at JUNE 30, 202220 27 (12,236)(12,189)
OCI before reclassifications (3)
(7)21 (71)(57)
Amounts reclassified to the Consolidated Statement of Earnings (4)
— 19 — 19 
Net current period OCI(7)40 (71)(38)
Less: OCI attributable to non-controlling interests— — (7)(7)
BALANCE at JUNE 30, 2023$13 $67 $(12,300)$(12,220)
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, 2015$(2,642) $6
 $(4,321) $(5,823) $(12,780)
OCI before reclassifications (1)
(103) 29
 (1,710) (1,679) (3,463)
Amounts reclassified from AOCI (2)
104
 (1) 233
 —
 336
Net current period OCI1
 28
 (1,477) (1,679) (3,127)
BALANCE at JUNE 30, 2016(2,641) 34
 (5,798) (7,502) (15,907)
OCI before reclassifications (3)
(237) (49) 910
 356
 980
Amounts reclassified from AOCI (4)
(69) (10) 491
 (117) 295
Net current period OCI(306) (59) 1,401
 239
 1,275
BALANCE at JUNE 30, 2017$(2,947) $(25) $(4,397) $(7,263) $(14,632)
(1)Net of tax (benefit)/expense of $1, $953 and $515 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2022. Income tax effects within foreign currency translation include impacts from items such as net investment hedge transactions.
(1)
(2)Net of tax (benefit)/expense of $0, $69 and $0 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2022.
(3)Net of tax (benefit)/expense of $(2), $1 and $(197) for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2023. Income tax effects within foreign currency translation include impacts from items such as net investment hedge transactions.
(4)Net of tax (benefit)/expense of $0, $8 and $0 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2023.
Net of tax (benefit) / expense of $6, $7 and $(708) for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2016.
(2)
Net of tax (benefit) / expense of $(1), $0 and $87 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2016.
(3)
Net of tax (benefit) / expense of $(186), $(6) and $360 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2017.
(4)
Net of tax (benefit) / expense of $0, $0 and $191 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2017.
The below provides additional details on amounts reclassified from AOCI into the Consolidated Statement of Earnings:
Hedges: see Note 9 for classification of gains and losses from hedges in the Consolidated Statements of Earnings.
•Investment securities: amounts reclassified from AOCI into Other non-operating income, net.
Pension and other retiree benefits:•Postretirement benefit plans: amounts reclassified from AOCI into Cost of product sold, SG&A, and Net earnings from discontinued operationsOther non-operating income, net and included in the computation of net periodic pension costpostretirement costs (see Note 88).
NOTE 12
LEASES
The Company determines whether a contract contains a lease at the inception of a contract by determining if the contract conveys the right to control the use of identified property, plant or equipment for additional details).
Financial statement translation: amounts reclassified from AOCI into Net earnings from discontinued operations. These amountsa period of time in exchange for consideration. We lease certain real estate, machinery, equipment, vehicles and office equipment for varying periods. Many of these leases include an option to either renew or terminate the lease. For purposes of calculating lease liabilities, these options are included within the lease term when it has become reasonably certain that the Company will exercise such options. The incremental borrowing rate utilized to calculate our lease liabilities is based on the information available at commencement date, as most of the leases do not provide an implicit borrowing rate. Our operating lease agreements do not contain any material guarantees or restrictive covenants. The Company does not have any material finance leases or sublease activities. Short-term leases, defined as leases with initial terms of 12 months or less, are not reflected on the Consolidated Balance Sheets. Lease expense for such short-term leases is not material. The most significant assets in our leasing portfolio relate to accumulated translationreal estate and vehicles. For purposes of calculating lease liabilities for such leases, we have combined lease and non-lease components.

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 61
The components of the Company’s total operating lease cost for the fiscal years ended June 30, 2023, 2022 and 2021, were as follows:
Fiscal years ended June 30202320222021
Operating lease cost$229 $220 $245 
Variable lease cost (1)
79 89 75 
Total lease cost$308 $309 $320 
(1)Includes primarily costs for utilities, common area maintenance, property taxes and other operating costs associated with foreign entities soldoperating leases that are not included in the lease liability and are recognized in the period in which they are incurred.
Supplemental balance sheet and other information related to leases is as partfollows:
As of June 3020232022
Operating leases:
Right-of-use assets (Other noncurrent assets)$781$760
Current lease liabilities (Accrued and other liabilities)222205
Noncurrent lease liabilities (Other noncurrent liabilities)595595
Total operating lease liabilities$817$800
Weighted average remaining lease term:
Operating leases6.2 years6.4 years
Weighted average discount rate:
Operating leases3.5 %3.2 %
At June 30, 2023, future payments of operating lease liabilities were as follows:
Operating Leases
June 30, 2023
1 year$222 
2 years185 
3 years137 
4 years100 
5 years71 
Over 5 years196 
Total lease payments911
Less: Interest(94)
Present value of lease liabilities$817
Total cash paid for amounts included in the salemeasurement of lease liabilities was $233 and $228 for the Beauty Brands business.fiscal years ended June 30, 2023 and 2022, respectively.
The right-of-use assets obtained in exchange for lease liabilities were $213 and $217 for the fiscal years ended June 30, 2023 and 2022, respectively.
NOTE 1213
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, weWe 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.
62 The Procter & Gamble Company
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:
Years ending June 3020182019202020212022Thereafter
Fiscal years ending June 30Fiscal years ending June 3020242025202620272028Thereafter
Purchase obligations$843
$225
$168
$99
$70
$202
Purchase obligations$1,169 $597 $379 $314 $168 $362 
Such amounts represent minimum commitments under take-or-pay agreements with suppliers and are in line with expected usage. These amounts include purchase commitments related to service contracts for information technology, human resources management and facilities management activities that have been outsourced to third-party suppliers. Such amounts also include arrangements with suppliers that qualify as embedded operating leases. Due to the proprietary nature

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 63

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.
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:
Years ending June 3020182019202020212022Thereafter
Operating leases$261
$273
$237
$194
$160
$368
Litigation
We are 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, patent and trademark matters, labor and employment matters and tax.
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 materially affect our financial position, results of operations or cash flows.
NOTE 13
DISCONTINUED OPERATIONS
On October 1, 2016, the Company completed the divestiture of four product categories to Coty, Inc. (“Coty”). The divestiture included 41 of the Company's beauty brands (“Beauty Brands”), including the global salon professional hair care and color, retail hair color, cosmetics and a majority of the fine fragrance businesses, along with select hair styling brands. The form of the divestiture transaction was a Reverse Morris Trust split-off, in which P&G shareholders were given the election to exchange their P&G shares for shares of a new corporation that held the Beauty Brands (Galleria Co.), and then immediately exchange those shares for Coty shares. The value P&G received in the transaction was $11.4 billion. The value was comprised of 105 million shares of common stock of the Company, which were tendered by shareholders of the Company and exchanged for the Galleria Co. shares, valued at approximately $9.4 billion, and the assumption of $1.9 billion of debt by Galleria Co. The shares tendered in the transaction were reflected as an addition to treasury stock and the cash received related to the debt assumed by Coty was reflected as an investing activity in the Consolidated Statement of Cash Flows. The Company recorded an after-tax gain on the final transaction of $5.3 billion, net of transaction and related costs.
Two of the fine fragrance brands, Dolce & Gabbana and Christina Aguilera, were excluded from the divestiture. These brands were subsequently divested at amounts that approximated their adjusted carrying values.
In February 2016, the Company completed the divestiture of its Batteries business to Berkshire Hathaway (BH) via a split transaction, in which the Company exchanged the Duracell Company, which the Company had infused with additional cash, to repurchase all 52.5 million shares of P&G stock owned by BH. During the fiscal year ended June 30, 2016, the Company recorded non-cash, before-tax goodwill and indefinite-lived asset impairment charges of $402 ($350 after tax), to reduce the Batteries carrying value to the total estimated proceeds based on the value of BH’s shares in P&G stock at the time of the impairment charges (see Note 4). The Company recorded an after-tax gain on the final transaction of $422 to reflect a subsequent increase in the final value of the BH’s shares in P&G stock. The total value of the transaction was $4.2 billion representing the value of the Duracell business and the cash infusion. The cash infusion of $1.7 billion was reflected as a purchase of treasury stock.
On July 31, 2014, the Company completed the divestiture of its Pet Care operations in North America, Latin America, and other selected countries to Mars, Incorporated (Mars) for $2.9 billion in an all-cash transaction. Under the terms of the agreement, Mars acquired our branded pet care products, our manufacturing sites in the United States and the majority of the employees working in the Pet Care business. The agreement included an option for Mars to acquire the Pet Care business in several additional countries, which was also completed in fiscal 2015. The European Union countries were not included in the agreement with Mars.
In December 2014, the Company completed the divestiture of its Pet Care operations in Western Europe to Spectrum Brands in an all-cash transaction. Under the terms of the agreement, Spectrum Brands acquired our branded pet care products, our manufacturing site in the Netherlands and the majority of the employees working in the Western Europe Pet Care business. The one-time after-tax impact of these transactions is not material.
In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Beauty Brands, Batteries and Pet Care businesses are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Additionally, the Beauty Brands' balance sheet positions are presented as assets and liabilities held for sale in the Consolidated Balance Sheet as of June 30, 2016. The Beauty Brands were historically part of the Company's Beauty reportable segment. The Batteries business was historically part of the Company's Fabric & Home Care reportable segment. The Pet Care business was historically part of the Company's Health Care reportable segment.


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

On July 1, 2015, the Company adopted ASU 2014-08, which included new reporting and disclosure requirements for discontinued operations. The new requirements are effective for discontinued operations occurring on or after the adoption date, which includes the Beauty Brands divestiture. All other discontinued operations prior to July 1, 2015 are reported based on the previous disclosure requirements for discontinued operations, including the Batteries and Pet Care divestitures.
The following table summarizes Net earnings/(loss) from discontinued operations and reconciles to the Consolidated Statements of Earnings:
Years ended June 302017 2016 2015
Beauty Brands$5,217
 $336
 $643
Batteries—
 241
 (1,835)
Pet Care—
 —
 49
Net earnings/(loss) from discontinued operations$5,217
 $577
 $(1,143)

The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Beauty Brands:
 Beauty Brands
Years ended June 302017 2016 2015
Net sales$1,159
 $4,910
 $5,530
Cost of products sold450
 1,621
 1,820
Selling, general and administrative expense783
 2,763
 2,969
Intangible asset impairment charges—
 48
 —
Interest expense14
 32
 —
Interest income—
 2
 2
Other non-operating income/(loss), net16
 9
 91
Earnings/(loss) from discontinued operations before income taxes$(72) $457
 $834
Income taxes on discontinued operations46
 121
 191
Gain on sale of business before income taxes$5,197
 $—
 $—
Income tax expense/(benefit) on sale of business(138)
(1) 
—
 —
Net earnings from discontinued operations$5,217
 $336
 $643
(1)
The income tax benefit of the Beauty Brands divestiture represents the reversal of underlying deferred tax balances partially offset by current tax expense related to the transaction.
For the fiscal year ended June 30, 2017, the Beauty Brands incurred transition costs of $167, after-tax, which are included in the table above. For the fiscal year ended June 30, 2016, transition costs of $112, before-tax, were incurred and are included in Net earnings/(loss) from discontinued operations.
The following is selected financial information included in cash flows from discontinued operations for the Beauty Brands:
 Beauty Brands
Years ended June 302017 2016 2015
NON-CASH OPERATING ITEMS     
Depreciation and amortization$24
 $106
 $125
Deferred income tax benefit(649) —
 —
Gain on sale of businesses5,210
 8
 86
Goodwill and intangible asset impairment charges—
 48
 —
Net increase in accrued taxes93
 —
 —
CASH FLOWS FROM OPERATING ACTIVITIES     
Cash taxes paid$418
 $—
 $—
CASH FLOWS FROM INVESTING ACTIVITIES     
Capital expenditures$38
 $114
 $106

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 65

The major components of assets and liabilities of the Beauty Brands held for sale are provided below.
 Beauty Brands
As of June 30
2016 (1)
 
Cash$40
 
Restricted cash996
(2) 
Accounts receivable384
 
Inventories494
 
Prepaid expenses and other current assets126
 
Property, plant and equipment, net629
 
Goodwill and intangible assets, net4,411
 
Other noncurrent assets105
 
Current assets held for sale$7,185
 
 
 
Accounts payable$148
 
Accrued and other liabilities384
 
Noncurrent deferred tax liabilities370
 
Long-term debt996
(2) 
Other noncurrent liabilities445
 
Current liabilities held for sale$2,343
 
(1)
The Company closed the Beauty Brands transaction in October 2016. Therefore, as of June 30, 2016, all assets and liabilities held for sale were reported as current assets and liabilities held for sale on the Consolidated Balance Sheets.
(2)
On January 26, 2016, Beauty Brands drew on its Term B loan of $1.0 billion. The proceeds were held in restricted cash in escrow until the legal integration activities prior to close. Beauty Brands received additional debt funding commitments with a consortium of lenders of $3.5 billion.
Following is selected financial information included in Net earnings/(loss) from discontinued operations for the Batteries and Pet Care businesses:
  Net Sales Earnings Before Impairment Charges and Income Taxes Impairment Charges Income Tax (Expense)/Benefit Gain/(Loss) on Sale Before Income Taxes Income Tax (Expense)/Benefit on Sale Net Earnings/(Loss) from Discontinued Operations
Batteries20161,517
 266
 (402) (45) (288) 710
(1) 
241
 20152,226
 479
 (2,174) (140) —
 —
 (1,835)
Pet Care2016—
 —
 —
 —
 —
 —
 —
 2015251
 —
 —
 (4) 195
 (142) 49
Total20161,517
 266
 (402) (45) (288) 710
(1) 
241
 20152,477
 479
 (2,174) (144) 195
 (142) (1,786)
(1)
The income tax benefit of the Batteries divestiture primarily represents the reversal of underlying deferred tax balances.


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

NOTE 14
QUARTERLY RESULTS (UNAUDITED)
Quarters Ended  Sep 30 Dec 31 Mar 31 Jun 30 Total Year
NET SALES2016-2017 $16,518
 $16,856
 $15,605
 $16,079
 $65,058
 2015-2016 16,527
 16,915
 15,755
 16,102
 65,299
OPERATING INCOME2016-2017 3,771
 3,875
 3,360
 2,949
 13,955
 2015-2016 3,768
 3,853
 3,318
 2,502
 13,441
GROSS MARGIN2016-2017 51.0% 50.8% 49.8% 48.4% 50.0%
 2015-2016 50.7% 50.0% 49.8% 47.9% 49.6%
NET EARNINGS:           
Net earnings from continuing operations2016-2017 $2,875
 $2,561
 $2,556
 $2,202
 $10,194
 2015-2016 2,777
 2,905
 2,337
 2,008
 10,027
Net earnings/(loss) from discontinued operations2016-2017 (118) 5,335
 —
 —
 5,217
 2015-2016 (142) 323
 446
 (50) 577
Net earnings attributable to Procter & Gamble2016-2017 2,714
 7,875
 2,522
 2,215
 15,326
 2015-2016 2,601
 3,206
 2,750
 1,951
 10,508
DILUTED NET EARNINGS PER COMMON SHARE: (1)
           
Earnings from continuing operations2016-2017 $1.00
 $0.93
 $0.93
 $0.82
 $3.69
 2015-2016 0.96
 1.01
 0.81
 0.71
 3.49
Earnings/(loss) from discontinued operations2016-2017 (0.04) 1.95
 —
 —
 1.90
 2015-2016 (0.05) 0.11
 0.16
 (0.02) 0.20
Net earnings2016-2017 0.96
 2.88
 0.93
 0.82
 5.59
 2015-2016 0.91
 1.12
 0.97
 0.69
 3.69
(1)
Diluted net earnings per share is calculated on Net earnings attributable to Procter & Gamble.

Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 67

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 Chairman of the Board, President and Chief Executive Officer, David S. Taylor,Jon R. Moeller, and the Company's Chief Financial Officer, Jon R. Moeller,Andre Schulten, 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. TaylorMoeller and MoellerSchulten 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. TaylorMoeller and Moeller,Schulten, to allow their timely decisions regarding required disclosure.
Reports on Internal Control over Financial Reporting.
The information required by this item is incorporated by reference to "Management's Report on Internal Control over Financial Reporting" and "Report of Independent Registered Public Accounting Firm" included in Item 8 of this Form 10-K.
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.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 63
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.Ms. Christine M. McCarthy.
The information required by this item is incorporated by reference to the following sections of the 20172023 Proxy Statement filed pursuant to Regulation 14A:14A, which will be filed no later than 120 days after June 30, 2023: the section entitled Election of Directors; the subsection of the Corporate Governance section entitled Corporate Governance, up to but not includingBoard Meetings and Committees of the subsection entitled Service on Other Public Boards;Board; the subsectionssubsection of the Corporate Governance section entitled Code of Ethics; and the subsectionssubsection of the Other Matters section entitled Director Nominations for Inclusion in the 2018 Proxy Statement and entitled Shareholder Recommendations or Nominations of Board Nominees and Committee Process for Recommending Board Nominees; and the section entitled Section 16(a) Beneficial Ownership Reporting Compliance.Director Candidates. Pursuant to the Instruction 3 ofto Item 401(b)401 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 the 20172023 Proxy Statement filed pursuant to Regulation 14A:14A, which will be filed no later than 120 days after June 30, 2023: the subsections of the Corporate Governance section entitled Board Meetings and Committees of the Board, and entitled Compensation Committee Interlocks and Insider Participation;Participation, and Risk Oversight - Compensation-Related Risk; and the portion beginning with the section entitled Director Compensation up to but not including the section entitled Security Ownership of Management and Certain Beneficial Owners.


Pay Versus Performance.
68 The Procter & Gamble Company

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��June 30, 2017.2023. The table includes the following plans: The Procter & Gamble 1992 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 2004 Long-TermProcter & Gamble 2009 Stock and Incentive Compensation Plan; The Procter & Gamble 20092014 Stock and Incentive Compensation Plan; and The Procter & Gamble 20142019 Stock and Incentive Compensation Plan.

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))
Equity compensation plans approved by security holders
Stock Options/Stock Appreciation Rights121,226,313 $104.1900 (1)
Restricted Stock Units (RSUs)/Performance Stock Units (PSUs)6,430,184 N/A(1)
TOTAL127,656,497 $104.1900 (2)
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))
Equity compensation plans approved by security holders (1)
     
Options204,743,572
 
$72.6124
 
(2) 
Restricted Stock Units (RSUs)/Performance Stock Units (PSUs)11,227,504
 N/A
 
(2) 
Equity compensation plans not approved by security holders (3)
     
Options1,886,917
 56.2185
 
(4) 
GRAND TOTAL217,857,993
 
$72.4627
(5) 
94,626,812
(1)
Includes The Procter & Gamble 1992 Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan; The Procter & Gamble 2003 Non-Employee Directors' Stock Plan; The Procter & Gamble 2009 Stock and Incentive Compensation Plan; and The Procter & Gamble 2014 Stock and Incentive Compensation Plan.
(2)
Of the plans listed in (1),(1)Of the plans listed above, only The Procter & Gamble 2014 Stock and Incentive Compensation Plan allow for future grants of securities. The maximum number of shares that may be granted under this plan is 185 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 5 shares for each share awarded. Total shares available for future issuance under this plan is 95 million.
(3)
Includes The Procter & Gamble Future Shares 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 Future Shares2019 Stock and Incentive Compensation Plan
On October 14, 1997, the Company's Board (the “2019 Plan”) allows for future grants of Directors approvedsecurities. The Procter & Gamble Future Shares Plan pursuant to which options to purchasemaximum number of shares of the Company's common stockthat may be granted to employees worldwide. The purpose ofunder 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 17187 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 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 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

The Procter & Gamble Company 69

Company prior to October 1, 2005 are eligible to receive grants under this plan. The last grant of equity under this plan was on February 27, 2009.
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 million 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. Theare counted on a one-for-one basis while full value awards (such as RSUs and PSUs) are counted as five shares for each share awarded. Total shares available for future issuance under this plan is 96 million.
(2)Weighted average exercise price for all stockof outstanding 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.only.
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 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 2017following section of the 2023 Proxy Statement filed pursuant to Regulation 14A, beginning withwhich will be filed no later than 120 days after June 30, 2023: the subsection of the Beneficial Ownership section entitled Security Ownership of Management and Certain Beneficial Owners and up to but not including the section entitled Section 16(a) Beneficial Ownership Reporting Compliance.Owners.

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 20172023 Proxy Statement filed pursuant to Regulation 14A:14A, which will be filed no later than 120 days after June 30, 2023: the subsections of the Corporate Governance section entitled Director Independence and Review and Approval of Transactions with Related Persons.

Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to the following section of the 20172023 Proxy Statement filed pursuant to Regulation 14A:14A, which will be filed no later than 120 days after June 30, 2023: Report of the Audit Committee, which ends with the subsection entitled Services Provided by Deloitte.


64 The Procter & Gamble Company
PART IV
Item 15. Exhibits and Financial Statement Schedules.
1.Financial Statements:
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 (PCAOB Firm ID is 34)
•Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
•Consolidated Statements of Earnings - for fiscal years ended June 30, 2017, 20162023, 2022 and 2015
2021
•Consolidated Statements of Other Comprehensive Income - for fiscal years ended June 30, 2017, 20162023, 2022 and 20152021
•Consolidated Balance Sheets - as of June 30, 20172023 and 2016
2022
•Consolidated Statements of Shareholders' Equity - for fiscal years ended June 30, 2017, 20162023, 2022 and 20152021
•Consolidated Statements of Cash Flows - for fiscal years ended June 30, 2017, 20162023, 2022 and 20152021
•Notes to Consolidated Financial Statements
2.Financial Statement Schedules:
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 Consolidated Financial Statements or Notes thereto.

70 The Procter & Gamble Company

EXHIBITS
Exhibit      (3-1) -

(3-2) -

Exhibit      (4-1) -

     (4-2) -The Company agrees to furnish to the Securities and Exchange Commission, upon request, a copy of any other instrument defining the rights of holders of the Company’s long-term debt.
(4-3) -

(4-4) -
(4-5) -
(4-6) -
(4-7) -
(4-8) -
(4-9) -
(4-10) -
(4-11) -

The Procter & Gamble Company 65
Exhibit   (10-1) -
(10-2) -
(10-2)
(10-3) -

(10-3)
(10-4) -

(10-4)
(10-5) -

(10-5)
(10-6) -

The Procter & Gamble 1993 Non-Employee Directors' Stock
(10-6)
(10-7) -

(10-7)
(10-8) -

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, 2015).*
(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
(10-9) -

(10-10) -
(10-10)
(10-11) -

Summary of the Company's
(10-11)
(10-12) -

(10-13) -
(10-12)
(10-14) -

(10-13)
(10-15) -

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, 2012).*
(10-14) -
The Gillette Company Executive Life Insurance Program +.*
(10-15) -
The Gillette Company Personal Financial Planning Reimbursement Program +.*
(10-16) -
The Gillette Company Senior Executive Financial Planning Program +.*
(10-17) -
The Gillette Company Estate Preservation +.*
(10-18) -
(10-19) -
Senior Executive Recoupment Policy +.*

The Procter & Gamble Company 71

(10-16) -
(10-20)
(10-17) -

(10-21)
(10-18) -

(10-19) -
(10-22)
(10-20) -

(10-23)
(10-21) -

(10-22) -
(10-24)
(10-23) -


66 The Procter & Gamble Company
(10-25)
(10-24) -

(10-25) -
(10-26) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional terms and conditions +, and The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Related correspondence (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2016)2019).*
(10-26) -

Computation(10-26) of Ratio of Earnings to Fixed Charges. +the Company's Annual Report on Form 10-K for the year ended June 30, 2017).*
(10-27) -

(10-28) -
Exhibit      (21) -
Exhibit      (23) -

Exhibit      (31) -

Exhibit      (32) -

Exhibit   (99-1) -

101.INS (1)
Inline XBRL Instance Document
101.SCH (1)
Inline XBRL Taxonomy Extension Schema Document
101.CAL (1)
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1)
Inline XBRL Taxonomy Definition Linkbase Document
101.LAB (1)
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1)
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
(1)
(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.
Item 16. Form 10-K Summary.
Not applicable.



72 The Procter & Gamble Company 67

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
THE PROCTER & GAMBLE COMPANYBy/s/ JON R. MOELLER
By/s/ DAVID S. TAYLOR
(David S. Taylor)
Jon R. Moeller)
Chairman of the Board, President and Chief Executive Officer
August 7, 201704, 2023
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.
SignatureTitleDate
/s/ DAVID S. TAYLOR
(David S. Taylor)
Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)August 7, 2017
/s/ JON R. MOELLER
(Jon R. Moeller)
Vice Chairman of the Board, President and Chief FinancialExecutive Officer
(Principal Financial (Principal Executive Officer)
August 7, 201704, 2023
/s/ VALARIE L. SHEPPARDANDRE SCHULTEN
(Valarie L. Sheppard)Andre Schulten)
Senior Vice President, Comptroller & Treasurer (Principal AccountingChief Financial Officer
(Principal Financial Officer)		August 7, 201704, 2023
/s/ FRANCIS S. BLAKEMATTHEW W. JANZARUK
(Francis S. Blake)Matthew W. Janzaruk)
DirectorSenior Vice President - Chief Accounting Officer
(Principal Accounting Officer)		August 7, 201704, 2023
/s/ B. MARC ALLEN
(B. Marc Allen)
DirectorAugust 04, 2023
/s/ SHEILA BONINI
(Sheila Bonini)
DirectorAugust 04, 2023
/s/ ANGELA F. BRALY
(Angela F. Braly)
DirectorAugust 7, 201704, 2023
/s/ AMY L. CHANG
(Amy L. Chang)
DirectorAugust 7, 201704, 2023
/s/ KENNETH I. CHENAULTJOSEPH JIMENEZ
(Kenneth I. Chenault)Joseph Jimenez)
DirectorAugust 7, 201704, 2023
/s/ SCOTT D. COOKCHRISTOPHER J. KEMPCZINSKI
(Scott D. Cook)Christopher J. Kempczinski)
DirectorAugust 7, 201704, 2023
/s/ DEBRA L. LEE
(Debra L. Lee)
DirectorAugust 04, 2023
/s/ TERRY J. LUNDGREN
(Terry J. Lundgren)
DirectorAugust 7, 201704, 2023
/s/ W. JAMES MCNERNEY, JR.CHRISTINE M. MCCARTHY
(W. James McNerney, Jr.)Christine M. McCarthy)
DirectorAugust 7, 201704, 2023
/s/ MARGARET C. WHITMANROBERT J. PORTMAN
(Margaret C. Whitman)Robert J. Portman)
DirectorAugust 7, 201704, 2023
/s/ RAJESH SUBRAMANIAM
(Rajesh Subramaniam)
DirectorAugust 04, 2023
/s/ PATRICIA A. WOERTZ
(Patricia A. Woertz)
DirectorAugust 7, 2017
/s/ ERNESTO ZEDILLO
(Ernesto Zedillo)
DirectorAugust 7, 201704, 2023


The Procter & Gamble Company 73


EXHIBIT INDEX
Exhibit     (3-1) -

Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 11, 2011 and consolidated by the Board of Directors on April 8, 2016) (Incorporated by reference to Exhibit (3-1) of the Company's Annual Report on Form 10-K for the year ended June 30, 2016).
(3-2) -

Regulations (as approved by the Board of Directors on April 8, 2016, 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 Annual Report on Form 10-K for the year ended June 30, 2016).
Exhibit     (4-1) -

Indenture, dated as of September 3, 2009, between the Company and Deutsche Bank Trust Company Americas, as Trustee (Incorporated by reference to Exhibit (4-1) of the Company's Annual Report on Form 10-K for the year ended June 30, 2015).
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, 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, 2013).
(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, 2013).
(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, 2013).
(10-4) -

Summary of the Company’s Retirement Plan Restoration Program (Incorporated by reference to Exhibit (10-27) of the Company's Annual Report on Form 10-K for the year ended June 30, 2016); and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-8) of the Company's Form 10-Q for the quarter ended September 30, 2015).
(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, 2013).
(10-6) -

Summary of the Company’s Long-Term Incentive Program (Incorporated by reference to Exhibit (10-6) of the Company's Annual Report on Fork 10-K for the year ended June 30, 2016); related correspondence and terms and conditions +.
(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, 2015).
(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 (10-1) of the Company's Form 10-Q for the quarter ended September 30, 2012).
(10-9) -

The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended December 31, 2013).
(10-10) -

Summary of the Company's Short Term Achievement Reward Program (Incorporated by reference to Exhibit (10-10) of the Company's Annual Report on Form 10-K for the year ended June 30, 2016); related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended September 30, 2015).
(10-11) -

Company's Forms of Separation Agreement & Release (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2017).
(10-12) -

Summary of personal benefits available to certain officers and non-employee directors (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended September 30, 2013).
(10-13) -

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, 2012).
(10-14) -

The Gillette Company Executive Life Insurance Program +.
(10-15) -

The Gillette Company Personal Financial Planning Reimbursement Program +.
(10-16) -

The Gillette Company Senior Executive Financial Planning Program +.
(10-17) -

The Gillette Company Estate Preservation +.
(10-18) -

The Gillette Company Deferred Compensation Plan +.
(10-19) -

Senior Executive Recoupment Policy +.
(10-20) -

The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through August 21, 2006 +.

74 The Procter & Gamble Company

(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 +, 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 December 31, 2012).
(10-22) -

The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions and related correspondence (Incorporated by reference to Exhibit (10-2) of the Company Form 10-Q for the quarter ended December 31, 2013).
(10-23) -

The Procter & Gamble Performance Stock Program Summary (Incorporated by reference to Exhibit (10-23) of the Company's Annual Report on Form 10-K for the year ended June 30, 2016); related correspondence and terms and conditions +.
(10-24) -

The Procter & Gamble 2013 Non-Employee Directors' Stock Plan (Incorporated by reference to Exhibit (10-3) of the Company's Form 10-Q for the quarter ended December 31, 2013).
(10-25) -

The Procter & Gamble 2014 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at the annual meeting on October 14, 2014 (Incorporated by reference to Exhibit (10-25) of the Company's Annual Report on Form 10-K for the year ended June 30, 2016); and the Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2014 Stock and Incentive Compensation Plan (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended March 31, 2015).
(10-26) -

The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional terms and conditions +, and The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Related correspondence (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2016).
Exhibit      (12) -

Computation of 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
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.
+
Filed herewith.