x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Ohio
|
|
1-434
|
|
31-0411980
|
(State of Incorporation)
|
|
(Commission File Number)
|
|
(I.R.S. Employer Identification Number)
|
One Procter & Gamble Plaza, Cincinnati, Ohio
|
|
45202
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
Large accelerated filer
|
þ
|
|
|
Accelerated filer
|
¨
|
|
|
Non-accelerated filer
|
¨
|
|
|
Smaller reporting company
|
¨
|
|
|
|
|
|
|
Emerging growth company
|
¨
|
|
Item 1.
|
Financial Statements
|
|
Three Months Ended September 30
|
||||||
Amounts in millions except per share amounts
|
2018
|
|
2017
|
||||
NET SALES
|
$
|
16,690
|
|
|
$
|
16,653
|
|
Cost of products sold
|
8,484
|
|
|
8,269
|
|
||
Selling, general and administrative expense
|
4,652
|
|
|
4,736
|
|
||
OPERATING INCOME
|
3,554
|
|
|
3,648
|
|
||
Interest expense
|
129
|
|
|
115
|
|
||
Interest income
|
53
|
|
|
49
|
|
||
Other non-operating income, net
|
462
|
|
|
169
|
|
||
EARNINGS BEFORE INCOME TAXES
|
3,940
|
|
|
3,751
|
|
||
Income taxes
|
729
|
|
|
881
|
|
||
NET EARNINGS
|
3,211
|
|
|
2,870
|
|
||
Less: Net earnings attributable to noncontrolling interests
|
12
|
|
|
17
|
|
||
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,199
|
|
|
$
|
2,853
|
|
|
|
|
|
||||
NET EARNINGS PER SHARE (1)
|
|
|
|
||||
Basic
|
1.26
|
|
|
1.09
|
|
||
Diluted
|
1.22
|
|
|
1.06
|
|
||
|
|
|
|
||||
DIVIDENDS PER COMMON SHARE
|
$
|
0.7172
|
|
|
$
|
0.6896
|
|
Diluted Weighted Average Common Shares Outstanding
|
2,612.1
|
|
|
2,690.6
|
|
(1)
|
Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.
|
|
Three Months Ended September 30
|
||||||
Amounts in millions
|
2018
|
|
2017
|
||||
NET EARNINGS
|
$
|
3,211
|
|
|
$
|
2,870
|
|
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
|
|
|
|
||||
Financial statement foreign currency translation
|
(216
|
)
|
|
840
|
|
||
Unrealized gains/(losses) on hedges
|
7
|
|
|
(463
|
)
|
||
Unrealized gains/(losses) on investment securities
|
(5
|
)
|
|
(4
|
)
|
||
Unrealized gains/(losses) on defined benefit retirement plans
|
152
|
|
|
(33
|
)
|
||
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
|
(62
|
)
|
|
340
|
|
||
TOTAL COMPREHENSIVE INCOME
|
3,149
|
|
|
3,210
|
|
||
Less: Total comprehensive income attributable to noncontrolling interests
|
8
|
|
|
17
|
|
||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,141
|
|
|
$
|
3,193
|
|
Amounts in millions
|
|
|
|
|
September 30, 2018
|
|
June 30, 2018
|
|||||
Assets
|
|
|
|
|
|
|
|
|||||
CURRENT ASSETS
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
|
|
|
$
|
2,545
|
|
|
$
|
2,569
|
|
|
Available-for-sale investment securities
|
|
|
|
|
8,708
|
|
|
9,281
|
|
|||
Accounts receivable
|
|
|
|
|
5,035
|
|
|
4,686
|
|
|||
INVENTORIES
|
|
|
|
|
|
|
|
|||||
Materials and supplies
|
|
|
|
|
1,429
|
|
|
1,335
|
|
|||
Work in process
|
|
|
|
|
600
|
|
|
588
|
|
|||
Finished goods
|
|
|
|
|
3,153
|
|
|
2,815
|
|
|||
Total inventories
|
|
|
|
|
5,182
|
|
|
4,738
|
|
|||
Prepaid expenses and other current assets
|
|
|
|
|
1,876
|
|
|
2,046
|
|
|||
TOTAL CURRENT ASSETS
|
|
|
|
|
23,346
|
|
|
23,320
|
|
|||
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
20,590
|
|
|
20,600
|
|
|||
GOODWILL
|
|
|
|
|
45,225
|
|
|
45,175
|
|
|||
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET
|
|
|
|
23,919
|
|
|
23,902
|
|
||||
OTHER NONCURRENT ASSETS
|
|
|
|
|
5,360
|
|
|
5,313
|
|
|||
TOTAL ASSETS
|
|
|
|
|
$
|
118,440
|
|
|
$
|
118,310
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
|
|
|
|
$
|
10,243
|
|
|
$
|
10,344
|
|
|
Accrued and other liabilities
|
|
|
|
|
8,469
|
|
|
7,470
|
|
|||
Debt due within one year
|
|
|
|
|
10,508
|
|
|
10,423
|
|
|||
TOTAL CURRENT LIABILITIES
|
|
|
|
|
29,220
|
|
|
28,237
|
|
|||
LONG-TERM DEBT
|
|
|
|
|
20,779
|
|
|
20,863
|
|
|||
DEFERRED INCOME TAXES
|
|
|
|
|
6,179
|
|
|
6,163
|
|
|||
OTHER NONCURRENT LIABILITIES
|
|
|
|
|
9,758
|
|
|
10,164
|
|
|||
TOTAL LIABILITIES
|
|
|
|
|
65,936
|
|
|
65,427
|
|
|||
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|||||
Preferred stock
|
|
|
|
|
951
|
|
|
967
|
|
|||
Common stock – shares issued –
|
September 2018
|
|
4,009.2
|
|
|
|
|
|
||||
|
June 2018
|
|
4,009.2
|
|
|
4,009
|
|
|
4,009
|
|
||
Additional paid-in capital
|
|
|
|
|
63,711
|
|
|
63,846
|
|
|||
Reserve for ESOP debt retirement
|
|
|
|
|
(1,177
|
)
|
|
(1,204
|
)
|
|||
Accumulated other comprehensive income/(loss)
|
|
|
|
|
(15,133
|
)
|
|
(14,749
|
)
|
|||
Treasury stock
|
|
|
|
|
(99,956
|
)
|
|
(99,217
|
)
|
|||
Retained earnings
|
|
|
|
|
99,831
|
|
|
98,641
|
|
|||
Noncontrolling interest
|
|
|
|
|
268
|
|
|
590
|
|
|||
TOTAL SHAREHOLDERS’ EQUITY
|
|
|
|
|
52,504
|
|
|
52,883
|
|
|||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
$
|
118,440
|
|
|
$
|
118,310
|
|
|
Three Months Ended September 30
|
||||||
Amounts in millions
|
2018
|
|
2017
|
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
|
$
|
2,569
|
|
|
$
|
5,569
|
|
OPERATING ACTIVITIES
|
|
|
|
||||
Net earnings
|
3,211
|
|
|
2,870
|
|
||
Depreciation and amortization
|
643
|
|
|
692
|
|
||
Share-based compensation expense
|
102
|
|
|
84
|
|
||
Deferred income taxes
|
34
|
|
|
426
|
|
||
Gain on sale of assets
|
(361
|
)
|
|
(81
|
)
|
||
Changes in:
|
|
|
|
||||
Accounts receivable
|
(475
|
)
|
|
(304
|
)
|
||
Inventories
|
(494
|
)
|
|
(357
|
)
|
||
Accounts payable, accrued and other liabilities
|
933
|
|
|
235
|
|
||
Other operating assets and liabilities
|
(84
|
)
|
|
(30
|
)
|
||
Other
|
58
|
|
|
96
|
|
||
TOTAL OPERATING ACTIVITIES
|
3,567
|
|
|
3,631
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures
|
(1,080
|
)
|
|
(1,132
|
)
|
||
Proceeds from asset sales
|
9
|
|
|
120
|
|
||
Acquisitions, net of cash acquired
|
(237
|
)
|
|
—
|
|
||
Purchases of short-term investments
|
(158
|
)
|
|
(1,942
|
)
|
||
Proceeds from sales and maturities of short-term investments
|
649
|
|
|
388
|
|
||
Change in other investments
|
(48
|
)
|
|
32
|
|
||
TOTAL INVESTING ACTIVITIES
|
(865
|
)
|
|
(2,534
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Dividends to shareholders
|
(1,853
|
)
|
|
(1,823
|
)
|
||
Change in short-term debt
|
24
|
|
|
48
|
|
||
Additions to long-term debt
|
—
|
|
|
2,124
|
|
||
Reductions of long-term debt
|
—
|
|
|
(151
|
)
|
||
Treasury stock purchases
|
(1,252
|
)
|
|
(2,502
|
)
|
||
Impact of stock options and other
|
425
|
|
|
580
|
|
||
TOTAL FINANCING ACTIVITIES
|
(2,656
|
)
|
|
(1,724
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(70
|
)
|
|
82
|
|
||
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(24
|
)
|
|
(545
|
)
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$
|
2,545
|
|
|
$
|
5,024
|
|
•
|
Beauty: Hair Care (Conditioner, Shampoo, Styling Aids, Treatments); Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care);
|
•
|
Grooming: Shave Care (Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care); Appliances
|
•
|
Health Care: Oral Care (Toothbrushes, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, 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); and
|
•
|
Baby, Feminine & Family Care: Baby Care (Baby Wipes, Diapers and Pants); Feminine Care (Adult Incontinence, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).
|
(1)
|
% of Net sales by business unit excludes sales held in Corporate.
|
|
|
Three Months Ended September 30
|
||||||||||
|
|
Net Sales
|
|
Earnings/(Loss) Before Income Taxes
|
|
Net Earnings
|
||||||
Beauty
|
2018
|
$
|
3,289
|
|
|
$
|
947
|
|
|
$
|
759
|
|
|
2017
|
3,138
|
|
|
836
|
|
|
632
|
|
|||
Grooming
|
2018
|
1,562
|
|
|
417
|
|
|
340
|
|
|||
|
2017
|
1,577
|
|
|
414
|
|
|
329
|
|
|||
Health Care
|
2018
|
1,845
|
|
|
440
|
|
|
332
|
|
|||
|
2017
|
1,902
|
|
|
455
|
|
|
305
|
|
|||
Fabric & Home Care
|
2018
|
5,488
|
|
|
1,144
|
|
|
877
|
|
|||
|
2017
|
5,383
|
|
|
1,179
|
|
|
769
|
|
|||
Baby, Feminine & Family Care
|
2018
|
4,390
|
|
|
902
|
|
|
692
|
|
|||
|
2017
|
4,545
|
|
|
964
|
|
|
630
|
|
|||
Corporate
|
2018
|
116
|
|
|
90
|
|
|
211
|
|
|||
|
2017
|
108
|
|
|
(97
|
)
|
|
205
|
|
|||
Total Company
|
2018
|
$
|
16,690
|
|
|
$
|
3,940
|
|
|
$
|
3,211
|
|
|
2017
|
16,653
|
|
|
3,751
|
|
|
2,870
|
|
|
Beauty
|
|
Grooming
|
|
Health Care
|
|
Fabric & Home Care
|
|
Baby, Feminine & Family Care
|
|
Total Company
|
||||||||||||
Goodwill at June 30, 2018
|
$
|
12,992
|
|
|
$
|
19,820
|
|
|
$
|
5,929
|
|
|
$
|
1,865
|
|
|
$
|
4,569
|
|
|
$
|
45,175
|
|
Acquisitions and divestitures
|
117
|
|
|
—
|
|
|
(50
|
)
|
|
6
|
|
|
—
|
|
|
73
|
|
||||||
Translation and other
|
(7
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(23
|
)
|
||||||
Goodwill at September 30, 2018
|
$
|
13,102
|
|
|
$
|
19,817
|
|
|
$
|
5,878
|
|
|
$
|
1,865
|
|
|
$
|
4,563
|
|
|
$
|
45,225
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||
Intangible assets with determinable lives
|
$
|
7,420
|
|
|
$
|
(5,184
|
)
|
Intangible assets with indefinite lives
|
21,683
|
|
|
—
|
|
||
Total identifiable intangible assets
|
$
|
29,103
|
|
|
$
|
(5,184
|
)
|
|
Approximate Percent Change in Estimated Fair Value
|
||||
|
+50 bps Discount Rate
|
|
-50 bps Long-term Growth
|
||
Shave Care goodwill reporting unit
|
(10
|
)%
|
|
(7
|
)%
|
Gillette indefinite-lived intangible asset
|
(10
|
)%
|
|
(7
|
)%
|
CONSOLIDATED AMOUNTS
|
Three months ended September 30
|
||||||
|
2018
|
|
2017
|
||||
Net earnings
|
$
|
3,211
|
|
|
$
|
2,870
|
|
Less: Net earnings attributable to noncontrolling interests
|
12
|
|
|
17
|
|
||
Net earnings attributable to P&G (Diluted)
|
3,199
|
|
|
2,853
|
|
||
Preferred dividends, net of tax
|
(66
|
)
|
|
(62
|
)
|
||
Net earnings attributable to P&G available to common shareholders (Basic)
|
$
|
3,133
|
|
|
$
|
2,791
|
|
|
|
|
|
||||
SHARES IN MILLIONS
|
|
|
|
||||
Basic weighted average common shares outstanding
|
2,495.8
|
|
|
2,550.5
|
|
||
Add: Effect of dilutive securities
|
|
|
|
||||
Conversion of preferred shares (1)
|
91.9
|
|
|
96.6
|
|
||
Impact of stock options and other unvested equity awards (2)
|
24.4
|
|
|
43.5
|
|
||
Diluted weighted average common shares outstanding
|
2,612.1
|
|
|
2,690.6
|
|
||
|
|
|
|
||||
NET EARNINGS PER SHARE (3)
|
|
|
|
||||
Basic
|
$
|
1.26
|
|
|
$
|
1.09
|
|
Diluted
|
$
|
1.22
|
|
|
$
|
1.06
|
|
(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 69 million and 20 million for the three months ended September 30, 2018 and 2017 respectively, 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)
|
Net earnings per share are calculated on Net earnings attributable to Procter & Gamble.
|
|
Three Months Ended September 30
|
||||||
|
2018
|
|
2017
|
||||
Share-based compensation expense
|
$
|
102
|
|
|
$
|
84
|
|
Net periodic benefit cost for pension benefits (1)
|
28
|
|
|
51
|
|
||
Net periodic benefit cost/(credit) for other retiree benefits (1)
|
(41
|
)
|
|
(38
|
)
|
(1)
|
The components of the total net periodic benefit cost for both pension benefits and other retiree benefits for those interim periods, on an annualized basis, do not differ materially from the amounts disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2018.
|
|
Fair Value Asset
|
||||||
|
September 30, 2018
|
|
June 30, 2018
|
||||
Investments:
|
|
|
|
||||
U.S. government securities
|
$
|
5,233
|
|
|
$
|
5,544
|
|
Corporate bond securities
|
3,475
|
|
|
3,737
|
|
||
Other investments
|
158
|
|
|
141
|
|
||
Total
|
$
|
8,866
|
|
|
$
|
9,422
|
|
|
Amount of Gain/(Loss) Recognized in AOCI on Derivatives
|
||||||
|
Three Months Ended September 30
|
||||||
|
2018
|
|
2017
|
||||
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS (1) (2)
|
|
|
|
||||
Foreign exchange contracts
|
$
|
(43
|
)
|
|
$
|
(184
|
)
|
|
Amount of Gain/(Loss) Recognized in Earnings
|
||||||
|
Three Months Ended September 30
|
||||||
|
2018
|
|
2017
|
||||
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
|
|
|
|
||||
Interest rate contracts
|
$
|
(24
|
)
|
|
$
|
(3
|
)
|
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
|
|
|
|
||||
Foreign currency contracts
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
(1)
|
For the derivatives in net investment hedging relationships, the amount of gain/(loss) excluded from effectiveness testing, which was recognized in earnings, was $14 and $31 for the three months ended September 30, 2018 and 2017, 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 $207 and $248, as of September 30, 2018 and 2017, respectively.
|
|
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
|
||||||||||||||||||
|
Hedges
|
|
Investment Securities
|
|
Pension and Other Retiree Benefits
|
|
Financial Statement Translation
|
|
Total AOCI
|
||||||||||
Balance at June 30, 2018
|
$
|
(3,246
|
)
|
|
$
|
(173
|
)
|
|
$
|
(4,058
|
)
|
|
$
|
(7,272
|
)
|
|
$
|
(14,749
|
)
|
OCI before reclassifications (1)
|
7
|
|
|
(4
|
)
|
|
100
|
|
|
(218
|
)
|
|
(115
|
)
|
|||||
Amounts reclassified from AOCI (2)
|
—
|
|
|
(1
|
)
|
|
52
|
|
|
2
|
|
|
53
|
|
|||||
Net current period OCI
|
7
|
|
|
(5
|
)
|
|
152
|
|
|
(216
|
)
|
|
(62
|
)
|
|||||
Reclassification to retained earnings in accordance with ASU 2018-02 (3)
|
(18
|
)
|
|
—
|
|
|
(308
|
)
|
|
—
|
|
|
(326
|
)
|
|||||
Less: Other comprehensive income/(loss) attributable to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||||
Balance at September 30, 2018
|
$
|
(3,257
|
)
|
|
$
|
(178
|
)
|
|
$
|
(4,214
|
)
|
|
$
|
(7,484
|
)
|
|
$
|
(15,133
|
)
|
(1)
|
Net of tax expense/(benefit) of $2, $0 and $20 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively.
|
(2)
|
Net of tax expense/(benefit) of $0, $0 and $16 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively.
|
(3)
|
Adjustment made to early adopt ASU 2018-02: "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," as discussed in Note 2.
|
•
|
Hedges: see Note 7 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: amounts reclassified from AOCI into Other non-operating income, net and included in the computation of net periodic postretirement costs.
|
•
|
Financial statement translation: amounts reclassified from AOCI into SG&A.
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
||||||||||||||
|
Reserve Balance June 30, 2018
|
|
Charges
|
|
Cash Spent
|
|
Charges Against Assets
|
|
Reserve Balance September 30, 2018
|
||||||||||
Separations
|
$
|
259
|
|
|
$
|
53
|
|
|
$
|
(62
|
)
|
|
$
|
—
|
|
|
$
|
250
|
|
Asset-related costs
|
—
|
|
|
28
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|||||
Other costs
|
254
|
|
|
56
|
|
|
(66
|
)
|
|
—
|
|
|
244
|
|
|||||
Total
|
$
|
513
|
|
|
$
|
137
|
|
|
$
|
(128
|
)
|
|
$
|
(28
|
)
|
|
$
|
494
|
|
|
Three Months Ended September 30, 2018
|
||
Beauty
|
$
|
10
|
|
Grooming
|
6
|
|
|
Health Care
|
8
|
|
|
Fabric & Home Care
|
13
|
|
|
Baby, Feminine & Family Care
|
21
|
|
|
Corporate (1)
|
79
|
|
|
Total Company
|
$
|
137
|
|
(1)
|
Corporate includes costs related to allocated overheads, including charges related to our Sales and Market Operations, Global Business Services and Corporate Functions activities.
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview
|
•
|
Summary of Results – Three Months Ended September 30, 2018
|
•
|
Economic Conditions and Uncertainties
|
•
|
Results of Operations – Three Months Ended September 30, 2018
|
•
|
Business Segment Discussion – Three Months Ended September 30, 2018
|
•
|
Liquidity and Capital Resources
|
•
|
Reconciliation of Measures Not Defined by U.S. GAAP
|
Reportable Segments
|
Product Categories (Sub-Categories)
|
Major Brands
|
Beauty
|
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
|
|
Grooming
|
Grooming (1) (Shave Care - Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care; Appliances)
|
Braun, Fusion, Gillette, Mach3, Prestobarba, Venus
|
Health Care
|
Oral Care (Toothbrushes, Toothpaste, Other Oral Care)
|
Crest, Oral-B
|
Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care)
|
Metamucil, Prilosec, Vicks
|
|
Fabric & Home Care
|
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 Care
|
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, Puffs
|
(1)
|
The Grooming product category is comprised of the Shave Care and Appliances Global Business Units.
|
|
Three Months Ended September 30, 2018
|
||
|
Net Sales
|
|
Net Earnings
|
Beauty
|
20%
|
|
25%
|
Grooming
|
9%
|
|
12%
|
Health Care
|
11%
|
|
11%
|
Fabric & Home Care
|
33%
|
|
29%
|
Baby, Feminine & Family Care
|
27%
|
|
23%
|
Total Company
|
100%
|
|
100%
|
•
|
Net sales were unchanged at $16.7 billion. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 4%. Organic sales increased 7% in Beauty, 4% in Grooming and Health Care and 5% in Fabric & Home Care. Organic sales decreased 1% in Baby, Feminine & Family Care.
|
•
|
Unit volume increased 3%, with organic volume also up 3%. Volume increased mid-single digits in Grooming and Fabric & Home Care and low single digits in Beauty, Health Care and Baby, Feminine & Family Care. Excluding the impacts of the PGT Healthcare partnership dissolution and other minor divestitures, organic volume increased mid-single digits in Health Care.
|
•
|
Net earnings were $3.2 billion, an increase of $341 million, or 12% versus the prior year due to a reduction in income taxes (due primarily to the ongoing impacts of the U.S. Tax Act) and a gain on the dissolution of the PGT Healthcare partnership.
|
•
|
Diluted net earnings per share increased 15% to $1.22 due primarily to the increase in net earnings and a reduction in shares outstanding due to share repurchases.
|
•
|
Net earnings attributable to Procter & Gamble increased $346 million or 12% versus the prior year period to $3.2 billion.
|
•
|
Core net earnings attributable to Procter & Gamble, which represents net earnings excluding the current period gain on the dissolution of the PGT Healthcare partnership and incremental restructuring charges in both periods, was unchanged at $2.9 billion. Core net earnings per share increased 3% to $1.12 due to the reduction in shares outstanding.
|
•
|
Operating cash flow was $3.6 billion. Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $2.7 billion. Adjusted free cash flow productivity was 95%. Adjusted free cash flow and adjusted free cash flow productivity are defined in the section entitled "Reconciliation of Measures not defined by U.S. GAAP"
|
|
Three Months Ended September 30
|
||||
Amounts in millions, except per share amounts
|
2018
|
|
2017
|
|
% Chg
|
Net sales
|
$16,690
|
|
$16,653
|
|
—%
|
Operating income
|
3,554
|
|
3,648
|
|
(3)%
|
Net earnings
|
3,211
|
|
2,870
|
|
12%
|
Net earnings attributable to Procter & Gamble
|
3,199
|
|
2,853
|
|
12%
|
Diluted net earnings per common share
|
1.22
|
|
1.06
|
|
15%
|
Core net earnings per common share
|
1.12
|
|
1.09
|
|
3%
|
|
|||||
|
Three Months Ended September 30
|
||||
COMPARISONS AS A PERCENTAGE OF NET SALES
|
2018
|
|
2017
|
|
Basis Pt Chg
|
Gross profit
|
49.2%
|
|
50.3%
|
|
(110)
|
Selling, general & administrative expense
|
27.9%
|
|
28.4%
|
|
(50)
|
Operating income
|
21.3%
|
|
21.9%
|
|
(60)
|
Earnings before income taxes
|
23.6%
|
|
22.5%
|
|
110
|
Net earnings
|
19.2%
|
|
17.2%
|
|
200
|
Net earnings attributable to Procter & Gamble
|
19.2%
|
|
17.1%
|
|
210
|
•
|
a 100 basis point decline due to higher commodity costs,
|
•
|
a 60 basis point decline from unfavorable product mix (primarily within segments due to disproportionate growth of lower margin products forms and club channels in certain categories) and
|
•
|
a 60 basis point decline from unfavorable foreign exchange
|
•
|
a 390 basis point reduction from the ongoing impacts of the U.S. Tax Act, as the impact of the lower blended U.S. federal rate on current period earnings versus prior year rate was partially offset by reduced foreign tax credits versus prior year due to the inability to fully credit foreign taxes under the U.S. Tax Act,
|
•
|
a 180 basis point reduction from the tax impact of the gain on the dissolution of the PGT Healthcare partnership,
|
•
|
a 40 basis point reduction from favorable impacts from geographic mix of earnings,
|
•
|
a 60 basis point increase from reduced excess tax benefits from the exercise of stock options (50 basis points in the current year versus 110 basis points in the prior year), and
|
•
|
a 50 basis point increase from reduced favorable discrete impacts related to uncertain tax positions (10 basis points unfavorable in the current year versus 40 basis points favorable in the prior year period).
|
|
Three Months Ended September 30, 2018
|
|||||||||||||||||||
|
Net Sales
|
|
% Change Versus Year Ago
|
|
Earnings Before Income Taxes
|
|
% Change Versus Year Ago
|
|
Net Earnings
|
|
% Change Versus Year Ago
|
|||||||||
Beauty
|
$
|
3,289
|
|
|
5
|
%
|
|
$
|
947
|
|
|
13
|
%
|
|
$
|
759
|
|
|
20
|
%
|
Grooming
|
1,562
|
|
|
(1
|
)%
|
|
417
|
|
|
1
|
%
|
|
340
|
|
|
3
|
%
|
|||
Health Care
|
1,845
|
|
|
(3
|
)%
|
|
440
|
|
|
(3
|
)%
|
|
332
|
|
|
9
|
%
|
|||
Fabric & Home Care
|
5,488
|
|
|
2
|
%
|
|
1,144
|
|
|
(3
|
)%
|
|
877
|
|
|
14
|
%
|
|||
Baby, Feminine & Family Care
|
4,390
|
|
|
(3
|
)%
|
|
902
|
|
|
(6
|
)%
|
|
692
|
|
|
10
|
%
|
|||
Corporate
|
116
|
|
|
7
|
%
|
|
90
|
|
|
N/A
|
|
|
211
|
|
|
N/A
|
|
|||
Total Company
|
$
|
16,690
|
|
|
—
|
%
|
|
$
|
3,940
|
|
|
5
|
%
|
|
$
|
3,211
|
|
|
12
|
%
|
•
|
Volume in Hair Care increased low single digits. Developed market volume was unchanged. Volume in developing regions increased low single digits due to market growth and product innovation. Global market share of the Hair Care category decreased slightly.
|
•
|
Volume in Skin and Personal Care increased mid-single digits. Volume increased low single digits in developed regions due to premium innovation and market growth. Volume increased high single digits in developing regions due to premium innovation, increased marketing spending and market growth. Global market share of the Skin and Personal Care category increased slightly.
|
•
|
Shave Care volume increased mid-single digits. Developed regions volume increased mid-single digits due to increased competitiveness following price reductions in prior quarters and an increase in consumer promotions. Developing regions volume increased mid-single digits due to increase in consumer promotions and higher trade inventories in certain markets. Global market share of the Shave Care category was unchanged.
|
•
|
Volume in Appliances increased mid-single digits. Volume increased mid-single digits in developed regions and low single digits in developing regions due to market growth. Global market share of the Appliances category decreased more than half a point.
|
•
|
Oral Care volume increased low single digits. Volume increased low single digits in developed regions due to product innovation and lower pricing in the form of increased promotional spending. Volume in developing regions was unchanged. Global market share of the Oral Care category increased slightly.
|
•
|
Volume in Personal Health Care decreased low single digits. Excluding the impact of the dissolution of the PGT Healthcare partnership, organic volume increased double digits. Developed regions volume decreased mid-single digits, while organic volume grew mid-single digits due to product innovation and increased advertising spending. Volume in developing regions increased low single digits and double digits on an organic basis, due to innovation and market growth. Global market share of the Personal Health Care category increased more than half a point.
|
•
|
Fabric Care volume increased mid-single digits. Volume in developed regions grew mid-single digits due to product innovation and lower pricing in the form of increased promotional spending. Volume in developing regions increased low single digits. Excluding the impact of minor brand divestitures, developing regions volume increased mid-single digits driven by product innovation and market growth. Global market share of the Fabric Care category increased more than half a point.
|
•
|
Home Care volume increased mid-single digits. Volume in developed regions increased high single digits due to product innovation and market growth. Volume in developing regions decreased low single digits due to category contraction in certain markets. Global market share of the Home Care category increased nearly half a point.
|
•
|
Volume in Baby Care decreased high single digits. Volume in developed regions declined mid-single digits due to competitive activity, including lower competitor pricing due to higher promotional spending in certain markets. Volume in developing regions declined high single digits due to competitive activity, volume declines following increased prices and category contraction in certain markets. Global market share of the Baby Care category decreased more than a point.
|
•
|
Volume in Feminine Care increased low single digits. Volume in developed regions increased mid-single digits due to product innovation and adult incontinence category growth. Volume increased low single digits in developing regions driven by innovation and lower pricing in the form of increased promotional spending. Global market share of the Feminine Care category increased less than half a point.
|
•
|
Volume in Family Care, which is predominantly a North American business, increased high single digits driven by product innovation and distribution gains. In the U.S., all-outlet share of the Family Care category increased more than half a point.
|
Three Months Ended September 30, 2018
|
Net Sales Growth
|
|
Foreign Exchange Impact
|
|
Acquisition & Divestiture Impact/Other (1)
|
|
Organic Sales Growth
|
Beauty
|
5%
|
|
3%
|
|
(1)%
|
|
7%
|
Grooming
|
(1)%
|
|
4%
|
|
1%
|
|
4%
|
Health Care
|
(3)%
|
|
2%
|
|
5%
|
|
4%
|
Fabric & Home Care
|
2%
|
|
2%
|
|
1%
|
|
5%
|
Baby, Feminine & Family Care
|
(3)%
|
|
2%
|
|
—%
|
|
(1)%
|
Total Company
|
—%
|
|
3%
|
|
1%
|
|
4%
|
Fiscal Year-to-Date, September 30, 2018
|
|||||
Operating Cash Flow
|
|
Capital Spending
|
U.S. Tax Act Payments
|
|
Adjusted Free Cash Flow
|
$3,567
|
|
$(1,080)
|
$235
|
|
$2,722
|
Fiscal Year-to-Date, September 30, 2018
|
||||||
Adjusted Free Cash Flow
|
|
Net Earnings
|
Gain on Dissolution of PGT Partnership
|
Adjusted Net Earnings
|
|
Adjusted Free Cash Flow Productivity
|
$2,722
|
|
$3,211
|
$(353)
|
$2,858
|
|
95%
|
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures |
||||||||||||||
Three Months Ended September 30, 2018
|
||||||||||||||
|
AS REPORTED (GAAP)
|
|
INCREMENTAL RESTRUCTURING
|
|
GAIN ON DISSOLUTION OF PGT PARTNERSHIP
|
|
ROUNDING
|
|
NON-GAAP (CORE)
|
|||||
COST OF PRODUCTS SOLD
|
8,484
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
8,438
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
|
4,652
|
|
|
(28
|
)
|
|
—
|
|
|
1
|
|
|
4,625
|
|
OPERATING INCOME
|
3,554
|
|
|
74
|
|
|
—
|
|
|
(1
|
)
|
|
3,627
|
|
INCOME TAX
|
729
|
|
|
6
|
|
|
(2
|
)
|
|
1
|
|
|
734
|
|
NET EARNINGS ATTRIBUTABLE TO P&G
|
3,199
|
|
|
69
|
|
|
(353
|
)
|
|
—
|
|
|
2,915
|
|
|
|
|
|
|
|
|
|
|
Core EPS
|
|||||
DILUTED NET EARNINGS PER COMMON SHARE (1)
|
1.22
|
|
|
0.03
|
|
|
(0.14
|
)
|
|
0.01
|
|
|
1.12
|
|
|
|
CHANGE VERSUS YEAR AGO
|
|
|
|
|
|
|
|
CORE EPS
|
3
|
%
|
|
|
|
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures |
|||||||||||||
Three Months Ended September 30, 2017
|
|||||||||||||
|
AS REPORTED (GAAP)
|
|
|
INCREMENTAL RESTRUCTURING
|
|
|
ROUNDING
|
|
NON-GAAP (CORE)
|
||||
COST OF PRODUCTS SOLD
|
8,269
|
|
|
|
(100
|
)
|
|
|
—
|
|
|
8,169
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
|
4,736
|
|
|
|
7
|
|
|
|
—
|
|
|
4,743
|
|
OPERATING INCOME
|
3,648
|
|
|
|
93
|
|
|
|
—
|
|
|
3,741
|
|
INCOME TAX
|
881
|
|
|
|
20
|
|
|
|
—
|
|
|
901
|
|
NET EARNINGS ATTRIBUTABLE TO P&G
|
2,853
|
|
|
|
75
|
|
|
|
—
|
|
|
2,928
|
|
|
|
|
|
|
|
|
|
|
Core EPS:
|
||||
DILUTED NET EARNINGS PER COMMON SHARE (1)
|
1.06
|
|
|
|
0.03
|
|
|
|
—
|
|
|
1.09
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
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
|
||
7/01/2018 - 7/31/2018
|
15,834,932
|
|
|
$79.09
|
|
12,638,835
|
|
|
(3)
|
8/01/2018 - 8/31/2018
|
3,024,703
|
|
|
$82.65
|
|
3,024,703
|
|
|
(3)
|
9/01/2018 - 9/30/2018
|
—
|
|
|
$0.00
|
|
—
|
|
|
(3)
|
Total
|
18,859,635
|
|
|
$79.66
|
|
15,663,538
|
|
|
|
(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 for open market transactions is calculated on a settlement basis and excludes commission.
|
(3)
|
On October 19, 2018, the Company stated that in fiscal year 2019 the Company expects to reduce outstanding shares through direct share repurchases at a value of up to $5 billion, notwithstanding any purchases under the Company's compensation and benefit plans. Purchases may be made in the open market and/or private transactions and purchases may be increased, decreased or discontinued at any time without prior notice. The share repurchases are authorized pursuant to a resolution issued by the Company's Board of Directors and are expected to be financed by a combination of operating cash flows and issuance of long-term and short-term debt.
|
Item 6.
|
Exhibits
|
|
|
|
|
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 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 Form 10-K for the year ended June 30, 2016)
|
|
|
|
|
10-1
|
|
|
The Procter & Gamble Performance Stock Program Summary * +
|
|
|
|
|
10-2
|
|
|
The Procter & Gamble Company Executive Deferred Compensation Plan * +
|
|
|
|
|
10-3
|
|
|
Summary of Additional Personal Benefits Available to Certain Officers and Non-Employee Directors * +
|
|
|
|
|
12
|
|
|
Computation of Ratio of Earnings to Fixed Charges +
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer +
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a) Certification – Chief Financial Officer +
|
|
|
|
|
32.1
|
|
|
Section 1350 Certifications – Chief Executive Officer +
|
|
|
|
|
32.2
|
|
|
Section 1350 Certifications – Chief Financial Officer +
|
|
|
|
|
101.INS (1)
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
|
*
|
Compensatory plan or arrangement
|
|
|
+
|
Filed herewith
|
|
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
|
|
|
|
|
|
|
|
THE PROCTER & GAMBLE COMPANY
|
|
|
|
|
|
October 19, 2018
|
|
|
|
/s/ VALARIE L. SHEPPARD
|
Date
|
|
|
|
(Valarie L. Sheppard)
|
|
|
|
|
Senior Vice President, Comptroller and Treasurer
|
Exhibit
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS (1)
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
|
+
|
Filed herewith
|
|
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
III.
|
PERFORMANCE CATEGORIES
|
·
|
Organic sales growth (percentile rank in the competitive peer group)* - 30%
|
·
|
Constant currency core before-tax operating profit growth - 20%
|
·
|
Core earnings per share (EPS) growth - 30%
|
·
|
Adjusted free cash flow productivity - 20%
|
•
|
Termination on Account of Death (except in France and the UK). The Award is immediately vested and will become deliverable on the Settlement Date or Agreed Settlement Date, whichever is applicable.
|
•
|
Termination on Account of Death for awards granted in France or the UK. The consequences of death are determined by the local plan supplement, if applicable.
|
•
|
Termination on Account of Retirement or Disability after June 30th of the fiscal year in which this Award was granted. PSUs are retained and will be delivered on the Settlement Date.
|
•
|
Termination pursuant to a Written Separation Agreement that provides for retention of the Award, after June 30th of the fiscal year in which this Award was granted. PSUs are retained and will be delivered on the Settlement Date.
|
•
|
Termination in connection with a divestiture or separation of any of the Company’s businesses, as determined by the Company’s Chief Human Resources Officer. PSUs are retained and will be delivered on the Settlement Date.
|
|
|
|
|
|
|
Article 1. Purpose, Status, and Effective Date
|
1
|
|
|
|
|
Article 2. Definitions
|
1
|
|
|
|
|
Article 3. Eligibility and Participation
|
4
|
|
|
|
|
Article 4. Contributions and Credits
|
4
|
|
|
|
|
Article 5. Vesting
|
5
|
|
|
|
|
Article 6. Participant Accounts; Investment Options
|
6
|
|
|
|
|
Article 7. Distribution of Benefits
|
7
|
|
|
|
|
Article 8. Claims Procedures
|
9
|
|
|
|
|
Article 9. Plan Administration
|
10
|
|
|
|
|
Article 10. Amendment and Termination
|
12
|
|
|
|
|
Article 11. Additional Provisions
|
13
|
|
(a)
|
“Account” shall mean the bookkeeping account for a Participant that is established and maintained to record the Participant’s interest under the Plan. The balance posted to the record of the Account of a Participant shall reflect the Participant’s Contributions, PST Restoration Program Contributions, distributions, adjustments for income, gain, or loss, and other charges and credits pursuant to Article 6.
|
(b)
|
“Administrative Committee” shall mean the committee that administers the Short-Term Achievement Reward incentive plan or such other administrative committee of the Company appointed by the Compensation and Leadership Development Committee to administer the Plan. Pursuant to Section 9.2, the Administrative Committee has the authority to delegate its responsibilities. Throughout this plan document, the term “Administrative Committee” shall also include any individual to whom the Administrative Committee has delegated its responsibilities pursuant to Section 9.2.
|
(c)
|
“Beneficiary” shall mean the person or persons or entity designated by the Participant to receive the balance of the Participant’s Account in the event of the Participant’s death. The designation may be in favor of one or more Beneficiaries, may include contingent as well as primary designations and named or unnamed trustees under any will or trust agreement and may apportion the benefits payable in any manner among the Beneficiaries. A Participant’s designation of one or more Beneficiaries shall be made in writing in a manner designated by the Administrative Committee and shall not be effective until received by the Administrative Committee. If a Participant fails to properly designate a Beneficiary or if the designated beneficiaries of such Participant shall have predeceased the Participant, the Participant’s estate shall be the Beneficiary.
|
(d)
|
“Claimant” shall mean the Participant or Beneficiary or his or her representative submitting a claim for benefits under the Plan.
|
(e)
|
“Code” shall mean the Internal Revenue Code of 1986, as amended, or as it may be amended from time to time. Furthermore, the phrase “to the extent permitted under the Code” means to the extent the action described does not cause taxation of a Participant’s Account prior to distribution of all or a portion of the Participant’s Account.
|
(f)
|
“Company” shall mean The Procter & Gamble Company, an Ohio corporation, and any successor thereto which continues the Plan.
|
(g)
|
“Compensation” shall mean the definition of compensation for the Plan Year announced in writing by the Administrative Committee on or before the due date for the Administrative Committee’s receipt of Participants’ Deferral Elections for such Plan Year. Unless and until superseded, the definition of compensation announced by the Administrative Committee for a Plan Year shall remain in effect for subsequent Plan Years.
|
(h)
|
“Compensation and Leadership Development Committee” shall mean the Compensation and Leadership Development Committee of the Board of Directors, as constituted from time to time, of the Company. If the Compensation and Leadership Development Committee has delegated any of its authority under the Plan to a committee or to an individual, the term “Compensation and Leadership Development Committee” shall also include such committee or individual.
|
(i)
|
“Contributions” shall mean Deferrals.
|
(j)
|
“Deferral Election” shall mean the election or elections filed by the Participant with the Company to defer Compensation under the Plan.
|
(k)
|
“Deferrals” shall mean the amounts credited to a Participant’s Account as Deferrals pursuant to the Participant’s Deferral Election.
|
(l)
|
“Disability” shall mean the time when: (a) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expect to last for a continuous period of not less than twelve (12) months; or (b) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan of the Employer covering the Participant.”
|
(m)
|
“Effective Date” shall mean the date set forth in Section 1.3.
|
(n)
|
“Eligible Employee” shall mean an Employee who satisfies one of the requirements for eligibility under Article 3 of the Plan.
|
(o)
|
“Employee” shall mean any employee of the Company or a subsidiary who is expressly designated as an Employee. Any person who is not expressly designated as an Employee by the Company (or by the subsidiary of the Company for whom the person performs services) shall not be an Employee for purposes of the Plan, notwithstanding that such person may be later determined by the Internal Revenue Service or by a court of competent jurisdiction to be an employee.
|
(p)
|
“Employer” shall mean, with respect to any Participant, the Company or, if applicable, a subsidiary of the Company (that is participating in the Plan with the consent of the Compensation and Leadership Development Committee) that employs such Participant.
|
(q)
|
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
(r)
|
“Form RTD-C” shall mean the Statement of Terms and Conditions for Restricted Stock Units on Form RTD-C or similar grant materials provided by the Company for Profit Sharing Restoration Program Restricted Stock Unit grants, as may be amended from time to time.
|
(s)
|
“Investment Option” shall mean a security (other than stock of the Company), mutual fund, common or collective trust, insurance company pooled separate account, or other benchmark selected by the Administrative Committee pursuant to Section 6.2 for measuring the income, gain, or loss, and other charges and credits recorded for a Participant’s Account.
|
(t)
|
“Participant” shall mean an Employee who is eligible to participate in the Plan: (i) by reason of being selected for participation pursuant to Section 3.1(a) of the Plan; or (ii) because the Employee satisfies eligibility criteria established by the Administrative Committee for participation by a class of employees pursuant to Section 3.1(b) of the Plan.
|
(u)
|
“Plan” shall mean The Procter & Gamble Company Deferred Compensation Plan, as herein set out or as duly amended, together with any election forms executed by the Participant.
|
(v)
|
“Plan Year” for this Plan shall mean the calendar year.
|
(w)
|
“PST Restoration Program Contributions” shall mean the amounts credited to a Participant’s Account as Deferrals pursuant to the conversion of Restricted Stock Units under the PST Restoration Diversification Program solely for purposes of determining the value, under Article 6 of the Plan, of such Restricted Stock Units after conversion.
|
(x)
|
“PST Restoration Diversification Program” shall mean the Company’s executive compensation program which allows certain employees to convert certain Restricted Stock Units granted to them at specified times into PST Restoration Program Contributions.
|
(y)
|
“Retirement” shall have the same meaning as provided under The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan as in effect on December 31, 2008.
|
(z)
|
“Scheduled In-Service Withdrawal” shall mean a distribution of all or a portion of the Deferrals credited to a Participant’s Account in the Plan Year elected by the Participant for such distribution.
|
(aa)
|
“Separation from Service” shall have the meaning provided under Section 409A of the Code and regulations thereto.
|
3.1
|
Eligibility.
|
(a)
|
Participation in the Plan is limited to the class of Employees who are expressly selected for Plan participation by the Compensation and Leadership Development Committee, or to those Employees at Band 6 selected for Plan participation by the Company’s Chief Human Resources Officer.
|
(b)
|
In lieu of expressly selecting Employees for Plan participation, the Compensation and Leadership Development Committee may establish eligibility criteria providing for the participation of all Employees who satisfy such criteria.
|
(c)
|
The Compensation and Leadership Development Committee may adopt, amend, or abolish a Participant’s selection for eligibility or eligibility criteria under Sections 3.1(a) and 3.1(b) hereof at any time, and for any reason, by resolution, which resolutions shall be attached to the copy of the Plan maintained by the Company and shall be effective as of the date specified therein, or if later, the date submitted to the Company.
|
(a)
|
A Participant may elect to make Deferrals to his or her Account for a Plan Year by timely executing and filing a Deferral Election with the Administrative Committee on or before the due date established by the Administrative Committee for the Plan Year for which the Deferral Election is being made. Except as provided in paragraphs (b), (c) and (d) of this Section 4.1, such due date shall be prior to January 1 of the Plan Year in which services for which the Compensation would otherwise be payable commence.
|
(b)
|
The Administrative Committee may provide for separate Deferral Elections and due dates for the various elements of Compensation, such as base salary and bonuses. Any Deferral Election must be made prior to the period for which the element of Compensation being deferred is earned, as determined by the Administrative Committee in its sole discretion, and the Participant’s Deferral Election shall only apply to Compensation earned after the date on which it is received by the Administrative Committee. Notwithstanding the above, in the case of “performance-based compensation” (as such term is defined under Code Section 409A and regulations thereto) based upon a performance period of at least twelve (12) months, the Administrative Committee may allow elections to defer such performance-based compensation no later than the date that is six (6) months before the end of the related performance period provided that the Participant has performed services continuously from a date no later than the date upon which the performance criteria are established through a date no earlier than the date upon which the Participant makes an initial deferral election, and further provided that in no event may an election to defer performance-based compensation be made after such compensation has become both substantially certain to be paid and readily ascertainable.
|
(c)
|
A Participant may elect to make PST Restoration Program Contributions at any time during the Company’s open window trading period for executives so long as such contributions are consistent with all Company policies and procedures and Form RTD - C, as amended (“Terms and Conditions”). Other than for purposes of determining the value of such contributions under Article 6 of the Plan, the Terms and Conditions shall apply to PST Restoration Program Contributions accounted for under this Plan.
|
(d)
|
A Participant who first becomes eligible for participation in the Plan after January 1 of a Plan Year who wishes to make Deferrals to his or her Account for such Plan Year shall execute and file with the Administrative Committee a Deferral Election within thirty (30) days after the date on which such Participant is notified that he or she has become eligible to participate in the Plan. For this purpose, the date of the notice shall be the date of notification, regardless of when actually received by the Participant. A Participant may not, however, make a Deferral Election under this Section 4.1(c) if the Participant is already eligible to participate in another deferred compensation plan that is required under Code Section 409A to be aggregated with the Plan.
|
(e)
|
Except as otherwise set forth in paragraph (c) of this Article 4.1, only one Deferral Election may be made for each element of Compensation earned in a single Plan Year (or earned over a period of more than one Plan Year). Any Participant who fails to timely execute and file a Deferral Election with the Administrative Committee for a Plan Year with respect to an element of Compensation shall not be permitted to make Deferrals for such element of Compensation for such Plan Year.
|
(f)
|
A Deferral Election shall direct the Employer to reduce the Participant’s Compensation (or the element thereof) by a whole percentage specified by the Participant in the Deferral Election.
|
(g)
|
The amount specified by the Participant in the Deferral Election cannot reduce the Participant’s current Compensation for such Plan Year below the amount necessary to satisfy any applicable taxes and withholdings required by law, as determined by the Administrative Committee.
|
(h)
|
Except as otherwise provided in paragraphs (c) and (h) of this Article 4.1, a Deferral Election for Compensation shall be effective only for the Plan Year for which it is made. Once filed with the Administrative Committee, a Deferral Election shall be irrevocable.
|
(i)
|
In making a Deferral Election, the Participant consents to the Employer’s withholding from his or her currently payable Compensation the amount or amounts elected and the crediting of such withheld amounts to the Participant’s Account, as provided in the Plan.
|
(a)
|
A Participant shall elect on his or her Deferral Election form or on such other form or by such other means as may be specified by the Administrative Committee, one or more Investment Options to which Contributions to be credited to the Participant’s Account shall be allocated. A
|
(b)
|
In the event a Participant fails or refuses to make an election allocating Contributions credited to his or her Account among the then available Investment Options, the Administrative Committee shall specify the Investment Option or Options to which the Participant’s Account shall be allocated and notify the Participant of its selection, which notification may be the Account statements provided to the Participant.
|
(a)
|
With the exception of PST Restoration Program Contributions, at the time each Deferral Election is made, the Participant may elect to receive a distribution of up to one hundred percent (100%) of the related amount deferred (including adjustments thereon pursuant to Section 6.4) upon a Separation from Service (for reasons other than death) or Disability.
|
(b)
|
A Participant may instead elect to receive a Scheduled In-Service Withdrawal of up to one hundred percent (100%) of the related amount deferred (including adjustments thereon pursuant to Section 6.4); provided, however, that any Scheduled In-Service Withdrawal must occur at least one (1) year after the end of the Plan Year in which the Deferrals being distributed were credited to the Participant’s Account. Scheduled In-Service Withdrawals are not available for PST Restoration Program Contributions (including any adjustments thereon pursuant to Article 6.4).
|
(c)
|
With the exception of any PST Restoration Program Contributions, separate distribution elections may be made for each Plan Year’s credited Contributions. The Participant’s distribution election shall be made in writing as specified by the Administrative Committee.
|
(d)
|
Notwithstanding anything to the contrary in this Article 7, a distribution payable with respect to any PST Restoration Program Contributions (including any adjustments thereon pursuant to Article 6.4) shall be made in accordance with the Terms and Conditions associated with those contributions, except that such distributions shall be payable in cash and not in the Company’s common stock.
|
(a)
|
At the time each Deferral Election is made, a Participant may elect one or both of the following forms of distribution for his or her Account distributable by reason of the Participant’s Retirement or Disability: (i) a single sum distribution, or (ii) a distribution in approximately equal annual installments payable over a period of two (2) to ten (10) years. The Account balance of a Participant who fails or refuses to elect a method of distribution shall be paid in a single sum.
|
(b)
|
Except as set forth in paragraph (c) of this Article 7.2, a distribution payable by reason of the Participant’s Retirement or Disability shall be paid (in the case of a single sum) or commence to be paid (in the case of annual payments) as soon as practicable in the calendar year following the calendar year in which the Participant’s Retirement or Disability occurs. A distribution may, however, be delayed in order to comply with Section 7.7 of the Plan.
|
(c)
|
Notwithstanding anything to the contrary in this Article 7, a distribution payable with respect to any PST Restoration Program Contributions (including any adjustments thereon pursuant to Article 6.4) shall be made in accordance with the Terms and Conditions associated with those contributions, except that such distributions shall be payable in cash and not in the Company’s common stock.
|
(a)
|
At the time a Participant first makes a Deferral Election, the Participant may elect how to receive the undistributed portion of his or her Account in the event of death. The Participant may elect: (i) a single sum distribution, or (ii) a distribution in approximately equal annual installments payable over a period of two (2) to ten (10) years. If a Participant fails or refuses to elect a method of distribution, the undistributed portion of his or her Account shall be paid in a single sum.
|
(b)
|
If a Participant dies before a complete distribution of his or her Account under the Plan has occurred, the Participant’s undistributed Account balance shall commence to be distributed to his or her Beneficiary under the distribution method (for death) elected by the Participant as soon as administratively possible following receipt by the Administrative Committee of satisfactory notice and confirmation of the Participant’s death.
|
(c)
|
Notwithstanding anything to the contrary in this Article 7, a distribution payable with respect to any PST Restoration Program Contributions (including any adjustments thereon pursuant to Article 6.4) shall be made in accordance with the Terms and Conditions associated with those contributions, except that such distributions shall be payable in cash and not in the Company’s common stock.
|
(a)
|
A Scheduled In-Service Withdrawal shall be paid in a single sum as soon as practicable in the January of the payout year elected by the Participant to receive such Scheduled In-Service Withdrawal.
|
(b)
|
If a Participant has elected a Scheduled In-Service Withdrawal for all or a portion of his or her Account, but terminates employment with all Employers for any reason other than Disability or death prior to the year specified by the Participant for such Scheduled In-Service Withdrawal to be paid, the Scheduled In-Service Withdrawal shall be paid in the year following the year employment terminates.
|
(c)
|
If a Participant terminates employment with all Employers by reason of Disability or death prior to the year specified by the Participant for such Scheduled In-Service Withdrawal to be paid, the Scheduled In-Service Withdrawal distribution shall be distributed in the manner elected by the Participant for Disability or death. However, if Disability or death occurs within a Plan Year during which a Scheduled In-Service Withdrawal is still to be paid, such withdrawal shall be paid as scheduled to the Participant (or in the event of death, to the Participant’s estate).
|
(d)
|
Notwithstanding the above, PST Restoration Program Contributions (including any adjustments thereon pursuant to Article 6.4) are not eligible for Scheduled In-Service Withdrawals.
|
(a)
|
The Administrative Committee may delegate its responsibilities hereunder to one or more persons, to serve at the Administrative Committee’s discretion. The Administrative Committee or its delegatee(s) shall have such powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following:
|
(b)
|
The Administrative Committee shall have no power to add to, subtract from, or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility under the Plan. No member of the Administrative Committee shall participate in any action on any matters involving solely his or her own rights or benefits as a Participant under the Plan, and any such matters shall be determined by the Compensation and Leadership Development Committee.
|
(1)
|
I have reviewed this quarterly report on Form 10-Q of The Procter & Gamble Company;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ DAVID S. TAYLOR
|
(David S. Taylor)
|
Chairman of the Board, President and Chief Executive Officer
|
|
October 19, 2018
|
Date
|
(1)
|
I have reviewed this quarterly report on Form 10-Q of The Procter & Gamble Company;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JON R. MOELLER
|
(Jon R. Moeller)
|
Vice Chairman and Chief Financial Officer
|
|
October 19, 2018
|
Date
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in that Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company.
|
/s/ DAVID S. TAYLOR
|
(David S. Taylor)
|
Chairman of the Board, President and Chief Executive Officer
|
|
October 19, 2018
|
Date
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in that Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company.
|
/s/ JON R. MOELLER
|
(Jon R. Moeller)
|
Vice Chairman and Chief Financial Officer
|
|
October 19, 2018
|
Date
|