x
|
True
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
False
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Ohio
|
OH
|
1-434
|
|
31-0411980
|
(State of Incorporation)
|
|
(Commission File Number)
|
|
(I.R.S. Employer Identification Number)
|
One Procter & Gamble Plaza
|
|
Cincinnati
|
OH
|
|
One Procter & Gamble Plaza, Cincinnati, Ohio
|
45202
|
|||
(Address of principal executive offices)
|
(Zip Code)
|
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, without Par Value
|
PG
|
NYSE
|
4.125% EUR notes due December 2020
|
PG20A
|
NYSE
|
0.275% Notes due 2020
|
PG20
|
NYSE
|
2.000% Notes due 2021
|
PG21
|
NYSE
|
2.000% Notes due 2022
|
PG22B
|
NYSE
|
1.125% Notes due 2023
|
PG23A
|
NYSE
|
0.500% Notes due 2024
|
PG24A
|
NYSE
|
0.625% Notes due 2024
|
PG24B
|
NYSE
|
1.375% Notes due 2025
|
PG25
|
NYSE
|
4.875% EUR notes due May 2027
|
PG27A
|
NYSE
|
1.200% Notes due 2028
|
PG28
|
NYSE
|
1.250% Notes due 2029
|
PG29B
|
NYSE
|
1.800% Notes due 2029
|
PG29A
|
NYSE
|
6.250% GBP notes due January 2030
|
PG30
|
NYSE
|
5.250% GBP notes due January 2033
|
PG33
|
NYSE
|
1.875% Notes due 2038
|
PG38
|
NYSE
|
|
Large accelerated filer
|
þ
|
|
|
Accelerated filer
|
¨
|
|
|
Non-accelerated filer
|
¨
|
|
|
Smaller reporting company
|
¨
|
False
|
|
|
|
|
|
Emerging growth company
|
¨
|
False
|
Item 1.
|
Financial Statements
|
|
Three Months Ended September 30
|
||||||
Amounts in millions except per share amounts
|
2019
|
|
2018
|
||||
NET SALES
|
$
|
17,798
|
|
|
$
|
16,690
|
|
Cost of products sold
|
8,723
|
|
|
8,484
|
|
||
Selling, general and administrative expense
|
4,785
|
|
|
4,652
|
|
||
OPERATING INCOME
|
4,290
|
|
|
3,554
|
|
||
Interest expense
|
(108
|
)
|
|
(129
|
)
|
||
Interest income
|
58
|
|
|
53
|
|
||
Other non-operating income, net
|
103
|
|
|
462
|
|
||
EARNINGS BEFORE INCOME TAXES
|
4,343
|
|
|
3,940
|
|
||
Income taxes
|
726
|
|
|
729
|
|
||
NET EARNINGS
|
3,617
|
|
|
3,211
|
|
||
Less: Net earnings attributable to noncontrolling interests
|
24
|
|
|
12
|
|
||
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,593
|
|
|
$
|
3,199
|
|
|
|
|
|
||||
NET EARNINGS PER SHARE (1)
|
|
|
|
||||
Basic
|
$
|
1.41
|
|
|
$
|
1.26
|
|
Diluted
|
$
|
1.36
|
|
|
$
|
1.22
|
|
|
|
|
|
||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
2,647.5
|
|
|
2,612.1
|
|
(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
|
2019
|
|
2018
|
||||
NET EARNINGS
|
$
|
3,617
|
|
|
$
|
3,211
|
|
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
|
|
|
|
||||
Foreign currency translation
|
(540
|
)
|
|
(209
|
)
|
||
Unrealized gains/(losses) on investment securities
|
(5
|
)
|
|
(5
|
)
|
||
Unrealized gains/(losses) on defined benefit retirement plans
|
179
|
|
|
152
|
|
||
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
|
(366
|
)
|
|
(62
|
)
|
||
TOTAL COMPREHENSIVE INCOME
|
3,251
|
|
|
3,149
|
|
||
Less: Total comprehensive income attributable to noncontrolling interests
|
20
|
|
|
8
|
|
||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE
|
$
|
3,231
|
|
|
$
|
3,141
|
|
Amounts in millions
|
|
|
|
|
September 30, 2019
|
|
June 30, 2019
|
|||||
Assets
|
|
|
|
|
|
|
|
|||||
CURRENT ASSETS
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
|
|
|
$
|
9,304
|
|
|
$
|
4,239
|
|
|
Available-for-sale investment securities
|
|
|
|
|
—
|
|
|
6,048
|
|
|||
Accounts receivable
|
|
|
|
|
5,143
|
|
|
4,951
|
|
|||
INVENTORIES
|
|
|
|
|
|
|
|
|||||
Materials and supplies
|
|
|
|
|
1,394
|
|
|
1,289
|
|
|||
Work in process
|
|
|
|
|
656
|
|
|
612
|
|
|||
Finished goods
|
|
|
|
|
3,415
|
|
|
3,116
|
|
|||
Total inventories
|
|
|
|
|
5,465
|
|
|
5,017
|
|
|||
Prepaid expenses and other current assets
|
|
|
|
|
2,013
|
|
|
2,218
|
|
|||
TOTAL CURRENT ASSETS
|
|
|
|
|
21,925
|
|
|
22,473
|
|
|||
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
20,901
|
|
|
21,271
|
|
|||
GOODWILL
|
|
|
|
|
39,605
|
|
|
40,273
|
|
|||
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET
|
|
|
|
24,002
|
|
|
24,215
|
|
||||
OTHER NONCURRENT ASSETS
|
|
|
|
|
7,625
|
|
|
6,863
|
|
|||
TOTAL ASSETS
|
|
|
|
|
$
|
114,058
|
|
|
$
|
115,095
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
|
|
|
|
$
|
10,951
|
|
|
$
|
11,260
|
|
|
Accrued and other liabilities
|
|
|
|
|
9,950
|
|
|
9,054
|
|
|||
Debt due within one year
|
|
|
|
|
9,352
|
|
|
9,697
|
|
|||
TOTAL CURRENT LIABILITIES
|
|
|
|
|
30,253
|
|
|
30,011
|
|
|||
LONG-TERM DEBT
|
|
|
|
|
20,161
|
|
|
20,395
|
|
|||
DEFERRED INCOME TAXES
|
|
|
|
|
6,325
|
|
|
6,899
|
|
|||
OTHER NONCURRENT LIABILITIES
|
|
|
|
|
10,335
|
|
|
10,211
|
|
|||
TOTAL LIABILITIES
|
|
|
|
|
67,074
|
|
|
67,516
|
|
|||
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|||||
Preferred stock
|
|
|
|
|
915
|
|
|
928
|
|
|||
Common stock – shares issued –
|
September 2019
|
|
4,009.2
|
|
|
|
|
|
||||
|
June 2019
|
|
4,009.2
|
|
|
4,009
|
|
|
4,009
|
|
||
Additional paid-in capital
|
|
|
|
|
63,949
|
|
|
63,827
|
|
|||
Reserve for ESOP debt retirement
|
|
|
|
|
(1,112
|
)
|
|
(1,146
|
)
|
|||
Accumulated other comprehensive income/(loss)
|
|
|
|
|
(15,298
|
)
|
|
(14,936
|
)
|
|||
Treasury stock
|
|
|
|
|
(102,510
|
)
|
|
(100,406
|
)
|
|||
Retained earnings
|
|
|
|
|
96,625
|
|
|
94,918
|
|
|||
Noncontrolling interest
|
|
|
|
|
406
|
|
|
385
|
|
|||
TOTAL SHAREHOLDERS’ EQUITY
|
|
|
|
|
46,984
|
|
|
47,579
|
|
|||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
$
|
114,058
|
|
|
$
|
115,095
|
|
|
Three Months Ended September 30, 2019
|
||||||||||||||||||||||||||||
Dollars in millions; shares in thousands
|
Common Stock
|
Preferred Stock
|
Add-itional Paid-In Capital
|
Reserve for ESOP Debt Retirement
|
Accumu-lated
Other Comp-rehensive Income/(Loss) |
Treasury Stock
|
Retained Earnings
|
Non-controlling Interest
|
Total Share-holders' Equity
|
||||||||||||||||||||
Shares
|
Amount
|
||||||||||||||||||||||||||||
BALANCE JUNE 30, 2019
|
2,504,751
|
|
|
$4,009
|
|
|
$928
|
|
|
$63,827
|
|
|
($1,146
|
)
|
|
($14,936
|
)
|
|
($100,406
|
)
|
|
$94,918
|
|
|
$385
|
|
|
$47,579
|
|
Net earnings
|
|
|
|
|
|
|
|
3,593
|
|
24
|
|
3,617
|
|
||||||||||||||||
Other comprehensive income/(loss)
|
|
|
|
|
|
(362
|
)
|
|
|
(4
|
)
|
(366
|
)
|
||||||||||||||||
Dividends and dividend equivalents ($0.7459 per share):
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Common
|
|
|
|
|
|
|
|
(1,874
|
)
|
|
(1,874
|
)
|
|||||||||||||||||
Preferred, net of tax benefits
|
|
|
|
|
|
|
|
(65
|
)
|
|
(65
|
)
|
|||||||||||||||||
Treasury stock purchases
|
(25,405
|
)
|
|
|
|
|
|
(3,000
|
)
|
|
|
(3,000
|
)
|
||||||||||||||||
Employee stock plans
|
13,050
|
|
|
|
120
|
|
|
|
885
|
|
|
|
1,005
|
|
|||||||||||||||
Preferred stock conversions
|
1,416
|
|
|
(13
|
)
|
2
|
|
|
|
11
|
|
|
|
—
|
|
||||||||||||||
ESOP debt impacts
|
|
|
|
|
34
|
|
|
|
53
|
|
|
87
|
|
||||||||||||||||
Noncontrolling interest, net
|
|
|
|
|
|
|
|
|
|
1
|
|
1
|
|
||||||||||||||||
BALANCE
SEPTEMBER 30, 2019 |
2,493,812
|
|
|
$4,009
|
|
|
$915
|
|
|
$63,949
|
|
|
($1,112
|
)
|
|
($15,298
|
)
|
|
($102,510
|
)
|
|
$96,625
|
|
|
$406
|
|
|
$46,984
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||||||||
Dollars in millions; shares in thousands
|
Common Stock
|
Preferred Stock
|
Add-itional Paid-In Capital
|
Reserve for ESOP Debt Retirement
|
Accumu-lated
Other Comp-rehensive Income/(Loss) |
Treasury Stock
|
Retained Earnings
|
Non-controlling Interest
|
Total Share-holders' Equity
|
||||||||||||||||||||
Shares
|
Amount
|
||||||||||||||||||||||||||||
BALANCE
JUNE 30, 2018 |
2,498,093
|
|
|
$4,009
|
|
|
$967
|
|
|
$63,846
|
|
|
($1,204
|
)
|
|
($14,749
|
)
|
|
($99,217
|
)
|
|
$98,641
|
|
|
$590
|
|
|
$52,883
|
|
Impact of adoption of new accounting standards
|
|
|
|
|
|
(326
|
)
|
|
(200
|
)
|
(27
|
)
|
(553
|
)
|
|||||||||||||||
Net earnings
|
|
|
|
|
|
|
|
3,199
|
|
12
|
|
3,211
|
|
||||||||||||||||
Other comprehensive income/(loss)
|
|
|
|
|
|
(58
|
)
|
|
|
(4
|
)
|
(62
|
)
|
||||||||||||||||
Dividends and dividend equivalents
($0.7172 per share): |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Common
|
|
|
|
|
|
|
|
(1,791
|
)
|
|
(1,791
|
)
|
|||||||||||||||||
Preferred, net of tax benefits
|
|
|
|
|
|
|
|
(66
|
)
|
|
(66
|
)
|
|||||||||||||||||
Treasury stock purchases
|
(15,690
|
)
|
|
|
|
|
|
(1,252
|
)
|
|
|
(1,252
|
)
|
||||||||||||||||
Employee stock plans
|
7,368
|
|
|
|
20
|
|
|
|
500
|
|
|
|
520
|
|
|||||||||||||||
Preferred stock conversions
|
1,637
|
|
|
(16
|
)
|
3
|
|
|
|
13
|
|
|
|
—
|
|
||||||||||||||
ESOP debt impacts
|
|
|
|
|
27
|
|
|
|
48
|
|
|
75
|
|
||||||||||||||||
Noncontrolling interest, net
|
|
|
|
(158
|
)
|
|
|
|
|
(303
|
)
|
(461
|
)
|
||||||||||||||||
BALANCE
SEPTEMBER 30, 2018 |
2,491,408
|
|
|
$4,009
|
|
|
$951
|
|
|
$63,711
|
|
|
($1,177
|
)
|
|
($15,133
|
)
|
|
($99,956
|
)
|
|
$99,831
|
|
|
$268
|
|
|
$52,504
|
|
|
Three Months Ended September 30
|
||||||
Amounts in millions
|
2019
|
|
2018
|
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
|
$
|
4,239
|
|
|
$
|
2,569
|
|
OPERATING ACTIVITIES
|
|
|
|
||||
Net earnings
|
3,617
|
|
|
3,211
|
|
||
Depreciation and amortization
|
723
|
|
|
643
|
|
||
Share-based compensation expense
|
110
|
|
|
102
|
|
||
Deferred income taxes
|
(586
|
)
|
|
34
|
|
||
Gain on sale of assets
|
(2
|
)
|
|
(361
|
)
|
||
Changes in:
|
|
|
|
||||
Accounts receivable
|
(261
|
)
|
|
(475
|
)
|
||
Inventories
|
(549
|
)
|
|
(494
|
)
|
||
Accounts payable, accrued and other liabilities
|
1,151
|
|
|
933
|
|
||
Other operating assets and liabilities
|
(35
|
)
|
|
(84
|
)
|
||
Other
|
1
|
|
|
58
|
|
||
TOTAL OPERATING ACTIVITIES
|
4,169
|
|
|
3,567
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures
|
(1,079
|
)
|
|
(1,080
|
)
|
||
Proceeds from asset sales
|
6
|
|
|
9
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(237
|
)
|
||
Purchases of short-term investments
|
—
|
|
|
(158
|
)
|
||
Proceeds from sales and maturities of investment securities
|
6,151
|
|
|
649
|
|
||
Change in other investments
|
1
|
|
|
(48
|
)
|
||
TOTAL INVESTING ACTIVITIES
|
5,079
|
|
|
(865
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Dividends to shareholders
|
(1,932
|
)
|
|
(1,853
|
)
|
||
Change in short-term debt
|
(61
|
)
|
|
24
|
|
||
Treasury stock purchases
|
(3,000
|
)
|
|
(1,252
|
)
|
||
Impact of stock options and other
|
875
|
|
|
425
|
|
||
TOTAL FINANCING ACTIVITIES
|
(4,118
|
)
|
|
(2,656
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(65
|
)
|
|
(70
|
)
|
||
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
5,065
|
|
|
(24
|
)
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$
|
9,304
|
|
|
$
|
2,545
|
|
•
|
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, Pain Relief, 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, Taped Diapers and Pants); Feminine Care (Adult Incontinence, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).
|
|
% of Net sales by operating segment (1)
|
||
|
Three Months Ended September 30
|
||
|
2019
|
|
2018
|
Fabric Care
|
23%
|
|
23%
|
Baby Care
|
11%
|
|
12%
|
Home Care
|
10%
|
|
10%
|
Hair Care
|
10%
|
|
10%
|
Skin and Personal Care
|
10%
|
|
9%
|
Family Care
|
9%
|
|
9%
|
Oral Care
|
7%
|
|
8%
|
Shave Care
|
7%
|
|
8%
|
Feminine Care
|
6%
|
|
6%
|
Personal Health Care
|
5%
|
|
3%
|
Other
|
2%
|
|
2%
|
Total
|
100%
|
|
100%
|
(1)
|
% of Net sales by operating segment excludes sales held in Corporate.
|
|
|
Three Months Ended September 30
|
||||||||||
|
|
Net Sales
|
|
Earnings/(Loss) Before Income Taxes
|
|
Net Earnings
|
||||||
Beauty
|
2019
|
$
|
3,552
|
|
|
$
|
1,092
|
|
|
$
|
874
|
|
|
2018
|
3,289
|
|
|
947
|
|
|
759
|
|
|||
Grooming
|
2019
|
1,531
|
|
|
426
|
|
|
353
|
|
|||
|
2018
|
1,562
|
|
|
417
|
|
|
340
|
|
|||
Health Care
|
2019
|
2,221
|
|
|
540
|
|
|
401
|
|
|||
|
2018
|
1,845
|
|
|
440
|
|
|
332
|
|
|||
Fabric & Home Care
|
2019
|
5,832
|
|
|
1,338
|
|
|
1,028
|
|
|||
|
2018
|
5,488
|
|
|
1,144
|
|
|
877
|
|
|||
Baby, Feminine & Family Care
|
2019
|
4,567
|
|
|
1,134
|
|
|
871
|
|
|||
|
2018
|
4,390
|
|
|
902
|
|
|
692
|
|
|||
Corporate
|
2019
|
95
|
|
|
(187
|
)
|
|
90
|
|
|||
|
2018
|
116
|
|
|
90
|
|
|
211
|
|
|||
Total Company
|
2019
|
$
|
17,798
|
|
|
$
|
4,343
|
|
|
$
|
3,617
|
|
|
2018
|
16,690
|
|
|
3,940
|
|
|
3,211
|
|
|
Beauty
|
|
Grooming
|
|
Health Care
|
|
Fabric & Home Care
|
|
Baby, Feminine & Family Care
|
|
Total Company
|
||||||||||||
Goodwill at June 30, 2019
|
$
|
12,985
|
|
|
$
|
12,881
|
|
|
$
|
7,972
|
|
|
$
|
1,855
|
|
|
$
|
4,580
|
|
|
$
|
40,273
|
|
Acquisitions and divestitures
|
(1
|
)
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
||||||
Translation and other
|
(222
|
)
|
|
(159
|
)
|
|
(153
|
)
|
|
(18
|
)
|
|
(62
|
)
|
|
(614
|
)
|
||||||
Goodwill at September 30, 2019
|
$
|
12,762
|
|
|
$
|
12,722
|
|
|
$
|
7,766
|
|
|
$
|
1,837
|
|
|
$
|
4,518
|
|
|
$
|
39,605
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||
Intangible assets with determinable lives
|
$
|
8,452
|
|
|
$
|
(5,443
|
)
|
Intangible assets with indefinite lives
|
20,993
|
|
|
—
|
|
||
Total identifiable intangible assets
|
$
|
29,445
|
|
|
$
|
(5,443
|
)
|
|
Approximate Percent Change in Estimated Fair Value
|
||||
|
+25 bps Discount Rate
|
|
-25 bps Growth Rate
|
||
Shave Care goodwill reporting unit
|
(5
|
)%
|
|
(6
|
)%
|
Gillette indefinite-lived intangible asset
|
(5
|
)%
|
|
(5
|
)%
|
CONSOLIDATED AMOUNTS
|
Three Months Ended September 30
|
||||||
|
2019
|
|
2018
|
||||
Net earnings
|
$
|
3,617
|
|
|
$
|
3,211
|
|
Less: Net earnings attributable to noncontrolling interests
|
24
|
|
|
12
|
|
||
Net earnings attributable to P&G (Diluted)
|
3,593
|
|
|
3,199
|
|
||
Preferred dividends
|
(65
|
)
|
|
(66
|
)
|
||
Net earnings attributable to P&G available to common shareholders (Basic)
|
$
|
3,528
|
|
|
$
|
3,133
|
|
|
|
|
|
||||
SHARES IN MILLIONS
|
|
|
|
||||
Basic weighted average common shares outstanding
|
2,504.0
|
|
|
2,495.8
|
|
||
Add: Effect of dilutive securities
|
|
|
|
||||
Conversion of preferred shares (1)
|
87.4
|
|
|
91.9
|
|
||
Impact of stock options and other unvested equity awards (2)
|
56.1
|
|
|
24.4
|
|
||
Diluted weighted average common shares outstanding
|
2,647.5
|
|
|
2,612.1
|
|
||
|
|
|
|
||||
NET EARNINGS PER SHARE (3)
|
|
|
|
||||
Basic
|
$
|
1.41
|
|
|
$
|
1.26
|
|
Diluted
|
$
|
1.36
|
|
|
$
|
1.22
|
|
(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 1 million and 69 million for the three months ended September 30, 2019 and 2018 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
|
||||||
|
2019
|
|
2018
|
||||
Share-based compensation expense
|
$
|
110
|
|
|
$
|
102
|
|
Net periodic benefit cost for pension benefits (1)
|
40
|
|
|
28
|
|
||
Net periodic benefit cost/(credit) for other retiree benefits (1)
|
(52
|
)
|
|
(41
|
)
|
(1)
|
The components of the total net periodic benefit cost for both pension benefits and other retiree benefits for these 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, 2019.
|
|
Amount of Gain/(Loss) Recognized in OCI on Derivatives
|
||||||
|
Three Months Ended September 30
|
||||||
|
2019
|
|
2018
|
||||
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS (1) (2)
|
|||||||
Foreign exchange contracts
|
$
|
113
|
|
|
$
|
(43
|
)
|
(1)
|
For the derivatives in net investment hedging relationships, the amount of gain/(loss) excluded from effectiveness testing, which was recognized in earnings, was $19 and $14 for the three months ended September 30, 2019 and 2018, 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 Accumulated other comprehensive income/(loss) (AOCI) for such instruments was $609 and $207, for the three months ended September 30, 2019 and 2018, respectively.
|
|
Amount of Gain/(Loss) Recognized in Earnings
|
||||||
|
Three Months Ended September 30
|
||||||
|
2019
|
|
2018
|
||||
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
|
|||||||
Interest rate contracts
|
$
|
90
|
|
|
$
|
(24
|
)
|
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
|
|||||||
Foreign currency contracts
|
$
|
(97
|
)
|
|
$
|
(2
|
)
|
|
|
||||||||||||||
|
Investment Securities
|
|
Pension and Other Retiree Benefits
|
|
Foreign Currency Translation
|
|
Total AOCI
|
||||||||
Balance at June 30, 2019
|
$
|
11
|
|
|
$
|
(4,198
|
)
|
|
$
|
(10,749
|
)
|
|
$
|
(14,936
|
)
|
OCI before reclassifications (1)
|
(3
|
)
|
|
104
|
|
|
(540
|
)
|
|
(439
|
)
|
||||
Amounts reclassified from AOCI into the Consolidated Statements of Earnings (2)
|
(2
|
)
|
|
75
|
|
|
—
|
|
|
73
|
|
||||
Net current period OCI
|
(5
|
)
|
|
179
|
|
|
(540
|
)
|
|
(366
|
)
|
||||
Less: Other comprehensive income/(loss) attributable to non-controlling interests
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Balance at September 30, 2019
|
$
|
6
|
|
|
$
|
(4,019
|
)
|
|
$
|
(11,285
|
)
|
|
$
|
(15,298
|
)
|
(1)
|
Net of tax expense/(benefit) of $0, $51 and $170 for gains/losses on investment securities, pension and other retiree benefit items and foreign currency translation, respectively.
|
(2)
|
Net of tax expense/(benefit) of $0, $20 and $0 for gains/losses on investment securities, pension and other retiree benefit items and foreign currency translation, respectively.
|
•
|
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.
|
|
Reserve Balance
|
|
Three Months Ended September 30, 2019
|
|
Reserve Balance
|
||||||||||||||
|
June 30, 2019
|
|
Charges
|
|
Cash Spent
|
|
Charges Against Assets
|
|
September 30, 2019
|
||||||||||
Separations
|
$
|
280
|
|
|
$
|
34
|
|
|
$
|
(60
|
)
|
|
$
|
—
|
|
|
$
|
254
|
|
Asset-related costs
|
—
|
|
|
45
|
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|||||
Other costs
|
188
|
|
|
14
|
|
|
(25
|
)
|
|
—
|
|
|
177
|
|
|||||
Total
|
$
|
468
|
|
|
$
|
93
|
|
|
$
|
(85
|
)
|
|
$
|
(45
|
)
|
|
$
|
431
|
|
|
Three Months Ended September 30, 2019
|
||
Beauty
|
$
|
8
|
|
Grooming
|
18
|
|
|
Health Care
|
12
|
|
|
Fabric & Home Care
|
4
|
|
|
Baby, Feminine & Family Care
|
20
|
|
|
Corporate (1)
|
31
|
|
|
Total Company
|
$
|
93
|
|
(1)
|
Corporate includes costs related to allocated overheads, including charges related to our Market Operations, Global Business Services and Corporate Functions activities.
|
|
September 30, 2019
|
||
Operating leases:
|
|
||
Other noncurrent assets
|
$
|
887
|
|
|
|
||
Accrued and other liabilities
|
263
|
|
|
Other noncurrent liabilities
|
630
|
|
|
Total operating lease liabilities
|
$
|
893
|
|
|
|
||
Weighted average remaining lease term:
|
|
||
Operating leases
|
7 years
|
|
|
|
|
||
Weighted average discount rate:
|
|
||
Operating leases
|
4.3
|
%
|
|
Operating Leases
|
||
|
September 30, 2019
|
||
1 year
|
$
|
263
|
|
2 years
|
177
|
|
|
3 years
|
158
|
|
|
4 years
|
134
|
|
|
5 years
|
114
|
|
|
Over 5 years
|
218
|
|
|
Total lease payments
|
1,064
|
|
|
Less: Interest
|
(171
|
)
|
|
Present value of lease liabilities
|
$
|
893
|
|
|
Operating Leases
|
||
|
June 30, 2019
|
||
2020
|
$
|
263
|
|
2021
|
209
|
|
|
2022
|
165
|
|
|
2023
|
141
|
|
|
2024
|
121
|
|
|
After 2024
|
244
|
|
|
Total lease payments
|
$
|
1,143
|
|
Amounts in millions
|
November 30, 2018
|
||
Current assets
|
$
|
420
|
|
Property, plant and equipment
|
121
|
|
|
Intangible assets
|
2,134
|
|
|
Goodwill
|
2,085
|
|
|
Other non-current assets
|
209
|
|
|
Total assets acquired
|
$
|
4,969
|
|
|
|
||
Current liabilities
|
$
|
233
|
|
Deferred income taxes
|
764
|
|
|
Non-current liabilities
|
95
|
|
|
Total liabilities acquired
|
$
|
1,092
|
|
|
|
||
Noncontrolling interest (1)
|
$
|
169
|
|
|
|
||
Net assets acquired
|
$
|
3,708
|
|
(1)
|
Represents a 48% minority ownership interest in the Merck India company.
|
Amounts in millions
|
Estimated Fair Value
|
|
Avg Remaining
Useful Life |
||
Intangible assets with determinable lives
|
|
|
|
||
Brands
|
$
|
701
|
|
|
14
|
Patents and technology
|
162
|
|
|
10
|
|
Customer relationships
|
325
|
|
|
20
|
|
Total
|
$
|
1,188
|
|
|
15
|
|
|
|
|
||
Intangible assets with indefinite lives
|
|
|
|
||
Brands
|
946
|
|
|
|
|
Total intangible assets
|
$
|
2,134
|
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview
|
•
|
Summary of Results – Three Months Ended September 30, 2019
|
•
|
Economic Conditions and Uncertainties
|
•
|
Results of Operations – Three Months Ended September 30, 2019
|
•
|
Business Segment Discussion – Three Months Ended September 30, 2019
|
•
|
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, Herbal Essences, Pantene, Rejoice
|
Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care)
|
Olay, Old Spice, Safeguard, SK-II, Secret
|
|
Grooming
|
Grooming (1) (Shave Care - Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care; Appliances)
|
Braun, Gillette, Venus
|
Health Care
|
Oral Care (Toothbrushes, Toothpaste, Other Oral Care)
|
Crest, Oral-B
|
Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Pain Relief, Other Personal Health Care)
|
Metamucil, Neurobion, Pepto Bismol, 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, Fairy, Febreze, Mr. Clean, Swiffer
|
|
Baby, Feminine & Family Care
|
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)
|
The Grooming product category is comprised of the Shave Care and Appliances operating segments.
|
|
Three Months Ended September 30, 2019
|
||
|
Net Sales
|
|
Net Earnings
|
Beauty
|
20%
|
|
25%
|
Grooming
|
9%
|
|
10%
|
Health Care
|
12%
|
|
11%
|
Fabric & Home Care
|
33%
|
|
29%
|
Baby, Feminine & Family Care
|
26%
|
|
25%
|
Total Company
|
100%
|
|
100%
|
•
|
Net sales increased 7% to $17.8 billion, driven by a 20% increase in Health Care, a high single digits increase in Beauty and mid-single digits increases in Fabric & Home Care and Baby, Feminine & Family Care, partially offset by a low single digit decline in Grooming. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 7%, driven by a double digits increase in Beauty, high single digits increases in Health Care and Fabric & Home Care, a mid-single digit increase in Baby, Feminine & Family Care and a low single digit increase in Grooming.
|
•
|
Unit volume increased 5%, with organic volume up 4%. Volume increased high teens in Health Care, mid-single digits in Fabric & Home Care, and low single digits in Beauty and in Baby, Feminine & Family Care. Volume decreased low single digits in Grooming. Excluding the impacts of the Merck OTC acquisition, organic volume increased mid-single digits in Health Care.
|
•
|
Net earnings were $3.6 billion, an increase of $0.4 billion or 13% versus the prior year due to the increase in net sales, an increase in operating margin and a reduction in the current year income tax rate, partially offset by the base period gain on dissolution of the PGT Healthcare partnership.
|
•
|
Net earnings attributable to Procter & Gamble increased $0.4 billion or 12% versus the prior year to $3.6 billion.
|
•
|
Diluted net earnings per share increased 11% to $1.36 due primarily to the increase in net earnings.
|
•
|
Core net earnings attributable to Procter & Gamble, which represents net earnings excluding incremental restructuring charges in both periods and the base period gain on the dissolution of the PGT Healthcare partnership, increased 24% to $3.6 billion. Core net earnings per share increased 22% to $1.37 due primarily to the increase in Core net earnings.
|
•
|
Operating cash flow was $4.2 billion. Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $3.3 billion. Adjusted free cash flow productivity was 91%.
|
|
Three Months Ended September 30
|
||||
Amounts in millions, except per share amounts
|
2019
|
|
2018
|
|
% Chg
|
Net sales
|
$17,798
|
|
$16,690
|
|
7%
|
Operating income
|
4,290
|
|
3,554
|
|
21%
|
Net earnings
|
3,617
|
|
3,211
|
|
13%
|
Net earnings attributable to Procter & Gamble
|
3,593
|
|
3,199
|
|
12%
|
Diluted net earnings per common share
|
1.36
|
|
1.22
|
|
11%
|
Core net earnings per common share
|
1.37
|
|
1.12
|
|
22%
|
|
|||||
|
Three Months Ended September 30
|
||||
COMPARISONS AS A PERCENTAGE OF NET SALES
|
2019
|
|
2018
|
|
Basis Pt Chg
|
Gross profit
|
51.0%
|
|
49.2%
|
|
180
|
Selling, general & administrative expense
|
26.9%
|
|
27.9%
|
|
(100)
|
Operating income
|
24.1%
|
|
21.3%
|
|
280
|
Earnings before income taxes
|
24.4%
|
|
23.6%
|
|
80
|
Net earnings
|
20.3%
|
|
19.2%
|
|
110
|
Net earnings attributable to Procter & Gamble
|
20.2%
|
|
19.2%
|
|
100
|
•
|
90 basis points of gross manufacturing cost savings projects (80 basis points net of product and packaging reinvestments),
|
•
|
70 basis points of positive pricing impacts,
|
•
|
40 basis points of lower commodity costs, and
|
•
|
50 basis points of other benefits
|
•
|
a 150 basis-point reduction from increased excess tax benefits of share-based compensation (200 basis points in the current year versus 50 basis points in the prior year),
|
•
|
a 120 basis-point reduction from a non-recurring tax benefit arising from a simplification of our legal entity structure,
|
•
|
a 90 basis-point reduction from favorable impacts from geographic mix of earnings,
|
•
|
partially offset by a 180 basis-point increase related to the prior year tax impact of the gain on the dissolution of the PGT Healthcare partnership.
|
|
Three Months Ended September 30, 2019
|
|||||||||||||||||||
|
Net Sales
|
|
% Change Versus Year Ago
|
|
Earnings/(Loss) Before Income Taxes
|
|
% Change Versus Year Ago
|
|
Net Earnings
|
|
% Change Versus Year Ago
|
|||||||||
Beauty
|
$
|
3,552
|
|
|
8
|
%
|
|
$
|
1,092
|
|
|
15
|
%
|
|
$
|
874
|
|
|
15
|
%
|
Grooming
|
1,531
|
|
|
(2
|
)%
|
|
426
|
|
|
2
|
%
|
|
353
|
|
|
4
|
%
|
|||
Health Care
|
2,221
|
|
|
20
|
%
|
|
540
|
|
|
23
|
%
|
|
401
|
|
|
21
|
%
|
|||
Fabric & Home Care
|
5,832
|
|
|
6
|
%
|
|
1,338
|
|
|
17
|
%
|
|
1,028
|
|
|
17
|
%
|
|||
Baby, Feminine & Family Care
|
4,567
|
|
|
4
|
%
|
|
1,134
|
|
|
26
|
%
|
|
871
|
|
|
26
|
%
|
|||
Corporate
|
95
|
|
|
N/A
|
|
|
(187
|
)
|
|
N/A
|
|
|
90
|
|
|
N/A
|
|
|||
Total Company
|
$
|
17,798
|
|
|
7
|
%
|
|
$
|
4,343
|
|
|
10
|
%
|
|
$
|
3,617
|
|
|
13
|
%
|
•
|
Volume in Hair Care increased low single digits. Increased volume was driven by mid-single digits growth in North America, Asia Pacific, Europe, Latin America and IMEA (due to product innovation, market growth and Japan retailer inventory increase), partially offset by a low single digits decline in Greater China due to competitive activities. Excluding the impact of minor brand acquisitions, volume increased low single digits in North America. Global market share of the Hair Care category was unchanged.
|
•
|
Volume in Skin and Personal Care increased mid-single digits. Volume increased in all regions, led by a high single digits increase in Greater China and mid-single digits increases in North America and Latin America driven by premium innovation. Global market share of the Skin and Personal Care category increased more than half a point.
|
•
|
Shave Care volume decreased low single digits. The volume decrease was driven by a high single digits decline in North America due to competitive activity, partially offset by a mid-single digits increase in Greater China and low single digit increases in Latin America and Asia Pacific due to product innovation. Global market share of the Shave Care category was unchanged.
|
•
|
Volume in Appliances decreased mid-single digits. A decline of more than 20% in Asia Pacific (due to market contraction, competitive activities and a reduction in trade inventories), was partially offset by mid-single digit volume increase in Greater China due to innovation. Global market share of the Appliances category was unchanged.
|
•
|
Oral Care volume increased mid-single digits. Increased volume was driven by high teens growth in IMEA and high single digits growth in North America, Asia Pacific and Latin America due to innovation and market growth. Global market share of the Oral Care category increased nearly half a point.
|
•
|
Volume in Personal Health Care increased more than 50% versus the prior year period. Excluding the impact of the Merck OTC consumer healthcare acquisition, organic volume increased high single digits. The organic volume increase was driven by over 20% growth in Europe and double digits growth in North America (due to innovation and higher retailer inventory build for the cough/cold season versus the year ago period), partially offset by double digit volume declines in Asia Pacific due to devaluation-related price increases. Global market share of the Personal Health Care category increased slightly.
|
•
|
Fabric Care volume increased high single digits. Volume increased in all regions led by double digits growth in Asia Pacific, Greater China and Latin America, high single digits growth in North America and mid-single digits growth in Europe. Growth was driven by product innovation, market growth and the increase in Japan retailer inventories prior to a VAT increase. Global market share of the Fabric Care category increased half a point.
|
•
|
Home Care volume increased low single digits. Excluding the impact of minor brand divestitures, organic volume increased mid-single digits. Increased volume was driven by high single digits growth in Asia Pacific, mid-single digits growth in Europe and low single digits growth in North America. Volume grew behind product innovation and the increase in Japan retailer inventories prior to a VAT increase. Global market share of the Home Care category increased more than a point.
|
•
|
Volume in Baby Care decreased low single digits. Volume decreased high single digits in Latin America and mid-single digits in Europe due to competitive activity, devaluation related price increases and category contraction in certain markets. This was partially offset by high teens volume increase in Asia Pacific due to the increase in Japan retailer inventories prior to the VAT increase, mid-single digit increase in Greater China, and low single digit increase in North America due to product innovation. Global market share of the Baby Care category decreased more than a point.
|
•
|
Volume in Feminine Care increased mid-single digits. Volume increased high single digits in IMEA and Latin America and increased mid-single digits in Europe due to product innovation and adult incontinence category growth. Global market share of the Feminine Care category was unchanged.
|
•
|
Volume in Family Care, which is predominantly a North American business, increased mid-single digits driven by product innovation, partially offset by volume declines due to price increases. North America share of the Family Care category decreased nearly half a point.
|
Three Months Ended September 30, 2019
|
Net Sales Growth
|
|
Foreign Exchange Impact
|
|
Acquisition & Divestiture Impact/Other (1)
|
|
Organic Sales Growth
|
Beauty
|
8%
|
|
2%
|
|
—%
|
|
10%
|
Grooming
|
(2)%
|
|
2%
|
|
1%
|
|
1%
|
Health Care
|
20%
|
|
2%
|
|
(13)%
|
|
9%
|
Fabric & Home Care
|
6%
|
|
1%
|
|
1%
|
|
8%
|
Baby, Feminine & Family Care
|
4%
|
|
1%
|
|
—%
|
|
5%
|
Total Company
|
7%
|
|
2%
|
|
(2)%
|
|
7%
|
Three Months Ended September 30, 2019
|
|||||
Operating Cash Flow
|
|
Capital Spending
|
U.S. Tax Act Payments
|
|
Adjusted Free Cash Flow
|
$4,169
|
|
$(1,079)
|
$215
|
|
$3,305
|
Three Months Ended September 30, 2019
|
||||
Adjusted Free Cash Flow
|
|
Net Earnings
|
|
Adjusted Free Cash Flow Productivity
|
$3,305
|
|
$3,617
|
|
91%
|
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures |
|||||||||||||||
Three Months Ended September 30, 2019
|
|||||||||||||||
|
AS REPORTED (GAAP)
|
|
INCREMENTAL RESTRUCTURING
|
|
ROUNDING
|
|
NON-GAAP (CORE)
|
||||||||
COST OF PRODUCTS SOLD
|
$
|
8,723
|
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
8,671
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
|
4,785
|
|
|
22
|
|
|
—
|
|
|
4,807
|
|
||||
OPERATING INCOME
|
4,290
|
|
|
30
|
|
|
—
|
|
|
4,320
|
|
||||
INCOME TAX
|
726
|
|
|
1
|
|
|
—
|
|
|
727
|
|
||||
NET EARNINGS ATTRIBUTABLE TO P&G
|
3,593
|
|
|
31
|
|
|
(1
|
)
|
|
3,623
|
|
||||
|
|
|
|
|
|
|
Core EPS
|
||||||||
DILUTED NET EARNINGS PER COMMON SHARE (1)
|
$
|
1.36
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
1.37
|
|
|
|
CHANGE VERSUS YEAR AGO
|
|
|
|
|
|
|
|
CORE NET EARNINGS ATTRIBUTABLE TO P&G
|
24
|
%
|
|
|
|
|
|
CORE EPS
|
22
|
%
|
|
|
|
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
|
|
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
|
||
7/01/2019 - 7/31/2019
|
10,793,321
|
|
|
$114.19
|
|
8,720,696
|
|
|
(3)
|
8/01/2019 - 8/31/2019
|
8,496,790
|
|
|
$117.69
|
|
8,496,790
|
|
|
(3)
|
9/01/2019 - 9/30/2019
|
8,187,635
|
|
|
$122.14
|
|
8,187,635
|
|
|
(3)
|
Total
|
27,477,746
|
|
|
$117.64
|
|
25,405,121
|
|
|
|
(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 22, 2019, the Company stated that in fiscal year 2020 the Company expects to reduce outstanding shares through direct share repurchases at a value of $6 to $8 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
|
*
|
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 22, 2019
|
|
|
|
/s/ VALARIE L. SHEPPARD
|
Date
|
|
|
|
(Valarie L. Sheppard)
|
|
|
|
|
Controller and Treasurer, and Executive Vice President -
|
|
|
|
|
Company Transition Leader
|
Exhibit
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
104
|
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
|
|
|
|
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
|
+
|
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 STAR Target for each participant is calculated as:
|
•
|
The Business Unit Performance Factor is weighted at 70% and is based on the fiscal year success for the appropriate STAR business unit. The STAR business units are defined by the Chief Human Resources Officer and may consist of business categories, segments, geographies, functions, organizations or a combination of one or more of these items. The STAR business units will be defined within ninety (90) days of the beginning of the fiscal year, but may be adjusted as necessary to reflect business and/or organizational changes (e.g., reorganization, acquisition, merger, divestiture, etc.). The Business Unit Performance Factors can range from 0% to 200% with a target of 100%. In general, a committee consisting of at least two of the Chief Executive Officer, Chief Financial Officer, Chief Human Resources Officer and/or the Chief Operating Officer (the “STAR Committee”), conducts a comprehensive retrospective assessment of the fiscal year performance of each STAR business unit against previously established goals and relative to competition for one or more of the following measures: Operating Total Shareholder Return, After Tax Profit, Free Cash Flow Productivity, Value Share, Organic Sales, Internal controls, Accounts receivable ,Inventory, Organization Head Self-Assessment, and Cross Organization Assessment. The STAR Committee makes a recommendation of an appropriate Business Unit Performance Factor to the C&LD Committee. There may also be other factors significantly affecting STAR business unit results positively or negatively which can be considered by the STAR Committee when making its recommendation. No member of the STAR Committee makes any recommendation or determination as to their own STAR award. As a result, there are certain instances in which a Business Unit
|
•
|
The Total Company Performance Factor is weighted at 30% and is based on the total Company’s success during the fiscal year and ranges from 0% to 200%, with a target of 100%. The same Total Company Performance Factor is applied to all STAR award calculations, regardless of STAR business unit. It is determined using a matrix which compares results against pre-established goals for fiscal year organic sales growth and core earnings per share (“EPS”) growth for the fiscal year.
|
•
|
Retirement, Death or Special Separation with a Separation Package: If a participant worked at least 28 days (4 calendar weeks) during the fiscal year, the STAR award is pro-rated by dividing the number of calendar days the participant was an “active employee” during the fiscal year by 365.
|
•
|
Voluntary Resignation or Termination for cause: Separating employees must have been active employees as of June 30 or the last business day in June (the close of the fiscal year for which the award is payable) to receive an award.
|
•
|
Separation due to a Company authorized divestiture: In the case of divestitures the CHRO is authorized to determine the appropriate STAR payout based on Business Unit factors either at Target or at projected or actual business results. The CHRO is also authorized to pay awards for the current or following partial fiscal year at time of divestiture close for administrative convenience.
|
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.
|
(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 22, 2019
|
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;
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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;
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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
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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 22, 2019
|
Date
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2019 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 22, 2019
|
Date
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2019 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 22, 2019
|
Date
|