Procter & Gamble Annual Report 2017

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FY2017 Annual Report · Procter & Gamble

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2017
Annual
Report

Financial Highlights (unaudited)

Amounts in billions, except per share amounts

Net Sales

Operating Income

Net Earnings
Attributable to P&G

2017

2016

2015

2014

2013

$65.1
$14.0
$15.3

$65.3

$70.7

$74.4

$73.9

$13.4

$11.0

$13.9

$13.1

$10.5

$7.0

$11.6

$11.3

Net Earnings Margin from
Continuing Operations

15.7% 15.4% 11.7% 14.3% 14.0%

Diluted Net Earnings
per Common Share from
Continuing Operations 1

Diluted Net Earnings
per Common Share 1

Operating Cash Flow

Dividends per
Common Share

$3.69 $3.49

$2.84

$3.63

$3.50

$5.59 $3.69
$12.8
$2.70

$2.66

$15.4

$2.44

$4.01

$3.86

$14.6

$14.0

$14.9

$2.59

$2.45

$2.29

2017 NET SALES BY GEOGR APHIC REGION

2017 NET SALES BY
BUSINESS SEGMENT 2

Baby, Feminine,
and Family Care 28%

Beauty 18%

Fabric and Home Care 32%

Health Care 12%

Grooming 10%

2017 NET SALES
BY MARKET MATURIT Y

Developed Markets 65%

Developing Markets 35%

North America 45%

Latin America 8%

India, Middle East,
and Africa (IMEA) 7%

Europe 23%

Asia Pacific 9%

Greater China 8%

(1) Diluted net earnings per common share are calculated based on net earnings attributable to Procter & Gamble.
(2) These results exclude net sales in Corporate.

VARIOUS STATEMENTS IN THIS ANNUAL REPORT, including estimates, projections, objectives and expected results, are “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are generally identified by the
words “believe,” “expect,” “anticipate,” “intend,” “opportunity,” “plan,” “project,” “will,” “should,” “could,” “would,” “likely” and similar expressions. Forward-looking statements are
based on current assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements, including the risks and
uncertainties discussed on pages 2 – 6 of this Annual Report. We undertake no obligation to update or revise publicly any forward-looking statements.

Dear Shareowners,

We met or exceeded our objectives for fiscal year 2017.

We met our sales objective, with organic sales growth of 2%
for the fiscal year — more than a full point faster than fiscal
2016 — and mainly composed of volume growth.

We exceeded our earnings objective, with core earnings per
share of $3.92, a 7% increase. This includes a 4% headwind
from foreign exchange. Excluding foreign exchange, we
delivered another year of double-digit currency-neutral
core earnings per share growth.

All-in sales were essentially in line with the year before. This includes a 2%
headwind from the combined impacts of foreign exchange and divestitures.
All-in GAAP earnings per share increased 51%. This includes a significant
one-time gain from the sale of 41 specialty beauty brands to Coty, Inc.

We continued to deliver robust free cash flow results. Adjusted free cash
flow was $9.8 billion, with adjusted free cash flow productivity of 94%.

TABLE OF CONTENTS

Letter to Shareowners
P&G’s 10-Category Portfolio
Form 10-K
Measures Not Defined by U.S. GAAP
Company and Shareholder Information
Company Leadership
Board of Directors
Recognition and Commitments
Citizenship

i
iii
xi
29
75
76
77
78
Inside Back Cover

David S. Taylor

Chairman of the Board,
President and Chief Executive Officer

ii • The Procter & Gamble Company

We built on our strong track record of returning cash to you, our
shareowners. In total, P&G returned nearly $22 billion of value through
dividends, share exchanges and share repurchase. We paid $7.2 billion
in dividends and increased our dividend by 3%, marking the 61st
consecutive annual increase and the 127th consecutive year P&G has
paid a dividend — every year since our incorporation in 1890. We reduced
shares outstanding by more than $14.6 billion through a combination
of share repurchases and shares exchanged in the sale of our specialty
beauty brands to Coty.

The streamlining and strengthening of our product
portfolio is now complete. In just over two years,
we divested, discontinued or consolidated 105 brands,
and built market capitalization as we executed this
significant restructure. With this work complete, we are
truly a new P&G, better positioned for the long term.

Looking forward, our objective is very clear: balanced top- and bottom-line
growth that consistently delivers total shareholder return in the top third of
our peer group. The work we’ve begun and the progress we’ve made have
us building toward this level of results.

To accomplish our objective, we’re raising the bar across everything we do
to continue to accelerate sales growth, improve productivity, and empower
our organization and culture to deliver sustained, exceptional performance.

A Streamlined and
Strengthened Portfolio
in 10 Categories

During fiscal 2017, P&G completed
the transformation of our brand
portfolio. We now have a much
stronger, more focused portfolio
that is better positioned to win.

P&G has leading market positions in
our 10 categories, and they leverage
the Company’s core strengths:
consumer understanding, branding,
product and package innovations,
and go-to-market capabilities.

These are daily-use categories
where purchase intent and choice are
driven by a specific job to do and the
product’s effectiveness in doing it.
Daily-use categories drive shopping
trips and dollars, and loyalty to brands
is often higher in these categories.

P&G’s
10-Category
Portfolio

EXPLORE OUR
BR ANDS

FABRIC C ARE

Laundry Detergents, Fabric Enhancers,
Laundry Additives

HOME C ARE

Dish Care, Air Care, Surface Care,
P&G Professional

GROOMING

Male Blades & Razors, Female Blades & Razors,
Pre- and Post-Shave Products,
Appliances, Other Shave Care

OR AL C ARE

Toothbrushes, Toothpaste,
Other Oral Care

BABY C ARE

Diapers and Pants,
Baby Wipes

FEMININE C ARE

Feminine Care,
Adult Incontinence

FAMILY C ARE

Paper Towels, Tissues,
Toilet Paper

PERSONAL HEALTH C ARE

HAIR C ARE

SKIN AND PERSONAL C ARE

Gastrointestinal, Respiratory,
Rapid Diagnostics, Vitamins / Minerals /
Supplements, Other Personal Health Care

Shampoo, Conditioner,
Styling Aids, Treatments

Skin Care, Antiperspirant and
Deodorant, Personal Cleansing

iv • The Procter & Gamble Company

Accelerating Sales Growth

We’re working to accelerate organic sales growth by strengthening and
extending the advantages we’ve created with our products and packages,
improving the execution of our consumer communication and on-shelf and
online presence, and ensuring our brands offer a superior consumer value
in each price tier where we compete.

The market continues to be challenging, whether it’s price transparency,
changing retail dynamics, established and new competitors — both online
and offline — or slowing market growth. The best response is innovation
and greater superiority in all elements of our consumer proposition — a
higher standard. That is what we are working on, starting with the consumer
and shopper. That’s where we believe sustained success must start.

The superiority of our products, packages, execution
and consumer value create impactful, meaningful
advantages that earn trial and repurchase, grow
markets and build market share.

It is what will be required to prevent commoditization of our categories
and minimize deflationary impacts. It is required to reduce our promotion
spending and create strong retail relevance across offline and online channels.

Our products need to deliver a big enough advantage to increase loyalty
to our brands and change expectations of the category. We’re moving
from a single evaluation metric — Weighted Purchase Intent — to a “body
of evidence” approach, which uses a mix of technical tests, blind tests,
context-aided tests, household panel data and in-market product reviews
to provide a more complete assessment of the actual product experience.
It includes behavioral data, which is more reliable than the attitudinal data
we historically collected. In the end, we’re striving for products that are
so good, consumers don’t want to part with them after use, to the point
where they consider their old product meaningfully inferior.

Packaging is another area where we see great opportunities for innovation,
both online and offline. Superior packaging attracts consumers at the first
moment of truth, provides integrity, protects quality, and delights consumers
during use and in its ability to be disposed of responsibly. Superior packaging
creates recognizable brand blocks at shelf, aids consumers in selecting the
best product for their needs, conveys the equity of the brand, and closes
the sale.

SUPERIOR PRODUCTS

Using Tide PODS changed consumers’
laundry detergent expectations. Consumers
rated their detergent then tried Tide PODS
for four weeks. After using PODS, they
lowered their assessment of their previous
detergent by more than 10 points.
Tide PODS and Gain Flings have driven
90% of U.S. laundry detergent category
growth since their introduction.

SUPERIOR PACKAGING

P&G’s scent beads’ distinctive packages
allow consumers to experience the product
benefit in-store by squeezing to release
the scent. P&G has an approximately
80% market share in the markets where
we compete, supporting overall category
growth of nearly 20% in fiscal year 2017.

SUPERIOR BRAND COMMUNICATIONS

The best advertising sparks conversations,
affects attitudes, and changes behavior.
The Always #LikeAGirl campaign has started
a movement and helped girls worldwide
feel more confident. The campaign has also
significantly driven Always brand awareness
and equity scores among viewers, and Always
has built more than two points of U.S. market
share since the campaign began.

The Procter & Gamble Company • v

Superior product and packaging benefits need to be communicated to
consumers with exceptional brand messaging — advertising that opens hearts
and minds, creates awareness and, ultimately, creates desire to purchase the
product. This is advertising that drives growth for brands and the categories in
which they compete, and clears the highest bar for creative brilliance — sparking
conversations, affecting attitudes, changing behavior and sometimes even
defining popular culture. We’re setting a higher standard of excellence on
advertising quality with a focus on brand performance claims that communicate
the brand’s benefit superiority to create awareness and trial.

Our go-to-market execution in-store and online are additional areas where
we’re redefining excellence to a higher standard to grow categories and
our brands. In stores, this means having the right store coverage, product
forms, sizes, price points, shelving and merchandising execution. Online,
it means having the right content, assortment, ratings, reviews, search
and subscription offerings.

The last element is winning consumer and retail customer value equations.
Value is more than price. It is the superior value of the total proposition for
the consumer: a product that meets a need in a noticeable and superior way,
with a package that is convenient to use, with compelling communication,
presented in a clear and shoppable way in-store. For our retail customers,
the value equation includes margin, penny profit, trip generation, basket size
and category growth.

EXCELLENT IN-STORE
& ONLINE EXECUTION

Pantene’s new in-store shelf design
simplifies the shopping experience and
drives regimen use across consumer
needs. In Brazil it has helped generate
record market share in fiscal year 2017.

WINNING CONSUMER & RETAIL
CUSTOMER VALUE EQUATIONS

Winning consumer value is about more
than price — it’s about delighting consumers
so they see the superior value of the total
proposition. Our super-premium SK-II
skin care brand has delivered consistent
double-digit growth in fiscal year 2017.

vi • The Procter & Gamble Company

A New Standard
of Excellence

We are establishing a higher
standard of excellence for
all our brands, with greater
superiority in all elements of
our consumer proposition.
Success on all five of these
elements represents a
significant opportunity to
accelerate top-line growth.

Dawn — A Brand
Winning Through
Superiority

Dawn — known as Fairy outside
North America — is P&G’s top
hand dishwashing brand, and
a great example of a brand
executing well in every one
of our superiority criteria.

Superior Products

Superior Packaging

Our products need to deliver a
big enough advantage to change
consumers’ affinity for our brands
and their expectations of the
category — products so good,
consumers don’t want to part
with them after use.

Superior packaging attracts the consumer
at the first moment of truth, provides
integrity, protects quality, and delights
consumers during use and in its ability
to be disposed of responsibly. It creates
recognizable brand blocks at shelf,
aids consumers in selecting the best
product for their needs, conveys the
equity of the brand, and closes the sale.

Dawn is a superior-performing
product. According to consumer
research, Dawn Ultra Blue
outperforms its nearest competitor
on 16 attributes, including
tough food cleaning, long-lasting
product, and overall value.

The iconic bottle of Dawn and Fairy
is clean and simple. It is visually
attractive and instantly recognizable
for consumers where they shop.

The Procter & Gamble Company • vii

Superior Brand
Communications

Excellent In-Store
& Online Execution

Winning Consumer & Retail
Customer Value Equations

Excellence in stores means having
the right store coverage, product
forms, sizes, price points, shelving
and merchandising execution.
Online, it means having the right
content, assortment, ratings, reviews,
search and subscription offerings.

For consumers, value is a product that
meets a need in a noticeable and superior
way, a convenient-to-use package, and
compelling communication, presented
in a clear and shoppable way in-store.
For retail customers, value includes margin,
penny profit, trip generation, basket size
and category growth.

Dawn reaches consumers with
strong competitive advertising like
“3x more grease cleaning power
than the leading competitor” and
“A drop of Dawn and grease is gone” —
messages that connect to consumers
and convince them of the benefits of
the brand, so they want to try it.

Dawn stands out on-shelf with
a “wall of blue” — big blocks of
the iconic blue color that attract
consumers’ attention.

More than half the consumers who
try Dawn or Fairy buy it again. Dawn
has delivered 10 consecutive years of
sales growth in North America, with
U.S. value share up more than two
points in fiscal year 2017. Fairy has an
all-time high value share in the U.K.,
of more than 70%.

Productivity
Fuels Growth

Productivity is the fuel for both top- and
bottom-line growth — providing savings
for investment in sales growth, as well as
for margin expansion to grow earnings
per share. We have plans to save up to
$10 billion from fiscal year 2017
through fiscal year 2021.

P R O D UCTIVIT

V
A
L
U
E

G
R
O

up to

$10B

in savings

I N

T
N

V E ST ME

There are four elements of our
planned productivity savings:

Cost of goods sold
Marketing spending
Trade spending
Overhead spending

viii • The Procter & Gamble Company

Improving Productivity and Cost

Establishing and extending product, package, execution and value superiority
represents a significant opportunity to accelerate top-line growth. Achieving this
higher standard of performance more consistently will require investment, which
leads to continuing to raise the bar on productivity.

Productivity is the fuel for both top- and bottom-line
growth — providing savings for investment in sales growth,
as well as for margin expansion to grow earnings per share.

We have plans to save up to $10 billion from fiscal year 2017 through fiscal year 2021.
This is on top of the $10 billion saved from fiscal year 2012 through fiscal year 2016.
There are four elements of our planned productivity savings: cost of goods sold,
marketing spending, trade spending and overhead spending.

The majority of the savings opportunities are in cost of goods sold. We see
opportunities ahead in raw and packaging materials, manufacturing expense,
transportation and warehousing as we fully synchronize our supply network
and replenishment systems from our suppliers to our customers.

In marketing spending, we have identified savings opportunities such as driving
down media rates; eliminating media supply chain waste; reducing agency fees
and advertising production costs; and improving the efficiency of in-store materials,
direct-to-consumer programs and sampling programs.

Trade spending is a large spending pool where just a 10% efficiency will result
in meaningful savings. This will come from improved execution against category
and brand key business drivers, and better optimizing investments by category.

Finally, we’re optimizing each function in the Company, with a particular focus
on reducing the cost of activities furthest away from consumers or customers
and increasing end-to-end business accountability.

Empowering Our Organization and Culture

All of this work is underpinned by an organization that is experienced, agile,
accountable and committed to win.

We’re further strengthening our organization design, culture
and accountability by moving resources closer to consumers
and customers; driving deeper mastery and accountability;
and enabling greater efficiency, speed and agility.

We continue to move resources out of global or corporate roles into regions and
countries, where they can better learn from, innovate for and serve local consumers.
Today, the large majority of commercial function employees — including general
management, brand, sales and finance — reside in local markets. They are responsible
for executing innovation, advertising and merchandising programs by leveraging

The Procter & Gamble Company • ix

End-to-End
Business Ownership
& Accountability

We’re moving to an end-to-end
business ownership and accountability
approach in large markets, giving
category business leaders full
decision-making authority from
the front end of innovation all
the way through to the customer.

Innovation

their unique, local knowledge of consumers, customers and competitors. Most of
the remaining commercial function employees are in regional roles, coordinating
innovation launch pipelines, and setting pricing and promotional strategy. Only a
small percentage are in global roles, including global category leadership, and are
dispersed around the world. Profit and loss statements are owned by the category
business units at the regional and global level.

In large markets, we’re implementing an end-to-end ownership and accountability
approach. This new model gives full decision-making authority to category
business leaders, from the front end of innovation all the way through to the
customer. We implemented this end-to-end approach in the U.S. in fiscal year
2016, brought four more markets into the model this past fiscal year, and will
add five more markets this year. In total, these end-to-end markets will account
for 70% of our sales.

In smaller countries, where we don’t have the scale to organize in a dedicated
end-to-end model, we are implementing a new “freedom within a framework”
approach. The objective is to enable these smaller markets to be faster and more
agile. As long as the market is executing within predefined strategies and is
delivering the financial target set by the region, they have freedom to make real-
time changes without the need for engagement with regional or global resources.

We’re changing talent development and career planning to drive more mastery
and depth in each of our 10 product categories. We’re aligning incentives —
at a lower level of granularity — to better match responsibilities and to
increase accountability.

We’re hiring from the outside to supplement internal development when and
where appropriate to field the best team. External hiring has roughly quadrupled
across five different levels of management, including senior leadership.

Bottom line, we are empowering P&G people with the mastery, flexibility,
speed and accountability needed to drive strong business results.

Manufacturing

Building Citizenship into Building the Business

We believe Citizenship should be built into how we deliver great results.

We take a broad view of Citizenship that incorporates Ethics & Corporate
Responsibility, Community Impact, Diversity & Inclusion, Gender Equality and
Environmental Sustainability. Our aspiration is to have a positive impact on all
stakeholders, including the wise use of our planet’s precious resources. This
commitment to Citizenship is also important to many consumers, shareowners and
stakeholders who want to ensure our actions and values are worthy of their trust.

Last year, we delivered our 12 billionth liter of clean water with P&G’s Children’s
Safe Drinking Water program; washed more than 3,100 loads of laundry for
U.S. families with our Tide Loads of Hope program; and responded to more
than 20 natural disasters globally with donations of P&G products, financial aid
and volunteer time. We signed onto a number of external commitments where
we believe P&G’s voice can make a difference, including the Catalyst CEO
Champions for Change, the Climate Leadership Council and the CEO Action
for Diversity & Inclusion.

Marketing

Selling

We’re making
sequential progress,
and we’re raising the
bar in everything
we do.

x • The Procter & Gamble Company

We’re making significant progress on sustainability to better serve the increasingly
environmentally concerned shopper. In the last year, we qualified 73% of our plants
as sending zero manufacturing waste to landfill, we completed the final stages of
wind and biomass projects that will nearly double our use of renewable energy once
they are fully online, we announced the first recyclable shampoo bottle made with
reclaimed beach plastic on Head & Shoulders, and we introduced Tide purclean,
the first bio-based detergent with the cleaning power of Tide.

You’ll find more about our efforts in our Citizenship Report, which will be published
this fall. In the meantime, please go to www.pg.com/citizenship to learn more.

Raising the Bar

As we close fiscal 2017 and enter fiscal 2018, we are where we expected to be.
We’re making sequential progress, and we’re raising the bar in everything we do.

We’re accelerating efforts to execute and deliver on the plans we’ve put into action.
We’re expecting continued consecutive acceleration of organic sales growth of
2% to 3%, core earnings per share growth of 5% to 7%, and 90% or better free
cash flow productivity.

We’ll measure our progress in years, not quarters. We’ll continue to make the needed
investment in innovation, brand building and go-to-market execution to position
P&G well for the next three years, five years, and into the future.

We’re raising the bar to a higher standard of performance — irresistibly superior products
and packaging, coupled with superior commercial execution, fueled by strong cost
savings and continued strengthening of our organization and culture. This will lead
to balanced growth and value creation and winning total shareholder return.

Winning results matter. They matter to our employees, retirees and stakeholders.
They matter to you, our shareowners. Winning results happen because we earn
them — every day, every week, every month, every quarter, and every year —
in every brand and in every country in which we compete.

We’re committed to win, and we’ll do it within our Purpose,
Values and Principles that have guided P&G for 180 years.
We’ll always do it the right way, with integrity and with
competitive passion. That’s P&G at its best.

David S. Taylor

Chairman of the Board,
President and Chief Executive Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2017

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-434

THE PROCTER & GAMBLE COMPANY
One Procter & Gamble Plaza, Cincinnati, Ohio 45202
Telephone (513) 983-1100
IRS Employer Identification No. 31-0411980
State of Incorporation: Ohio

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, without Par Value

Name of each exchange on which registered
New York Stock Exchange, NYSE Euronext-Paris

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filed," "accelerated filer," "smaller reporting
company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Non-accelerated filer

Accelerated filer

(Do not check if smaller reporting company)

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

The aggregate market value of the voting stock held by non-affiliates amounted to $215 billion on December 31, 2016.

There were 2,550,014,230 shares of Common Stock outstanding as of July 31, 2017.

Portions of the Proxy Statement for the 2017 Annual Meeting of Shareholders, which was filed on August 1, 2017 (2017 Proxy Statement),
are incorporated by reference into Part III of this report to the extent described herein.

Documents Incorporated by Reference

FORM 10-K TABLE OF CONTENTS

PART I

Business

Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4. Mine Safety Disclosure

Properties
Legal Proceedings

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases

Executive Officers of the Registrant

of Equity Securities
Selected Financial Data

Item 6.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.

Financial Statements and Supplementary Data

Management's Report and Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Note 1: Summary of Significant Accounting Policies
Note 2: Segment Information
Note 3: Supplemental Financial Information
Note 4: Goodwill and Intangible Assets
Note 5: Income Taxes
Note 6: Earnings Per Share
Note 7: Stock-based Compensation
Note 8: Postretirement Benefits and Employee Stock Ownership Plan
Note 9: Risk Management Activities and Fair Value Measurements
Note 10: Short-term and Long-term Debt
Note 11: Accumulated Other Comprehensive Income/(Loss)
Note 12: Commitments and Contingencies
Note 13: Discontinued Operations
Note 14: Quarterly Results (Unaudited)

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information

PART III Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation
Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13. Certain Relationships and Related Transactions and Director Independence
Item 14.

Principal Accountant Fees and Services

PART IV Item 15. Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
Exhibit Index

Item 16.

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The Procter & Gamble Company 1

PART I

Item 1. Business.

Additional information required by this item is incorporated
herein by reference to Management's Discussion and Analysis
(MD&A); and Notes 1 and 2 to our Consolidated Financial
Statements. Unless the context indicates otherwise, the terms
the "Company," "P&G," "we," "our" or "us" as used herein
refer to The Procter & Gamble Company (the registrant) and
its subsidiaries.

The Procter & Gamble Company is focused on providing
branded consumer packaged goods of superior quality and
value to improve the lives of the world's consumers. The
Company was incorporated in Ohio in 1905, having been built
from a business founded in 1837 by William Procter and James
Gamble. Today, our products are sold in more than 180
countries and territories.

Throughout this Form 10-K, we incorporate by reference
information from other documents filed with the Securities and
Exchange Commission (SEC).

The Company's Annual Report on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K, and
amendments thereto, are filed electronically with the SEC. The
SEC maintains an internet site that contains these reports at:
www.sec.gov. You can also access these reports through links
from our website at: www.pginvestor.com.

Copies of these reports are also available, without charge, by
contacting Wells Fargo, 1100 Centre Pointe Curve, Suite 101,
Mendota, MN 55120-4100.

Financial Information about Segments

As of June 30, 2017, the Company has five reportable segments
under U.S. GAAP: Beauty; Grooming; Health Care; Fabric &
Home Care; and Baby, Feminine & Family Care. Many of the
factors necessary for understanding these businesses are
similar. Operating margins of the individual businesses vary
due to the nature of materials and processes used to
manufacture the products, the capital intensity of the businesses
and differences in selling, general and administrative expenses
as a percentage of net sales. Net sales growth by business is
also expected to vary slightly due to the underlying growth of
the markets and product categories in which they operate.
While none of our reportable segments are highly seasonal,
components within certain reportable segments, such as
Appliances (Grooming) and Personal Health Care (Health), are
seasonal.

Additional information about our reportable segments can be
found in the MD&A and Note 2 to our Consolidated Financial
Statements.

Narrative Description of Business

Business Model. Our business model relies on the continued
growth and success of existing brands and products, as well as
the creation of new products. The markets and industry
segments in which we offer our products are highly
competitive. Our products are sold in more than 180 countries
and territories primarily through mass merchandisers, grocery

stores, membership club stores, drug stores, department stores,
distributors, wholesalers, baby stores, specialty beauty stores,
e-commerce, high-frequency stores and pharmacies. We
utilize our superior marketing and online presence to win with
consumers at the "zero moment of truth" - when they are
searching for information about a brand or product. We work
collaboratively with our customers to improve the in-store and
online presence of our products and win the "first moment of
truth" - when a consumer is shopping in the store or online.
We must also win the "second moment of truth" - when a
consumer uses the product, evaluates how well it met his or
her expectations and decides whether it was a good value. We
believe we must continue to provide new, innovative products
and branding to the consumer in order to grow our business.
Accordingly, marketing and research and product development
activities, designed to enable sustained organic growth,
continued to carry a high priority during the past fiscal year.

Key Product Categories. Information on key product
categories can be found in Note 2 to our Consolidated Financial
Statements.

Key Customers. Our customers include mass merchandisers,
grocery stores, membership club stores, drug stores,
department stores, distributors, wholesalers, baby stores,
specialty beauty stores, e-commerce, high-frequency stores
and pharmacies. Sales to Wal-Mart Stores, Inc. and its affiliates
represent approximately 16% of our total sales in 2017, and
15% in 2016 and 2015. No other customer represents more
than 10% of our total sales. Our top ten customers accounted
for approximately 35% of our total sales in 2017, 2016 and
2015. The nature of our business results in no material backlog
orders or contracts with the government. We believe our
practices related to working capital items for customers and
suppliers are consistent with the industry segments in which
we compete.

Sources and Availability of Materials. Almost all of the raw
and packaging materials used by the Company are purchased
from others, some of which are single-source suppliers. We
produce certain raw materials, primarily chemicals, for further
use in the manufacturing process. In addition, fuel, natural gas
and derivative products are important commodities consumed
in our manufacturing process and in the transportation of input
materials and of finished product to customers. The prices we
pay for materials and other commodities are subject to
fluctuation. When prices for these items change, we may or
may not pass the change to our customers. The Company
purchases a substantial variety of other raw and packaging
materials, none of which is material to our business taken as a
whole.

Trademarks and Patents. We own or have licenses under
patents and registered trademarks, which are used in
connection with our activity in all businesses. Some of these
patents or licenses cover significant product formulation and
processes used to manufacture our products. The trademarks
are important to the overall marketing and branding of our
products. All major trademarks in each business are registered.

2 The Procter & Gamble Company

In part, our success can be attributed to the existence and
continued protection of these trademarks, patents and licenses.

Our sales by geography for the fiscal years ended June 30 were
as follows:

Competitive Condition. The markets in which our products
are sold are highly competitive. Our products compete against
similar products of many large and small companies, including
well-known global competitors. In many of the markets and
industry segments in which we sell our products we compete
against other branded products as well as retailers' private-label
brands. We are well positioned in the industry segments and
markets in which we operate, often holding a leadership or
significant market share position. We support our products
with advertising, promotions and other marketing vehicles to
build awareness and trial of our brands and products in
conjunction with an extensive sales force. We believe this
combination provides the most efficient method of marketing
for these types of products. Product quality, performance, value
and packaging are also important differentiating factors.

Research and Development Expenditures. Research and
development (R&D) expenditures enable us to develop
technologies and obtain patents across all categories in order
to meet the needs and improve the lives of our consumers.
Research and development expenses were $1.9 billion in 2017
and 2016 and $2.0 billion in 2015 (reported in Net earnings
from continuing operations).

Expenditures for Environmental Compliance. Expenditures
for compliance with federal, state and local environmental laws
and regulations are fairly consistent from year to year and are
not material to the Company. No material change is expected
in fiscal year 2018.

Employees. Total number of employees is an estimate of total
Company employees excluding interns, co-ops, contractors
and employees of joint ventures as of the years ended June 30.
The number of employees includes manufacturing and non-
manufacturing employees. A discussion of progress on non-
manufacturing enrollment objectives is included in Note 3 to
our Consolidated Financial Statements. The number of
employees includes employees of discontinued operations.

2017

2016

2015

2014

2013

2012

Total Number of Employees
95,000

105,000

110,000

118,000

121,000

126,000

Financial Information about Foreign and Domestic
Operations. Net sales in the U.S. account for 42% of total net
sales. No other individual country exceeds 10% of total net
sales. Operations outside the U.S. are generally characterized
by the same conditions discussed in the description of the
business above and may be affected by additional factors
including changing currency values, different rates of inflation,
economic growth and political and economic uncertainties and
disruptions.

North America (1)
Europe

Asia Pacific

Greater China

Latin America
IMEA (2)

2017
45%

23%

2016

44%

23%

2015

41%

24%

10%

(1) North America includes results for the United States, Canada and

(2)

Puerto Rico only.
IMEA includes India, Middle East and Africa.

Net sales and total assets in the United States and
internationally were as follows (in billions):

Net Sales (years ended June 30)
2017

United States
$27.3

International
$37.8

2016

2015
Total Assets (years ended June 30)
2017

2016

2015

$27.0

$26.8

$59.8

$64.4

$65.0

$38.3

$43.9

$60.6

$62.7

$64.5

Item 1A. Risk Factors.

We discuss our expectations regarding future performance,
events and outcomes, such as our business outlook and
objectives in this Form 10-K, quarterly and annual reports,
press releases and other written and oral communications. All
statements, except for historical and present factual
information, are “forward-looking statements” and are based
on financial data and business plans available only as of the
time the statements are made, which may become outdated or
incomplete. We assume no obligation to update any forward-
looking statements as a result of new information, future events
or other factors. Forward-looking statements are inherently
uncertain, and investors must recognize that events could
significantly differ from our expectations.

The following discussion of “risk factors” identifies significant
factors that may adversely affect our business, operations,
financial position or future financial performance. This
information should be read in conjunction with the MD&A and
the Consolidated Financial Statements and related Notes
incorporated in this report. The following discussion of risks
is not all inclusive, but is designed to highlight what we believe
are important factors to consider when evaluating our
expectations. These and other factors could cause our future
results to differ from those in the forward-looking statements
and from historical trends.

Our business is subject to numerous risks as a result of our
having significant operations and sales in international
markets, including foreign currency fluctuations, currency
exchange or pricing controls and localized volatility.

We are a global company, with operations in approximately 70
countries and products sold in more than 180 countries and
territories around the world. We hold assets, incur liabilities,
earn revenues and pay expenses in a variety of currencies other
than the U.S. dollar, and our operations outside the U.S.
generate a significant portion of our net revenue. Fluctuations
in exchange rates for foreign currencies may reduce the U.S.
dollar value of revenues, profits and cash flows we receive
from non-U.S. markets, increase our supply costs (as measured
in U.S. dollars) in those markets, negatively impact our
competitiveness in those markets or otherwise adversely
impact our business results or financial condition. Moreover,
discriminatory or conflicting fiscal or trade policies in different
countries could adversely affect our results. See also the
Results of Operations and Cash Flow, Financial Condition and
Liquidity sections of the MD&A and Note 9 to our
Consolidated Financial Statements.

We also have businesses and maintain local currency cash
balances in a number of countries with exchange, import
authorization, pricing or other controls or restrictions,
including Nigeria and Ukraine. Our results of operations and
financial condition could be adversely impacted if we are
unable to successfully manage such controls and restrictions,
continue existing business operations and repatriate earnings
from overseas, or if new or increased tariffs, quotas, exchange
or price controls, trade barriers or similar restrictions are
imposed on our business.

Additionally, our business, operations or employees may be
adversely affected by political volatility, labor market
disruptions or other crises or vulnerabilities in individual
countries or regions, including political instability or upheaval,
broad economic instability or sovereign risk related to a default
by or deterioration in the credit worthiness of local
governments, particularly in emerging markets.
Uncertain global economic conditions may adversely
impact demand for our products or cause our customers
and other business partners to suffer financial hardship,
which could adversely impact our business.

Our business could be negatively impacted by reduced demand
for our products related to one or more significant local,
regional or global economic disruptions, such as: a slow-down
in the general economy; reduced market growth rates; tighter
credit markets for our suppliers, vendors or customers; a
significant shift in government policies; or the inability to
conduct day-to-day
through our financial
intermediaries to pay funds to or collect funds from our
customers, vendors and suppliers. Additionally, economic
conditions may cause our suppliers, distributors, contractors
or other third party partners to suffer financial difficulties that
they cannot overcome, resulting in their inability to provide us
with the materials and services we need, in which case our
business and results of operations could be adversely affected.
Customers may also suffer financial hardships due to economic

transactions

The Procter & Gamble Company 3

conditions such that their accounts become uncollectible or are
subject to longer collection cycles. In addition, if we are unable
to generate sufficient income and cash flow, it could affect the
Company’s ability to achieve expected share repurchase and
dividend payments.
Disruptions in credit markets or changes to our credit
ratings may reduce our access to credit.

A disruption in the credit markets or a downgrade of our current
credit rating could increase our future borrowing costs and
impair our ability to access capital and credit markets on terms
commercially acceptable to us, which could adversely affect
our liquidity and capital resources or significantly increase our
cost of capital.
Disruption in our global supply chain may negatively
impact our business results.

labor disputes,

Our ability to meet our customers’ needs and achieve cost
targets depends on our ability to maintain key manufacturing
and supply arrangements, including execution of supply chain
optimizations and certain sole supplier or sole manufacturing
plant arrangements.
The loss or disruption of such
manufacturing and supply arrangements, including for issues
such as
impairment of key
manufacturing sites, discontinuity in our internal information
and data systems, inability to procure sufficient raw or input
materials, significant changes in trade policy, natural disasters,
acts of war or terrorism or other external factors over which
we have no control, could interrupt product supply and, if not
effectively managed and remedied, have an adverse impact on
our business, financial condition or results of operations.
Our businesses face cost fluctuations and pressures that
could affect our business results.

loss or

Our costs are subject to fluctuations, particularly due to
changes in the prices of commodities and raw materials and
the costs of labor, transportation, energy, pension and
healthcare. Therefore, our business results are dependent, in
part, on our continued ability to manage these fluctuations
through pricing actions, cost saving projects and sourcing
decisions, while maintaining and improving margins and
market share. Failure to manage these fluctuations could
adversely impact our financial results.
Our ability to meet our growth targets depends on
successful product, marketing and operations innovation
and successful responses to competitive innovation and
changing consumer habits.
We are a consumer products company that relies on continued
global demand for our brands and products. Achieving our
business results depends, in part, on successfully developing,
introducing and marketing new products and on making
significant improvements to our equipment and manufacturing
processes. The success of such innovation depends on our
ability to correctly anticipate customer and consumer
acceptance and trends, to obtain, maintain and enforce
necessary intellectual property protections and to avoid
infringing upon the intellectual property rights of others. We
must also successfully respond to technological advances
made by, and intellectual property rights granted to,
competitors. Failure to continually innovate, improve and

4 The Procter & Gamble Company

respond to competitive moves and changing consumer habits
could compromise our competitive position and adversely
impact our results.
The ability to achieve our business objectives is dependent
on how well we can compete with our local and global
competitors in new and existing markets and channels.

The consumer products industry is highly competitive. Across
all of our categories, we compete against a wide variety of
global and local competitors. As a result, we experience
ongoing competitive pressures in the environments in which
we operate, as well as challenges in maintaining profit margins.
To address these challenges, we must be able to successfully
respond to competitive factors, including pricing, promotional
incentives and trade terms. In addition, evolving sales channels
and business models may affect customer and consumer
preferences as well as market dynamics, which, for example,
may be seen in the growing consumer preference for shopping
online. Failure to successfully respond to competitive factors
and effectively compete in growing sales channels and business
models, particularly e-commerce, could negatively impact our
results.
A significant change in customer relationships or in
customer demand for our products could have a significant
impact on our business.

We sell most of our products via retail customers, which include
mass merchandisers, grocery stores, membership club stores,
drug stores, department stores, distributors, wholesalers, baby
stores, specialty beauty stores, e-commerce, high-frequency
stores and pharmacies. Our success is dependent on our ability
to successfully manage relationships with our retail trade
customers, which includes our ability to offer trade terms that
are mutually acceptable and are aligned with our pricing and
profitability targets. Continued concentration among our retail
customers could create significant cost and margin pressure on
our business, and our business performance could suffer if we
cannot reach agreement with a key customer on trade terms
and principles. Our business could also be negatively impacted
if a key customer were to significantly reduce the inventory
level of our products or experience a significant business
disruption.
If the reputation of the Company or one or more of our
brands erodes significantly, it could have a material impact
on our financial results.

The Company's reputation, and the reputation of our brands,
form the foundation of our relationships with key stakeholders
and other constituencies, including consumers, customers and
suppliers. The quality and safety of our products are critical
to our business. Many of our brands have worldwide
recognition and our financial success is directly dependent on
the success of our brands. The success of our brands can suffer
if our marketing plans or product initiatives do not have the
desired impact on a brand's image or its ability to attract
consumers. Our results could also be negatively impacted if
one of our brands suffers substantial harm to its reputation due
to a significant product recall, product-related litigation,
ingredients,
changing consumer perceptions of certain
allegations of product tampering or the distribution and sale of

counterfeit products. Additionally, negative or inaccurate
postings or comments on social media or networking websites
about the Company or one of its brands could generate adverse
publicity that could damage the reputation of our brands or the
Company. If we are unable to effectively manage real or
perceived issues, including concerns about safety, quality,
ingredients, efficacy or similar matters, sentiments toward the
Company or our products could be negatively impacted and
our financial results could suffer. Our Company also devotes
significant time and resources to programs that are consistent
with our corporate values and are designed to protect and
preserve our reputation, such as social responsibility and
environmental sustainability. If these programs are not
executed as planned or suffer negative publicity, the
Company's reputation and financial results could be adversely
impacted.
We rely on third parties in many aspects of our business,
which creates additional risk.

Due to the scale and scope of our business, we must rely on
relationships with third parties, including our suppliers,
distributors, contractors, joint venture partners and external
business partners, for certain functions. If we are unable to
effectively manage our third party relationships and the
agreements under which our third party partners operate, our
financial results could suffer. Additionally, while we have
policies and procedures for managing these relationships, they
inherently involve a lesser degree of control over business
operations, governance and compliance, thereby potentially
increasing our financial, legal, reputational and operational
risk.
An
a
cybersecurity breach, or the failure of one or more key
information technology systems, networks, hardware,
processes, and/or associated sites owned or operated by the
Company or one of its service providers could have a
material adverse impact on our business or reputation.

information

including

incident,

security

We rely extensively on information technology (IT) systems,
networks and services, including internet and intranet sites,
data hosting and processing facilities and tools, physical
security systems and other hardware, software and technical
applications and platforms, many of which are managed,
hosted, provided and/or used by third parties or their vendors,
to assist in conducting our business. The various uses of these
IT systems, networks and services include, but are not limited
to:

ordering and managing materials from suppliers;
converting materials to finished products;
shipping products to customers;

•
•
•
• marketing and selling products to consumers;
•

collecting,
transferring, storing and/or processing
customer, consumer, employee, vendor, investor, and
other stakeholder information and personal data;
summarizing and reporting results of operations,
including financial reporting;
hosting, processing and sharing, as appropriate,
confidential and proprietary research, business plans and
financial information;

•

•
•
•

collaborating via an online and efficient means of global
business communications;
complying with regulatory, legal and tax requirements;
providing data security; and
handling other processes necessary to manage our
business.

in anticipating and

Numerous and evolving information security threats, including
advanced persistent cybersecurity threats, pose a risk to the
security of our IT systems, networks and services, as well as
to the confidentiality, availability and integrity of our data and
of our critical business operations. As cybersecurity threats
rapidly evolve in sophistication and become more prevalent
across the industry globally, the Company is continually
increasing its attention to these threats. We continue to assess
potential threats and vulnerabilities and make investments
seeking to address them, including monitoring of networks and
systems, increasing information security skills, deploying
employee security training, and updating security policies for
the Company and its third-party providers. However, because
the techniques used in cyber attacks change frequently and may
be difficult to detect for periods of time, we may face
difficulties
implementing adequate
preventative measures or mitigating harms after such an attack.
Our IT databases and systems and our third-party providers’
databases and systems have been, and will likely continue to
be, subject to advanced computer viruses or other malicious
codes, unauthorized access attempts, denial of service attacks,
phishing and other cyber-attacks. To date, we have seen no
material impact on our business or operations from these
attacks; however, we cannot guarantee that our security efforts
or the security efforts of our third-party providers will prevent
breaches, operational incidents or other breakdowns to our or
our third-party providers’ databases or systems. If the IT
systems, networks or service providers we rely upon fail to
function properly or cause operational outages or aberrations,
or if we or one of our third-party providers suffer a loss,
significant unavailability of key operations or disclosure of our
sensitive business or stakeholder information, due to any
number of causes, ranging from catastrophic events or power
outages to improper data handling or security incidents, and
our business continuity plans do not effectively address these
failures on a timely basis, we may be exposed to reputational,
competitive, operational and business harm as well as litigation
and regulatory action. The costs and operational consequences
implementing
of responding
remediation measures could be significant and could adversely
impact our results.
Changing political conditions could adversely impact our
business and financial results.

items and

the above

Changes in the political conditions in markets in which we
manufacture, sell or distribute our products may be difficult to
predict and may adversely affect our business and financial
results. For example, the United Kingdom’s decision to leave
the European Union has created uncertainty regarding, among
other things, the U.K.'s future legal and economic framework
and how the U.K. will interact with other countries, including
with respect to the free movement of goods, services and
people. In addition, results of elections, referendums or other

The Procter & Gamble Company 5

political processes in certain markets in which our products are
manufactured, sold or distributed could create uncertainty
regarding how existing governmental policies, laws and
regulations may change, including with respect to sanctions,
taxes, the movement of goods, services and people between
countries and other matters. The potential implications of such
uncertainty, which include, among others, exchange rate
fluctuations and market contraction, could adversely affect the
Company’s business and financial results.
We must successfully manage compliance with laws and
regulations, as well as manage new and pending legal and
regulatory matters in the U.S. and abroad.

Our business is subject to a wide variety of laws and regulations
across all of the countries in which we do business, including
those laws and regulations involving intellectual property,
product liability, marketing, antitrust, privacy, environmental,
employment, anti-bribery, anti-corruption, tax, accounting and
financial reporting or other matters. Rapidly changing laws,
regulations and related interpretations, as well as increased
enforcement actions, create challenges for the Company,
including our compliance and ethics programs, and may alter
the environment in which we do business, which could
adversely impact our financial results. If we are unable to
continue to meet these challenges and comply with all laws,
regulations and related interpretations, it could negatively
impact our reputation and our business results. Failure to
successfully manage regulatory and legal matters and resolve
such matters without significant liability or damage to our
reputation may materially adversely impact our results of
operations and financial position. Furthermore, if pending
legal or regulatory matters result in fines or costs in excess of
the amounts accrued to date, that may also materially impact
our results of operations and financial position.
Changes in applicable tax regulations and resolutions of
tax disputes could negatively affect our financial results.

The Company is subject to taxation in the U.S. and numerous
foreign jurisdictions. Because the U.S. maintains a worldwide
corporate tax system, the foreign and U.S. tax systems are
somewhat interdependent. For example, certain income that
is earned and taxed in countries outside the U.S. is not taxed
in the U.S., provided those earnings are indefinitely reinvested
outside the U.S. If those same foreign earnings are instead
repatriated to the U.S., additional residual U.S. taxation will
likely occur, due to the U.S.’s worldwide tax system and higher
U.S. corporate tax rate. The U.S. is considering corporate tax
reform that may significantly change the corporate tax rate and
the U.S. international tax rules. Additionally, longstanding
international tax norms that determine each country’s
jurisdiction to tax cross-border international trade are evolving
as a result of the Base Erosion and Profit Shifting reporting
requirements (“BEPS") recommended by the G8, G20 and
Organization for Economic Cooperation and Development
("OECD"). As these and other tax laws and related regulations
change, our financial results could be materially impacted.
Given the unpredictability of these possible changes and their
potential interdependency, it is very difficult to assess whether
the overall effect of such potential tax changes would be

6 The Procter & Gamble Company

cumulatively positive or negative for our earnings and cash
flow, but such changes could adversely impact our financial
results.

Furthermore, we are subject to regular review and audit by both
foreign and domestic tax authorities. While we believe our tax
positions will be sustained, the final outcome of tax audits and
related litigation, including maintaining our intended tax
treatment of divestiture transactions such as the fiscal 2017
Beauty Brands transaction with Coty, may differ materially
from the tax amounts recorded in our Consolidated Financial
Statements, which could adversely impact our cash flows and
financial results.
We must successfully manage ongoing acquisition, joint
venture and divestiture activities.

As a company that manages a portfolio of consumer brands,
our ongoing business model includes a certain level of
acquisition, joint venture and divestiture activities. We must
be able to successfully manage the impacts of these activities,
while at the same time delivering against our business
objectives. Specifically, our financial results could be
adversely impacted by the dilutive impacts from the loss of
earnings associated with divested brands. Our financial results
could also be impacted in the event of acquisitions or joint
venture activities if: 1) changes in the cash flows or other
market-based assumptions cause the value of acquired assets
to fall below book value, or 2) we are not able to deliver the
expected cost and growth synergies associated with such
acquisitions and joint ventures, which could also have an
impact on goodwill and intangible assets.
Our business results depend on our ability to successfully
manage productivity
improvements and ongoing
organizational change.

Our financial projections assume certain ongoing productivity
improvements and cost savings, including staffing adjustments
as well as employee departures. Failure to deliver these
planned productivity improvements and cost savings, while
continuing to invest in business growth, could adversely impact
our financial results. Additionally, successfully executing
management transitions at leadership levels of the Company
and retention of key employees is critical to our business
success. We are generally a build-from-within company and

our success is dependent on identifying, developing and
retaining key employees to provide uninterrupted leadership
and direction for our business. This includes developing and
retaining organizational capabilities in key growth markets
where the depth of skilled or experienced employees may be
limited and competition for these resources is intense, as well
as continuing the development and execution of robust
leadership succession plans.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

In the U.S., we own and operate 24 manufacturing sites located
in 18 different states or territories. In addition, we own and
operate 89 manufacturing sites in 38 other countries. Many of
the domestic and international sites manufacture products for
multiple businesses. Beauty products are manufactured at 24
of these locations; Grooming products at 21; Health Care
products at 17; Fabric & Home Care products at 43; and Baby,
Feminine & Family Care at 41. Management believes that the
Company's manufacturing sites are adequate to support the
business and that the properties and equipment have been well
maintained.

Item 3. Legal Proceedings.

The Company is subject, from time to time, to certain legal
proceedings and claims arising out of our business, which
cover a wide range of matters, including antitrust and trade
contracts,
regulation,
environmental issues, patent and trademark matters, labor and
employment matters and tax. See Note 12 to our Consolidated
Financial Statements for information on certain legal
proceedings for which there are contingencies.

advertising,

liability,

product

This item should be read in conjunction with the Company's
Risk Factors in Part I, Item 1A for additional information.

Item 4. Mine Safety Disclosure.

Not applicable.

The names, ages and positions held by the Executive Officers of the Company on August 7, 2017, are:

EXECUTIVE OFFICERS OF THE REGISTRANT

Name

Position

Age

First Elected to
Officer Position

The Procter & Gamble Company 7

David S. Taylor

Chairman of the Board, President and Chief Executive
Officer

Jon R. Moeller

Vice Chairman and Chief Financial Officer

Steven D. Bishop

Group President - Global Health Care

Giovanni Ciserani

Group President - Global Fabric and Home Care and Global
Baby and Feminine Care

Mary Lynn Ferguson-McHugh

Group President - Global Family Care and P&G Ventures

Charles E. Pierce

Group President - Global Grooming

Carolyn M. Tastad

Group President - North America Selling and Market
Operations

Mark F. Biegger

Chief Human Resources Officer

Gary A. Coombe

President - Europe Selling and Market Operations

Kathleen B. Fish

Chief Technology Officer

R. Alexandra Keith

President - Global Hair Care and Beauty Sector

Deborah P. Majoras

Chief Legal Officer and Secretary

Juan Fernando Posada

President - Latin America Selling and Market Operations

Matthew Price

President - Greater China Selling and Market Operations

Marc S. Pritchard

Chief Brand Officer

Mohamed Samir

President - India, Middle East and Africa (IMEA) Selling
and Market Operations

Jeffrey K. Schomburger

Global Sales Officer

Valarie L. Sheppard

Senior Vice President, Comptroller and Treasurer

Yannis Skoufalos

Global Product Supply Officer

Magesvaran Suranjan

President - Asia Pacific Selling and Market Operations

2013

2009

2016

2013

2016

2014

2012

2014

2017

2010

2015

2008

2014

2015

2005

2011

2015

All the Executive Officers named above have been employed by the Company for more than the past five years.

8 The Procter & Gamble Company

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

ISSUER PURCHASES OF EQUITY SECURITIES

PART II

Period

4/1/2017 - 4/30/2017

5/1/2017 - 5/31/2017

6/1/2017 - 6/30/2017
Total

Total Number of
Shares Purchased (1)

Average Price
Paid per Share (2)

5,568,038

2,315,036

—

7,883,074

89.80

86.39

—

$88.80

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (3)

5,568,038

2,315,036

—

7,883,074

Approximate Dollar Value of
Shares that May Yet Be
Purchased Under Our Share
Repurchase Program
(3)

(3)

(1) All transactions were made in the open market with large financial institutions. This table excludes shares withheld from employees to
satisfy minimum tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless
exercises through an independent third party and does not repurchase stock in connection with cashless exercises.

(2) Average price paid per share is calculated on a settlement basis and excludes commission.
(3) On April 26, 2017, the Company stated that in fiscal year 2017 the Company expected to reduce outstanding shares at a value of approximately
$15 billion, through a combination of direct share repurchase and shares exchanged in the Beauty Brands transaction, notwithstanding any
purchases under the Company's compensation and benefit plans. The share repurchases were authorized pursuant to a resolution issued by
the Company's Board of Directors and were financed through a combination of operating cash flows and issuance of long-term and short-
term debt. The total value of the shares purchased under the share repurchase plan and exchanged in the Beauty Brands transaction was
$14.9 billion. The share repurchase plan ended on June 30, 2017.

Additional information required by this item can be found in Part III, Item 12 of this Form 10-K.

SHAREHOLDER RETURN PERFORMANCE GRAPHS

Market and Dividend Information

P&G has been paying a dividend for 127 consecutive years since its original incorporation in 1890 and has increased its dividend
for 61 consecutive years. Over the past five years, the dividend has increased at an annual compound average rate of 5%.
Nevertheless, as in the past, further dividends will be considered after reviewing dividend yields, profitability expectations and
financing needs and will be declared at the discretion of the Company's Board of Directors.

(in dollars; split-adjusted)

Dividends per share

1957

1967

1977

1987

1997

2007

2017

0.01

0.03

0.08

0.17

0.45

1.28

2.70

Quarterly Dividends

Quarter Ended

September 30

December 31

March 31

June 30

Common Stock Price Range

Quarter Ended

September 30

December 31

March 31

June 30

The Procter & Gamble Company 9

2016 - 2017

2015 - 2016

0.6695

0.6896

0.6629

0.6695

2016 - 2017

2015 - 2016

High

Low

High

Low

90.22

90.32

92.00

91.13

84.32

81.18

83.24

85.52

82.55

81.23

83.87

84.80

65.02

71.30

74.46

79.10

P&G trades on the New York Stock Exchange and NYSE Euronext-Paris under the stock symbol PG. There were approximately
3.0 million common stock shareowners, including shareowners of record, participants in the P&G Shareholder Investment Program,
participants in P&G stock ownership plans and beneficial owners with accounts at banks and brokerage firms, as of June 30, 2017.

Shareholder Return

The following graph compares the cumulative total return of P&G’s common stock for the five-year period ended June 30, 2017,
against the cumulative total return of the S&P 500 Stock Index (broad market comparison) and the S&P 500 Consumer Staples
Index (line of business comparison). The graph and table assume $100 was invested on June 30, 2012, and that all dividends were
reinvested.

Company Name/Index

P&G

S&P 500 Index

S&P 500 Consumer Staples Index

Cumulative Value of $100 Investment, through June 30

2012

2013

2014

2015

2016

2017

100 $

130 $

137 $

140 $

100

121

117

150

135

161

148

157 $
168

176

167

198

181

10 The Procter & Gamble Company

Item 6. Selected Financial Data.

The information required by this item is incorporated by reference to Note 1 and Note 2 to our Consolidated Financial Statements.
For further details behind the business drivers for recent results presented below, see the Management's Discussion and Analysis.

Financial Summary (Unaudited)

Amounts in millions, except per share amounts

Net sales

Gross profit

Operating income

Net earnings from continuing operations

Net earnings/(loss) from discontinued operations

Net earnings attributable to Procter & Gamble

Net earnings margin from continuing operations
Basic net earnings per common share: (1)
Earnings from continuing operations

Earnings/(loss) from discontinued operations

Basic net earnings per common share
Diluted net earnings per common share: (1)
Earnings from continuing operations

Earnings/(loss) from discontinued operations

Diluted net earnings per common share

Dividends per common share

2017
$ 65,058

32,523

13,955

10,194

5,217

15,326

2016

2015

2014

2013

2012

$ 65,299

$ 70,749

$ 74,401

$ 73,910

$ 73,138

32,390

13,441

10,027

577

10,508

33,693

11,049

8,287
(1,143)
7,036

35,371

13,910

10,658

1,127

11,643

35,858

13,051

10,346

1,056

11,312

35,254

12,495

8,864

2,040

10,756

15.7%

15.4%

11.7%

14.3%

14.0%

12.1%

3.79

2.01

5.80

3.69

1.90

5.59

2.70

3.59

0.21

3.80

3.49

0.20

3.69

2.66

2.92
(0.42)
2.50

2.84
(0.40)
2.44

2.59

3.78

0.41

4.19

3.63

0.38

4.01

2.45

3.65

0.39

4.04

3.50

0.36

3.86

2.29

3.08

0.74

3.82

2.97

0.69

3.66

2.14

Research and development expense

$ 1,874

$ 1,879

$ 1,991

$ 1,910

$ 1,867

$ 1,874

Advertising expense

Total assets

Capital expenditures

Long-term debt

Shareholders' equity

7,118

7,243

7,180

7,867

8,188

7,839

120,406

127,136

129,495

144,266

139,263

132,244

3,384

18,038

3,314

18,945

3,736

18,327

3,848

19,807

4,008

19,111

3,964

21,080

$ 55,778

$ 57,983

$ 63,050

$ 69,976

$ 68,709

$ 64,035

(1) Basic net earnings per common share and Diluted net earnings per common share are calculated based on Net earnings attributable to

Procter & Gamble.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The Procter & Gamble Company 11

excluding

impacts of

cash flow productivity. Organic sales growth is net sales
the Venezuela
growth
the
deconsolidation, acquisitions, divestitures and
foreign
exchange from year-over-year comparisons. Core EPS is
diluted net earnings per share from continuing operations
excluding certain items that are not judged to be part of the
Company's sustainable results or trends. Adjusted free cash
flow is operating cash flow less capital spending and certain
divestiture impacts. Adjusted free cash flow productivity is
the ratio of adjusted free cash flow to net earnings excluding
certain one-time items. We believe these measures provide our
investors with additional information about our underlying
results and trends, as well as insight to some of the metrics
used to evaluate management. The explanation at the end of
the MD&A provides more details on the use and the derivation
of these measures.

Management also uses certain market share and market
consumption estimates to evaluate performance relative to
competition despite some limitations on the availability and
comparability of share and consumption
information.
References to market share and market consumption in the
MD&A are based on a combination of vendor-reported
consumption and market size data, as well as internal estimates.
All market share references represent the percentage of sales
in dollar terms on a constant currency basis of our products,
relative to all product sales in the category.

OVERVIEW

P&G is a global leader in fast-moving consumer goods,
focused on providing branded consumer packaged goods of
superior quality and value to our consumers around the world.
Our products are sold in more than 180 countries and territories
primarily through mass merchandisers, grocery stores,
membership club stores, drug stores, department stores,
distributors, baby stores, specialty beauty stores, e-commerce,
high-frequency stores and pharmacies. We have on-the-ground
operations in approximately 70 countries.

Our market environment is highly competitive with global,
regional and local competitors. In many of the markets and
industry segments in which we sell our products, we compete
against other branded products, as well as retailers' private-
label brands. Additionally, many of the product segments in
which we compete are differentiated by price tiers (referred to
as super-premium, premium, mid-tier and value-tier products).
We are well positioned in the industry segments and markets
in which we operate, often holding a leadership or significant
market share position.

Management's Discussion and Analysis

Forward-Looking Statements

Certain statements in this report, other than purely historical
information, including estimates, projections, statements
relating to our business plans, objectives and expected
operating results and the assumptions upon which those
statements are based, are “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-
looking statements may appear throughout this report,
including, without limitation, in the following sections:
“Management's Discussion and Analysis” and “Risk Factors.”
These forward-looking statements generally are identified by
the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “strategy,” “future,” “opportunity,”
“plan,” “may,” “should,” “will,” “would,” “will be,” “will
continue,” “will likely result” and similar expressions.
Forward-looking statements are based on current expectations
and assumptions, which are subject to risks and uncertainties
that may cause results to differ materially from those expressed
or implied in the forward-looking statements. A detailed
discussion of risks and uncertainties that could cause results
and events to differ materially from such forward-looking
statements is included in the section titled "Economic
Conditions and Uncertainties" and the section titled “Risk
Factors” (Item 1A of this Form 10-K). Forward-looking
statements are made as of the date of this report, and we
undertake no obligation to update or revise publicly any
forward-looking statements, whether because of new
information, future events or otherwise.

The purpose of Management's Discussion and Analysis
(MD&A) is to provide an understanding of Procter & Gamble's
financial condition, results of operations and cash flows by
focusing on changes in certain key measures from year to year.
The MD&A is provided as a supplement to, and should be read
in conjunction with, our Consolidated Financial Statements
and accompanying notes. The MD&A is organized in the
following sections:

Summary of 2017 Results

• Overview
•
• Economic Conditions and Uncertainties
• Results of Operations
•
Segment Results
• Cash Flow, Financial Condition and Liquidity
•
Significant Accounting Policies and Estimates
• Other Information

Throughout the MD&A we refer to measures used by
management to evaluate performance, including unit volume
growth, net sales and net earnings. We also refer to a number
of financial measures that are not defined under accounting
principles generally accepted in the United States of America
(U.S. GAAP), including organic sales growth, core earnings
per share (Core EPS), adjusted free cash flow and adjusted free

12 The Procter & Gamble Company

ORGANIZATIONAL STRUCTURE

Our organizational structure is comprised of Global Business Units (GBUs), Selling and Market Operations (SMOs), Global
Business Services (GBS) and Corporate Functions (CF).
Global Business Units

Our GBUs are organized into ten product categories. Under U.S. GAAP, the GBUs underlying the ten product categories are
aggregated into five reportable segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family
Care. The GBUs are responsible for developing overall brand strategy, new product upgrades and innovations and marketing
plans. The following provides additional detail on our reportable segments and the ten product categories and brand composition
within each segment.

Reportable Segments

% of
Net Sales (1)

% of Net
Earnings (1)

Beauty

18%

19%

Grooming

10%

16%

Health Care

12%

13%

Fabric & Home Care

32%

27%

Baby, Feminine &
Family Care

28%

25%

Product Categories (Sub-Categories)

Hair Care (Conditioner, Shampoo, Styling Aids,
Treatments)
Skin and Personal Care (Antiperspirant and
Deodorant, Personal Cleansing, Skin Care)
Grooming (2) (Shave Care - Female Blades &
Razors, Male Blades & Razors, Pre- and Post-
Shave Products, Other Shave Care; Appliances)
Oral Care (Toothbrushes, Toothpaste, Other Oral
Care)
Personal Health Care (Gastrointestinal, Rapid
Diagnostics, Respiratory, Vitamins/Minerals/
Supplements, Other Personal Health Care)
Fabric Care (Fabric Enhancers, Laundry
Additives, Laundry Detergents)
Home Care (Air Care, Dish Care, P&G
Professional, Surface Care)

Major Brands
Head & Shoulders,
Pantene, Rejoice

Olay, Old Spice,
Safeguard, SK-II

Braun, Fusion, Gillette,
Mach3, Prestobarba,
Venus

Crest, Oral-B

Prilosec, Vicks

Ariel, Downy, Gain, Tide

Cascade, Dawn, Febreze,
Mr. Clean, Swiffer

Baby Care (Baby Wipes, Diapers and Pants)
Feminine Care (Adult Incontinence, Feminine
Care)

Luvs, Pampers

Always, Tampax

Family Care (Paper Towels, Tissues, Toilet Paper) Bounty, Charmin

(1) Percent of Net sales and Net earnings from continuing operations for the year ended June 30, 2017 (excluding results held in Corporate).
(2) The Grooming product category is comprised of the Shave Care and Appliances GBUs.

Recent Developments: During fiscal 2017, the Company
completed the previously announced plan to significantly
streamline our product portfolio by divesting, discontinuing or
consolidating about 100 non-strategic brands. The resulting
portfolio of about 65 key brands are in 10 category-based
businesses where P&G has leading market positions, strong
brands and consumer-meaningful product technologies.

During fiscal 2017, the Company completed the divestiture of
four product categories, which included 43 of the Company's
beauty brands ("Beauty Brands"), including the global salon
professional hair care and color, retail hair color, cosmetics and
the fine fragrance businesses, along with select hair styling
brands. The Beauty Brands had historically been part of the
Company’s Beauty reportable segment. The results of the
Beauty Brands are presented as discontinued operations and,
as such, are excluded from both continuing operations and
segment results for all periods presented. Additionally, the
Beauty Brands balance sheet positions as of June 30, 2016 are
presented as held for sale in the Consolidated Balance Sheets.
The Company recorded an after-tax gain on the final
transaction of $5.3 billion ($1.95 per share), net of transaction
and related costs.

During fiscal 2016, the Company completed the divestiture of
its Batteries business. The Batteries business had historically
been part of the Company’s Fabric & Home Care reportable
segment. The results of the Batteries business are presented
as discontinued operations and, as such, are excluded from both
continuing operations and segment results for all periods
presented.

During fiscal 2015, the Company completed the divestiture of
its Pet Care business. The gain on the transaction was not
material. The results of the Pet Care business are presented as
discontinued operations and, as such, are excluded from both
continuing operations and segment results for all periods
presented.

Refer to Note 13 to our Consolidated Financial Statements for
more details on each of these divestiture transactions.

While our ongoing business model may include a certain level
of acquisition and divestiture activity, with the aforementioned
transactions and other recent minor brand divestitures, the
Company has completed the strategic portfolio reshaping
program.

As of June 30, 2015, the Company deconsolidated our
Venezuelan subsidiaries and began accounting for our
investment in those subsidiaries using the cost method of
accounting. This change resulted in a fiscal 2015 one-time
after-tax charge of $2.1 billion ($0.71 per share). Beginning
in fiscal 2016, our financial results only include sales of
finished goods to our Venezuelan subsidiaries to the extent we
receive cash payments from Venezuela (expected to be largely
through
the DIPRO and DICOM exchange market).
Accordingly, we no longer include the results of our
Venezuelan subsidiaries' operations in reporting periods
following fiscal 2015 (see Note 1 to the Consolidated Financial
Statements and additional discussion in the MD&A under
"Venezuela Impacts" in Results of Operations).
Beauty: We are a global market leader in the beauty category.
Most of the beauty markets in which we compete are highly
fragmented with a large number of global and local
competitors. We compete in skin and personal care and in hair
care. In skin and personal care, we offer a wide variety of
products, ranging from deodorants to personal cleansing to skin
care, such as our Olay brand, which is one of the top facial skin
care brands in the world with nearly 6% global market share.
We are the global market leader in the retail hair care market
with over 20% global market share primarily behind our
Pantene and Head & Shoulders brands.
Grooming: We compete in Shave Care and Appliances. In
Shave Care, we are the global market leader in the blades and
razors market. Our global blades and razors market share is
nearly 65%, primarily behind the Gillette franchise including
our Fusion, Mach3, Prestobarba and Venus brands. Our
appliances, such as electric razors and epilators, are sold under
the Braun brand in a number of markets around the world where
we compete against both global and regional competitors. We
hold nearly 25% of the male shavers market and over 50% of
the female epilators market.
Health Care: We compete in oral care and personal health
care. In oral care, there are several global competitors in the
market and we have the number two market share position with
nearly 20% global market share behind our Oral-B and Crest
brands. In personal health care, we are a top ten competitor in
a large, highly fragmented industry, primarily behind
respiratory
(Vicks brand), non-prescription
heartburn medications (Prilosec OTC brand) and digestive
wellness products (Metamucil, Pepto Bismol, and Align
brands). Nearly all of our sales outside the U.S. in personal
health care are generated through the PGT Healthcare
partnership with Teva Pharmaceuticals Ltd.
Fabric & Home Care: This segment is comprised of a variety
of fabric care products including laundry detergents, additives
and fabric enhancers; and home care products including
dishwashing liquids and detergents, surface cleaners and air
fresheners. In fabric care, we generally have the number one
or number two market share position in the markets in which
we compete and are the global market leader with over 25%
global market share, primarily behind our Tide, Ariel and
Downy brands. Our global home care market share is over
20% across the categories in which we compete.

treatments

The Procter & Gamble Company 13

Baby, Feminine & Family Care: In baby care, we are the
global market leader and compete mainly in diapers, pants and
baby wipes with over 25% global market share. We are the
number one or number two baby care competitor in most of
the key markets in which we compete, primarily behind
Pampers, the Company's largest brand, with annual net sales
of more than $8 billion. We are the global market leader in the
feminine care category with over 25% global market share,
primarily behind Always. We also compete in the adult
incontinence category in certain markets, achieving over 10%
market share in the markets where we compete. Our family
care business is predominantly a North American business
comprised largely of the Bounty paper towel and Charmin
toilet paper brands. U.S. market shares are over 40% for
Bounty and over 25% for Charmin.
Selling and Market Operations

Our SMOs are responsible for developing and executing go-
to-market plans at the local level. The SMOs include dedicated
retail customer, trade channel and country-specific teams. Our
SMOs are organized under six regions comprised of North
America, Europe, Latin America, Asia Pacific, Greater China
and India, Middle East and Africa (IMEA). Throughout the
MD&A, we reference business results in developed markets,
which are comprised of North America, Western Europe and
Japan, and developing markets which are all other markets not
included in developed.
Corporate Functions

CF provides company-level strategy and portfolio analysis,
corporate accounting,
tax, external relations,
treasury,
governance, human resources and legal, as well as other
centralized functional support.
Global Business Services

GBS provides technology, processes and standard data tools
to enable the GBUs, the SMOs and Corporate Functions to
better understand the business and better serve consumers and
customers. The GBS organization is responsible for providing
world-class solutions at a low cost and with minimal capital
investment.
STRATEGIC FOCUS

P&G aspires to serve the world’s consumers better than our
best competitors in every category and in every country in
which we compete, and, as a result, deliver total shareholder
return in the top one-third of our peer group. Delivering and
sustaining leadership levels of shareholder value creation
requires balanced top-line growth, bottom-line growth and
strong cash generation.

Our strategic choices are focused on winning with consumers.
The consumers who purchase and use our products are at the
center of everything we do. We increase the number of users
- and the usage - of our brands when we win at the zero, first
and second moments of truth: when consumers research our
categories and brands, purchase them in a store or online and
use them in their homes.

Winning with consumers around the world and against our best
competitors requires innovation. Innovation has always been,
and continues to be, P&G’s lifeblood. Innovation requires

14 The Procter & Gamble Company

consumer insights and technology advancements that lead to
product
and
merchandising programs and game-changing inventions that
create new brands and categories.

improved marketing

improvements,

Productivity improvement is critical to delivering our balanced
top-line growth, bottom-line growth and value creation
objectives. Productivity improvement and sales growth
reinforce and fuel each other. We are driving productivity
improvement across all elements of cost, including cost of
goods sold, marketing and promotional expenses and non-
manufacturing overhead. Productivity improvements and cost
savings are being reinvested in product and packaging
improvements, brand awareness-building advertising and
trial-building sampling programs, increased sales coverage
and R&D programs.

We are improving operational effectiveness and organizational
culture through enhanced clarity of roles and responsibilities,
accountability and incentive compensation programs.

The Company has undertaken an effort to focus and strengthen
its business portfolio to compete in categories and with brands
that are structurally attractive and that play to P&G's strengths.

The ongoing portfolio of businesses consists of 10 product
categories. These are categories where P&G has leading
market positions, strong brands and consumer-meaningful
product technologies.

We believe these strategies are right for the long-term health
of the Company and our objective of delivering total
shareholder return in the top one-third of our peer group.

The Company expects the delivery of the following long-term
annual financial targets will result in total shareholder returns
in the top third of the competitive peer group:

• Organic sales growth above market growth rates in the

categories and geographies in which we compete;
• Core EPS growth of mid-to-high single digits; and
• Adjusted free cash flow productivity of 90% or greater.

In periods with significant macroeconomic pressures, we
intend to maintain a disciplined approach to investing so as not
to sacrifice the long-term health of our businesses to meet short-
term objectives in any given year.

SUMMARY OF 2017 RESULTS

Amounts in millions, except per share amounts
Net sales
Operating income
Net earnings from continuing operations
Net earnings/(loss) from discontinued operations
Net earnings attributable to Procter & Gamble
Diluted net earnings per common share
Diluted net earnings per share from continuing operations
Core earnings per share
Cash flow from operating activities

2017
65,058
13,955
10,194
5,217
15,326
5.59
3.69
3.92
12,753

Change vs.
Prior Year

— % $
4 %
2 %
804 %
46 %
51 %
6 %
7 %
(17)%

2016
65,299
13,441
10,027
577
10,508
3.69
3.49
3.67
15,435

Change vs.
Prior Year

(8)% $
22 %
21 %
N/A
49 %
51 %
23 %
(2)%
6 %

2015
70,749
11,049
8,287
(1,143)
7,036
2.44
2.84
3.76
14,608

• Net sales were unchanged at $65.1 billion including a

negative 2% impact from foreign exchange.

Organic sales increased 2% on a 2% increase in
organic volume.
Unit volume increased 1%. Volume increased low
single digits in Grooming, Health Care, Fabric &
Home Care and Baby, Feminine & Family Care.
Volume decreased low single digits in Beauty.
• Net earnings from continuing operations increased $167
million or 2% in fiscal 2017, driven by higher operating
income and a lower effective tax rate, partially offset by
an increase in other non-operating expense. Foreign
exchange impacts negatively affected net earnings from
continuing operations by approximately $420 million or
4%.

• Net earnings from discontinued operations increased $4.6
billion primarily due to the net impact of a gain on the sale
of our Beauty business in fiscal 2017, partially offset by

the base period results, which included the net earnings of
the Batteries and Beauty Brands businesses prior to
divestiture, a gain on the sale of the Batteries business and
impairment charges on the Batteries business prior to
divestiture.

• Net earnings attributable to Procter & Gamble were $15.3
billion, an increase of $4.8 billion or 46% versus the prior
year primarily due to the aforementioned increases in net
earnings from both continuing and from discontinued
operations.

• Diluted net earnings per share increased 51% to $5.59.

Diluted net earnings per share from continuing
operations increased 6% to $3.69.
Core EPS increased 7% to $3.92.

• Cash flow from operating activities was $12.8 billion.
Adjusted free cash flow was $9.8 billion.
Adjusted free cash flow productivity was 94%.

ECONOMIC CONDITIONS AND UNCERTAINTIES

We discuss expectations regarding future performance, events
and outcomes, such as our business outlook and objectives, in
annual and quarterly reports, press releases and other written
and oral communications. All such statements, except for
historical and present factual information, are "forward-
looking statements" and are based on financial data and our
business plans available only as of the time the statements are
made, which may become out-of-date or incomplete. We
assume no obligation
to update any forward-looking
statements as a result of new information, future events or other
factors. Forward-looking statements are inherently uncertain
and investors must recognize that events could be significantly
different from our expectations. For more information on risks
that could impact our results, refer to Item 1A Risk Factors in
this Form 10-K.
Global Economic Conditions. Current macroeconomic
factors remain dynamic, and any causes of market size
contraction, such as reduced GDP in commodity-dependent
economies, greater political unrest in the Middle East and
Central & Eastern Europe, further economic instability in the
European Union, political instability in certain Latin American
markets, further economic slowdowns in Japan and China and
changes to international trade agreements in North America
and elsewhere, could reduce our sales or erode our operating
margin, in either case reducing our earnings.
Changes in Costs. Our costs are subject to fluctuations,
particularly due to changes in commodity prices and our own
productivity efforts. We have significant exposures to certain
commodities, in particular certain oil-derived materials like
resins, and volatility in the market price of these commodity
input materials has a direct impact on our costs. If we are
unable to manage commodity fluctuations through pricing
actions, cost savings projects and sourcing decisions as well
as through consistent productivity improvements, it may
adversely impact our gross margin, operating margin and net
earnings. Sales could also be adversely impacted following
pricing actions if there is a negative impact on consumption of
our products. We strive to implement, achieve and sustain cost
improvement plans, including outsourcing projects, supply
chain optimization and general overhead and workforce
optimization. As discussed later in this MD&A, we initiated
certain non-manufacturing overhead reduction projects along
with manufacturing and other supply chain cost improvements
projects in fiscal 2012. In fiscal 2017, we announced an
additional multi-year cost reduction program. These programs
are resulting in significant enrollment and other savings. If we
are not successful in executing and sustaining these changes,
there could be a negative impact on our operating margin and
net earnings.
Foreign Exchange. We have both translation and transaction
exposure to the fluctuation of exchange rates. Translation
exposures relate to exchange rate impacts of measuring income
statements of foreign subsidiaries that do not use the U.S. dollar
as their functional currency. Transaction exposures relate to
1) the impact from input costs that are denominated in a
currency other than the local reporting currency and 2) the
revaluation of transaction-related working capital balances

The Procter & Gamble Company 15

denominated in currencies other than the functional currency.
Over the past four years, the U.S. dollar has strengthened versus
a number of foreign currencies leading to lower sales and
earnings from these foreign exchange impacts. Certain
countries experiencing significant exchange rate fluctuations,
like Argentina, Egypt, Nigeria, and the United Kingdom have
had, and could continue to have, a significant impact on our
sales, costs and earnings. Increased pricing in response to these
fluctuations in foreign currency exchange rates may offset
portions of the currency impacts but could also have a negative
impact on consumption of our products, which would affect
our sales.
Government Policies. Our net earnings could be affected by
changes in U.S. or foreign government tax policies. For
example, the U.S. is considering corporate tax reform that may
significantly impact the corporate tax rate and change the U.S.
tax treatment of international earnings. Additionally, we
attempt to carefully manage our debt and currency exposure
in certain countries with currency exchange,
import
authorization and pricing controls, such as Nigeria and
Ukraine. Changes in government policies in these areas might
cause an increase or decrease in our sales, operating margin
and net earnings. For example, during fiscal 2015, the
Company deconsolidated its Venezuelan subsidiaries due to
evolving conditions that resulted in an other-than-temporary
lack of exchangeability between the Venezuelan bolivar and
U.S. dollar and restricted our ability to pay dividends and
satisfy certain other obligations denominated in U.S. dollars.

RESULTS OF OPERATIONS

The key metrics included in our discussion of our consolidated
results of operations include net sales, gross margin, selling,
general and administrative costs (SG&A), other non-operating
items and income taxes. The primary factors driving year-
over-year changes in net sales include overall market growth
in the categories in which we compete, product initiatives,
competitive activities (the level of initiatives and other
activities by competitors), geographic expansion and
acquisition and divestiture activity, all of which drive changes
in our underlying unit volume, as well as pricing actions (which
can also indirectly impact volume), changes in product and
geographic mix and foreign currency impacts on sales outside
the U.S.

Most of our cost of products sold and SG&A are to some extent
variable in nature. Accordingly, our discussion of these
operating costs focuses primarily on relative margins rather
than the absolute year-over-year changes in total costs. The
primary drivers of changes in gross margin are input costs
(energy and other commodities), pricing impacts, geographic
mix (for example, gross margins in developed markets are
generally higher than in developing markets for similar
products), product mix (for example, the Beauty segment has
higher gross margins than the Company average), foreign
exchange rate fluctuations (in situations where certain input
costs may be tied to a different functional currency than the
underlying sales), the impacts of manufacturing savings
projects and reinvestments (for example, product or package
improvements) and to a lesser extent scale impacts (for costs

16 The Procter & Gamble Company

that are fixed or less variable in nature). The primary drivers
of SG&A are marketing-related costs and non-manufacturing
overhead costs. Marketing-related costs are primarily variable
in nature, although we may achieve some level of scale benefit
over time due to overall growth and other marketing
efficiencies. Overhead costs are also variable in nature, but on
a relative basis, less so than marketing costs due to our ability
to leverage our organization and systems infrastructures to
support business growth.
Accordingly, we generally
experience more scale-related impacts for these costs.

The Company is in the midst of a productivity and cost savings
plan to reduce costs in the areas of supply chain, certain
marketing activities and overhead expenses. The plan is
designed to accelerate cost reductions by streamlining
management decision making, manufacturing and other work
processes to fund the Company's growth strategy.
Net Sales

Fiscal year 2017 compared with fiscal year 2016

Net sales were unchanged at $65.1 billion in 2017 on a 1%
increase in unit volume versus the prior year period. Volume
increased low single digits in Grooming, Health Care, Fabric
& Home Care and Baby, Feminine & Family Care. Volume
decreased low single digits in Beauty.

Operating Costs

Comparisons as a percentage of net sales; Years ended June 30

Gross margin

Selling, general and administrative expense

Operating margin

Earnings from continuing operations before income taxes

Net earnings from continuing operations

Net earnings attributable to Procter & Gamble

Fiscal year 2017 compared with fiscal year 2016

Gross margin increased 40 basis points (bps) to 50.0% of net
sales in 2017. Gross margin increased primarily due to:
•

a 230 basis-point positive impact from total manufacturing
cost savings (210 basis points net of product and
packaging reinvestments),
a 20 basis-point benefit from lower restructuring charges
and
a 10 basis-point benefit from positive scale impacts due
to higher volume.

•

These impacts were partially offset by:
•

a 90 basis-point decrease from unfavorable product mix
between segments (caused primarily by the lower relative
proportion of sales in Grooming, which has higher than
company-average gross margins) and within segments
(due to disproportionate growth of lower margin products,
forms and package sizes in certain businesses),
a 40 basis-point negative impact from unfavorable foreign
exchange and

•

Volume increased low single digits in developed regions and
was unchanged in developing regions. Organic volume
increased low single digits in both developed and developing
markets. Unfavorable foreign exchange reduced net sales by
2%. Neither pricing nor mix had any net impact on net sales
for the year. Organic sales grew 2% driven by a 2% increase
in organic volume.
Fiscal year 2016 compared with fiscal year 2015

Net sales decreased 8% to $65.3 billion in 2016 on a 3%
decrease in unit volume versus the prior year period. Volume
decreased low single digits in Grooming, Health Care, Fabric
& Home Care and Baby, Feminine & Family Care and
decreased mid-single digits in Beauty. Volume increased low
single digits in developed regions and declined high single
digits in developing regions, in part due to increased pricing
to address foreign exchange devaluations and due to the
Venezuela deconsolidation and minor brand divestitures.
Organic volume declined mid-single digits in developing
markets. Unfavorable foreign exchange reduced net sales by
6%, while higher pricing drove a 1% favorable impact on net
sales. Organic volume decreased 1% and organic sales grew
1% driven by higher pricing.

2017

Basis Point
Change

2016

Basis Point
Change

2015

50.0%

28.5%

21.5%

20.4%

15.7%

23.6%

40
(50)
90
(10)
30

750

49.6%

29.0%

20.6%

20.5%

15.4%

16.1%

200
(10)
500

490

370

620

47.6%

29.1%

15.6%

11.7%

9.9%

•

a combined 70 basis-point impact due to higher
commodities and other costs.

Total SG&A decreased 2% to $18.6 billion as increased
overhead and advertising spending were more than offset by a
reduction in other operating expenses, primarily due to a
reduction in net foreign exchange transactional costs and gains
on real estate sales. SG&A as a percentage of net sales
decreased 50 basis points to 28.5% as a result of the decline in
other operating expenses.

• Marketing spending as a percentage of net sales increased
10 basis points due to an increase in marketing activities,
partially offset by productivity savings.

• Overhead costs as a percentage of net sales increased 20
basis points, primarily driven by wage inflation and
increased sales personnel in certain businesses, partially
offset by 20 basis points of productivity savings.

• Other operating expenses as a percent of net sales declined
80 basis points. Lower foreign exchange transactional
charges reduced SG&A as a percentage of net sales by

approximately 20 basis points. The balance of the
reduction is primarily driven by gains on sales of real
estate.

Fiscal year 2016 compared with fiscal year 2015

Gross margin increased 200 basis points to 49.6% of net sales
in 2016. Gross margin increased primarily due to:

•

•
•

a 210 basis-point positive impact from manufacturing cost
savings,
a 110 basis-point benefit from lower commodity costs and
a 70 basis-point benefit of higher pricing.

These impacts were partially offset by:

•

a 70 basis-point negative impact from unfavorable foreign
exchange,
a 70 basis-point decrease due to unfavorable product mix
caused by the disproportionate decline of higher margin
segments like Beauty and by product form mix within the
segments,
a 20 basis-point decrease from negative scale impacts due
to lower volume and
a 20 basis-point decline due to incremental restructuring
activity.

Total SG&A decreased 8% to $18.9 billion in 2016 primarily
due to reduced overhead spending and a decrease in foreign
exchange transaction charges. SG&A as a percentage of net
sales declined 10 basis points to 29.0%, as negative scale
impacts of lower net sales and inflationary impacts were more
than offset by cost savings efforts, mainly in overhead
spending, and lower foreign exchange transactional charges.

• Marketing spending as a percentage of net sales increased
90 basis points due to the negative scale impacts from
reduced sales.

• Overhead costs as a percentage of net sales decreased 20
basis points, as 90 basis points of productivity savings
were partially offset by wage inflation, increased sales
personnel in certain businesses and investments in
research and development.

• Lower foreign exchange transactional charges reduced
SG&A as a percentage of net sales by approximately 70
basis points. A pre-deconsolidation balance sheet
remeasurement charge in Venezuela in fiscal year 2015
drove 20 basis points of this decline. The balance of the
reduction relates to lower transactional charges from
revaluing receivables and payables from transactions
denominated in a currency other than a local entity’s
functional currency.

In addition to the gross margin expansion and decrease in
SG&A as a percent of net sales discussed above, operating
margin also increased by 290 basis points in 2016 due to a $2.0
billion charge in 2015 related to the deconsolidation of the
Company's Venezuelan subsidiaries.

Non-Operating Items

Fiscal year 2017 compared with fiscal year 2016

•

Interest expense was $465 million in 2017, a decrease of
$114 million versus the prior year due to a decrease in
weighted average interest rates.

The Procter & Gamble Company 17

•

Interest income was $171 million in 2017, comparable to
2016.

• Other non-operating income/(expense), which consists
primarily of divestiture gains, investment income, and
other non-operating items, was a net expense of $404
million in 2017 versus a net income of $325 million in
2016, a $729 million year-over-year decrease. This
change is due to a $543 million current-year charge related
to early extinguishment of long-term debt and a reduction
in gains on minor brand divestitures. In 2017, we had
approximately $110 million in minor brand divestiture
gains, including Hipoglos (a baby care brand sold
primarily in Brazil) and other minor brands. The prior
year divestiture activities included approximately $300
million in minor brand divestiture gains, including Escudo
and certain hair care brands in Europe and IMEA.

Fiscal year 2016 compared with fiscal year 2015

•

Interest expense was $579 million in 2016, a decrease of
$47 million versus the prior year due to lower average debt
balances.
Interest income was $182 million in 2016, an increase of
$33 million versus the prior year primarily due to
increasing cash, cash equivalents and
investment
securities balances.

• Other non-operating income, which primarily includes
divestiture gains and investment income, decreased $115
million to $325 million in 2016, due primarily to lower
gains on minor brand divestitures. In 2016, we had
approximately $300 million in minor brand divestiture
gains, including Escudo and certain hair care brands in
Europe and IMEA. The prior year acquisition and
divestiture activities included approximately $450 million
in divestiture gains, including Zest, Camay, Fekkai and
Wash & Go hair care brands and Vaposteam.

Income Taxes

Fiscal year 2017 compared with fiscal year 2016

The effective tax rate on continuing operations decreased 190
basis points to 23.1%. The rate declined due to:

•

a 130 basis-points impact from excess tax benefits
associated with share-based payments due to the adoption
of FASB Accounting Standards Update (ASU) 2016-09
Improvements
to Employee Share-based Payment
Accounting in 2017,
a 150 basis-point benefit from discrete impacts related to
uncertain
to
approximately 205 basis points in the current year versus
55 basis points in the prior year),
a 50 basis-point benefit from the tax impact of the early
extinguishment of long-term debt, and
a 130 basis-point benefit from the prior year establishment
of a valuation allowance on deferred tax assets related to
net operating loss carryforwards.

tax positions (which netted

income

These benefits were partially offset by a 230 basis-point
increase from unfavorable geographic mix, primarily due to a
greater proportion of total income taxed in the U.S. and a 40
basis-point increase due to the impact of minor brand
divestitures.

18 The Procter & Gamble Company

Fiscal year 2016 compared with fiscal year 2015

The effective tax rate on continuing operations increased 30
basis points to 25.0% in 2016 mainly due to:

•

a 260 basis-point negative impact from the unfavorable
geographic mix of earnings, and
a 130 basis-point impact in 2016 from the establishment
of valuation allowances on deferred tax assets related to
net operating loss carryforwards and the impact of
favorable discrete adjustments related to uncertain income
tax positions (which netted to 55 basis points in 2016
versus 85 basis points in 2015).

These benefits were partially offset by a 400 basis point
decrease related to the non-deductibility of the Venezuelan
deconsolidation charge in 2015.
Net Earnings

Fiscal year 2017 compared with fiscal year 2016

Net earnings from continuing operations increased $167
million, or 2%, to $10.2 billion. Operating income improved
$514 million, or 4%, due to improved gross margin and reduced
SG&A costs. Net earnings also benefitted from a lower tax
rate in 2017. These benefits were partially offset by the
increase in net non-operating expenses, discussed above.
reduced net earnings by
Foreign exchange
approximately $420 million in 2017 due to weakening of
certain currencies against the U.S. dollar, including those in
Argentina, Nigeria, Egypt and the United Kingdom. This
impact includes both transactional charges as discussed above
in Operating Costs and translational impacts from converting
earnings from foreign subsidiaries to U.S. dollars.

impacts

Net earnings from discontinued operations increased $4.6
billion in 2017 to $5.2 billion. This change was driven by the
$5.3 billion gain on the sale of the Beauty Brands in the current
year, partially offset by the impact of the base period results,
which included the net earnings of the Batteries and Beauty
Brands businesses prior to divestiture, a gain on the sale of the
Batteries business and impairment charges on the Batteries
business prior to divestiture (see Note 13 to the Consolidated
Financial Statements).

Net earnings attributable to Procter & Gamble increased $4.8
billion, or 46%, to $15.3 billion.

Diluted net earnings per share from continuing operations
increased $0.20, or 6%, to $3.69 due to the increase in net
earnings from continuing operations and a reduction in the
number of weighted average shares outstanding following the
shares tendered in the sale of the Beauty Brands to Coty (see
Note 13 to the Consolidated Financial Statements), along with
ongoing share repurchases.

Diluted net earnings per share from discontinued operations
were $1.90. This was an increase of $1.70 per share versus the
prior year primarily resulting from the gain on the sale of the
Beauty Brands. Diluted net earnings per share increased $1.90,
or 51%, to $5.59.

Core EPS increased 7% to $3.92. Core EPS in fiscal year 2017
represents diluted net earnings per share from continuing
early
operations
incremental
extinguishment of

charge
long-term debt and

excluding

the

restructuring charges related to our productivity and cost
savings plan. The increase was driven by operating margin
expansion, lower effective tax rate and the reduction in the
number of weighted average shares outstanding discussed
above.
Fiscal year 2016 compared with fiscal year 2015

Net earnings from continuing operations increased $1.7
billion, or 21%, to $10.0 billion in 2016 primarily due to the
base period charge of $2.1 billion after-tax related to the
deconsolidation of Venezuelan subsidiaries. Earnings also
declined due to the impact of the decline in net sales in fiscal
2016, partially offset by improved gross margin and the
reduction in SG&A. Foreign exchange impacts reduced net
earnings by about $880 million in 2016 due to weakening of
certain key currencies against the U.S. dollar, primarily in
Argentina, Brazil, Canada, Mexico and Russia. This impact
includes both transactional charges as discussed above in
Operating Costs and translational impacts from converting
earnings from foreign subsidiaries to U.S. dollars.

Net earnings from discontinued operations improved $1.7
billion in 2016 to $577 million. Batteries drove a $2.1 billion
improvement due primarily to a $1.8 billion reduction in after-
tax impairment charges in the Batteries business ($350 million
in 2016 compared to $2.1 billion in 2015) and a $422 million
after-tax gain in 2016 from the sale of the Batteries business.
This was partially offset by a decrease in the earnings of the
Beauty Brands in 2016 (see Notes 4 and 13 to the Consolidated
Financial Statements).

Net earnings attributable to Procter & Gamble increased $3.5
billion, or 49% to $10.5 billion.

Diluted net earnings per share from continuing operations
increased $0.65, or 23%, to $3.49 in 2016 due to the increase
in net earnings and a decline in the average number of shares
outstanding. Diluted net earnings per share from discontinued
operations were $0.20 primarily resulting from the gain on the
sale of the Batteries business. This was an improvement of
$0.60 per share versus the prior year. Diluted net earnings per
share increased $1.25, or 51%, to $3.69.

Core EPS decreased 2% to $3.67 in 2016. Core EPS in fiscal
year 2016 represents diluted net earnings per share from
continuing operations excluding charges for certain European
legal matters and incremental restructuring related to our
productivity and cost savings plan. The decline was driven by
reduced net sales and foreign exchange impacts, partially offset
by gross margin expansion.
Venezuela Impacts

June 30, 2015, we deconsolidated our Venezuelan subsidiaries
and began accounting for our investment in those subsidiaries
using the cost method of accounting. This resulted in a write-
off of all of the net assets of our Venezuelan subsidiaries, along
with Venezuela related assets held by other subsidiaries.
Beginning in fiscal 2016, our financial results only include

The Procter & Gamble Company 19

sales of finished goods to our Venezuelan subsidiaries to the
extent we receive payments from Venezuela. Accordingly, we
no longer include the results of our Venezuelan subsidiaries’
operations in our financial results.

SEGMENT RESULTS

Segment results reflect information on the same basis we use for internal management reporting and performance evaluation. The
results of these reportable segments do not include certain non-business unit specific costs such as interest expense, investing
activities and certain restructuring and asset impairment costs. These costs are reported in our Corporate segment and are included
as part of our Corporate segment discussion. Additionally, as described in Note 2 to the Consolidated Financial Statements, we
apply blended statutory tax rates in the segments. Eliminations to adjust segment results to arrive at our consolidated effective
tax rate are included in Corporate. All references to net earnings throughout the discussion of segment results refer to net earnings
from continuing operations.

Beauty

Grooming

Health Care

Fabric & Home Care

Baby, Feminine & Family Care
TOTAL COMPANY

Beauty

Grooming

Health Care

Fabric & Home Care

Baby, Feminine & Family Care
TOTAL COMPANY

Net Sales Change Drivers 2017 vs. 2016 (1)

Volume with
Acquisitions &
Divestitures

Volume
Excluding
Acquisitions &
Divestitures

(2)%

2 %

3 %

1 %

2 %
1 %

1 %

3 %

4 %

2 %

2 %
2%

Foreign
Exchange
(2 )%
(2 )%
(2 )%
(2 )%
(2 )%
(2)%

Price

Mix

Other (2)

Net Sales
Growth

1 %

(1)%

— %

(1)%
— %

2 %

(2)%

1 %

— %
— %

1 %

— %

— %
1%

— %

(3)%

2 %

— %

(1)%
— %

Net Sales Change Drivers 2016 vs. 2015 (1)

Volume with
Acquisitions &
Divestitures

Volume
Excluding
Acquisitions &
Divestitures

(5 )%

(2 )%

(1 )%

(3 )%
(3)%

(2 )%
(2 )%
(2 )%
1 %
(2 )%
(1)%

Foreign
Exchange
(6 )%
(9 )%
(6 )%
(6 )%
(6 )%
(6)%

Price

Mix

Other (2)

Net Sales
Growth

2 %

5 %

2 %

— %

— %
1%

— %

(2)%

1 %

— %

— %
— %

— %

— %
—%

(9 )%
(8 )%
(5 )%
(7 )%
(9 )%
(8)%

(1) Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.
(2) Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.

BEAUTY

($ millions)

Volume

Net sales

2017
N/A

$11,429

Change
vs. 2016

(2)%

—%

Net earnings
% of net sales

$1,914
16.7% (50) bps

(3)%

2016

N/A

$11,477

$1,975
17.2%

Change
vs. 2015

(5)%

(9)%

(9)%
(10) bps

Fiscal year 2017 compared with fiscal year 2016

Beauty net sales were unchanged at $11.4 billion in 2017 on a
2% decrease in unit volume. Unfavorable foreign exchange

reduced net sales by 2%. Price increases had a 1% positive
impact on net sales. Favorable product mix added 2% to net
sales, primarily due to growth of the super-premium SK-II
brand, which has higher than segment average selling prices.
Organic sales increased 3% on organic volume that increased
1%. Global market share of the Beauty segment decreased 0.6
points. Volume decreased low single digits in developed
regions. Volume decreased low single digits in developing
regions. Excluding minor brand divestitures, organic volume
in developing regions increased low single digits.

• Volume in Hair Care decreased low single digits due to
minor brand divestitures. Organic volume increased low
single digits. Developed regions decreased low single

20 The Procter & Gamble Company

digits mainly due to competitive activity. Developing
regions decreased low single digits due to minor brand
divestitures. Organic volume increased low single digits
in developing regions behind product innovation and
market growth. Global market share of the hair care
category decreased more than half a point.

improved due to productivity savings, increased pricing and
lower commodity costs, partially offset by negative mix.
SG&A as a percentage of net sales increased as lower
marketing and overhead spending from the Company's focus
on efficiencies was more than offset by the negative scale
impacts from the reduction in sales.

• Volume in Skin and Personal Care was unchanged
including the impact of minor brand divestitures. Organic
volume increased low single digits. Developed market
volume decreased low single digits following increased
pricing and due to competitive activity. Volume increased
low single digits in developing regions behind innovation
and market growth. Global market share of the skin and
personal care category decreased half a point.

Net earnings decreased 3% to $1.9 billion due to a 50 basis
point decrease in net earnings margin, behind an increase in
SG&A as a percentage of net sales. SG&A as a percentage of
net sales increased due to increased overhead spending
including investments in sales resources and incremental
marketing activity. Gross margin decreased slightly as the
benefits from productivity savings and higher pricing were
more than offset by higher commodity costs and unfavorable
mix impacts (driven by Hair Care from an increase in the
proportion of lower margin forms and categories, and
unfavorable geographic mix, which more than offset benefit
from Skin and Personal Care, driven by the growth of SK-II).

Fiscal year 2016 compared with fiscal year 2015

Beauty net sales decreased 9% to $11.5 billion in fiscal 2016
on a 5% decrease in unit volume. Unfavorable foreign
exchange reduced net sales by 6%. Price increases had a 2%
positive impact on net sales. Organic sales were unchanged
on organic volume that decreased 2%. Global market share of
the Beauty segment decreased 1.0 points. Volume decreased
low single digits in developed markets and decreased high
single digits in developing markets.

• Volume in Hair Care was down mid-single digits.
Developed markets declined mid-single digits due to
competitive activity while developing markets declined
mid-single digits driven by increased pricing, the
Venezuela deconsolidation and minor brand divestitures.
Global market share of the hair care category decreased
more than a point.

• Volume in Skin and Personal Care decreased high single
digits, while organic volume decreased low single digits,
with the difference attributable to the Camay and Zest
brand divestitures and the Venezuela deconsolidation.
Organic volume was unchanged in developed regions as
commercial innovation was offset by ongoing competitive
activity. Organic volume declined mid-single digits in
developing regions primarily due to increased pricing and
competitive activity. Global market share of the skin and
personal care category decreased nearly a point.

Net earnings decreased 9% to $2.0 billion in 2016 primarily
due to the reduction in net sales, along with a 10 basis-point
decrease in net earnings margin. Net earnings margin
decreased due to an increase in SG&A as a percentage of net
sales, largely offset by gross margin expansion. Gross margin

GROOMING

($ millions)

Volume

Net sales

2017
N/A

$6,642

$1,537
Net earnings
% of net sales 23.1%

Change vs.
2016

(3)%

(1)%

2016

N/A

$6,815

$1,548

Change vs.
2015

(2)%

(8)%

(13)%

40 bps

22.7% (130) bps

Fiscal year 2017 compared with fiscal year 2016

Grooming net sales decreased 3% to $6.6 billion in 2017 on a
2% increase in unit volume. Unfavorable foreign exchange
reduced net sales by 2%. Unfavorable mix reduced net sales
by 2% driven by disproportionate growth in emerging markets,
where average selling prices are lower than in developed
regions, in part due to a higher relative proportion of disposable
razors in those markets. Price reductions in the U.S. during
the second half of the year taken to address consumer price-
competitiveness drove a 1% reduction in net sales. Organic
sales were unchanged on organic volume that increased 3%.
Global market share of the Grooming segment decreased 0.7
points. Volume increased low single digits in developed and
developing regions.

•

Shave Care volume increased low single digits. Shave
Care volume decreased low single digits in developed
regions due to competitive activity and increased low
single digits in developing regions behind product
innovation. Global market share of the shave care
category decreased half a point.

• Volume in Appliances increased double digits. Volume
increased double digits in developed regions and increased
low single digits in developing regions due to product
innovation. Global market share of the appliances
category increased nearly half a point.

Net earnings decreased 1% to $1.5 billion due to the reduction
in net sales, partially offset by an increase in net earnings
margin. Net earnings margin increased 40 basis points due to
a decrease in SG&A as a percent of net sales and improved
gross margin. SG&A as a percent of net sales decreased due
to a gain on the sale of real estate, partially offset by increased
overhead spending. Gross margin increased as the benefits of
productivity efforts were only partially offset by unfavorable
foreign exchange impacts, reduced pricing and negative mix
driven by growth in emerging markets, where average selling
prices are lower than in developed regions, in part due to a
higher relative proportion of disposable razors in those
markets.

The Procter & Gamble Company 21

increased mid-single digits in developing regions driven
by market growth and product innovation. Global market
share of the oral care category decreased slightly.

• Volume in Personal Health Care increased low single
digits. Volume increased low single digits in both
developed and developing regions behind a stronger
cough/cold season relative
to prior year, product
innovation and expanded distribution. Global market
share of the personal health care category was unchanged.

Net earnings increased 2% to $1.3 billion due to the increase
in net sales. Operating margin was unchanged as a higher gross
margin was offset by increased SG&A as a percentage of net
sales. Gross margin increased due to productivity cost savings,
partially offset by unfavorable geographic mix driven by the
disproportionate growth of developing regions, which have
lower than segment-average margins. SG&A increased as a
percentage of net sales due to increased overhead spending,
partially offset by reduced marketing spending.

Fiscal year 2016 compared with fiscal year 2015

Health Care net sales were down 5% to $7.4 billion in 2016
on a 2% decrease in unit volume. Unfavorable foreign
exchange reduced net sales by 6%. Price increases contributed
2% to net sales, mainly in developing markets. Favorable
geographic mix increased net sales 1%, primarily driven by a
decline in Oral Care volume in developing regions, which have
lower than segment average selling prices. Organic sales
increased 2%. Global market share of the Health Care segment
decreased 0.7 points. Volume was up low single digits in
developed regions and declined high single digits in
developing regions.

• Oral Care volume declined low single digits due to a high
single-digit decrease in developing regions caused by
increased pricing, competitive activity and reduced
customer inventory. Volume in developed regions
increased low single digits driven by product innovation.
Global market share of the oral care category was down
less than a point.

• Volume in Personal Health Care decreased mid-single
digits primarily due to a mid-single-digit decrease in
developed regions driven by competitive activity and a
weak cough/cold season. Volume in developing markets
decreased low single digits due to increased pricing.
Global market share of the personal health care category
decreased half a point.

Net earnings increased 7% to $1.3 billion in 2016 as the
reduction in net sales was more than offset by a 190 basis-point
increase in net earnings margin. Gross margin increased
primarily due to manufacturing cost savings and increased
pricing. SG&A as a percentage of net sales decreased primarily
due to reduced marketing spending from the focus on
productivity and cost savings efforts.

Fiscal year 2016 compared with fiscal year 2015

Grooming net sales decreased 8% to $6.8 billion in 2016 on a
2% decrease in unit volume. Unfavorable foreign exchange
reduced net sales by 9%. Price increases in Shave Care
contributed 5% to net sales. Unfavorable product mix
decreased net sales by 2% due to a higher relative mix of
disposable razors, which have lower than segment average
selling prices compared to system razor cartridges. Organic
sales increased 2%. Global market share of the Grooming
segment decreased 1.1 points. Volume decreased low single
digits in developed and developing regions.

•

Shave Care volume decreased low single digits in both
developed and developing regions due to competitive
activity and increased pricing. Global market share of the
shave care category decreased more than half a point.
• Volume in Appliances was up mid-single digits due to a
mid-single-digit increase in developed regions from
product innovation. Volume in developing regions
increased low single digits due to growth from product
innovation, partially offset by reductions due to increased
pricing. Global market share of the Appliances category
decreased more than half a point.

Net earnings decreased 13% to $1.5 billion in 2016 due to the
reduction in net sales and a 130 basis-point decrease in net
earnings margin. Net earnings margin decreased due to
increased SG&A as a percentage of net sales partially offset
by a lower tax rate. Gross margin was unchanged as the benefits
of increased pricing and productivity efforts were largely offset
by unfavorable foreign exchange impacts and negative product
mix caused by an increase in the proportion of disposable razor
sales compared to system razor cartridges. SG&A as a
percentage of net sales increased due to increased marketing
spending and the negative scale impact of lower net sales. The
tax rate declined due to the geographic mix of earnings.

HEALTH CARE

($ millions)

Volume

2017
N/A

Change
vs. 2016

Net sales
Net earnings

% of net sales

$7,513
$1,280
17.0% — bps

2%
2%

2016

N/A

$7,350
$1,250

17.0%

Change
vs. 2015

(2)%

(5)%
7%

190 bps

Fiscal year 2017 compared with fiscal year 2016

Health Care net sales increased 2% to $7.5 billion in 2017 on
a 3% increase in unit volume. Unfavorable foreign exchange
reduced net sales by 2%. Favorable product mix contributed
1% to net sales due primarily to an increase in power
toothbrushes in Oral Care, which have higher than segment-
average selling prices. Organic sales increased 5% on organic
volume that increased 4%. Global market share of the Health
Care segment decreased 0.2 points. Volume increased low
single digits in developed regions and increased mid-single
digits in developing regions.

• Oral Care volume increased mid-single digits. Volume
increased low single digits in developed regions and

22 The Procter & Gamble Company

FABRIC & HOME CARE

($ millions)

Volume

Net sales

2017
N/A

$20,717

Change
vs. 2016

—%

Net earnings

% of net sales

$2,713
13.1% (30) bps

(2)%

2016

N/A

$20,730

$2,778

13.4%

Change
vs. 2015

(1)%

(7)%

160 bps

Fiscal year 2017 compared with fiscal year 2016

Fabric & Home Care net sales were unchanged in 2017 at $20.7
billion on a 1% increase in unit volume. Unfavorable foreign
exchange reduced net sales by 2%. Favorable geographic mix
increased net sales 1%, primarily driven by increased volume
in developed regions, which have higher than segment-average
selling prices. Organic sales increased 3% on organic volume
that increased 2%. Global market share of the Fabric & Home
Care segment decreased 0.1 points. Volume increased low
single digits in developed regions and decreased low single
digits in developing regions. Excluding minor brand
divestitures, organic volume increased mid-single digits in
developed regions and decreased low single digits in
developing regions.

•

Fabric Care volume increased low single digits as a mid-
single digit volume increase in developed regions, due
primarily to product innovation, was partially offset by a
low single-digit decrease in developing regions, driven by
competitive activity and reduced distribution of less
profitable brands. Global market share of the fabric care
category was unchanged.

• Home Care volume increased low single digits driven by
a low single-digit increase in both developed and
developing regions due to market growth and product
innovation. Global market share of the home care category
was unchanged.

Net earnings decreased 2% to $2.7 billion due to a 30 basis-
point decrease in net earnings margin. Net earnings margin
decreased due to an increase in the effective tax rate driven by
the geographic mix of earnings. Gross margin expanded
slightly, driven by manufacturing cost savings, partially offset
by unfavorable foreign exchange impacts and increased
commodity costs. SG&A as a percentage of net sales increased
slightly due to increased overhead spending.

Fiscal year 2016 compared with fiscal year 2015

Fabric & Home Care net sales in 2016 were down 7% to $20.7
billion on unit volume that declined 1%. Unfavorable foreign
exchange reduced net sales by 6%. Organic sales increased
1% on a 1% increase in organic volume, which excludes minor
brand divestitures and the Venezuela deconsolidation. Global
market share of the Fabric & Home Care segment decreased
0.2 points. Volume increased mid-single digits in developed
regions and was down high single digits in developing regions.

•

Fabric Care volume declined low single digits due to a
double-digit decrease in developing regions driven by
increased pricing, reduced distribution of less profitable
brands, minor brand divestitures and the Venezuela

deconsolidation. Organic volume in developing regions
decreased high single digits. Volume in developed
markets increased mid-single digits due to innovation and
increased marketing. Global market share of the fabric
care category was flat.
• Home Care volume

low single digits.
increased
Developed market volume increased low single digits as
benefits from product innovation more than offset impacts
from competitive activity. This was partially offset by a
low single-digit decrease in developing regions following
increased pricing. Global market share of the home care
category was down slightly.

Net earnings increased 5% to $2.8 billion in 2016 behind a 160
basis-point increase in net earnings margin, which more than
offset the reduction in net sales. Net earnings margin increased
due to gross margin expansion, partially offset by increased
SG&A as a percentage of net sales. Increased gross margin
was driven by manufacturing cost savings and lower
commodity costs. SG&A as a percentage of net sales increased
due to an increase in marketing spending and the negative scale
impacts from the reduction in net sales.

BABY, FEMININE & FAMILY CARE

($ millions)

Volume

Net sales

2017
N/A

$18,252

Change
vs. 2016

(1)%

Net earnings

% of net sales

$2,503
13.7% (60) bps

(6)%

2016

N/A

$18,505

$2,650

14.3%

Change
vs. 2015

(3)%

(9)%

(10)%

(20) bps

Fiscal year 2017 compared with fiscal year 2016

Baby, Feminine & Family Care net sales decreased 1% to $18.3
billion in 2017 on a 2% increase in unit volume. Unfavorable
foreign exchange reduced net sales by 2%. Lower pricing had
a negative 1% impact on net sales. Organic sales increased
1% on organic volume that increased 2%. Global market share
of the Baby, Feminine & Family Care segment decreased 0.1
points. Volume increased low single digits in developed
regions and was unchanged in developing regions.

• Volume in Baby Care was unchanged. Volume in
developed regions decreased low single digits, primarily
due to competitive activity, and volume in developing
regions increased low single digits, due to market growth
and product innovation. Global market share of the baby
care category decreased more than half a point.

• Volume in Feminine Care increased low single digits.
Volume in developed regions increased low single digits,
driven by product innovation, and volume in developing
regions decreased low single digits due to competitive
activity and reduced exports
to our Venezuelan
subsidiaries. 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 and increased merchandising. In the
U.S., all-outlet share of the family care category increased
less than a point.

Net earnings decreased 6% to $2.5 billion due to the reduction
in net sales and a 60 basis point decrease in net earnings margin.
Net earnings margin decreased as increased SG&A as a percent
of net sales was only partially offset by an increase in gross
margin. SG&A as a percentage of net sales increased due to
increased marketing and overhead spending. Gross margin
increased driven by manufacturing cost savings partially offset
by unfavorable foreign exchange impacts, lower pricing and
unfavorable product mix across business units due to increased
net sales in product forms and larger package sizes with lower
than segment-average margins.

Fiscal year 2016 compared with fiscal year 2015

Baby, Feminine & Family Care net sales decreased 9% to $18.5
billion in 2016 on a 3% decline in unit volume. Unfavorable
foreign exchange reduced net sales by 6%. Organic sales
declined 1% on a 2% decline in organic volume. Global market
share of the Baby, Feminine & Family Care segment decreased
1.1 points. Volume increased low single digits in developed
regions and decreased double digits in developing regions.
• Volume in Baby Care was down mid-single digits due to
a high single-digit decrease in developing regions caused
by price increases in the previous fiscal year, the Venezuela
deconsolidation and competitive activity. Organic volume
in developing markets was down mid-single digits.
Volume was up low single digits in developed regions as
product innovation and market growth more than offset
competitive activity. Global market share of the baby care
category decreased less than two points, primarily
attributable to developing markets.

• Volume in Feminine Care declined low single digits due
to a mid-single-digit decrease in developing regions
caused by competitive activity and price increases in the
previous fiscal year, partially offset by market growth. In
developed regions, volume was unchanged. Global
market share of the feminine care category decreased more
than half a point.

• Volume in Family Care decreased low single digits due to
a double-digit decline in developing regions driven by the
discontinuation of non-strategic products. Volume in
developed regions increased low single digits due to
product innovation and increased merchandising. In the
U.S., all-outlet share of the family care category decreased
nearly half a point.

Net earnings decreased 10% to $2.7 billion in 2016 primarily
due to the reduction in net sales. Net earnings margin decreased
20 basis points as higher gross margin was more than offset by
an increase in SG&A as a percentage of net sales and a higher
tax rate. Gross margin increased driven by manufacturing cost
savings and lower commodity costs, partially offset by
negative product mix. SG&A as a percentage of net sales
increased due to the negative scale impact from the reduction
in net sales. The higher tax rate versus the prior year was due
to the geographic mix of earnings.

The Procter & Gamble Company 23

CORPORATE

($ millions)

Net sales
Net earnings/
(loss)

2017
$505

$247

Change
vs. 2016

20%

N/A

2016

$422

Change
vs. 2015

(9)%

$(174)

N/A

Corporate includes certain operating and non-operating
activities not allocated to specific business segments. These
include: the incidental businesses managed at the corporate
level; financing and investing activities; certain employee
benefit costs; other general corporate items; gains and losses
related to certain divested brands and categories; and certain
restructuring-type activities to maintain a competitive cost
structure,
and workforce
optimization. Corporate also includes reconciling items to
adjust the accounting policies used in the segments to U.S.
GAAP. The most significant reconciling item is income taxes
to adjust from blended statutory rates that are reflected in the
segments to the overall Company effective tax rate.

including manufacturing

Fiscal year 2017 compared with fiscal year 2016

Corporate net sales increased 20%, or $83 million, to $505
million in 2017 primarily due to an increase in the incidental
businesses managed at the corporate level. Corporate net
earnings
improved by
continuing operations
approximately $421 million in 2017, primarily due to:

from

•

•
•
•

•

lower restructuring charges in 2017 compared to the prior
year,
a gain on the sale of real estate in the current fiscal year,
lower foreign exchange transactional charges,
a reduction in the proportion of corporate overhead
spending not allocated to the segments, consisting in part
of reduced stranded overheads following divestitures, and
current year tax benefits resulting from the adoption of a
new accounting standard on the tax impacts of share-based
payments to employees (see Note 1 to the Consolidated
Financial Statements).

These benefits were partially offset by a $345 million after-tax
charge on the early extinguishment of long-term debt in fiscal
2017 and lower gains from minor brand divestitures compared
to 2016.

Fiscal year 2016 compared with fiscal year 2015

Corporate net sales decreased $44 million in 2016 to $422
million. Corporate net earnings from continuing operations
improved by approximately $2.2 billion in 2016, primarily due
to the $2.1 billion Venezuela deconsolidation charge in the
prior fiscal year and lower foreign currency transactional
charges. Additional discussion of these items impacting net
earnings in Corporate are included in the Results of Operations
section.

Productivity and Cost Savings Plan

In 2012, the Company initiated a productivity and cost savings
plan to reduce costs and better leverage scale in the areas of
supply chain, research and development, marketing and
overheads. The plan was designed to accelerate cost reductions
by streamlining management decision making, manufacturing

24 The Procter & Gamble Company

and other work processes to fund the Company's growth
strategy. In 2016 the Company communicated additional
multi-year productivity and cost savings targets. In 2017, the
Company communicated specific elements of the productivity
and cost savings targets.

As part of the original plan, the Company incurred
approximately $5.6 billion in before-tax restructuring costs
over a six-year period (from fiscal 2012 through fiscal 2017).
Savings generated from the restructuring costs are difficult to
estimate, given the nature of the activities, the timing of the
execution and the degree of reinvestment. Through 2017, these
costs and other non-manufacturing enrollment reductions
delivered approximately $2.9 billion in annual before-tax gross
savings.

The additional productivity and cost savings plan will further
reduce costs in the areas of supply chain, certain marketing
activities and overhead expenses. As part of this plan, the
Company expects to incur approximately $1.2 billion in total
before-tax restructuring costs in fiscal 2018 and 2019. This
in meaningful non-
program
manufacturing enrollment reductions, along with further
optimization of the supply chain and other manufacturing
processes.

is expected

result

Restructuring accruals of $277 million as of June 30, 2017 are
classified as current liabilities. During fiscal 2017, 48% of the
restructuring charges incurred either have been or will be
settled with cash. Consistent with our historical policies for
ongoing restructuring-type activities, the resulting charges are
funded by and included within Corporate for segment
reporting.

In addition to our restructuring programs, we have additional
ongoing savings efforts in our supply chain, marketing and
overhead areas that yield additional benefits to our operating
margins.

Refer to Note 3 to the Consolidated Financial Statements for
more details on the restructuring program and to the Operating
Costs section of the MD&A for more information about the
total benefit to operating margins from our total savings efforts.

CASH FLOW, FINANCIAL CONDITION AND
LIQUIDITY

We believe our financial condition continues to be of high
quality, as evidenced by our ability to generate substantial cash
from operations and to readily access capital markets at
competitive rates.

Operating cash flow provides the primary source of cash to
fund operating needs and capital expenditures. Excess
operating cash is used first to fund shareholder dividends.
Other discretionary uses include share repurchases and
acquisitions to complement our portfolio of businesses, brands
and geographies. As necessary, we may supplement operating
cash flow with debt to fund these activities. The overall cash
position of the Company reflects our strong business results
and a global cash management strategy that takes into account
liquidity management,
tax
considerations.

economic

factors

and

Operating Cash Flow

Fiscal year 2017 compared with fiscal year 2016

Operating cash flow was $12.8 billion in 2017, a 17% decrease
from the prior year. Net earnings, adjusted for non-cash items
(depreciation and amortization, share-based compensation,
deferred income taxes, loss/(gain) on sale of assets and
impairment charges) and the loss on early extinguishment of
debt generated $13.0 billion of operating cash flow. Working
capital and other impacts used $281 million of operating cash
flow.

• An increase in accounts receivable used $322 million of
cash due to higher relative sales late in the period as
compared to the prior period, partially offset by collection
of approximately $150 million of retained receivables
from the Beauty Brands business. In addition, the number
of days sales outstanding increased 1 day due in part to
foreign exchange impacts.

• Lower inventory generated $71 million of cash mainly due
to supply chain optimizations, partially offset by increases
to support business growth and increased commodity
costs. Inventory days on hand decreased approximately 1
day primarily due to supply chain optimizations.

• Accounts payable, accrued and other liabilities decreased,
using $149 million in operating cash flow. This was
caused by reduced accruals from lower fourth quarter
marketing and overhead activities as compared to the base
period, as well as the payment of approximately $595
million of accounts payable and accrued liabilities related
to the divestiture of the Beauty Brands business, including
liabilities retained by the Company pursuant to the terms
of the agreement. These impacts were partially offset by
approximately $700 million related to extended payment
terms with our suppliers. These factors, along with the
impact of foreign exchange, drove a 4 day increase in days
payable outstanding. Although difficult to project due to
market and other dynamics, we anticipate incremental
cash flow benefits from the extended payment terms with
suppliers could decline slightly over the next fiscal year.
• Other operating assets and liabilities used $43 million of

cash.

Fiscal year 2016 compared with fiscal year 2015

Operating cash flow was $15.4 billion in 2016, a 6% increase
from the prior year. Net earnings, adjusted for non-cash items
(depreciation and amortization, share-based compensation,
deferred income taxes, loss/(gain) on sale of assets and
impairment charges) generated $13.6 billion of operating cash
flow. Working capital and other impacts generated $1.8 billion
of operating cash flow.

• Reduced accounts receivable generated $35 million of
cash due to improved collection results partially offset by
sales mix. The number of days sales outstanding increased
1 day due to foreign exchange impacts.

• Lower inventory generated $116 million of cash mainly
due to supply chain optimizations and lower commodity
costs. Inventory days on hand increased 4 days primarily
due to foreign exchange impacts.

• Accounts payable, accrued and other liabilities increased,
generating $1.3 billion in operating cash flow, of which
approximately $0.8 billion was driven by extended
payment terms with our suppliers. The balance was
primarily driven by an increase in fourth quarter marketing
activity versus the prior year. These items, along with the
impact of foreign exchange, drove a 24 day increase in
days payable outstanding.

• Other operating assets and liabilities generated $204

million of cash.

Adjusted Free Cash Flow. We view adjusted free cash flow
as an important measure because it is a factor impacting the
amount of cash available for dividends, share repurchases,
acquisitions and other discretionary investment. It is defined
as operating cash flow less capital expenditures and excluding
tax payments related to certain divestitures and is one of the
measures used to evaluate senior management and determine
their at-risk compensation.
Fiscal year 2017 compared with fiscal year 2016

Adjusted free cash flow was $9.8 billion in 2017, a decrease
of 19% versus the prior year. The decrease was primarily
driven by the decrease in operating cash flows. Adjusted free
cash flow productivity, defined as the ratio of adjusted free
cash flow to net earnings, excluding the loss on debt
extinguishment and impacts of the sale of the Beauty Brands,
was 94% in 2017.
Fiscal year 2016 compared with fiscal year 2015

Adjusted free cash flow was $12.1 billion in 2016, an increase
of 4% versus the prior year. The increase was driven by the
increase in operating cash flows and decrease in capital
spending. Adjusted free cash flow productivity, defined as the
ratio of adjusted free cash flow to net earnings excluding the
impairment charges and gain on the sale of the Batteries
business, was 115% in 2016.
Investing Cash Flow

Fiscal year 2017 compared with fiscal year 2016

Net investing activities consumed $5.7 billion in cash in 2017
mainly due to capital spending and purchases of short-term
investments, partially offset by proceeds from asset sales,
transactions related to the close of the Beauty Brands
divestiture and sales and maturities of short-term investments.
Fiscal year 2016 compared with fiscal year 2015

Net investing activities consumed $5.6 billion in cash in 2016
mainly due to capital spending, divestiture transactions and
purchases of short-term investments, partially offset by sales
and maturities of short-term investments.
Capital Spending. Capital expenditures, primarily to support
capacity expansion, innovation and cost efficiencies, were $3.4
billion in 2017 and $3.3 billion in 2016. Capital spending as
a percentage of net sales increased 10 basis points to 5.2% in
2017. Capital spending as a percentage of net sales was 5.1%
in 2016.
Acquisitions. Acquisition activity was not material in 2017 or
2016.

The Procter & Gamble Company 25

Proceeds from Divestitures and Other Asset Sales. Proceeds
from asset sales in 2017 contributed $571 million in cash,
primarily from real estate sales and other minor brand
divestitures. Proceeds from asset sales contributed $432
million in cash in 2016 primarily from plant asset sales and
other minor brand divestitures. In fiscal 2016, the Company
invested $1.0 billion of cash, received from the pre-Beauty
Brands divestiture issuance of transaction-related debt, in
restricted cash. In fiscal 2017, the Company invested an
additional $874 million of cash, received from the issuance of
debt, in restricted cash. At the closing of the Beauty Brands
transaction, $1.9 billion of restricted cash was released and
returned to cash and cash equivalents and $475 million of cash
was transferred to the discontinued Beauty Brands business.
Financing Cash Flow
Dividend Payments. Our first discretionary use of cash is
dividend payments. Dividends per common share increased
1.5% to $2.70 per share in 2017. Total dividend payments to
common and preferred shareholders were $7.2 billion in 2017
and $7.4 billion in 2016. In April 2017, the Board of Directors
declared an increase in our quarterly dividend from $0.6695
to $0.6896 per share on Common Stock and Series A and B
ESOP Convertible Class A Preferred Stock. This represents a
3% increase compared to the prior quarterly dividend and is
the 61st consecutive year that our dividend has increased. We
have paid a dividend for 127 years, every year since our
incorporation in 1890.
Long-Term and Short-Term Debt. We maintain debt levels
we consider appropriate after evaluating a number of factors,
including cash flow expectations, cash requirements for
ongoing operations, investment and financing plans (including
acquisitions and share repurchase activities) and the overall
cost of capital. Total debt was $31.6 billion as of June 30, 2017
and $30.6 billion as of June 30, 2016.
Treasury Purchases. Total share repurchases were $5.2 billion
in 2017 and $4.0 billion in 2016. In addition, the cash infusion
of $1.7 billion in the Batteries divestiture was reflected as a
purchase of treasury stock in 2016.

Liquidity

At June 30, 2017, our current liabilities exceeded current assets
by $3.7 billion largely due to short-term borrowings under our
commercial paper program. We anticipate being able to
support our short-term liquidity and operating needs largely
through cash generated from operations. The Company
regularly assesses its cash needs and the available sources to
fund these needs. As of June 30, 2017, $15.0 billion of the
Company’s cash, cash equivalents and marketable securities
is held off-shore by foreign subsidiaries. Amounts held by
foreign subsidiaries are generally subject to U.S. income
taxation upon repatriation to the U.S. Under current law, we
do not expect restrictions or taxes on repatriation of cash held
outside of the U.S. to have a material effect on our overall
liquidity, financial condition or the results of operations for the
foreseeable future. Of the June 30, 2017 balance of off-shore
cash, cash equivalents and marketable securities, the majority
relates to various Western European countries. As of June 30,
2017, we did not have material cash, cash equivalents and

26 The Procter & Gamble Company

marketable securities balances in any country subject to
exchange controls that significantly restrict our ability to
access or repatriate the funds.

We utilize short- and long-term debt to fund discretionary
items, such as acquisitions and share repurchases. We have
strong short- and long-term debt ratings, which have enabled,
and should continue to enable, us to refinance our debt as it
becomes due at favorable rates in commercial paper and bond
markets. In addition, we have agreements with a diverse group
of financial institutions that, if needed, should provide
sufficient credit funding to meet short-term financing
requirements.

On June 30, 2017, our short-term credit ratings were P-1
(Moody's) and A-1+ (Standard & Poor's), while our long-term
credit ratings were Aa3 (Moody's) and AA- (Standard &
Poor's), all with a stable outlook.

We maintain bank credit facilities to support our ongoing
commercial paper program. The current facility is an $8.0

billion facility split between a $3.2 billion five-year facility
and a $4.8 billion 364-day facility, which expire in November
2021 and November 2017, respectively. Both facilities can be
extended for certain periods of time as specified in the terms
of the credit agreement. These facilities are currently undrawn
and we anticipate that they will remain undrawn. These credit
facilities do not have cross-default or ratings triggers, nor do
they have material adverse events clauses, except at the time
of signing. In addition to these credit facilities, we have an
automatically effective registration statement on Form S-3
filed with the SEC that is available for registered offerings of
short- or long-term debt securities. For additional details on
debt see Note 10 to the Consolidated Financial Statements.

Guarantees and Other Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing
arrangements, including variable interest entities, which we
believe could have a material impact on our financial condition
or liquidity.

Contractual Commitments

The following table provides information on the amount and payable date of our contractual commitments as of June 30, 2017.

Amounts in millions
RECORDED LIABILITIES
Total debt
Capital leases
Uncertain tax positions (1)
OTHER
Interest payments relating to long-term debt
Operating leases (2)
Minimum pension funding (3)
Purchase obligations (4)
TOTAL CONTRACTUAL COMMITMENTS

Total

Less Than 1 Year

1-3 Years

3-5 Years

After 5 Years

31,455
51
18

5,220
1,493
378
1,607
40,222

13,543
13
18

594
261
123
843
15,395

3,101
20
—

1,014
510
255
393
5,293

4,236
10
—

887
354
—
169
5,656

10,575
8
—

2,725
368
—
202
13,878

(1) As of June 30, 2017, the Company's Consolidated Balance Sheet reflects a liability for uncertain tax positions of $585 million, including
$120 million of interest and penalties. Due to the high degree of uncertainty regarding the timing of future cash outflows of liabilities for
uncertain tax positions beyond one year, a reasonable estimate of the period of cash settlement beyond twelve months from the balance
sheet date of June 30, 2017, cannot be made.

(2) Operating lease obligations are shown net of guaranteed sublease income.
(3) Represents future pension payments to comply with local funding requirements. These future pension payments assume the Company
continues to meet its future statutory funding requirements. Considering the current economic environment in which the Company operates,
the Company believes its cash flows are adequate to meet the future statutory funding requirements. The projected payments beyond fiscal
year 2020 are not currently determinable.

(4) Primarily reflects future contractual payments under various take-or-pay arrangements entered into as part of the normal course of business.
Commitments made under take-or-pay obligations represents minimum commitments under take-or-pay agreements with suppliers and are
in line with expected usage. This includes service contracts for information technology, human resources management and facilities
management activities that have been outsourced. Such amounts also include arrangements with suppliers that qualify as embedded operating
leases. While the amounts listed represent contractual obligations, we do not believe it is likely that the full contractual amount would be
paid if the underlying contracts were canceled prior to maturity. In such cases, we generally are able to negotiate new contracts or cancellation
penalties, resulting in a reduced payment. The amounts do not include other contractual purchase obligations that are not take-or-pay
arrangements. Such contractual purchase obligations are primarily purchase orders at fair value that are part of normal operations and are
reflected in historical operating cash flow trends. We do not believe such purchase obligations will adversely affect our liquidity position.

SIGNIFICANT ACCOUNTING
ESTIMATES

POLICIES AND

In preparing our financial statements in accordance with U.S.
GAAP, there are certain accounting policies that may require

a choice between acceptable accounting methods or may
require substantial judgment or estimation in their application.
These include income taxes, certain employee benefits and
goodwill and intangible assets. We believe these accounting

policies, and others set forth in Note 1 to the Consolidated
Financial Statements, should be reviewed as they are integral
to understanding the results of operations and financial
condition of the Company.

The Company has discussed the selection of significant
accounting policies and the effect of estimates with the Audit
Committee of the Company's Board of Directors.
Income Taxes

Our annual tax rate is determined based on our income,
statutory tax rates and the tax impacts of items treated
differently for tax purposes than for financial reporting
purposes. Also inherent in determining our annual tax rate are
judgments and assumptions regarding the recoverability of

certain deferred tax balances, primarily net operating loss and
other carryforwards, and our ability to uphold certain tax
positions.

Realization of net operating losses and other carryforwards is
dependent upon generating sufficient taxable income in the
appropriate jurisdiction prior to the expiration of the
carryforward periods, which involves business plans, planning
opportunities and expectations about future outcomes.
Although realization is not assured, management believes it is
more likely than not that our deferred tax assets, net of valuation
allowances, will be realized.

We operate in multiple jurisdictions with complex tax policy
and regulatory environments. In certain of these jurisdictions,
we may take tax positions that management believes are
supportable, but are potentially subject to successful challenge
by the applicable taxing authority. These interpretational
differences with the respective governmental taxing authorities
can be impacted by the local economic and fiscal environment.

A core operating principle is that our tax structure is based on
our business operating model, such that profits are earned in
line with the business substance and functions of the various
legal entities. However, because of the complexity of transfer
pricing concepts, we may have income tax uncertainty related
to the determination of intercompany transfer prices for our
various cross-border transactions. We have obtained and
continue to prioritize the strategy of seeking advance rulings
with tax authorities to reduce this uncertainty. We estimate
that our current portfolio of advance rulings reduces this
uncertainty with respect to over 70% of our global earnings.
We evaluate our tax positions and establish liabilities in
accordance with the applicable accounting guidance on
uncertainty in income taxes. We review these tax uncertainties
in light of changing facts and circumstances, such as the
progress of tax audits, and adjust them accordingly. We have
a number of audits in process in various jurisdictions. Although
the resolution of these tax positions is uncertain, based on
currently available information, we believe that the ultimate
outcomes will not have a material adverse effect on our
financial position, results of operations or cash flows.

Because there are a number of estimates and assumptions
inherent in calculating the various components of our tax
provision, certain changes or future events such as changes in
tax legislation, geographic mix of earnings, completion of tax
audits or earnings repatriation plans could have an impact on

The Procter & Gamble Company 27

those estimates and our effective tax rate. For additional details
on the Company's income taxes, see Note 5 to the Consolidated
Financial Statements.
Employee Benefits

We sponsor various post-employment benefits throughout the
world. These include pension plans, both defined contribution
plans and defined benefit plans, and other post-employment
benefit (OPEB) plans, consisting primarily of health care and
life insurance for retirees. For accounting purposes, the defined
benefit pension and OPEB plans require assumptions to
estimate the projected and accumulated benefit obligations,
including the following variables: discount rate; expected
salary increases; certain employee-related factors, such as
turnover, retirement age and mortality; expected return on
assets; and health care cost trend rates. These and other
assumptions affect the annual expense and obligations
recognized for the underlying plans. Our assumptions reflect
our historical experiences and management's best judgment
regarding future expectations. As permitted by U.S. GAAP,
the net amount by which actual results differ from our
assumptions is deferred. If this net deferred amount exceeds
10% of the greater of plan assets or liabilities, a portion of the
deferred amount is included in expense for the following year.
The cost or benefit of plan changes, such as increasing or
decreasing benefits for prior employee service (prior service
cost), is deferred and included in expense on a straight-line
basis over the average remaining service period of the
employees expected to receive benefits.

The expected return on plan assets assumption impacts our
defined benefit expense since many of our defined benefit
pension plans and our primary OPEB plan are partially funded.
The process for setting the expected rates of return is described
in Note 8 to the Consolidated Financial Statements. For 2017,
the average return on assets assumptions for pension plan assets
and OPEB assets was 6.9% and 8.3%, respectively. A change
in the rate of return of 100 basis points for both pension and
OPEB assets would impact annual after-tax benefit expense by
approximately $100 million.

Since pension and OPEB liabilities are measured on a
discounted basis, the discount rate impacts our plan obligations
and expenses. Discount rates used for our U.S. defined benefit
pension and OPEB plans are based on a yield curve constructed
from a portfolio of high quality bonds for which the timing and
amount of cash outflows approximate the estimated payouts
of the plan. For our international plans, the discount rates are
set by benchmarking against investment grade corporate bonds
rated AA or better. The average discount rate on the defined
benefit pension plans of 2.4% represents a weighted average
of local rates in countries where such plans exist. A 1.0%
change in the discount rate would impact annual after-tax
benefit expense by approximately $200 million. The average
discount rate on the OPEB plan of 3.9% reflects the higher
interest rates generally applicable in the U.S., which is where
a majority of the plan participants receive benefits. A 1.0%
change in the discount rate would impact annual after-tax
OPEB expense by approximately $70 million. For additional
details on our defined benefit pension and OPEB plans, see
Note 8 to the Consolidated Financial Statements.

is based on a number of factors including competitive
environment, market share, brand history, underlying product
life cycles, operating plans and
the macroeconomic
environment of the countries in which the brands are sold.
Determinable-lived intangible assets are amortized to expense
over their estimated lives. Impairment assessment for
determinable-lived intangibles is only required when an event
or change in circumstances indicates that the carrying amount
of the asset may not be recoverable. Indefinite-lived intangible
assets and goodwill are not amortized, but are tested separately
at least annually for impairment.

Most of our goodwill reporting units are comprised of a
combination of legacy and acquired businesses and as a result
have fair value cushions that, at a minimum, exceed two times
their underlying carrying values. Certain of our goodwill
reporting units, in particular Shave Care and Appliances, are
comprised entirely of acquired businesses and as a result have
fair value cushions that are not as high. Both of these wholly-
acquired reporting units have fair value cushions that currently
exceed the underlying carrying values. However, the Shave
Care cushion, as well as the related Gillette indefinite-lived
intangible asset cushion, have been reduced to below 10% due
in large part to an increased competitive market environment
in the U.S., a deceleration of category growth caused by
changing grooming habits and
significant currency
devaluations in a number of countries relative to the U.S. dollar
that have occurred in recent years and resulted in reduced cash
flow projections. As a result, this unit is more susceptible to
impairment risk from adverse changes in business operating
plans,
and macroeconomic
environment conditions, including any further significant
devaluation of major currencies relative to the U.S. dollar.
While management has implemented strategies to address
these events, adverse changes in the future could reduce the
underlying cash flows used to estimate fair values and could
result in a decline in fair value that could trigger future
impairment charges of the business unit's goodwill and
indefinite-lived intangibles (carrying values of Shave Care
goodwill and the Gillette indefinite-lived intangible asset as of
June 30, 2017 are $19 billion and $16 billion, respectively).

development

Other postretirement benefits

Uncertain tax positions

Other
TOTAL

1,344

1,457

277

449

168

1,994

7,024

5,487

1,333

564

870

315

397

158

2,302

7,449

6,761

1,808

952

804

8,254

$ 10,325

OTHER NONCURRENT LIABILITIES

RESTRUCTURING PROGRAM

including manufacturing

The Company has historically incurred an ongoing annual level
of restructuring-type activities to maintain a competitive cost
structure,
and workforce
optimization. Before-tax costs incurred under the ongoing
program have generally ranged from $250 to $500 annually.
In fiscal 2012, the Company initiated an incremental
restructuring program as part of a productivity and cost savings
plan to reduce costs in the areas of supply chain, research and
development, marketing and overheads. The productivity and
cost savings plan was designed to accelerate cost reductions
by streamlining management decision making, manufacturing
and other work processes in order to help fund the Company's
growth strategy.

The Company incurred $5.6 billion in before-tax restructuring
costs over a six year period (from fiscal 2012 through fiscal
2017), including costs incurred as part of the incremental
restructuring program. The program included a non-

Amounts in millions of dollars except per share amounts or as otherwise specified.

fiscal 2017,

the Company

manufacturing overhead enrollment reduction target of
approximately 25% - 30% by the end of fiscal year 2017.
Through
reduced non-
manufacturing enrollment by approximately 26%. The
reductions were enabled by the elimination of duplicate work,
simplification through the use of technology and optimization
of various functional and business organizations and the
Company's global footprint. In addition, the plan included
integration of newly acquired companies and the optimization
of the supply chain and other manufacturing processes.

additional

non-manufacturing

In fiscal 2017 the Company announced specific elements of an
additional multi-year productivity and cost savings plan to
further reduce costs in the areas of supply chain, certain
marketing activities and overhead expenses. Over the next two
fiscal years (fiscal 2018 and 2019), the Company expects to
incur approximately $1.2 billion total before-tax restructuring
costs under the plan. This program is expected to result in
meaningful
enrollment
reductions, along with further optimization of the supply chain
and other manufacturing processes.
Restructuring costs incurred consist primarily of costs to
separate employees, asset-related costs to exit facilities and
other costs. The Company incurred total restructuring charges
of approximately $754 and $977 for the years ended June 30,
2017 and 2016, respectively. Approximately $137 and $202
of these charges were recorded in SG&A for the years ended
June 30, 2017 and 2016, respectively and approximately $593
and $718 of these charges were recorded in Cost of products
sold for the years ended June 30, 2017 and 2016, respectively.
The remainder of the charges were included in Net earnings
from discontinued operations. Of the total costs incurred since
the inception of this restructuring program, $2.5 billion were
related to separations, $1.8 billion were asset-related and $1.3
billion were related to other restructuring-type costs. The
following table presents restructuring activity for the years
ended June 30, 2017 and 2016:

Amounts in millions
RESERVE
JUNE 30, 2015
Charges

Cash spent
Charges against
assets
RESERVE
JUNE 30, 2016
Charges
Cash spent (1)
Charges against
assets
RESERVE
JUNE 30, 2017

Separations

Asset-
Related
Costs

Other

Total

362 $ — $
262

432

27 $
283

389
977

(381)

—

(238)

(619)

—

(432)

—

(432)

243
206

(221)

—
397

—

72
151

315
754

(174)

(395)

—

(397)

—

(397)

228 $ — $

49 $

277

(1)

Includes liabilities transferred to Coty related to our Beauty
Brands divestiture.

The Procter & Gamble Company 47

Separation Costs

Other Costs

Employee separation charges for the years ended June 30, 2017
and 2016, related to severance packages for approximately
2,120 and 2,770 employees, respectively. For the years ended
June 30, 2017 and 2016, these severance packages included
approximately 380 and 920 non-manufacturing employees,
respectively. The packages were predominantly voluntary and
the amounts were calculated based on salary levels and past
service periods. Severance costs related to voluntary
separations are generally charged to earnings when the
employee accepts the offer. Since its inception, the
restructuring program has incurred separation charges related
to approximately 19,190 employees, of which approximately
9,920 are non-manufacturing overhead personnel.

Asset-Related Costs

Asset-related costs consist of both asset write-downs and
accelerated depreciation. Asset write-downs relate to the
establishment of a new fair value basis for assets held-for-sale
or disposal. These assets were written down to the lower of
their current carrying basis or amounts expected to be realized
upon disposal, less minor disposal costs. Charges for
accelerated depreciation relate to long-lived assets that will be
taken out of service prior to the end of their normal service
period. These assets relate primarily to manufacturing
consolidations and technology standardizations. The asset-
related charges will not have a significant impact on future
depreciation charges.

Other restructuring-type charges are incurred as a direct result
of the restructuring program. Such charges primarily include
asset removal and termination of contracts related to supply
chain optimization.

Consistent with our historical policies
for ongoing
restructuring-type activities, the restructuring program charges
are funded by and included within Corporate for both
management and segment reporting. Accordingly, all of the
charges under the program are included within the Corporate
reportable segment. However, for informative purposes, the
following table summarizes the total restructuring costs related
to our reportable segments:

Years ended June 30

2017

2016

2015

Beauty

Grooming

Health Care

Fabric & Home Care
Baby, Feminine & Family
Care
Corporate (1)
Total Company

90 $
45

144

231

229
754 $

72 $

250

225

362

197

192

527

977 $ 1,068

(1) Corporate includes costs related to allocated overheads,
including charges related to our Sales and Market Operations,
Global Business Services and Corporate Functions activities and
costs related to discontinued operations from our Batteries and
Beauty Brands businesses.

Amounts in millions of dollars except per share amounts or as otherwise specified.

48 The Procter & Gamble Company

NOTE 4

GOODWILL AND INTANGIBLE ASSETS

The change in the net carrying amount of goodwill by reportable segment was as follows:

Balance at June 30, 2015 - Net (1) (2)

Acquisitions and divestitures

Translation and other

Balance at June 30, 2016 - Net (1)
Acquisitions and divestitures

Translation and other

Balance at June 30, 2017 - Net (1)

Beauty

Grooming

12,704

19,619

(2)

(57)

12,645
—

146

—
(142)
19,477
—

150

Health
Care

Fabric &
Home
Care

Baby,
Feminine
& Family
Care

Corporate

Total
Company

5,876
(2)
(34)
5,840
(10)
48

1,874

—
(18)
1,856
(3)
4

4,549

—
(17)
4,532
(24)
38

—

— 44,622
(4)
(268)
— 44,350
(37)
—
386

—

$ 12,791 $ 19,627 $ 5,878 $ 1,857 $

4,546 $

— $ 44,699

(1) Grooming goodwill balance is net of $1.2 billion accumulated impairment losses.
(2) The Batteries goodwill at June 30, 2015, net of $2.1 billion accumulated impairment losses, was reported in Current assets held for sale in

the Consolidated Balance Sheet. The Batteries business was divested in February 2016.

During fiscal 2017, the Company completed the divestiture of
four product categories, comprised of 43 of its beauty brands
("Beauty Brands"). The transactions included the global salon
professional hair care and color, retail hair color and cosmetics
businesses and the fine fragrances business, along with select
hair styling brands (see Note 13). The Beauty Brands have
historically been part of the Company's Beauty reportable
segment. In accordance with applicable accounting guidance
for the disposal of long-lived assets, the results of the Beauty
Brands are presented as discontinued operations. As a result,
the goodwill attributable to the Beauty Brands as of June 30,
2016 and 2015 is excluded from the preceding table and is
reported as Current assets held for sale in the Consolidated
Balance Sheets as of June 30, 2016.

In February 2016, the Company completed the divestiture of
its Batteries business to Berkshire Hathaway (BH). Prior to
the transaction, the Company recorded a non-cash, before-tax
impairment charge of $402 ($350 after tax) during fiscal 2016,
which reflected the value of BH's shares in P&G stock as of
the date of the impairment charges (see Note 13). This
impairment charge as well as accumulated Batteries
impairment charges totaling $2.1 billion through fiscal 2015
were included as part of discontinued operations.

The change in goodwill during fiscal 2017 and the remaining
change during fiscal 2016 was primarily due to currency
translation across all reportable segments.

All of the goodwill and indefinite-lived intangible asset
impairment charges that are not reflected in discontinued
operations are included in Corporate for segment reporting.

The goodwill and intangible asset valuations are dependent on
a number of significant estimates and assumptions, including
macroeconomic conditions, overall category growth rates,
competitive activities, cost containment and margin expansion
and Company business plans. We believe these estimates and
assumptions are reasonable and are comparable to those that
would be used by other marketplace participants. However,
actual events and results could differ substantially from those

Amounts in millions of dollars except per share amounts or as otherwise specified.

used in our valuations. To the extent such factors result in a
failure to achieve the level of projected cash flows used to
estimate fair value, we may need to record additional non-cash
impairment charges in the future.

Identifiable intangible assets were comprised of:

2017

2016

As of June 30

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

INTANGIBLE ASSETS WITH DETERMINABLE LIVES

Brands

$ 3,094 $

(1,898) $ 3,409 $

(2,032)

Patents and
technology

Customer
relationships

Other
TOTAL

2,617

(2,261)

2,624

(2,164)

1,377

239

(564)

(132)

1,382

246

(514)

(130)

$ 7,327 $

(4,855) $ 7,661 $

(4,840)

INTANGIBLE ASSETS WITH INDEFINITE LIVES

Brands
TOTAL

21,715

$ 29,042 $

— 21,706
(4,855) $ 29,367 $

—

(4,840)

Due to the divestiture of the Beauty Brands, intangible assets
specific to this business as of June 30, 2016 are reported in
Current assets held for sale in accordance with the accounting
principles for assets held for sale.

Amortization expense of intangible assets was as follows:

Years ended June 30

Intangible asset amortization

2017
$ 325

2016

2015

$ 388

$ 457

Estimated amortization expense over the next five fiscal years
is as follows:

Years ending June 30

2018

2019

2020

2021

2022

Estimated
amortization expense $ 292 $ 275 $ 249 $ 201 $ 185

NOTE 5

INCOME TAXES

Income taxes are recognized for the amount of taxes payable
for the current year and for the impact of deferred tax assets
and liabilities, which represent future tax consequences of
events that have been recognized differently in the financial
statements than for tax purposes. Deferred tax assets and
liabilities are established using the enacted statutory tax rates
and are adjusted for any changes in such rates in the period of
change.

Earnings from continuing operations before income taxes
consisted of the following:

Years ended June 30

United States

International
TOTAL

2017
$ 9,031

2016

2015

$ 8,788

$ 8,496

4,226

4,581

2,516

$ 13,257

$ 13,369

$ 11,012

Income taxes on continuing operations consisted of the
following:

Years ended June 30
CURRENT TAX EXPENSE

2017

2016

2015

U.S. federal

International

U.S. state and local

DEFERRED TAX EXPENSE

U.S. federal

International and other

$ 1,531

$ 1,673

$ 2,127

1,243

241

3,015

1,483

224

3,380

(71)

(38)

1,142

252

3,521

(607)

(189)

(796)

TOTAL TAX EXPENSE $ 3,063

$ 3,342

$ 2,725

A reconciliation of the U.S. federal statutory income tax rate
to our actual income tax rate on continuing operations is
provided below:

Years ended June 30

2017

2016

2015

U.S. federal statutory
income tax rate

Country mix impacts of
foreign operations

Changes in uncertain tax
positions

Excess tax benefits from
the exercise of stock
options

Venezuela deconsolidation
charge

Other
EFFECTIVE INCOME
TAX RATE

35.0 % 35.0 % 35.0 %

(6.8)% (9.1)% (14.0)%

(2.0)% (0.5)% (0.9)%

(1.3)%

— %

6.6 %
— %
(1.8)% (0.4)% (2.0)%

23.1 % 25.0 % 24.7 %

Country mix impacts of foreign operations includes the effects
of foreign subsidiaries' earnings taxed at rates other than the

The Procter & Gamble Company 49

U.S. statutory rate, the U.S. tax impacts of non-U.S. earnings
repatriation and any net impacts of intercompany transactions.
Changes in uncertain tax positions represent changes in our net
liability related to prior year tax positions. Excess tax benefits
from the exercise of stock options reflect the impact of adopting
(Topic 718):
"Stock Compensation
ASU 2016-09,
Improvements
Payment
to
Accounting)."

Employee-Share-Based

Tax costs charged to shareholders' equity totaled $333 for the
year ended June 30, 2017. This primarily relates to the impact
of certain adjustments to pension obligations recorded in
stockholders' equity, partially offset by the tax effects of net
investment hedges. Tax benefits credited to shareholders'
equity totaled $899 for the year ended June 30, 2016. This
primarily relates to the impact of certain adjustments to pension
obligations recorded in stockholders' equity and the impact of
excess tax benefits from the exercise of stock options.

We have undistributed earnings of foreign subsidiaries of
approximately $49 billion at June 30, 2017, for which deferred
taxes have not been provided. Such earnings are considered
indefinitely invested in the foreign subsidiaries. If such
earnings were repatriated, additional tax expense may result.
However, the calculation of the amount of deferred U.S.
income tax on these earnings is not practicable because of the
large number of assumptions necessary to compute the tax.

A reconciliation of the beginning and ending liability for
uncertain tax positions is as follows:

Years ended June 30
BEGINNING OF YEAR $

2017

2016

2015

857

$ 1,096

$ 1,437

Increases in tax positions
for prior years

Decreases in tax positions
for prior years

Increases in tax positions
for current year

Settlements with taxing
authorities

Lapse in statute of
limitations

Currency translation
END OF YEAR

124

(147)

(97)

(146)

118

(381)

(301)

(250)

(22)

(4)

(39)

(23)

(27)

(123)

465

857

$ 1,096

Included in the total liability for uncertain tax positions at
June 30, 2017, is $284 that, depending on the ultimate
resolution, could impact the effective tax rate in future periods.

The Company is present in approximately 140 taxable
jurisdictions and, at any point in time, has 50-60 jurisdictional
audits underway at various stages of completion. We evaluate
our tax positions and establish liabilities for uncertain tax
positions that may be challenged by local authorities and may
not be fully sustained, despite our belief that the underlying
tax positions are fully supportable. Uncertain tax positions are
reviewed on an ongoing basis and are adjusted in light of
changing facts and circumstances, including progress of tax
audits, developments in case law and the closing of statutes of

Amounts in millions of dollars except per share amounts or as otherwise specified.

Deferred income tax assets and liabilities were comprised of
the following:

As of June 30
DEFERRED TAX ASSETS
Pension and postretirement benefits $
Loss and other carryforwards

Stock-based compensation

Unrealized loss on financial and
foreign exchange transactions

Fixed assets

Accrued marketing and promotion

Advance payments

Inventory

Accrued interest and taxes

Other

Valuation allowances
TOTAL

2017

2016

1,775

2,226

1,516

732

1,077

845

259

212

210

121

122

216

240

515

709

(505)

764

(467)

5,134

5,654

DEFERRED TAX LIABILITIES

Goodwill and other intangible
assets

Fixed assets

Unrealized gain on financial and
foreign exchange transactions

Other
TOTAL

9,403

9,461

1,495

1,533

314

387

105

$ 11,238

$ 11,486

Net operating loss carryforwards were $3.3 billion and $3.2
billion at June 30, 2017 and 2016, respectively. If unused, $1.1
billion will expire between 2017 and 2036. The remainder,
totaling $2.2 billion at June 30, 2017, may be carried forward
indefinitely.

50 The Procter & Gamble Company

limitation. Such adjustments are reflected in the tax provision
as appropriate. We have tax years open ranging from 2008 and
forward. We are generally not able to reliably estimate the
ultimate settlement amounts until the close of the audit. While
we do not expect material changes, it is possible that the amount
of unrecognized benefit with respect to our uncertain tax
positions could increase or decrease within the next 12 months.
At this time, we are not able to make a reasonable estimate of
the range of impact on the balance of uncertain tax positions
or the impact on the effective tax rate related to these items.

We recognize the additional accrual of any possible related
interest and penalties relating to the underlying uncertain tax
position in income tax expense. As of June 30, 2017, 2016 and
2015, we had accrued interest of $100, $323 and $347 and
accrued penalties of $20, $20 and $19, respectively, which are
not included in the above table. During the fiscal years ended
June 30, 2017, 2016 and 2015, we recognized $62, $2 and $15
in interest benefit/(expense) and $0, $(2) and $13 in penalties
benefit/(expense), respectively. The net benefits recognized
resulted primarily from the favorable resolution of tax
positions for prior years.

Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 51

NOTE 6

EARNINGS PER SHARE

Basic net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble less preferred
dividends (net of related tax benefits) by the weighted average number of common shares outstanding during the year. Diluted
net earnings per common share are calculated on the basis of the weighted average number of common shares outstanding plus
the dilutive effect of stock options and other stock-based awards (see Note 7) and the assumed conversion of preferred stock (see
Note 8).

Net earnings per share were as follows:

Years ended June 30

2017

CONSOLIDATED AMOUNTS

Net earnings/(loss)

Net earnings attributable to
noncontrolling interests
Net earnings/(loss) attributable
to P&G (Diluted)

Preferred dividends, net of tax
Net earnings/(loss) attributable
to P&G available to common
shareholders (Basic)

SHARES IN MILLIONS

Basic weighted average common
shares outstanding

Add: Effect of dilutive securities
Conversion of preferred shares(1)
Impact of stock options and
other unvested equity awards (2)

Diluted weighted average
common shares outstanding

PER SHARE AMOUNTS

Continuing
Operations

Dis-
continued
Operations
$ 10,194 $ 5,217 $ 15,411

Total

2016

Dis-
continued
Operations

Continuing
Operations

Total

$ 10,027 $

577 $ 10,604

2015

Dis-
Continuing
continued
Operations
Operations
$ 8,287 $ (1,143) $ 7,144

Total

(85)

—

(85)

(96)

—

(96)

(98)

(10)

(108)

10,109

5,217

(247)

—

15,326
(247)

9,931
(255)

577

—

10,508
(255)

8,189
(259)

(1,153)
—

7,036
(259)

$ 9,862 $ 5,217 $ 15,079

$ 9,676 $

577 $ 10,253

$ 7,930 $ (1,153) $ 6,777

2,598.1

2,698.9

2,711.7

99.3

103.9

108.6

43.0

41.6

63.3

2,740.4

2,844.4

2,883.6

Basic net earnings/(loss) per
common share (3)
Diluted net earnings/(loss) per
common share (3)

3.79 $

2.01 $

5.80

3.69 $

1.90 $

5.59

3.59 $

0.21 $

3.80

3.49 $

0.20 $

3.69

2.92 $ (0.42) $

2.50

2.84 $ (0.40) $

2.44

(1) Despite being included currently in Diluted net earnings per common share, the actual conversion to common stock occurs when the
preferred shares are sold. Shares may only be sold after being allocated to the ESOP participants pursuant to the repayment of the ESOP's
obligations through 2035.

(2) Weighted average outstanding stock options of approximately 20 million in 2017, 55 million in 2016 and 8 million in 2015 were not included
in the Diluted net earnings per share calculation because the options were out of the money or to do so would have been antidilutive (i.e.,
the total proceeds upon exercise would have exceeded the market value of the underlying common shares).

(3) Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings/(loss) attributable to Procter

& Gamble.

Amounts in millions of dollars except per share amounts or as otherwise specified.

52 The Procter & Gamble Company

NOTE 7

STOCK-BASED COMPENSATION

We have two primary stock-based compensation programs
under which we annually grant stock option, restricted stock
unit (RSU) and performance stock unit (PSU) awards to key
managers and directors.

In our main long-term incentive program, key managers can
elect to receive options or RSUs. All options granted vest after
three years. Exercise prices on options granted have been, and
continue to be, set equal to the market price of the underlying
shares on the date of the grant. The stock options granted from
July 1998 through August 2002 had a 15-year life and expired
during fiscal year 2017. The options granted since September
2002 have a 10-year life.

RSUs granted in February 2017 vest and settle in shares of
common stock three years from the grant date. RSUs granted
prior to February 2017 vest and settle in shares of common
stock five years from the grant date.

Senior-level executives participate in an additional long-term
incentive program that awards PSUs, which are paid in shares
after the end of a three-year performance period. Under this
program, the number of PSUs that will vest is based on the
pre-established
Company's
performance goals during that three year period.

performance

relative

In addition to these long-term incentive programs, we award
RSUs to the Company's directors and make other minor stock
option and RSU grants to employees for which the terms are
not substantially different than our long-term incentive awards.

A total of 185 million shares of common stock were authorized
for issuance under the stock-based compensation plan
approved by shareholders in 2014. A total of 95 million shares
remain available for grant under the 2014 plan.

The Company recognizes stock-based compensation expense
based on the fair value of the awards at the date of grant. The
fair value is amortized on a straight-line basis over the requisite
service period. Awards to employees eligible for retirement
prior to the award becoming fully vested are recognized as
compensation expense from the grant date through the date the
employee first becomes eligible to retire and is no longer
required to provide services to earn the award. Stock-based
compensation expense, which is included as part of Cost of
products sold and SG&A in the Consolidated Statement of
Earnings, and the related tax benefit were as follows:

Years ended June 30
Stock options
RSUs and PSUs
Total stock-based expense (1)

2017
$ 216
150
$ 366

2016
$ 199
143
$ 342

2015
$ 223
114
$ 337

Income tax benefit (1)
(1)

$ 111

$ 109

Includes amounts related to discontinued operations, which are
not material in any period presented.

Amounts in millions of dollars except per share amounts or as otherwise specified.

We utilize an industry standard lattice-based valuation model
to calculate the fair value for stock options granted.
Assumptions utilized in the model, which are evaluated and
revised to reflect market conditions and experience, were as
follows:

Years ended June 30

Interest rate
Weighted average
interest rate
Dividend yield

Expected
volatility
Weighted average
volatility
Expected life in
years

2017

2016
0.8 - 2.6% 0.7 - 1.9% 0.1 - 2.1%

2015

2.6%

3.2%

1.8%

3.2%

2.0%

3.1%

12 - 16% 15 - 17% 11 - 15%

15%

9.6

16%

8.3

15%

8.3

Lattice-based option valuation models incorporate ranges of
assumptions for inputs and those ranges are disclosed in the
preceding table. Expected volatilities are based on a
combination of historical volatility of our stock and implied
volatilities of call options on our stock. We use historical data
to estimate option exercise and employee termination patterns
within the valuation model. The expected life of options
granted is derived from the output of the option valuation model
and represents the average period of time that options granted
are expected to be outstanding. The interest rate for periods
within the contractual life of the options is based on the U.S.
Treasury yield curve in effect at the time of grant.

A summary of options, RSUs and PSUs outstanding under the
plans as of June 30, 2017 and activity during the year then
ended is presented below:

Options
(in
thousands)

Weighted
Average
Exercise
Price

Weighted
Average
Contract-
ual Life in
Years

Aggregate
Intrinsic
Value

Options

Outstanding,
beginning of year
Granted
Exercised
Canceled
OUTSTANDING,
END OF YEAR

230,397 $ 68.02
90.70
21,425
59.11
(44,070)
69.76
(1,267)

206,485 $ 72.46

EXERCISABLE

140,803 $ 66.71

5.4 $ 3,109

3.9 $ 2,878

The weighted average grant-date fair value of options granted
was $10.45, $8.48 and $9.38 per share in 2017, 2016 and 2015,
respectively. The total intrinsic value of options exercised was
$1,334, $1,388 and $1,814 in 2017, 2016 and 2015,
respectively. The total grant-date fair value of options that
vested during 2017, 2016 and 2015 was $246, $200 and $241,
respectively.
there was $208 of
compensation cost that has not yet been recognized related to
stock option grants. That cost is expected to be recognized
over a remaining weighted average period of 2.0 years. Cash
received from options exercised was $2,630, $2,332 and
$2,631 in 2017, 2016 and 2015, respectively. The actual tax

At June 30, 2017,

benefit for the tax deductions from option exercises totaled
$421, $433 and $519 in 2017, 2016 and 2015, respectively.

RSUs

PSUs

Units (in
thousands)

Weighted
Average
Grant Date
Fair Value

Units (in
thousands)

Weighted
Average
Grant Date
Fair Value

5,274 $
1,730
(1,586)
(59)

65.53
89.74
66.70
69.21

1,146 $
623
(575)
—

75.25
91.03
77.55
—

5,359 $

74.98

1,194 $

82.40

Other stock-
based awards
Non-vested at
July 1, 2016
Granted
Vested
Forfeited
Non-vested at
June 30, 2017

At June 30, 2017, there was $255 of compensation cost that
has not yet been recognized related to restricted stock, RSUs
and PSUs. That cost is expected to be recognized over a
remaining weighted average period of 2.5 years. The total
grant date fair value of shares vested was $163, $97 and $79
in 2017, 2016 and 2015, respectively.
The Company settles equity issuances with treasury shares.
We have no specific policy to repurchase common shares to
mitigate the dilutive impact of options, RSUs and PSUs.
However, we have historically made adequate discretionary
purchases, based on cash availability, market trends and other
factors, to offset the impacts of such activity.

The Procter & Gamble Company 53

NOTE 8

POSTRETIREMENT BENEFITS AND EMPLOYEE
STOCK OWNERSHIP PLAN

We offer various postretirement benefits to our employees.
Defined Contribution Retirement Plans

We have defined contribution plans, which cover the majority
of our U.S. employees, as well as employees in certain other
countries. These plans are fully funded. We generally make
contributions to participants' accounts based on individual base
salaries and years of service. Total global defined contribution
expense was $270, $292 and $305 in 2017, 2016 and 2015,
respectively.

The primary U.S. defined contribution plan (the U.S. DC plan)
comprises the majority of the expense for the Company's
defined contribution plans. For the U.S. DC plan, the
contribution rate is set annually. Total contributions for this
plan approximated 14% of total participants' annual wages and
salaries in 2017 in 2016 and 2015.

We maintain The Procter & Gamble Profit Sharing Trust
(Trust) and Employee Stock Ownership Plan (ESOP) to
provide a portion of the funding for the U.S. DC plan and other
retiree benefits (described below). Operating details of the
ESOP are provided at the end of this Note. The fair value of
the ESOP Series A shares allocated to participants reduces our
cash contribution required to fund the U.S. DC plan.
Defined Benefit Retirement Plans and Other Retiree
Benefits

We offer defined benefit retirement pension plans to certain
employees. These benefits relate primarily to local plans
outside the U.S. and, to a lesser extent, plans assumed in
previous acquisitions covering U.S. employees.

We also provide certain other retiree benefits, primarily health
care and life insurance, for the majority of our U.S. employees,
who become eligible for these benefits when they meet
minimum age and service requirements. Generally, the health
care plans require cost sharing with retirees and pay a stated
percentage of expenses, reduced by deductibles and other
coverages. These benefits are primarily funded by ESOP
Series B shares and certain other assets contributed by the
Company.

Amounts in millions of dollars except per share amounts or as otherwise specified.

54 The Procter & Gamble Company

Obligation and Funded Status. The following provides a reconciliation of benefit obligations, plan assets and funded status of
these defined benefit plans:

Years ended June 30
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year (3)
Service cost
Interest cost
Participants' contributions
Amendments
Net actuarial loss/(gain)
Acquisitions/(divestitures) (4)
Curtailments
Special termination benefits
Currency translation and other
Benefit payments
BENEFIT OBLIGATION AT END OF YEAR (3)

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year
Actual return on plan assets
Acquisitions/(divestitures) (4)
Employer contributions
Participants' contributions
Currency translation and other
ESOP debt impacts (5)
Benefit payments
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
Reclassification of net obligation to held for sale liabilities
FUNDED STATUS

Pension Benefits (1)
2016
2017

Other Retiree Benefits (2)

2017

2016

$ 17,285
310
300
14
2
(643)
(413)
(132)
4
35
(602)
$ 16,160

$ 15,951
314
466
17
8
1,927
(21)
—
6
(826)
(557)
$ 17,285

$ 10,269
884
(34)
316
14
(18)
—
(602)
$ 10,829
—
(5,331) $

$ 10,605
630
(13)
306
17
(719)
—
(557)
$ 10,269
402
(6,614)

5,632
133
175
74
—
(554)
(31)
(37)
21
16
(242)
5,187

3,787
136
—
36
74
(4)
44
(242)
3,831
—
(1,356) $

4,904
124
219
74
(40)
589
(7)
—
12
(14)
(229)
5,632

3,470
408
—
32
74
(8)
40
(229)
3,787
16
(1,829)

(1) Primarily non-U.S.-based defined benefit retirement plans.
(2) Primarily U.S.-based other postretirement benefit plans.
(3) For the pension benefit plans, the benefit obligation is the projected benefit obligation. For other retiree benefit plans, the benefit obligation

is the accumulated postretirement benefit obligation.

(4) For the year ended June 30, 2017, this represents the obligations and plans which were classified as held for sale at June 30, 2016.
(5) Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.

The underfunding of pension benefits is primarily a function of the different funding incentives that exist outside of the U.S. In
certain countries, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations
prior to their due date. In these instances, benefit payments are typically paid directly from the Company's cash as they become
due.

Years ended June 30
CLASSIFICATION OF NET AMOUNT RECOGNIZED

Noncurrent assets

Current liabilities

Noncurrent liabilities
NET AMOUNT RECOGNIZED

AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)

Net actuarial loss

Prior service cost/(credit)
NET AMOUNTS RECOGNIZED IN AOCI

4,548

245

4,793

6,088

270

6,358

Amounts in millions of dollars except per share amounts or as otherwise specified.

Pension Benefits

Other Retiree Benefits

2017

2016

2017

2016

196
(40)
(5,487)
(5,331) $

180
(33)
(6,761)
(6,614)

— $
(23)
(1,333)
(1,356) $

—
(21)
(1,808)
(1,829)

1,819
(293)
1,526

2,247
(334)
1,913

The Procter & Gamble Company 55

The accumulated benefit obligation for all defined benefit pension plans was $14,512 and $15,546 as of June 30, 2017 and 2016,
respectively. Pension plans with accumulated benefit obligations in excess of plan assets and plans with projected benefit obligations
in excess of plan assets consisted of the following:

As of June 30

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

Accumulated Benefit Obligation
Exceeds the Fair Value of Plan Assets

Projected Benefit Obligation
Exceeds the Fair Value of Plan Assets

2017

2016

2017

2016

13,699

12,276

8,279

15,233

13,587

8,082

14,181

12,630

8,654

15,853

14,149

8,657

Net Periodic Benefit Cost. Components of the net periodic benefit cost were as follows:

Years ended June 30

2017

2016

2015

2017

2016

2015

Pension Benefits

Other Retiree Benefits

314

317

133

124

156

AMOUNTS RECOGNIZED IN NET PERIODIC BENEFIT COST
Service cost (1)
Interest cost

310

Expected return on plan assets

Amortization of net actuarial loss
Amortization of prior service cost/(credit)

Amortization of net actuarial loss/ prior service cost
due to settlements and curtailments

Special termination benefits
GROSS BENEFIT COST/(CREDIT)

Dividends on ESOP preferred stock
NET PERIODIC BENEFIT COST/(CREDIT)

186 (2)
4

528

—

528

300
(675)
375
28

466
(731)
265
29

545
(732)
275
30

—

349

—

349

446

—

446

CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN AOCI

Net actuarial loss/(gain) - current year

Prior service cost/(credit) - current year

Amortization of net actuarial loss

Amortization of prior service (cost)/credit

Amortization of net actuarial loss/prior service costs
due to settlements and curtailments

Reduction in net actuarial losses resulting from
curtailment

$ 2,028

8
(265)
(29)

—

(852)
2
(375)
(28)

(186)

(132)
6
(1,565)

175
(431)
122
(45)

16 (2)
21 (2)
(9)
(45)
(54)

(259)
—
(122)
45

(16)

219
(416)
78
(52)

—

12
(35)
(52)
(87) $

240
(406)
105
(20)

—

98
(58)
40

597
(40)
(78)
52

—

(37)
2
(387)

—
(3)
528

Currency translation and other
TOTAL CHANGE IN AOCI
NET AMOUNTS RECOGNIZED IN PERIODIC
BENEFIT COST AND AOCI
(1) Service cost includes amounts related to discontinued operations, which are not material for any period.
(2) Amortization of net actuarial loss / prior service cost due to settlement and curtailments and $18 of the special termination benefits are

(172)
1,570

$ (1,037)

$ 1,919

(441)

441

included in Net earnings from discontinued operations.

Amounts expected to be amortized from AOCI into net periodic benefit cost during the year ending June 30, 2018, are as follows:

Net actuarial loss

Prior service cost/(credit)

Pension Benefits

Other Retiree Benefits

289

67
(35)

Amounts in millions of dollars except per share amounts or as otherwise specified.

56 The Procter & Gamble Company

Assumptions. We determine our actuarial assumptions on an annual basis. These assumptions are weighted to reflect each country
that may have an impact on the cost of providing retirement benefits. The weighted average assumptions used to determine benefit
obligations recorded on the Consolidated Balance Sheets as of June 30, were as follows: (1)

As of June 30

Discount rate

Rate of compensation increase

Health care cost trend rates assumed for next year

Rate to which the health care cost trend rate is assumed to decline (ultimate
trend rate)

Year that the rate reaches the ultimate trend rate

(1) Determined as of end of year.

Pension Benefits

Other Retiree Benefits

2017

2016

2017

2016

2.4%
3.0%

N/A

2.1%

2.9%

N/A

3.9%
N/A

6.4%

4.9%

2022

3.6%

N/A

7.2%

4.9%

2021

The weighted average assumptions used to determine net benefit cost recorded on the Consolidated Statement of Earnings for the
years ended June 30, were as follows: (1)

Years ended June 30

Discount rate

Expected return on plan assets

Rate of compensation increase

(1) Determined as of beginning of year.

Pension Benefits

Other Retiree Benefits

2016

2017
2.1% 3.1%
6.9% 7.2%
2.9% 3.1%

2015

3.5%
7.2%

3.2%

2016

2017
3.6% 4.5%
8.3% 8.3%
N/A
N/A

2015

4.4%
8.3%

N/A

For the fiscal year 2017, the Company changed its method of determining service and interest costs for plans that make up the
majority of our obligation from the single weighted average discount rate approach to specific spot rates along the yield curve,
which management has concluded is a more precise estimate. Prior to this change in methodology, the Company measured service
and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations.
The Company has accounted for this change as a change in accounting estimate and, accordingly, has accounted for it on a
prospective basis. This change does not impact the benefit obligation and did not have a material impact on fiscal year 2017
results.

Several factors are considered in developing the estimate for the long-term expected rate of return on plan assets. For the defined
benefit retirement plans, these factors include historical rates of return of broad equity and bond indices and projected long-term
rates of return obtained from pension investment consultants. The expected long-term rates of return for plan assets are 8 - 9%
for equities and 5 - 6% for bonds. For other retiree benefit plans, the expected long-term rate of return reflects that the assets are
comprised primarily of Company stock. The expected rate of return on Company stock is based on the long-term projected return
of 8.5% and reflects the historical pattern of returns.

Assumed health care cost trend rates could have a significant effect on the amounts reported for the other retiree benefit plans. A
one percentage point change in assumed health care cost trend rates would have the following effects:

Effect on the total service and interest cost components

Effect on the accumulated postretirement benefit obligation

One-Percentage
Point Increase

One-Percentage
Point Decrease

950

(55)
(697)

Plan Assets. Our investment objective for defined benefit retirement plan assets is to meet the plans' benefit obligations and to
improve plan self-sufficiency for future benefit obligations. The investment strategies focus on asset class diversification, liquidity
to meet benefit payments and an appropriate balance of long-term investment return and risk. Target ranges for asset allocations
are determined by assessing different investment risks and matching the actuarial projections of the plans' future liabilities and
benefit payments with current as well as expected long-term rates of return on the assets, taking into account investment return
volatility and correlations across asset classes. Plan assets are diversified across several investment managers and are generally
invested in liquid funds that are selected to track broad market equity and bond indices. Investment risk is carefully controlled
with plan assets rebalanced to target allocations on a periodic basis and with continual monitoring of investment managers'
performance relative to the investment guidelines established with each investment manager.

Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 57

Our target asset allocation for the year ended June 30, 2017, and actual asset allocation by asset category as of June 30, 2017 and
2016, were as follows:

Target Asset Allocation

Actual Asset Allocation at June 30

Asset Category

Cash

Debt securities

Equity securities
TOTAL

Pension Benefits
2%

57%

41%

100%

Other Retiree
Benefits

Pension Benefits

Other Retiree Benefits

2017

2016

2017

2016

95%

100%

53%

45%

100%

55%

43%

100%

95%

100%

94%

100%

The following tables set forth the fair value of the Company's plan assets as of June 30, 2017 and 2016 segregated by level within
the fair value hierarchy (refer to Note 9 for further discussion on the fair value hierarchy and fair value principles). Company
stock listed as Level 2 in the hierarchy represents preferred shares which are valued based on the value of Company common
stock. The majority of our Level 3 pension assets are insurance contracts. Their fair values are based on their cash equivalent or
models that project future cash flows and discount the future amounts to a present value using market-based observable inputs,
including credit risk and interest rate curves. There was no significant activity within the Level 3 pension and other retiree benefits
plan assets during the years presented. Investments valued using net asset value as a practical expedient are primarily equity and
fixed income collective funds. These assets are not valued using the fair value hierarchy, but rather valued using the net asset
value reported by the managers of the funds and as supported by the unit prices of actual purchase and sale transactions. For
additional details on the fair value hierarchy, see Note 9.

As of June 30
ASSETS AT FAIR VALUE

Cash and cash equivalents
Company stock (1)
Other (2)

TOTAL ASSETS IN THE FAIR
VALUE HEIRARCHY

Investments valued at net asset value
TOTAL ASSETS AT FAIR VALUE

Pension Benefits

Other Retiree Benefits

Fair Value
Hierarchy Level

2017

2016

Fair Value
Hierarchy Level

2017

2016

134

1, 2 & 3

—

165

151

—

166

299

$
$
$ 10,530
$ 10,829

317

9,952

10,269

3,643

3,656

$
175
3,831

3,545

—

3,615

172

3,787

(1) Company stock is net of ESOP debt discussed below.
(2) The Company's other pension plan assets measured at fair value are generally classified as Level 3 within the fair value hierarchy. There

are no material other pension plan asset balances classified as Level 1 or Level 2 within the fair value hierarchy.

Cash Flows. Management's best estimate of cash requirements
and discretionary contributions for the defined benefit
retirement plans and other retiree benefit plans for the year
ending June 30, 2018, is $125 and $39, respectively. For the
defined benefit retirement plans, this is comprised of $75 in
expected benefit payments from the Company directly to
participants of unfunded plans and $50 of expected
contributions to funded plans. For other retiree benefit plans,
this is comprised of $24 in expected benefit payments from the

Company directly to participants of unfunded plans and $15
of expected contributions to funded plans. Expected
contributions are dependent on many variables, including the
variability of the market value of the plan assets as compared
to the benefit obligation and other market or regulatory
conditions. In addition, we take into consideration our business
investment opportunities and resulting cash requirements.
Accordingly, actual funding may differ significantly from
current estimates.

Amounts in millions of dollars except per share amounts or as otherwise specified.

58 The Procter & Gamble Company

Total benefit payments expected to be paid to participants,
which include payments funded from the Company's assets
and payments from the plans are as follows:

The series A and B preferred shares of the ESOP are allocated
to employees based on debt service requirements. The number
of preferred shares outstanding at June 30 was as follows:

Years ending June 30
EXPECTED BENEFIT PAYMENTS

Pension
Benefits

Other Retiree
Benefits

2018

2019

2020

2021

2022

524

530

539

575

596

198

211

222

232

242

2023 - 2027

3,221

1,334

Employee Stock Ownership Plan

We maintain the ESOP to provide funding for certain employee
benefits discussed in the preceding paragraphs.

The ESOP borrowed $1.0 billion in 1989 and the proceeds were
used to purchase Series A ESOP Convertible Class A Preferred
Stock to fund a portion of the U.S. DC plan. Principal and
interest requirements of the borrowing were paid by the Trust
from dividends on the preferred shares and from advances
provided by the Company. The original borrowing of $1.0
billion has been repaid in full, and advances from the Company
of $62 remain outstanding at June 30, 2017. Each share is
convertible at the option of the holder into one share of the
Company's common stock. The dividend for the current year
was equal to the common stock dividend of $2.70 per share.
The liquidation value is $6.82 per share.

In 1991, the ESOP borrowed an additional $1.0 billion. The
proceeds were used to purchase Series B ESOP Convertible
Class A Preferred Stock to fund a portion of retiree health care
benefits. These shares, net of the ESOP's debt, are considered
plan assets of the other retiree benefits plan discussed above.
Debt service requirements are funded by preferred stock
dividends, cash contributions and advances provided by the
Company, of which $770 are outstanding at June 30, 2017.
Each share is convertible at the option of the holder into one
share of the Company's common stock. The dividend for the
current year was equal to the common stock dividend of $2.70
per share. The liquidation value is $12.96 per share.

including

Our ESOP accounting practices are consistent with current
ESOP accounting guidance,
the permissible
continuation of certain provisions from prior accounting
guidance. ESOP debt, which is guaranteed by the Company,
is recorded as debt (see Note 10) with an offset to the Reserve
for ESOP debt retirement, which is presented within
Shareholders' equity. Advances to the ESOP by the Company
are recorded as an increase in the Reserve for ESOP debt
retirement. Interest incurred on the ESOP debt is recorded as
Interest expense. Dividends on all preferred shares, net of
related tax benefits, are charged to Retained earnings.

Shares in thousands

Allocated

Unallocated
TOTAL SERIES A

Allocated

Unallocated
TOTAL SERIES B

2017
36,488

5,060

2016

2015

39,241

42,044

6,095

7,228

41,548

45,336

49,272

25,378

30,412

55,790

23,925

32,319

56,244

23,074

34,096

57,170

For purposes of calculating diluted net earnings per common
share, the preferred shares held by the ESOP are considered
converted from inception.

NOTE 9

RISK MANAGEMENT ACTIVITIES AND FAIR VALUE
MEASUREMENTS

At inception, we formally designate and document qualifying
instruments as hedges of underlying exposures. We formally
assess, at inception and at least quarterly thereafter, whether
the financial instruments used in hedging transactions are
effective at offsetting changes in either the fair value or cash
flows of the related underlying exposures. Fluctuations in the
value of these instruments generally are offset by changes in
the fair value or cash flows of the underlying exposures being
hedged. This is driven by the high degree of effectiveness
between the exposure being hedged and the hedging
instrument. The ineffective portion of a change in the fair value
of a qualifying instrument is immediately recognized in
earnings. The amount of ineffectiveness recognized was
immaterial for all years presented.
Credit Risk Management

We have counterparty credit guidelines and normally enter into
transactions with investment grade financial institutions, to the
extent commercially viable. Counterparty exposures are
monitored daily and downgrades in counterparty credit ratings
are reviewed on a timely basis. We have not incurred, and do
not expect to incur, material credit losses on our risk
management or other financial instruments.

Substantially all of the Company's financial instruments used
in hedging transactions are governed by industry standard

Amounts in millions of dollars except per share amounts or as otherwise specified.

netting and collateral agreements with counterparties. If the
Company's credit rating were to fall below the levels stipulated
in the agreements, the counterparties could demand either
collateralization or termination of the arrangements. The
aggregate fair value of the instruments covered by these
contractual features that are in a net liability position as of
June 30, 2017, was not material. The Company has not been
required to post collateral as a result of these contractual
features.
Interest Rate Risk Management

Our policy is to manage interest cost using a mixture of fixed-
rate and variable-rate debt. To manage this risk in a cost-
efficient manner, we enter into interest rate swaps whereby we
agree to exchange with the counterparty, at specified intervals,
the difference between fixed and variable interest amounts
calculated by reference to a notional amount.

Interest rate swaps that meet specific accounting criteria are
accounted for as fair value or cash flow hedges. For fair value
hedges, the changes in the fair value of both the hedging
the underlying debt obligations are
instruments and
immediately recognized in Interest expense. For cash flow
hedges, the effective portion of the changes in fair value of the
hedging instrument is reported in OCI and reclassified into
Interest expense over the life of the underlying debt obligation.
The ineffective portion for both cash flow and fair value
hedges, which was not material for any year presented, was
immediately recognized in Interest expense.
Foreign Currency Risk Management

We manufacture and sell our products and finance our
operations in a number of countries throughout the world. As
a result, we are exposed to movements in foreign currency
exchange rates.

To manage the exchange rate risk primarily associated with the
financing of our operations, we have historically used a
combination of forward contracts, options and currency swaps.
Historically, we have had currency swaps with original
maturities up to five years, which were intended to offset the
effect of exchange rate fluctuations on intercompany loans
denominated in foreign currencies. These swaps were
accounted for as cash flow hedges. The effective portion of
the changes in fair value of these instruments was reported in
OCI and reclassified into SG&A and Interest expense in the
same period or periods during which the related hedged
transactions affected earnings. The ineffective portion, which
was not material for any year presented, was immediately
recognized in SG&A.

The change in fair values of certain non-qualifying instruments
used to manage foreign exchange exposure of intercompany
financing transactions and certain balance sheet items subject
to revaluation are immediately recognized in earnings,
substantially offsetting the foreign currency mark-to-market
impact of the related exposures.
Net Investment Hedging

We hedge certain net investment positions in foreign
subsidiaries. To accomplish this, we either borrow directly in
foreign currencies and designate all or a portion of the foreign

The Procter & Gamble Company 59

currency debt as a hedge of the applicable net investment
position or we enter into foreign currency swaps that are
designated as hedges of net investments. Changes in the fair
value of these instruments are recognized in OCI to offset the
change in the value of the net investment being hedged. The
ineffective portion of these hedges, which was not material in
any year presented, was immediately recognized in Interest
expense.
Commodity Risk Management

Certain raw materials used in our products or production
processes are subject to price volatility caused by weather,
supply conditions, political and economic variables and other
unpredictable factors. To manage the volatility related to
anticipated purchases of certain of these materials, we have
historically, on a limited basis, used futures and options with
maturities generally less than one year and swap contracts with
maturities up to five years. As of and during the years ended
June 30, 2017 and 2016, we did not have any commodity
hedging activity.
Insurance

We self-insure for most insurable risks. However, we purchase
insurance for Directors and Officers Liability and certain other
coverage where it is required by law or by contract.
Fair Value Hierarchy

Accounting guidance on fair value measurements for certain
financial assets and liabilities requires that financial assets and
liabilities carried at fair value be classified and disclosed in
one of the following categories:

• Level 1: Quoted market prices in active markets for

identical assets or liabilities.

• Level 2: Observable market-based inputs or unobservable

inputs that are corroborated by market data.

• Level 3: Unobservable inputs reflecting the reporting
entity's own assumptions or external inputs from inactive
markets.

When applying fair value principles in the valuation of assets
and liabilities, we are required to maximize the use of quoted
market prices and minimize the use of unobservable inputs.
The Company has not changed its valuation techniques used
in measuring the fair value of any financial assets or liabilities
during the year. Our fair value estimates take into consideration
the credit risk of both the Company and our counterparties.

When active market quotes are not available for financial assets
and liabilities, we use industry standard valuation models.
Where applicable, these models project future cash flows and
discount the future amounts to a present value using market-
based observable inputs including credit risk, interest rate
curves, foreign currency rates and forward and spot prices for
currencies. In circumstances where market-based observable
inputs are not available, management judgment is used to
develop assumptions to estimate fair value. Generally, the fair
value of our Level 3 instruments is estimated as the net present
value of expected future cash flows based on external inputs.

Amounts in millions of dollars except per share amounts or as otherwise specified.

60 The Procter & Gamble Company

The following table sets forth the Company's financial assets as of June 30, 2017 and 2016 that were measured at fair value on a
recurring basis during the period:

As of June 30

Investments:

U.S. government securities

Corporate bond securities

Other investments

TOTAL

Fair Value Asset

2017

2016

6,297

3,271

132

9,700

4,839

1,407

6,274

Investment securities are presented in Available-for-sale investment securities and Other noncurrent assets. The amortized cost
of the U.S. government securities with maturities less than one year was $2,494 and $292 as of June 30, 2017 and 2016, respectively.
The amortized cost of the U.S. government securities with maturities between one and five years was $3,824 and $4,513 as of
June 30, 2017 and 2016, respectively. The amortized cost of corporate bond securities with maturities of less than a year was
$730 and $382 as of June 30, 2017 and 2016, respectively. The amortized cost of corporate bond securities with maturities between
one and five years was $2,547 and $1,018 as of June 30, 2017 and 2016, respectively. The Company's investments measured at
fair value are generally classified as Level 2 within the fair value hierarchy. There are no material investment balances classified
as Level 1 or Level 3 within the fair value hierarchy, or using net asset value as a practical expedient. Fair values are generally
estimated based upon quoted market prices for similar instruments.

The fair value of long-term debt was $21,396 and $24,362 as of June 30, 2017 and 2016, respectively. This includes the current
portion of debt instruments ($1,694 and $2,761 as of June 30, 2017 and 2016, respectively). Certain long-term debt approximates
fair value. Certain long-term debt is not recorded at fair value on a recurring basis, but is measured at fair value for disclosure
purposes. Long-term debt with fair value of $1,716 and $2,331 as of June 30, 2017 and 2016, respectively, is classified as Level
2 within the fair value hierarchy. All remaining long-term debt is classified as Level 1 within the fair value hierarchy. Fair values
are generally estimated based on quoted market prices for identical or similar instruments.

Disclosures about Derivative Instruments

The notional amounts and fair values of qualifying and non-qualifying derivative instruments used in hedging transactions as of
June 30, 2017 and 2016 are as follows:

Notional Amount

Fair Value Asset

Fair Value (Liability)

As of June 30
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS

2017

2016

Foreign currency contracts
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS

— $

798

Interest rate contracts
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS

4,993

4,552

3,013
Net investment hedges
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

6,102

Foreign currency contracts

4,969

6,482

2017

2016

2017

2016

— $

180

371

— $

(63)

(2) $

—

(177) $

(115)

(7) $

(38)

All derivative assets are presented in Prepaid expenses and other current assets or Other noncurrent assets. All derivative liabilities
are presented in Accrued and other liabilities or Other noncurrent liabilities. The decrease in the notional balance of foreign
currency cash flow hedges is reflective of the decrease in the underlying intercompany loans. The increase in the notional balance
of net investment hedges primarily reflects a movement into lower yielding foreign currency swaps. The decrease in the notional
balance of foreign currency contracts not designated as hedging instruments reflects changes in the level of intercompany financing
activity during the period. All of the Company's derivative assets and liabilities measured at fair value are classified as Level 2
within the fair value hierarchy.

The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were
no transfers between levels during the periods presented. In addition, there was no significant activity within the Level 3 assets
and liabilities during the periods presented. Except for the impairment charges related to our Batteries business (see Note 4), there
were no significant assets or liabilities that were re-measured at fair value on a non-recurring basis during the years ended June 30,
2017 and 2016.

Amounts in millions of dollars except per share amounts or as otherwise specified.

Amount of Gain/(Loss)
Recognized in AOCI
on Derivatives (Effective Portion)

NOTE 10
SHORT-TERM AND LONG-TERM DEBT

The Procter & Gamble Company 61

Years ended June 30
DERIVATIVES IN CASH FLOW HEDGING
RELATIONSHIPS

2017

2016

Interest rate contracts

Foreign currency contracts
TOTAL

(2) $
—
(2) $

(2)

—

(2)

DERIVATIVES IN NET INVESTMENT HEDGING
RELATIONSHIPS

Net investment hedges

(104) $

(53)

During the next 12 months, the amount of the June 30, 2017
AOCI balance that will be reclassified to earnings is expected
to be immaterial. The amounts of gains and losses included in
earnings from qualifying and non-qualifying financial
instruments used in hedging transactions for the years ended
June 30, 2017 and 2016 were as follows:

Amount of Gain/(Loss)
Reclassified from
AOCI into Earnings

Years ended June 30
DERIVATIVES IN CASH FLOW HEDGING
RELATIONSHIPS

2017

2016

Interest rate contracts

Foreign currency contracts
TOTAL

— $
69

(106)

(103)

Amount of Gain/(Loss)
Recognized in Earnings

Years ended June 30
DERIVATIVES IN FAIR VALUE HEDGING
RELATIONSHIPS

2017

2016

Interest rate contracts

Debt
TOTAL

(193) $
193
— $

212

(212)

—

DERIVATIVES IN NET INVESTMENT HEDGING
RELATIONSHIPS

Net investment hedges
DERIVATIVES NOT DESIGNATED AS HEDGING
INSTRUMENTS
Foreign currency contracts (1) $

(120)

(2)

(1) The gain or loss on non-qualifying foreign currency contracts
substantially offsets the foreign currency mark-to-market impact
of the related exposure.

2017

2016

As of June 30
DEBT DUE WITHIN ONE YEAR
Current portion of long-term debt
Commercial paper
Other
TOTAL

$ 1,676
11,705
173
$ 13,554

$ 2,760
8,690
203
$ 11,653

Short-term weighted average
interest rates (1)

0.5%

0.2%

(1)

Short-term weighted average interest rates include the effects of
interest rate swaps discussed in Note 9.

As of June 30
LONG-TERM DEBT
5.13% EUR note due October 2017
1.60% USD note due November 2018
1.90% USD note due November 2019
0.28% JPY note due May 2020
4.13% EUR note due December 2020

9.36% ESOP debentures due
2017-2021 (1)
1.85% USD note due February 2021
1.70% USD note due November 2021
2.00% EUR note due November 2021
2.30% USD note due February 2022
2.00% EUR note due August 2022
3.10% USD note due August 2023
1.13% EUR note due November 2023
2.70% USD note due February 2026
2.45% USD note due November 2026
4.88% EUR note due May 2027
5.55% USD note due March 2037
Capital lease obligations
All other long-term debt
Current portion of long-term debt
TOTAL

2017

2016

1,078
1,000
550
894
686

417
600
875
858
1,000
1,144
1,000
1,430
600
875
1,144
1,130
51
4,382
(1,676)
$18,038

1,221
1,000
550
973
666

498
600
—
833
1,000
1,110
1,000
1,388
600
—
1,110
1,400
45
7,711
(2,760)
$18,945

Long-term weighted average
interest rates (2)
3.1%
(1) Debt issued by the ESOP is guaranteed by the Company and is

2.6%

recorded as debt of the Company, as discussed in Note 8.

(2) Long-term weighted average interest rates include the effects of

interest rate swaps discussed in Note 9.

Long-term debt maturities during the next five fiscal years are
as follows:

Years ending June 30
Debt maturities

2019

2018

2020
$1,676 $1,111 $2,010 $1,411 $2,890

2022

2021

The Procter & Gamble Company fully and unconditionally
guarantees the registered debt and securities issued by its 100%
owned finance subsidiaries.

Amounts in millions of dollars except per share amounts or as otherwise specified.

62 The Procter & Gamble Company

NOTE 11

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The table below presents the changes in Accumulated other comprehensive income/(loss) (AOCI), including the reclassifications
out of Accumulated other comprehensive income/(loss) by component:

Changes in Accumulated Other Comprehensive Income/(Loss) by Component

Hedges

Investment
Securities

Pension and Other
Retiree Benefits

Financial Statement
Translation

Total

BALANCE at JUNE 30, 2015
OCI before reclassifications (1)
Amounts reclassified from AOCI (2)
Net current period OCI

BALANCE at JUNE 30, 2016
OCI before reclassifications (3)
Amounts reclassified from AOCI (4)
Net current period OCI

(2,642) $

(103)

104

(2,641)
(237)

(69)

(306)

29
(1)
28

34
(49)
(10)
(59)
(25) $

(4,321) $
(1,710)
233
(1,477)
(5,798)
910

491

1,401
(4,397) $

(5,823) $ (12,780)
(3,463)
(1,679)
336
—
(3,127)
(1,679)
(15,907)
(7,502)
980
356
(117)
239

1,275
(7,263) $ (14,632)

295

BALANCE at JUNE 30, 2017

(2,947) $

(1) Net of tax (benefit) / expense of $6, $7 and $(708) for gains/losses on hedges, investment securities and pension and other retiree benefit

items, respectively, for the period ended June 30, 2016.

(2) Net of tax (benefit) / expense of $(1), $0 and $87 for gains/losses on hedges, investment securities and pension and other retiree benefit

items, respectively, for the period ended June 30, 2016.

(3) Net of tax (benefit) / expense of $(186), $(6) and $360 for gains/losses on hedges, investment securities and pension and other retiree benefit

items, respectively, for the period ended June 30, 2017.

(4) Net of tax (benefit) / expense of $0, $0 and $191 for gains/losses on hedges, investment securities and pension and other retiree benefit

items, respectively, for the period ended June 30, 2017.

The below provides additional details on amounts reclassified from AOCI into the Consolidated Statement of Earnings:

• Hedges: see Note 9 for classification of gains and losses from hedges in the Consolidated Statements of Earnings.
•
•

Investment securities: amounts reclassified from AOCI into Other non-operating income, net.
Pension and other retiree benefits: amounts reclassified from AOCI into Cost of product sold, SG&A, and Net earnings from
discontinued operations and included in the computation of net periodic pension cost (see Note 8 for additional details).
Financial statement translation: amounts reclassified from AOCI into Net earnings from discontinued operations. These
amounts relate to accumulated translation associated with foreign entities sold as part of the sale of the Beauty Brands business.

•

NOTE 12

COMMITMENTS AND CONTINGENCIES

Guarantees

routine

provide

indemnifications

In conjunction with certain transactions, primarily divestitures,
we may
(e.g.,
indemnification for representations and warranties and
retention of previously existing environmental, tax and
employee liabilities) for which terms range in duration and, in
some circumstances, are not explicitly defined. The maximum
obligation under some indemnifications is also not explicitly
stated and, as a result, the overall amount of these obligations
cannot be reasonably estimated. Other than obligations
recorded as liabilities at the time of divestiture, we have not
made significant payments for these indemnifications. We
believe that if we were to incur a loss on any of these matters,
the loss would not have a material effect on our financial
position, results of operations or cash flows.

In certain situations, we guarantee loans for suppliers and
customers. The total amount of guarantees issued under such
arrangements is not material.

Amounts in millions of dollars except per share amounts or as otherwise specified.

Off-Balance Sheet Arrangements

We do not have off-balance sheet financing arrangements,
including variable interest entities, that have a material impact
on our financial statements.
Purchase Commitments and Operating Leases

We have purchase commitments for materials, supplies,
services and property, plant and equipment as part of the normal
course of business. Commitments made under take-or-pay
obligations are as follows:

Years ending
June 30

Purchase
obligations

2018

2019

2020

2021

2022

There
after

$ 843 $ 225 $ 168 $ 99 $ 70 $ 202

Such amounts represent minimum commitments under take-
or-pay agreements with suppliers and are in line with expected
usage. These amounts include purchase commitments related
to service contracts for information technology, human
resources management and facilities management activities
that have been outsourced to third-party suppliers. Such
amounts also include arrangements with suppliers that qualify
as embedded operating leases. Due to the proprietary nature

of many of our materials and processes, certain supply
contracts contain penalty provisions for early termination. We
do not expect to incur penalty payments under these provisions
that would materially affect our financial position, results of
operations or cash flows.

We also lease certain property and equipment for varying
periods. Future minimum rental commitments under non-
cancelable operating leases, net of guaranteed sublease
income, are as follows:

Years ending
June 30

Operating
leases

Litigation

2018

2019

2020

2021

2022

There
after

$ 261 $ 273 $ 237 $ 194 $ 160 $ 368

We are subject, from time to time, to certain legal proceedings
and claims arising out of our business, which cover a wide
range of matters, including antitrust and trade regulation,
product liability, advertising, contracts, environmental, patent
and trademark matters, labor and employment matters and tax.
While considerable uncertainty exists, in the opinion of
management and our counsel, the ultimate resolution of the
various lawsuits and claims will not materially affect our
financial position, results of operations or cash flows.

We are also subject to contingencies pursuant to environmental
laws and regulations that in the future may require us to take
action to correct the effects on the environment of prior
manufacturing and waste disposal practices. Based on
currently available information, we do not believe the ultimate
resolution of environmental remediation will materially affect
our financial position, results of operations or cash flows.

NOTE 13

DISCONTINUED OPERATIONS

On October 1, 2016, the Company completed the divestiture
of four product categories to Coty, Inc. (“Coty”). The
divestiture included 41 of the Company's beauty brands
(“Beauty Brands”), including the global salon professional hair
care and color, retail hair color, cosmetics and a majority of
the fine fragrance businesses, along with select hair styling
brands. The form of the divestiture transaction was a Reverse
Morris Trust split-off, in which P&G shareholders were given
the election to exchange their P&G shares for shares of a new
corporation that held the Beauty Brands (Galleria Co.), and
then immediately exchange those shares for Coty shares. The
value P&G received in the transaction was $11.4 billion. The
value was comprised of 105 million shares of common stock
of the Company, which were tendered by shareholders of the
Company and exchanged for the Galleria Co. shares, valued
at approximately $9.4 billion, and the assumption of $1.9
billion of debt by Galleria Co. The shares tendered in the
transaction were reflected as an addition to treasury stock and
the cash received related to the debt assumed by Coty was
reflected as an investing activity in the Consolidated Statement
of Cash Flows. The Company recorded an after-tax gain on
the final transaction of $5.3 billion, net of transaction and
related costs.

The Procter & Gamble Company 63

Two of the fine fragrance brands, Dolce & Gabbana and
Christina Aguilera, were excluded from the divestiture. These
brands were subsequently divested at amounts
that
approximated their adjusted carrying values.

In February 2016, the Company completed the divestiture of
its Batteries business to Berkshire Hathaway (BH) via a split
transaction, in which the Company exchanged the Duracell
Company, which the Company had infused with additional
cash, to repurchase all 52.5 million shares of P&G stock owned
by BH. During the fiscal year ended June 30, 2016, the
Company recorded non-cash, before-tax goodwill and
indefinite-lived asset impairment charges of $402 ($350 after
tax), to reduce the Batteries carrying value to the total estimated
proceeds based on the value of BH’s shares in P&G stock at
the time of the impairment charges (see Note 4). The Company
recorded an after-tax gain on the final transaction of $422 to
reflect a subsequent increase in the final value of the BH’s
shares in P&G stock. The total value of the transaction was
$4.2 billion representing the value of the Duracell business and
the cash infusion. The cash infusion of $1.7 billion was
reflected as a purchase of treasury stock.

On July 31, 2014, the Company completed the divestiture of
its Pet Care operations in North America, Latin America, and
other selected countries to Mars, Incorporated (Mars) for $2.9
billion in an all-cash transaction. Under the terms of the
agreement, Mars acquired our branded pet care products, our
manufacturing sites in the United States and the majority of
the employees working in the Pet Care business. The
agreement included an option for Mars to acquire the Pet Care
business in several additional countries, which was also
completed in fiscal 2015. The European Union countries were
not included in the agreement with Mars.

In December 2014, the Company completed the divestiture of
its Pet Care operations in Western Europe to Spectrum Brands
in an all-cash transaction. Under the terms of the agreement,
Spectrum Brands acquired our branded pet care products, our
manufacturing site in the Netherlands and the majority of the
employees working in the Western Europe Pet Care business.
The one-time after-tax impact of these transactions is not
material.

In accordance with applicable accounting guidance for the
disposal of long-lived assets, the results of the Beauty Brands,
Batteries and Pet Care businesses are presented as discontinued
operations and, as such, have been excluded from both
continuing operations and segment results for all periods
presented. Additionally, the Beauty Brands' balance sheet
positions are presented as assets and liabilities held for sale in
the Consolidated Balance Sheet as of June 30, 2016. The
Beauty Brands were historically part of the Company's Beauty
reportable segment. The Batteries business was historically
part of the Company's Fabric & Home Care reportable
segment. The Pet Care business was historically part of the
Company's Health Care reportable segment.

Amounts in millions of dollars except per share amounts or as otherwise specified.

64 The Procter & Gamble Company

On July 1, 2015, the Company adopted ASU 2014-08, which included new reporting and disclosure requirements for discontinued
operations. The new requirements are effective for discontinued operations occurring on or after the adoption date, which includes
the Beauty Brands divestiture. All other discontinued operations prior to July 1, 2015 are reported based on the previous disclosure
requirements for discontinued operations, including the Batteries and Pet Care divestitures.

The following table summarizes Net earnings/(loss) from discontinued operations and reconciles to the Consolidated Statements
of Earnings:

Years ended June 30

Beauty Brands

Batteries

Pet Care
Net earnings/(loss) from discontinued operations

2017

2016

2015

5,217

—

336

241

—

5,217

577

643
(1,835)
49
(1,143)

The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Beauty Brands:

Years ended June 30

Net sales

Cost of products sold

Selling, general and administrative expense

Intangible asset impairment charges

Interest expense

Interest income

Other non-operating income/(loss), net

Earnings/(loss) from discontinued operations before income taxes

Income taxes on discontinued operations

Gain on sale of business before income taxes

Income tax expense/(benefit) on sale of business
Net earnings from discontinued operations

Beauty Brands

2017

2016

2015

1,159

4,910

450

783

—

16
(72)
46

(1)

5,197
(138)
5,217

1,621

2,763

457

121

— $

—

336

5,530

1,820

2,969

—

834

191

—

643

(1) The income tax benefit of the Beauty Brands divestiture represents the reversal of underlying deferred tax balances partially offset by current

tax expense related to the transaction.

For the fiscal year ended June 30, 2017, the Beauty Brands incurred transition costs of $167, after-tax, which are included in the
table above. For the fiscal year ended June 30, 2016, transition costs of $112, before-tax, were incurred and are included in Net
earnings/(loss) from discontinued operations.

The following is selected financial information included in cash flows from discontinued operations for the Beauty Brands:

Years ended June 30
NON-CASH OPERATING ITEMS

Depreciation and amortization

Deferred income tax benefit

Gain on sale of businesses

Goodwill and intangible asset impairment charges

Net increase in accrued taxes
CASH FLOWS FROM OPERATING ACTIVITIES

Cash taxes paid
CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

Amounts in millions of dollars except per share amounts or as otherwise specified.

Beauty Brands

2017

2016

2015

24
(649)
5,210

—

418

106

125

—

48
—

— $

—

114

106

The major components of assets and liabilities of the Beauty Brands held for sale are provided below.

The Procter & Gamble Company 65

As of June 30

Cash

Restricted cash

Accounts receivable

Inventories

Prepaid expenses and other current assets

Property, plant and equipment, net

Goodwill and intangible assets, net

Other noncurrent assets
Current assets held for sale

Accounts payable

Accrued and other liabilities

Noncurrent deferred tax liabilities

Long-term debt
Other noncurrent liabilities
Current liabilities held for sale

Beauty Brands

2016 (1)

40
996 (2)
384

494

126

629

4,411

105

7,185

148

384

370
996 (2)
445

2,343

(1) The Company closed the Beauty Brands transaction in October 2016. Therefore, as of June 30, 2016, all assets and liabilities held for sale

were reported as current assets and liabilities held for sale on the Consolidated Balance Sheets.

(2) On January 26, 2016, Beauty Brands drew on its Term B loan of $1.0 billion. The proceeds were held in restricted cash in escrow until the
legal integration activities prior to close. Beauty Brands received additional debt funding commitments with a consortium of lenders of
$3.5 billion.

Following is selected financial information included in Net earnings/(loss) from discontinued operations for the Batteries and Pet
Care businesses:

Earnings
Before
Impairment
Charges and
Income Taxes

Impairment
Charges

Income Tax
(Expense)/
Benefit

Gain/(Loss) on
Sale Before
Income Taxes

Income Tax
(Expense)/
Benefit on
Sale

Net Earnings/
(Loss) from
Discontinued
Operations

266

479

—

266
479

(402)
(2,174)
—

—
(402)
(2,174)

(45)
(140)
—
(4)
(45)
(144)

(288)
—

—

195
(288)
195

710 (1)
—

—
(142)
710 (1)
(142)

241
(1,835)
—

241
(1,786)

Net Sales

1,517

2,226

—

251

1,517
2,477

2016

2015

2016

2015

2016
2015

Batteries

Pet Care

Total

(1) The income tax benefit of the Batteries divestiture primarily represents the reversal of underlying deferred tax balances.

Amounts in millions of dollars except per share amounts or as otherwise specified.

66 The Procter & Gamble Company

NOTE 14

QUARTERLY RESULTS (UNAUDITED)

Quarters Ended
NET SALES

OPERATING INCOME

GROSS MARGIN

NET EARNINGS:

2016-2017

2015-2016
2016-2017

2015-2016

Sep 30
$ 16,518

Dec 31
$ 16,856

Mar 31
$ 15,605

Jun 30
$ 16,079

Total Year
$ 65,058

16,527
3,771

3,768
51.0%

50.7 %

16,915
3,875

3,853
50.8%

50.0 %

15,755
3,360

3,318
49.8%

49.8 %

16,102
2,949

2,502
48.4%

47.9 %

65,299
13,955

13,441

50.0%

49.6 %

Net earnings from continuing operations

2016-2017

$ 2,875

$ 2,561

$ 2,556

$ 2,202

$ 10,194

Net earnings/(loss) from discontinued operations

Net earnings attributable to Procter & Gamble

DILUTED NET EARNINGS PER COMMON
SHARE: (1)
Earnings from continuing operations

Earnings/(loss) from discontinued operations

Net earnings

2015-2016
2016-2017

2015-2016

2,777
(118)

(142)
2,714

2,601

2016-2017

1.00

2015-2016
2016-2017

2015-2016

0.96
(0.04)

(0.05)
0.96

0.91

2,905
5,335

323
7,875

3,206

0.93

1.01
1.95

0.11
2.88

1.12

2,337
—

446
2,522

2,750

0.93

0.81
—

0.16
0.93

0.97

2,008
—

(50)
2,215

1,951

0.82

0.71
—

(0.02)
0.82

0.69

10,027
5,217

577
15,326

10,508

3.69

3.49
1.90

0.20
5.59

3.69

(1) Diluted net earnings per share is calculated on Net earnings attributable to Procter & Gamble.

Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 67

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms, and
(2) accumulated and communicated to our management,
including Messrs. Taylor and Moeller, to allow their timely
decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures.

Changes in Internal Control over Financial Reporting.

The Company's President and Chief Executive Officer, David
S. Taylor, and the Company's Chief Financial Officer, Jon R.
Moeller, performed an evaluation of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934 (Exchange
Act)) as of the end of the period covered by this Annual Report
on Form 10-K.

Messrs. Taylor and Moeller have concluded that the Company's
disclosure controls and procedures were effective to ensure
that information required to be disclosed in reports we file or
submit under the Exchange Act is (1) recorded, processed,

There were no changes in our internal control over financial
reporting that occurred during the Company's fourth fiscal
quarter that have materially affected, or are reasonably likely
to materially affect, the Company's internal control over
financial reporting.

Item 9B. Other Information.

Not applicable.

PART III

Item 11. Executive Compensation.

The information required by this item is incorporated by
reference to the following sections of the 2017 Proxy Statement
filed pursuant to Regulation 14A: the subsections of the
Corporate Governance section entitled Committees of the
Board and entitled Compensation Committee Interlocks and
Insider Participation; and the portion beginning with the
section entitled Director Compensation up to but not including
the section entitled Security Ownership of Management and
Certain Beneficial Owners.

Item 10. Directors, Executive Officers and Corporate
Governance.

The Board of Directors has determined that the following
members of the Audit Committee are independent and are
Audit Committee financial experts as defined by SEC rules:
Ms. Patricia A. Woertz (Chair) and Mr. Kenneth I. Chenault.

The information required by this item is incorporated by
reference to the following sections of the 2017 Proxy Statement
filed pursuant to Regulation 14A: the section entitled Election
of Directors; the section entitled Corporate Governance, up to
but not including the subsection entitled Service on Other
Public Boards; the subsections of the Corporate Governance
section entitled Code of Ethics; the subsections of the Other
Matters section entitled Director Nominations for Inclusion in
the 2018 Proxy Statement and entitled Shareholder
Recommendations of Board Nominees and Committee Process
for Recommending Board Nominees; and the section entitled
Section 16(a) Beneficial Ownership Reporting Compliance.
Pursuant to Instruction 3 of Item 401(b) of Regulation S-K,
Executive Officers of the Registrant are reported in Part I of
this report.

68 The Procter & Gamble Company

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table gives information about the Company's common stock that may be issued upon the exercise of options,
warrants and rights under all of the Company's equity compensation plans as of June 30, 2017. The table includes the following
plans: The Procter & Gamble 1992 Stock Plan; The Procter & Gamble Future Shares Plan; The Procter & Gamble 2001 Stock
and Incentive Compensation Plan; The Procter & Gamble 2003 Non-Employee Directors' Stock Plan; The Gillette Company 2004
Long-Term Incentive Plan; The Procter & Gamble 2009 Stock and Incentive Compensation Plan; and The Procter & Gamble 2014
Stock and Incentive Compensation Plan.

Plan Category
Equity compensation plans approved by
security holders (1)
Options

Restricted Stock Units (RSUs)/Performance
Stock Units (PSUs)
Equity compensation plans not approved by
security holders (3)
Options
GRAND TOTAL

(a)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights

(b)
Weighted-
average exercise
price of outstanding
options, warrants and
rights

(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))

204,743,572

$72.6124

11,227,504

N/A

1,886,917
217,857,993

56.2185
$72.4627 (5)

(2)

(4)

94,626,812

(1)

Includes The Procter & Gamble 1992 Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan; The Procter & Gamble
2003 Non-Employee Directors' Stock Plan; The Procter & Gamble 2009 Stock and Incentive Compensation Plan; and The Procter & Gamble
2014 Stock and Incentive Compensation Plan.

(2) Of the plans listed in (1), only The Procter & Gamble 2014 Stock and Incentive Compensation Plan allow for future grants of securities.
The maximum number of shares that may be granted under this plan is 185 million shares. Stock options and stock appreciation rights are
counted on a one for one basis while full value awards (such as RSUs and PSUs) will be counted as 5 shares for each share awarded. Total
shares available for future issuance under this plan is 95 million.
Includes The Procter & Gamble Future Shares Plan and The Gillette Company 2004 Long-Term Incentive Plan.

(3)
(4) None of the plans listed in (3) allow for future grants of securities.
(5) Weighted average exercise price of outstanding options only.

The Procter & Gamble Future Shares Plan

On October 14, 1997, the Company's Board of Directors
approved The Procter & Gamble Future Shares Plan pursuant
to which options to purchase shares of the Company's common
stock may be granted to employees worldwide. The purpose
of this plan is to advance the interests of the Company by giving
substantially all employees a stake in the Company's future
growth and success and to strengthen the alignment of interests
between employees and the Company's shareholders through
increased ownership of shares of the Company's stock. The
plan has not been submitted to shareholders for approval.

Subject to adjustment for changes in the Company's
capitalization, the number of shares to be granted under the
plan is not to exceed 17 million shares. Under the plan's
regulations, recipients are granted options to acquire 100 shares
of the Company's common stock at an exercise price equal to
the average price of the Company's common stock on the date
of the grant. These options vest five years after the date of
grant and expire ten years following the date of grant. If a
recipient leaves the employ of the Company prior to the vesting

date for a reason other than disability, retirement or special
separation (as defined in the plan), then the award is forfeited.

At the time of the first grant following Board approval of the
plan, each employee of the Company not eligible for an award
under the 1992 Stock Plan was granted options for 100 shares.
From the date of this first grant through June 30, 2003, each
new employee of the Company has also received options for
100 shares. Following the grant of options on June 30, 2003,
the Company suspended this part of the plan. The plan
terminated on October 13, 2007.

The Gillette Company 2004 Long-Term Incentive Plan

Shareholders of The Gillette Company approved The Gillette
Company 2004 Long-Term Incentive Plan on May 20, 2004,
and the plan was assumed by the Company upon the merger
between The Procter & Gamble Company and The Gillette
Company. All options became immediately vested and
exercisable on October 1, 2005 as a result of the merger. After
the merger, all outstanding options became options to purchase
shares of The Procter & Gamble Company subject to an
exchange ratio of .975 shares of P&G stock per share of Gillette
stock. Only employees previously employed by The Gillette

Company prior to October 1, 2005 are eligible to receive grants
under this plan. The last grant of equity under this plan was
on February 27, 2009.

The plan was designed to attract, retain and motivate
employees of The Gillette Company and, until the effective
date of the merger between The Gillette Company and The
Procter & Gamble Company, non-employee members of the
Gillette Board of Directors. Under the plan, eligible
participants are: (i) granted or offered the right to purchase
stock options, (ii) granted stock appreciation rights and/or
(iii) granted shares of the Company's common stock or
restricted stock units (and dividend equivalents). Subject to
adjustment for changes in the Company's capitalization and
the addition of any shares authorized but not issued or
redeemed under The Gillette Company 1971 Stock Option
Plan, the number of shares to be granted under the plan is not
to exceed 19 million shares.

Except in the case of death of the recipient, all stock options
and stock appreciation rights must expire no later than ten years
from the date of grant. The exercise price for all stock options
granted under the plan must be equal to or greater than the fair
market value of the Company's stock on the date of grant. Any
common stock awarded under the plan may be subject to
restrictions on sale or transfer while the recipient is employed,
as the committee administering the plan may determine.

If a recipient of a grant leaves the Company while holding an
unexercised option or right: (1) any unexercisable portions
immediately become void, except in the case of death,
retirement, special separation (as those terms are defined in the

The Procter & Gamble Company 69

plan) or any grants as to which the Compensation Committee
of the Board of Directors has waived the termination
provisions; and (2) any exercisable portions immediately
become void, except in the case of death, retirement, special
separation, voluntary resignation that is not for Good Reason
(as those terms are defined in the plan) or any grants as to which
the Compensation Committee of the Board of Directors has
waived the termination provisions.

Additional information required by this item is incorporated
by reference to the 2017 Proxy Statement filed pursuant to
Regulation 14A, beginning with the section entitled Security
Ownership of Management and Certain Beneficial Owners and
up to but not including the section entitled Section 16(a)
Beneficial Ownership Reporting Compliance.

Item 13. Certain Relationships and Related Transactions and
Director Independence.

Item 14. Principal Accountant Fees and Services.

The information required by this item is incorporated by
reference to the following section of the 2017 Proxy Statement
filed pursuant to Regulation 14A: Report of the Audit
Committee, which ends with the subsection entitled Services
Provided by Deloitte.

Item 15. Exhibits and Financial Statement Schedules.

• Consolidated Statements of Shareholders' Equity - for

PART IV

years ended June 30, 2017, 2016 and 2015

• Consolidated Statements of Cash Flows - for years ended

June 30, 2017, 2016 and 2015

• Notes to Consolidated Financial Statements

2. Financial Statement Schedules:

These schedules are omitted because of the absence of the
conditions under which they are required or because the
information is set forth in the Consolidated Financial
Statements or Notes thereto.

1. Financial Statements:

The following Consolidated Financial Statements of The
Procter & Gamble Company and subsidiaries, management's
report and the reports of the independent registered public
accounting firm are incorporated by reference in Part II, Item 8
of this Form 10-K.

• Management's Report on Internal Control over Financial

Reporting

• Report of Independent Registered Public Accounting Firm

on Internal Control over Financial Reporting

• Report of Independent Registered Public Accounting Firm

on Consolidated Financial Statements

• Consolidated Statements of Earnings - for years ended

June 30, 2017, 2016 and 2015

• Consolidated Statements of Other Comprehensive

Income - for years ended June 30, 2017, 2016 and 2015

• Consolidated Balance Sheets - as of June 30, 2017 and

2016

70 The Procter & Gamble Company

EXHIBITS

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

(3-2) - Regulations (as approved by the Board of Directors on April 8, 2016, pursuant to authority granted by shareholders at the
annual meeting on October 13, 2009) (Incorporated by reference to Exhibit (3-2) of the Company's Annual Report on
Form 10-K for the year ended June 30, 2016).

Exhibit (4-1) -

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

Exhibit (10-1) - The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended on August 17, 2007), which was
originally adopted by shareholders at the annual meeting on October 9, 2001 (Incorporated by reference to Exhibit (10-1)
of the Company's Form 10-Q for the quarter ended March 31, 2013), and related correspondence and terms and conditions
(Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2013).*

(10-2) - The Procter & Gamble 1992 Stock Plan (as amended December 11, 2001), which was originally adopted by the shareholders
at the annual meeting on October 12, 1992 (Incorporated by reference to Exhibit (10-2) of the Company's Annual Report
on Form 10-K for the year ended June 30, 2013).*

(10-3) - The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the

Company's Annual Report on Form 10-K for the year ended June 30, 2013).*

(10-4) -

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

(10-5) - The Procter & Gamble 1993 Non-Employee Directors' Stock Plan (as amended September 10, 2002), which was originally
adopted by the shareholders at the annual meeting on October 11, 1994 (Incorporated by reference to Exhibit (10-5) of
the Company's Annual Report on Form 10-K for the year ended June 30, 2013).*

(10-6) -

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

(10-7) - The Procter & Gamble Future Shares Plan (as adjusted for the stock split effective May 21, 2004), which was originally
adopted by the Board of Directors on October 14, 1997 (Incorporated by reference to Exhibit (10-7) of the Company's
Annual Report on Form 10-K for the year ended June 30, 2015).*

(10-8) - The Procter & Gamble 2003 Non-Employee Directors' Stock Plan (as amended in August 2007), which was originally
adopted by the shareholders at the annual meeting on October 14, 2003, and related correspondence and terms and conditions
(Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended September 30, 2012).*

(10-9) - The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-4) of

the Company's Form 10-Q for the quarter ended December 31, 2013).*

(10-10) -

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

(10-11) - Company's Forms of Separation Agreement & Release (Incorporated by reference to Exhibit (10-1) of the Company's

Form 10-Q for the quarter ended March 31, 2017).*

(10-12) -

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

(10-13) - The Gillette Company 2004 Long-Term Incentive Plan (as amended on August 14, 2007) (Incorporated by reference to

Exhibit (10-4) of the Company's Form 10-Q for the quarter ended September 30, 2012).*

(10-14) - The Gillette Company Executive Life Insurance Program +.*

(10-15) - The Gillette Company Personal Financial Planning Reimbursement Program +.*

(10-16) - The Gillette Company Senior Executive Financial Planning Program +.*

(10-17) - The Gillette Company Estate Preservation +.*

(10-18) - The Gillette Company Deferred Compensation Plan +.*

(10-19) -

Senior Executive Recoupment Policy +.*

The Procter & Gamble Company 71

(10-20) - The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through

August 21, 2006 +.*

(10-21) - The Procter & Gamble 2009 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at
the annual meeting on October 13, 2009 +, and the Regulations of the Compensation and Leadership Development
Committee for The Procter & Gamble 2009 Stock and Incentive Compensation Plan, The Procter & Gamble 2001 Stock
and Incentive Compensation Plan, The Procter & Gamble 1992 Stock Plan, The Procter & Gamble 1992 Stock Plan
(Belgium Version), The Gillette Company 2004 Long-Term Incentive Plan and the Gillette Company 1971 Stock Option
Plan (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2012).*

(10-22) - The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions and related
correspondence (Incorporated by reference to Exhibit (10-2) of the Company Form 10-Q for the quarter ended December
31, 2013).*

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

(10-24) - The Procter & Gamble 2013 Non-Employee Directors' Stock Plan (Incorporated by reference to Exhibit (10-3) of the

Company's Form 10-Q for the quarter ended December 31, 2013).*

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

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

Exhibit (12) - Computation of Ratio of Earnings to Fixed Charges. +

Exhibit (21) - Subsidiaries of the Registrant. +

Exhibit (23) - Consent of Independent Registered Public Accounting Firm. +

Exhibit (31) - Rule 13a-14(a)/15d-14(a) Certifications. +

Exhibit (32) - Section 1350 Certifications. +

Exhibit (99-1) - Summary of Directors and Officers Insurance Program. +

101.INS (1) XBRL Instance Document

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(1) Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement
or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act
of 1934 and otherwise are not subject to liability.

* Compensatory plan or arrangement.
+ Filed herewith.

Item 16. Form 10-K Summary.

Not applicable.

72 The Procter & Gamble Company

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Cincinnati, State of Ohio.

THE PROCTER & GAMBLE COMPANY

By /s/ DAVID S. TAYLOR

(David S. Taylor)
Chairman of the Board, President and Chief Executive Officer

August 7, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
in the capacities and on the dates indicated.

Signature

Title

Date

/s/ DAVID S. TAYLOR
(David S. Taylor)

/s/ JON R. MOELLER
(Jon R. Moeller)

Chairman of the Board, President and Chief
Executive Officer (Principal Executive Officer)

August 7, 2017

Vice Chairman and Chief Financial Officer
(Principal Financial Officer)

August 7, 2017

/s/ VALARIE L. SHEPPARD
(Valarie L. Sheppard)

Senior Vice President, Comptroller & Treasurer
(Principal Accounting Officer)

August 7, 2017

/s/ FRANCIS S. BLAKE
(Francis S. Blake)

/s/ ANGELA F. BRALY
(Angela F. Braly)

/s/ AMY L. CHANG
(Amy L. Chang)

/s/ KENNETH I. CHENAULT
(Kenneth I. Chenault)

/s/ SCOTT D. COOK
(Scott D. Cook)

/s/ TERRY J. LUNDGREN
(Terry J. Lundgren)

/s/ W. JAMES MCNERNEY, JR.
(W. James McNerney, Jr.)

/s/ MARGARET C. WHITMAN
(Margaret C. Whitman)

/s/ PATRICIA A. WOERTZ
(Patricia A. Woertz)

/s/ ERNESTO ZEDILLO
(Ernesto Zedillo)

Director

August 7, 2017

The Procter & Gamble Company 73

EXHIBIT INDEX

Exhibit (4-1) -

(10-3) - The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the

Company's Annual Report on Form 10-K for the year ended June 30, 2013).

(10-4) -

(10-6) -

(10-9) - The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-4) of

the Company's Form 10-Q for the quarter ended December 31, 2013).

(10-10) -

(10-11) - Company's Forms of Separation Agreement & Release (Incorporated by reference to Exhibit (10-1) of the Company's

Form 10-Q for the quarter ended March 31, 2017).

(10-12) -

(10-13) - The Gillette Company 2004 Long-Term Incentive Plan (as amended on August 14, 2007) (Incorporated by reference to

Exhibit (10-4) of the Company's Form 10-Q for the quarter ended September 30, 2012).

(10-14) - The Gillette Company Executive Life Insurance Program +.

(10-15) - The Gillette Company Personal Financial Planning Reimbursement Program +.

(10-16) - The Gillette Company Senior Executive Financial Planning Program +.

(10-17) - The Gillette Company Estate Preservation +.

(10-18) - The Gillette Company Deferred Compensation Plan +.

(10-19) -

Senior Executive Recoupment Policy +.

(10-20) - The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through

August 21, 2006 +.

74 The Procter & Gamble Company

(10-24) - The Procter & Gamble 2013 Non-Employee Directors' Stock Plan (Incorporated by reference to Exhibit (10-3) of the

Company's Form 10-Q for the quarter ended December 31, 2013).

Exhibit (12) - Computation of Ratio of Earnings to Fixed Charges. +

Exhibit (21) -

Subsidiaries of the Registrant. +

Exhibit (23) - Consent of Independent Registered Public Accounting Firm. +

Exhibit (31) - Rule 13a-14(a)/15d-14(a) Certifications. +

Exhibit (32) -

Section 1350 Certifications. +

Exhibit (99-1) -

Summary of Directors and Officers Insurance Program. +

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+ Filed herewith.

Company and Shareholder Information

The Procter & Gamble Company • 75

P&G’S PURPOSE
We will provide branded products and
services of superior quality and value
that improve the lives of the world’s
consumers, now and for generations to
come. As a result, consumers will reward
us with leadership sales, profit and value
creation, allowing our people, our
shareholders and the communities in
which we live and work to prosper.
To learn more, please visit www.pg.com.

BR ANDS
For information on our portfolio of
brands and our latest innovations,
please visit www.pg.com/brands and
www.pginnovation.com.

CITIZENSHIP
P&G is committed to being a good
corporate citizen and always doing the
right thing. We focus our citizenship
efforts in five areas: ethics and
corporate responsibility, community
impact, diversity and inclusion,
gender equality and environmental
sustainability. To learn more, please
visit www.pg.com/citizenship.

CORPOR ATE HEADQUARTERS
The Procter & Gamble Company
P.O. Box 599
Cincinnati, OH 45201-0599

P&G DIRECT STOCK PURCHASE PL AN
The Procter & Gamble Direct Stock
Purchase Plan (DSPP) is a direct stock
purchase and dividend reinvestment
plan. The DSPP is open to current P&G
shareholders as well as new investors
and is designed to encourage long-
term investment in P&G by providing
a convenient and economical way
to purchase P&G stock and reinvest
dividends. Highlights of the plan include:

• Minimum initial investment — $250
• Weekly purchases
• 24/7 online account access
• Optional cash investment—minimum $50
• Administered by Wells Fargo

Shareowner Services

For complete information on the DSPP,
please read the Plan Prospectus. The
Prospectus and online Plan Application
are available at www.pgshareholder.com
or by contacting Wells Fargo Shareowner
Services.

STOCK SYMBOL
PG

P&G ONLINE

www.pg.com

news.pg.com

www.facebook.com/proctergamble

www.twitter.com/proctergamble

www.linkedin.com/company/
procter-&-gamble

www.youtube.com/proctergamble

www.instagram.com/proctergamble

ANNUAL MEETING
The next annual meeting of shareholders
will be held on Tuesday, October 10, 2017.
A full transcript of the meeting will be
available from Susan Felder, Assistant
Secretary. Ms. Felder can be reached at
1 P&G Plaza, Cincinnati, OH 45202-3315.

FORM 10 -K
Shareholders may obtain a copy of
P&G’s 2017 report to the Securities and
Exchange Commission on Form 10-K at no
charge by going to www.pginvestor.com
or by sending a written request to Wells
Fargo Shareowner Services, P.O. Box
64874, St. Paul, MN 55164-0874.

The most recent certifications by our Chief
Executive and Chief Financial Officers
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 are filed as exhibits to
our Form 10-K for the fiscal year ended
June 30, 2017. We have also filed with the
New York Stock Exchange the most recent
Annual CEO certification as required by
Section 303A.12(a) of the New York Stock
Exchange Listed Company Manual.

GIVING THE GIFT OF P&G STOCK
Did you know that you can give P&G stock
to your children, grandchildren, nieces,
nephews and friends? Many of our
long-time shareholders know what a great
gift P&G stock makes for a special person
on a special occasion. You can make the
gift by transferring shares from your
account or by purchasing shares for the
recipient through the DSPP. Please visit
www.pgshareholder.com or contact Wells
Fargo Shareowner Services for details.

SHAREOWNER SERVICES
Wells Fargo Shareowner Services serves
as transfer and dividend paying agent for
P&G Common Stock and Administrator
of the Procter & Gamble Direct Stock
Purchase Plan. Registered shareholders
and Plan participants needing account
assistance with share transfers, plan
purchases/sales, lost stock certificates,
etc., should contact Wells Fargo
Shareowner Services at:

Website www.shareowneronline.com
E-mail www.shareowneronline.com
Click Contact Us under the Email section.
Phone (M–F, 7am–7pm CST)
1-800-742-6253 or 1-651-450-4064

TR ANSFER AGENT
Wells Fargo Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100

REGISTR AR
Wells Fargo Shareowner Services
P.O. Box 64874
St. Paul, MN 55164-0874

EXCHANGE LISTINGS
New York Stock Exchange
NYSE Euronext-Paris

76 • The Procter & Gamble Company

Company Leadership

David S. Taylor
Chairman of the Board, President and Chief Executive Officer

Jon R. Moeller
Vice Chairman and Chief Financial Officer

BUSINESS UNITS AND MARKET OPER ATIONS

Shailesh Jejurikar
President – Global Fabric Care
and Brand Building Organization,
Global Fabric & Home Care

Henry Karamanoukian
Senior Vice President –
Go-to-Market, China

R. Alexandra Keith
President – Global Hair Care
and Beauty Sector

Charles E. Pierce
Group President – Global Grooming

Juan Fernando Posada
President – Latin America

Matthew Price
President – Greater China

Mohamed Samir
President – India, Middle East and Africa

Markus Strobel
President – Global Skin & Personal Care

Magesvaran Suranjan
President – Asia Pacific

Carolyn M. Tastad
Group President – North America

George Tsourapas
President – Global Home Care
and P&G Professional

Steven D. Bishop
Group President – Global Health Care

Giovanni Ciserani
Group President – Global Fabric & Home
Care and Global Baby and Feminine Care

Gary A. Coombe
President – Europe

Mary Lynn Ferguson-McHugh
Group President – Global Family Care
and P&G Ventures

Thomas M. Finn
President – Global Personal Health Care

Fama Francisco
President – Global Feminine Care

COMPANY OPER ATIONS

Mark Biegger
Chief Human Resources Officer

Deborah P. Majoras
Chief Legal Officer and Secretary

Jeffrey K. Schomburger
Global Sales Officer

Kathleen B. Fish
Chief Technology Officer

Julio N. Nemeth
President – Global Business Services

William P. Gipson
President – End-to-End Packaging
Transformation and Chief Diversity Officer

Javier Polit
Chief Information Officer

Marc S. Pritchard
Chief Brand Officer

Valarie L. Sheppard
Senior Vice President,
Comptroller and Treasurer

Yannis Skoufalos
Global Product Supply Officer

The Procter & Gamble Company • 77

Board of Directors

Francis S. Blake
Former Chairman of the Board and Chief Executive Officer of
The Home Depot, Inc. (national retailer). Director since 2015.
Also non-Executive Chairman of the Board of Delta Airlines
and Director of Macy’s, Inc. Age 68. Member of the Audit
and Governance & Public Responsibility Committees.

Angela F. Braly
Former Chair of the Board, President and Chief Executive Officer
of WellPoint, Inc. (healthcare insurance), now known as Anthem.
Director since 2009. Also a Director of Lowe’s Companies, Inc.,
Brookfield Asset Management, and ExxonMobil Corporation.
Age 56. Chair of the Governance & Public Responsibility
Committee and member of the Audit Committee.

W. James McNerney, Jr.
Senior Advisor at Clayton, Dubilier & Rice (private equity
investment). Retired Chairman of the Board of The Boeing
Company (aerospace, commercial jetliners and military defense
systems). President of The Boeing Company from 2005 to 2013.
Chief Executive Officer from 2005 to 2015. Director since 2003.
Also a Director of International Business Machines Corporation.
Age 68. Lead Director, Chair of the Compensation & Leadership
Development Committee and member of the Governance
& Public Responsibility Committee.

David S. Taylor
Chairman of the Board, President and Chief Executive Officer
of the Company. Director since 2015. Age 59.

Amy L. Chang
Founder and Chief Executive Officer of Accompany, Inc.
(relationship intelligence company). Appointed to the Board
effective June 2017. Also a Director of Cisco Systems, Inc. and
former Director of Splunk, Inc. (2015–2017). Age 40. Member
of the Audit and Innovation & Technology Committees.

Kenneth I. Chenault
Chairman and Chief Executive Officer of American Express
Company (global services, payments and travel). Director
since 2008. Also a Director of International Business Machines
Corporation. Age 66. Member of the Audit and Compensation
& Leadership Development Committees.

Scott D. Cook
Chairman of the Executive Committee of the Board of Intuit
Inc. (software and web services). Director since 2000. Age 65.
Chair of the Innovation & Technology Committee and member
of the Compensation & Leadership Development Committee.

Terry J. Lundgren
Executive Chairman and Chairman of the Board of Macy’s, Inc.
(national retailer). Director since 2013. Age 65. Member of
the Compensation & Leadership Development and Innovation
& Technology Committees.

Margaret C. Whitman
President and Chief Executive Officer of Hewlett Packard Enterprise
(multinational information technology enterprise). Chairman of
the Board, President and Chief Executive Officer of the Hewlett-
Packard Company from 2011 to 2015. Director since 2011.
Also Director of DXC Technology. Age 61. Member of the
Compensation & Leadership Development and Innovation
& Technology Committees.

Patricia A. Woertz
Retired Chairman of the Board, President and former Chief
Executive Officer of Archer Daniels Midland Company (agricultural
processors of oilseeds, corn, wheat and cocoa, etc.). Director
since 2008. Also a director of 3M Company since 2016. Age 64.
Chair of the Audit Committee and member of the Governance
& Public Responsibility Committee.

Ernesto Zedillo
Former President of Mexico, Director of the Center for the
Study of Globalization and Professor in the field of International
Economics and Politics at Yale University. Director since 2001.
Also a Director of Alcoa Corp., Citigroup, Inc. and Promotora
de Informaciones S.A. Age 65. Member of the Governance &
Public Responsibility and Innovation & Technology Committees.

THE BOARD OF DIRECTORS HAS FOUR COMMIT TEES:

Audit, Compensation & Leadership Development, Governance & Public Responsibility, Innovation & Technology

78 • The Procter & Gamble Company

Recognition and Commitments

P&G believes in doing what’s right and being a good
corporate citizen. Here are some highlights of external
recognitions and commitments where we believe
P&G’s voice can make a difference.

LEADERSHIP
• Chief Executive Magazine’s 40 Best Companies for Leaders
• Top 10, NAFE’s Top Company for Female Executives

INNOVATION
• Recent innovations earned P&G seven of the top 25 places
on the IRI New Product Pacesetters Report for the most
successful non-food product launches of 2016: Gillette Fusion
ProShield (#2), Tide PODS plus Febreze (#4), Crest Pro-Health
Advanced (#5), Tampax Pocket Pearl (#9), Old Spice Fresher
Collection (#10), Tide Simply Clean & Sensitive (#16) and
Pantene Pro-V Stylers (#23). This underscores our commitment
to creating innovative, irresistibly superior products.

• At P&G, we believe creativity is a force for business,

for change and for good in the world. The Cannes Lions
International Festival of Creativity is one of the world’s
premier events to inspire and recognize creativity in
branded communications. This year P&G and our agencies
were awarded 26 Lions for campaigns that raised the bar
on creativity and built the business. Some of the highest-
awarded campaigns like Gillette Handle with Care, Ariel
Dads #Sharetheload, SK-II Marriage Market Takeover
and Vicks Touch of Care spoke out about societal issues
in an effort to create far-reaching positive change.

CITIZENSHIP
Ethics & Corporate Responsibility
• Fortune’s World’s Most Admired Companies
• Forbes’ America’s Most Reputable Companies
• Barron’s Most Respected Companies
• Supply Chain Master — Gartner Supply Chain Top 25
• Human Rights Campaign’s Corporate Equality Index —

score of perfect 100 for 4th consecutive year

Community Impact
• We delivered our 12 billionth liter of clean water with

P&G’s Children’s Safe Drinking Water program.

• P&G washed more than 3,100 loads of laundry for
U.S. families with our Tide Loads of Hope program.

• We responded to more than 20 natural disasters

globally with donations of P&G products, financial aid
and volunteer time.

Diversity & Inclusion
• CEO David Taylor joined other CEOs and companies to
advance diversity and inclusion in the workplace with
CEO Action for Diversity & Inclusion and Catalyst CEO
Champions for Change.

• P&G spent more than $2 billion with minority- and

women-owned businesses for the 10th consecutive year.
Since 2005, P&G has been a member of the Billion Dollar
Roundtable, a forum of companies spending more than
$1 billion annually with diverse suppliers.

• DiversityInc’s Top 50 Companies for Diversity

• Working Mother Media’s 100 Best Companies
and Best Companies for Multicultural Women

Gender Equality
• P&G’s brands — Always, Secret, SK-II, Ariel, Luvs and others —
continued to deliver campaigns that break down stereotypes
and start conversations that motivate change.

• We are partnering with organizations that share our
commitment to addressing gender bias such as the
Association of National Advertisers, CARE, Global Citizen,
Save the Children, Sesame Workshop, UN Women,
Women in the World and World Vision.

• P&G’s #WeSeeEqual video was viewed millions of times
in more than 180 countries and was named one of
the most inclusive ads of 2017 by The Association
of National Advertisers.

Environmental Sustainability
• We were included on Corporate Responsibility Magazine’s
100 Best Corporate Citizens List, the MSCI Sustainability
Index, and the FTSE4Good Index.

• P&G joined as a founding member of the Climate

Leadership Council.

• We received a Climate Leadership Award for Organizational

Leadership from the U.S. EPA.

The paper utilized in the printing of this annual report is certified to the FSC® Standards,
which promotes environmentally appropriate, socially beneficial and economically viable
management of the world’s forests.

Design: Madison Design

Citizenship at P&G

We believe in, and have publicly committed to, doing what’s right and being
a good corporate citizen. We focus our efforts across a number of areas.
To learn more about how our Citizenship efforts are a force for good and
a force for growth, visit us at www.pg.com/citizenship.

ETHICS & CORPOR ATE RESPONSIBILIT Y

We define being a good corporate citizen as improving transparency,

building collaborative partnerships, respecting human and labor

rights, doing the right thing, and sourcing responsibly.

COMMUNIT Y IMPACT

We’re focused on improving and serving the communities where

we live and work through our products, our people and our passion.

DIVERSIT Y & INCLUSION

We aspire to be as diverse as the people who use our products.

The more we reflect the diversity of our consumers, the better

equipped we are to understand and serve them.

GENDER EQUALIT Y

We’re working to build a better world for all of us — inside and outside

of P&G — free of gender bias, with equal representation and an equal

voice for women and men … a world where everyone sees equal.

ENVIRONMENTAL SUSTAINABILIT Y

Our goal is to enable consumers to make more sustainable choices.

We have integrated sustainability throughout our business practices,

operations, innovation, brand building and culture.

Explore the digital version of the 2017 P&G Annual Report
at www.pg.com/annualreport2017