THE PROCTER & GAMBLE COMPANY (Exact name of registrant as - PDF document

Section 1: 10-Q (FY1617 Q2 OND 10-Q) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10- Q (Mark one) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 31, 2016 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to THE PROCTER & GAMBLE COMPANY (Exact name of registrant as specified in its charter) Ohio 1 - 434 31 - 0411980 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number) One Procter & Gamble Plaza, Cincinnati, Ohio 45202 (Address of principal executive offices) (Zip Code) (513) 983 - 1100 (Registrant’s telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S - T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non - accelerated filer (as defined in Rule 12b - 2 of the Exchange Act). Large accelerated filer þ Accelerated filer o Non - accelerated filer o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b - 2 of the Exchange Act).

Yes o No þ There were 2,556,477,220 shares of Common Stock outstanding as of December 31, 2016 .

PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended Six Months Ended December 31 December 31 2016 2015 2016 2015 Amounts in millions except per share amounts NET SALES $ 16,856 $ 16,915 $ 33,374 $ 33,442 Cost of products sold 8,298 8,460 16,400 16,612 4,683 9,328 Selling, general and administrative expense 4,602 9,209 OPERATING INCOME 3,875 3,853 7,646 7,621 Interest expense 122 143 253 283 Interest income 42 58 77 102 (539 ) (476 ) Other non - operating income/(loss), net 35 17 EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 3,256 3,803 6,994 7,457 Income taxes on continuing operations 695 898 1,558 1,775 2,561 2,905 5,436 5,682 NET EARNINGS FROM CONTINUING OPERATIONS 5,335 5,217 NET EARNINGS FROM DISCONTINUED OPERATIONS 323 181 NET EARNINGS 7,896 3,228 10,653 5,863 21 22 64 56 Less: Net earnings attributable to noncontrolling interests $ 7,875 $ 3,206 $ 10,589 $ 5,807 NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE BASIC NET EARNINGS PER COMMON SHARE: (1) $ 0.96 $ 1.99 Earnings from continuing operations $ 1.04 $ 2.02 2.05 0.12 1.98 0.07 Earnings from discontinued operations 3.01 3.97 1.16 2.09 BASIC NET EARNINGS PER COMMON SHARE DILUTED NET EARNINGS PER COMMON SHARE: (1) Earnings from continuing operations $ 0.93 $ 1.01 $ 1.93 $ 1.97 1.95 0.11 1.88 0.06 Earnings from discontinued operations 2.88 1.12 3.81 2.03 DILUTED NET EARNINGS PER COMMON SHARE $ 0.6695 $ 0.6629 $ 1.3390 $ 1.3258 DIVIDENDS PER COMMON SHARE Diluted weighted average common shares outstanding 2,737.6 2,864.6 2,780.2 2,865.8 (1) Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble. See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) Three Months Ended Six Months Ended December 31 December 31 Amounts in millions 2016 2015 2016 2015 NET EARNINGS $ 7,896 $ 3,228 $ 10,653 $ 5,863 OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX Financial statement translation (1,988 ) (955 ) (1,989 ) (1,978 ) Unrealized gains/(losses) on hedges 864 252 749 210 Unrealized gains/(losses) on investment securities (55 ) (28 ) (68 ) (20 ) Unrealized gains/(losses) on defined benefit retirement plans 600 143 693 234 TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX (579 ) (615 ) (588 ) (1,554 ) TOTAL COMPREHENSIVE INCOME/(LOSS) 7,317 2,640 10,038 4,309 Less: Total comprehensive income attributable to noncontrolling interests 21 22 64 56 TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO PROCTER & $ 7,296 $ 2,618 $ 9,974 $ 4,253 GAMBLE See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Amounts in millions December 31, 2016 June 30, 2016 Assets CURRENT ASSETS Cash and cash equivalents $ 6,051 $ 7,102 Available - for - sale investment securities 7,403 6,246 Accounts receivable 4,729 4,373 INVENTORIES Materials and supplies 1,398 1,188 Work in process 522 563 Finished goods 2,867 2,965 4,787 Total inventories 4,716 Deferred income taxes — 1,507 Prepaid expenses and other current assets 2,602 2,653 — Current assets held for sale 7,185 TOTAL CURRENT ASSETS 25,572 33,782 PROPERTY, PLANT AND EQUIPMENT, NET 18,778 19,385 GOODWILL 43,458 44,350 TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET 24,185 24,527 OTHER NONCURRENT ASSETS 5,040 5,092 $ 117,033 $ 127,136 TOTAL ASSETS Liabilities and Shareholders' Equity CURRENT LIABILITIES $ 8,300 $ Accounts payable 9,325 Accrued and other liabilities 7,584 7,449 Current liabilities held for sale — 2,343 13,007 Debt due within one year 11,653 TOTAL CURRENT LIABILITIES 28,891 30,770 LONG - TERM DEBT 16,460 18,945 DEFERRED INCOME TAXES 8,692 9,113 OTHER NONCURRENT LIABILITIES 9,246 10,325 TOTAL LIABILITIES 63,289 69,153 SHAREHOLDERS ’ EQUITY 1,024 Preferred stock 1,038 Common stock – shares issued – December 2016 4,009.2 June 2016 4,009.2 4,009 4,009 63,596 Additional paid - in capital 63,714 Reserve for ESOP debt retirement (1,272 ) (1,290 ) Accumulated other comprehensive income/(loss) (16,522 ) (15,907 ) (92,720 ) Treasury stock (82,176 ) Retained earnings 94,945 87,953 Noncontrolling interest 684 642 TOTAL SHAREHOLDERS ’ EQUITY 53,744 57,983 $ 117,033 $ 127,136 TOTAL LIABILITIES AND SHAREHOLDERS ’ EQUITY See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended December 31 Amounts in millions 2016 2015 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 7,102 $ 6,836 OPERATING ACTIVITIES Net earnings 10,653 5,863 Depreciation and amortization 1,435 1,454 Loss on early extinguishment of debt 543 — Share - based compensation expense 104 140 Deferred income taxes (448 ) 140 Gain on sale of businesses (5,343 ) (37 ) Goodwill and intangible asset impairment charges — 402 Changes in: Accounts receivable (595 ) (488 ) Inventories (247 ) (386 ) (296 ) Accounts payable, accrued and other liabilities 322 Other operating assets and liabilities 152 374 Other 67 234 TOTAL OPERATING ACTIVITIES 6,025 8,018 INVESTING ACTIVITIES Capital expenditures (1,429 ) (1,223 ) Proceeds from asset sales 280 80 Acquisitions, net of cash acquired (16 ) (186 ) Purchases of short - term investments (1,739 ) (762 ) Proceeds from sales of short - term investments 354 683 Pre - divestiture addition of restricted cash related to the Beauty Brands divestiture (874 ) — Cash transferred at closing related to the Beauty Brands divestiture (475 ) — Release of restricted cash upon closing of the Beauty Brands divestiture 1,870 — Change in other investments 8 (31 ) TOTAL INVESTING ACTIVITIES (2,021 ) (1,439 ) FINANCING ACTIVITIES Dividends to shareholders (3,637 ) (3,733 ) Change in short - term debt 2,715 2,020 2,641 Additions to long - term debt 1,721 ) (1) Reductions of long - term debt (5,029 (2,239 ) Treasury stock purchases (2,503 ) (2,503 ) 1,074 Impact of stock options and other 1,007 TOTAL FINANCING ACTIVITIES (4,739 ) (3,727 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (316 ) (285 ) CHANGE IN CASH AND CASH EQUIVALENTS (1,051 ) 2,567 $ 6,051 $ 9,403 CASH AND CASH EQUIVALENTS, END OF PERIOD (1) Includes $543 of costs related to early extinguishment of debt. See accompanying Notes to Consolidated Financial Statements.