PG 10-Q 9/30/2016

Section 1: 10-Q (FY1617 Q1 JAS 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 September 30, 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 2,675,992,524 shares of Common Stock outstanding as of September 30, 2016.

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended September 30 2016

Amounts in millions except per share amounts

NET SALES Cost of products sold

$

Selling, general and administrative expense

2015

16,518 8,102 4,645

$

3,771

OPERATING INCOME Interest expense Interest income

3,768

131 35 63

Other non-operating income/(loss), net EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income taxes on continuing operations NET EARNINGS FROM CONTINUING OPERATIONS

140 44 (18)

3,738 863

3,654 877

2,875

2,777

(118)

NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS NET EARNINGS Less: Net earnings attributable to noncontrolling interests

16,527 8,152 4,607

(142)

2,757

2,635

43

34

NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE

$

2,714

$

2,601

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

$

1.03 (0.04)

$

0.98 (0.05)

Earnings/(loss) from discontinued operations

0.99

BASIC NET EARNINGS PER COMMON SHARE DILUTED NET EARNINGS PER COMMON SHARE: (1) Earnings from continuing operations Earnings/(loss) from discontinued operations

1.00 (0.04)

DILUTED NET EARNINGS PER COMMON SHARE

0.96

DIVIDENDS PER COMMON SHARE Diluted weighted average common shares outstanding (1)

$

$

0.670 2,822.9

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.

0.93 $

0.96 (0.05) 0.91

$

0.663 2,867.5

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) Three Months Ended September 30 Amounts in millions

NET EARNINGS

2016

$

OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX Financial statement translation Unrealized gains/(losses) on hedges Unrealized gains/(losses) on investment securities Unrealized gains/(losses) on defined benefit retirement plans TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX TOTAL COMPREHENSIVE INCOME/(LOSS) Less: Total comprehensive income attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO PROCTER & GAMBLE

See accompanying Notes to Consolidated Financial Statements.

$

2015

2,757

$

2,635

(1) (115) (13) 93

(1,023) (42) 8 91

(36)

(966)

2,721

1,669

43

34

2,678

$

1,635

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2016

Amounts in millions

Assets CURRENT ASSETS Cash and cash equivalents Restricted cash Available-for-sale investment securities Accounts receivable INVENTORIES Materials and supplies Work in process

$

Finished goods Total inventories Deferred income taxes Prepaid expenses and other current assets Current assets held for sale TOTAL CURRENT ASSETS PROPERTY, PLANT AND EQUIPMENT, NET GOODWILL TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OTHER NONCURRENT ASSETS

7,456 1,870 6,615 4,713

June 30, 2016

$

7,102 — 6,246 4,373

1,380 549 3,070

1,188 563 2,965

4,999 — 2,447 7,071

4,716 1,507 2,653 7,185

35,171 19,310 44,458 24,429 5,675

33,782 19,385 44,350 24,527 5,092

TOTAL ASSETS

$

129,043

$

127,136

Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable Accrued and other liabilities Current liabilities held for sale

$

9,024 8,032 3,130 12,215

$

9,325 7,449 2,343 11,653

Debt due within one year TOTAL CURRENT LIABILITIES LONG-TERM DEBT DEFERRED INCOME TAXES OTHER NONCURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS’ EQUITY Preferred stock Common stock – shares issued –

September 2016 June 2016

4,009.2 4,009.2

Additional paid-in capital Reserve for ESOP debt retirement Accumulated other comprehensive income/(loss) Treasury stock Retained earnings Noncontrolling interest TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY See accompanying Notes to Consolidated Financial Statements.

$

32,401 18,910 8,515 10,266

30,770 18,945 9,113 10,325

70,092

69,153

1,029

1,038

4,009 63,553 (1,271) (15,943) (81,970) 88,855 689

4,009 63,714 (1,290) (15,907) (82,176) 87,953 642

58,951

57,983

129,043

$

127,136

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30 Amounts in millions

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES Net earnings Depreciation and amortization Share-based compensation expense Deferred income taxes Gain on sale of businesses Goodwill and intangible asset impairment charges Changes in: Accounts receivable Inventories Accounts payable, accrued and other liabilities Other operating assets and liabilities Other

2016

$

TOTAL OPERATING ACTIVITIES

2015

7,102

$

2,757 728 44 (177) (75) —

2,635 731 67 89 (7) 402

(424) (287) 298 135 26

(368) (519) 298 141 69

3,025

INVESTING ACTIVITIES Capital expenditures Proceeds from asset sales Acquisitions, net of cash acquired Purchases of short-term investments Proceeds from sales of short-term investments Cash transferred to discontinued Beauty Brands business Restricted cash related to Beauty Brands divestiture Change in other investments

6,836

3,538

(684) 183 (14) (631) 243 (348) (874) 4

(532) 38 — (494) 418 — — 24

TOTAL INVESTING ACTIVITIES

(2,121)

(546)

FINANCING ACTIVITIES Dividends to shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Treasury stock purchases Impact of stock options and other

(1,851) 1,519 891 (1,001) (1,002) 937

(1,865) 450 — (537) (502) 483

TOTAL FINANCING ACTIVITIES

(507)

(1,971)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(43)

(152)

CHANGE IN CASH AND CASH EQUIVALENTS

354

869

CASH AND CASH EQUIVALENTS, END OF PERIOD

See accompanying Notes to Consolidated Financial Statements.

$

7,456

$

7,705

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016. In the opinion of management, the accompanying unaudited Consolidated Financial Statements of The Procter & Gamble Company and subsidiaries (the "Company," "Procter & Gamble," "P&G," "we" or "our") contain all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods reported. However, the results of operations included in such financial statements may not necessarily be indicative of annual results. 2. New Accounting Pronouncements and Policies In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers. We will adopt the standard no later than July 1, 2018. While we are currently assessing the impact of the new standard, we do not expect this new guidance to have a material impact on our Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”. This guidance simplifies the presentation of deferred taxes on the balance sheet by requiring that all deferred tax assets and liabilities be classified as non-current. The new standard is effective for us beginning July 1, 2017, with early adoption permitted. We elected to early adopt the new guidance on a prospective basis in the first quarter of fiscal year 2017. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. The standard requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. We will adopt the standard no later than July 1, 2019. We are currently assessing the impact that the new standard will have on our Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, "Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits (which represent the excess of actual tax benefits received at vest or settlement over the benefits recognized at issuance of share based payments) and tax deficiencies (which represent the amount by which actual tax benefits received at vest or settlement is lower than the benefits recognized at issuance of share based payments) to be recorded in the income statement when the awards vest or are settled. The amended guidance also requires excess tax benefits to be classified as an operating activity in the statement of cash flows, rather than a financing activity. The standard further provides an accounting policy election to account for forfeitures as they occur rather than utilizing the estimated amount of forfeitures at the time of issuance. The new standard is effective for us beginning July 1, 2017, with early adoption permitted. We elected to early adopt the new guidance on a prospective basis in the first quarter of fiscal year 2017. The primary impact of adoption was the recognition of excess tax benefits in our Income taxes on continuing operations rather than in Additional paid-in capital for fiscal year 2017. As a result, we recognized a discrete tax benefit of $117 in Income taxes on continuing operations during the three months ended September 30, 2016. We also elected to adopt the cash flow presentation of the excess tax benefits prospectively commencing in the first quarter of fiscal 2017. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. None of the other provisions in this amended guidance had a significant impact on our Consolidated Financial Statements. No other new accounting pronouncement issued or effective during the fiscal year had, or is expected to have, a material impact on our Consolidated Financial Statements.

3. Segment Information As discussed in Note 11, the Beauty Brands and Batteries businesses are presented as discontinued operations and are excluded from segment results for all periods presented. Effective July 1, 2016, the Company began accounting for sales to its Venezuela subsidiaries in Corporate for management reporting purposes. As a result, we are also reflecting such sales in Corporate for segment reporting purposes. This change is being made on a prospective basis for both management and external segment reporting purposes and did not have a significant impact on any of the segments. Amounts in millions of dollars unless otherwise specified.

Following is a summary of reportable segment results: Three Months Ended September 30 Earnings/(Loss) from Continuing Operations Before Income Taxes

Net Sales

Beauty Grooming Health Care Fabric & Home Care Baby, Feminine & Family Care Corporate Total Company

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

Net Earnings/(Loss) from Continuing Operations

$

2,996 3,041 1,658 1,674 1,861 1,796 5,302 5,251 4,595 4,658 106 107

$

783 822 529 499 496 448 1,129 1,120 1,045 1,111 (244) (346)

$

$

16,518 16,527

$

3,738 3,654

$

592 624 415 390 320 318 728 747 697 749 123 (51) 2,875 2,777

4. Goodwill and Other Intangible Assets Goodwill is allocated by reportable segment as follows: Beauty

Goodwill at June 30, 2016 Acquisitions and divestitures

Health Care

$

12,645 — 52

$

19,477 — 39

$

$

12,697

$

19,516

$

Translation and other Goodwill at September 30, 2016

Grooming

Fabric & Home Care

5,840 $ (10) 14 5,844

$

1,856 (3) 2 1,855

Baby, Feminine & Family Care

Total Company

$

4,532 — 14

$

$

4,546

$

44,350 (13) 121 44,458

On October 1, 2016, the Company completed the divestiture of four product categories, comprised of 41 of its beauty brands ("Beauty Brands"), to Coty, Inc. The transaction includes the global salon professional hair care and color, retail hair color and cosmetics businesses and a majority of the fine fragrances business, along with select hair styling brands (see Note 11). 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 September 30, 2016 is excluded from the preceding table and is reported as Current assets held for sale in the Consolidated Balance Sheets. Goodwill increased from June 30, 2016 primarily due to currency translation. The test to evaluate goodwill for impairment is a two-step process. In the first step, we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit is less than its carrying value, we perform a second step to determine the implied fair value of the reporting unit's goodwill. The second step of the impairment analysis requires a valuation of a reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the resulting implied fair value of the reporting unit's goodwill is less than its carrying value, that difference represents an impairment. The business unit valuations used to test goodwill and intangible assets for impairment are dependent on a number of significant estimates and assumptions including macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion and Company business plans. We believe these estimates and assumptions are reasonable. However, future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets, including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values. Amounts in millions of dollars unless otherwise specified.

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 continuing 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. While both of these wholly-acquired reporting units have fair value cushions that currently exceed the underlying carrying values, the Shave Care cushion, as well as the related indefinite-lived intangible assets, have been reduced to below 20% due in large part to significant currency devaluations in a number of countries relative to the U.S. dollar in recent years. 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. Any such 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. Identifiable intangible assets at September 30, 2016 are comprised of: Gross Carrying Amount

Accumulated Amortization

Intangible assets with determinable lives Intangible assets with indefinite lives

$

7,637 21,682

$

(4,890) —

Total identifiable intangible assets

$

29,319

$

(4,890)

Due to the divestiture of the Beauty Brands, intangible assets specific to these businesses are reported as Current assets held for sale (see Note 11). Intangible assets with determinable lives consist of brands, patents, technology and customer relationships. The intangible assets with indefinite lives consist of brands. The amortization expense of intangible assets for the three months ended September 30, 2016 and 2015 was $89 and $104, respectively.

Amounts in millions of dollars unless otherwise specified.

5. Earnings Per Share Net earnings attributable to Procter & Gamble less preferred dividends (net of related tax benefits) are divided by the weighted average number of common shares outstanding during the period to calculate Basic net earnings per common share. Diluted net earnings per common share are calculated to give effect to stock options and other stock-based awards and assume conversion of preferred stock. Net earnings attributable to Procter & Gamble and common shares used to calculate Basic and Diluted net earnings per share were as follows: Three Months Ended September 30, 2016 Continuing Operations

CONSOLIDATED AMOUNTS Net earnings/(loss)

$

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

$

Discontinued Operations

Three Months Ended September 30, 2015 Continuing Operations

Total

2,875 $ (43)

(118) $ —

2,757 (43 )

2,832 (63)

(118) —

2,714 (63 )

2,769 $

(118) $

2,651

$

$

Discontinued Operations

Total

2,777 $ (34)

(142) $ —

2,635 (34)

2,743 (65)

(142) —

2,601 (65)

2,678 $

(142) $

2,536

SHARES IN MILLIONS Basic weighted average common shares outstanding

2,674.7

2,674.7

2,674.7

2,720.1

2,720.1

2,720.1

101.0

101.0

101.0

105.7

105.7

105.7

47.2

47.2

47.2

41.7

41.7

41.7

2,822.9

2,822.9

2,822.9

2,867.5

2,867.5

2,867.5

Effect of dilutive securities Conversion of preferred shares (1) Exercise of stock options and other unvested equity awards (2) Diluted weighted average common shares outstanding

PER SHARE AMOUNTS (3) Basic net earnings/(loss) per common share Diluted net earnings/(loss) per common share (1)

(2)

(3)

$ $

1.03 $ 1.00 $

(0.04) $ (0.04) $

0.99 0.96

$ $

0.98 $ 0.96 $

(0.05) $ (0.05) $

0.93 0.91

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. Outstanding stock options of approximately 26 million and 69 million for the three months ended September 30, 2016 and 2015, respectively, were not included in the Diluted net earnings per share calculation because the options were out of the money or to do so would have been antidilutive (i.e., the total proceeds upon exercise would have exceeded the market value of the underlying common shares). Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings/(loss) attributable to Procter & Gamble.

6. Share-Based Compensation and Postretirement Benefits The following table provides a summary of our share-based compensation expense and postretirement benefit costs: Three Months Ended September 30 2016

Share-based compensation expense Net periodic benefit cost for pension benefits (1) Net periodic benefit cost/(credit) for other retiree benefits (1) (1)

$

2015

44 96 (19)

$

66 86 (24)

The components of the total net periodic benefit cost for both pension benefits and other retiree benefits for those interim periods, on an annualized basis, do not differ materially from the amounts disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

The disclosures above for both share-based compensation and postretirement benefits include amounts related to discontinued operations which were not material in any period presented. Amounts in millions of dollars unless otherwise specified.

7. Risk Management Activities and Fair Value Measurements As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. There have been no significant changes in our risk management policies or activities during the three months ended September 30, 2016. The Company has not changed its valuation techniques used in measuring the fair value of any financial assets and liabilities during the period. 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. Also, there was no significant activity within the Level 3 assets and liabilities during the periods presented. There were no significant assets or liabilities that were remeasured at fair value on a non-recurring basis for the three months ended September 30, 2016. The following table sets forth the Company’s financial assets as of September 30, 2016 and June 30, 2016 that are measured at fair value on a recurring basis during the period: Fair Value Asset September 30, 2016

Investments U.S. government securities Corporate bond securities Other investments Total

June 30, 2016

$

4,826 1,789 29

$

4,839 1,407 28

$

6,644

$

6,274

Investment securities are presented in Available-for-sale investment securities and Other noncurrent assets. The amortized cost of U.S. government securities with maturities less than one year was $643 as of September 30, 2016 and $292 as of June 30, 2016. The amortized cost of U.S. government securities with maturities between one and five years was $4,162 as of September 30, 2016 and $4,513 as of June 30, 2016. The amortized cost of Corporate bond securities with maturities of less than a year was $387 as of September 30, 2016 and $382 as of June 30, 2016. The amortized cost of Corporate bond securities with maturities between one and five years was $1,399 as of September 30, 2016 and $1,018 as of June 30, 2016. 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 either Level 1 or Level 3 within the fair value hierarchy. Fair values are generally estimated based upon quoted market prices for similar instruments. The fair value of long-term debt was $23,435 and $24,362 as of September 30, 2016 and June 30, 2016, respectively. This includes the current portion ($1,723 and $2,761 as of September 30, 2016 and June 30, 2016, respectively) of debt instruments. Certain long-term debt is recorded at 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 $2,281 and $2,331 as of September 30, 2016 and June 30, 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. The following table sets forth the notional amounts and fair values of qualifying and non-qualifying financial instruments used in hedging transactions as of September 30, 2016 and June 30, 2016: Notional Amount September 30, 2016

Fair Value Asset/(Liability)

June 30, 2016

September 30, 2016

June 30, 2016

Derivatives in Cash Flow Hedging Relationships Foreign currency contracts

$

798

$

798

$

18

$

31

$

5,013

$

4,993

$

343

$

371

$

3,013

$

3,013

$

(121)

$

(87)

$

4,641

$

6,482

$

(20)

$

(10)

Derivatives in Fair Value Hedging Relationships Interest rate contracts Derivatives in Net Investment Hedging Relationships Net investment hedges Derivatives Not Designated as Hedging Instruments Foreign currency contracts

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 total notional amount of contracts outstanding at the end of the period is indicative of the Company's derivative activity during the period. The change in the notional balance of foreign currency contracts not designated as hedging instruments during the period reflects changes in the level of intercompany Amounts in millions of dollars unless otherwise specified.

financing activity. All of the Company's derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. Amount of Gain/(Loss) Recognized in AOCI on Derivatives (Effective Portion) September 30, 2016

June 30, 2016

Derivatives in Cash Flow Hedging Relationships Interest rate contracts Foreign currency contracts

$

(2) (2)

$

(2) —

Total

$

(4)

$

(2)

$

(74)

$

(53)

Derivatives in Net Investment Hedging Relationships Net investment hedges

During the next 12 months, the amount of the September 30, 2016 Accumulated other comprehensive income (AOCI) balance that will be reclassified to earnings is expected to be immaterial. The amounts of gains and losses on qualifying and non-qualifying financial instruments used in hedging transactions for the three months ended September 30, 2016 and 2015 are as follows: Amount of Gain/(Loss) Reclassified from AOCI into Earnings Three Months Ended September 30 2016

2015

Derivatives in Cash Flow Hedging Relationships (1) Interest rate contracts Foreign currency contracts

$

— (8)

$

2 (9)

Total

$

(8)

$

(7)

Amount of Gain/(Loss) Recognized in Earnings Three Months Ended September 30 2016

2015

Derivatives in Fair Value Hedging Relationships (2) Interest rate contracts Debt

$

(28) 28

$

89 (89)

Total

$

—

$

—

$

—

$

—

$

(8)

$

(62)

Derivatives in Net Investment Hedging Relationships (2) Net investment hedges Derivatives Not Designated as Hedging Instruments Foreign currency contracts

(3)

(1) The gain or loss on the effective portion of cash flow hedging relationships is reclassified from AOCI into net income in the same period during

which the related item affects earnings. Such amounts are included in the Consolidated Statements of Earnings as follows: interest rate contracts in Interest expense and foreign currency contracts in Selling, general and administrative expense (SG&A) and Interest expense. (2) The gain or loss on the ineffective portion of interest rate contracts and net investment hedges, if any, is included in the Consolidated Statements of Earnings in Interest expense. (3) The gain or loss on foreign currency contracts not designated as hedging instruments is included in the Consolidated Statements of Earnings in SG&A. This gain or loss substantially offsets the foreign currency mark-to-market impact of the related exposure.

Amounts in millions of dollars unless otherwise specified.

8. Accumulated Other Comprehensive Income/(Loss) The table below presents the changes in Accumulated other comprehensive income/(loss) by component and the reclassifications out of Accumulated other comprehensive income/(loss): Changes in Accumulated Other Comprehensive Income/(Loss) by Component Investment Securities

Hedges

Balance at June 30, 2016 OCI before reclassifications (1)

$

(2,641) (123) 8

Amounts reclassified from AOCI (2) (3)

$

34 (10) (3)

(115)

Net current period OCI $

Balance at September 30, 2016

(2,756)

Pension and Other Retiree Benefits

$

(5,798) 1 92

(13) $

21

Financial Statement Translation

$

(7,502) (1) —

93 $

(5,705)

Total

$

(1) $

(7,503)

(15,907) (133) 97 (36)

$

(15,943)

(1) Net of tax expense/(benefit) of $(68), $(4) and $9 for gains/losses on hedges, investment securities and pension and other retiree benefit items,

respectively. (2) Net of tax expense/(benefit) of $0, $0 and $35 for gains/losses on hedges, investment securities and pension and other retiree benefit items,

respectively. (3) See Note 7 for classification of gains and losses from hedges in the Consolidated Statements of Earnings. Gains and losses on investment

securities are reclassified from AOCI into Other non-operating income/(loss), net. Gains and losses on pension and other retiree benefits are reclassified from AOCI into Cost of products sold and SG&A and are included in the computation of net periodic pension costs. 9. Restructuring Program The Company has historically incurred an ongoing annual level of restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization. Before-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 expects to incur approximately $5.5 billion in before-tax restructuring costs over a six year period (from fiscal 2012 through fiscal 2017), including costs incurred as part of the ongoing and incremental restructuring program. The program includes a non-manufacturing overhead enrollment reduction target of approximately 25% - 30% by the end of fiscal 2017. Through September 30, 2016, the Company reduced non-manufacturing enrollment by approximately 24%. The reductions are 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 includes integration of newly acquired companies and the 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. Through fiscal 2016, the Company incurred charges of approximately $4.9 billion. Approximately $2.3 billion of these charges were related to separations, $1.4 billion were asset-related costs and $1.2 billion were related to other restructuring-type costs. For the three month period ended September 30, 2016, the Company incurred total restructuring charges of approximately $168. Approximately $21 of these charges were recorded in SG&A and approximately $129 of these charges were recorded in Cost of products sold. The remainder of the charges were included in discontinued operations. The following table presents restructuring activity for the three months ended September 30, 2016: Three Months Ended September 30, 2016 Accrual Balance June 30, 2016

Charges

Cash Spent

Charges Against Assets

Accrual Balance September 30, 2016

Separations Asset-related costs Other costs

$

243 — 72

$

47 105 16

$

(41) — (30)

$

— (105) —

$

249 — 58

Total

$

315

$

168

$

(71)

$

(105)

$

307

Separation Costs Employee separation charges for the three month period ended September 30, 2016 relate to severance packages for approximately 520 employees, including non-manufacturing employees of approximately 80. The packages are predominantly voluntary and the amounts are 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 17,590 employees, of which approximately 9,620 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 Costs Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include employee relocation related to separations and office consolidations, termination of contracts related to supply chain redesign and the cost to change internal systems and processes to support the underlying organizational changes. 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: Three Months Ended September 30, 2016

Beauty Grooming Health Care Fabric & Home Care Baby, Feminine & Family Care

$

19 5 4 27 54 59

$

168

Corporate (1) Total Company (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 Beauty Brands businesses.

10. Commitments and Contingencies Litigation The Company is subject to various legal proceedings and claims arising out of our business which cover a wide range of matters such as antitrust, trade and other governmental regulations, product liability, patent and trademark, advertising, contracts, environmental, labor and employment and tax. With respect to these and other litigation and claims, 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. Income Tax Uncertainties 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 closing of statutes of limitations. 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. Based on information currently available, we anticipate that over the next 12 month period, audit activity could be completed related to uncertain tax positions in multiple jurisdictions for which we have accrued liabilities of approximately $200, including interest and penalties. Additional information on the Commitments and Contingencies of the Company can be found in our Annual Report on Form 10-K for the year ended June 30, 2016.

11. 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 fine fragrance businesses, along with select hair styling brands. The value of the transaction is estimated at approximately $11.4 billion. The value is comprised of 105 million shares of common stock of the Company, which were tendered by shareholders of the Company and exchanged for shares of the newly formed entity holding the Beauty Brands immediately prior to the close of the transaction, valued at approximately $9.4 billion, and the assumption of $1.9 billion of debt by the entity holding the Beauty Brands. Subsequent to the initial contract signing and prior to the completion of the merger, two of the fine fragrance brands, Dolce & Gabbana and Christina Aguilera, were excluded from the divestiture. These brands have been 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 Duracell, which the Company had infused with approximately $1.9 billion of additional cash, to repurchase all 52.5 million shares of P&G stock owned by BH. During fiscal 2016, the Company recorded a non-cash, before-tax goodwill and indefinite-lived asset impairment charge of $402 ($350 after-tax), to reduce the 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. The Company recorded an after-tax gain on the final transaction of $422 to reflect 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 was reflected as a purchase of treasury stock. In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Beauty Brands and Batteries business 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 Sheets. 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.

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 divestiture. The following table summarizes Net earnings/(loss) from discontinued operations and reconciles to the Consolidated Statements of Earnings: Three Months Ended September 30 2016

Beauty Brands

(118) —

$

150 (292)

$

(118)

$

(142)

Batteries Net earnings/(loss) from discontinued operations

2015

$

Amounts in millions of dollars unless otherwise specified.

The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Beauty Brands: Beauty Brands Three Months Ended September 30 2016

Net sales Cost of products sold Selling, general and administrative expense Interest expense

$

Other non-operating income/(loss), net Earnings/(loss) from discontinued operations before income taxes

$

(72)

$

1,219 385 647 — 1

$

188

46

Income taxes on discontinued operations Net earnings/(loss) from discontinued operations

2015

1,159 450 783 14 16

$

(118)

38 $

150

The Beauty Brands incurred transition costs of $135 for the three months ended September 30, 2016, included in the above table. The following is selected financial information related to cash flows from discontinued operations for the Beauty Brands: Beauty Brands Three Months Ended September 30 2016

NON-CASH OPERATING ITEMS Depreciation and amortization Gain on sale of business CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures

2015

$

24 13

$

28 —

$

38

$

18

Amounts in millions of dollars unless otherwise specified.

The major components of assets and liabilities of the Beauty Brands held for sale are provided below. Beauty Brands September 30, 2016

Cash Restricted cash Accounts receivable Inventories Prepaid expenses and other current assets Property, plant and equipment, net Goodwill and intangible assets, net

June 30, 2016

$

387 — 475 500 178 627 4,426 478

$

40 996 384 494 126 629 4,411 105

Current assets held for sale

$

7,071

$

7,185

Accounts payable Accrued and other liabilities Noncurrent deferred tax liabilities Long-term debt

$

171 342 337 1,887 393

$

148 384 370 996 445

$

3,130

$

2,343

Other noncurrent assets

Other noncurrent liabilities Current liabilities held for sale

Prior to the transaction, Beauty Brands drew $1.9 billion of debt ($1.0 billion as of June 30, 2016), which as noted above, was used to fund a portion of the transaction. The proceeds were held by the Beauty Brands as of June 30, 2016. As of September 30, 2016 the funds are held by the Company and are reflected on the Consolidated Balance Sheet as Restricted cash until the anticipated legal closing activities are completed. Subsequent to closing, this cash will be used to retire P&G debt as part of a broader debt retirement program that was announced subsequent to September 30, 2016. The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Batteries business: Batteries Three Months Ended September 30, 2015

Net sales Earnings before impairment charges and income taxes Impairment charges Income tax (expense)/benefit

$

506 93 (402) 17

Net earnings/(loss) from discontinued operations

$

(292)

Amounts in millions of dollars unless otherwise specified.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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, the following sections: “Management's Discussion and Analysis,” “Risk Factors,” and Notes 4, 10 and 11 to the Consolidated Financial Statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forwardlooking 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. We undertake no obligation to update or revise publicly any forwardlooking statements, whether because of new information, future events or otherwise. Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to manage disruptions in credit markets or changes to our credit rating; (4) the ability to maintain key manufacturing and supply arrangements (including sole supplier and sole manufacturing plant arrangements) and manage disruption of business due to factors outside of our control, such as natural disasters and acts of war or terrorism; (5) the ability to successfully manage cost fluctuations and pressures, including commodity prices, raw materials, labor costs, energy costs and pension and health care costs; (6) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to technological advances attained by, and patents granted to, competitors; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third party relationships, such as our suppliers, contractors and external business partners; (11) the ability to rely on and maintain key information technology systems and networks (including Company and third-party systems and networks) and maintain the security and functionality of such systems and networks and the data contained therein; (12) the ability to successfully manage regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, intellectual property, antitrust, privacy, tax, accounting standards and environmental) and to resolve pending matters within current estimates; (13) the ability to manage changes in applicable tax laws and regulations; (14) the ability to successfully manage our portfolio optimization strategy, as well as ongoing acquisition, divestiture and joint venture activities, to achieve the Company’s overall business strategy, without impacting the delivery of base business objectives; (15) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes, while successfully identifying, developing and retaining particularly key employees, especially in key growth markets where the availability of skilled or experienced employees may be limited; and (16) the ability to manage the uncertain implications of the United Kingdom’s withdrawal from the European Union. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section titled "Economic Conditions and Uncertainties" and the section titled “Risk Factors” (Part II, Item 1A of this Form 10-Q). 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: • • • • • • •

Overview Summary of Results – Three Months Ended September 30, 2016 Economic Conditions and Uncertainties Results of Operations – Three Months Ended September 30, 2016 Business Segment Discussion – Three Months Ended September 30, 2016 Liquidity and Capital Resources Reconciliation of Measures Not Defined by U.S. GAAP

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 net earnings per share (Core EPS), free cash flow and free cash flow productivity. Organic sales growth is net sales growth excluding the impacts of 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. Free cash flow is operating cash flow less capital spending. Free cash flow productivity is the ratio of free cash flow to net earnings. 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. The table below provides detail on our reportable segments, including the product categories and brand composition within each segment. Reportable Segments

Beauty

Grooming Health Care

Fabric & Home Care

Baby, Feminine & Family Care (1)

Product Categories (Sub-Categories)

Major Brands

Head & Shoulders, Pantene, Hair Care (Conditioner, Shampoo, Styling Aids, Treatments) Rejoice Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Olay, Old Spice, Safeguard, Skin Care) SK-II Grooming (1) (Shave Care - Female Blades & Razors, Male Blades & Razors, Pre- Braun, Fusion, Gillette, and Post-Shave Products, Other Shave Care; Appliances) Mach3, Prestobarba, Venus Oral Care (Toothbrushes, Toothpaste, Other Oral Care) Crest, Oral-B Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Prilosec, Vicks Vitamins/Minerals/Supplements, Other Personal Health Care) Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents) Ariel, Downy, Gain, Tide Cascade, Dawn, Febreze, Mr. Home Care (Air Care, Dish Care, P&G Professional, Surface Care) Clean, Swiffer Baby Care (Baby Wipes, Diapers and Pants) Luvs, Pampers Feminine Care (Adult Incontinence, Feminine Care) Always, Tampax Family Care (Paper Towels, Tissues, Toilet Paper) Bounty, Charmin

The Grooming product category is comprised of the Shave Care and Appliances Global Business Units.

The following table provides the percentage of net sales and net earnings by reportable business segment for the three months ended September 30, 2016 (excluding net sales and net earnings in Corporate): Three Months Ended September 30, 2016

Beauty Grooming Health Care Fabric & Home Care Baby, Feminine & Family Care Total Company

Net Sales

Net Earnings

18% 10% 12% 32% 28%

22% 15% 12% 26% 25%

100%

100%

SUMMARY OF RESULTS Following are highlights of results for the three months ended September 30, 2016 versus the three months ended September 30, 2015: •

•

• • • • •

Net sales were unchanged versus the previous year at $16.5 billion. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 3%. Organic sales increased 3% in Beauty and in Grooming, 7% in Health Care, 4% in Fabric & Home Care and 2% in Baby, Feminine & Family Care. Unit volume increased 2% with organic volume up 3%. Volume increased mid-single digits in Health Care and low single digits in Fabric & Home Care and in Baby, Feminine & Family Care. Volume was unchanged in Grooming and decreased low single digits in Beauty. Excluding the impacts of minor brand divestitures, organic volume increased low single digits in both Beauty and Grooming. Net earnings from continuing operations were $2.9 billion, an increase of $98 million, or 4% versus the prior year period. This increase was driven by an increase in other non-operating income due to minor brand divestitures and a lower effective tax rate. Diluted net earnings per share from continuing operations increased 4% to $1.00. Net earnings attributable to Procter & Gamble were $2.7 billion, an increase of $113 million, or 4% versus the prior year period, driven by the increase in net earnings from continuing operations. Core net earnings per share, which excludes discontinued operations and incremental restructuring charges, increased 5% to $1.03. Operating cash flow was $3.0 billion. Free cash flow, which is operating cash flow less capital expenditures, was $2.3 billion. Free cash flow productivity, which is the ratio of free cash flow to net earnings, was 85%.

ECONOMIC CONDITIONS AND UNCERTAINTIES 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 Eastern Europe, further economic instability in the European Union, political instability in certain Latin American markets and economic slowdowns in Japan and China, 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 2012. 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 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, Mexico, 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 Egypt, 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. For information on risk factors that could impact our results, refer to Part I, Item 1A "Risk Factors" in the Company's Form 10-K for the fiscal year ended June 30, 2016. RESULTS OF OPERATIONS – Three Months Ended September 30, 2016 The following discussion provides a review of results for the three months ended September 30, 2016 versus the three months ended September 30, 2015. Three Months Ended September 30 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 net earnings per common share

2016

$

2015

16,518 $ 3,771 2,875 (118) 2,714 0.96 1.00 1.03

% Chg

16,527 3,768 2,777 (142) 2,601 0.91 0.96 0.98

—% —% 4% N/A 4% 5% 4% 5%

Three Months Ended September 30 COMPARISONS AS A % OF NET SALES

Gross profit Selling, general & administrative expense Operating income Earnings from continuing operations before income taxes Net earnings from continuing operations Net earnings attributable to Procter & Gamble

2016

2015

Basis Pt Chg

51.0% 28.1% 22.8% 22.6% 17.4% 16.4%

50.7% 27.9% 22.8% 22.1% 16.8% 15.7%

30 20 — 50 60 70

Net Sales Net sales were unchanged at $16.5 billion for the first quarter. Unit volume increased 2%. Unfavorable foreign exchange reduced net sales by 3%.

Pricing and mix had no net impact on consolidated net sales. Volume increased mid-single digits in Health Care and low single digits in Fabric & Home Care and in Baby, Feminine & Family Care. Volume was unchanged in Grooming and decreased low single digits in Beauty driven by minor brand divestitures. Volume increased low single digits in developed regions and was unchanged in developing regions. Organic sales increased 3% driven by a 3% increase in organic volume. Net Sales Change Drivers 2016 vs. 2015 (Three Months Ended September 30)* Volume with Acquisitions & Divestitures

Volume Excluding Acquisitions & Divestitures

Foreign Exchange

Price

Mix

Other**

Net Sales Growth

Baby, Feminine & Family Care

(2)% —% 5% 2% 3%

2% 3% 5% 4% 4%

(2)% (3)% (3)% (2)% (3)%

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

1% —% 1% 1% (1)%

1% 1% —% 1% 1%

(1)% (1)% 4% 1% (1)%

Total Company

2%

3%

(3)%

—%

—%

1%

—%

Beauty Grooming Health Care Fabric & Home Care

* Net sales percentage changes are approximations based on quantitative formulas that are consistently applied. ** Other includes the sales mix impact from acquisitions/divestitures and rounding impacts necessary to reconcile volume to net sales. Operating Costs Gross margin increased 30 basis points to 51.0% of net sales for the quarter. Gross margin increased primarily due to a 190 basis point positive impact from manufacturing cost savings and a 20 basis point benefit from volume scale leverage. These impacts were partially offset by an 80 basis point negative impact from unfavorable foreign exchange, a 20 basis point decrease due to incremental restructuring charges, a 30 basis point decline from unfavorable product mix across segments (caused by net sales declines in Beauty and in Grooming, which have higher than companyaverage gross margins), and 50 basis points of combined impact from higher commodity costs and initiative investments. Total SG&A spending increased 1% to $4.6 billion due to increased marketing activities partially offset by lower overhead spending due to productivity efforts. SG&A as a percentage of net sales increased 20 basis points to 28.1%. Marketing spending as a percentage of net sales increased 60 basis points due to an increase in advertising and other activities. Overhead costs as a percentage of net sales decreased 40 basis points, as 60 basis points of productivity savings in overhead spending was partially offset by wage inflation and foreign exchange. Non-Operating Expenses and Income Interest expense was $131 million for the quarter, a decrease of $9 million versus the prior year period, due to a decrease in weighted average interest rates. Interest income was $35 million for the quarter, a decrease of $9 million versus the prior year period due to a decrease in cash and cash equivalents. Other non-operating income/(loss) was $63 million, an increase of $81 million, due to gains from minor brand divestitures. Income Taxes on Continuing Operations The effective tax rate on continuing operations decreased 90 basis points to 23.1% primarily due to a 310 basis point impact following the adoption of a new accounting standard on the tax impacts of share-based payments to employees. This was partially offset by unfavorable geographic mix of earnings and the impact of favorable discrete adjustments related to uncertain income tax positions (which netted to 30 basis points in the current year versus 60 basis points in the prior year). Net Earnings from Continuing Operations Net earnings from continuing operations increased $98 million or 4% for the quarter. This increase was due to the increase in non-operating income and decrease in the effective income tax rate discussed above. Foreign exchange impacts reduced net earnings by about $200 million for the quarter due to weakening of certain key currencies against the U.S. dollar, primarily the currencies of Argentina, Mexico, Egypt and the United Kingdom. This impact includes both transactional charges and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Diluted net earnings per share from continuing operations increased 4% to $1.00 due to increased net earnings. Discontinued Operations The net loss from discontinued operations improved by $24 million to $118 million in the current period versus a net loss of $142 million in the prior period. This change was driven primarily by a base period loss on the Batteries business (as impairment charges more than offset earnings), partially offset by current period Beauty Brands transition costs (see Note 11 to the Consolidated Financial Statements). Net Earnings Net earnings attributable to Procter & Gamble increased $113 million or 4% to $2.7 billion for the quarter. The increase was due to the improvements in net earnings from both continuing and discontinued operations, both discussed above. Diluted net earnings per share increased 5% to $0.96. Core net earnings per share increased 5% to $1.03. Core net earnings per share represents diluted net earnings per share from continuing operations excluding incremental restructuring charges related to our productivity and cost savings plans. BUSINESS SEGMENT DISCUSSION – Three Months Ended September 30, 2016 The following discussion provides a review of results by reportable business segment. Analyses of the results for the three month period ended September 30, 2016 are provided based on a comparison to the same three month period ended September 30, 2015. The primary financial measures used to evaluate segment performance are net sales and net earnings from continuing operations. The table below provides supplemental information on net sales and net earnings from continuing operations by reportable business segment for the three months ended September 30,

2016 versus the comparable prior year period (dollar amounts in millions): Three Months Ended September 30, 2016

Net Sales

Beauty Grooming Health Care Fabric & Home Care Baby, Feminine & Family Care Corporate

$

2,996 1,658 1,861 5,302 4,595 106

Total Company

$

16,518

% Change Versus Year Ago

(1)% (1)% 4% 1% (1)% (1)%

Earnings/(Loss) from Continuing Operations Before Income Taxes

$

—% $

783 529 496 1,129 1,045 (244)

% Change Versus Year Ago

(5)% 6% 11 % 1% (6)% N/A

3,738

Net Earnings/(Loss) from Continuing Operations

% Change Versus Year Ago

$

592 415 320 728 697 123

(5)% 6% 1% (3)% (7)% N/A

2% $

2,875

4%

Beauty Three months ended September 30, 2016 compared with three months ended September 30, 2015 Beauty net sales decreased 1% to $3.0 billion during the first fiscal quarter on a 2% decrease in unit volume. Unfavorable foreign exchange reduced net sales by 2%. Price increases contributed 1% to net sales. Favorable product mix added 1% to net sales primarily due to growth of the superpremium SK-II brand which has higher than average selling prices. Organic sales increased 3% on organic volume that increased 2%. Global market share of the Beauty segment decreased 0.7 points. Volume decreased low single digits in both developed and developing markets. Excluding the impact of minor brand divestitures, organic volume increased low single digits in developing markets. •

Volume in Hair Care was down low single digits due to minor brand divestitures. Organic volume increased low single digits. Developed markets declined low single digits due to competitive activity and developing markets declined low single digits due to minor brand divestitures. Organic volume increased low single digits in developing markets behind market growth and increased marketing. Global market share of the Hair Care category decreased nearly a point.

•

Volume in Skin and Personal Care increased low single digits. Volume increased low single digits in developed regions due to product innovation and increased promotional activity. Volume decreased low single digits in developing regions due to minor brand divestitures, with organic volume up low single digits behind innovation and increased marketing. Global market share of the Skin and Personal Care category decreased half a point.

Net earnings decreased 5% to $592 million due to the reduction in net sales, along with an 80 basis point decrease in net earnings margin. The net earnings margin declined due to an increase in SG&A as a percentage of net sales, partially offset by increase in gross margin. SG&A as a percentage of net sales increased due to increases in both marketing and overhead spending. Gross margin increased primarily due to increased pricing and productivity savings, which were only partially offset by unfavorable commodity and foreign exchange impacts.

Grooming Three months ended September 30, 2016 compared with three months ended September 30, 2015 Grooming net sales decreased 1% to $1.7 billion during the first fiscal quarter on unit volume that was unchanged. Unfavorable foreign exchange reduced net sales by 3%. Price increases in Shave Care contributed 1% to net sales. Organic sales increased 3% on a 3% increase in organic volume. Global market share of the Grooming segment decreased 0.1 point. Volume increased low single digits in developed regions and was unchanged in developing regions. •

•

Shave Care volume was unchanged in both developed and developing regions as increased marketing support and product innovation were largely offset by competitive activity. Organic volume increased mid-single digits in developing regions. Global market share of the blades and razors category increased slightly. Volume in Appliances increased low single digits. Volume was up mid-single digits in developed regions and low single digits in developing regions due to product innovation and market growth. Global market share of the Appliances category decreased a point.

Net earnings increased 6% to $415 million as a 170 basis-point increase in net earnings margin was only partially offset by the reduction in net sales. Net earnings margin increased due to an increase in gross margin driven by the benefits of increased pricing and productivity efforts, which were only partially offset by unfavorable foreign exchange and other investments. Gross margin expansion was partially offset by an increase in SG&A as a percent of net sales due to increased marketing spending. Health Care Three months ended September 30, 2016 compared with three months ended September 30, 2015 Health Care net sales increased 4% to $1.9 billion during the first fiscal quarter on a 5% increase in unit volume. Unfavorable foreign exchange reduced net sales by 3%. Price increases in both Oral Care and Personal Health Care contributed 1% to net sales and favorable product mix added 1% to net sales primarily due to an increase in Oral care product forms with higher than average selling prices. Organic sales increased 7% on a 5% increase in organic volume. Global market share of the Health Care segment decreased 0.3 points. Volume increased mid-single digits in both developed and developing regions. •

Oral Care volume increased mid-single digits in developed regions and low 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 high single digits with low single-digit growth in developed regions and double-digit growth in developing regions behind market growth, product innovation and expanded distribution. Global market share of the Personal Health Care category decreased nearly half a point.

Net earnings increased 1% to $320 million primarily due to the increase in net sales partially offset by a 50 basis point reduction in net earnings margin. Gross margin increased due to manufacturing cost savings and increased pricing, partially offset by unfavorable sales channel mix and foreign exchange impacts. This was more than offset by an increase in SG&A as a percentage of net sales due to a base period benefit related to the earnings of our PGT Healthcare partnership. Fabric & Home Care Three months ended September 30, 2016 compared with three months ended September 30, 2015 Fabric & Home Care net sales increased 1% to $5.3 billion for the first fiscal quarter on a 2% increase in unit volume. Unfavorable foreign exchange reduced net sales by 2%. Favorable geographic mix added 1% to net sales due to the growth of developed regions which have higher than segmentaverage selling prices. Lower pricing driven by promotional spending had a negative 1% impact on net sales. Organic sales increased 4% on a 4% increase in organic volume. Global market share of the Fabric & Home Care segment was unchanged. Volume increased mid-single digits in developed regions and was down low single digits in developing regions. • Fabric Care volume increased low single digits as a mid-single-digit increase in developed markets due to innovation and increased marketing spending were 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 mid-single-digit increase in developed markets due to product innovation, partially offset by a low single-digit decrease in developing regions due to minor brand divestitures. Organic volume in developing regions increased low single digits due to product innovation. Global market share of the Home Care category was up slightly. Net earnings decreased 3% to $728 million due to a 50 basis-point decrease in net earnings margin, which more than offset the increase in net sales. Net earnings margin decreased primarily due to a higher tax rate. Gross margin expansion was largely offset by increased SG&A as a percent of net sales. Increased gross margin was driven by manufacturing cost savings and favorable geographic and product mix, driven by increases in developed markets and in premium product forms, both of which have higher than segment-average margins, partially offset by unfavorable foreign exchange impacts, lower pricing and other investments. SG&A as a percentage of net sales increased primarily due to increased marketing and overhead spending. The tax rate increased due in part to disproportionate growth in the U.S., which has higher than global-average tax rates.

Baby, Feminine & Family Care Three months ended September 30, 2016 compared with three months ended September 30, 2015 Baby, Feminine & Family Care net sales decreased 1% to $4.6 billion during the first fiscal quarter on a 3% increase in unit volume. Unfavorable foreign exchange reduced net sales by 3%. Unfavorable geographic mix reduced net sales by 1% due to the disproportionate growth of developing regions which have lower than segment-average selling prices. Lower pricing driven by promotional spending had a negative 1% impact on net sales. Organic sales increased 2% on a 4% increase in organic volume. Global market share of the Baby, Feminine & Family Care segment decreased 0.5 points. Volume increased low single digits in developed regions and increased mid-single digits in developing regions. •

•

•

Volume in Baby Care increased low single digits caused by a high single-digit increase in developing regions due to market growth and decreased pricing. Volume decreased low single digits in developed regions due to competitive activity. Global market share of the Baby Care category decreased less than half a point. Volume in Feminine Care increased low single digits due to a mid-single-digit increase in developed regions and a low single-digit increase in developing regions, both due to product innovation and market growth. Global market share of the Feminine Care category decreased nearly half a point. Volume in Family Care, which is predominantly a North American business, increased mid-single digits driven by market growth, product innovation and increased merchandising. In the U.S., all-outlet share of the Family Care category was up less than half a point.

Net earnings decreased 7% to $697 million due to the decline in net sales and a 90 basis point reduction in the net earnings margin. Net earnings margin declined due to an increase in SG&A as a percent of sales driven by higher marketing and overhead spending, partially offset by an increase in gross margin. Gross margin increased slightly due to manufacturing cost savings and lower commodity costs, partially offset by unfavorable foreign exchange impacts and other investments. Corporate 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; other general corporate items; the gains and losses related to certain divested brands and categories; certain restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization; certain significant asset impairment charges; and certain balance sheet impacts from significant foreign exchange devaluations. Corporate also includes reconciling items to adjust the accounting policies used in the segments to U.S. GAAP. The most significant reconciling item includes income taxes to adjust from blended statutory rates that are reflected in the segments to the overall Company effective tax rate. Corporate net sales decreased 1% to $106 million during the first fiscal quarter. Corporate net earnings from continuing operations improved by $174 million to $123 million in the first fiscal quarter due mainly to a reduction in unallocated corporate overhead spending, due in part to the elimination of stranded overheads from divestitures, and tax benefits resulting from the adoption of a new accounting standard on the tax impacts of sharebased payments to employees. Additional discussion of this item is 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 and other work processes to fund the Company's growth strategy. As part of this plan, which has been expanded since its inception, the Company expects to incur approximately $5.5 billion in before-tax restructuring costs over a six-year period (from fiscal 2012 through fiscal 2017). Approximately 91% of the estimated costs have been incurred through September 2016. Savings generated from the restructuring costs are difficult to estimate, given the nature of the activities, the corollary benefits achieved (e.g., enrollment reduction achieved via normal attrition), the timing of the execution and the degree of reinvestment. Overall, the costs and other non-manufacturing enrollment reductions are expected to deliver approximately $3 billion in annual gross savings (before-tax). The cumulative before-tax savings as of the current year are estimated at approximately $2.5 to $3 billion. Consistent with our historical policies for ongoing restructuring-type activities, the resulting charges are funded by and included within Corporate for segment reporting. Refer to Note 9 in the Notes to the Consolidated Financial Statements for more details on the restructuring program.

LIQUIDITY & CAPITAL RESOURCES Operating Activities We generated $3.0 billion of cash from operating activities in the quarter, a decrease of $513 million versus the prior year. Net earnings, adjusted for non-cash items (depreciation and amortization, share-based compensation expense, deferred income taxes, and gain on sale of businesses), generated $3.3 billion of operating cash flow. Working capital and other impacts used $252 million of cash in the period. Accounts receivable used $424 million of cash in part due to an increase in sales versus the final quarter of fiscal 2016. Inventory consumed $287 million of cash due to initiatives and production seasonality to support holiday shipments. Accounts payable, accrued and other liabilities generated $298 million of cash primarily due to an increase in taxes payable due to the timing of estimated payments. All other operating assets and liabilities generated $135 million of cash. Investing Activities Cash used by investing activities was $2.1 billion in the quarter. Capital expenditures were $684 million, or 4.1% of net sales. We generated $183 million of cash from proceeds from asset sales primarily from plant asset sales and minor brand divestitures. The pending sale of the Beauty Brands used cash of $1.2 billion, including $348 million of cash transferred to the Beauty business and accounted for in Current assets held for sale and $874 million of borrowings related to the Beauty Brands that were placed in Restricted cash to be used in connection with the sale of the Beauty Brands. We used $631 million for purchases of short-term investments, partially offset by cash generated from proceeds from sales or maturities of short-term investments. Financing Activities Our financing activities consumed net cash of $507 million in the quarter. We used $1.0 billion for treasury stock purchases and $1.9 billion for dividends. Cash generated from net debt issuances was $1.4 billion. Cash from the exercise of stock options and other impacts generated $937 million of cash. As of September 30, 2016, our current assets exceeded current liabilities by $2.8 billion. Excluding assets and liabilities of the Beauty businesses held for sale, current liabilities exceeded current assets by $1.2 billion. We have short- and long-term debt to meet our financing needs. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We have strong short- and long-term debt ratings that 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. RECONCILIATION OF MEASURES NOT DEFINED BY U.S. GAAP In accordance with the SEC's Regulation G, the following provides definitions of the non-GAAP measures and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective of underlying business trends (i.e. trends excluding nonrecurring or unusual items) and results and provide a supplemental measure of year-on-year results. The non-GAAP measures described below are used by Management in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measure, but rather as supplemental information to our business results. These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted. The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP measures adjusted as applicable for the following item: Incremental restructuring: The Company has and continues to have an ongoing level of restructuring activities. Such activities have resulted in ongoing annual restructuring related charges of approximately $250 - $500 million before tax. Beginning in 2012 Procter & Gamble began a $10 billion strategic productivity and cost savings initiative that includes incremental restructuring activities. This results in incremental restructuring charges to accelerate productivity efforts and cost savings. The adjustment to Core earnings includes only the restructuring costs above what we believe are the normal recurring level of restructuring costs. We do not view the above item to be part of our sustainable results and its exclusion from Core earnings measures provides a more comparable measure of year-on-year results. Organic sales growth: Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. Management believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis, and this measure is used in assessing achievement of management goals for at-risk compensation. Free cash flow: Free cash flow is defined as operating cash flow less capital spending. Free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. Management views free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends and discretionary investment. Free cash flow productivity: Free cash flow productivity is defined as the ratio of free cash flow to net earnings. Management views free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash. Free cash flow productivity is used by management in making operating decisions, allocating financial resources and for budget planning purposes. The Company's long-term target is to generate

annual free cash flow productivity at or above 90 percent. Core EPS: Core earnings per share, or Core EPS, is a measure of the Company's diluted net earnings per share from continuing operations adjusted as indicated. Management views this non-GAAP measure as a useful supplemental measure of Company performance over time. Organic sales growth: Net Sales Growth

Foreign Exchange Impact

Acquisition/Divestiture Impact*

Organic Sales Growth

Beauty Grooming Health Care Fabric & Home Care Baby, Feminine & Family Care

(1)% (1)% 4% 1% (1)%

2% 3% 3% 2% 3%

2% 1% —% 1% —%

3% 3% 7% 4% 2%

Total Company

—%

3%

—%

3%

Three Months Ended September 30, 2016

* Acquisition/Divestiture Impact includes the mix impacts of acquisitions and divestitures and rounding impacts necessary to reconcile net sales to organic sales. Free cash flow and free cash flow productivity (dollar amounts in millions): Fiscal Year-to-Date, September 30, 2016 Operating Cash Flow

Capital Spending

Free Cash Flow

Net Earnings

Free Cash Flow Productivity

$3,025

$(684)

$2,341

$2,757

85%

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures Three Months Ended September 30, 2016 AS REPORTED (GAAP)

DISCONTINUED OPERATIONS

INCREMENTAL RESTRUCTURING

ROUNDING

NON-GAAP (CORE)

COST OF PRODUCTS SOLD SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE OPERATING INCOME INCOME TAX ON CONTINUING OPERATIONS

8,102

—

(111)

—

7,991

4,645 3,771 863

— — —

23 88 15

(1) 1 1

NET EARNINGS ATTRIBUTABLE TO P&G

2,714

118

73

—

4,667 3,860 879 2,905 Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE*

0.96

0.04

0.03

—

1.03

* Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

CHANGE VERSUS YEAR AGO CORE EPS

5%

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures Three Months Ended September 30, 2015 AS REPORTED (GAAP)

DISCONTINUED OPERATIONS

INCREMENTAL RESTRUCTURING

ROUNDING

NON-GAAP (CORE)

COST OF PRODUCTS SOLD SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE OPERATING INCOME INCOME TAX ON CONTINUING OPERATIONS

8,152

—

(72)

—

8,080

4,607 3,768 877

— — —

— 72 14

— — 1

NET EARNINGS ATTRIBUTABLE TO P&G

2,601

142

58

(1)

4,607 3,840 892 2,800 Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE*

0.91

* Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

0.05

0.02

—

0.98

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s exposure to market risk since June 30, 2016. Additional information can be found in Note 7 Risk Management Activities and Fair Value Measurements of the Consolidated Financial Statements.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures The Company’s Chairman of the Board, 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 report. 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, 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. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the Company’s quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. PART II. OTHER INFORMATION Item 1.

Legal Proceedings

The Company is subject, from time to time, to certain legal proceedings and claims arising out of our business, which cover a wide range of matters, including antitrust and trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters and tax.

Item 1A.

Risk Factors

For information on Risk Factors, please refer to Part I, Item 1A "Risk Factors" in the Company’s Form 10-K for the fiscal year ended June 30, 2016.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds ISSUER PURCHASES OF EQUITY SECURITIES

Period

7/01/2016 - 7/31/2016 8/01/2016 - 8/31/2016 9/01/2016 - 9/30/2016 Total (1)

(2) (3)

Total Number of Shares Purchased (1)

8,766,524 5,774,731 — 14,541,255

Average Price Paid (2) per Share

$85.51 $86.58 — $85.94

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

5,846,912 5,774,731 —

Approximate Dollar Value of Shares That May Yet Be Purchased Under our Share Repurchase Program ($ in billions) (3) (3) (3)

11,621,643

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. Average price paid per share for open market transactions is calculated on a settlement basis and excludes commission. On August 2, 2016, the Company stated that in fiscal year 2017 the Company expects to reduce outstanding shares at a value of approximately $15 billion, through a combination of direct share repurchase and shares that will be exchanged in the Beauty Brands transaction, notwithstanding any purchases under the Company's compensation and benefit plans. Purchases may be made in the open market and/or private transactions and purchases may be increased, decreased or discontinued at any time without prior notice. The share repurchases are authorized pursuant to a resolution issued by the Company's Board of Directors and are expected to be financed by a combination of operating cash flows and issuance of long-term and short-term debt.

Item 6.

Exhibits 2-1

Fourth Amendment to the Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, Coty Inc., Galleria Co. and Green Acquisition Sub Inc. + **

2-2

Side Letter Amendment to the Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, Coty Inc., Galleria Co. and Green Acquisition Sub Inc. + **

3-1

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

3-2

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

10-1

Company’s Form of Separation Agreement & Release * +

10-2

The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional Terms and Conditions * +

12

Computation of Ratio of Earnings to Fixed Charges

31.1

Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer

31.2

Rule 13a-14(a)/15d-14(a) Certification – Chief Financial Officer

32.1

Section 1350 Certifications – Chief Executive Officer

32.2

Section 1350 Certifications – Chief Financial Officer

101.INS

(1)

XBRL Instance Document

101.SCH (1)

XBRL Taxonomy Extension Schema Document

101.CAL (1)

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF (1)

XBRL Taxonomy Definition Linkbase Document

101.LAB (1)

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

(1)

XBRL Taxonomy Extension Presentation Linkbase Document

* Compensatory plan or arrangement ** Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC, upon request, a copy of all omitted schedules and attachments. + Filed herewith (1 ) XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Pursuant to the requirements 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.

THE PROCTER & GAMBLE COMPANY October 25, 2016

/s/ VALARIE L. SHEPPARD

Date

(Valarie L. Sheppard) Senior Vice President, Comptroller and Treasurer

EXHIBIT INDEX Exhibit 2-1

Fourth Amendment to the Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, Coty Inc., Galleria Co. and Green Acquisition Sub Inc. + **

2-2

Side Letter Amendment to the Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, Coty Inc., Galleria Co. and Green Acquisition Sub Inc. + **

3-1

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

3-2

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

10-1

Company’s Form of Separation Agreement & Release +

10-2

The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional Terms and Conditions +

12

Computation of Ratio of Earnings to Fixed Charges

31.1

Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer

31.2

Rule 13a-14(a)/15d-14(a) Certification – Chief Financial Officer

32.1

Section 1350 Certifications – Chief Executive Officer

32.2

Section 1350 Certifications – Chief Financial Officer

101.INS

(1)

XBRL Instance Document

101.SCH (1)

XBRL Taxonomy Extension Schema Document

101.CAL (1)

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF (1)

XBRL Taxonomy Definition Linkbase Document

101.LAB (1)

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

(1)

XBRL Taxonomy Extension Presentation Linkbase Document

** Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC, upon request, a copy of all omitted schedules and attachments. + Filed herewith (1 ) XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. (Back To Top)

Section 2: EX-2.1 (FOURTH AMENDMENT TO THE TRANS AGREEMENT AMONG P&G, COTY, GALLERIA AND GREEN ACQ) EXHIBIT 2-1

Fourth Amendment to Transaction Agreement

FOURTH AMENDMENT TO TRANSACTION AGREEMENT This Fourth Amendment to the Transaction Agreement (this “Amendment”), dated August 25, 2016, is by and among The Procter & Gamble Company, an Ohio corporation (“Parent”), Galleria Co., a Delaware corporation (“SplitCo”), Coty Inc., a Delaware corporation (“Acquiror”), and Green Acquisition Sub Inc., a Delaware corporation (“Merger Sub”), and amends that certain Transaction Agreement, dated July 8, 2015 and amended August 13, 2015, February 19, 2016 and May 25, 2016, by and among Parent, SplitCo, Acquiror and Merger Sub (the “Agreement”) and certain deliveries to be made thereunder, all as contemplated by Section 10.06 of the Agreement. The capitalized terms used but not defined herein shall have the meanings given to them in the Agreement. NOW, THEREFORE, the Parties hereby agree as follows: ARTICLE I AMENDMENTS Section 1.1 Accounts Receivable. a.

Section 1.05(a)(xvii) of the Agreement is hereby deleted in its entirety and replaced with the following: “(xvii) all accounts receivable that are either (A) primarily related to the Galleria Business and held by SplitCo or any Galleria Entity or (B) primarily related to the Salon Professional Business or the Mercury Business, including (notwithstanding anything to the contrary in this Agreement) all accounts receivable primarily related to the Dolce & Gabbana Business or the Christina Aguilera Business, other than accounts receivable primarily related to the Mercury Business in Russia.”

b.

Section 5.21(e) of the Agreement is hereby deleted in its entirety and replaced with the following: “(e) Transfer of Accounts Receivable. Prior to the Closing, Parent will cause (i) all accounts receivable that are either (A) primarily related to the Galleria Business and held by SplitCo or any Galleria Entity or (B) primarily related to the Salon Professional Business or the Mercury Business, including (notwithstanding anything to the contrary in this Agreement) all accounts receivable primarily related to the Dolce & Gabbana Business or the Christina Aguilera Business, other than accounts receivable primarily related to the Mercury Business in Russia and (ii) all other rights to payment and security for payments to the extent they relate to the Galleria Business to be held by a member of the Galleria Group.”

c.

Section 1.05(b)(i) of the Parent Disclosure Letter is hereby amended such that the following disclosure will be added as a new item 11 under the “Mercury” heading: “11. All accounts receivable primarily related to the Mercury Business in Russia, other than accounts receivable that are primarily related to the Galleria Business and held by SplitCo or any Galleria Entity.”

d.

Section 11.01(b) of the Parent Disclosure Letter is hereby amended so as to delete the text under the heading “Accounts Receivable, other” and replace such text with the following: “Accounts receivable - other represent receivables owed to the business for activities such as supplier rebates or other miscellaneous sales receivables. Except with respect to the Salon Professional Business and the Mercury Business, including (notwithstanding anything to the contrary in this Agreement) all accounts receivable primarily related to the Dolce & Gabbana Business or the Christina Aguilera Business, the Cut-Off Date Adjustment Statement excludes accounts receivable that are not held by SplitCo or any Galleria Entity. The amount of accounts receivable attributable to the Mercury Business reflected in the Cut-Off Date Adjustment Statement will be discounted by 2%.”

e.

Article XI of the Agreement is hereby amended so as to add the following defined terms: “Christina Aguilera Business” means the portion of the Mercury Business marketed under the Christina Aguilera brand.

1

“Dolce & Gabbana Business” means the portion of the Mercury BGSS Equipment. Section 1.2 GSS Equipment. a.

Section 1.05(a)(i) of the Parent Disclosure Letter is hereby amended such that the following disclosure is added as a new item 11: “11. The tangible assets located at Parent’s Capella facility in Nizhny Novgorod, Russia and listed on Attachment 11-C to this Schedule 1.05(a)(i).”

b.

The Parent Disclosure Letter is hereby amended to add Attachment A to this Amendment as a new Attachment 11-C to Section 1.05(a)(i) of the Parent Disclosure Letter.

Section 1.3 Galleria Software - Warehouse Management Systems. a.

Section 1.05(a)(x) of the Parent Disclosure Letter is hereby amended to add the following disclosure: Warehouse Management Systems: 1.

The following warehouse management systems (WMS):

FACILITY

WMS

Gargenville 3PL

LM7

Aspropyrgos

Aberon

Riverside

TOPS/KNAPP

Cologne

LVS

Section 1.4 Trade Funds Liabilities. a.

Section 1.06(a)(vi) of the Agreement is hereby deleted in its entirety and replaced with the following: “(vi) all Liabilities to the extent relating to, resulting from or arising out of trade and consumer promotions, in-store promotions, coupon campaigns, loyalty programs and gift card campaigns of the Galleria Business and the Dolce & Gabbana Business, other than such Liabilities relating to, resulting from or arising out of the Retail Color Business, the Retail Styling Business, or the Mercury Business (including the Dolce & Gabbana Business), in each case, in Russia, Ukraine, Azerbaijan, Kazakhstan or Turkey;”

b.

Section 1.06(b)(i) of the Parent Disclosure Letter is hereby amended such that the following disclosure will be added as a new paragraph 2: “2. All Liabilities to the extent relating to, resulting from or arising out of trade and consumer promotions, in-store promotions, coupon campaigns, loyalty programs and gift card campaigns of the Retail Color Business, the Retail Styling Business or the Mercury Business (including the Dolce & Gabbana Business), in each case, in Russia, Ukraine, Azerbaijan, Kazakhstan or Turkey.”

c.

Section 11.01(b) of the Parent Disclosure Letter is hereby amended so as to delete the last sentence in the second paragraph under the heading “Trade accounts payable and accrued liabilities” and replace such text with the following: “Except with respect to trade and consumer promotions, in-store promotions, coupon campaigns, loyalty programs and gift card campaigns, the Cut-Off Date Adjustment Statement excludes accrued manufacturing expenses, restructuring, accrued marketing expenses and accrued sundry liabilities, in each case, that are not held by SplitCo or any Galleria Entity.”

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Section 1.5 Galleria Business Acquired Plans. a.

Paragraph 4(b)(i) of Schedule 1.05(a)(xiii) of the Parent Disclosure Letter is hereby deleted in its entirety and replaced with the following: “(A) In the case of an Unfunded DB Plan, “DB Actuarial Liabilities” means the estimated Liabilities, as of the Closing Date, attributable to Pension Employees under the Unfunded DB Plans, calculated on the basis of the accumulated benefit obligation based on GAAP ASC 715 and using Parent’s most recent actuarial assumptions incorporated into Parent’s annual financial reports. The DB Actuarial Liabilities will be estimated approximately 90 calendar days prior to the Closing Date. (B) Within 60 calendar days prior to the Closing Date, Parent will deliver to Acquiror a statement setting forth a detailed calculation and breakdown prepared by a qualified actuary selected by Parent (“Parent’s Actuary”) of the DB Actuarial Liabilities for the Unfunded DB Plans. Unless Acquiror notifies Parent of an objection to the determination by Parent’s Actuary of the DB Actuarial Liabilities within 10 calendar days following Parent’s delivery of the determination by Parent’s Actuary of the DB Actuarial Liabilities, such amount will become final and binding on Parent, Acquiror and their respective Affiliates and will be the “Final DB Actuarial Liabilities.” Any notice of objection from Acquiror must specify in reasonable detail the nature of any objection, and may only be based on the good faith belief by a qualified actuary selected by Acquiror (“Acquiror’s Actuary”) that Parent’s Actuary has used unreasonable actuarial assumptions or otherwise made an actuarial error. In the event Acquiror provides such a notice of objection, Parent’s Actuary and Acquiror’s Actuary will discuss the calculation of the DB Actuarial Liabilities in good faith and seek to reach an agreement during the 10-calendar day period following Parent’s receipt of such notice of objection. If such actuaries are able to reach agreement, then they will reduce such agreement to writing and such agreement will become final and binding on Parent, Acquiror and their respective Affiliates and will be the “Final DB Actuarial Liabilities.” If such actuaries are unable to reach an agreement within such 10-calendar day period, they will jointly select and retain a third actuary within 10 Business Days following such 10-calendar day period, which third actuary will make the appropriate calculations in respect of the DB Actuarial Liabilities within 20 calendar days after its selection, and such amount will be final and binding on Parent, Acquiror and their respective Affiliates and will be the “Final DB Actuarial Liabilities.” Parent and Acquiror will share equally the cost of any such third actuary. (C) Any transfers required pursuant to Paragraph 4(a)(ii)(A) with respect to Unfunded DB Plans will be completed on or prior to the Closing Date. For the avoidance of doubt, no Assets will be transferred pursuant to this Schedule 1.05(a)(xiii) of the Parent Disclosure Letter or Section 6.03(b) of the Agreement with respect to any Liabilities attributable to Pension Employees under the Galleria Business Acquired Plans that are reflected in the Cut-Off Date Adjustment Statement.”

b.

Exhibit R to the Agreement is hereby amended to add the following: “Germany 1.

Death Benefit according to Social benefits catalogue

2.

Uberbruckungsgeld Muelhens (P&G Manufacturing Cologne only)

3.

Belegschaftskasse Muelhens (P&G Manufacturing Cologne only)

4.

German portion of the International Retirement Arrangement (IRA) / International Pension Protection Program (IPP)

Belgium 1.

Belgium portion of the International Retirement Arrangement (IRA) / International Pension Protection Program (IPP)

Japan 1.

Early Retirement Allowance Plan (New Life Assistance Plan) - in force during Continuation Period

3

Thailand 1.

Legal Severance Payment Plan

Turkey Termination Indemnity Plan” Section 1.6 Closing. a.

Section 2.06 of the Agreement is hereby deleted in its entirety and replaced with the following: “2.06 Closing of the Merger. On the terms and subject to the conditions set forth in this Agreement, the consummation of the Merger (the “Closing”) will take place at Jones Day, 222 East 41st Street, New York, New York, at 10:00 a.m., local time, on the first calendar day after the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature or pursuant to the terms of this Agreement are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, where permitted, the waiver of those conditions), unless another date or place is agreed to in writing by Parent and Acquiror. The date on which the Closing occurs is referred to as the “Closing Date.” For accounting purposes, the Closing will be deemed to have occurred (a) as of 11:59:59 pm local time on the Closing Date if the Closing Date is the last calendar day of a month, (b) as of 12:00:01 am local time on the Closing Date if the Closing Date is the first calendar day of a month, or (c) as of such time as the Parties may mutually agree in good faith if the Closing Date is not the first or last calendar day of a month.”

Section 1.7 Sufficiency; Condition of Assets. a.

Section 3.14(a) of the Parent Disclosure Letter is hereby amended so as to add the following text as a new item 20: “20. No go-to-market structure in Brazil for the Retail Color Business and the Retail Styling Business will transfer to SplitCo. SplitCo will rely on the go-to-market capacity in Brazil acquired by Acquiror in connection with the acquisition of Hypermarcas SA for the Retail Color Business and the Retail Styling Business, in each case, in Brazil.”

Section 1.8 Inventory Accumulation. a.

Section 5.21(j) of the Agreement is hereby deleted in its entirety and replaced with the following text: (j) Prior to the Closing, Parent will use its Commercially Reasonable Efforts to establish for the Galleria Entities a non-ordinary course accumulation of inventory of all Products of the Galleria Business in an amount valued at $40,000,000 in accordance with the Accounting Principles. The Cut-Off Date Working Capital will include Parent’s good faith projection of the amount of such inventory that would be present as of the Closing Date, but in no event will exceed $40,000,000.

Section 1.9 Panama Relocation. The Agreement is hereby amended so as to add the following as a new Section 5.32: a.

5.32 Panama Relocation. Prior to the Business Transfer Time, Parent will use Commercially Reasonable Efforts to relocate each In-Scope Employee located in Panama to a new location to be reasonably determined by Parent. To the extent any costs or expenses are incurred by Parent in connection with the foregoing (including any relocation, severance or termination pay or benefits), the Recapitalization Amount will be increased in an amount equal to such costs or expenses incurred by Parent (and, in respect of any such costs or expenses that have not been determined as of the 12th Business Day prior to the Business Transfer Time (including in respect of costs that have been incurred but not invoiced), the Recapitalization Amount will be adjusted by an amount equal to Parent’s good faith estimate of such undetermined costs). For the avoidance of doubt, the restrictions in Section 5.01(b)(xiv) will not apply to the relocation of In-Scope Employees described in this Section 5.32.

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Section 1.10 Certain Rio Excluded Assets. a.

The Parent Disclosure Letter is hereby amended so as to add the following text as a new Section 5.33 of the Parent Disclosure Letter.

“Section 5.33 Certain Rio Excluded Assets 1. b.

The Assets listed on Attachment 1 to this Section 5.33.”

The Parent Disclosure Letter is hereby amended so as to add Attachment B to this Amendment as a new Attachment 1 to Section 5.33 of the Parent Disclosure Letter.

Section 1.11 Renewal of Certain Trademarks. a.

The Agreement is hereby amended so as to add the following as a new Section 5.34: 5.34 Renewal of Certain Trademarks. Notwithstanding anything to the contrary herein, Parent will use Commercially Reasonable Efforts to renew the registrations of the Trademarks set forth on Attachment C to this Amendment that are due to expire or otherwise require necessary maintenance payments prior to March 2017. Parent will pay all registration fees, costs and expenses incurred in connection with the foregoing; provided, however, that the Recapitalization Amount will be increased by an amount equal to the fees, costs and expenses incurred by Parent or its Affiliates in connection with the foregoing (and, in respect of any such fees, costs or expenses that have not been determined as of the 12th Business Day prior to the Business Transfer Time (including in respect of costs that have been incurred but not invoiced), the Recapitalization Amount will be adjusted by an amount equal to Parent’s good faith estimate of such undetermined costs).

Section 1.12 Brazil, Mexico and Japan Employment Transfers. a.

Clause (i) of Section 6.02(b) of the Agreement is hereby amended so as to add the following text after “pursuant to the transactions contemplated by this Agreement”: “(including the transactions contemplated by Section 6.02(f) below)”.

b.

The Agreement is hereby amended to add a new Section 6.02(f) as follows: “(f) Prior to the Closing, Parent, SplitCo and Acquiror will, or will cause their respective Subsidiaries to, cooperate to effect the transfer of In-Scope Employees in Brazil, Mexico and Japan to employment with SplitCo or one of its Subsidiaries as of the Closing pursuant to employer substitution transfer mechanics under applicable Law in Brazil and Mexico and pursuant to company split transfer mechanics under applicable Law in Japan (collectively, the “Employer Substitution Mechanics”). For the avoidance of doubt, any and all Liabilities that result from or arise out of the Employer Substitution Mechanics will be deemed to be Galleria Liabilities under Section 1.06(a)(iii) and Section 6.04(i) of this Agreement, including Liabilities resulting from or arising out of (i) any failure by Acquiror, SplitCo, or any member of the Galleria Group to provide any terms of employment required to be provided by such entity following the Closing in connection with or as a result of the Employer Substitution Mechanics or under applicable Law, or (ii) any rejection or challenge by any In-Scope Employee, labor organization or other representative of any InScope Employee, or Governmental Authority related to the Employer Substitution Mechanics, including claims with respect to any In-Scope Employee’s terms and conditions of employment with the Galleria Group or termination of employment from the Parent Group.”

c.

Article XI of the Agreement is hereby amended so as to add the following defined term:

“Employer Substitution Mechanics” has the meaning set forth in Section 6.02(f).

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Section 1.13 Maternity and Sick Leave of Absence Employees. a.

The Agreement is hereby amended to add a new Section 6.02(g) as follows: “(g) Notwithstanding anything to the contrary in this Agreement, to the extent required under applicable Law, any Galleria Business Employee who is not actively at work as of the Closing due to a maternity leave of absence or a sick leave of absence (each, a “Maternity or Sick Leave of Absence Employee”) will remain an employee of Parent or its Subsidiaries, and will not transfer employment to Acquiror or any of its Affiliates, until such time as such transfer of employment is permitted under applicable Law. Each Maternity or Sick Leave of Absence Employee will not be considered a Continuing Employee unless and until such Maternity or Sick Leave of Absence Employee transfers to employment with Acquiror or its Affiliates prior to the second anniversary of the Closing or such longer period as required by Law, and Parent may determine not to transfer such Person if Parent determines, in its sole discretion, that doing so would materially increase the likelihood that the Intended TaxFree Treatment would not apply to the transactions contemplated hereby.”

b.

Article XI of the Agreement is hereby amended so as to add the following defined term:

“Maternity or Sick Leave of Absence Employee” has the meaning set forth in Section 6.02(g). Section 1.14 United Kingdom and Ireland Benefits Matters. This Agreement is hereby amended to add a new Section 10.02(k) as follows: “(k) In connection with the determination by Acquiror and SplitCo to provide certain pension benefits in connection with the transition from a defined benefit to a defined contribution pension benefit to eligible employees in the United Kingdom and Ireland following the Closing, the Recapitalization Amount will be decreased by $10 million.” Section 1.15 Amendment to Transition Services Agreement (Exhibit I). Exhibit I to the Agreement is hereby amended by deleting Exhibit I in its entirety and replacing it with Exhibit I to this Amendment. Section 1.16 Certain Assets Located at Cologne and Seaton. Schedule 1.09 to the Agreement is hereby amended by adding a new paragraph (i) as follows: “(i) Galleria Assets. Notwithstanding anything to the contrary in Section 1.09(c) or Section 1.09(d) of this Schedule 1.09, the Excluded Assets will not include any tools (including special and general tools) or fixed assets exclusively related to the Parent’s Dolce & Gabbana business, in each case, to the extent located at the Galleria Facilities in Cologne, Germany or Seaton, United Kingdom.” ARTICLE II MISCELLANEOUS Section 2.1 Effect of Amendment. Except as and to the extent expressly modified by this Amendment, the Agreement, as so amended by this Amendment, will remain in full force and effect in all respects. Each reference to “hereof,” “herein,” “hereby,” and “this Agreement” in the Agreement will from and after the effective date hereof refer to the Agreement as amended by this Amendment. Notwithstanding anything to the contrary in this Amendment, the date of the Agreement, as amended hereby, will in all instances remain as July 8, 2015, and any references in the Agreement to “the date first above written,” “the date of this Agreement,” “the date hereof” and similar references will continue to refer to July 8, 2015, including, without limitation, for purposes of Article II of the Agreement. Section 2.2 Entire Agreement. This Amendment, together with the Agreement and the Ancillary Agreements, including any related annexes, schedules and exhibits, as well as any other agreements and documents referred to herein and therein, will together constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter. Section 2.3 Governing Law; Jurisdiction; Waiver of Jury Trial. Sections 10.04 (a), (b) and (c) (Governing Law; Jurisdiction; Waiver of Jury Trial), in each case, of the Agreement are incorporated into this Amendment by reference as if fully set forth herein, mutatis mutandis.

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Section 2.4 Notices. All notices, requests, permissions, waivers and other communications hereunder will be in writing and sent pursuant to the requirements of Section 10.05 of the Agreement. Section 2.5 No Third-Party Beneficiaries. This Amendment is solely for the benefit of the Parties and does not confer on third parties (including any employees of any member of the Parent Group or the Acquiror Group) any remedy, claim, reimbursement, claim of action or other right in addition to those existing without reference to this Amendment. Section 2.6 Construction. The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Amendment. Section 2.7 Counterparts. This Amendment may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This Amendment, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party will re-execute original forms thereof and deliver them to the requesting Party. [Signature page follows.] 7

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the day and year first written above.

THE PROCTER & GAMBLE COMPANY

By: /s/ Christopher D. Rose Name: Christopher D. Rose Title: Authorized signatory

[Signature Page to Fourth Amendment to Transaction Agreement]

8

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the day and year first above written.

GALLERIA CO.

By: /s/ Matthew C. Loftus Name: Matthew C. Loftus Title: Authorized Signatory

[Signature Page to Fourth Amendment to Transaction Agreement]

9

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the day and year first above written.

COTY INC.

By: /s/ Jules P. Kaufman Name: Jules P. Kaufman Title: Senior Vice President, General Counsel and Secretary

[Signature Page to Fourth Amendment to Transaction Agreement]

10

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the day and year first above written.

GREEN ACQUISITION SUB INC.

By: /s/ Jules P. Kaufman Name: Jules P. Kaufman Title: President

[Signature Page to Fourth Amendment to Transaction Agreement]

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Attachment A Attachment 11-C to Schedule 1.05(a)(i) Please see attached.

Attachment B Lista dos Equipamentos / Equipment List Please see attached.

Attachment C Trademarks To Be Renewed Please see attached.

Exhibit I Please see attached.

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Section 3: EX-2.2 (SIDE LETTER AMEND TO TRANS AGREEMENT AMOUNG P&G, COTY, GALLERIA AND GREEN ACQ) EXHIBIT 2-2

Side Letter Amendment

September 13, 2016

Strictly Confidential Coty Inc. 350 Fifth Avenue New York, New York 10018 Attention: Patrice de Talhouët, Chief Financial Officer Jules P. Kaufman, Senior Vice President, General Counsel and Secretary Re: Long-Term Disability Employees Ladies & Gentlemen: Reference is made to the Transaction Agreement among The Procter & Gamble Company, Galleria Co., Coty Inc. and Green Acquisition Sub Inc. (the “Parties”), dated July 8, 2015 (as amended from time to time, the “Transaction Agreement”). This letter, Exhibit A and Attachment A attached hereto, which together are referred to herein as the “Side Letter,” are intended to confirm the mutual understanding of the Parties with respect to certain employees of Parent who are not actively at work due to long-term disability as of the Closing Date. Each of the Parties agrees as follows: 1. Definitions. Capitalized terms used and not otherwise defined in this Side Letter will have the meanings given to such terms in the Transaction Agreement. 2. Treatment of Certain Long-Term Disability Employees. Notwithstanding any provision of the Transaction Agreement to the contrary, but subject to applicable law, any In-Scope Employee who is not actively at work as of the Closing due to a long-term disability leave of absence and who is listed on Exhibit A attached hereto (each, a “Long-Term Disability Employee”), (i) will remain an employee of Parent or its Subsidiaries, (ii) effective immediately prior to the Closing, will cease to be considered an In-Scope Employee, and (iii) will not become a Continuing Employee. In connection with the foregoing, the Recapitalization Amount will be increased in an amount equal to $15,000,000. 3. Severance. Attachment 1 to Section 6.04(c) of the Parent Disclosure Letter is hereby deleted in its entirety and replaced with a new Attachment 1 as set forth on Attachment A to this Side Letter. 4. Effect of Side Letter. This Side Letter constitutes a valid amendment of the Transaction Agreement as contemplated by Section 10.06 of the Transaction Agreement. Except as expressly modified by this Side Letter, the Transaction Agreement, as so amended by this Side Letter, will remain in full force and effect in all respects. Each reference to “hereof,” “herein,” “hereby” and “this Agreement” in the Transaction Agreement will from and after the effective date hereof refer to the Transaction Agreement as amended by this Side Letter. Notwithstanding anything to the contrary in this Side Letter, the date of the Transaction Agreement, as amended hereby, will in all instances remain as July 8, 2015, and any references in the Transaction Agreement to “the date first above written,” “the date of this Agreement,” “the date hereof” and similar references will continue to refer to July 8, 2015, including, without limitation, for purposes of Article III and Article IV of the Transaction Agreement. 5. Entire Agreement. This Side Letter, together with the Transaction Agreement, the Parent Disclosure Letter, and the Ancillary Agreements, including any related annexes, schedules and exhibits, as well as any other agreements and documents referred to therein, will together constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter. 6. Governing Law; Jurisdiction; Waiver of Jury Trial. Sections 10.04(a), (b) and (c) (Governing Law; Jurisdiction; Waiver of Jury Trial), in each case, of the Transaction Agreement are incorporated into this Side Letter by reference as if fully set forth herein, mutatis mutandis. 7. Notices. All notices, requests, permissions, waivers and other communications hereunder will be in writing and sent pursuant to the requirements of Section 10.05 of the Transaction Agreement.

1

8. No Third-Party Beneficiaries. This Side Letter is solely for the benefit of the Parties and does not confer on third parties (including any employees of any member of the Parent Group or the Acquiror Group) any remedy, claim, reimbursement, claim of action or other right in addition to those existing without reference to this Side Letter. Nothing in this Side Letter is intended to be a guaranty or promise of employment to any person for any specific length of time. 9. Construction. The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Side Letter. 10. Counterparts. This Side Letter may be executed in multiple counterparts (any one of which need not contain the signatures of more than one party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This Side Letter, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party, the other party will re-execute original forms thereof and deliver them to the requesting party.

[SIGNATURE PAGE FOLLOWS]

2

Very truly yours, THE PROCTER & GAMBLE COMPANY

By: /s/ Laura Becker Name: Laura Becker Title: Vice President

cc: Skadden Arps Slate Meagher & Flom LLP Four Times Square New York, New York 10036 Attention: Paul T. Schnell Sean C. Doyle Jones Day 250 Vessey Street New York, New York 10281 Attention: Robert A. Profusek Peter E. Izanec

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Agreed and accepted as of the date first written above: COTY INC.

By: /s/ Jules P. Kaufman Jules P. Kaufman 4

Exhibit A Long-Term Disability Employees [omitted]

5

Attachment A [omitted]

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Section 4: EX-10.1 (COMPANY'S FORM OF SEPARATION AGREEMENT & RELEASE) EXHIBIT 10-1

Company's Form of Separation Agreement & Release

SEPARATION AGREEMENT AND RELEASE

To: «Employee_Name» Date: «Actual_Offer_Date» «Company» (“P&G”) is willing to provide you with certain assistance in connection with your employment separation from the Company. The following describes the terms under which you are separating from employment. Your receipt of the benefits described below is conditioned upon your accepting and abiding by the terms of this Agreement. Last Day of Employment:

Your last day of employment will be «Exit_Date», referred to as your “Last Day of Employment.” Unless otherwise noted below, your pay and benefits will cease as of your Last Day of Employment.

Separation Payment:

As soon as administratively practical after your Last Day of Employment, P&G will provide you with a Separation Payment of «Total_Amount», less legally required withholdings and deductions. In no event will payment be made before expiration of the seven-day revocation period discussed below or later than the March 15th of the year following the year which includes your last day of employment. Amounts you owe to P&G as of your Last Day of Employment, including, but not limited to, wage and/or benefit overpayments and unpaid loans, will also be deducted from the Separation Payment.

STAR Awards:

As of your Last Day of Employment, if you worked at least 28 days (4 calendar weeks) during that fiscal year, you will receive a pro-rated STAR award for that fiscal year. Your STAR award will be pro-rated by dividing the number of calendar days during the fiscal year from July 1 through your Last Day of Employment by 365. Your STAR award will be paid in cash in the September (but no later than September 15th) immediately following the end of the fiscal year in which you terminate.

Equity Awards:

Your separation will be treated as a Special Separation for purposes of any outstanding equity awards granted under the Procter & Gamble 2009 Stock and Incentive Compensation Plan, the Procter & Gamble 2001 Stock and Incentive Compensation Plan, the Procter & Gamble 1992 Stock Plan, or the Gillette Company 2004 Long-Term Incentive Plan and as a result the awards will be retained subject to the original terms and conditions of the awards. Awards granted under the Procter & Gamble 2014 Stock &

«Employee_Name» «Actual_Offer_Date» Page 3 of 12 Incentive Compensation Plan are retained subject to the terms and conditions of the Awards. This agreement does not alter the rights and obligations that you may have under the Procter & Gamble 2014 Stock & Incentive compensation Plan, the Procter & Gamble 2009 Stock and Incentive Compensation Plan, the Procter & Gamble 2001 Stock and Incentive Plan, the Procter & Gamble 1992 Stock Plan, and the Gillette Company 2004 Long-Term Incentive Plan. Current Medical, Dental, and Life Insurance Benefits:

Your Medical (including prescription drug and EAP programs), Dental, and Basic Group Life insurance coverage will continue under the same terms until «Benefits_End_Date». When your extended coverage ends, you may be entitled to continue your Medical and Dental insurance coverage under COBRA. If you are entitled to COBRA continuation coverage, you will receive a notice of your right to elect COBRA.

Retiree Medical and Dental Benefits:

If you were eligible for P&G retiree healthcare coverage on your Last Day of Employment, you will be eligible to enroll in P&G’s retiree medical and dental insurance coverage. You are eligible for P&G retiree healthcare coverage if you satisfy the regular retiree eligibility rules (i.e., you are a Regular Retiree) as of your Last Day of Employment. Under the terms of this Agreement, you also are eligible for P&G retiree healthcare coverage as a Special Retiree by satisfying the Rule of 70 as of your Last Day of Employment. You satisfy the Rule of 70 when your full years of age plus your full years of service equal 70.1 If you are eligible for P&G's retiree healthcare coverage as either a Regular Retiree or a Special Retiree as of your Last Day of Employment, you should contact the Employee Service Center before your extension of coverage ends to request retiree healthcare enrollment information. For details regarding the terms and conditions of your retiree health coverage, please refer to and review the summary plan descriptions, available at PGOne -> Life and Career. Important Note: If you become employed by a direct competitor of P&G (as determined by P&G’s Chief Human Resources Officer) in any capacity, you will not be eligible for coverage under P&G’s retiree healthcare coverage as long as you remain employed by such competitor. If you have questions, please contact the Benefits Service Center at 1-888-627-7472.

1

Special rules apply to Gillette Heritage Employees with regard to retiree medical eligibility and the retiree medical cost sharing under the retiree medical plan. If you are a Gillette Heritage Employee, you will receive a separate handout on your retiree medical eligibility.

«Employee_Name» «Actual_Offer_Date» Page 4 of 12 Retiree Life Benefits:

If you are eligible for retiree life coverage on your Last Day of Employment, your Basic Group Life Insurance will convert to Retiree Group Life Insurance. For details regarding the terms and conditions of your Retiree Group Life Insurance coverage, please refer to and review the summary plan descriptions available at PGOne -> Life and Career.

Outplacement Services:

P&G’s outplacement supplier, Right Management Consultants, will provide services to assist you in managing your transition to a new future, based on your interest. Services include pre-decision counseling, career transition programs, and job development opportunities. Right Management Consultants will also assist you in preparing for your job search, including résumé preparation, cover letters, other written materials and interview and networking training. After you accept this Agreement, you may begin utilizing outplacement services on a limited basis prior to your Last Day of Employment, consistent with the needs of the business and your responsibilities to complete and/or transition your work. Note that you must begin utilizing outplacement services within 45 days of your Last Day of Employment to be eligible for this benefit.

No Consideration Without Executing this Agreement:

You affirm that you understand and agree that you would not receive the separation payment and/or benefits specified in this Agreement without executing this Agreement and fulfilling the promises contained in it. Except as provided in this Agreement or under the terms and conditions of an applicable benefit plan or policy sponsored by P&G, you shall not be due any payments or benefits from P&G in connection with the termination of your employment.

Continued Employment Through Your Last Day of Employment:

You agree to perform your work and responsibilities as an employee in a satisfactory manner up to and including your Last Day of Employment, including compliance with all provisions of this “Separation Agreement and Release.” If P&G determines that you have engaged in serious misconduct during your employment, you understand and agree that P&G may terminate your employment immediately and will not provide, nor will it be obligated to provide, you with the Separation Payment, medical benefits, outplacement and other benefits described above. If you have already received any such pay or benefits, you agree to repay them to P&G upon demand.

«Employee_Name» «Actual_Offer_Date» Page 5 of 12 Nonadmission of Wrongdoing:

You affirm that you understand and agree that neither this Agreement nor the furnishing of the consideration for this Agreement, including the Separation Payment, shall be deemed or construed at any time for any purpose as an admission by P&G of wrongdoing or evidence of any liability or unlawful conduct of any kind.

Release of Claims - Including Age Discrimination and Employment Claims:

In consideration of the Separation Payment and other benefits provided above to which you would not have been entitled under any existing P&G Policy, you release P&G from any and all claims you have against P&G. The term “P&G” includes «Company» and any of its present, former and future owners, parents, affiliates and subsidiaries, and its and their directors, officers, shareholders, employees, agents, servants, representatives, predecessors, successors and assigns and their employee benefit plans and programs and their administrators and fiduciaries. This release applies to claims about which you now know or may later discover, and includes but is not limited to: (1) claims arising under the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq.; (2) claims arising out of or relating in any way to your employment with P&G or the conclusion of that employment; (3) claims arising under any federal, state and local employment discrimination laws, regulations or ordinances or other orders that relate to the employment relationship and/or employee benefits; and (4) any other federal, state or local law, rule, regulation or ordinance, public policy, contract, tort or common law. This release does not apply to claims that may arise after the date you accept this Agreement or that may not be released under applicable law. You are not waiving any rights you may have to: (a) your own vested accrued employee benefits under the P&G health, welfare, or retirement benefit plans as of the Last Day of Employment; (b) benefits and/or the right to seek benefits under applicable workers’ compensation and/or unemployment compensation statutes; (c) pursue claims which by law cannot be waived by signing this Agreement; (d) enforce this Agreement; and/or (e) challenge the validity of this Agreement.

«Employee_Name» «Actual_Offer_Date» Page 6 of 12 You agree that the decision as to what would be your Last Day of Employment was made prior to your accepting and executing this Agreement, and you agree that you are releasing any claim in connection with the separation of your employment. Nothing in this Agreement prohibits or prevents you from filing a charge with or participating, testifying, or assisting in any investigation, hearing, or other proceeding before any federal, state, or local government agency. However, to the maximum extent permitted by law, you agree that if such an administrative claim is made, you shall not be entitled to recover any individual monetary relief or other individual remedies. If any claim is not subject to release, to the extent permitted by law, you agree that you waive any right or ability to be a class or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a claim in which P&G is a party. Confidential, Proprietary, Trade Secret Information & Period of Non-Competition:

You agree that you will not use or share any confidential, proprietary or trade secret information about any aspect of P&G’s business with any non-P&G employee or business entity at any time in the future. You further agree that you will not obtain or have in your possession any confidential, proprietary or trade secret information on or after your last day of employment. Confidential, proprietary or trade secret information includes, but is not limited to, marketing and advertising plans, pricing information, upstream plans, specific areas of research and development, project work, product formulation, processing methods, assignments of individual employees, testing and evaluation procedures, cost figures, construction plans, and special techniques or methods of any kind. Notwithstanding the requirements of confidentiality, U.S. law protects individuals from liability under federal or state trade secret laws for disclosure of trade secrets made by such individual i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; or iii) to the individual’s attorney for use in a lawsuit alleging retaliation for reporting a suspected violation of law, provided that any document containing the trade secret is filed under seal and the individual does not otherwise disclose the trade secret, except pursuant to court order.

«Employee_Name» «Actual_Offer_Date» Page 7 of 12 You further understand and agree that, unless you have prior written consent from P&G, you will not engage in any activity or provide any services for a period of three (3) years following your Last Day of Employment in connection with the manufacture, development, advertising, promotion or sale of any product which is the same as, similar to, or competitive with any products of P&G or its subsidiaries (including both existing products as well as products in development which are known to you, as a consequence of your employment with P&G): 1. With respect to which your work has been directly concerned at any time during the two (2) years preceding your Last Day of Employment; or 2. With respect to which during that period of time you, as a consequence of your job performance and duties, acquired knowledge of trade secrets or other confidential information of P&G. For the purposes of this section, it shall be conclusively presumed that you have knowledge or information to which you were directly exposed through the actual receipt of memos or documents containing such information or through actual attendance at meetings at which such information was discussed or disclosed. The provisions of this section are not in lieu of, but are in addition to, your continuing obligation to not use or disclose P&G’s trade secrets and confidential information known to you until any particular trade secret or confidential information becomes generally known (through no fault of yours). Information regarding products in development, in test market or being marketed or promoted in a discrete geographic region, which information P&G is considering for a broader use, shall not be deemed generally known until such broader use is actually commercially implemented. Also, “generally known” means known throughout the domestic United States industry or, if you have job responsibilities outside of the United States, the appropriate foreign country or countries’ industry. If any restriction in this section is found by any court of competent jurisdiction or arbitrator to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it will be modified and interpreted to extend only over the maximum period of time, range of activities or geographic area so that it may be enforceable. As a participant in the 2009 Stock and Incentive Compensation Plan, the 2001 Stock and Incentive Compensation Plan, or the 1992 Stock Plan, you are also bound by the terms of Article F - Restrictions & Covenants of those plans, which are incorporated herein by reference.

«Employee_Name» «Actual_Offer_Date» Page 8 of 12

Non-Solicitation:

Acknowledgements and Affirmations:

If you are a participant in the 2014 Stock & Incentive Compensation Plan, you are also bound by the terms of Article 6 - Restrictions and Covenants of this plan which are incorporated herein by reference. You acknowledge, as a participant in the Procter & Gamble 2014 Stock & Incentive Compensation Plan, the Procter & Gamble 2009 Stock and Incentive Compensation Plan, the Procter & Gamble 2001 Stock and Incentive Plan, the Procter & Gamble 1992 Stock Plan, and/or the Gillette Company 2004 Long-Term Incentive Plan that you are bound to comply with the Plans’ non-solicitation obligations. Specifically, you agree that you will not, at any time following your Employment Separation Date, attempt to directly or indirectly induce any employee of P&G or its affiliates or subsidiaries to be employed or perform services elsewhere or attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier or partner of P&G or its affiliates or subsidiaries. You affirm that you have not filed, caused to be filed, or presently are a party to any claim against P&G. You affirm that you have been paid and/or have received all compensation, wages, bonuses, commissions, and/or benefits which are due and payable as of the date you sign this Agreement. To the extent that you are required to report hours worked, you affirm that you have reported all hours worked as of the date you sign this Agreement. You affirm that you have been granted any leave to which you were entitled under the Family and Medical Leave Act or related state or local leave or disability accommodation laws. You further affirm that you have no known workplace injuries or occupational diseases that have not been reported.

Assignment of Intellectual Property:

You will promptly and fully disclose, transfer and assign to P&G all inventions and any other intellectual property (collectively “Intellectual Property”) made or conceived by you during your employment with P&G. You agree to fully cooperate in executing any papers required for establishing or protecting the Intellectual Property and for establishing P&G’s ownership, even if such cooperation is necessary after your Last Day of Employment.

«Employee_Name» «Actual_Offer_Date» Page 9 of 12 Return of P&G Property:

Ethics Compliance:

Agreement to Arbitrate Disputes:

You agree that on or before your Last Day of Employment, you will return to P&G in good condition all of its equipment, materials and information that were in your possession, custody or control (including, but not limited to, computers, files, documents, credit cards, keys and identification badges). You further agree that you will provide your manager with all passwords to P&G electronic communication and data systems before your Last Day of Employment. You further agree that on or before your Last Day of Employment, you will return or if directed to do so by your immediate manager, delete (i.e., destroy all copies of) any and all P&G confidential, proprietary or trade secret information you have maintained in your possession, custody, or control in paper, electronic and/or digital formats, including but not limited to, any such confidential, proprietary, or trade secret information (e.g., files, documents, etc.) that you may have electronically or digitally processed or stored on P&G-issued or on personally-owned or maintained digital devices and/or service accounts. Such digital devices and/or service accounts may include, but are not limited to desktop and laptop computers, notebooks, tablets, iPads, mobile phones, smartphones, personal digital assistants (PDAs), USB and flash drives, external hard drives, CDs, DVDs, and/or external file processing or storage provided by cloud service providers such as box.net, dropbox, Google docs, etc. You agree that you provided P&G all information known to you regarding any violations of the Procter & Gamble Worldwide Business Conduct Manual and/or any other violations of P&G policy or the law. Resolving any future differences we may have in the courts can take a long time and be expensive. You and P&G therefore agree that the only remedy for all disputes that are not released by this Agreement or that arise out of your employment with or separation from P&G, or any aspect of this Agreement, will be to submit any such disputes (with the exception noted at the end of this section) to final and binding arbitration in accordance with the National Rules for Resolution of Employment Disputes of the American Arbitration Association then in effect.

«Employee_Name» «Actual_Offer_Date» Page 10 of 12 You and P&G agree that the aggrieved party must send written notice of any claim to the other party by certified mail, return receipt requested. Written notice for P&G will be sent to: Secretary, One Procter & Gamble Plaza, Cincinnati, OH 45202, and to you at the most current address shown for you in P&G’s records. The arbitrator will apply Ohio law. At your written request, P&G will reimburse you for all fees and costs charged by the American Arbitration Association and its arbitrator to the extent they exceed the applicable fees and costs that would have been charged by a court of competent jurisdiction had your claim been filed in court. There is one exception to this section. P&G may seek injunctive relief in any court of competent jurisdiction if it has reason to believe that you have violated or are about to violate (1) the terms of the “Confidential, Proprietary, Trade Secret Information & Period of Non-Competition” section above, or (2) if you are a participant in the 2009 Stock and Incentive Compensation Plan, the 2001 Stock and Incentive Compensation Plan, or the 1992 Stock Plan, the terms of Article F - Restrictions & Covenants of those plans or (3) if you are a participant in the 2014 Stock and Incentive Compensation Plan, the terms of Article 6 - Restrictions & Covenants of those plans. Severability:

If any court of competent jurisdiction or arbitrator should later find that any portion of this Agreement is invalid, that invalidity will not affect the enforceability of any other portion of this Agreement.

Employment References:

You understand that P&G’s historical policy is to not provide employment references to prospective employers. However, P&G is willing to waive that policy in your case on the following basis: You authorize your manager or human resources representative to provide an employment reference upon written or verbal request. In return, you release any claim against P&G and will not bring a lawsuit in court against P&G based upon that employment reference (or lack thereof). You agree that you will refer all reference inquiries to your manager or human resources representative only. You further understand that all disputes regarding employment references or the lack thereof must be resolved through the arbitration process described above.

«Employee_Name» «Actual_Offer_Date» Page 11 of 12 No Reliance:

This Agreement sets forth the entire agreement between you and P&G and fully supersedes any prior agreements or understanding between the parties except that if you are a participant in the 2009 Stock and Incentive Compensation Plan, the 2001 Stock and Incentive Compensation Plan, or the 1992 Stock Plan, the terms of Article F - Restrictions & Covenants of those plans remain in full force and effect and are incorporated herein by reference and if you are a participant in the 2014 Stock Plan, the terms of Article 6 Restrictions & Covenants of the plan remain in full force and are in effect and are incorporated herein by reference. In deciding to accept this Agreement, you agree that you have not relied upon any statements or promises by P&G, its managers, agents or employees, other than those set forth in this Agreement. No other promises or agreements concerning the matters described in this Agreement shall be binding unless in a subsequent document signed by these parties.

Your Attorney:

You acknowledge that you have been and hereby are advised to consult with legal counsel before accepting this Agreement and have either done so or have voluntarily declined to do so.

Timing for Acceptance or Revocation:

You have forty-five (45) calendar days in which to consider this Agreement in which you waive important rights, including those under the Age Discrimination in Employment Act of 1967. If you choose to sign this Agreement, please do so by indicating your acceptance of this Agreement with your electronic signature in P&G’s electronic system. We advise you to consult with an attorney of your choosing prior to signing this Agreement. Further, you may within seven (7) calendar days following the date you sign this Agreement, cancel and terminate it by giving written notice of your intention to revoke the Agreement to your immediate manager, and by returning to P&G any remuneration or benefits that have been advanced to you in anticipation of your not revoking your agreement and to which you are not entitled. If notice of your revocation is mailed, it must be postmarked within seven (7) calendar days after you sign this Agreement. You agree that any modifications, material or otherwise, made to this Agreement, do not restart or affect in any manner the original up to forty-five (45) calendar day consideration period.

«Employee_Name» «Actual_Offer_Date» Page 12 of 12

The benefits described in this Agreement and pursuant to the summary plan description for the Procter & Gamble Basic Separation Program for U.S. Employees, are the special benefits you will receive by signing this Agreement. To the extent this Agreement describes benefits under other benefit plans and policies sponsored by P&G, these special benefits are also described in the summary plan descriptions for those plans. As such, nothing in this Agreement amends or changes the terms of any P&Gsponsored employee benefit plan or policy.

After your Last Day of Employment, you will no longer be an active P&G employee, which may affect your coverage under those plans and policies. For example, plans may require that you enroll in Medicare to be eligible for coverage. For more information on how not being an active P&G employee may affect your coverage, please refer to and review the summary plan descriptions for each plan, available at PGOne -> Life and Career.

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Section 5: EX-10.2 (THE P&G 2014 STOCK AND INCENTIVE COMPENSATION PLAN-ADD TERMS & CONDITIONS) EXHIBIT 10-2

The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional Terms and Conditions

RSU Form BOD

FORM BOD AWARD AGREEMENT



Subject: Award of Restricted Stock Units This is to advise you that The Procter & Gamble Company (“Company”) hereby grants to you Restricted Stock Units (“RSUs”) of Procter & Gamble Common Stock as follows: Number of Restricted Stock Units:

[# SHARES]

Grant Date:

[GRANT_DATE]

Vest Date:

[DATE (Day Before Next Annual Meeting Following Grant)]

Original Settlement Date:

One Year Following Termination of Directorship

This Award is granted in accordance with and subject to the terms of The Procter & Gamble 2014 Stock and Incentive Compensation Plan (including any applicable sub-plan) (the “Plan”), the Regulations of the Compensation and Leadership Development Committee of the Board of Directors (“Committee”), and this Award Agreement, including Attachment A-BOD. Any capitalized terms used in this Agreement that are not otherwise defined herein are defined in the Plan. Voting Rights and Dividend Equivalents As a holder of RSUs, during the period from the Grant Date until the date the RSUs are paid, each time a cash dividend or other cash distribution is paid with respect to Common Stock, you will receive additional RSUs (“Dividend Equivalent RSUs”). The number of Dividend Equivalent RSUs will be determined as follows: multiply the number of RSUs and Dividend Equivalent RSUs currently held by the per share amount of the cash dividend or other cash distribution on Common Stock, then divide the result by the price of the Common Stock on the date of the dividend or distribution. These Dividend Equivalent RSUs will be subject to the same terms and conditions as the original RSUs that gave rise to them, including vesting and settlement terms, except that if there is a fractional number of Dividend Equivalent RSUs on the date the RSUs are paid, the Dividend Equivalent RSUs will be rounded up to the nearest whole number of RSUs. This Award represents an unfunded, unsecured right to receive payment in the future, and does not entitle you to voting rights or dividend rights as a shareholder. Vesting and Payment If you remain a Non-Employee Director through the Vest Date, the Award will be paid on the Original Settlement Date or Agreed Settlement Date, whichever is applicable, except in the case of death or Disability. In the case of death or Disability, the Award will be fully vested and payment will be made by the later of the end of the calendar year or two and a half months following the date of death or Disability, as applicable. Notwithstanding the foregoing, in the event of a Change in Control, payment shall be made pursuant to the terms provided in the Plan. Payment under this Award will be made in the form of Common Stock or such other form of payment as determined by the Committee pursuant to the Plan, subject to applicable tax withholding. Deferral Election At any time prior to Termination of Directorship, you and the Company may agree to postpone the Original Settlement Date to such later date (“Agreed Settlement Date”) as may be elected by you, which date shall be at least five years later than the Original Settlement Date and in accordance with Internal Revenue Code Section 409A. This Award Agreement including Attachment A-BOD, the Plan and Regulations of the Committee together constitute an agreement between the Company and you in accordance with the terms thereof and hereof, and no other understanding and/or agreements that have been entered by you with the Company regarding this specific Award. Any legal action related to this Award may be brought in any federal or state court located in Hamilton County, Ohio, USA, and you hereby agree to accept the jurisdiction of these courts and consent to service of process from said courts solely for legal actions related to this Award.

THE PROCTER & GAMBLE COMPANY Mark Biegger Chief Human Resources Officer

10-14-2014

RSU Form BOD Attachment A-BOD Please note that when the issue or transfer of the Common Stock covered by this Award may, in the opinion of the Company, conflict or be inconsistent with any applicable law or regulation of any governmental agency, the Company reserves the right to refuse to issue or transfer said Common Stock and that any outstanding Awards may be suspended or terminated and net proceeds may be recovered by the Company if you fail to comply with the terms and conditions governing this Award. Nature of the Award By completing this form and accepting the Award evidenced hereby, I acknowledge that: i) the Plan is established voluntarily by The Procter & Gamble Company (“P&G”), it is discretionary in nature and it may be amended, suspended or terminated at any time; ii) Awards under the Plan are voluntary and occasional and this Award does not create any contractual or other right to receive future Awards, or benefits in lieu of an Award, even if Awards have been granted repeatedly in the past; iii) all decisions with respect to future Awards, if any, will be at the sole discretion of P&G; iv) my participation in the Plan is voluntary; v) this Award is an extraordinary item and not part of normal or expected compensation for any purposes including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; vi) the Award will not be interpreted to form an employment relationship with P&G; and furthermore, the Award will not be interpreted to form an employment contract with P&G; vii) the future value of the shares purchased under the Plan is unknown and cannot be predicted with certainty, may increase or decrease in value and potentially have no value; viii) my participation in the Plan shall not interfere with the ability of P&G to terminate my directorship at any time, with or without cause; ix) and no claim or entitlement to compensation or damages arises from the termination of the Award or the diminution in value of the Award or shares purchased and I irrevocably release P&G from any such claim that may arise. Data Privacy I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described in this document by and among, as applicable, The Procter & Gamble Company and its subsidiaries and affiliates (“P&G”) for the exclusive purpose of implementing, administering and managing my participation in the Plan. I understand that P&G holds certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, , any shares of stock or directorships held in P&G, details of all Awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the purpose of implementing, administering and managing the Plan (“Data”). I understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in my country or elsewhere (including countries outside the European Economic Area), and that the recipient’s country may have different data privacy laws and protections than my country. I understand that I may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. I authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing my participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom I may elect to deposit any shares of stock acquired upon exercise or settlement of the Award. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. I understand, however, that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative. Responsibility for Taxes Regardless of any action P&G takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“TaxRelated Items”), I acknowledge that the ultimate liability for all Tax-Related Items is and remains my responsibility and that P&G (1) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Award, including the issuance, vesting or exercise, settlement, the subsequent sale of shares acquired, the receipt of any dividends or dividend equivalents or the potential impact of current or future tax legislation in any jurisdiction; and (2) does not commit to structure the terms of the Award or any aspect of the Award to reduce or eliminate my liability for Tax-Related Items. Prior to exercise or settlement of an Award, I shall pay or make adequate arrangements satisfactory to P&G to satisfy all withholding and payment on account obligations of P&G. In this regard, I authorize P&G to withhold all applicable Tax-Related Items from my wages or other cash compensation paid to me by P&G or from proceeds of the sale of the shares. Alternatively, or in addition, if permissible under local law, P&G may (1) sell or arrange for the sale of shares that I acquire to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in shares, provided that P&G only withholds the amount of shares necessary to satisfy the minimum withholding amount. Finally, I shall pay to P&G any amount of Tax-Related Items that P&G may be required to withhold as a result of my participation in the Plan or my purchase of shares that cannot be satisfied by the means previously described. P&G may refuse to honor the exercise and refuse to deliver the shares if I fail to comply with my obligations in connection with the Tax-Related Items as described in this section.

10-14-2014

RSU Form RTN2

FORM RTN2 AWARD AGREEMENT [FIRST NAME] [MIDDLE NAME] [LAST NAME] Subject: RESTRICTED STOCK UNIT SERIES RTN2 In recognition of your contributions to the future success of the business, The Procter & Gamble Company (“Company”) hereby grants to you Restricted Stock Units (“RSUs”) of Procter & Gamble Common Stock as follows: Grant Date:

[GRANT DATE]

Stock Price on Grant Date:

[GRANT PRICE]

Number of Restricted Stock Units:

[RSU SHARES 1]

Vest Date:

[VEST DATE 1]

Settlement Date:

[SETTLEMENT DATE 1]

Number of Restricted Stock Units:

[RSU SHARES 2]

Vest Date:

[VEST DATE 2]

Settlement Date:

[SETTLEMENT DATE 2]

Total Number of Restricted Stock Units:

[RSU SHARES]

This Award is granted in accordance with and subject to the terms of The Procter & Gamble 2014 Stock and Incentive Compensation Plan (including any applicable sub-plan) (the “Plan”), the Regulations of the Compensation and Leadership Development Committee of the Board of Directors (“Committee”), this Award Agreement including Attachments, and the Settlement Instructions in place as may be revised from time to time. Any capitalized terms used in this Agreement that are not otherwise defined herein are defined in the Plan. You may access the Plan by activating this hyperlink: The Procter & Gamble 2014 Stock and Incentive Compensation Plan and the Regulations and Sub Plans by activating this hyperlink: Regulations of the Committee. If you have difficulty accessing the materials online, please send an email to [email protected] for assistance. Voting Rights and Dividend Equivalents As a holder of RSUs, during the period from the Grant Date until the date the RSUs are paid, each time a cash dividend or other cash distribution is paid with respect to Common Stock, you will receive additional RSUs (“Dividend Equivalent RSUs”). The number of Dividend Equivalent RSUs will be determined as follows: multiply the number of RSUs and Dividend Equivalent RSUs currently held by the per share amount of the cash dividend or other cash distribution on Common Stock, then divide the result by the price of the Common Stock on the date of the dividend or distribution. These Dividend Equivalent RSUs will be subject to the same terms and conditions as the original RSUs that gave rise to them, including vesting and settlement terms, except that if there is a fractional number of Dividend Equivalent RSUs on the date the RSUs are paid, the Dividend Equivalent RSUs will be rounded up to the nearest whole number of RSUs. This Award represents an unfunded, unsecured right to receive payment in the future, and does not entitle you to voting rights or dividend rights as a shareholder. Payment and Vesting If you remain employed through the Vest Dates, the Award will be paid on the Settlement Date(s) according to the vesting schedule, except in the case of death, as described below. If your Termination of Employment occurs for any reason before a Vest Date except for the reasons listed below, the Award will be forfeited. For the purposes of this Award, Termination of Employment will be effective as of the date that you are no longer actively employed and will not be extended by any notice period required under local law. 1.

Termination on Account of Death or Disability. In the case of death or disability, the Award will be fully vested and payment will be made by the later of the end of the calendar year or two and a half months following the date of death or disability.

2.

Termination without Cause Pursuant to a Written Separation Agreement. In the event of your Termination of Employment from the Company or a Subsidiary without Cause, your Award is forfeited unless the Chief Human Resources Officer authorizes the retention of the Award and you have executed a written separation agreement with the Company that provides for retention of the Award. If the Award is retained pursuant to CHRO authorization, the Award will be delivered on the Settlement Date(s) as long as you remain in compliance with the terms of the Plan, the Regulations, and your separation agreement.

Notwithstanding the foregoing, in the event of a Change in Control, payment shall be made pursuant to the terms provided in the Plan. Payment under this Award will be made in the form of Common Stock or such other form of payment as determined by the Committee pursuant to the Plan, subject to applicable tax withholding.

RTN2 07-01-2016

RSU Form RTN2 This Award Agreement including Attachment A, the Plan and Regulations of the Committee together constitute an agreement between the Company and you in accordance with the terms thereof and hereof, and no other understandings and/or agreements that have been entered by you with the Company regarding this specific Award. Any legal action related to this Award, including Article 6 of the Plan, may be brought in any federal or state court located in Hamilton County, Ohio, USA, and you hereby agree to accept the jurisdiction of these courts and consent to service of process from said courts solely for legal actions related to this Award.

THE PROCTER & GAMBLE COMPANY Mark Biegger Chief Human Resources Officer

RTN2 07-01-2016

RSU Form RTN2 Attachment A Please note that when the issue or transfer of the Common Stock covered by this Award may, in the opinion of the Company, conflict or be inconsistent with any applicable law or regulation of any governmental agency, the Company reserves the right to refuse to issue or transfer said Common Stock and that any outstanding Awards may be suspended or terminated and net proceeds may be recovered by the Company if you fail to comply with the terms and conditions governing this Award. Nature of the Award By completing this form and accepting the Award evidenced hereby, I acknowledge that: i) the Plan is established voluntarily by The Procter & Gamble Company (“P&G”), it is discretionary in nature and it may be amended, suspended or terminated at any time; ii) Awards under the Plan are voluntary and occasional and this Award does not create any contractual or other right to receive future Awards, or benefits in lieu of an Award, even if Awards have been granted repeatedly in the past; iii) all decisions with respect to future Awards, if any, will be at the sole discretion of P&G; iv) my participation in the Plan is voluntary; v) this Award is an extraordinary item and not part of normal or expected compensation or salary for any purposes including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; vi) in the event that my employer is not P&G, the Award will not be interpreted to form an employment relationship with P&G; and furthermore, the Award will not be interpreted to form an employment contract with my employer (“Employer”); vii) the future value of the shares purchased under the Plan is unknown and cannot be predicted with certainty, may increase or decrease in value and potentially have no value; viii) my participation in the Plan shall not create a right to further employment with my employer and shall not interfere with the ability of my employer to terminate my employment relationship at any time, with or without cause; ix) and no claim or entitlement to compensation or damages arises from the termination of the Award or the diminution in value of the Award or shares purchased and I irrevocably release P&G and my employer from any such claim that may arise. Data Privacy I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described in this document by and among, as applicable, my Employer and The Procter & Gamble Company and its subsidiaries and affiliates (“P&G”) for the exclusive purpose of implementing, administering and managing my participation in the Plan. I understand that P&G and my Employer hold certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in P&G, details of all Awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the purpose of implementing, administering and managing the Plan (“Data”). I understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in my country or elsewhere (including countries outside the European Economic Area), and that the recipient’s country may have different data privacy laws and protections than my country. I understand that I may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. I authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing my participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom I may elect to deposit any shares of stock acquired upon exercise or settlement of the Award. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. I understand, however, that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative. Responsibility for Taxes Regardless of any action P&G or my Employer takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), I acknowledge that the ultimate liability for all Tax-Related Items is and remains my responsibility and that P&G and/or my Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Award, including the issuance, vesting or exercise, settlement, the subsequent sale of shares acquired, the receipt of any dividends or dividend equivalents or the potential impact of current or future tax legislation in any jurisdiction; and (2) do not commit to structure the terms of the Award or any aspect of the Award to reduce or eliminate my liability for Tax-Related Items. Prior to exercise or settlement of an Award, I shall pay or make adequate arrangements satisfactory to P&G and/or my Employer to satisfy all withholding and payment on account obligations of P&G and/or my employer. In this regard, I authorize P&G and/or my Employer to withhold all applicable Tax-Related Items from my wages or other cash compensation paid to me by P&G and/or my Employer or from proceeds of the sale of the shares. Alternatively, or in addition, if permissible under local law, P&G may (1) sell or arrange for the sale of shares that I acquire to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in shares, provided that P&G only withholds the amount of shares necessary to satisfy the minimum withholding amount. Finally, I shall pay to P&G or my Employer any amount of Tax-Related Items that P&G or my Employer may be required to withhold as a result of my participation in the Plan or my purchase of shares that cannot be satisfied by the means previously described. P&G may refuse to honor the exercise and refuse to deliver the shares if I fail to comply with my obligations in connection with the Tax-Related Items as described in this section.

RTN2 07-01-2016 (Back To Top)

Section 6: EX-12.0 (COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES)

EXHIBIT 12 THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Three Months Ended September 30

Years Ended June 30 2016

Amounts in millions, except ratio amounts

EARNINGS, AS DEFINED Earnings from operations before income taxes after eliminating undistributed earnings of equity method investees $ Fixed charges (excluding capitalized interest)

2015

2014

2013

2012

2016

2015

13,356 778

$

11,009 842

$

13,492 928

$

13,499 900

$

11,970 1,000

$

3,715 181

$

3,632 195

TOTAL EARNINGS, AS DEFINED

$

14,134

$

11,851

$

14,420

$

14,399

$

12,970

$

3,896

$

3,827

FIXED CHARGES, AS DEFINED Interest expense (including capitalized interest)

$

634 144

$

693 166

$

789 174

$

755 171

$

844 176

$

145 36

$

156 41

$

778

$

859

$

963

$

926

$

1,020

$

181

$

197

1/3 of rental expense TOTAL FIXED CHARGES, AS DEFINED RATIO OF EARNINGS TO FIXED CHARGES

18.2x

13.8x

15.0x

15.5x

12.7x

21.5x

19.4x

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Section 7: EX-31.1 (RULE 13A-14(A)/15D-14(A) CERTIFICATION-CHIEF EXECUTIVE OFFICER)

EXHIBIT 31.1 Rule 13a-14(a)/15d-14(a) Certifications I, David S. Taylor, certify that: (1) I have reviewed this quarterly report on Form 10-Q of The Procter & Gamble Company; (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; (4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d-15(f)) for the registrant and have: a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ DAVID S. TAYLOR (David S. Taylor) President and Chief Executive Officer

October 25, 2016 Date

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Section 8: EX-31.2 (RULE 13A-14(A)/15D-14(A) CERTIFICATION-CHIEF FINANCIAL OFFICER)

EXHIBIT 31.2 Rule 13a-14(a)/15d-14(a) Certifications I, Jon R. Moeller, certify that: (1) I have reviewed this quarterly report on Form 10-Q of The Procter & Gamble Company; (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; (4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d-15(f)) for the registrant and have: a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ JON R. MOELLER (Jon R. Moeller) Chief Financial Officer October 25, 2016 Date

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Section 9: EX-32.1 (SECTION 1350 CERTIFICATIONS-CHIEF EXECUTIVE OFFICER)

EXHIBIT 32.1 Section 1350 Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of The Procter & Gamble Company (the “Company”) certifies to his knowledge that: (1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in that Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company.

/s/ DAVID S. TAYLOR (David S. Taylor) President and Chief Executive Officer

October 25, 2016 Date A signed original of this written statement required by Section 906 has been provided to The Procter & Gamble Company and will be retained by The Procter & Gamble Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Section 10: EX-32.2 (SECTION 1350 CERTIFICATIONS-CHIEF FINANCIAL OFFICER)

EXHIBIT 32.2 Section 1350 Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of The Procter & Gamble Company (the “Company”) certifies to his knowledge that: (1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in that Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company.

/s/ JON R. MOELLER (Jon R. Moeller) Chief Financial Officer October 25, 2016 Date A signed original of this written statement required by Section 906 has been provided to The Procter & Gamble Company and will be retained by The Procter & Gamble Company and furnished to the Securities and Exchange Commission or its staff upon request.

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