What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-08-05 compared with 2023-08-04 · 164 added, 135 removed, 1116 unchanged (21% of the section changed)

44 unchanged sentences

The Company estimates fair value using the income method, which is based on the present value of estimated future cash flows attributable to the respective asset.

This requires management to make significant estimates and assumptions related to forecasts of future net sales and earnings, including growth rates beyond a 10-year time period, royalty rates, and discount rate.

Changes in the assumptions could have a significant impact on either the fair value, the amount of any impairment charge, or both.

The Company performed their annual impairment assessment of the Gillette Brand as of December 31, 2022.

Because the estimated fair value exceeds the carrying value, no impairment was recorded.

The Company performed their annual impairment assessment of the Gillette Brand as of October 1, 2023.

During the fiscal year ended June 30, 2024, the Company determined that the fair value of the Gillette indefinite-lived intangible asset was less than its carrying amount.

As a result, the Company recorded an impairment charge of $1.3 billion ($1.0 billion after tax) to reduce the carrying amount to be equivalent to the estimated fair value as of December 31, 2023.

As of June 30, 2024, the carrying value of the Gillette Brand was $12.8 billion.

We identified the Company’s impairment evaluation of the Gillette Brand as a critical audit matter because of the significant judgments made by management to estimate the fair value of the indefinite-lived intangible asset.

A high degree of auditor judgment and an increased extent of effort was required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts of future net sales and earnings as well as the selection of royalty rates and discount rate, including the need to involve our fair value specialists.

A high degree of auditor judgment and an increased extent of effort was required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts of future net sales and earnings as well as the selection of royalty rate and discount rate, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasts of future net sales and earnings and the selection of the royalty rates and discount rate for the Gillette Brand included the following, among others:

• We tested the effectiveness of controls over the Gillette Brand, including those over the determination of fair value, such as controls related to management’s development of forecasts of future net sales and earnings, and the selection of royalty rates and discount rate.

• We evaluated management’s ability to accurately forecast net sales and earnings by comparing actual results to management’s historical forecasts.

Our audit procedures related to forecasts of future net sales and earnings and the selection of the royalty rate and discount rate for the Gillette Brand included the following, among others:

34 The Procter & Gamble Company

• We evaluated management’s ability to accurately forecast net sales and earnings by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecast of net sales and earnings by comparing the forecasts to:

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• Forecasted information included in analyst and industry reports for the Company and certain of its peer companies.

• With the assistance of our fair value specialists, we evaluated the net sales and earnings growth rates, royalty rates, and discount rate by:

• Testing the source information underlying the determination of net sales and earnings growth rates, royalty rates, and discount rate and the mathematical accuracy of the calculations.

• With the assistance of our fair value specialists, we evaluated the net sales and earnings growth rates, royalty rate, and discount rate by:

• Testing the source information underlying the determination of net sales and earnings growth rates, royalty rate, and discount rate and the mathematical accuracy of the calculations.

• Developing a range of independent estimates for the discount rate and comparing the discount rate selected by management to that range.

36 unchanged sentences

Selling, general and administrative expense 23,305 21,112 20,217

Indefinite-lived intangible asset impairment charge 1,341 — —

OPERATING INCOME 18,545 18,134 17,813

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(net of tax (benefit)/expense of $( 1 ), $( 2 ) and $ 1 , respectively)

( 3 ) ( 7 ) 5

Unrealized gains on defined benefit postretirement plans

(net of tax expense of $ 230 , $ 9 and $ 1,022 , respectively)

40 2,992 1,386

TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX 317 ( 38 ) 1,547

99 unchanged sentences

Depreciation and amortization 2,896 2,714 2,807

Loss on early extinguishment of debt — — 512

Share-based compensation expense 562 545 528

1 unchanged sentence

Loss/(gain) on sale of assets ( 215 ) ( 40 ) ( 85 )

Indefinite-lived intangible asset impairment charge 1,341 — —

Change in accounts receivable ( 766 ) ( 307 ) ( 694 )

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Reductions in long-term debt ( 2,335 ) ( 1,878 ) ( 2,343 )

( 1,878 ) ( 2,343 ) ( 4,987 )

Treasury stock purchases ( 5,006 ) ( 7,353 ) ( 10,003 )

7 unchanged sentences

Cash payments for income taxes 4,363 4,278 3,818

(1) Includes early extinguishment of debt costs of $ 512 in 2021.

See accompanying Notes to Consolidated Financial Statements.

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The Procter & Gamble Company's (the "Company," "Procter & Gamble," "we" or "us") business is focused on providing branded consumer packaged goods of superior quality and value.

Our products are sold in approximately 180 countries and territories primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels.

Our products are sold in about 180 countries and territories primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels.

We also sell direct to consumers.

We have on-the-ground operations in approximately 70 countries.

We have on-the-ground operations in about 70 countries.

Basis of Presentation

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Intercompany transactions are eliminated.

Because of a lack of control over Venezuelan subsidiaries caused by a number of currency and other operating controls and restrictions, our Venezuelan subsidiaries are not consolidated for any year presented.

We account for those subsidiaries at cost, less impairments, plus or minus observable price changes.

Beginning in fiscal year 2022, the Company began to present increases and reductions in short-term debt with maturities of more than three months separately within the Consolidated Statements of Cash Flows.

The presentation for the fiscal year ended June 30, 2021, has been revised to align with the current period presentation.

This change had no impact on total financing activities, and we have concluded the change is not material.

Use of Estimates

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Selling, general and administrative expense (SG&A) is primarily comprised of marketing expenses, selling expenses, research and development costs, administrative and other indirect overhead costs, depreciation and amortization expense on non-manufacturing assets and other miscellaneous operating items.

Research and development costs are charged to expense as incurred and were $ 2.0 billion in 2023 and 2022 and $ 1.9 billion in 2021.

Advertising costs, charged to expense as incurred, include television, print, radio, digital and in-store advertising expenses and were $ 8.0 billion in 2023, $ 7.9 billion in 2022 and

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

40 The Procter & Gamble Company

$ 8.2 billion in 2021.

Research and development costs are charged to expense as incurred and were $ 2.0 billion in 2024, 2023 and 2022.

Advertising costs, charged to expense as incurred, include television, print, radio, digital and in-store advertising expenses and were $ 9.6 billion in 2024, $ 8.0 billion in 2023 and $ 7.9 billion in 2022.

Non-advertising related components of the Company's total marketing spending reported in SG&A include costs associated with consumer promotions, product sampling and sales aids.

Other Non-Operating Income, Net

Other non-operating income, net primarily includes divestiture gains, net non-service impacts related to postretirement benefit plans, investment income and other non-operating items.

Other non-operating income, net primarily includes divestiture gains, net non-service impacts related to postretirement benefit plans, investment income, accumulated foreign currency translation losses and other non-operating items.

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

The Procter & Gamble Company 41

Currency Translation

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For additional details on goodwill and intangible assets see Note 4.

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

The Procter & Gamble Company 41

Fair Values of Financial Instruments

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The fair values of long-term debt and financial instruments are disclosed in Note 9.

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

42 The Procter & Gamble Company

New Accounting Pronouncements and Policies

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations".

This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services.

These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

We will adopt the guidance effective July 1, 2023.

Additional disclosures will be included in the Notes to the Consolidated Financial Statements.

No other new accounting pronouncements issued or effective during the fiscal year or in future years had, or are expected to have, a material impact on our Consolidated Financial Statements.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-07, “Segment Reporting:

Improvements to Reportable Segment Disclosures.” This guidance requires disclosure of incremental segment information on an annual and interim basis.

This amendment is effective for our fiscal year ending June 30, 2025, and our interim periods within the fiscal year ending June 30, 2026.

We are currently assessing the impact of this guidance on our disclosures.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes:

Improvements to Income Tax Disclosures.” This guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of income taxes paid by jurisdiction.

This amendment is effective for our fiscal year ending June 30, 2026.

We are currently assessing the impact of this guidance on our disclosures.

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.

SEGMENT INFORMATION

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Baby Care (Baby Wipes, Taped Diapers and Pants);

Feminine Care (Adult Incontinence, Feminine Care);

Feminine Care (Adult Incontinence, Menstrual Care);

Family Care (Paper Towels, Tissues, Toilet Paper).

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Baby Care 9 % 10 % 10 %

Skin and Personal Care 9 % 9 % 10 %

Hair Care 9 % 9 % 9 %

Family Care 9 % 8 % 9 %

Hair Care 9 % 9 % 9 %

Skin and Personal Care 9 % 9 % 9 %

Oral Care 8 % 8 % 8 %

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This transition included the integration of the management team, strategic decision-making, innovation plans, financial targets, budgets and internal management reporting.

For the fiscal years ended June 30, 2022 and 2021, Appliances was presented in Other.

For the fiscal year ended June 30, 2022, Appliances was presented in Other.

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

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Our largest customer, Walmart Inc.

and its affiliates, accounted for consolidated net sales of approximately 15 % in 2023, 2022 and 2021.

and its affiliates, accounted for consolidated net sales of approximately 16 % in 2024 and 15 % in 2023 and 2022.

No other customer represents more than 10% of our consolidated net sales.

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PROPERTY, PLANT AND EQUIPMENT

Buildings $ 8,277 $ 8,087

Machinery and equipment $ 37,507 $ 36,521

Buildings 8,534 8,277

Construction in progress 3,126 2,980

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ACCRUED AND OTHER LIABILITIES - CURRENT

Marketing and promotion $ 3,894 $ 3,878

Compensation expenses 2,030 1,797

Accrued marketing and promotion $ 4,172 $ 3,894

Accrued compensation 2,161 2,030

Taxes payable 1,042 828

Derivative liabilities 631 1

Leases 222 205

Accrued interest 282 235

Lease liabilities 243 222

Restructuring reserves 166 174

Derivative liabilities 54 631

Other 2,953 2,915

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OTHER NONCURRENT LIABILITIES

Pension benefits $ 3,116 $ 3,139

Tax Act transitional tax payable 1,154 1,661

Other retiree benefits 690 672

Pension benefit obligations $ 2,884 $ 3,116

Uncertain tax positions 723 622

Long term operating leases 595 595

Lease liabilities 666 595

Other retiree benefit obligations 653 690

Tax Act transitional tax payable 592 1,154

Derivative liabilities 325 445

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Before tax costs incurred under ongoing programs have generally ranged from $ 250 to $ 500 annually.

Restructuring costs incurred consist primarily of costs to separate employees, asset-related costs to exit facilities and other costs.

Employee separation costs relate to severance packages that are primarily voluntary and the amounts calculated are 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.

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 for disposal.

These assets are written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less minor disposal costs.

Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period.

These assets relate primarily to manufacturing consolidations and technology standardizations.

The asset-related charges will not have a significant impact on future depreciation charges.

Other restructuring-type charges primarily include asset removal and termination of contracts related to supply chain and overhead optimization.

In December 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions.

In connection with this announcement, the Company expects to record incremental restructuring charges of $ 1.0 to $ 1.5 billion after tax, consisting primarily of foreign currency translation losses to be recognized as non-cash charges upon the substantial liquidation of operations in the affected markets.

The Company incurred total restructuring charges of $ 659 and $ 329 for the fiscal years ended June 30, 2024 and 2023.

Of the charges incurred for fiscal year 2024, $ 248 were recorded in Costs of products sold, $ 155 in SG&A and $ 255 in Other non-operating income, net.

Of the charges incurred in fiscal year 2023, $ 160 were recorded in Costs of products sold, $ 160 in SG&A and $ 9 in Other non-operating income, net .

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

46 The Procter & Gamble Company

charges incurred in fiscal year 2022, $ 182 were recorded in Costs of products sold, $ 67 in SG&A, and $ 4 in Other non-operating income, net.

The following table presents restructuring activity for the fiscal years ended June 30, 2024 and 2023:

Separations Asset-Related Costs Other Total

Separation Costs Asset-Related Costs Other Costs Total

RESERVE JUNE 30, 2022 $ 121 $ — $ 26 $ 147

Cost incurred and charged to expense 88 87 78 253

Cost incurred 175 43 111 329

Cost paid/settled ( 141 ) ( 43 ) ( 118 ) ( 302 )

RESERVE JUNE 30, 2023 155 — 19 174

Cost incurred and charged to expense 175 43 111 329

Cost incurred 202 101 355 659

Cost paid/settled ( 224 ) ( 101 ) ( 342 ) ( 667 )

RESERVE JUNE 30, 2024 $ 133 $ — $ 32 $ 166

Separation Costs

Employee separation costs relate to severance packages that are primarily voluntary and the amounts calculated are based on salary levels and past service periods.

Asset-Related Costs

Asset-related costs consist of both asset write-downs and accelerated depreciation for manufacturing and facilities consolidations.

Asset write-downs relate to the establishment of a new fair value basis for assets held-for-sale or for disposal.

These assets are 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.

Other restructuring-type charges are incurred as a direct result of the restructuring plan.

Such charges include accumulated foreign currency translation losses, asset removal and termination of contracts related to Enterprise Market portfolio restructuring.

As of June 30, 2024, the Company has substantially liquidated its operations in certain Enterprise Markets, including Nigeria, and recorded a non-cash charge of $ 216 for accumulated foreign currency translation losses previously included in Accumulated other comprehensive income/(loss).

Consistent with our historical policies for ongoing restructuring-type activities, the restructuring charges are funded by and included within Corporate for management and segment reporting .

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Corporate (1)

Total Company $ 329 $ 253 $ 330

TOTAL $ 659 $ 329 $ 253

(1) Corporate includes costs related to allocated overheads, including charges related to our Enterprise Markets, Global Business Services and Corporate Functions activities.

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

The Procter & Gamble Company 47

GOODWILL AND INTANGIBLE ASSETS

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

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

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

BALANCE AT JUNE 30, 2022 - NET (1)

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(1) Grooming goodwill balance is net of $ 7.9 billion accumulated impairment losses.

Goodwill decreased during fiscal 2024 primarily due to currency translation across all reportable segments and a brand divestiture in the Beauty reportable segment.

Goodwill increased during fiscal 2023 primarily due to an acquisition in the Beauty segment, other minor brand acquisitions in the Baby, Feminine & Family Care segment and currency translation across all reportable segments.

Goodwill and indefinite-lived intangibles are tested for impairment at least annually by comparing the estimated fair values of our reporting units and indefinite-lived intangible assets to their respective carrying values.

We use the income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.

When appropriate, the market approach, which leverages comparable company revenue and earnings multiples, is weighted with the income approach to estimate fair value.

Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability).

Significant judgement by management is required to estimate the impact of macroeconomic and other factors on future cash flows, including those related to the Russia-Ukraine War.

Significant judgment by management is required to estimate the impact of macroeconomic and other factors on future cash flows.

Estimates utilized in the projected cash flows include consideration of macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion, Company business plans, the underlying product or technology life cycles, economic barriers to entry, a brand's relative market position and the discount rate applied to the cash flows.

Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

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

46 The Procter & Gamble Company

We believe the estimates and assumptions utilized in our impairment testing are reasonable and are comparable to those that would be used by other marketplace participants.

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To the extent such factors result in a failure to achieve the level of projected cash flows initially used to estimate fair value for purposes of establishing or subsequently impairing the carrying amount of goodwill and related intangible assets, we may need to record additional non-cash impairment charges in the future.

Goodwill decreased during fiscal 2022 due to currency translation across all reportable segments, partially offset by three acquisitions (Farmacy Beauty, Ouai and TULA) in the Beauty reportable segment.

During the fiscal year ended June 30, 2024, we determined that the fair value of the Gillette indefinite-lived intangible asset was less than its carrying amount.

As a result, we recorded a non-cash impairment charge of $ 1.3 billion ($ 1.0 billion after tax) to reduce the carrying amount to be equivalent to the estimated fair value as of December 31, 2023.

Following the impairment charge, the carrying value of the Gillette indefinite-lived intangible asset is $ 12.8 billion.

The impairment charge arose due to a higher discount rate, weakening of several currencies relative to the U.S.

dollar and the impact of a new restructuring program focused primarily in certain Enterprise Markets, including Argentina and Nigeria.

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

48 The Procter & Gamble Company

Identifiable intangible assets were comprised of:

53 unchanged sentences

earnings repatriation and any net impacts of intercompany transactions.

Changes in uncertain tax positions represent changes in our net liability related to prior year tax positions.

Excess tax benefits from the exercise of stock options reflect the excess of actual tax benefits received on employee exercises of stock options and other share-based payments (which generally equals the income taxable to the employee) over the amount of tax benefits that were calculated and recognized based on the grant date fair values of such instruments.

Tax benefits credited to shareholders' equity totaled $ 190 for the fiscal year ended June 30, 2023.

This primarily relates to the tax effects of net investment hedges.

Tax costs charged to shareholders' equity totaled $ 1,538 for the fiscal year ended June 30, 2022.

This primarily relates to the tax effects of certain adjustments to pension obligations recorded in shareholders' equity and the tax effects of net investment hedges.

Changes in uncertain tax positions represent changes in our net liability related to prior year tax positions.

Prior to the passage of the U.S.

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END OF YEAR $ 582 $ 515 $ 583

Included in the total liability for uncertain tax positions at June 30, 2024, is $ 488 that, depending on the ultimate resolution, could impact the effective tax rate in future periods.

The Company is present in about 70 countries and over 150 taxable jurisdictions and, at any point in time, has 30 - 40 jurisdictional audits underway at various stages of completion.

We evaluate our tax positions and establish liabilities for

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

50 The Procter & Gamble Company

Included in the total liability for uncertain tax positions at June 30, 2023, is $ 354 that, depending on the ultimate resolution, could impact the effective tax rate in future periods.

The Company is present in approximately 70 countries and over 150 taxable jurisdictions and, at any point in time, has 30 - 40 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 that may be challenged by local authorities and may not be fully sustained, despite our belief that the underlying tax positions are fully supportable.

Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, developments in case law and the closing of statutes of limitation.

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We have tax years open ranging from 2010 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 existing liabilities of approximately $ 40 , including interest and penalties.

We are generally not able to reliably estimate the timing and ultimate settlement amounts until the close of an audit.

Based on information currently available, we do not anticipate over the next 12-month period any significant audit activity concluding related to uncertain tax positions for which we have existing accrued liabilities.

We recognize the additional accrual of any possible related interest and penalties relating to the underlying uncertain tax position in income tax expense.

4 unchanged sentences

DEFERRED TAX ASSETS

Loss and other carryforwards $ 1,014 $ 914

Capitalized research & development $ 1,140 $ 930

Loss and other carryforwards 892 1,014

Pension and other retiree benefits 592 737

1 unchanged sentence

Stock-based compensation 433 412

Unrealized loss on financial and foreign exchange transactions 282 138

Fixed assets 206 223

Lease liabilities 199 197

Unrealized loss on financial and foreign exchange transactions 107 282

Other 843 874

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EARNINGS PER SHARE

Basic net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble less preferred dividends by the weighted average number of common shares outstanding during the year.

Diluted net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble by the diluted weighted average number of common shares outstanding during the year.

Diluted net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble by the diluted weighted average number of common shares outstanding during the period.

The diluted shares include the dilutive effect of stock options and other share-based awards based on the treasury stock method (see Note 7) and the assumed conversion of preferred stock (see Note 8).

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(2) An overview of preferred shares can be found in Note 8.

(3) Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.

SHARE-BASED COMPENSATION

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Awards to employees eligible for retirement prior to the award becoming fully vested are recognized as compensation expense ratably from the grant date through the date the employee first becomes eligible to retire and/or is no longer required to provide services to earn the award.

Share-based compensation expense is included as part of Cost of products sold and SG&A in the Consolidated Statement of Earnings and includes an estimate of forfeitures, which is based on historical data.

Share-based compensation expense is included as part of Cost of products sold and SG&A in the Consolidated Statements of Earnings and includes an estimate of forfeitures, which is based on historical data.

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

52 The Procter & Gamble Company

Total expense and related tax benefit were as follows:

Total expense and related recognized tax benefit were as follows:

Fiscal years ended June 30 2024 2023 2022

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DC plan, the contribution rate is set annually.

Total contributions for this plan approximated 13 % of total participants' annual wages and salaries in 2023 and 14 % in 2022 and 2021.

Total contributions for this plan approximated 13 % of total participants' annual wages and salaries in 2024 and 2023 and 14 % in 2022.

We maintain The Procter & Gamble Profit Sharing Trust (Trust) and Employee Stock Ownership Plan (ESOP) to provide a portion of the funding for the U.S.

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Amendments 21 8 2 —

8 5 — ( 586 )

Net actuarial loss/(gain) ( 11 ) ( 550 ) ( 268 ) ( 208 )

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For other retiree benefit plans, the benefit obligation is the accumulated postretirement benefit obligation.

(4) For the other retiree benefits, the amendment primarily relates to adjustments in the self-insured U.S.

retiree health care program to utilize fully-insured Medicare Advantage Programs impacting fiscal year 2022.

(4) Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.

The actuarial gain for pension benefits in 2024 was primarily related to updating of various assumptions in the plan, offset by updates in work experience and decreases in discount rates.

The actuarial gain for other retiree benefits in 2024 was primarily related to updating various assumptions in the plan based work experience and an increase in discount rates.

The actuarial gain for pension plans in 2023 was primarily related to increases in discount rates, offset by inflation-related pension benefit increases.

The actuarial gain for other retiree benefits in 2023 was primarily related to increases in discount rates and a decrease in assumptions for medical claims costs.

The actuarial gain for pension plans in 2022 was primarily related to increases in discount rates.

The actuarial gain for other retiree benefits in 2022 was primarily related to increases in discount rates, partially offset by unfavorable medical claim experience.

The underfunding of pension benefits is primarily a function of the different funding incentives that exist outside of the U.S.

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Special termination benefits 4 5 4 3 4 1

GROSS BENEFIT COST/(CREDIT) 176 186 202 ( 526 ) ( 474 ) ( 311 )

Dividends on ESOP preferred stock — — — — — ( 8 )

NET PERIODIC BENEFIT COST/(CREDIT) $ 203 $ 176 $ 186 $ ( 623 ) $ ( 526 ) $ ( 474 )

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The service cost component of the net periodic benefit cost is included in the Consolidated Statements of Earnings in Cost of products sold and SG&A.

All other components are included in the Consolidated Statements of Earnings in Other non-operating income/(expense), net, unless otherwise noted.

All other components are included in the Consolidated Statements of Earnings in Other non-operating income, net, unless otherwise noted.

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

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(1) Determined as of end of fiscal year.

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

The weighted average assumptions used to determine net benefit cost recorded on the Consolidated Statements of Earnings for the fiscal years ended June 30 were as follows:

Pension Benefits Other Retiree Benefits

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TOTAL 100 % 100 % 100 % 100 % 100 % 100 %

The following table sets forth the fair value of the Company's plan assets as of June 30, 2023 and 2022, segregated by level within the fair value hierarchy (refer to Note 9 for further discussion on the fair value hierarchy and fair value principles).

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

The Procter & Gamble Company 57

The following table sets forth the fair value of the Company's plan assets as of June 30, 2024 and 2023, segregated by level within the fair value hierarchy (refer to Note 9 for further discussion on the fair value hierarchy and fair value principles).

Investments valued using net asset value as a practical expedient are not valued using the fair value hierarchy, but rather valued using the net asset value reported by the managers of the funds and as supported by the unit prices of actual purchase and sale transactions.

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Principal and interest requirements of the borrowing were paid by the Trust from dividends on the preferred shares and from advances provided by the Company.

The original borrowing of $ 1.0 billion has been repaid in full, and advances from the Company of $ 8 remain outstanding at June 30, 2023.

The original borrowing of $ 1.0 billion has been repaid in full.

No advances from the Company remain outstanding at June 30, 2024.

Each share is convertible at the option of the holder into one share of the Company's common stock.

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The original borrowings of $ 1.0 billion were repaid in 2021.

Debt service requirements were funded by preferred stock dividends, cash contributions and advances provided by the Company, of which $ 814 are outstanding at June 30, 2023.

Debt service requirements were funded by preferred stock dividends, cash contributions and advances provided by the Company, of

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

58 The Procter & Gamble Company

which $ 737 are outstanding at June 30, 2024.

Each share is convertible at the option of the holder into one share of the Company's common stock.

1 unchanged sentence

The liquidation value is $ 12.96 per share.

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

56 The Procter & Gamble Company

Our ESOP accounting practices are consistent with current ESOP accounting guidance, including the permissible continuation of certain provisions from prior accounting guidance.

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For fair value hedges, the changes in the fair value of both the hedging instruments and the underlying debt obligations are immediately recognized in earnings.

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

The Procter & Gamble Company 59

Foreign Currency Risk Management

4 unchanged sentences

The change in fair value of these instruments and the underlying exposure are both immediately recognized in earnings.

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

The Procter & Gamble Company 57

To manage exchange rate risk related to our intercompany financing, we primarily use forward contracts and currency swaps.

17 unchanged sentences

The Company had no significant activity with Level 3 assets and liabilities during the periods presented.

Except for the impairment of the Gillette indefinite-lived intangible asset discussed in Note 4, there were no significant assets or liabilities that were re-measured at fair value on a non-recurring basis for the periods presented.

When applying fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs.

30 unchanged sentences

The carrying value of those debt instruments designated as net investment hedges, which includes the adjustment for the foreign currency transaction gain or loss on those instruments, was $ 11.9 billion and $ 11.8 billion as of June 30, 2024 and 2023, respectively.

The increase in the notional balance of derivative instruments designated as net investment hedges is primarily driven by the Company’s decision to leverage favorable interest rate spreads in the foreign currency swap market.

The decrease in the notional balance of foreign currency contracts not designated as hedging instruments reflects changes in the level of intercompany financing activity during the period.

Derivative assets are presented in Prepaid expenses and other current assets or Other noncurrent assets.

16 unchanged sentences

Foreign currency contracts $ ( 91 ) $ ( 97 )

The loss on the derivatives in fair value hedging relationships is fully offset by the mark-to-market impact of the related exposure.

These are both recognized in the Consolidated Statement of Earnings in Interest Expense.

The loss on derivatives not designated as hedging instruments is substantially offset by the currency mark-to-market of the related exposure.

These are both recognized in the Consolidated Statements of Earnings in SG&A.

The gains/(losses) on the derivatives in fair value hedging relationships are fully offset by the mark-to-market impact of the related exposure.

These are both recognized in Interest expense.

The losses on derivatives not designated as hedging instruments are substantially offset by the currency mark-to-market of the related exposure.

These are both recognized in Selling, general and administrative expense (SG&A).

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

25 unchanged sentences

3.95 % USD note due January 2028

3.15 % EUR note due April 2028

1.20 % EUR note due October 2028

4.35 % USD note due January 2029

1.25 % EUR note due October 2029

6 unchanged sentences

4.05 % USD note due January 2033

4.55 % USD note due January 2034

3.20 % EUR note due April 2034

5.55 % USD note due March 2037

12 unchanged sentences

Debt maturities $ 3,838 $ 3,367 $ 4,350 $ 2,074 $ 1,867

Credit Facilities

We maintain bank credit facilities to support our ongoing commercial paper program.

The current facility is an $ 8.0 billion facility split between a $ 3.2 billion five-year facility and a $ 4.8 billion 364-day facility, which expire in November 2028 and October 2024, respectively.

Both facilities can be extended for certain periods of time as specified in the terms of the credit agreement.

These facilities are currently undrawn and we anticipate that they will remain undrawn.

These credit facilities do not have cross-default or ratings triggers, nor do they have material adverse event clauses, except at the time of signing.

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

2 unchanged sentences

Investment Securities Post-retirement Benefit Plans Foreign Currency Translation Total AOCI

BALANCE at JUNE 30, 2021 $ 15 $ ( 2,963 ) $ ( 10,796 ) $ ( 13,744 )

BALANCE AT JUNE 30, 2022, NET OF TAX $ 20 $ 27 $ ( 12,236 ) $ ( 12,189 )

Other comprehensive income/(loss), before tax:

OCI before reclassifications ( 9 ) 22 ( 268 ) ( 255 )

4 2,797 ( 1,451 ) 1,350

Amounts reclassified to the Consolidated Statement of Earnings — 27 — 27

Net current period OCI 5 2,992 ( 1,450 ) 1,547

OCI attributable to non-controlling interests — 2 ( 10 ) ( 8 )

BALANCE at JUNE 30, 2022 20 27 ( 12,236 ) ( 12,189 )

Total other comprehensive income/(loss), before tax ( 9 ) 49 ( 268 ) ( 228 )

Tax effect 2 ( 9 ) 197 190

Total other comprehensive income/(loss), net of tax ( 7 ) 40 ( 71 ) ( 38 )

OCI attributable to non-controlling interests, net of tax — — ( 7 ) ( 7 )

BALANCE AT JUNE 30, 2023, NET OF TAX 13 67 ( 12,300 ) ( 12,220 )

Other comprehensive income/(loss), before tax:

OCI before reclassifications ( 4 ) 823 ( 376 ) 443

( 7 ) 21 ( 71 ) ( 57 )

Amounts reclassified to the Consolidated Statement of Earnings — ( 47 ) 216 169

Net current period OCI ( 7 ) 40 ( 71 ) ( 38 )

OCI attributable to non-controlling interests — — ( 7 ) ( 7 )

BALANCE at JUNE 30, 2023 $ 13 $ 67 $ ( 12,300 ) $ ( 12,220 )

(1) Net of tax (benefit)/expense of $ 1 , $ 953 and $ 515 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2022.

Income tax effects within foreign currency translation include impacts from items such as net investment hedge transactions.

(2) Net of tax (benefit)/expense of $ 0 , $ 69 and $ 0 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2022.

(3) Net of tax (benefit)/expense of $( 2 ), $ 1 and $( 197 ) for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2023.

Income tax effects within foreign currency translation include impacts from items such as net investment hedge transactions.

(4) Net of tax (benefit)/expense of $ 0 , $ 8 and $ 0 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively, for the period ended June 30, 2023.

Total other comprehensive income/(loss), before tax ( 4 ) 776 ( 160 ) 612

Tax effect 1 ( 230 ) ( 66 ) ( 295 )

Total other comprehensive income/(loss), net of tax ( 3 ) 546 ( 226 ) 317

OCI attributable to non-controlling interests, net of tax — — ( 3 ) ( 3 )

BALANCE AT JUNE 30, 2024, NET OF TAX $ 10 $ 613 $ ( 12,522 ) $ ( 11,900 )

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

• Investment securities:

amounts reclassified from AOCI into Other non-operating income, net.

• Postretirement benefit plans:

amounts reclassified from AOCI into Other non-operating income, net and included in the computation of net periodic postretirement costs (see Note 8).

• Postretirement benefit plan amounts are reclassified from AOCI into Other non-operating income, net and included in the computation of net periodic postretirement costs (see Note 8).

• Foreign currency translation amounts are reclassified from AOCI into Other non-operating income, net.

These amounts relate to accumulated foreign currency translation losses recognized due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria (see Note 3).

The Company determines whether a contract contains a lease at the inception of a contract by determining if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

5 unchanged sentences

The Company does not have any material finance leases or sublease activities.

Short-term leases, defined as leases with initial terms of 12 months or less, are not reflected on the Consolidated Balance Sheets.

Short-term leases, defined

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

The Procter & Gamble Company 63

as leases with initial terms of 12 months or less, are not reflected on the Consolidated Balance Sheets.

Lease expense for such short-term leases is not material.

1 unchanged sentence

For purposes of calculating lease liabilities for such leases, we have combined lease and non-lease components.

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

The Procter & Gamble Company 61

The components of the Company’s total operating lease cost for the fiscal years ended June 30, 2024, 2023 and 2022, were as follows:

26 unchanged sentences

In conjunction with certain transactions, primarily divestitures, we may provide routine indemnifications (e.g., indemnification for representations and warranties and retention of previously existing environmental, tax and employee liabilities) for which terms range in duration and, in some circumstances, are not explicitly defined.

The maximum obligation under some indemnifications is also not explicitly stated and, as a result, the overall amount of these obligations cannot be reasonably estimated.

We have not made significant payments for these indemnifications.

We believe that if we were to incur a loss on any of these matters, the loss would not have a material effect on our financial position, results of operations or cash flows.

The maximum obligation under some

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

64 The Procter & Gamble Company

indemnifications is also not explicitly stated and, as a result, the overall amount of these obligations cannot be reasonably estimated.

We have not made significant payments for these indemnifications.

We believe that if we were to incur a loss on any of these matters, the loss would not have a material effect on our financial position, results of operations or cash flows.

In certain situations, we guarantee loans for suppliers and customers.

15 unchanged sentences

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.

SUPPLIER FINANCE PROGRAMS

The Company has an ongoing program to negotiate extended payment terms with its suppliers consistent with market practices.

The Company also supports a Supply Chain Finance program (“SCF”) with several global financial institutions.

Under SCF, the Company maintains an accounts payable system to facilitate participating suppliers' ability to sell receivables from the Company to a SCF bank.

These participating suppliers negotiate their sales of receivables arrangements directly with the respective SCF bank.

The Company is not party to those agreements, but the SCF banks allow the suppliers to utilize the Company’s creditworthiness in establishing credit spreads and associated costs.

Under this model, this arrangement generally provides the suppliers with more favorable terms than they would be able to secure on their own.

The Company has no economic interest in a supplier’s decision to sell a receivable.

Once a qualifying supplier chooses to participate in SCF, the supplier selects which individual Company invoices to sell to the SCF bank.

The Company’s obligations to its suppliers, including the amounts due and scheduled payment dates, are not impacted by the supplier’s decisions to finance amounts under these arrangements.

The Company does not provide any form of guarantee under these financing arrangements.

Our payment terms for suppliers under this program generally range from 60 to 180 days.

All outstanding amounts related to suppliers participating in SCF are recorded within Accounts payable in our Consolidated Balance Sheets, and the associated payments are included in operating activities within our Consolidated Statements of Cash Flows.

The amount due to suppliers participating in SCF and included in Accounts payable was approximately $ 5.6 billion as of June 30, 2024 and $ 5.7 billion as of June 30, 2023.

SUBSEQUENT EVENT

On July 1, 2024, the Company completed the divestiture of its business in Argentina.

The Company expects to record a non-cash charge of approximately $ 750 for accumulated foreign currency translation losses in the first quarter of the fiscal year ended June 30, 2025.

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

Not applicable.

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

The Procter & Gamble Company 65

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data