PG 10-Q Quarterly Report March 31, 2019

PROCTER & GAMBLE CO

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10-Q 1 fy1819q3jfm10-qreport.htm FY 1819 Q3 JFM 10-Q Document

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 March 31, 2019



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 every Interactive Data File required to be submitted 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 such files).

Yes þ No o

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



Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

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

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

Yes o No þ

There were 2,508,329,764 shares of Common Stock outstanding as of March 31, 2019.

PART I. FINANCIAL INFORMATION



Item 1.	Financial Statements

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS



	Three Months Ended March 31				Nine Months Ended March 31
Amounts in millions except per share amounts	2019		2018		2019		2018
NET SALES	$	16,462	$	16,281	$	50,590	$	50,329
Cost of products sold	8,427		8,384		25,830		25,362
Selling, general and administrative expense	4,806		4,688		14,081		14,191
OPERATING INCOME	3,229		3,209		10,679		10,776
Interest expense	131		133		398		370
Interest income	52		69		168		184
Other non-operating income, net	128		108		685		447
EARNINGS BEFORE INCOME TAXES	3,278		3,253		11,134		11,037
Income taxes	502		713		1,931		3,066
NET EARNINGS	2,776		2,540		9,203		7,971
Less: Net earnings attributable to noncontrolling interests	31		29		65		112
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE	$	2,745	$	2,511	$	9,138	$	7,859

NET EARNINGS PER SHARE ⁽¹⁾
Basic	$	1.07	$	0.97	$	3.58	$	3.02
Diluted	$	1.04	$	0.95	$	3.48	$	2.94

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	2,637.7		2,645.6		2,624.3		2,668.6


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

See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)



	Three Months Ended March 31						Nine Months Ended March 31
Amounts in millions	2019			2018			2019			2018
NET EARNINGS	$	2,776		$	2,540		$	9,203		$	7,971
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
Financial statement foreign currency translation	(127		)	925			(713		)	1,953
Unrealized gains/(losses) on hedges	200			(558		)	399			(1,188		)
Unrealized gains/(losses) on investment securities	54			(70		)	107			(135		)
Unrealized gains/(losses) on defined benefit retirement plans	64			(17		)	314			111
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX	191			280			107			741
TOTAL COMPREHENSIVE INCOME	2,967			2,820			9,310			8,712
Less: Total comprehensive income attributable to noncontrolling interests	34			29			65			112
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE	$	2,933		$	2,791		$	9,245		$	8,600

See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



Amounts in millions			March 31, 2019			June 30, 2018
Assets
CURRENT ASSETS
Cash and cash equivalents			$	2,738		$	2,569
Available-for-sale investment securities			7,085			9,281
Accounts receivable			5,198			4,686
INVENTORIES
Materials and supplies			1,415			1,335
Work in process			617			588
Finished goods			3,326			2,815
Total inventories			5,358			4,738
Prepaid expenses and other current assets			1,933			2,046
TOTAL CURRENT ASSETS			22,312			23,320
PROPERTY, PLANT AND EQUIPMENT, NET			20,993			20,600
GOODWILL			46,753			45,175
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET			25,836			23,902
OTHER NONCURRENT ASSETS			5,779			5,313
TOTAL ASSETS			$	121,673		$	118,310

Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable			$	10,207		$	10,344
Accrued and other liabilities			9,252			7,470
Debt due within one year			8,911			10,423
TOTAL CURRENT LIABILITIES			28,370			28,237
LONG-TERM DEBT			21,359			20,863
DEFERRED INCOME TAXES			6,951			6,163
OTHER NONCURRENT LIABILITIES			9,441			10,164
TOTAL LIABILITIES			66,121			65,427
SHAREHOLDERS’ EQUITY
Preferred stock			933			967
Common stock – shares issued –	March 2019	4,009.2
	June 2018	4,009.2	4,009			4,009
Additional paid-in capital			63,624			63,846
Reserve for ESOP debt retirement			(1,145		)	(1,204		)
Accumulated other comprehensive income/(loss)			(14,968		)	(14,749		)
Treasury stock			(99,484		)	(99,217		)
Retained earnings			102,103			98,641
Noncontrolling interest			480			590
TOTAL SHAREHOLDERS’ EQUITY			55,552			52,883
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	121,673		$	118,310

See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY



	Three Months Ended March 31, 2019
Dollars in millions; shares in thousands	Common Stock				Preferred Stock			Add-itional Paid-In Capital			Reserve for ESOP Debt Retirement			Accumu-lated Other Comp-rehensive Income/(Loss)			Treasury Stock			Retained Earnings			Non-controlling Interest			Total Share-holders' Equity
	Shares		Amount
BALANCE DECEMBER 31, 2018	2,501,580			$4,009		$946			$63,679			($1,178	)		($15,156	)		($99,480	)		$101,170			$453			$54,443
Net earnings																				2,745			31			2,776
Other comprehensive income/(loss)														188									3			191
Dividends and dividend equivalents ($0.7172 per share):
Common																				(1,799		)				(1,799		)
Preferred, net of tax benefits																				(64		)				(64		)
Treasury stock purchases	(12,945	)															(1,250		)							(1,250		)
Employee stock plans	18,197							(57		)							1,235									1,178
Preferred stock conversions	1,498				(13		)	2									11									—
ESOP debt impacts											33									51						84
Noncontrolling interest, net								—															(7		)	(7		)
BALANCE MARCH 31, 2019	2,508,330			$4,009		$933			$63,624			($1,145	)		($14,968	)		($99,484	)		$102,103			$480			$55,552



	Nine Months Ended March 31, 2019
Dollars in millions; shares in thousands	Common Stock				Preferred Stock			Add-itional Paid-In Capital			Reserve for ESOP Debt Retirement			Accumu-lated Other Comp-rehensive Income/(Loss)			Treasury Stock			Retained Earnings			Non-controlling Interest			Total Share-holders' Equity
	Shares		Amount
BALANCE JUNE 30, 2018	2,498,093			$4,009		$967			$63,846			($1,204	)		($14,749	)		($99,217	)		$98,641			$590			$52,883
Impact of adoption of new accounting standards														(326		)				(200		)	(27		)	(553		)
Net earnings																				9,138			65			9,203
Other comprehensive income/(loss)														107									—			107
Dividends and dividend equivalents ($2.1516 per share):
Common																				(5,380		)				(5,380		)
Preferred, net of tax benefits																				(195		)				(195		)
Treasury stock purchases	(37,282	)															(3,253		)							(3,253		)
Employee stock plans	43,586							(110		)							2,957									2,847
Preferred stock conversions	3,933				(34		)	5									29									—
ESOP debt impacts											59									99						158
Noncontrolling interest, net								(117		)													(148		)	(265		)
BALANCE MARCH 31, 2019	2,508,330			$4,009		$933			$63,624			($1,145	)		($14,968	)		($99,484	)		$102,103			$480			$55,552

See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (cont.)



	Three Months Ended March 31, 2018
Dollars in millions; shares in thousands	Common Stock				Preferred Stock			Add-itional Paid-In Capital			Reserve for ESOP Debt Retirement			Accumu-lated Other Comp-rehensive Income/(Loss)			Treasury Stock			Retained Earnings			Non-controlling Interest			Total Share-holders' Equity
	Shares		Amount
BALANCE DECEMBER 31, 2017	2,521,004			$4,009		$986			$63,757			($1,229	)		($14,171	)		($97,121	)		$97,881			$609			$54,721
Net earnings																				2,511			29			2,540
Other comprehensive income/(loss)														280									—			280
Dividends and dividend equivalents ($0.6896 per share):
Common																				(1,739		)				(1,739		)
Preferred, net of tax benefits																				(74		)				(74		)
Treasury stock purchases	(16,506	)															(1,381		)							(1,381		)
Employee stock plans	8,509							(42		)							578									536
Preferred stock conversions	1,592				(14		)	2									12									—
ESOP debt impacts											26									44						70
Noncontrolling interest, net																							(7		)	(7		)
BALANCE MARCH 31, 2018	2,514,599			$4,009		$972			$63,717			($1,203	)		($13,891	)		($97,912	)		$98,623			$631			$54,946



	Nine Months Ended March 31, 2018
Dollars in millions; shares in thousands	Common Stock				Preferred Stock			Add-itional Paid-In Capital		Reserve for ESOP Debt Retirement			Accumu-lated Other Comp-rehensive Income/(Loss)			Treasury Stock			Retained Earnings			Non-controlling Interest			Total Share-holders' Equity
	Shares		Amount
BALANCE JUNE 30, 2017	2,553,297			$4,009		$1,006			$63,641		($1,249	)		($14,632	)		($93,715	)		$96,124			$594			$55,778
Net earnings																			7,859			112			7,971
Other comprehensive income/(loss)													741									—			741
Dividends and dividend equivalents ($2.0688 per share):
Common																			(5,251		)				(5,251		)
Preferred, net of tax benefits																			(198		)				(198		)
Treasury stock purchases	(63,242	)														(5,634		)							(5,634		)
Employee stock plans	20,748							71								1,408									1,479
Preferred stock conversions	3,796				(34		)	5								29									—
ESOP debt impacts										46									89						135
Noncontrolling interest, net																						(75		)	(75		)
BALANCE MARCH 31, 2018	2,514,599			$4,009		$972			$63,717		($1,203	)		($13,891	)		($97,912	)		$98,623			$631			$54,946

See accompanying Notes to Consolidated Financial Statements.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Nine Months Ended March 31
Amounts in millions	2019			2018
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	$	2,569		$	5,569
OPERATING ACTIVITIES
Net earnings	9,203			7,971
Depreciation and amortization	2,004			2,084
Share-based compensation expense	299			249
Deferred income taxes	(24		)	(1,826		)
Gain on sale of assets	(370		)	(187		)
Changes in:
Accounts receivable	(549		)	(450		)
Inventories	(601		)	(457		)
Accounts payable, accrued and other liabilities	1,441			752
Other operating assets and liabilities	(537		)	2,331
Other	225			201
TOTAL OPERATING ACTIVITIES	11,091			10,668
INVESTING ACTIVITIES
Capital expenditures	(2,533		)	(2,810		)
Proceeds from asset sales	22			246
Acquisitions, net of cash acquired	(3,943		)	(108		)
Purchases of short-term investments	(159		)	(3,770		)
Proceeds from sales and maturities of short-term investments	2,535			2,790
Change in other investments	(59		)	44
TOTAL INVESTING ACTIVITIES	(4,137		)	(3,608		)
FINANCING ACTIVITIES
Dividends to shareholders	(5,561		)	(5,449		)
Change in short-term debt	(1,832		)	(1,259		)
Additions to long-term debt	2,368			5,072
Reductions of long-term debt	(1,002		)	(1,402		)
Treasury stock purchases	(3,253		)	(5,634		)
Impact of stock options and other	2,590			1,158
TOTAL FINANCING ACTIVITIES	(6,690		)	(7,514		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(95		)	211
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	169			(243		)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	2,738		$	5,326

See accompanying Notes to Consolidated Financial Statements.

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, 2018 and the Form 8-K filed October 22, 2018 to update the Form 10-K to revise disclosures to reflect the adoption of the Financial Accounting Standards Board (FASB) ASU 2017-07 and 2016-18. For additional details on the impacts of adoption, see Note 2. 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 and U.S. Tax Reform

On July 1, 2018 , we adopted ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." This guidance outlines a single, comprehensive model of accounting for revenue from contracts with customers. We adopted the standard using the modified retrospective transition method, under which prior periods were not revised to reflect the impacts of the new standard. Our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Accordingly, the timing of revenue recognition is not materially impacted by the new standard. Trade promotions, consisting primarily of customer pricing allowances, in-store merchandising funds, advertising and other promotional activities, and consumer coupons, are offered through various programs to customers and consumers. The adoption of the new standard impacts the accrual timing for certain portions of our customer and consumer promotional spending, which resulted in a cumulative reduction to Retained earnings of $534 , net of tax, on the date of adoption. The provisions of the new standard also impact the classification of certain payments to customers, moving an immaterial amount of such payments from expense to a deduction from net sales. Had this standard been effective and adopted during fiscal 2018, the impact would have been to reclassify $232 from Selling, General and Administrative expense (SG&A) to a reduction of Net sales for the nine months ended March 31, 2018 and $309 for the year ended June 30, 2018 , with no impact to operating profit. This guidance included practical expedients, none of which are material to our Consolidated Financial Statements. This new guidance does not have any other material impacts on our Consolidated Financial Statements, including financial disclosures.

On July 1, 2018, we adopted ASU 2017-07, "Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)." This guidance requires an entity to disaggregate the current service cost component from the other components of net benefit costs in the face of the income statement. It requires the service cost component to be presented with other current compensation costs for the related employees in the operating section of the income statement, with other components of net benefit cost presented outside of income from operations. We adopted the standard retrospectively, using the practical expedient which allows entities to use information previously disclosed in their pension and other postretirement benefit plans footnote as the basis to apply the retrospective presentation requirements. As such, prior periods’ results have been revised to report the other components of net defined benefit costs, previously reported in Cost of products sold and SG&A, in Other non-operating income, net.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows: Restricted Cash (Topic 230)." This guidance requires the Statement of Cash Flows to present changes in the total of cash, cash equivalents and restricted cash. Prior to the adoption of this ASU, the relevant accounting guidance did not require the Statement of Cash Flows to include changes in restricted cash. We adopted the standard retrospectively on July 1, 2018. We currently have no significant restricted cash balances. Historically, we had restricted cash balances and changes related to divestiture activity. Such balances were presented as Current assets held for sale on the balance sheets, with changes presented as Investing activities on the Statements of Cash Flow. In accordance with ASU 2016-08, such balances are now included in the beginning and ending balances of Cash, cash equivalents and restricted cash for all periods presented.

In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220)." This guidance permits companies to make an election to reclassify stranded tax effects from the recently enacted U.S. Tax Cuts and Jobs Act included in Accumulated other comprehensive income/(loss) (AOCI) to Retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt this guidance in the quarter ended September 30, 2018. The reclassification from the adoption of this standard resulted in an increase of $326 to Retained earnings and a decrease of $326 to AOCI.

In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity transfers of Assets other than Inventory." The standard eliminates the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. We have adopted this standard effective July 1, 2018 on a modified

Amounts in millions of dollars unless otherwise specified.

retrospective basis. The adoption of ASU 2016-16 did not have a material impact on our Consolidated Financial Statements, including the cumulative effect adjustment required upon adoption.

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. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842) Targeted Improvements”. The updated guidance provides an optional transition method, which allows for the application of the standard as of the adoption date with no restatement of prior period amounts. We plan to adopt the standard on July 1, 2019 under the optional transition method described above. We are currently in the process of implementing lease accounting software as well as assessing the impact that the new standard will have on our Consolidated Financial Statements, which will consist primarily of a balance sheet gross up of our operating leases to show equal and offsetting lease assets and lease liabilities.

In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard simplifies the accounting for goodwill impairment by requiring a goodwill impairment to be measured using a single step impairment model, whereby the impairment equals the difference between the carrying amount and the fair value of the specified reporting units in their entirety. This eliminates the second step of the current impairment model that requires companies to first estimate the fair value of all assets in a reporting unit and measure impairments based on those fair values and a residual measurement approach. It also specifies that any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We will adopt the standard no later than July 1, 2020. The impact of the new standard will be dependent on the specific facts and circumstances of future individual impairments, if any.

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.

U.S. Tax Reform

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "U.S. Tax Act"). The U.S. Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering the U.S. corporate income tax rates and implementing a hybrid territorial tax system. As the Company has a June 30 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of approximately 28% for our fiscal year ended June 30, 2018 , and 21% for subsequent fiscal years. However, the U.S. Tax Act eliminated the domestic manufacturing deduction and moved to a hybrid territorial system, which also largely eliminated the ability to credit certain foreign taxes that existed prior to enactment of the U.S. Tax Act.

There are also certain transitional impacts of the U.S. Tax Act. As part of the transition to the new hybrid territorial tax system, the U.S. Tax Act imposed a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries. In addition, the reduction of the U.S. corporate tax rate caused us to adjust our U.S. deferred tax assets and liabilities to the lower federal base rate of 21% . These transitional impacts resulted in a provisional net charge of $602 million for the fiscal year ended June 30, 2018 , and $650 million for the nine months ended March 31, 2018 , comprised of a repatriation tax charge of $3.9 billion (comprised of U.S. repatriation taxes and foreign withholding taxes) and a net deferred tax benefit of $3.2 billion . We finalized our assessment of the transitional impacts of the U.S. Tax Act during the quarter ended December 31, 2018 and there was no significant impact on tax expense during the nine months ended March 31, 2019 . Any legislative changes, as well as any other new or proposed Treasury regulations, which have yet to be issued, may result in additional income tax impacts which could be material in the period any such changes are enacted.

3. Segment Information

Under U.S. GAAP, our Global Business Units (GBUs) are aggregated into five reportable segments: 1) Beauty, 2) Grooming, 3) Health Care, 4) Fabric & Home Care and 5) Baby, Feminine & Family Care. Our five reportable segments are comprised of:


•	Beauty : Hair Care (Conditioner, Shampoo, Styling Aids, Treatments); Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care);


•	Grooming : Shave Care (Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care); Appliances


•	Health Care : Oral Care (Toothbrushes, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care);


•	Fabric & Home Care : Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents); Home Care (Air Care, Dish Care, P&G Professional, Surface Care); and


•	Baby, Feminine & Family Care : Baby Care (Baby Wipes, Diapers and Pants); Feminine Care (Adult Incontinence, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).

Amounts in millions of dollars unless otherwise specified.

Our business units are comprised of similar product categories. Nine business units individually accounted for 5% or more of consolidated net sales as follows:



	% of Net sales by Business Unit ⁽¹⁾
	Three Months Ended March 31		Nine Months Ended March 31
	2019	2018	2019	2018
Fabric Care	22%	22%	23%	22%
Baby Care	12%	13%	12%	13%
Home Care	11%	11%	10%	10%
Skin and Personal Care	10%	9%	10%	9%
Hair Care	9%	10%	9%	10%
Family Care	8%	8%	9%	8%
Oral Care	8%	8%	8%	8%
Shave Care	8%	8%	8%	8%
Feminine Care	6%	6%	6%	6%
All Other	6%	5%	5%	6%
Total	100%	100%	100%	100%


⁽¹⁾	% of Net sales by business unit excludes sales held in Corporate.

Following is a summary of reportable segment results:



		Three Months Ended March 31							Nine Months Ended March 31
		Net Sales		Earnings/(Loss) Before Income Taxes			Net Earnings		Net Sales		Earnings/(Loss) Before Income Taxes			Net Earnings
Beauty	2019	$	3,061	$	675		$	551	$	9,707	$	2,586		$	2,082
	2018	2,934		642			488		9,305		2,331			1,775
Grooming	2019	1,424		329			344		4,603		1,194			1,062
	2018	1,550		422			334		4,903		1,367			1,086
Health Care	2019	2,115		462			358		6,180		1,571			1,210
	2018	1,934		467			305		6,048		1,590			1,065
Fabric & Home Care	2019	5,382		1,114			847		16,427		3,392			2,584
	2018	5,262		1,001			635		16,079		3,281			2,118
Baby, Feminine & Family Care	2019	4,357		861			653		13,305		2,693			2,052
	2018	4,458		852			539		13,616		2,749			1,766
Corporate	2019	123		(163		)	23		368		(302		)	213
	2018	143		(131		)	239		378		(281		)	161
Total Company	2019	$	16,462	$	3,278		$	2,776	$	50,590	$	11,134		$	9,203
	2018	16,281		3,253			2,540		50,329		11,037			7,971

4. Goodwill and Other Intangible Assets

Goodwill is allocated by reportable segment as follows:



	Beauty			Grooming			Health Care			Fabric & Home Care			Baby, Feminine & Family Care			Total Company
Goodwill at June 30, 2018	$	12,992		$	19,820		$	5,929		$	1,865		$	4,569		$	45,175
Acquisitions and divestitures	132			—			1,960			6			57			2,155
Translation and other	(202		)	(212		)	(81		)	(18		)	(64		)	(577		)
Goodwill at March 31, 2019	$	12,922		$	19,608		$	7,808		$	1,853		$	4,562		$	46,753

Amounts in millions of dollars unless otherwise specified.

Goodwill from current year acquisitions primarily reflects the acquisition of the over-the-counter (OTC) healthcare business of Merck KGaA (Merck OTC) in the Health Care reportable segment (see Note 11), along with other minor acquisitions in the Beauty, Baby, Feminine & Family Care and Fabric & Home Care reportable segments. Goodwill increases due to acquisitions was partially offset by the divestiture of the Teva portion of the PGT business in the Health Care reportable segment and currency translation.

Identifiable intangible assets at March 31, 2019 were comprised of:



	Gross Carrying Amount		Accumulated Amortization
Intangible assets with determinable lives	$	8,586	$	(5,338	)
Intangible assets with indefinite lives	22,588		—
Total identifiable intangible assets	$	31,174	$	(5,338	)

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 March 31, 2019 and 2018 was $98 and $75 , respectively. For the nine months ended March 31, 2019 and 2018 , the amortization expense of intangible assets was $252 and $227 , respectively.

Goodwill and indefinite lived intangible assets are not amortized, but are tested annually for impairment. 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, 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. Our annual impairment testing for goodwill and indefinite lived intangible assets occurs during the 3 months ended December 31. Because of the relative size of the cushions in the Shave Care reporting unit and related Gillette indefinite-lived intangible asset, as discussed in the following paragraph, and the business unit performance, we updated our step-one impairment test during the quarter ended March 31, 2019 .

Most of our goodwill reporting units are comprised of a combination of legacy and acquired businesses and as a result have fair value cushions that, at a minimum, exceed two times their underlying carrying values. Certain of our goodwill reporting units, in particular Shave Care and Appliances, are comprised entirely of acquired businesses and as a result, have fair value cushions that are not as high. Both of these wholly acquired reporting units have fair value cushions that currently equal or exceed the underlying carrying values. However, the overall Shave Care goodwill cushion and related Gillette indefinite-lived intangible asset cushion have been reduced in recent years, with the fair values in the current year being reduced to amounts that approximate the reporting unit's carrying value and indefinite lived intangible. These reductions are due in large part to an increased competitive market environment in the U.S. and certain other markets, a deceleration of category growth caused by changing grooming habits and significant currency devaluations in a number of countries relative to the U.S. dollar, which collectively have resulted in reduced cash flow projections. The current year reduction in the fair value was primarily caused by further currency devaluations, along with competitive activities. As a result of these factors and the reduction in the fair values and related cushions, goodwill for the Shave Care reporting unit and the related indefinite-lived intangible asset are more susceptible to impairment risk.

The most significant assumptions utilized in the determination of the estimated fair values of Shave Care reporting unit and the Gillette indefinite-lived intangible asset are the net sales and earnings growth rates (including residual growth rates) and discount rate. The residual growth rate represents the expected rate at which the reporting unit and Gillette brand are expected to grow beyond the shorter-term business planning period. The residual growth rate utilized in our fair value estimates is consistent with the reporting unit and brand operating plans, and approximates expected long term category market growth rates. The residual growth rate is dependent on overall market growth rates, the competitive environment, inflation, relative currency exchange rates and business activities that impact market share. As a result, the residual growth rate could be adversely impacted by a sustained deceleration in category growth, grooming habit changes, devaluation of currencies against the U.S. dollar or an increased competitive environment. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and debt markets or other country specific factors, such as further devaluation of currencies against the U.S. dollar. Spot rates as of the fair value measurement date are utilized in our fair value estimates for cash flows outside the U.S.

Amounts in millions of dollars unless otherwise specified.

While management can and has implemented strategies to address these events, changes in operating plans or 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 would trigger future impairment charges of the reporting unit's goodwill and indefinite-lived intangibles. As of March 31, 2019 , the carrying values of Shave Care goodwill and the Gillette indefinite-lived intangible asset were $19.3 billion and $15.7 billion , respectively.

The table below provides a sensitivity analysis for the Shave Care reporting unit and the Gillette indefinite lived intangible asset, utilizing reasonably possible changes in the assumptions for the shorter term and residual growth rates and the discount rate, to demonstrate the potential impacts to the estimated fair values. The table below provides, in isolation, the estimated fair value impacts related to a 25 basis point increase to discount rate or a 25 basis point decrease to our shorter-term and residual growth rates, both of which would result in impairment charges.



	Approximate Percent Change in Estimated Fair Value
	+25 bps Discount Rate		-25 bps Growth Rate
Shave Care goodwill reporting unit	(6	)%	(6	)%
Gillette indefinite-lived intangible asset	(6	)%	(6	)%

5. Earnings Per Share

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

Net earnings per share were as follows:



CONSOLIDATED AMOUNTS	Three Months Ended March 31						Nine Months Ended March 31
	2019			2018			2019			2018
Net earnings	$	2,776		$	2,540		$	9,203		$	7,971
Less: Net earnings attributable to noncontrolling interests	31			29			65			112
Net earnings attributable to P&G (Diluted)	2,745			2,511			9,138			7,859
Preferred dividends, net of tax	(64		)	(74		)	(195		)	(198		)
Net earnings attributable to P&G available to common shareholders (Basic)	$	2,681		$	2,437		$	8,943		$	7,661

SHARES IN MILLIONS
Basic weighted average common shares outstanding	2,509.1			2,522.7			2,501.5			2,535.7
Add: Effect of dilutive securities
Conversion of preferred shares ⁽¹⁾	89.6			94.3			90.8			95.4
Impact of stock options and other unvested equity awards ⁽²⁾	39.0			28.6			32.0			37.5
Diluted weighted average common shares outstanding	2,637.7			2,645.6			2,624.3			2,668.6

NET EARNINGS PER SHARE ⁽³⁾
Basic	$	1.07		$	0.97		$	3.58		$	3.02
Diluted	$	1.04		$	0.95		$	3.48		$	2.94


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

⁽²⁾

Weighted average outstanding stock options of approximately 4 million and 54 million for the three months ended March 31, 2019 and 2018 , and approximately 25 million and 24 million for the nine months ended March 31, 2019 and 2018 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).


⁽³⁾	Net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

Amounts in millions of dollars unless otherwise specified.

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 March 31						Nine Months Ended March 31
	2019			2018			2019			2018
Share-based compensation expense	$	118		$	92		$	299		$	249
Net periodic benefit cost for pension benefits ⁽¹⁾	30			53			94			156
Net periodic benefit cost/(credit) for other retiree benefits ⁽¹⁾	(41		)	(44		)	(124		)	(120		)

⁽¹⁾

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, 2018 , as revised by the Form 8-K filed October 22, 2018 to update the Form 10-K to revise disclosures to reflect the adoption of the Financial Accounting Standards Board (FASB) ASU 2017-07 and 2016-18.

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 nine months ended March 31, 2019 .

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 nine months ended March 31, 2019 .

The following table sets forth the Company’s financial assets as of March 31, 2019 and June 30, 2018 that are measured at fair value on a recurring basis during the period:



	Fair Value Asset
	March 31, 2019		June 30, 2018
Investments:
U.S. government securities	$	4,307	$	5,544
Corporate bond securities	2,778		3,737
Other investments	165		141
Total	$	7,250	$	9,422

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 $700 as of March 31, 2019 and $2,003 as of June 30, 2018 . The amortized cost of U.S. government securities with maturities between one and five years was $3,657 as of March 31, 2019 and $3,659 as of June 30, 2018 . The amortized cost of Corporate bond securities with maturities of less than a year was $1,422 as of March 31, 2019 and $1,291 as of June 30, 2018 . The amortized cost of Corporate bond securities with maturities between one and five years was $1,375 as of March 31, 2019 and $2,503 as of June 30, 2018 . The Company's investments measured at fair value are generally classified as Level 2 within the fair value hierarchy. There are no material investment balances classified as Level 1 or Level 3 within the fair value hierarchy, or that used net asset value as a practical expedient. Fair values are generally estimated based upon quoted market prices for similar instruments.

The fair value of long-term debt was $24,958 and $23,402 as of March 31, 2019 and June 30, 2018 , respectively. This includes the current portion of debt instruments ( $2,310 and $1,769 as of March 31, 2019 and June 30, 2018 , respectively). Certain long-term debt (debt tied to derivatives designated as a fair value hedge) is recorded at fair value. All other long-term debt is recorded at amortized cost, but is measured at fair value for disclosure purposes. We consider our debt to be Level 2 in the fair value hierarchy. Fair values are generally estimated based on quoted market prices for identical or similar instruments.

Amounts in millions of dollars unless otherwise specified.

Disclosures about Financial Instruments

The notional amounts and fair values of financial instruments used in hedging transactions as of March 31, 2019 and June 30, 2018 are as follows:



	Notional Amount				Fair Value Asset				Fair Value (Liability)
	March 31, 2019		June 30, 2018		March 31, 2019		June 30, 2018		March 31, 2019			June 30, 2018
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts	$	4,515	$	4,587	$	127	$	125	$	(16	)	$	(53	)
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Foreign currency interest rate contracts	$	3,034	$	1,848	$	27	$	41	$	(8	)	$	(75	)
TOTAL DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS	$	7,549	$	6,435	$	154	$	166	$	(24	)	$	(128	)

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts	$	6,362	$	7,358	$	42	$	30	$	(14	)	$	(56	)

TOTAL DERIVATIVES AT FAIR VALUE	$	13,911	$	13,793	$	196	$	196	$	(38	)	$	(184	)

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 fair value of the interest rate derivative asset/liability directly offsets the cumulative amount of the fair value hedging adjustment included in the carrying amount of the underlying debt obligation. The carrying amount of the underlying debt obligation, which includes the unamortized discount or premium and the fair value adjustment, was $4,611 and $4,639 as of March 31, 2019 and June 30, 2018 , respectively. In addition to the foreign currency derivative contracts designated as net investment hedges, certain of our foreign currency denominated debt instruments are designated as net investment hedges. The 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 $16,958 and $15,012 as of March 31, 2019 and June 30, 2018 , respectively. All of the Company's derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy.

Before tax gains/(losses) on our financial instruments in hedging relationships are categorized as follows:



	Amount of Gain/(Loss) Recognized in OCI on Derivatives
	Three Months Ended March 31					Nine Months Ended March 31
	2019		2018			2019		2018
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS ^{(1) (2)}
Foreign exchange contracts	$	34	$	(222	)	$	53	$	(483	)


⁽¹⁾	For the derivatives in net investment hedging relationships, the amount of gain/(loss) excluded from effectiveness testing, which was recognized in earnings, was $17 and $34 for the three months ended March 31, 2019 and 2018, respectively. The amount of gain/(loss) excluded from effectiveness testing was $44 and $107 for the nine months ended March 31, 2019 and 2018, respectively.

⁽²⁾

In addition to the foreign currency derivative contracts designated as net investment hedges, certain of our foreign currency denominated debt instruments are designated as net investment hedges. The amount of gain/(loss) recognized in AOCI for such instruments was $226 and $(535) , for the three months ended March 31, 2019 and 2018, respectively. The amount of gain/(loss) recognized in AOCI for such instruments was $467 and $(1,280) , for the nine months ended March 31, 2019 and 2018, respectively.



	Amount of Gain/(Loss) Recognized in Earnings
	Three Months Ended March 31					Nine Months Ended March 31
	2019		2018			2019		2018
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts	$	21	$	(46	)	$	39	$	(87	)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts	$	75	$	123		$	68	$	121

The gain/(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 Statements of Earnings in Interest Expense. The gain/(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.

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) (AOCI), including the reclassifications out of Accumulated other comprehensive income/(loss) by component:



	Changes in Accumulated Other Comprehensive Income/(Loss) by Component
	Hedges			Investment Securities			Pension and Other Retiree Benefits			Financial Statement Translation			Total AOCI
Balance at June 30, 2018	$	(3,246	)	$	(173	)	$	(4,058	)	$	(7,272	)	$	(14,749	)
OCI before reclassifications ⁽¹⁾	399			109			163			(713		)	(42		)
Amounts reclassified from AOCI ⁽²⁾	—			(2		)	151			—			149
Net current period OCI	399			107			314			(713		)	107
Reclassification to retained earnings in accordance with ASU 2018-02 ⁽³⁾	(18		)	—			(308		)	—			(326		)
Less: Other comprehensive income/(loss) attributable to non-controlling interests							—			—			—
Balance at March 31, 2019	$	(2,865	)	$	(66	)	$	(4,052	)	$	(7,985	)	$	(14,968	)


⁽¹⁾	Net of tax expense/(benefit) of $122 , $0 and $43 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 $48 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively.


⁽³⁾	Adjustment made to early adopt ASU 2018-02: "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," as discussed in Note 2.

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


•	Investment securities: amounts reclassified from AOCI into Other non-operating income, net.


•	Pension and other retiree benefits: amounts reclassified from AOCI into Other non-operating income, net and included in the computation of net periodic postretirement costs.


•	Financial statement translation: amounts reclassified from AOCI into SG&A.

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 2017, the Company announced specific elements of a multi-year productivity and cost savings plan to further reduce costs in the areas of supply chain, certain marketing activities and overhead expenses. This program is expected to result in incremental enrollment reductions, along with further optimization of the supply chain and other manufacturing processes.

Restructuring costs incurred consist primarily of costs to separate employees, asset-related costs to exit facilities and other costs. For the three and nine month periods ended March 31, 2019 , the Company incurred total restructuring charges of $116 and $430 , respectively. Of these charges incurred, $29 and $126 were recorded in SG&A and $85 and $291 were recorded in Cost of products sold, respectively. The remainder of these charges were recorded in Other non-operating income, net. The following table presents restructuring activity for the nine months ended March 31, 2019 :



	Reserve Balance		Charges Previously Reported (Six Months Ended December 31, 2018)		Charges for the		Nine Months Ended March 31, 2019						Reserve Balance
	June 30, 2018				Three Months Ended March 31, 2019		Cash Spent			Charges Against Assets			March 31, 2019
Separations	$	259	$	109	$	57	$	(188	)	$	—		$	237
Asset-related costs	—		50		52		—			(102		)	—
Other costs	254		155		7		(206		)	—			210
Total	$	513	$	314	$	116	$	(394	)	$	(102	)	$	447

Separation Costs

Employee separation charges for the three and nine month periods ended March 31, 2019 , relate to severance packages for approximately 240 employees and 1,210 employees, respectively. The packages were predominantly voluntary and the amounts were calculated based on salary levels and past service periods. Severance costs related to voluntary separations are generally charged to earnings when the employee accepts the offer.

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 asset removal and termination of contracts related to supply chain optimization.

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



	Three Months Ended March 31, 2019		Nine Months Ended March 31, 2019
Beauty	$	6	$	33
Grooming	18		49
Health Care	3		15
Fabric & Home Care	15		46
Baby, Feminine & Family Care	26		117
Corporate ⁽¹⁾	48		170
Total Company	$	116	$	430


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

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 150 taxable jurisdictions and, at any point in time, has 40 – 50 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. While we do not expect material changes, it is possible that the amount of unrecognized benefit with respect to our uncertain tax positions could increase or decrease within the next 12 months. At this time, we are not able to make a reasonable estimate of the range of impact on the balance of uncertain tax positions or the impact on the effective tax rate related to these items.

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, 2018 .

Amounts in millions of dollars unless otherwise specified.

11. Merck Acquisition

On November 30, 2018, we completed our acquisition of the over the counter (OTC) healthcare business of Merck KGaA (Merck OTC) for $3.7 billion (based on exchange rates at the time of closing) in an all-cash transaction. This business primarily sells OTC consumer healthcare products, mainly in Europe, Latin America and Asia markets. The results of Merck OTC, which are not material to the Company, are reported in our consolidated financial statements beginning December 1, 2018. Total sales for Merck OTC’s most recently completed fiscal year ended December 31, 2017 were approximately $1 billion .

The following table presents the preliminary allocation of purchase price related to the Merck OTC business as of the date of acquisition. The preliminary allocation of the purchase price is based on the best estimates of management and is subject to revision based on final determination of fair values of the assets and liabilities acquired, which will be completed as we complete our analysis of the underlying assets and acquired liabilities, such as pensions, litigation cases, environmental issues, and tax positions.



Amounts in millions	November 30, 2018
Current assets	$	392
Property, plant and equipment	122
Intangible assets	2,111
Goodwill	2,014
Other non-current assets	144
Total Assets Acquired	$	4,783

Current liabilities	$	237
Deferred income taxes	661
Non-current liabilities	60
Total Liabilities Acquired	$	958

Noncontrolling Interest ⁽¹⁾	$	169

Net Assets Acquired	$	3,656


⁽¹⁾	Represents a 48% minority ownership interest in the Merck India company.

The acquisition resulted in $2.0 billion in goodwill, of which approximately $180 million is expected to be deductible for tax purposes. All of this goodwill was allocated to the Health Care Segment. The goodwill is primarily attributable to the assembled workforce and synergies we expect to generate by combining the Merck OTC business with the Company’s existing personal health care business.

We have preliminarily estimated the fair value of Merck OTC’s identifiable intangible assets as $2.1 billion . The preliminary allocation of identifiable intangible assets and their average useful lives is as follows:



Amounts in millions	Estimated Fair Value		Avg Remaining Useful Life
Intangible Assets with Determinable Lives
Brands	$	701	14
Patents and technology	118		7
Customer relationships	346		20
Total	$	1,165	15

Intangible Assets with Indefinite Lives
Brands	946
Total Intangible Assets	$	2,111

The majority of the intangible valuation relates to brand intangibles. Our preliminary assessment as to brand intangibles that have an indefinite life and those that have a definite life was based on a number of factors, including competitive environment, market

Amounts in millions of dollars unless otherwise specified.

share, brand history, product life cycles, operating plan and the macroeconomic environment of the countries in which the brands are sold. The indefinite-lived brand intangibles include Neurobion and Dolo Neurobion. The definite-lived brand intangibles primarily include regional or local brands. The definite-lived brand intangibles have estimated lives ranging from 10 to 20 years. The technology intangibles are related to R&D and manufacturing know-how; these intangibles have a 7 year estimated life. The customer relationships intangibles have a 20 year estimated life and reflect the historical and projected attrition rates for Merck OTC’s relationships with health care professionals, retailers and distributors.



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 and 10 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. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking 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 to generate sufficient income and cash flow to allow the Company to affect 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 execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to 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 prices of commodities and raw materials, and costs of labor, transportation, energy, pension and healthcare; (6) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits and 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, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third party information technology systems, networks and services, and maintain the security and functionality of such systems, networks and services and the data contained therein; (12) the ability to successfully manage uncertainties related to changing political conditions (including the United Kingdom’s decision to leave the European Union) and potential implications such as exchange rate fluctuations and market contraction; (13) the ability to successfully manage regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, intellectual property, antitrust, data protection, tax, environmental, and accounting and financial reporting) and to resolve pending matters within current estimates; (14) the ability to manage changes in applicable tax laws and regulations including maintaining our intended tax treatment of divestiture transactions; (15) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company’s overall business strategy and financial objectives, without impacting the delivery of base business objectives; and (16) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes, while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited. 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 – Nine Months Ended March 31, 2019


•	Economic Conditions and Uncertainties


•	Results of Operations – Three and Nine Months Ended March 31, 2019


•	Business Segment Discussion – Three and Nine Months Ended March 31, 2019


•	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), adjusted free cash flow and adjusted free cash flow productivity. The explanation at the end of the MD&A provides the definition of these non-GAAP measures as well as 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 purchased traditional brick-and-mortar and online data in key markets 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. The Company measures fiscal-year-to-date market shares through the most recent period for which market share data is available, which typically reflects a lag time of one or two months.

OVERVIEW

P&G is a global leader in the fast-moving consumer goods industry, 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, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, 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	Product Categories (Sub-Categories)	Major Brands
Beauty	Hair Care ( Conditioner, Shampoo, Styling Aids, Treatments )	Head & Shoulders, Pantene, Rejoice
Beauty	Skin and Personal Care ( Antiperspirant and Deodorant, Personal Cleansing, Skin Care )	Olay, Old Spice, Safeguard, SK-II
Grooming	Grooming ⁽¹⁾ (Shave Care - Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care; Appliances)	Braun, Fusion, Gillette, Mach3, Prestobarba, Venus
Health Care	Oral Care ( Toothbrushes, Toothpaste, Other Oral Care )	Crest, Oral-B
Health Care	Personal Health Care ( Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care )	Metamucil, Prilosec, Vicks
Fabric & Home Care	Fabric Care ( Fabric Enhancers, Laundry Additives, Laundry Detergents )	Ariel, Downy, Gain, Tide
Fabric & Home Care	Home Care ( Air Care, Dish Care, P&G Professional, Surface Care )	Cascade, Dawn, Febreze, Mr. Clean, Swiffer
Baby, Feminine & Family Care	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, Puffs


⁽¹⁾	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 and nine months ended March 31, 2019 (excluding net sales and net earnings in Corporate):



	Three Months Ended March 31, 2019		Nine Months Ended March 31, 2019
	Net Sales	Net Earnings	Net Sales	Net Earnings
Beauty	19%	20%	19%	23%
Grooming	9%	12%	9%	12%
Health Care	13%	13%	12%	13%
Fabric & Home Care	33%	31%	33%	29%
Baby, Feminine & Family Care	26%	24%	27%	23%
Total Company	100%	100%	100%	100%

SUMMARY OF RESULTS

Following are highlights of results for the nine months ended March 31, 2019 versus the nine months ended March 31, 2018 :

•

Net sales increased 1% to $50.6 billion , driven by a mid-single digits increase in Beauty and a low single digit increase in Health Care and Fabric & Home Care, partially offset by a low single digit decline in Baby, Feminine & Family Care and mid-single digit decline in Grooming. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 4% , driven by a high single digits increase in Beauty, a mid-single digits increase in Health Care and Fabric & Home Care and a low single digit increase in Baby, Feminine & Family Care. Organic sales were unchanged in Grooming.

•

Unit volume increased 2% , with organic volume also up 2% . Volume increased mid-single digits in Fabric & Home Care and Health Care, low single digits in Beauty and was unchanged in Baby, Feminine & Family Care. Volume decreased low single digits in Grooming. Excluding the impacts of the PGT Healthcare partnership dissolution and the Merck OTC acquisition, organic volume increased low single digits in Health Care.

•

Net earnings were $9.2 billion , an increase of $1.2 billion or 15% versus the prior year due to a reduction in current year income tax expense (due to the impacts of the U.S. Tax Act, comprised of the reduction in the ongoing tax rate on earnings and the base period charges related to the transitional impacts of the U.S. Tax Act) and a current year gain on the dissolution of the PGT Healthcare partnership, partially offset by a reduction in the operating earnings margin primarily driven by currency impacts.


•	Diluted net earnings per share increased 18% to $3.48 due primarily to the increase in net earnings and a reduction in shares outstanding due to share repurchases.


•	Net earnings attributable to Procter & Gamble increased $1.3 billion or 16% versus the prior year to $9.1 billion .

•

Core net earnings attributable to Procter & Gamble, which represents net earnings excluding the current period gain on the dissolution of the PGT Healthcare partnership, incremental restructuring charges in both periods and the base period charges related to the transitional impacts of the U.S. Tax Act, increased 3% to $9.0 billion. Core net earnings per share increased 4% to $3.42 due to the increase in Core net earnings and the reduction in shares outstanding.


•	Operating cash flow was $11.1 billion . Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $8.8 billion . Adjusted free cash flow productivity was 99% . Adjusted free cash flow and adjusted free cash flow productivity are defined in the section entitled "Reconciliation of Measures not defined by U.S. GAAP."

ECONOMIC CONDITIONS AND UNCERTAINTIES

Global Economic Conditions . Our products are sold in numerous countries across North America, Europe, Latin America, Asia and Africa with more than half our sales generated outside the United States. As such, we are exposed to and impacted by global macro-economic factors, U.S. and foreign government policies and foreign exchange fluctuations. 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, Central & Eastern Europe and the Korean peninsula, economic uncertainty related to the execution of the United Kingdom's exit from the European Union, political instability in certain Latin American markets and overall economic slowdowns, 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, transportation costs and our own productivity efforts. We have significant exposures to certain commodities, in particular certain oil-derived materials like resins and paper-based materials like pulp, 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, in 2012 we initiated overhead and supply chain cost improvement projects. In fiscal 2017, we communicated specific elements of an additional multi-year cost reduction program which is resulting in enrollment reductions and other savings. If we are not successful in executing and sustaining these changes, there could be a negative impact on our operating margin and net earnings.

Foreign Exchange . We have both translation and transaction exposure to the fluctuation of exchange rates. Translation exposures relate to exchange rate impacts of measuring income statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency. Transaction exposures relate to 1) the impact from input costs that are denominated in a currency other than the local reporting currency and 2) the revaluation of transaction-related working capital balances denominated in currencies other than the functional currency. In four of the past five fiscal years, as well as the current year, 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, Russia, Turkey, Brazil, China and the United Kingdom have previously had, and could in the future have, a significant impact on our sales, costs and earnings. Increased pricing in response to certain 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 and profits.

Government Policies . Our net earnings could be affected by changes in U.S. or foreign government tax policies, for example, the U.S. Tax Act enacted in December 2017, the implications and uncertainties of which are disclosed elsewhere in this report. Additionally, we attempt to carefully manage our debt, currency and other exposures in certain countries with currency exchange, import authorization and pricing controls, such as Nigeria, Algeria, Egypt and Turkey. Further, our earnings and sales could be affected by changes to international trade agreements in North America and elsewhere, including increases of import tariffs, both currently effective and future potential changes. Changes in government policies in these areas might cause an increase or decrease in our sales, operating margin and net earnings.

For information on risk factors that could impact our results, please refer to “Risk Factors” in Part I, Item 1A of the Company's Form 10-K for the fiscal year ended June 30, 2018.

RESULTS OF OPERATIONS – Three Months Ended March 31, 2019

The following discussion provides a review of results for the three months ended March 31, 2019 versus the three months ended March 31, 2018 .



	Three Months Ended March 31
Amounts in millions, except per share amounts	2019	2018	% Chg
Net sales	$16,462	$16,281	1%
Operating income	3,229	3,209	1%
Net earnings	2,776	2,540	9%
Net earnings attributable to Procter & Gamble	2,745	2,511	9%
Diluted net earnings per common share	1.04	0.95	9%
Core net earnings per common share	1.06	1.00	6%

	Three Months Ended March 31
COMPARISONS AS A PERCENTAGE OF NET SALES	2019	2018	Basis Pt Chg
Gross profit	48.8%	48.5%	30
Selling, general & administrative expense	29.2%	28.8%	40
Operating income	19.6%	19.7%	(10)
Earnings before income taxes	19.9%	20.0%	(10)
Net earnings	16.9%	15.6%	130
Net earnings attributable to Procter & Gamble	16.7%	15.4%	130

Net Sales

Net sales for the quarter increased 1% to $16.5 billion including a 5% negative impact from foreign exchange. Unit volume increased 3% . Excluding the impacts of acquisitions and divestitures, organic volume increased 2%. Increased pricing had a 2% favorable impact to net sales. Mix was a 1% positive impact to net sales, driven by disproportionate growth of the Skin & Personal Care category (behind the super-premium SK-II brand) and developed regions, each of which have higher than company average selling prices. Volume increased high-single digits in Health Care, increased mid-single digits in Fabric & Home Care, increased low single digits in Beauty and was unchanged in Baby, Feminine & Family Care. Volume decreased low-single digits in Grooming. Excluding the impacts of the PGT Healthcare partnership dissolution and Merck OTC acquisition, Health Care organic volume increased low single digits. Volume increased low single digits in both developed and developing regions. Organic sales increased 5% on a 2% increase in organic volume.



	Net Sales Change Drivers 2019 vs. 2018 (Three Months Ended March 31) ⁽¹⁾
	Volume with Acquisitions & Divestitures	Volume Excluding Acquisitions & Divestitures	Foreign Exchange	Price	Mix	Other ⁽²⁾	Net Sales Growth
Beauty	3%	3%	(5)%	2%	4%	—%	4%
Grooming	(3)%	(3)%	(7)%	2%	—%	—%	(8)%
Health Care	7%	2%	(4)%	2%	1%	3%	9%
Fabric & Home Care	5%	5%	(4)%	1%	1%	(1)%	2%
Baby, Feminine & Family Care	—%	—%	(4)%	3%	(1)%	—%	(2)%
Total Company	3%	2%	(5)%	2%	1%	—%	1%


⁽¹⁾	Net sales percentage changes are approximations based on quantitative formulas that are consistently appl ied.


⁽²⁾	Other includes the sales mix impact from acquisitions and divestitures, the impact from the July 1, 2018 adoption of new accounting standards for "Revenue from Contracts with Customers" and rounding impacts necessary to reconcile volume to net sales.

Operating Costs

Gross margin increased 30 basis points to 48.8% of net sales for the quarter. Gross margin benefited from 160 basis points of gross manufacturing cost savings projects (130 basis points net of product and packaging reinvestments), 80 basis points of positive pricing impacts and 30 basis points from lower restructuring costs. These impacts were offset by:


•	a 70 basis point decline due to higher commodity costs,


•	a 60 basis point decline from unfavorable foreign exchange and


•	an 80 basis point net decline from unfavorable product mix and other impacts (primarily mix within segments due to the growth of lower margin products forms and club channel in certain categories and due to the disproportionate growth of the Fabric Care category which is one of our largest categories and has lower than company-average margins).

Total SG&A spending increased 3% to $4.8 billion due to increases in overhead costs and other operating costs, partially offset by a reduction in marketing spending. SG&A as a percentage of net sales increased 40 basis points to 29.2% due to the increase in overhead and other operating costs, partially offset by the impacts of the reductions in marketing spending as a percentage of net sales. Marketing spending as a percentage of net sales decreased 50 basis points due to the positive scale impacts of the organic net sales increase, savings in agency compensation, production costs and advertising spending, and the impact of adopting the new standard on "Revenue from Contracts with Customers" which prospectively reclassified certain customer spending from marketing (SG&A) expense to a reduction of net sales. These reductions were partially offset by reinvestments in media and other marketing spending. Overhead costs as a percentage of net sales increased 40 basis points as the positive scale impacts of the organic net sales increase and productivity savings were more than offset by inflation, Merck OTC related overhead spending and other costs. Other net operating costs as a percentage of net sales increased approximately 50 basis points due to an increase in foreign exchange transaction charges and the net impact of changes in indirect tax reserves. Productivity-driven cost savings delivered 100 basis points of benefit in SG&A.

Non-Operating Expenses and Income

Interest expense was $131 million for the quarter, a marginal decrease versus the prior year period. Interest income was $52 million for the quarter, a $17 million decrease versus the prior year period due to a reduction in investment securities. Other non-operating income was $128 million , an increase of $20 million versus the prior year period due to lower pension related costs versus the base period.

Income Taxes

For the three months ended March 31, 2019 the effective tax rate decreased 660 basis points versus the prior year period to 15.3% due to:


•	a 540 basis-point reduction from the impact of the lower blended U.S. federal tax rate on current year earnings versus the prior year rate due to the phased in rate impact of the U.S. Tax Act in the prior year caused by our June 30 fiscal year-end,


•	a 180 basis-point reduction from higher excess tax benefits from share-based compensation (240 basis points in the current year versus 60 basis points in the prior year),


•	a 70 basis-point reduction due to prior year transitional impacts from the U.S. Tax Act,


•	a 70 basis-point increase from discrete impacts related to uncertain tax positions (40 basis points of unfavorable impact in the current year versus 30 basis points of favorable impact in the prior year),


•	a 60 basis-point increase from unfavorable impacts from geographic mix of earnings.

Net Earnings

Net earnings increased $236 million or 9% to $2.8 billion for the quarter . The tax rate reduction discussed above drove a $211 million increase in net earnings. This tax benefit, along with the increase in net sales and the increased gross margin were partially offset by the increase in SG&A spending, all of which are discussed above. Foreign exchange had a negative impact of $245 million on net earnings for the quarter, including both transactional charges and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble increased $234 million or 9% to $2.7 billion for the quarter. Diluted net earnings per share increased 9% to $1.04 . Core net earnings per share increased 6% to $1.06 . Core net earnings per share represents diluted net earnings per share excluding the transitional impacts from the U.S. Tax Act in the base period and incremental restructuring charges in both periods related to our productivity and cost savings plans.

RESULTS OF OPERATIONS – Nine Months Ended March 31, 2019

The following discussion provides a review of results for the nine months ended March 31, 2019 versus the nine months ended March 31, 2018 .



	Nine Months Ended March 31
Amounts in millions, except per share amounts	2019	2018	% Chg
Net sales	$50,590	$50,329	1%
Operating income	10,679	10,776	(1)%
Net earnings	9,203	7,971	15%
Net earnings attributable to Procter & Gamble	9,138	7,859	16%
Diluted net earnings per common share	3.48	2.94	18%
Core net earnings per common share	3.42	3.28	4%

	Nine Months Ended March 31
COMPARISONS AS A PERCENTAGE OF NET SALES	2019	2018	Basis Pt Chg
Gross profit	48.9%	49.6%	(70)
Selling, general & administrative expense	27.8%	28.2%	(40)
Operating income	21.1%	21.4%	(30)
Earnings before income taxes	22.0%	21.9%	10
Net earnings	18.2%	15.8%	240
Net earnings attributable to Procter & Gamble	18.1%	15.6%	250

Net Sales

Net sales for the nine months ended March 31, 2019 increased 1% to $50.6 billion including a 3% negative impact from foreign exchange. Unit volume increased 2% . Pricing was a 1% positive impact to net sales. Mix was a 1% positive impact to net sales, driven by disproportionate organic growth of the Skin and Personal Care and Personal Health Care categories and developed regions, all of which have higher than company average selling prices. Volume increased mid-single digits in Fabric & Home Care and Health Care and increased low single digits in Beauty. Volume was unchanged in Baby, Feminine & Family Care and decreased low single digits in Grooming. Excluding the impacts of the PGT Healthcare partnership dissolution and Merck OTC acquisition, Health Care organic volume increased low single digits. Volume increased low single digits in developed and developing regions. Organic sales increased 4% on a 2% increase in organic volume.



	Net Sales Change Drivers 2019 vs. 2018 (Nine Months Ended March 31) ⁽¹⁾
	Volume with Acquisitions & Divestitures	Volume Excluding Acquisitions & Divestitures	Foreign Exchange	Price	Mix	Other ⁽²⁾	Net Sales Growth
Beauty	2%	2%	(4)%	2%	4%	—%	4%
Grooming	(1)%	(1)%	(5)%	1%	—%	(1)%	(6)%
Health Care	4%	3%	(3)%	1%	1%	(1)%	2%
Fabric & Home Care	4%	5%	(3)%	—%	1%	—%	2%
Baby, Feminine & Family Care	—%	—%	(3)%	1%	1%	(1)%	(2)%
Total Company	2%	2%	(3)%	1%	1%	—%	1%


⁽¹⁾	Net sales percentage changes are approximations based on quantitative formulas that are consistently appl ied.


⁽²⁾	Other includes the sales mix impact from acquisitions and divestitures, the impact from the July 1, 2018 adoption of new accounting standards for "Revenue from Contracts with Customers" and rounding impacts necessary to reconcile volume to net sales.

Operating Costs

Gross margin decreased 70 basis points to 48.9% of net sales for the nine months ended March 31, 2019 . Gross margin benefited from 140 basis points of gross manufacturing cost savings projects (110 basis points net of product and packaging reinvestments) and 40 basis points of positive pricing impacts. This was more than offset by:


•	a 90 basis point decline due to higher commodity costs,


•	a 70 basis point decline from unfavorable product mix and other impacts (primarily mix within segments due to the growth of lower margin products forms and club channels in certain categories and due to the disproportionate growth of the Fabric Care category which has lower than company-average margins) and


•	a 60 basis point decline from the impact of unfavorable foreign exchange

Total SG&A spending decreased 1% to $14.1 billion primarily due to decreases in marketing spending. SG&A as a percentage of net sales decreased 40 basis points to 27.8% as the impact of the reduction in marketing spending was partially offset by an increase in other net operating costs as a percentage of net sales. Overhead costs as a percentage of net sales was relatively unchanged as productivity savings and fixed cost leverage from increased net sales were offset by the impact of inflation and other cost increases, including the overhead costs of the Merck OTC acquisition. Marketing spending as a percentage of net sales decreased 90 basis points due to the positive scale impacts of the net sales increase, savings in agency compensation, production costs and advertising spending, and the impact of adopting the new standard on "Revenue from Contracts with Customers" which prospectively reclassified certain customer spending from marketing (SG&A) expense to a reduction of net sales. Other net operating costs as a percentage of net sales increased 50 basis points primarily due to an increase in foreign exchange transactional charges and the net impact of changes in indirect tax reserves. Productivity-driven cost savings delivered 80 basis points of benefit in SG&A.

Non-Operating Expenses and Income

Interest expense was $398 million for the nine months ended March 31, 2019 , an increase of $28 million versus the prior year period due to an increase in debt and in weighted average interest rates. Interest income was $168 million for the nine months ended March 31, 2019 , a reduction of $16 million versus the prior year period due to a reduction in investment securities. Other non-operating income was $685 million , an increase of $238 million versus the prior year period primarily due to the $355 million before-tax gain from the dissolution of the PGT Healthcare partnership in the current year, partially offset by the impact of minor brand divestiture gains in the base period.

Income Taxes

For the nine months ended March 31, 2019 the effective tax rate decreased 1,050 basis points versus the prior year period to 17.3% due to:


•	a 590 basis-point reduction due to prior year transitional impacts from the U.S. Tax Act,


•	a 470 basis-point reduction from the impact of the lower blended U.S. federal tax rate on current year earnings versus the prior year rate due to the phased in rate impact of the U.S. Tax Act in the prior year caused by our June 30 fiscal year-end,


•	an 80 basis-point reduction from higher excess tax benefits from share-based compensation (140 basis points in the current year versus 60 basis points in the prior year),


•	a 60 basis-point reduction from the tax impact of the gain on the dissolution of the PGT Healthcare partnership,


•	a 10 basis-point increase from reduced favorable discrete impacts related to uncertain tax positions (10 basis points in the current year versus 20 basis points in the prior year),


•	a 140 basis-point increase from unfavorable impacts from geographic mix of earnings.

Net Earnings

Net earnings increased $1.2 billion or 15% to $9.2 billion for the nine months ended March 31, 2019. The tax rate reduction discussed above drove a $1.1 billion increase in net earnings. This tax benefit, along with the current period gain on the dissolution of the PGT Healthcare partnership, and the benefits from the net sales increase and the decrease in SG&A spending, were partially offset by the decrease in gross margin, all of which are discussed above. Foreign exchange had a $729 million negative impact on net earnings for the fiscal year to date period, including both transactional charges and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble increased $1.3 billion or 16% to $9.1 billion. Diluted net earnings per share increased 18% to $3.48 . The difference between the change in net earnings and diluted net earnings per share was due to a reduction in the number of weighted average shares outstanding. Core net earnings per share increased 4% to $3.42 . Core net earnings per share represents diluted net earnings per share excluding the current period gain on the dissolution of the PGT Healthcare partnership, incremental restructuring charges in both periods related to our productivity and cost savings plans and the base period charges related to the transitional impacts of the U.S. Tax Act.

Amounts in millions of dollars unless otherwise specified.

BUSINESS SEGMENT DISCUSSION – Three and Nine Months Ended March 31, 2019

The following discussion provides a review of results by reportable business segment. Analysis of the results for the three and nine months periods ended March 31, 2019 is provided based on a comparison to the same three and nine months periods ended March 31, 2018 . The primary financial measures used to evaluate segment performance are net sales and net earnings. The table below provides supplemental information on net sales and net earnings by reportable business segment for the three and nine months ended March 31, 2019 versus the comparable prior year period (dollar amounts in millions):



	Three Months Ended March 31, 2019
	Net Sales		% Change Versus Year Ago		Earnings/(Loss) Before Income Taxes			% Change Versus Year Ago		Net Earnings		% Change Versus Year Ago
Beauty	$	3,061	4	%	$	675		5	%	$	551	13	%
Grooming	1,424		(8	)%	329			(22	)%	344		3	%
Health Care	2,115		9	%	462			(1	)%	358		17	%
Fabric & Home Care	5,382		2	%	1,114			11	%	847		33	%
Baby, Feminine & Family Care	4,357		(2	)%	861			1	%	653		21	%
Corporate	123		N/A		(163		)	N/A		23		N/A
Total Company	$	16,462	1	%	$	3,278		1	%	$	2,776	9	%



	Nine Months Ended March 31, 2019
	Net Sales		% Change Versus Year Ago		Earnings/(Loss) Before Income Taxes			% Change Versus Year Ago		Net Earnings		% Change Versus Year Ago
Beauty	$	9,707	4	%	$	2,586		11	%	$	2,082	17	%
Grooming	4,603		(6	)%	1,194			(13	)%	1,062		(2	)%
Health Care	6,180		2	%	1,571			(1	)%	1,210		14	%
Fabric & Home Care	16,427		2	%	3,392			3	%	2,584		22	%
Baby, Feminine & Family Care	13,305		(2	)%	2,693			(2	)%	2,052		16	%
Corporate	368		N/A		(302		)	N/A		213		N/A
Total Company	$	50,590	1	%	$	11,134		1	%	$	9,203	15	%

Beauty

Three months ended March 31, 2019 compared with three months ended March 31, 2018

Beauty net sales increased 4% to $3.1 billion during the third fiscal quarter on a 3% increase in unit volume . Favorable product mix added 4% to net sales due to the disproportionate growth of the Skin and Personal Care category, including the super-premium SK-II brand, which have higher than segment average selling prices. Higher pricing increased net sales by 2%. Unfavorable foreign exchange impacts reduced net sales by 5%. Organic sales increased 9% . Global market share of the Beauty segment decreased 0.1 points . Volume increased mid-single digits in developed regions and increased low single digits in developing regions. Excluding the impact of minor brand acquisitions, organic volume in developed regions increased low single digits.


•	Volume in Hair Care increased low single digits . Developed and developing market volume increased mid-single digits and low single digits respectively due to product innovation, market growth and increased distribution. Global market share of the Hair Care category was unchanged .

•

Volume in Skin and Personal Care increased mid-single digits . Excluding the impact of minor brand acquisitions, organic volume increased low single digits. Volume increased mid-single digits in developed regions. Excluding the impact of minor brand acquisitions, developed regions volume was unchanged. Volume increased mid-single digits in developing regions due to premium innovation and increased marketing spending. Global market share of the Skin and Personal Care category was unchanged .

Net earnings increased 13% to $551 million due to the increase in net sales and a 140 basis-point increase in net earnings margin. The net earnings margin increased primarily due to a lower tax rate. A reduction in gross margin was largely offset by a decrease in SG&A as a percentage of net sales. The gross margin reduction was primarily driven by negative mix impacts in Hair Care category (driven by disproportionate growth of certain countries and large sizes which have lower than segment-average margins) and negative foreign exchange impacts, partially offset by the benefit of increased pricing. The reduction in SG&A as a percentage of sales was primarily driven by reduced marketing spending due to the positive scale impacts of the net sales increase and the impacts of adopting the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated

between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Nine months ended March 31, 2019 compared with nine months ended March 31, 2018

Beauty fiscal year to date net sales increased 4% to $9.7 billion on a 2% increase in unit volume . Favorable product mix added 4% to net sales due to the disproportionate growth of the super-premium SK-II which has higher than segment average selling prices. Higher pricing increased net sales by 2%. Unfavorable foreign exchange impacts reduced net sales by 4%. Organic sales increased 8% . Global market share of the Beauty segment decreased 0.1 points . Volume increased low single digits in developed and developing regions.


•	Volume in Hair Care increased low single digits . Developed market volume increased low single digits due to product innovation and increased distribution. Volume in developing regions increased low single digits due to product innovation and market growth. Global market share of the Hair Care category decreased slightly .

•

Volume in Skin and Personal Care increased mid-single digits . Excluding the impact of minor brand acquisitions and divestitures, organic volume increased low single digits. Developed regions volume increased mid-single digits. Excluding the impact of minor brand acquisitions and divestitures, developed regions volume was unchanged. Volume increased high single digits in developing regions due to premium innovation, increased marketing spending and market growth. Global market share of the Skin and Personal Care category was unchanged .

Net earnings increased 17% to $2.1 billion due to the increase in net sales and a 230 basis-point increase in net earnings margin. The net earnings margin increased due to a decrease in SG&A as a percentage of net sales and a reduction in U.S. income tax rates. Gross margin was relatively unchanged as the benefits of increased pricing were offset by negative foreign exchange impacts. The reduction in SG&A as a percentage of sales was primarily driven by a reduction in marketing spending caused by the fixed cost leverage of increased net sales and the impacts of adopting the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Grooming

Three months ended March 31, 2019 compared with three months ended March 31, 2018

Grooming net sales decreased 8% to $1.4 billion during the third fiscal quarter on a 3% decrease in unit volume . Foreign exchange had a 7% unfavorable impact on net sales. Pricing had a positive 2% impact on net sales. Mix had no net impact to net sales as positive geographic mix impact in Shave care due to disproportionate growth of developed regions was offset by negative mix impact in Appliances from the disproportionate growth of mid-tier products. Organic sales decreased 1% . Global market share of the Grooming segment decreased 1.2 points . Volume increased low single digits in developed regions and decreased mid-single digits in developing regions.


•	Shave Care volume decreased low single digits . Developed regions volume increased low single digits due to innovation. Developing regions volume decreased mid-single digits due to reduced demand following devaluation related price increases and competitive activity. Global market share of the Shave Care category decreased nearly a point .


•	Volume in Appliances increased low single digits . Volume increased high single digits in developed regions due to innovation and market growth. Volume decreased mid-single digits in developing regions due to reduced demand following devaluation related price increases. Global market share of the Appliances category decreased more than a point .

Net earnings increased 3% to $344 million due to a 270 basis-point increase in net earnings margin, partially offset by the reduction in net sales. Net earnings margin increased due to a reduction in the effective tax rate, partially offset by a reduction in gross margin and an increase in SG&A as a percentage of net sales. Gross margin declined due to the negative impact of unfavorable mix (due to the disproportionate growth of club channel, disposable razors and lower tier products in Appliances category which have lower than segment average margins) and unfavorable foreign exchange impacts, partially offset by the positive impacts of manufacturing cost savings and increased pricing. SG&A as a percentage of net sales increased due to the negative scale impacts of the net sales decrease partially offset by reductions in overhead costs due to productivity savings and reduced marketing costs caused by the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was primarily due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below), and the impact of favorable adjustments to reserves for uncertain tax positions.

Nine months ended March 31, 2019 compared with nine months ended March 31, 2018

Grooming fiscal year to date net sales decreased 6% to $4.6 billion on a 1% decrease in unit volume . Foreign exchange had a 5% unfavorable impact on net sales. Increased pricing had a positive 1% impact on net sales. Organic sales were unchanged . Global market share of the Grooming segment decreased 0.9 points . Volume increased low single digits in developed regions and declined low single digits in developing regions.

•

Shave Care volume decreased low single digits . Developed regions volume increased low single digits due to increased competitiveness following price reductions in prior quarters, product innovation and an increase in consumer promotions. Developing regions volume decreased low single digits following devaluation related price increases and competitive activity. Global market share of the Shave Care category decreased half a point .


•	Volume in Appliances increased low single digits . Volume increased low single digits in developed regions due to innovation and market growth. Volume in developing regions was unchanged. Global market share of the Appliances category decreased more than half a point .

Net earnings decreased 2% to $1.1 billion due to the reduction in net sales partially offset by a 100 basis-point increase in net earnings margin. Net earnings margin increased primarily due to a reduction in U.S. income tax rates and a reduction in SG&A as a percentage of net sales, partially offset by a decrease in gross margin. Gross margin declined due to the negative impact of unfavorable mix (due to the disproportionate growth of disposable razors, lower tier products in the Appliances category and large count packs which have lower than segment average margins) and unfavorable foreign exchange impacts, partially offset by the positive impacts of manufacturing cost savings and increased pricing. SG&A as a percentage of net sales decreased due to reductions in both overhead costs and marketing spending and the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was primarily due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Health Care

Three months ended March 31, 2019 compared with three months ended March 31, 2018

Health Care net sales increased 9% to $2.1 billion during the third fiscal quarter on a 7% increase in unit volume . Excluding the impact of the dissolution of the PGT Healthcare partnership and the Merck OTC consumer healthcare acquisition, organic volume increased 2%. Unfavorable foreign exchange impacts decreased net sales by 4%. Higher pricing increased net sales by 2%. Favorable mix increased net sales by 1% due to the disproportionate organic growth of developed regions and premium products. Organic sales increased 5% . Global market share of the Health Care segment increased 0.7 points. Volume increased low single digits in developed regions and increased double digits in developing regions. Excluding the impact of the dissolution of the PGT Healthcare partnership and the Merck OTC consumer healthcare acquisition, organic volume increased mid-single digits in developed regions and decreased low single digits in developing regions.


•	Oral Care volume increased low single digits . Volume increased high single digits in developed regions due to product innovation and a reduction in trade inventories in the base period. Volume in developing regions decreased low single digits due to competitive activity. Global market share of the Oral Care category increased more than half a point .

•

Volume in Personal Health Care increased double digits . Excluding the impact of the PGT Healthcare partnership dissolution and the Merck OTC consumer healthcare acquisition, organic volume was unchanged. Developed regions volume decreased mid-single digits, while organic volume decreased low single digits due to reduced consumption from a weaker Cough / Cold season than the base period. Volume in developing regions increased double digits, while organic volume increased low single digits due to innovation. Global market share of the Personal Health Care category increased more than half a point .

Net earnings increased 17% to $358 million , due to the increase in net sales and a 110 basis point increase in net earnings margin. Net earnings margin increased due to a decrease in U.S. income tax rates, partially offset by an increase in SG&A as a percentage of sales and a reduction in gross margin. Gross margin decreased driven by unfavorable mix due to the disproportionate growth of club channel and products with lower than segment-average margins, partially offset by the net impacts of acquisitions and divestitures in personal health care and the positive impacts of increased pricing. SG&A as a percentage of net sales increased primarily due to an increase in overheads caused by the net impacts of personal health care acquisitions and divestitures, partially offset by the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers". The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Nine months ended March 31, 2019 compared with nine months ended March 31, 2018

Health Care fiscal year to date net sales increased 2% to $6.2 billion on a 4% increase in unit volume . Excluding the impact of the dissolution of the PGT Healthcare partnership and the Merck OTC consumer healthcare acquisition, organic volume increased 3%. Unfavorable foreign exchange impacts decreased net sales by 3%. Higher pricing increased net sales by 1%. Favorable mix impacts increased net sales by 1% due to the disproportionate organic growth of developed regions. Organic sales increased 5% . Global market share of the Health Care segment increased 0.5 points . Volume increased low single digits in developed regions and increased mid-single digits in developing regions. Excluding the impact of the dissolution of the PGT Healthcare partnership and the Merck OTC consumer healthcare acquisition, organic volume increased mid-single digits in developed regions and low single digits in developing regions.


•	Oral Care volume increased low single digits . Volume increased mid-single digits in developed regions due to product innovation. Volume in developing regions increased low single digits due to innovation, partially offset by competitive activity. Global market share of the Oral Care category increased less than half a point .

•

Volume in Personal Health Care increased mid-single digits . Developed regions volume decreased mid-single digits, while organic volume grew low single digits due to product innovation. Volume in developing regions increased double digits and high single digits on an organic basis, due to innovation and market growth. Global market share of the Personal Health Care category increased more than half a point .

Net earnings increased 14% to $1.2 billion , due to the increase in net sales and a 200 basis point increase in net earnings margin. Net earnings margin increased due to a decrease in U.S. income tax rates and a reduction in SG&A as a percentage of sales, partially offset by a reduction in gross margin. Gross margin decreased driven by unfavorable mix, due to the disproportionate growth of club channel and products with lower than segment-average margins and increases in commodity costs, partially offset by the net impacts of acquisitions and divestitures in personal health care. SG&A as a percentage of net sales decreased primarily due to a reduction in marketing spending and the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers", partially offset by an increase in overhead costs due to the net impacts of personal health care acquisitions and divestitures. The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Fabric & Home Care

Three months ended March 31, 2019 compared with three months ended March 31, 2018

Fabric & Home Care net sales increased 2% to $5.4 billion during the third fiscal quarter on a 5% increase in unit volume . Unfavorable foreign exchange impacts reduced net sales by 4%. Positive mix impacts increased net sales by 1% due to the disproportionate growth of premium products and higher pricing increased net sales by 1%. Organic sales increased 7% . Global market share of the Fabric & Home Care segment increased 0.4 points . Volume increased low single digits in developed regions and increased high single digits in developing regions.


•	Fabric Care volume increased mid-single digits . Volume in developed regions grew low single digits due to product innovation. Volume in developing regions increased high single digits driven by product innovation and market growth. Global market share of the Fabric Care category increased slightly .


•	Home Care volume increased mid-single digits . Volume in developed regions increased mid-single digits due to product innovation and market growth. Volume in developing regions increased low single digits driven by innovation. Global market share of the Home Care category increased nearly a point .

Net earnings increased 33% to $847 million due to the increase in net sales and a 360 basis point increase in net earnings margin. The net earnings margin increase was primarily due to a decrease in U.S. income tax rates and a reduction in SG&A as a percentage of sales. Gross margin increased marginally as manufacturing cost savings and positive pricing impacts were largely offset by increases in commodity costs and negative product mix impacts (driven by disproportionate growth of product forms with lower than segment-average margins). SG&A as a percentage of net sales was down due to reduction in overhead costs and marketing spending driven by productivity savings, fixed cost leverage of increased net sales and the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Nine months ended March 31, 2019 compared with nine months ended March 31, 2018

Fabric & Home Care fiscal year to date net sales increased 2% to $16.4 billion on a 4% increase in unit volume . Unfavorable foreign exchange impacts reduced net sales by 3%. Favorable mix was a 1% positive impact to net sales due to the disproportionate growth of premium products and developed regions, which have higher than segment average selling prices. Organic sales increased 6% on a 5% increase in organic volume. Global market share of the Fabric & Home Care segment increased 0.5 points . Volume increased mid-single digits in both developed and developing regions.


•	Fabric Care volume increased mid-single digits . Volume in developed regions grew mid-single digits due to product innovation and market growth. Volume in developing regions increased mid-single digits driven by product innovation and market growth. Global market share of the Fabric Care category increased less than half a point .


•	Home Care volume increased mid-single digits . Volume in developed regions increased mid-single digits due to product innovation and market growth. Volume in developing regions was unchanged. Global market share of the Home Care category increased nearly a point .

Net earnings increased 22% to $2.6 billion due to the increase in net sales and a 250 basis point increase in net earnings margin. Net earnings margin increase was primarily due to a decrease in U.S. income tax rates and a reduction in SG&A as a percentage of sales, partially offset by a reduction in gross margin. Gross margin decreased due to negative product mix impacts (driven by

disproportionate growth of product forms with lower than segment-average margins) and an increase in commodity costs, partially offset by manufacturing cost savings. SG&A as a percentage of net sales decreased due to a decrease in overhead costs and marketing spending, driven by productivity savings, fixed cost leverage from increased net sales and the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Baby, Feminine & Family Care

Three months ended March 31, 2019 compared with three months ended March 31, 2018

Baby, Feminine & Family Care net sales decreased 2% to $4.4 billion during the third fiscal quarter on unit volume that was unchanged . Unfavorable foreign exchange impacts decreased net sales by 4%. Higher pricing increased net sales by 3% due to commodity cost and devaluation related price increases. Unfavorable mix decreased sales by 1% due to the disproportionate growth of the Family Care category, in particular large sizes and club channels, each of which have lower than segment average prices. Organic sales increased 2% . Global market share of the Baby, Feminine & Family Care segment decreased 0.2 points . Volume increased low single digits in developed regions. Volume in developing regions decreased low single digits.


•	Volume in Baby Care decreased mid-single digits . Volume in developed regions declined mid-single digits due to competitive activity including competitive pricing activity in certain markets and market decline. Volume in developing regions declined high single digits following devaluation related price increases. Global market share of the Baby Care category decreased less than half a point .


•	Volume in Feminine Care increased low single digits . Volume in developed regions increased low single digits due to product innovation and adult incontinence category growth. Volume increased mid-single digits in developing regions driven by innovation and market growth. Global market share of the Feminine Care category was unchanged .


•	Volume in Family Care, which is predominantly a North American business, increased mid-single digits driven by product innovation and market growth. In the U.S., all-outlet share of the Family Care category was unchanged .

Net earnings increased 21% to $653 million as the reduction in net sales was more than offset by a 290 basis point increase in net earnings margin. Net earnings margin increased primarily due to a decrease in U.S. income tax rates along with a reduction in SG&A as a percentage of net sales and an increase in gross margin. Gross margin increased due to manufacturing cost savings projects and increased pricing, partially offset by increased commodity costs and negative currency impacts. SG&A as a percentage of net sales decreased due to reduced overhead costs, driven by productivity savings and the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

Nine months ended March 31, 2019 compared with nine months ended March 31, 2018

Baby, Feminine & Family Care fiscal year to date net sales decreased 2% to $13.3 billion on unit volume that was unchanged . Unfavorable foreign exchange impacts decreased net sales by 3%. Favorable pricing had a 1% impact to net sales. Positive mix was a 1% help to net sales due to the disproportionate growth of developed regions and premium products, which have higher than segment average selling prices. Organic sales increased 2% . Global market share of the Baby, Feminine & Family Care segment was unchanged . Volume increased low single digits in developed regions. Volume in developing regions decreased low single digits.

•

Volume in Baby Care decreased mid-single digits . Volume in developed regions declined mid-single digits due to competitive activity, including competitive pricing activity in certain markets and market decline. Volume in developing regions declined high single digits due to competitive activity, volume declines following devaluation related price increases and category contraction in certain markets. Global market share of the Baby Care category decreased half a point .


•	Volume in Feminine Care increased low single digits . Volume in developed regions increased low single digits due to product innovation and adult incontinence category growth. Volume increased mid-single digits in developing regions driven by innovation. Global market share of the Feminine Care category increased slightly .


•	Volume in Family Care, which is predominantly a North American business, increased mid-single digits driven by product innovation and distribution gains. In the U.S., all-outlet share of the Family Care category increased half a point .

Net earnings increased 16% to $2.1 billion as the reduction in net sales was more than offset by a 240 basis point increase in net earnings margin. Net earnings margin increased primarily due to a decrease in U.S. income tax rates. A reduction in SG&A as a percentage of net sales was largely offset by a reduction in gross margin. Gross margin decreased primarily due to an increase in commodity costs and unfavorable foreign exchange impacts, partially offset by manufacturing cost savings projects. SG&A as a percentage of net sales decreased due to reduced marketing spending and overhead costs, driven by productivity savings and the impacts from adoption of the new accounting standard on "Revenue from Contracts with Customers." The reduction in the tax rate was due to the impacts of the U.S. Tax Act, both from the overall rate reduction and the manner in which the impacts were allocated between the business and corporate segments in the prior year (See the Corporate segment discussion below).

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; certain employee benefit costs; 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. 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 $20 million to $ 123 million for the quarter ended March 31, 2019 and decreased $10 million to $368 million for the fiscal year to date. Corporate net earnings decreased $216 million in the quarter primarily due to the impact of the allocation methodology of the lower U.S. tax rates (in the prior year the net benefit was held in Corporate, whereas the lower rates are included in the reporting segments in the current year). Fiscal year to date Corporate net earnings increased $52 million due to higher current year divestiture gains (driven by the current year gain on the dissolution of the PGT healthcare partnership) and a $98 million reduction in income tax expense (driven by the net impact of the base period charges for the transitional impacts of the U.S. Tax Act, partially offset by the manner in which the impacts of the lower U.S. tax rates were allocated between the corporate and business segments as explained above), partially offset by higher current year foreign exchange transactional charges (discussed earlier in the Results of Operations section) and higher unallocated SG&A costs in the current year.

Restructuring Program to deliver Productivity and Cost Savings

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. In 2017, the Company communicated specific elements of an additional multi-year productivity and cost savings program.

The current productivity and cost savings plan will further reduce costs in the areas of supply chain, certain marketing activities and overhead expenses. As part of this plan, the Company incurred $1.1 billion in total before-tax restructuring costs in fiscal 2018, with an additional amount of approximately $0.7 billion expected in fiscal 2019. This program is expected to result in additional enrollment reductions, along with further optimization of the supply chain and other manufacturing processes. Consistent with our historical policies for ongoing restructuring-type activities, the resulting charges are funded by and included within Corporate for segment reporting.

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

Refer to Note 9 in the Notes to the Consolidated Financial Statements for more details on the restructuring program.

LIQUIDITY & CAPITAL RESOURCES

Operating Activities

We generated $11.1 billion of cash from operating activities fiscal year to date, an increase of approximately $423 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 assets), generated $11.1 billion of operating cash flow. Working capital and other impacts had no net impact on operating cash flow in the period. Accounts receivable increased, using $549 million of cash due to sales growth and to a lesser extent, the timing of the quarter-end (which fell on a Sunday, resulting in fewer days collection). Inventory consumed $601 million of cash primarily due to product initiatives and to support business growth. Accounts payable, accrued and other liabilities increased, generating $1.4 billion of cash primarily driven by an increase in payables to support the increase in inventory, increased marketing accruals based on timing of spending and extended payment terms with our suppliers. All other operating assets and liabilities used $537 million of cash, driven primarily by payment of the current year portion of taxes due related to the U.S. Tax Act and statutory pension contributions.

Investing Activities

Investing activities used $4.1 billion of cash fiscal year to date. Capital expenditures were $2.5 billion , or 5.0% of net sales. Acquisition activity used $3.9 billion of cash, primarily related to the Merck OTC acquisition. We used $159 million for purchases of short-term investments and received $2.5 billion of cash from sales and maturities of short-term investments.

Financing Activities

Our financing activities consumed net cash of $6.7 billion fiscal year to date. We used $3.3 billion for treasury stock purchases and $5.6 billion for dividends. Cash used from the net effect of debt issuances and payments was $466 million . Cash from the exercise of stock options and other impacts generated $2.6 billion of cash.

As of March 31, 2019 , our current liabilities exceeded current assets by $6.1 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 measures. We believe that these measures provide useful perspective on underlying business results and trends (i.e., trends excluding non-recurring or unusual items) 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.

Organic sales growth : Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions and divestitures, the impact from the July 1, 2018 adoption of new accounting standards for "Revenue from Contracts with Customers" and foreign exchange from year-over-year comparisons. The impact of the adoption of the new accounting standard for Revenue from Contracts with Customers is driven by the prospective reclassification of certain customer spending from marketing (SG&A) expense to a reduction of Net sales. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. This measure is used in assessing achievement of management goals for at-risk compensation.

Adjusted free cash flow : Adjusted free cash flow is defined as operating cash flow less capital spending and excluding payments for the transitional tax resulting from the comprehensive U.S. legislation commonly referred to as the Tax Cuts and Jobs Act enacted in December 2017 (the U.S. Tax Act). Adjusted free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. Management views adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments.

Adjusted free cash flow productivity : Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the gain on dissolution of the PGT Healthcare partnership, which is non-recurring and not considered indicative of underlying cash flow performance. Management views adjusted free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions, allocating financial resources and for budget planning purposes. This measure is also used in assessing the achievement of management goals for at-risk compensation. The Company's long-term target is to generate annual adjusted 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 adjusted as indicated. Management views this non-GAAP measure as a useful supplemental measure of Company performance over time. This measure is also used when evaluating senior management in determining their at-risk compensation.

The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP measures adjusted as applicable for the following items:

Incremental Restructuring : The Company has had 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. In 2012, the Company began a $10 billion strategic productivity and cost savings initiative that included incremental restructuring activities. In 2017, we communicated details of an additional multi-year productivity and cost savings plan. 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.

Transitional Impact of U.S. Tax Reform : As discussed in Note 2 to the Consolidated Financial Statements, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Act”) in December 2017. This resulted in a net charge of $650 million for the nine months ended March 31, 2018, comprised of an estimated repatriation tax charge of $3.9 billion and a net deferred tax benefit of $3.2 billion. The adjustment to core earnings only includes this transitional impact. It does not include the ongoing impacts of the lower U.S. statutory rate on current year earnings.

Gain on Dissolution of PGT Healthcare Partnership: The Company finalized the dissolution of our PGT Healthcare partnership, a venture between the Company and Teva Pharmaceuticals Industries, Ltd. (Teva) in the OTC consumer healthcare business, in the quarter ended September 30, 2018. The transaction was accounted for as a sale of the Teva portion of the PGT business; the Company recognized an after-tax gain on the dissolution of $353 million.

We do not view the above items to be part of our sustainable results and their exclusion from Core earnings measures provides a more comparable measure of year-on-year results. These items are also excluded when evaluating senior management in determining their at-risk compensation.

Organic sales growth :



Three Months Ended March 31, 2019	Net Sales Growth	Foreign Exchange Impact	Acquisition & Divestiture Impact/Other ⁽¹⁾	Organic Sales Growth
Beauty	4%	5%	—%	9%
Grooming	(8)%	7%	—%	(1)%
Health Care	9%	4%	(8)%	5%
Fabric & Home Care	2%	4%	1%	7%
Baby, Feminine & Family Care	(2)%	4%	—%	2%
Total Company	1%	5%	(1)%	5%



Nine Months Ended March 31, 2019	Net Sales Growth	Foreign Exchange Impact	Acquisition & Divestiture Impact/Other ⁽¹⁾	Organic Sales Growth
Beauty	4%	4%	—%	8%
Grooming	(6)%	5%	1%	—%
Health Care	2%	3%	—%	5%
Fabric & Home Care	2%	3%	1%	6%
Baby, Feminine & Family Care	(2)%	3%	1%	2%
Total Company	1%	3%	—%	4%


⁽¹⁾	Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures, the impact from the July 1, 2018 adoption of new accounting standards for "Revenue from Contracts with Customers" and rounding impacts necessary to reconcile net sales to organic sales.

Adjusted free cash flow (dollar amounts in millions) :



Fiscal Year-to-Date, March 31, 2019
Operating Cash Flow	Capital Spending	U.S. Tax Act Payments	Adjusted Free Cash Flow
$11,091	$(2,533)	$235	$8,793

Adjusted free cash flow productivity (dollar amounts in millions) :



Fiscal Year-to-Date, March 31, 2019
Adjusted Free Cash Flow	Net Earnings	Gain on Dissolution of PGT Partnership	Adjusted Net Earnings	Adjusted Free Cash Flow Productivity
$8,793	$9,203	$(353)	$8,850	99%



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures
Three Months Ended March 31, 2019
	AS REPORTED (GAAP)		INCREMENTAL RESTRUCTURING			ROUNDING			NON-GAAP (CORE)
COST OF PRODUCTS SOLD	$	8,427	$	(65	)	$	—		$	8,362
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE	4,806		18			(1		)	4,823
OPERATING INCOME	3,229		47			1			3,277
INCOME TAX	502		7			—			509
NET EARNINGS ATTRIBUTABLE TO P&G	2,745		44			—			2,789
									Core EPS
DILUTED NET EARNINGS PER COMMON SHARE ⁽¹⁾	$	1.04	$	0.02		$	—		$	1.06


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



CHANGE VERSUS YEAR AGO
CORE EPS	6	%



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures
Three Months Ended March 31, 2018
	AS REPORTED (GAAP)		INCREMENTAL RESTRUCTURING			TRANSITIONAL IMPACTS OF U.S. TAX REFORM			ROUNDING			NON-GAAP (CORE)
COST OF PRODUCTS SOLD	$	8,384	$	(110	)	$	—		$	(1	)	$	8,273
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE	4,688		(24		)	—			—			4,664
OPERATING INCOME	3,209		134			—			1			3,344
INCOME TAX	713		22			(22		)	(1		)	712
NET EARNINGS ATTRIBUTABLE TO P&G	2,511		116			22			—			2,649
												Core EPS
DILUTED NET EARNINGS PER COMMON SHARE ⁽¹⁾	$	0.95	$	0.04		$	0.01		$	—		$	1.00


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



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures
Nine Months Ended March 31, 2019
	AS REPORTED (GAAP)		INCREMENTAL RESTRUCTURING			GAIN ON DISSOLUTION OF PGT PARTNERSHIP			ROUNDING			NON-GAAP (CORE)
COST OF PRODUCTS SOLD	$	25,830	$	(234	)	$	—		$	—		$	25,596
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE	14,081		28			—			(1		)	14,108
OPERATING INCOME	10,679		206			—			1			10,886
INCOME TAX	1,931		30			(2		)	(1		)	1,958
NET EARNINGS ATTRIBUTABLE TO P&G	9,138		190			(353		)	1			8,976
												Core EPS:
DILUTED NET EARNINGS PER COMMON SHARE ⁽¹⁾	$	3.48	$	0.07		$	(0.13	)	$	—		$	3.42


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



CHANGE VERSUS YEAR AGO
CORE EPS	4	%



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts) Reconciliation of Non-GAAP Measures
Nine Months Ended March 31, 2018
	AS REPORTED (GAAP)		INCREMENTAL RESTRUCTURING			TRANSITIONAL IMPACTS OF U.S. TAX REFORM			ROUNDING			NON-GAAP (CORE)
COST OF PRODUCTS SOLD	$	25,362	$	(296	)	$	—		$	—		$	25,066
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE	14,191		2			—			(1		)	14,192
OPERATING INCOME	10,776		294			—			1			11,071
INCOME TAX	3,066		63			(650		)	(1		)	2,478
NET EARNINGS ATTRIBUTABLE TO P&G	7,859		242			650			—			8,751
												Core EPS:
DILUTED NET EARNINGS PER COMMON SHARE ⁽¹⁾	$	2.94	$	0.09		$	0.24		$	0.01		$	3.28


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



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, 2018 . 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 Vice Chairman and 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 fiscal quarter ended March 31, 2019 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 “Risk Factors” in Part I, Item 1A of the Company's Form 10-K for the year ended June 30, 2018.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share ⁽²⁾	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽³⁾	Approximate Dollar Value of Shares That May Yet Be Purchased Under Our Share Repurchase Program
1/01/2019 - 1/31/2019	4,891,751	$91.99	4,891,751	⁽³⁾
2/01/2019 - 2/28/2019	5,074,567	$98.53	5,074,567	⁽³⁾
3/01/2019 - 3/31/2019	2,979,459	$100.69	2,979,459	⁽³⁾
Total	12,945,777	$96.56	12,945,777


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


⁽²⁾	Average price paid per share for open market transactions is calculated on a settlement basis and excludes commission.

⁽³⁾

On April 23, 2019, the Company stated that in fiscal year 2019 the Company expects to reduce outstanding shares through direct share repurchases at a value of approximately $5 billion, notwithstanding any purchases under the Company's compensation and benefit plans. Purchases may be made in the open market and/or private transactions and purchases may be increased, decreased or discontinued at any time without prior notice. The share repurchases are authorized pursuant to a resolution issued by the Company's Board of Directors and are expected to be financed by a combination of operating cash flows and issuance of long-term and short-term debt.



Item 6.	Exhibits




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 and Release * +

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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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

+	Filed herewith

⁽¹⁾	Pursuant to Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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

April 23, 2019				/s/ VALARIE L. SHEPPARD
Date				(Valarie L. Sheppard)
				Senior Vice President, Comptroller and Treasurer

EXHIBIT INDEX



Exhibit

3-1		Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 11, 2011 and consolidated by the Board of Directors on April 8, 2016) (Incorporated by reference to Exhibit (3-1) of the Company's 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 and Release +

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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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



+	Filed herewith

⁽¹⁾	Pursuant to Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

TABLE OF CONTENTS

Part I. Financial Informationprint Item 1. Financial Statementsprint Item 2. Management's Discussion and Analysis Of Financial Condition and Results Of Operationsprint Item 3. Quantitative and Qualitative Disclosures About Market Riskprint Item 4. Controls and Proceduresprint Part II. Other Informationprint Item 1. Legal Proceedingsprint Item 1A. Risk Factorsprint Item 2. Unregistered Sales Of Equity Securities and Use Of Proceedsprint Item 6. Exhibitsprint

Exhibits

3-1 Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October11, 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 Companys Form of Separation Agreement and Release+ 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+

Customer name	Ticker
Big Lots, Inc.	BIG
Campbell Soup Company	CPB
Costco Wholesale Corporation	COST
CVS Health Corporation	CVS
Dillard's, Inc.	DDS
Dollar General Corporation	DG
Kohl's Corporation	KSS
The Kroger Co.	KR
Sears Holdings Corporation	SHLDQ

Supplier name	Ticker
3M Company	MMM
Anheuser-Busch InBev SA/NV	BUD
Thermo Fisher Scientific Inc.	TMO
CSX Corporation	CSX
Illinois Tool Works Inc.	ITW
Dow Inc.	DOW
FMC Corporation	FMC

PG 10-Q Quarter ended March 31, 2019

Exhibits