REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Procter & Gamble U.S. Business Services Company and the Plan Participants:
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of The Profit Sharing Retirement Plan of The Procter & Gamble
Commercial Company (the "Plan") as of June 30, 2023 and 2022, the related statements of changes in net assets available for benefits for the years then ended, and the related notes (collectively referred to as the "financial statements"). In
our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of June 30, 2023 and 2022, and the changes in net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on the Plan's financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Report on Supplemental Schedules
The supplemental schedule listed in the table of contents has been subjected to audit procedures performed in conjunction with the
audit of the Plan's financial statements. The supplemental schedule is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the
underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the supplemental schedule, we
evaluated whether the supplemental schedule, including its form and content, is presented in compliance with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. In our opinion, such schedule is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ DELOITTE & TOUCHE LLP
Cincinnati, Ohio
December 11, 2023
We have served as the auditor of the Plan since 1993.
|
THE PROFIT SHARING RETIREMENT PLAN OF
|
|
|
|
|
THE PROCTER & GAMBLE COMMERCIAL COMPANY
|
|
|
| |
|
|
|
|
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
|
|
|
|
|
AS OF JUNE 30, 2023 AND JUNE 30, 2022
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
2023
|
|
2022
|
| |
|
|
|
|
PARTICIPANT-DIRECTED INVESTMENTS — At fair value:
|
|
|
|
|
Cash
|
$ 32,139
|
|
$ 5,025
|
|
The Procter & Gamble Company common stock
|
31,830,045
|
|
30,929,804
|
|
The J.M. Smucker Company common stock
|
200,388
|
|
175,886
|
|
Common collective trust
|
37,345
|
|
40,729
|
|
Mutual funds
|
59,416,211
|
|
53,476,173
|
| |
|
|
|
|
Total participant-directed investments — at fair value
|
91,516,128
|
|
84,627,617
|
| |
|
|
|
|
RECEIVABLES:
|
|
|
|
|
Accrued investment income
|
48,218
|
|
29,708
|
|
Companies contributions receivable
|
594,603
|
|
579,051
|
| |
|
|
|
|
Total receivables
|
642,821
|
|
608,759
|
| |
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS
|
$ 92,158,949
|
|
$ 85,236,376
|
| |
|
|
|
| |
|
|
|
|
See notes to financial statements.
|
|
|
|
|
THE PROFIT SHARING RETIREMENT PLAN OF
|
|
|
|
|
THE PROCTER & GAMBLE COMMERCIAL COMPANY
|
|
|
| |
|
|
|
|
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
|
|
|
|
FOR THE YEARS ENDED JUNE 30, 2023 AND JUNE 30, 2022
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
2023
|
|
2022
|
| |
|
|
|
|
NET INVESTMENT INCOME/(LOSS):
|
|
|
|
|
Net appreciation/(depreciation) in fair value of investments
|
$ 6,632,162
|
|
$ (6,203,381)
|
|
Dividend income
|
2,055,192
|
|
1,747,789
|
|
Interest income
|
242,403
|
|
10,006
|
| |
|
|
|
|
Total investment income/(loss), net
|
8,929,757
|
|
(4,445,586)
|
| |
|
|
|
|
COMPANIES’ CONTRIBUTIONS
|
594,603
|
|
579,051
|
| |
|
|
|
|
DEDUCTIONS:
|
|
|
|
|
Benefits paid to participants
|
2,557,648
|
|
3,717,827
|
|
Administrative expenses
|
44,139
|
|
32,907
|
| |
|
|
|
|
Total deductions
|
2,601,787
|
|
3,750,734
|
| |
|
|
|
|
NET INCREASE/(DECREASE) IN NET ASSETS
|
6,922,573
|
|
(7,617,269)
|
| |
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS:
|
|
|
|
|
Beginning of year
|
85,236,376
|
|
92,853,645
|
| |
|
|
|
|
End of year
|
$ 92,158,949
|
|
$ 85,236,376
|
| |
|
|
|
| |
|
|
|
|
See notes to financial statements.
|
|
|
|
| |
|
|
|
THE PROFIT SHARING RETIREMENT PLAN OF
THE PROCTER & GAMBLE COMMERCIAL COMPANY
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED JUNE 30, 2023 AND JUNE 30, 2022
The following brief description of The Profit Sharing Retirement Plan of The Procter &
Gamble Commercial Company (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.
General — The Plan is a voluntary defined contribution plan covering substantially all full-time employees of Procter & Gamble Commercial LLC (the “Plan Sponsor”) and Olay LLC (collectively, the
“Companies”), subsidiaries of The Procter & Gamble Company (“P&G”). In order to be eligible to participate in the Plan, employees must be employed by the Companies and have completed one year of service. The Procter & Gamble
U.S. Business Services Company controls and manages the operation and administration of the Plan. Banco Popular de Puerto Rico serves as a trustee of the Plan. Alight Solutions, LLC is the recordkeeper of the Plan. Northern Trust is a
trustee and the custodian of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions — The Companies make contributions to the Plan each year based upon the amount of compensation and the years of service credited for each Plan participant, as defined by the Plan, up to
specified limitations. The Companies’ contributions are calculated by applying the relevant contribution percentage to the total compensation, both as defined by the Plan. Participants are not permitted to make contributions to the Plan.
The following schedule details the contribution percentages by years of service.
| |
|
Contribution
|
|
Years of Service
|
|
Percentage
|
| |
|
|
|
|
1–3
|
|
8
|
% |
|
4–6
|
|
9
|
|
|
7–8
|
|
10
|
|
|
9–10
|
|
11
|
|
|
11–12
|
|
12
|
|
|
13–14
|
|
13
|
|
|
15 or more
|
|
14
|
|
| |
|
|
|
Participant Accounts — Individual accounts are maintained for each Plan participant. Each participant account is credited with Companies’ contributions and an allocation of Plan earnings and charged with
withdrawals and an allocation of Plan losses and administrative expenses. Allocations of Plan earnings and losses are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant’s vested account. Participants can allocate their account to one or more of the investment options.
Investments — Participants direct the investment of the Companies’ contributions into various investment options offered by the Plan. The Plan currently offers various mutual funds and P&G common stock
as investment options for participants.
Vesting — Participants are vested 100% upon completion of three years of service. Participants are also 100% vested in their accounts upon termination for disability, early/normal retirement, death,
and also upon attainment of 65 years of age, regardless of years of service. Refer to Note 5 for vesting provisions in the event of Plan termination.
Payment of Benefits — On termination of service due to death, disability, termination, or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested
interest in his or her account, or an amount of the participant’s election as often as once per month.
Forfeited Accounts — Participants who terminate service prior to vesting forfeit their account balance. Forfeited amounts are used to reduce the Companies’ annual contributions. During the years ended June 30,
2023 and June 30, 2022, there were no forfeitures available to reduce the Companies’ annual contributions.
Plan Amendment — The Plan Sponsor has the right to amend the Plan at any time. However, no amendment can reduce the amount of any participant’s account or the participant’s vested percentage of that account.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Accounting — The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes
therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Risks and Uncertainties — The Plan utilizes various investment securities including mutual funds, P&G common stock, and The J.M. Smucker Company (“Smuckers”) common stock. Investment securities, in general, are
exposed to various risks, such as interest rate risk, credit risk, and overall market volatility. Market risks include global events which could impact the value of investment securities, such as a pandemic or international conflict. Due to
the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in
the financial statements.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed by Congress.
The CARES Act provided immediate and temporary relief for retirement plan sponsors and their participants with respect to employer contributions, distributions and participant loans. The Plan implemented the required minimum distributions
(RMDs) provision and RMDs were temporarily suspended for calendar year 2020. This suspension ended December 31, 2020.
Concentrations of Investments — Included in
investments at June 30, 2023 and 2022, are shares of P&G common stock of $31,830,045 and $30,929,804, respectively. This investment represents 34.8 percent and 36.5 percent of total investments at June 30, 2023 and 2022, respectively. A
significant decline in the market value of P&G common stock would significantly affect the net assets available for benefits.
Investment Valuation and Income
Recognition — The Plan’s investments are stated at fair value. Fair value of a financial instrument is the price that would be received to sell an asset in an orderly transaction
between market participants at the measurement date. Quoted market prices, when available, are used to value investments.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains (losses) on investments bought and sold as well as held during the year.
Management fees and operating expenses charged to the Plan for investments are deducted from income earned
on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.
Administrative Expenses — Investment management expenses are paid by the Plan and are deducted from investment income. Recordkeeping fees of the Plan are paid by participants
through a reduction in their investment balances.
Payment of Benefits — Benefit payments to participants are recorded upon distribution. There were no participants who elected to withdrawal from the plan, but had not yet been paid at June 30, 2023 or 2022.
|
3.
|
FAIR VALUE MEASUREMENTS
|
ASC 820, Fair Value Measurements and Disclosures, provides a
framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, as follows: Level 1, which refers to securities valued using unadjusted quoted
prices from active markets for identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available; and Level 3, which refers to securities valued based on
significant unobservable inputs. There are no Level 2 or Level 3 investments in this Plan. Assets are valued in their entirety based on the lowest level of input that is significant to the fair value measurement.
Asset Valuation Methodologies — Valuation methodologies maximize the use of relevant observable
inputs and minimize the use of unobservable inputs. The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2023 or 2022.
Cash — Held primarily in short-term money market funds, which are valued at cost plus accrued interest.
Common
Stocks — Valued at the closing price reported on the active market on which the individual securities are traded.
Mutual
Funds — Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-ended mutual funds that are registered with the Securities and Exchange
Commission. These funds are required to publish their daily net asset value and to transact at that price. The mutual funds held by the Plan are actively traded.
Transfers Between Levels — The availability of observable market data is monitored to assess the
appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.
The Plan’s policy is to recognize transfers between levels at the actual date of the event or change in circumstances that caused the transfer.
We evaluate the significance of transfers between levels based upon the nature of the financial instrument
and size of the transfer relative to total net assets available for benefits. For the years ended, June 30, 2023 and 2022, there were no transfers between levels.
Common Collective Trust Fund - As permitted by GAAP, the Plan uses net asset values as a practical expedient to determine the fair value of the common collective trust fund. Net asset value is based on the fair value of
the underlying investments held by the fund less its liabilities. Participant transactions (purchases and sales) may occur daily. Redemption for the common collective trust is permitted daily with no other restrictions or notice periods
and there are no unfunded commitments. In accordance with GAAP, the common collective trust fund measured at net asset value has not been classified in the fair value hierarchy. The fair value amount presented in the table below are
intended to permit reconciliation to the amounts presented in the Statement of Net Assets Available for Benefits.
The following table sets forth by level within the fair value hierarchy a summary of the Plan’s
investments measured at fair value on a recurring basis at June 30, 2023 and 2022:
| |
2023
|
|
2022
|
|
| |
|
|
|
|
|
Cash - Level 1
|
$ 32,139
|
|
$ 5,025
|
|
|
Common stock - Level 1
|
32,030,433
|
|
31,105,690
|
|
|
Mutual Funds - Level 1
|
59,416,211
|
|
53,476,173
|
|
| |
|
|
|
|
|
Fair Value Sub-total
|
91,478,783
|
|
84,586,888
|
|
| |
|
|
|
|
|
Investment measured at NAV - Common collective trust
|
37,345
|
|
40,729
|
|
| |
|
|
|
|
|
Total
|
$ 91,516,128
|
|
$ 84,627,617
|
|
| |
|
|
|
|
|
4.
|
EXEMPT PARTY-IN-INTEREST TRANSACTIONS
|
Certain Plan investments are shares of P&G common stock and funds managed by Banco Popular and
Northern Trust. Transactions with the recordkeeper, trustee, and custodian qualify as party-in-interest transactions. Fees paid for the investment management services were included as a reduction of the return earned on each fund.
At June 30, 2023 and 2022, the Plan held 209,767 and 215,104 shares, respectively, of P&G common stock
with a cost basis of $15,129,051 and $15,019,895, respectively. During the years ended June 30, 2023 and 2022, the Companies contributed $594,603 and $579,051, respectively, to the Plan on behalf of participating employees.
During the years ended June 30, 2023 and 2022, the Plan recorded dividend income from P&G common stock
of $775,183 and $762,118, respectively.
During the years ended June 30, 2023 and 2022, the Plan’s investment in P&G common stock, including
gains and losses on investments bought and sold as well as held during the year, appreciated in value by $1,656,885 and $2,125,801, respectively.
Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan to
discontinue contributions to the Plan at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event of Plan termination, participants will become fully vested and the net assets of the Plan will be
distributed to the participants in an order of priority determined in accordance with ERISA and its applicable regulations, and the Plan document.
|
6.
|
FEDERAL INCOME TAX STATUS
|
The Plan is exempt from Puerto Rico income taxes under the provisions of the Puerto Rican Internal Revenue
Code (the “PRIRC”), enacted on January 31, 2011. The 2011 PRIRC replaced the 1994 PRIRC, as amended. The 2011 PRIRC modified rules concerning contribution limits, coverage requirements, non-discrimination testing, and other matters. The 2011
PRIRC also provided for certain changes applicable to plans sponsored by entities under common control. These changes were effective for periods commencing after December 31, 2010, with certain additional requirements beginning January 1,
2012. Also, the Internal Revenue Service has determined and informed the Plan Sponsor by a letter dated January 22, 2018, that the Plan and related trust were designed in accordance with applicable requirements of the Internal Revenue Code
(IRC). The Plan is subject to routine audits by taxing jurisdictions at any time. The Plan has been amended since receiving the latest determination letter. The Companies and Plan management believe that the Plan is currently designed and
operated in compliance with the applicable requirements of the 2011 PRIRC and the IRC, and the Plan and the related trust continue to be tax-exempt. Therefore, no provision for income taxes has been reflected in the Plan’s financial
statements.
******
SUPPLEMENTAL SCHEDULE
|
THE PROFIT SHARING RETIREMENT PLAN OF
|
|
|
|
THE PROCTER & GAMBLE COMMERCIAL COMPANY
|
|
| |
|
|
|
|
EIN: 66-0676831
|
|
|
|
PLAN NUMBER: 001
|
|
|
| |
|
|
|
|
FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)
|
|
AS OF JUNE 30, 2023
|
|
|
| |
|
|
|
| |
|
|
|
| |
Identity of Issue
|
Description of Investment
|
Fair Value
|
| |
|
|
|
| |
|
|
|
|
*
|
BANCO POPULAR
|
Time Deposit Open Account Variable Rate (5.0630% as of 6/30/2023)
|
$ 32,139
|
| |
|
|
|
|
*
|
THE NORTHERN TRUST SHORT TERM INV. FUND
|
Common Collective Trust
|
37,345
|
| |
|
|
|
|
*
|
THE PROCTER & GAMBLE COMPANY
|
Common stock
|
31,830,045
|
| |
|
|
|
| |
THE J.M. SMUCKER COMPANY
|
Common stock
|
200,388
|
| |
|
|
|
| |
MUTUAL FUNDS:
|
|
|
| |
Vanguard
|
Treasury Money Market Fund
|
6,713,075
|
| |
Vanguard
|
Institutional Index
|
19,708,922
|
| |
Vanguard
|
Inflation Protected Securities
|
1,322,129
|
| |
Vanguard
|
Balanced Index
|
16,374,167
|
| |
Vanguard
|
Total Bond Index
|
4,040,834
|
| |
Vanguard
|
Small Cap Index
|
6,577,627
|
| |
Vanguard
|
FTSE All-World Ex US Index
|
4,679,457
|
| |
Total Mutual Funds
|
|
59,416,211
|
| |
|
|
|
| |
TOTAL INVESTMENTS
|
|
$ 91,516,128
|
| |
|
|
|
| |
|
|
|
|
*
|
Party-in-interest.
|
|
|
| |
|
|
|