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Appendix B Specimen Financial Statements: The Procter & Gamble Company Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pleces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report Financial Highlights Letter to the Stockholders Management's Discussion and Analysis Pinancial Statements Notes to the Financial Statements Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Selected Financial Data The official SEC filing of the annual report is called a Form 10-K, which often omits the public relations pieces found in most standard annual reports. On the following pages, we present The Procter & Gamble Company (P&G)'s financial statements taken from the company's 2017 Form 10-K. Consolidated Statements of Earnings 2017 2016 Amounts in millions except per share amounts; Years ended June 30 2015 NET SALES $ 65,058 $ 65,299 $ 70,749 Cost of products sold 32.900 32056 32.535 2017 $63.058 32.535 18,568 2016 $ 65.299 32.900 18,949 2015 $70.749 37,056 20 13,955 Heas ended June 30 NET SALES Cost of products sold Selling general and administrative expense Venezuela deconsolidation charge OPERATING INCOME Interest expense Interest income Other non-operating income/(expense), net EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income taxes on continuing operations NET EARNINGS FROM CONTINUING OPERATIONS NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS NET EARNINGS Less: Net earnings attributable to non controlling interests NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE BASIC NET EARNINGS PER COMMON SHARE:O) Earnings from continuing operations Earnings/(loss) from discontinued operations BASIC NET EARNINGS PER COMMON SHARE DILUTED NET EARNINGS PER COMMON SHARE: Earnings from continuing operations Earnings/(loss) from discontinued operations DILUTED NET EARNINGS PER COMMON SHARE DIVIDENDS PER COMMON SHARE 171 (404) 13.257 3,063 10,194 52217 13:441 579 182 325 13,369 3342 10.037 5772 10,604 06 $10.508 626 149 10 11.012 2.725 3.289 85 $15.326 7.144 108 37006 $ $ 3.79 2.01 5.80 3.59 0.21 3.80 5 2.92 (0.42) 5 250 $ $ $ $ $ 2.84 (0.00) 3.69 1.90 5459 2.70 349 0.20 3.69 2.66 8 $ $ $ $ 2.59 1.90 04.20 $ DILUTED NET EARNINGS PER COMMON SHARE: Earnings from continuing operations 8 3.69 5 3:49 Earnings/(los) from discontinued operations (040) DILUTED NET EARNINGS PER COMMON SHARE $ $ DIVIDENDS PER COMMON SHARE $ 2.70 2.66 $ 2.59 Wanie net camins per common share and Diluted net earnings per common share are calculated on Net camnings attributable to Procter & Gamble Consolidated Statements of Comprehensive Income Amounts in million Years ended June 30 2017 2016 2015 NET EARNINGS 57144 OTHER COMPREHENSIVE INCOME/CLOSS). NETOP TAX Financial statement translation 239 (1.679) (7.220) Unrealized yains/Clossen) on hodges (net of $(186), 55 and 5739 tax, respectively) (306) 1,2:14 Unrealized yains/(losses) on investment securities (set of (6),57 and so tax, respectively) (59) 28 24 Unrealised ains/Closed) on defined benefit retirement plans (net of $551. $(601) and $328 tax, respectively) 1,401 (147) BH TOTAL OTHER COMPREHENSIVE INCOME/CLOSS), NET OF TAX 1,275 (3.1272 (5.118) TOTAL COMPREHENSIVE INCOME 16,686 7:477 2,026 85 108 Less: Total comprehensive income attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE $ 16,601 $281 $1.918 1 2017 2016 Consolidated Balance Sheets Amounts in millions: As of June 30 Assets CURRENT ASSETS Cash and cash equivalent 5.569 7.102 2017 2016 8 5.569 $ 9.568 4.594 7.103 6,946 4373 Consolidated Balance Sheets Amounts in millions. As of June 30 Assets CURRENT ASSETS Cash and cash equivalents Avuilablo-for-sale investment securities Accounts receivable INVENTORIES Materials and supplies Work in process Finished goods Total inventorels Deferred income taxes Prepaid expenses and other current assets Current assets held for sale TOTAL CURRENT ASSETS PROPERTY, PLANT AND EQUIPMENT, NET GOODWILL TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OTHER NONCURRENT ASSETS TOTAL ASSETS 1.308 599 2,782 4,694 1,188 563 2,965 4.716 1.507 2,653 2.185 2,139 26,494 19,893 44,699 24,18% 5.133 $ 120.406 19:385 44350 24.527 5.092 $ 127116 Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable Accrued and other liabilities $ 9.632 77024 9.325 720 9.25 9,638 7.004 2.13 30.770 30,810 18,038 8,126 9,113 10,385 09.13 64,638 Liabilities and Shareholders' quity CURRENT LIABILITIES Accounts payable Accrued and other linbilities Current liabilities held for sale Debt due within one year TOTAL CURRENT LIABILITIES LONG-TERM DEBT DEFERRED INCOME TAXES OTHER NONCURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS' EQUITY Convertible Class A preferred stock, stated value $i per share (600 shares authorized) Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized) Common stock, stated value $1 per share (10,000 shares authorized; shares issued 2017 - 4,009., 2016 - 4.009.) Additional paid-in capital Reserve for ESOP debt retirement Accumulated other comprehensive income/Gloss) Treasury stock, at cost shares held: 2017-1455.9.2016 - 1.3419) Retained earnings Noncontrolling interest TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY See accompanying Notes to Consolidated Financial Statements, 1.006 1038 4,009 63,641 (1,249) (14.632) (93.715) 96,124 594 55.778 $ 120,406 4,009 63.714 (1,090) (15.907 (82,176) 87.953 57,983 S1977136 Consolidated Statements of Shareholders' Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY JURAS DOS 130,406 See accompanying Notes to Consolidated Financial Statements, Consolidated Statements of Shareholders' Equity Dollars in Accumulated Other millions: Reserve Common Total Additional for Comprehensive Non- Share Shares in Shares Common Preferred Paid In ESOP Debt Income/ thousands Outstanding Stock Treasury Retained controlling holders' Stock Capital Retirement (Loss) Stock Earnings Interest Equity BALANCE JUNE 2,710,806 $4,009 $1,111 $69.911 ($1,340) (57,662) ($75.805) $84,990 $762 569,976 30, 2014 Net earings 7,036 108 7.144 Other (5.118) (5.118) comprehensive loss Dividends to shareholders Common 17.098) 7.028) Preferred, net of (459) (259) tax benefits Treasury purchases (54,670) (4,604) (4.604) Employee plan 3.153 3.309 54.100 issuances Preferred stock 4.335 (34) 30 4 conversions 20 68 88 ESOP debt impacts (239) (219 458) Noncontrolling interest, net BALANCE JUNE $631 563.050 $4.009 ($12.780) (577226) $84,807 ($1,220) 2.714,521 $63.852 $1.077 30, 2015 156 2.7714.571 $4,009 $1,077 $63.852 ($1x320) ($12.980) (577226) $84807 $631 563.000 10.508 96 10,604 (3.137) 7.181) (955) (7.181) (103449) (8.21) (8.21 52,089 (144) 3.214 3.000 BALANCE JUNE 30, 2015 Net earnings Other comprehensive loss Dividends to shareholders: Common Preferred, net of tax benefits Treasury purchases (1) Employee plan Issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2016 Net earnings Other comprehensive loss Dividends to shareholders Common Preferred, net of tax benefits res 4,863 (39) 6 33 30 74 (BS) 104 @5) 2.668,074 $4.009 $1,038 $63/24 ($1.290) ($15.907) ($82,176) $87,953 $642552.983 15:326 85 1,275 15.411 1,275 (6,989) (247) (6,989) (247) 616860 (16) 1 tips 3.058 12 (16,866) purchases) (14,625) (14,60 Employee plan 45.8.48 Instances C) Preferred stock 4.241 4 conversions 28 ESOP debt impacts 41 81 Noncontrolling interest, net (133) BALANCE JUNE 1,553,297 84.009 $1,006 $63.641 (6.1,249) (14.632) (98 715) 596,124 3594 30, 2017 Includes $4,013 of tremury shares equired in the divertitute of the Batteries business (se Note 13) Includes $9.421 of tremury sharen received as part of the share exchange in the Beauty Brande transaction (pee Note 13) See accompanying Notes to Consolidated Financial Statements Consolidated Statements of Cash Flows Amounts in millions: Yones ended June 30 2016 2015 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 87,102 $ 6,836 $ 8,548 OPERATING ACTIVITIES Net earnings 15,411 10,604 7.144 Depreciation and amortization 2,820 3.078 3,134 Loss on early extinguishment of debt 543 Share based compensation expense 351 335 337 Deferred income taxes (601) (815) (803) Gain on sale of assets (5.490) (41) (766) Venezuela deconsolidation charge Goodwill and intangible asset impairment charges 450 2.174 2017 2.028 SUS (5.490) (41) (322) 71 (149) (43) 162 450 35 116 1,285 204 184 15.435 (766) 3,028 2.174 349 313 928 (976) 7246 14,608 12.753 (3.384) 571 (3.314) 432 Venezuela deconsolidation charge Goodwill and intangible asset impairment charges Change in accounts receivable Change in Inventories Change in accounts payable, accrued and other liabilities Change in other operating assets and liabilities Other TOTAL OPERATING ACTIVITIES INVESTING ACTIVITIES Capital expenditures Proceeds from asset sales Cash related to deconsolidated Venezuela operations Acquisitions, net of cash aoquired Purchases of short-term investments Proceeds from sales and maturities of short-term investments Pre-divestiture addition of restricted cash related to the Beauty Brands divestiture Cash transferred at closing related to the Beauty Brands divestiture Release of restricted cash upon closing of the Beauty Brands divestiture Cash transferred in Batteries divestiture Change in other investments TOTAL INVESTING ACTIVITIES FINANCING ACTIVITIES Dividends to shareholders Change in short-term debt Additions to long-term debt Reductions land om det (3.736) 4.498 (908) (137) (3.647) 1,203 (16) (4,843) 1.488 (874) (475) 1,870 (186) (2,815) 1.354 (996) (26) (5.689) (143) 93 (5.575) (163) (2.890 (7.236) 2,727 3,603 (4) (7.436 (418) 3.916 la (7.287) (2,580) 2.138 Change in other investments (26) 93 TOTAL INVESTING ACTIVITIES (163) (5.689) (5.575) (2 890) FINANCING ACTIVITIES Dividends to shareholders (7.236) 1.436) (7.287) Change in short-term debt 2.927 (418) (2.580) Additions to long-term debt 3,603 3.916 2,138 Reductions of long-term debt (4.931) (2,213) (3.512) Treasury stock purchases (5,204) (4.004) (4.604) Treasury stock from cash infused in Batteries divestiture (1.730) Impact of stock options and other 2.473 2,672 2,826 TOTAL FINANCING ACTIVITIES (8,568) (9,213)_(3,019) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (29) (380) (411) CHANGE IN CASH AND CASH EQUIVALENTS (1.533) 266 (1710 CASH AND CASH EQUIVALENTS, END OF YEAR 8 169 $ 2102 $6,836 SUPPLEMENTAL DISCLOSURE Cash payments for interest 8 518 $ 569 $ 678 Cash payment for income taxes 3,714 3.730 4.558 Divestiture of Batteries business in exchange for shares of P&G stock() 4,213 Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt 11,360 Assets acquired through non-cash capital leases are immaterial for all periods. Includes $543 of costs related to early extinguishment of debt. (Includes $1.730 from cash infused into the Batteries business pursuant to the divestiture agreement (see Note 13). See accompanying Notes to Consolidated Financial Statements Show Attemot History Current Attemptin Progress The financial statements of P&Gare presented in Appendix B. The company's complete annual report, including the notes to the financial statements, is available online Click here to view Appendix B Refer to PSG's financial statements and accompanying notes to answer the following questions (a) Your answer is incorrect Under PSGs stock-based compensation plan, stock options are granted annually to key managers and directors (1) How many options were granted during 2017 under the plan? 075 (a) Your answer is incorrect Under PSG's stock-based compensation plan, stock options are granted annually to key managers and directors (1) How many options were granted during 2017 under the plan? Options granted during 2017 (2) How many options were exercisable at June 30, 2017? Options exerciseable at June 30, 2017 (3) How many options were exercised in 2017 and what was the average price of those exercised? (Round average price to 2 decimal places. e. 15.25) 13) How many options were crised in 2017 and what was the average price of those the Round average price to 2 decimal places. 15.25 Options served in 2017 Average price 5 (4) What is the total stock-based compensation pense for stock options and the total compensation expense for restricted stock. restricted stock units Suit and performance stock units (PSU) for 2017, 2016 and 20152 2017 2016 Total stock based compensation expense 201 Totalcompensation expense $ (5) To what accounts are the proceeds from these action series credited! Option exercises credited . (5) To what accounts are the proceeds from these option exercises credited? Option exerches credited (6) What was the number of outstanding options at June 30, 2017 and at what average exercise price? (Round average price to 2 decimal places. e. 15.25 Number of outstanding options Average exercise price eTextbook and Media Save for Later Attempts: unlimited Submit Answ (b) The parts of this question must be completed in order. This part will be available when you complete the partabavn