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Published: 2021-09-28 10:49:18 ET
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11-K 1 pgisop2021.htm PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 11-K
 
\X\
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE FISCAL YEAR ENDED JUNE 30, 2021, OR
 
\ \
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] for the transition period from _________ to _______________
 
Commission file number 001-00434
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below: Procter & Gamble International Stock Ownership Plan, The Procter & Gamble Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202.
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: The Procter & Gamble Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202.
 
REQUIRED INFORMATION
 
Item 1.
Audited statements of financial condition as of the end of the latest two fiscal years of the plan (or such lesser period as the plan has been in existence).
 
Item 2.
Audited statements of income and changes in plan equity for each of the latest three fiscal years of the plan (or such lesser period as the plan has been in existence).
 
 
 
 
 
 
 
 
 
 
 
 

 
 





 
 
 
 
 
 
 


 
            
 
Procter & Gamble
International Stock
Ownership Plan

Financial Statements as of June 30, 2021 and 2020,
and for the Years Ended June 30, 2021, 2020,
and 2019, and Report of Independent Registered
Public Accounting Firm
  
                
               
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


   
PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN

TABLE OF CONTENTS
       
       Page
       
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    1
       
FINANCIAL STATEMENTS:    
       
  Statements of Net Assets Available for Plan Benefits as of June 30, 2021 and 2020    2
       
 
Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended
          June 30, 2021, 2020, and 2019
  
 
3
       
 
Notes to Financial Statements as of June 30, 2021 and 2020, and for the
          Years Ended June 30, 2021, 2020, and 2019
  

4-9
















REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Participants and The Board of Directors of The Procter & Gamble Company

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for plan benefits of the Procter & Gamble International Stock Ownership Plan (the "Plan") as of June 30, 2021 and 2020, the related statements of changes in net assets available for plan benefits for each of the three years in the period ended June 30, 2021, 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 plan benefits of the Plan as of June 30, 2021 and 2020, and the changes in net assets available for plan benefits for each of the three years in the period ended June 30, 2021, 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.


/s/ Deloitte & Touche LLP

Cincinnati, Ohio
September 28, 2021

We have served as the auditor of the Plan since at least 2000; however, an earlier year could not be reliably determined.



PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
    
       
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
    
AS OF JUNE 30, 2021 AND 2020
      
       
       
 
2021
  
2020
       
ASSETS:
      
  Cash
  $               13,317,027
  
  $            18,370,548
       
  Investments — at fair value:  
      
    The Procter & Gamble Company common stock —
      
      678,798 shares (cost $50,849,017) at June 30, 2021
      
      10,725,715 shares (cost $874,021,815) at June 30, 2020
                   91,590,214
  
           1,282,473,743
       
  Receivables:
      
    Participant contributions
                        288,700
  
                  7,610,317
    Employer contributions
                        210,201
  
                  3,440,948
       
           Total receivables
                        498,901
  
                11,051,265
       
           Total assets
                 105,406,142
  
           1,311,895,556
       
LIABILITY — Benefits payable
                               538
  
                     650,380
       
NET ASSETS AVAILABLE FOR PLAN BENEFITS
  $             105,405,604
  
  $       1,311,245,176
       
See notes to financial statements.
      
       




-2-

PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
      
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED JUNE 30, 2021, 2020, AND 2019
           
 
2021
  
2020
  
2019
ADDITIONS:
          
  Contributions:
          
    Participant contributions
  $            106,005,893
  
  $          100,003,884
  
  $           94,317,654
    Employer contributions
                 44,789,861
  
               41,963,005
  
              39,681,985
           
           Total contributions
                150,795,754
  
              141,966,889
  
             133,999,639
           
  Net investment income:
          
   Increase (decrease) in unrealized
          
      appreciation of investments
              (367,710,731)
  
               34,472,240
  
             303,886,046
    Realized gain from The Procter &
          
      Gamble Company common stock sold
                505,923,610
  
               75,592,054
  
              64,686,112
    Realized gain from The J.M. Smucker
          
      Company common stock sold
                               -
  
                    172,827
  
                    81,674
    Dividends from The Procter &
          
      Gamble Company common stock
                 16,509,028
  
               26,263,794
  
              27,324,087
    Dividends from The J.M. Smucker
          
      Company common stock
                               -
  
                       3,017
  
                      7,912
    Interest income
                         2,962
  
                     72,639
  
                   167,280
           
           Net investment income
                154,724,869
  
              136,576,571
  
             396,153,111
           
           Net additions
                305,520,623
  
              278,543,460
  
             530,152,750
           
DEDUCTIONS:
          
  Benefits paid to participants
              (141,393,977)
  
            (212,106,718)
  
           (266,144,763)
  Reimbursement to The Procter & Gamble Company
                               -
  
                             -
  
                 (976,043)
  Administrative fees
                      (31,009)
  
                    (44,604)
  
                   (50,545)
           
           Net deductions
              (141,424,986)
  
            (212,151,322)
  
           (267,171,351)
           
NET INCREASE PRIOR TO E*TRADE MIGRATION
                164,095,637
  
               66,392,138
  
             262,981,399
           
Migration to E*Trade
            (1,369,935,209)
  
                             -
  
                            -
           
NET INCREASE (DECREASE)
            (1,205,839,572)
  
               66,392,138
  
             262,981,399
NET ASSETS AVAILABLE FOR PLAN BENEFITS
          
  Beginning of year
             1,311,245,176
  
           1,244,853,038
  
             981,871,639
           
  End of year
  $            105,405,604
  
  $       1,311,245,176
  
  $      1,244,853,038
           
See notes to financial statements.
          
           


-3-
PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2021 AND 2020, AND FOR THE YEARS ENDED JUNE 30, 2021, 2020, AND 2019
1.
DESCRIPTION OF THE PLAN
The following description of the Procter & Gamble International Stock Ownership Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document and their country’s Plan supplement for more complete information.
General — The Plan is a defined contribution plan established in June of 1992 covering substantially all full-time international employees of The Procter & Gamble Company (the “Company”) and certain of its subsidiaries. Generally, participation varies by subsidiary or country and eligibility can begin immediately after employment and at various milestones up to one year. The Board of Directors of the Company controls and manages the operation and administration of the Plan. Bank of America Merrill Lynch serves as custodian of the Plan. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA), the rules and regulations of the U.S. Department of Labor, nor is it subject to U.S. income taxation (Note 7). The Plan’s recordkeeper is the Company.
Plan management closed participant accounts that were not closed by the deferral period in accordance with previous the Plan Document. Per the previous Plan Document, the Plan may have applied the funds resulting from the account closures to defray a subsidiary’s obligation for administrative expenses (see Note 5). Under the new Plan Document dated August 11, 2020, there is no deferral period.  If a participant later notifies the subsidiary of his or her whereabouts and requests the payments due under the Plan, the cash value of the amounts so applied shall be paid to him or her, as of the sales date, denominated in the currency of the participant’s jurisdiction. During the years ended June 30, 2021, 2020 and 2019, 608, 886 and 1,650 participant accounts were closed for approximately 541, 25,941 and 69,345 shares of Company common stock and 0, 1 and 54 shares of the J.M. Smucker Company (“Smucker”) common stock, respectively. Funds of $69,282, $3,232,604 and $6,339,397 were deposited to a separate account and are held as cash during the years ended June 30, 2021, 2020 and 2019, respectively. During the years ended June 30, 2021, 2020 and 2019, $1,691,095, $4,797,609 and $4,075,602, respectively, were reclaimed by participants. During the year ended June 30, 2019, the Plan used deferred funds to reimburse the Company $976,043, for administrative expenses incurred by the Company.  The Plan did not reimburse the Company for any administrative expense incurred by the Company during the years ended June 30, 2021 and 2020.
Contributions — Participants may contribute up to 20% of their base compensation, as defined in the Plan. The Company contributes 50% of the first 5% of the base compensation that a participant contributes to the Plan. However, participants in their initial year of eligibility receive a 100% Company contribution on the first 1% of the base compensation that the participant contributes to the Plan. Participants and/or Company may be permitted to contribute a lump sum payment as a “Special Additional Deposit.”
Participant Accounts — Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, the Company’s matching contribution, allocations of special additional deposits, if any, and Plan earnings, and charged with withdrawals and an allocation of Plan losses. Allocations 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.

-4-
Investments — Participants are only permitted to invest in Company common stock. All employee and Company contributions are converted into U.S. dollars and then invested in shares of Company common stock when funds are delivered to the custodian. Sales of Company stock may occur daily. Any dividends on shares of Company common stock are invested in additional shares of Company common stock, unless the participant elects to opt out.
The Plan’s investment in shares of Smucker common stock resulted from a 2002 transaction between the Company and Smucker.  As of June 30, 2020, the Plan no longer has any shares of Smucker common stock.
Vesting — Generally, participants are fully vested in all shares of common stock credited to their accounts under the Plan. In certain subsidiaries or countries, vesting provisions provide for vesting based on up to 30 years of continuous service for shares resulting from employer contributions.
Payment of Benefits — Participants may withdraw any portion of their contributions in excess of 5% of their base compensation, at any time during the year. Contributions made up to 5% of base compensation and Company matches are available to be withdrawn without penalty for a period of up to five years after the year in which the contributions are made.
E*Trade - During the year ended June 30, 2021, the Company began to move the administration of the Plan to E*Trade.  By country and plan, the majority of shares were transferred to E*Trade during the year and presented in the migration to E*Trade line in the Statements of Changes in Net Assets Available For Plan Benefits (9,712,914 shares valued at $1,284,665,195).  The shares remaining are expected to be transferred during the year ended June 30, 2022.  Once shares are transferred, they are no longer considered assets of the Plan.  However, participant and employer contributions ($61,912,400 and $23,357,614 subsequent to the initial transfer to E*Trade, respectively) are initially deposited into the Plan and included within the Plan’s financial statements.  Subsequently, they are automatically transferred to participants’ E*Trade accounts, and included in the migration to E*Trade line.
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 Plan 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 invests in Company common stock. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with 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.
During 2020, there was an outbreak of the novel corona virus (COVID 19), which impacted the financial markets and the global economy. COVID-19 has adversely affected, and may continue to adversely affect, the financial markets and the global economy. The related subsequent financial impact and duration cannot be reasonably estimated at this time.


-5-
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 or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion on fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis.
Cash — Amounts shown as cash are either 1) uninvested funds held by the custodian that are to be invested daily in Company common stock or 2) the balance of account closures past deferral that are held in a separate cash account.
Administrative Expenses — Administrative expenses (i.e., investment management and record keeping expenses) of the Plan are paid by the Company and the subsidiaries as provided in the Plan Document. The Plan may reimburse the Company for certain administrative expenses (see Note 5). Brokerage commissions are paid by the participant, and other costs related to the purchase or sale of shares are reflected in the price of the shares and borne by the participant.
Payment of Benefits — Benefit payments to participants are recorded when participants elect to withdraw. Amounts allocated to accounts of persons who have elected to withdraw from the Plan but have not yet been paid were $538 and $650,380 at June 30, 2021, and 2020, respectively.
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. Assets are classified 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, 2021 and 2020.
Common Stocks — Valued at the closing price reported on the active market on which they are 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. In such instances, the transfer is reported at the beginning of the reporting period.
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, 2021, 2020, and 2019, there were no transfers between levels.

-6-
The following tables set 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, 2021 and 2020.
 
                                   Assets Measured at Fair Value
 
                                 at June 30, 2021, Using
   
Quoted Prices in
  
Significant
  
Significant
    
   
Active Markets for
  
Other
  
Unobservable
    
   
Identical Assets
  
Observable Inputs
Inputs
    
   
(Level 1)
  
(Level 2)
  
(Level 3)
  
Total
                 
Common stock:
                
  The Procter & Gamble
                
    Company common stock
  
  $            91,590,214
  
  $                  -
  
  $                  -
  
  $          91,590,214
                 
Total investments
  
  $            91,590,214
  
  $                  -
  
  $                  -
  
  $          91,590,214
                 
   
                                   Assets Measured at Fair Value
   
                                   at June 30, 2020, Using
     
Quoted Prices in
  
Significant
  
Significant
    
     
Active Markets for
  
Other
  
Unobservable
    
     
Identical Assets
  
Observable Inputs
Inputs
    
     
(Level 1)
  
(Level 2)
  
(Level 3)
  
Total
                   
 
Common stock:
                
 
  The Procter & Gamble
                
 
    Company common stock
  
  $       1,282,473,743
  
  $                  -
  
  $                  -
  
  $     1,282,473,743
                   
 
Total investments
  
  $       1,282,473,743
  
  $                  -
  
  $                  -
  
  $     1,282,473,743
                   


4.
INVESTMENTS
The investments held by the Plan as of June 30, 2021, 2020, and 2019, and the related unrealized appreciation for the years ended June 30, 2021, 2020, and 2019, were as follows:
 
2021
  
2020
  
2019
           
Number of shares
                     678,798
  
              10,725,715
  
              11,083,712
           
Cost
  $             50,849,017
  
  $         874,021,815
  
  $        841,360,773
Market value
                91,590,214
  
          1,282,473,743
  
         1,215,340,461
           
Unrealized appreciation
  $             40,741,197
  
  $         408,451,928
  
  $        373,979,688
           
Increase (decrease) in unrealized
          
  appreciation
  $         (367,710,731)
  
  $           34,472,240
  
  $        303,886,046
           

-7-

The realized gain on sales of Company common stock for the years ended June 30, 2021, 2020, and 2019, was determined as follows:
 
2021
  
2020
  
2019
           
Proceeds on sales of shares
  $       1,425,087,201
  
  $      210,720,218
  
  $      268,240,621
Cost
             919,163,591
  
          135,128,164
  
         203,554,509
           
Realized gain
  $         505,923,610
  
  $        75,592,054
  
  $       64,686,112
           

The realized gain on sales of Smucker common stock for the years ended June 30, 2020 and 2019, was determined as follows:
 
2020
  
2019
  
         
Proceeds on sales of shares
  $     254,449
  
  $    105,596
  
Cost
           81,622
  
          23,922
  
         
Realized gain
  $     172,827
  
  $      81,674
  
         

5.
RELATED-PARTY TRANSACTIONS
At June 30, 2021 and 2020, the Plan held 678,798 and 10,725,715 shares, respectively, of Company common stock with a cost basis of $50,849,017 and $874,021,815, respectively. During the years ended June 30, 2021, 2020, and 2019, the Company contributed $44,789,861, $41,963,005, and $39,681,985, respectively, to the Plan on behalf of participating employees.
During the years ended June 30, 2021, 2020, and 2019, the Plan recorded dividend income from Company common stock of $16,509,028, $26,263,794, and $27,324,087, respectively.
During the years ended June 30, 2021, 2020, and 2019, the Plan’s investment in Company common stock, including gains and losses on investments bought and sold as well as held during the year, appreciated in value by $138,212,879, $110,220,539, and $368,534,142, respectively.
During the year ended June 30, 2019, the Plan made distributions of funds to the Company of $976,043. This represents reimbursement of administrative expenses paid by the Company for the Plan using funds obtained from the closing of accounts past deferral process (see Note 1).  No such distribution of funds to the Company were made during the years ended June 30, 2021 and 2020.
6.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan Document to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in the Plan Document.
7.
FEDERAL INCOME TAX STATUS
The Plan is not qualified under Section 401(a) of the Internal Revenue Code, and is exempt from the provisions of Title I of ERISA pursuant to Section 4(b)(4) thereof. The Company believes that the trustee should be viewed as a direct custodian.

-8-
Plan management believes that the participating employees should be treated as the beneficial owners of the shares of Company common stock held for their account under the Plan for U.S. tax purposes and that, subject to certain procedural conditions, the information provided by the employees may be relied upon in determining the applicable U.S. tax withholding rate on dividends paid by the Company with respect to these shares. The Plan is subject to routine audits by taxing jurisdictions at any time.
******

-9-


THE PLAN.  Pursuant to the requirements of the Securities Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized on September 28, 2021.


PROCTER & GAMBLE INTERNATIONAL STOCK OWNERSHIP PLAN



By:  /s/ Kyle Scheidler             
Kyle Scheidler
Group Manager






EXHIBIT INDEX

Exhibit No.