DISCONTINUED OPERATIONS

6 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

On October 1, 2016, the Company completed the divestiture of four product categories to Coty, Inc. (“Coty”). The divestiture included 41 of the Company's beauty brands (“Beauty Brands”), including the global salon professional hair care and color, retail hair color, cosmetics and a majority of the fine fragrance businesses, along with select hair styling brands. The form of the divestiture transaction was a Reverse Morris Trust split-off, in which P&G shareholders were given the election to exchange their P&G shares for shares of a new corporation that held the Beauty Brands (Galleria Co.), and then immediately exchange those shares for Coty shares. The value P&G received in the transaction was $11.4 billion. The value is comprised of 105 million shares of common stock of the Company, which were tendered by shareholders of the Company and exchanged for the Galleria Co. shares, valued at approximately $9.4 billion, and the assumption of $1.9 billion of debt by Galleria Co.. The shares tendered in the transaction were reflected as an addition to treasury stock and the cash received related to the debt assumed by Coty was reflected as an investing activity in the Consolidated Statement of Cash Flows. The Company recorded an after-tax gain on the final transaction of $5.3 billion, net of transaction and related costs.

Two of the fine fragrance brands, Dolce & Gabbana and Christina Aguilera, were excluded from the divestiture. These brands were divested at amounts that approximated their adjusted carrying values.

In February 2016, the Company completed the divestiture of its Batteries business to Berkshire Hathaway (BH) via a split transaction, in which the Company exchanged Duracell, which the Company had infused with approximately $1.9 billion of additional cash, to repurchase all 52.5 million shares of P&G stock owned by BH. During fiscal 2016, the Company recorded a non-cash, before-tax goodwill and indefinite-lived asset impairment charge of $402 ($350 after-tax), to reduce the value to the total estimated proceeds based on the value of BH’s shares in P&G stock at the time of the impairment charges. The Company recorded an after-tax gain on the final transaction of $422 to reflect the final value of the BH’s shares in P&G stock. The total value of the transaction was $4.2 billion representing the value of the Duracell business and the cash infusion. The cash infusion was reflected as a purchase of treasury stock.

In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Beauty Brands and Batteries business are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Additionally, the Beauty Brands' balance sheet positions are presented as assets and liabilities held for sale in the Consolidated Balance Sheets as of June 30, 2016. The Beauty Brands were historically part of the Company's Beauty reportable segment. The Batteries business was historically part of the Company's Fabric & Home Care reportable segment.

On July 1, 2015, the Company adopted ASU 2014-08, which included new reporting and disclosure requirements for discontinued operations. The new requirements are effective for discontinued operations occurring on or after the adoption date, which includes the Beauty Brands divestiture. All other discontinued operations prior to July 1, 2015 are reported based on the previous disclosure requirements for discontinued operations, including the Batteries divestiture.

The following table summarizes Net earnings/(loss) from discontinued operations and reconciles to the Consolidated Statements of Earnings:

	Three Months Ended December 31				Six Months Ended December 31
	2016		2015		2016		2015
Beauty Brands	$	5,335	$	238	$	5,217	$	388
Batteries	—		85		—		(207		)
Net earnings/(loss) from discontinued operations	$	5,335	$	323	$	5,217	$	181

The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Beauty Brands:

	Beauty Brands
	Three Months Ended December 31							Six Months Ended December 31
	2016				2015			2016				2015
Net sales	$	—			$	1,404		$	1,159			$	2,623
Cost of products sold	—				443			450				828
Selling, general and administrative expense	—				664			783				1,311
Interest expense	—				—			14				—
Other non-operating income/(loss), net	—				(3		)	16				(2		)
Earnings/(loss) from discontinued operations before income taxes	$	—			$	294		$	(72	)		$	482
Income taxes on discontinued operations	—				56			46				94
Gain on sale of business before income taxes	$	5,197			$	—		$	5,197			$	—
Income tax expense/(benefit) on sale of business	(138		)	(1)	—			(138		)	(1)	—
Net earnings/(loss) from discontinued operations	$	5,335			$	238		$	5,217			$	388

⁽¹⁾  The income tax benefit of the Beauty Brands divestiture represents the reversal of underlying deferred tax balances offset by current tax expense related to the transaction.

The Beauty Brands incurred transition costs of $167, after-tax, for the three months ended September 30, 2016, included in the above table. Residual transaction costs for the three months ended December 31, 2016 are included in the gain on the sale of business in the table above.

The following is selected financial information related to cash flows from discontinued operations for the Beauty Brands:

	Beauty Brands
	Six Months Ended December 31
	2016			2015
NON-CASH OPERATING ITEMS
Depreciation and amortization	$	24		$	52
Deferred income tax benefit	(649		)	—
Before tax gain on sale of business	5,210			—
Net increase in accrued taxes	382			—
CASH FLOWS FROM OPERATING ACTIVITIES
Cash taxes paid	$	129		$	—
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	$	38		$	35

The major components of assets and liabilities of the Beauty Brands held for sale are provided below.

	Beauty Brands
	June 30, 2016
Cash	$	40
Restricted cash	996
Accounts receivable	384
Inventories	494
Prepaid expenses and other current assets	126
Property, plant and equipment, net	629
Goodwill and intangible assets, net	4,411
Other noncurrent assets	105
Current assets held for sale	$	7,185
Accounts payable	$	148
Accrued and other liabilities	384
Noncurrent deferred tax liabilities	370
Long-term debt	996
Other noncurrent liabilities	445
Current liabilities held for sale	$	2,343

Prior to the transaction, Beauty Brands drew $1.9 billion of debt ($1.0 billion as of June 30, 2016), which as noted above, was used to fund a portion of the transaction. The proceeds were held by the Beauty Brands as of June 30, 2016. In connection with the closing, this cash reverted to the Company and was used to retire P&G debt as part of a broader $2.5 billion debt retirement program that was completed in November 2016.

The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Batteries business:

	Batteries
	Three Months Ended December 31, 2015			Six Months Ended December 31, 2015
Net sales	$	691		$	1,197
Earnings before impairment charges and income taxes	138			231
Impairment charges	—			(402		)
Income tax (expense)/benefit	(53		)	(36		)
Net earnings/(loss) from discontinued operations	$	85		$	(207	)