our investments in foreign operations. These currency interest rate swaps are designated as hedges of the Company's foreign net investments. Based on our interest rate exposure as of and during the year ended June 30, 2022, inclu ding derivative and other instruments sensitive to interest rates, we believe a near - term change in interest rates, at a 95% confidence level based on historical interest rate movements, would not materially affect our financial statements. Currency Rate E xposure on Financial Instruments. Because we manufacture and sell products and finance operations in a number of countries throughout the world, we are exposed to the impact on revenue and expenses of movements in currency exchange rates. Corporate policy prescribes the range of allowable hedging activity. To manage the exchange rate risk associated with the financing of our operations, we primarily use forward contracts and currency swaps with maturities of less than 18 months. Based on our currency rate exposure on derivative and other instruments as of and during the year ended June 30, 2022, we believe, at a 95% confidence level based on historical currency rate movements, the impact on such instruments of a near - term change in currency rates would not materially affect our financial statements. Commodity Price Exposure on Financial Instruments. We use raw materials that are subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors. We may use futures, options a nd swap contracts to manage the volatility related to the above exposures. As of and during the years ended June 30, 2022, and June 30, 2021, we did not have any financial commodity hedging activity. Measures Not Defined By U.S. GAAP In accordance with th e SEC's Regulation S - K Item 10(e), the following provides definitions of the non - GAAP measures and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective of underlying business trends (i.e., trends excluding non - recurring or unusual items) and results 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 bus iness 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 ev aluate 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 measures, but rather as supplemental information to our business result s. 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. These measures include: Organic Sales Growth. Organic sales growth is a non - GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year - over - year comparisons. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales g rowth on a consistent basis. This measure is used in assessing achievement of management goals for at - risk compensation. The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth: Year ended June 30, 2022 Net Sales Growth Foreign Exchange Impact Acquisition & Divestiture Impact/Other (1) Organic Sales Growth Beauty 2 % — % — % 2 % Grooming 2 % 3 % — % 5 % Health Care 9 % 1 % — % 10 % Fabric & Home Care 6 % 2 % — % 8 % Baby, Feminine & Family Care 5 % 1 % — % 6 % TOTAL COMPANY 5 % 2 % — % 7 % (1) Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures and rounding impacts necessary to reconcile net sales to organic sales. Adjusted Free Cash Flow. Adjusted free cash flow is defined as operating cash flow less capital spending and transitional tax payments resulting from the U.S. Tax Act beginning in 2019. Adjusted free cash flow repr esents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. We view adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for d ividends, share repurchases, acquisitions and other discretionary investments. The following table provides a numerical reconciliation of adjusted free cash flow ($ millions): Operating Cash Flow Capital Spending Adjustments to Operating Cash Flow (1) Adjusted Free Cash Flow 2022 $ 16,723 $ (3,156) $ 225 $ 13,792 2021 $ 18,371 $ (2,787) $ 225 $ 15,809 (1) Adjustments to Operating Cash Flow include transitional tax payments resulting from the U.S. Tax Act of $225 in 2022 and 2021. The Procter & Gamble Company 31