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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
xTrueQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2021
OR
oFalseTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
pg-20210331_g1.jpg
THE PROCTER & GAMBLE COMPANY
(Exact name of registrant as specified in its charter)
 

OhioOH1-43431-0411980
(State of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)
One Procter & Gamble PlazaCincinnatiOH
One Procter & Gamble Plaza, Cincinnati, Ohio45202
(Address of principal executive offices)(Zip Code)
(513) 983-1100
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, without Par ValuePGNYSE
2.000% Notes due 2021PG21NYSE
2.000% Notes due 2022PG22BNYSE
1.125% Notes due 2023PG23ANYSE
0.500% Notes due 2024PG24ANYSE
0.625% Notes due 2024PG24BNYSE
1.375% Notes due 2025PG25NYSE
4.875% EUR notes due May 2027PG27ANYSE
1.200% Notes due 2028PG28NYSE
1.250% Notes due 2029PG29BNYSE
1.800% Notes due 2029PG29ANYSE
6.250% GBP notes due January 2030PG30NYSE
5.250% GBP notes due January 2033PG33NYSE
1.875% Notes due 2038PG38NYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ     No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 þ
Accelerated filer
 ¨
Non-accelerated filer
 ¨
Smaller reporting company
 ¨
False
Emerging growth company
 ¨
False
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o     No þ False

There were 2,448,232,786 shares of Common Stock outstanding as of March 31, 2021.



PART I. FINANCIAL INFORMATION 

Item 1.Financial Statements

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended March 31Nine Months Ended March 31
Amounts in millions except per share amounts2021 20202021 2020
NET SALES$18,109 $17,214 $57,172 $53,252 
Cost of products sold8,922 8,716 27,317 26,308 
Selling, general and administrative expense5,402 5,045 15,409 14,719 
OPERATING INCOME3,785 3,453 14,446 12,225 
Interest expense(106)(100)(385)(308)
Interest income11 39 30 133 
Other non-operating income/(expense), net 187 106 (40)323 
EARNINGS BEFORE INCOME TAXES3,877 3,498 14,051 12,373 
Income taxes628 541 2,607 2,056 
NET EARNINGS3,249 2,957 11,444 10,317 
Less: Net earnings/(loss) attributable to noncontrolling interests(20)40 44 90 
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE$3,269 $2,917 $11,400 $10,227 
NET EARNINGS PER SHARE (1)
Basic$1.30 $1.15 $4.53 $4.03 
Diluted$1.26 $1.12 $4.37 $3.89 
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING2,590.3 2,613.3 2,610.4 2,630.3 
(1)Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

See accompanying Notes to Consolidated Financial Statements.



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31Nine Months Ended March 31
Amounts in millions2021202020212020
NET EARNINGS$3,249 $2,957 $11,444 $10,317 
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
Foreign currency translation(598)(1,164)639 (1,312)
Unrealized gains/(losses) on investment securities5 (6)19 (12)
Unrealized gains on defined benefit retirement plans194 185 24 327 
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX(399)(985)682 (997)
TOTAL COMPREHENSIVE INCOME2,850 1,972 12,126 9,320 
Less: Total comprehensive income/(loss) attributable to noncontrolling interests(21)29 50 73 
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE$2,871 $1,943 $12,076 $9,247 

See accompanying Notes to Consolidated Financial Statements.



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in millionsMarch 31, 2021June 30, 2020
Assets
CURRENT ASSETS
Cash and cash equivalents$10,007 $16,181 
Accounts receivable4,861 4,178 
INVENTORIES
Materials and supplies1,548 1,414 
Work in process710 674 
Finished goods3,744 3,410 
Total inventories6,002 5,498 
Prepaid expenses and other current assets1,738 2,130 
TOTAL CURRENT ASSETS22,608 27,987 
PROPERTY, PLANT AND EQUIPMENT, NET21,103 20,692 
GOODWILL40,612 39,901 
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET23,658 23,792 
OTHER NONCURRENT ASSETS8,797 8,328 
TOTAL ASSETS$116,778 $120,700 
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable$12,134 $12,071 
Accrued and other liabilities11,109 9,722 
Debt due within one year8,773 11,183 
TOTAL CURRENT LIABILITIES32,016 32,976 
LONG-TERM DEBT21,053 23,537 
DEFERRED INCOME TAXES5,977 6,199 
OTHER NONCURRENT LIABILITIES10,813 11,110 
TOTAL LIABILITIES69,859 73,822 
SHAREHOLDERS’ EQUITY
Preferred stock873 897 
Common stock – shares issued –March 20214,009.2 
June 20204,009.2 4,009 4,009 
Additional paid-in capital64,682 64,194 
Reserve for ESOP debt retirement(1,006)(1,080)
Accumulated other comprehensive loss(15,489)(16,165)
Treasury stock(112,147)(105,573)
Retained earnings105,674 100,239 
Noncontrolling interest323 357 
TOTAL SHAREHOLDERS’ EQUITY46,919 46,878 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$116,778 $120,700 

See accompanying Notes to Consolidated Financial Statements.



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Months Ended March 31, 2021
Dollars in millions;
shares in thousands
Common StockPreferred StockAdd-itional Paid-In CapitalReserve for ESOP Debt RetirementAccumu-lated
Other
Comp-rehensive
Income/(Loss)
Treasury StockRetained EarningsNon-controlling InterestTotal Share-holders' Equity
SharesAmount
BALANCE
DECEMBER 31, 2020
2,462,476 $4,009 $885 $64,672 ($1,072)($15,091)($109,583)$104,361 $359 $48,540 
Net earnings3,269 (20)3,249 
Other comprehensive income/(loss)(398)(1)(399)
Dividends and dividend equivalents ($0.7907 per share):
Common(1,952)(1,952)
Preferred, net of tax benefits(65)(65)
Treasury stock purchases(23,085)(3,001)(3,001)
Employee stock plans7,605 8 427 435 
Preferred stock conversions1,237 (12)2 10  
ESOP debt impacts66 61 127 
Noncontrolling interest, net(15)(15)
BALANCE
MARCH 31, 2021
2,448,233 $4,009 $873 $64,682 ($1,006)($15,489)($112,147)$105,674 $323 $46,919 

Nine Months Ended March 31, 2021
Dollars in millions;
shares in thousands
Common StockPreferred StockAdd-itional Paid-In CapitalReserve for ESOP Debt RetirementAccumu-lated
Other
Comp-rehensive
Income/(Loss)
Treasury StockRetained EarningsNon-controlling InterestTotal Share-holders' Equity
SharesAmount
BALANCE
JUNE 30, 2020
2,479,746 $4,009 $897 $64,194 ($1,080)($16,165)($105,573)$100,239 $357 $46,878 
Net earnings11,400 44 11,444 
Other comprehensive income/(loss)676 6 682 
Dividends and dividend equivalents
($2.3721 per share)
Common(5,887)(5,887)
Preferred, net of tax benefits(197)(197)
Treasury stock purchases(59,212)(8,009)(8,009)
Employee stock plans24,945 484 1,415 1,899 
Preferred stock conversions2,754 (24)4 20  
ESOP debt impacts74 119 193 
Noncontrolling interest, net(84)(84)
BALANCE
MARCH 31, 2021
2,448,233 $4,009 $873 $64,682 ($1,006)($15,489)($112,147)$105,674 $323 $46,919 

See accompanying Notes to Consolidated Financial Statements.



Three Months Ended March 31, 2020
Dollars in millions;
shares in thousands
Common StockPreferred StockAdd-itional Paid-In CapitalReserve for ESOP Debt RetirementAccumu-lated
Other
Comp-rehensive
Income/(Loss)
Treasury StockRetained EarningsNon-controlling InterestTotal Share-holders' Equity
SharesAmount
BALANCE
DECEMBER 31, 2019
2,469,453 $4,009 $911 $64,019 ($1,112)($14,942)($105,761)$98,414 $370 $45,908 
Net earnings2,917 40 2,957 
Other comprehensive income/(loss)(974)(11)(985)
Dividends and dividend equivalents
($0.7459 per share):
Common(1,850)(1,850)
Preferred, net of tax benefits(64)(64)
Treasury stock purchases(7,313)(901)(901)
Employee stock plans12,234 (44)829 785 
Preferred stock conversions1,269 (11)1 10  
ESOP debt impacts32 57 89 
Noncontrolling interest, net2 2 
BALANCE
MARCH 31, 2020
2,475,643 $4,009 $900 $63,976 ($1,080)($15,916)($105,823)$99,474 $401 $45,941 

Nine Months Ended March 31, 2020
Dollars in millions;
shares in thousands
Common StockPreferred StockAdd-itional Paid-In CapitalReserve for ESOP Debt RetirementAccumu-lated
Other
Comp-rehensive
Income/(Loss)
Treasury StockRetained EarningsNon-controlling InterestTotal Share-holders' Equity
SharesAmount
BALANCE
JUNE 30, 2019
2,504,751 $4,009 $928 $63,827 ($1,146)($14,936)($100,406)$94,918 $385 $47,579 
Net earnings10,227 90 10,317 
Other comprehensive income/(loss)(980)(17)(997)
Dividends and dividend equivalents (2.2377 per share):
Common(5,587)(5,587)
Preferred, net of tax benefits(193)(193)
Treasury stock purchases(61,346)(7,405)(7,405)
Employee stock plans28,965 145 1,964 2,109 
Preferred stock conversions3,273 (28)4 24  
ESOP debt impacts66 109 175 
Noncontrolling interest, net(57)(57)
BALANCE
MARCH 31, 2020
2,475,643 $4,009 $900 $63,976 ($1,080)($15,916)($105,823)$99,474 $401 $45,941 

See accompanying Notes to Consolidated Financial Statements.




THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31
Amounts in millions20212020
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD$16,181 $4,239 
OPERATING ACTIVITIES
Net earnings11,444 10,317 
Depreciation and amortization2,025 2,199 
Loss on early extinguishment of debt512  
Share-based compensation expense398 325 
Deferred income taxes(167)(588)
Loss/(gain) on sale of assets(15)11 
Changes in:
Accounts receivable(604)135 
Inventories(399)(533)
Accounts payable, accrued and other liabilities1,049 738 
Other operating assets and liabilities(92)(58)
Other99 51 
TOTAL OPERATING ACTIVITIES14,250 12,597 
INVESTING ACTIVITIES
Capital expenditures(2,073)(2,415)
Proceeds from asset sales40 28 
Acquisitions, net of cash acquired (58)
Purchases of investments securities(10) 
Proceeds from sales and maturities of investment securities 6,151 
Change in other investments (2)
TOTAL INVESTING ACTIVITIES(2,043)3,704 
FINANCING ACTIVITIES
Dividends to shareholders(6,066)(5,761)
Increases/(reductions) in short-term debt(3,381)3,020 
Additions to long-term debt2,429 4,951 
Reductions to long-term debt (1)
(4,889)(1,534)
Treasury stock purchases(8,009)(7,405)
Impact of stock options and other1,470 1,761 
TOTAL FINANCING ACTIVITIES(18,446)(4,968)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH65 (179)
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(6,174)11,154 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$10,007 $15,393 
(1)Includes early extinguishment of debt costs of $512 during the nine months ended March 31, 2021.

See accompanying Notes to Consolidated Financial Statements.



THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
These statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the fiscal year ended June 30, 2020. In the opinion of management, the accompanying unaudited Consolidated Financial Statements of The Procter & Gamble Company and subsidiaries (the "Company," "Procter & Gamble," "P&G," "we" or "our") contain all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods reported. However, the results of operations included in such financial statements may not necessarily be indicative of annual results.
2. New Accounting Pronouncements and Policies
On July 1, 2020, we adopted ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard simplifies the accounting for goodwill impairment by requiring a goodwill impairment to be measured using a single step impairment model, whereby the impairment equals the difference between the carrying amount and the estimated fair value of the specified reporting units in their entirety. This eliminated the second step of the previous impairment model that required companies to first estimate the fair value of all assets in a reporting unit and measure impairments based on those estimated fair values and a residual measurement approach. It also specifies that any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The impact of the new standard will depend on the specific facts and circumstances of future individual impairments, if any.
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying accounting principles generally accepted in the United States of America (U.S. GAAP) to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met and to other derivative instruments if there is a change to the interest rates used for discounting, margining or contract price alignment. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating our contracts and the optional expedients provided by the new standard.
No other new accounting pronouncement issued or effective during the fiscal year had, or is expected to have, a material impact on our Consolidated Financial Statements.
3. Segment Information
Under U.S. GAAP, our operating segments are aggregated into five reportable segments: 1) Beauty, 2) Grooming, 3) Health Care, 4) Fabric & Home Care and 5) Baby, Feminine & Family Care. Our five reportable segments are comprised of:
Beauty: Hair Care (Conditioners, Shampoos, Styling Aids, Treatments); Skin and Personal Care (Antiperspirants and Deodorants, Personal Cleansing, Skin Care);
Grooming: Shave Care (Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Shave Care); Appliances;
Health Care: Oral Care (Toothbrushes, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Pain Relief, Other Personal Health Care);
Fabric & Home Care: Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents); Home Care (Air Care, Dish Care, P&G Professional, Surface Care); and
Baby, Feminine & Family Care: Baby Care (Baby Wipes, Taped Diapers and Pants); Feminine Care (Adult Incontinence, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).









Amounts in millions of dollars unless otherwise specified.


Our operating segments are comprised of similar product categories. Operating segments that individually accounted for 5% or more of consolidated net sales are as follows:
% of Net sales by operating segment (1)
Three Months Ended March 31Nine Months Ended March 31
2021202020212020
Fabric Care23%23%22%23%
Home Care12%11%12%10%
Baby Care11%11%10%11%
Skin and Personal Care9%9%10%10%
Hair Care9%9%9%9%
Family Care9%9%9%9%
Oral Care8%8%8%8%
Shave Care7%7%7%7%
Feminine Care6%7%6%6%
Personal Health Care5%5%5%5%
Other1%1%2%2%
Total100%100%100%100%
(1)% of Net sales by operating segment excludes sales held in Corporate.
The following is a summary of reportable segment results:
Three Months Ended March 31Nine Months Ended March 31
Net SalesEarnings/(Loss) Before Income TaxesNet EarningsNet SalesEarnings/(Loss) Before Income TaxesNet Earnings
Beauty2021$3,316 $721 $577 $10,907 $3,145 $2,508 
20203,033 553 436 10,183 2,717 2,168 
Grooming20211,438 314 256 4,774 1,277 1,063 
20201,380 305 254 4,559 1,225 1,018 
Health Care20212,356 484 377 7,573 1,993 1,557 
20202,262 523 408 7,013 1,795 1,380 
Fabric & Home Care20216,275 1,348 1,027 19,417 4,689 3,626 
20205,826 1,271 957 17,445 3,887 2,960 
Baby, Feminine & Family Care20214,604 1,133 871 14,185 3,803 2,924 
20204,597 1,130 859 13,746 3,340 2,552 
Corporate2021120 (123)141 316 (856)(234)
2020116 (284)43 306 (591)239 
Total Company2021$18,109 $3,877 $3,249 $57,172 $14,051 $11,444 
202017,214 3,498 2,957 53,252 12,373 10,317 

Amounts in millions of dollars unless otherwise specified.


4. Goodwill and Other Intangible Assets
Goodwill is allocated by reportable segment as follows:
BeautyGroomingHealth CareFabric & Home CareBaby, Feminine & Family CareTotal Company
Goodwill at June 30, 2020$12,902 $12,815 $7,786 $1,841 $4,557 $39,901 
Translation and other254 206 159 24 68 711 
Goodwill at March 31, 2021$13,156 $13,021 $7,945 $1,865 $4,625 $40,612 
Goodwill increased from June 30, 2020 due to currency translation.

Identifiable intangible assets at March 31, 2021 were comprised of:
Gross Carrying AmountAccumulated Amortization
Intangible assets with determinable lives$8,574 $(6,005)
Intangible assets with indefinite lives21,089  
Total identifiable intangible assets$29,663 $(6,005)
Intangible assets with determinable lives consist of brands, patents, technology and customer relationships. The intangible assets with indefinite lives consist of brands. The amortization expense of determinable-lived intangible assets for the three months ended March 31, 2021 and 2020 was $78 and $87, respectively. For the nine months ended March 31, 2021 and 2020, the amortization expense was $241 and $274, respectively.
Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually for impairment by comparing the estimated fair values of our reporting units and underlying indefinite-lived intangible assets to their respective carrying values. We typically use an income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. If the resulting fair value is less than the asset's carrying value, that difference represents an impairment. Our annual impairment testing for goodwill and indefinite-lived intangible assets occurs during the three months ended December 31.
The business unit valuations used to test goodwill and intangible assets for impairment depend on a number of significant estimates and assumptions, including macroeconomic conditions, overall category growth rates, competitive activities, cost containment, margin expansion and Company business plans. We believe these estimates and assumptions are reasonable. However, future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets, including discount rates, tax rates or future cash flow projections, could result in significantly different estimates of the fair values. To the extent changes in such factors result in a failure to achieve the level of projected cash flows initially used to estimate fair value for purposes of establishing or subsequently impairing the carrying amount of goodwill and related intangible assets, we may need to record non-cash impairment charges in the future.
Most of our goodwill reporting units are comprised of a combination of legacy and acquired businesses and as a result have fair value cushions that, at a minimum, exceed two times their underlying carrying values. Certain of our goodwill reporting units, in particular Shave Care and Appliances, are comprised entirely of acquired businesses and as a result, have fair value cushions that are not as high. The Appliances reporting unit has a fair value that significantly exceeds the underlying carrying value. As previously disclosed, the carrying value of the Shave Care reporting unit and the related Gillette indefinite-lived intangible asset were impaired during the quarter ended June 30, 2019. Also, as previously disclosed, the Shave Care reporting unit fair value exceeded its carrying value by more than 20% and the Gillette indefinite-lived intangible asset fair value approximated its carrying value as of our fiscal 2020 impairment testing dates. Based on our impairment testing during the three months ended December 31, 2020, the Shave Care reporting unit fair value continued to exceed its carrying value by more than 20% and the Gillette indefinite-lived intangible asset's fair value continued to approximate its carrying value.
The most significant assumptions utilized in the determination of the estimated fair values of the Shave Care reporting unit and the Gillette indefinite-lived intangible asset are the net sales and earnings growth rates (including residual growth rates) and the discount rate. The residual growth rate represents the expected rate at which the Shave Care reporting unit and Gillette brand are expected to grow beyond the shorter-term business planning period. The residual growth rate utilized in our fair value estimates is consistent with the reporting unit and brand operating plans and approximates expected long-term category market growth rates. The residual growth rate depends on overall market growth rates, the competitive environment, inflation, relative currency exchange rates and business activities that impact market share. As a result, the residual growth rate could be adversely impacted by a sustained deceleration in category growth, grooming habit changes, devaluation of currencies against the U.S. dollar or an increased competitive environment. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including
Amounts in millions of dollars unless otherwise specified.


consideration of both debt and equity components of the capital structure. Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and debt markets or other country specific factors, such as further devaluation of currencies against the U.S. dollar. Currency spot rates as of the fair value measurement date are utilized in our fair value estimates for cash flows outside the U.S.
While management can and has implemented strategies to address these events, changes in operating plans or adverse changes in the business or in the macroeconomic environment in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that would trigger future impairment charges of the Shave Care reporting unit's goodwill and indefinite-lived intangibles. The duration and severity of the COVID-19 pandemic could also result in future impairment charges for the Shave Care reporting unit goodwill and the Gillette indefinite-lived intangible asset. While we have concluded that a triggering event did not occur during the quarter ended March 31, 2021, the Gillette indefinite-lived intangible asset is most susceptible to future impairment risk. Our assessment of the Gillette intangible asset assumes the pandemic’s impact on net sales growth rates will be largely eliminated by the end of the fiscal year. There continues to be a high level of uncertainty relating to how the pandemic will evolve, how governments and consumers will react and progress on the distribution of vaccines. Accordingly, there continues to be risk related to this key assumption. A more prolonged pandemic recovery period could impact the assumptions utilized in the determination of the estimated fair values of the Shave Care reporting unit and the Gillette indefinite-lived intangible asset that are significant enough to trigger an impairment. Net sales and earnings growth rates could be negatively impacted by reductions or changes in demand for our shave care products, which may be caused by, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine or other travel restrictions, or financial hardship, or by shifts in demand away from one or more of our higher priced products to lower priced products. In addition, relative global and country/regional macroeconomic factors could result in additional and prolonged devaluation of other countries’ currencies relative to the U.S. dollar. Finally, the discount rate utilized in our valuation model could be impacted by changes in the underlying interest rates and risk premiums included in the determination of the cost of capital. As of March 31, 2021, the carrying values of the Shave Care goodwill and the Gillette indefinite-lived intangible asset were $12.7 billion and $14.1 billion, respectively.
We performed a sensitivity analysis for the Shave Care reporting unit and the Gillette indefinite-lived intangible asset during our annual impairment testing, utilizing reasonably possible changes in the assumptions for the shorter-term and residual growth rates and the discount rate, to demonstrate the potential impacts to the estimated fair values. The table below provides, in isolation, the estimated fair value impacts related to a 25 basis-point increase in the discount rate or a 25 basis-point decrease in our shorter-term and residual growth rates, either of which, in isolation, would result in an impairment of the Gillette indefinite-lived intangible asset.
Approximate Percent Change in Estimated Fair Value
+25 bps Discount Rate-25 bps Growth Rates
Shave Care goodwill reporting unit(6)%(6)%
Gillette indefinite-lived intangible asset(6)%(6)%



Amounts in millions of dollars unless otherwise specified.


5. Earnings Per Share
Basic net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble less preferred dividends (net of related tax benefits) by the weighted average number of common shares outstanding during the period. Diluted net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble by the diluted weighted average number of common shares during the period. The diluted shares include the dilutive effect of stock options and other stock-based awards based on the treasury stock method and the assumed conversion of preferred stock.
Net earnings per share were calculated as follows:
CONSOLIDATED AMOUNTSThree Months Ended March 31Nine Months Ended March 31
2021202020212020
Net earnings$3,249 $2,957 $11,444 $10,317 
Less: Net earnings/(loss) attributable to noncontrolling interests(20)40 44 90 
Net earnings attributable to P&G (Diluted)3,269 2,917 11,400 10,227 
Less: Preferred dividends, net of tax65 64 197 193 
Net earnings attributable to P&G available to common shareholders (Basic)$3,204 $2,853 $11,203 $10,034 
SHARES IN MILLIONS
Basic weighted average common shares outstanding2,459.1 2,476.2 2,473.7 2,489.1 
Add: Effect of dilutive securities
Conversion of preferred shares (1)
82.3 85.5 83.1 86.4 
Impact of stock options and other unvested equity awards (2)
48.9 51.6 53.6 54.8 
Diluted weighted average common shares outstanding2,590.3 2,613.3 2,610.4 2,630.3 
NET EARNINGS PER SHARE (3)
Basic$1.30 $1.15 $4.53 $4.03 
Diluted$1.26 $1.12 $4.37 $3.89 
(1)Despite being included currently in Diluted net earnings per common share, the actual conversion to common stock occurs when the preferred shares are sold. Shares may only be sold after being allocated to the ESOP participants pursuant to the repayment of the ESOP's obligations through 2035.
(2)Weighted average outstanding stock options of approximately 12 million and 7 million for the three months ended March 31, 2021 and 2020, and approximately 8 million and 3 million for the nine months ended March 31, 2021 and 2020, respectively, were not included in the Diluted net earnings per share calculation because the options were out of the money or to do so would have been antidilutive (i.e., the total proceeds upon exercise would have exceeded the market value of the underlying common shares).
(3)Net earnings per share are calculated on Net earnings attributable to Procter & Gamble.
6. Share-Based Compensation and Postretirement Benefits
The following table provides a summary of our share-based compensation expense and postretirement benefit costs:
Three Months Ended March 31Nine Months Ended March 31
2021202020212020
Share-based compensation expense$144   $123 $398 $325 
Net periodic benefit cost for pension benefits (1)
48 42 141 126 
Net periodic benefit credit for other retiree benefits (1)
(80)(