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 (Conditioner, Shampoo, Styling Aids, Treatments); Skin and Personal Care (Antiperspirant and Deodorant, 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).
While none of our reportable segments are highly seasonal, components within certain reportable segments, such as Appliances (Grooming) and Personal Health Care (Health), are seasonal.
The accounting policies of the segments are generally the same as those described in Note 1. Differences between these policies and U.S. GAAP primarily reflect income taxes, which are reflected in the segments using applicable blended statutory rates. Adjustments to arrive at our effective tax rate are included in Corporate. In addition, capital expenditures in the segments are on an accrual basis consistent with the balance sheet. Adjustments to move from an accrual to cash basis, for purposes of the cash flow statement, are reflected in Corporate.
Corporate includes certain operating and non-operating activities that are not reflected in the operating results used internally to measure and evaluate the businesses, as well as items to adjust management reporting principles to U.S. GAAP. Operating activities in Corporate include the results of incidental businesses managed at the corporate level. Operating elements also include certain employee benefit costs, the costs of certain restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization, certain significant asset impairment charges and other general Corporate items. The non-operating elements in Corporate primarily include interest expense, certain pension and other postretirement benefit costs, certain acquisition and divestiture gains, interest and investing income and other financing costs.
Total assets for the reportable segments include those assets managed by the reportable segment, primarily inventory, fixed assets and intangible assets. Other assets, primarily cash, accounts receivable, investment securities and goodwill, are included in Corporate.
Amounts in millions of dollars except per share amounts or as otherwise specified.
46 The Procter & Gamble Company
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 Years ended June 30 2021 2020 2019
Fabric Care 22% 22% 22% Home Care 12% 11% 10% Baby Care 10% 11% 12% Skin and Personal Care 10% 10% 10% Hair Care 9% 9% 10% Family Care 9% 9% 9% Oral Care 8% 8% 8% Shave Care 7% 7% 8% Feminine Care 6% 6% 6% Personal Health Care 5% 5% 4% All Other 2% 2% 1%
TOTAL 100% 100% 100%
% of Net sales by operating segment excludes sales held in Corporate.
Net sales and long-lived assets in the United States and internationally were as follows (in billions):
Years ended June 30 2021 2020 2019
NET SALES United States $ 33.7 $ 31.3 $ 28.6 International $ 42.4 $ 39.7 $ 39.1
LONG-LIVED ASSETS United States $ 10.1 $ 9.9 $ 10.0 International $ 11.6 $ 10.8 $ 11.3
Long-lived assets consists of property, plant and equipment.
No country, other than the United States, exceeds 10% of the Company’s consolidated net sales or long-lived assets.
Our largest customer, Walmart Inc. and its affiliates, accounted for consolidated net sales of approximately 15% in 2021, 2020 and 2019. No other customer represents more than 10% of our consolidated net sales.
Global Segment Results Net Sales
Earnings/(Loss) Before
Income Taxes Net Earnings/(Loss)
Depreciation and
Amortization Total Assets
Capital Expenditures
BEAUTY 2021 $ 14,417 $ 4,018 $ 3,210 $ 333 $ 5,587 $ 386 2020 13,359 3,437 2,737 320 5,531 397 2019 12,897 3,282 2,637 272 5,362 634
GROOMING 2021 6,440 1,728 1,427 378 20,668 291 2020 6,069 1,613 1,329 406 20,589 305 2019 6,199 1,777 1,529 429 20,882 367
HEALTH CARE 2021 9,956 2,398 1,851 372 7,976 364 2020 9,028 2,156 1,652 350 7,726 338 2019 8,218 1,984 1,519 294 7,708 363
FABRIC & HOME CARE 2021 26,014 5,986 4,622 646 8,334 1,006 2020 23,735 5,426 4,154 605 7,745 887 2019 22,080 4,601 3,518 557 7,620 984
BABY, FEMININE & FAMILY CARE 2021 18,850 4,723 3,629 846 8,666 814
2020 18,364 4,534 3,465 839 8,628 764 2019 17,806 3,593 2,734 861 9,271 819
CORPORATE 2021 441 (1,238) (387) 160 68,076 (74) 2020 395 (1,332) (234) 493 70,481 382 2019 484 (9,168) (7,971) 411 64,252 180
TOTAL COMPANY 2021 $ 76,118 $ 17,615 $ 14,352 $ 2,735 $ 119,307 $ 2,787 2020 70,950 15,834 13,103 3,013 120,700 3,073 2019 67,684 6,069 3,966 2,824 115,095 3,347
The Corporate reportable segment includes the $8.3 billion non-cash before-tax ($8.0 billion after-tax) goodwill and intangible asset impairment charge in fiscal 2019. For additional details on goodwill and intangible assets see Note 4.
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Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 47
NOTE 3
SUPPLEMENTAL FINANCIAL INFORMATION
The components of property, plant and equipment were as follows:
As of June 30 2021 2020
PROPERTY, PLANT AND EQUIPMENT Buildings $ 8,165 $ 7,700 Machinery and equipment 35,367 33,260 Land 808 777 Construction in progress 2,358 2,034 TOTAL PROPERTY, PLANT AND EQUIPMENT 46,698 43,771 Accumulated depreciation (25,012) (23,079) PROPERTY, PLANT AND EQUIPMENT, NET $ 21,686 $ 20,692
Selected components of current and noncurrent liabilities were as follows:
As of June 30 2021 2020
ACCRUED AND OTHER LIABILITIES – CURRENT Marketing and promotion $ 4,140 $ 3,531 Compensation expenses 2,145 1,921 Taxes payable 637 693 Restructuring reserves 278 472 Leases 219 239 Other 3,104 2,866
TOTAL $ 10,523 $ 9,722
OTHER NONCURRENT LIABILITIES Pension benefits $ 5,452 $ 6,223 U.S. Tax Act transitional tax payable 1,891 2,121 Other retiree benefits 922 965 Uncertain tax positions 794 580 Long term operating leases 631 652 Other 579 569
TOTAL $ 10,269 $ 11,110
RESTRUCTURING PROGRAM
The Company has historically incurred an ongoing annual level of restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization. Before-tax costs incurred under the ongoing program have generally ranged from $250 to $500 annually. In fiscal 2012, the Company initiated an incremental restructuring program (covering fiscal 2012 through 2017) as part of a productivity and cost savings plan to accelerate cost reductions in the areas of supply chain, research and development, marketing activities and overhead expenses.
In fiscal 2017, the Company announced specific elements of an incremental multi-year productivity and cost savings plan
to further reduce costs in the areas of supply chain, certain marketing activities and overhead expense, which resulted in incremental restructuring charges through fiscal 2020. For fiscal 2021, restructuring charges were in line with our historical ongoing program.
Restructuring costs incurred consist primarily of costs to separate employees, asset-related costs to exit facilities and other costs. Employee separation costs relate to severance packages that are primarily voluntary and the amounts calculated are based on salary levels and past service periods. Severance costs related to voluntary separations are generally charged to earnings when the employee accepts the offer. Asset-related costs consist of both asset write- downs and accelerated depreciation. Asset write-downs relate to the establishment of a new fair value basis for assets held-for-sale or for disposal. These assets are written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less minor disposal costs. Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period. These assets relate primarily to manufacturing consolidations and technology standardizations. The asset-related charges will not have a significant impact on future depreciation charges. Other restructuring-type charges primarily include asset removal and termination of contracts related to supply chain and overhead optimization. The Company incurred total restructuring charges of $330 and $782 for the years ended June 30, 2021 and 2020. Of the charges incurred for fiscal year 2021, $176 were recorded in SG&A, $134 in Costs of products sold, and $20 in Other non-operating income, net. Of the charges incurred in fiscal year 2020, $155 were recorded in SG&A, $614 in Costs of products sold, and $13 in Other non-operating income, net. The following table presents restructuring activity for the years ended June 30, 2021 and 2020:
Separations Asset-Related
Costs Other Total
RESERVE JUNE 30, 2019 $ 280 $ — $ 188 $ 468 Cost incurred and charged to expense 221 372 189 782 Cost paid/settled (216) (372) (190) (778) RESERVE JUNE 30, 2020 285 — 187 472 Cost incurred and charged to expense 127 24 179 330 Cost paid/settled (236) (24) (264) (524) RESERVE JUNE 30, 2021 $ 176 $ — $ 102 $ 278
Amounts in millions of dollars except per share amounts or as otherwise specified.
48 The Procter & Gamble Company
Consistent with our historical policies for ongoing restructuring-type activities, the restructuring charges are funded by and included within Corporate for both management and segment reporting. Accordingly, all of the charges are included within the Corporate reportable segment.
However, for information purposes, the following table summarizes the total restructuring costs related to our reportable segments:
Years ended June 30 2021 2020 2019
Beauty $ 13 $ 54 $ 49 Grooming 25 102 65 Health Care 51 136 23 Fabric & Home Care 22 75 84 Baby, Feminine & Family Care 29 192 226 Corporate 190 223 307
Total Company $ 330 $ 782 $ 754
Corporate includes costs related to allocated overheads, including charges related to our Enterprise Markets, Global Business Services and Corporate Functions activities.
NOTE 4
GOODWILL AND INTANGIBLE ASSETS
The change in the net carrying amount of goodwill by reportable segment was as follows:
Beauty Grooming Health Care Fabric & Home
Care Baby, Feminine & Family Care Total Company
BALANCE AT JUNE 30, 2019 – NET $ 12,985 $ 12,881 $ 7,972 $ 1,855 $ 4,580 $ 40,273 Acquisitions and divestitures (1) — (46) — 5 (42) Translation and other (82) (66) (140) (14) (28) (330)
BALANCE AT JUNE 30, 2020 – NET 12,902 12,815 7,786 1,841 4,557 39,901 Acquisitions and divestitures — — 16 — — 16 Translation and other 355 280 244 32 96 1,007
BALANCE AT JUNE 30, 2021 – NET $ 13,257 $ 13,095 $ 8,046 $ 1,873 $ 4,653 $ 40,924
Grooming goodwill balance is net of $7.9 billion accumulated impairment losses.
Goodwill and indefinite-lived intangibles are tested for impairment at least annually 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. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability). Estimates utilized in the projected cash flows include consideration of macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion, Company business plans, the underlying product or technology life cycles, economic barriers to entry, a brand’s relative market position and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.
We believe the estimates and assumptions utilized in our impairment testing are reasonable and are comparable to
those that would be used by other marketplace participants. However, actual events and results could differ substantially from those used in our valuations. To the extent 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 additional non-cash impairment charges in the future.
Goodwill increased during fiscal 2021 driven by a minor brand acquisition in the Health Care reportable segment and currency translation across all reportable segments.
Goodwill decreased in fiscal 2020 primarily due to opening balance sheet adjustments from the fiscal 2019 acquisition of the over-the-counter (OTC) healthcare business of Merck KGaA (Merck OTC) in the Health Care reportable segment (see Note 14) and currency translation across all reportable segments.
During fiscal 2019, we determined that the estimated fair value of our Shave Care reporting unit was less than its carrying value. We also determined that the estimated fair value of the Gillette indefinite-lived intangible asset was less than its carrying value. As a result, we recorded non-cash
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Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 49
impairment charges for both assets. These reductions were due in large part to significant currency devaluations in a number of countries relative to the U.S. dollar, a deceleration of category growth caused by changing grooming habits, primarily in the developed markets, and an increased competitive market environment in the U.S. and certain other markets, which collectively resulted in reduced cash flow projections. A non-cash, before and after-tax impairment charge of $6.8 billion was recognized to reduce the carrying amount of goodwill for the Shave Care reporting unit. Additionally, a non- cash, before-tax impairment charge of $1.6 billion ($1.2 billion after-tax) was recognized to reduce the carrying amount of the Gillette indefinite-lived intangible asset to its estimated fair value as of June 30, 2019.
Identifiable intangible assets were comprised of:
2021 2020
As of June 30
Gross Carrying Amount
Accumulated Amortization
Gross Carrying Amount
Accumulated Amortization
INTANGIBLE ASSETS WITH DETERMINABLE LIVES Brands $ 3,908 $ (2,546) $ 3,820 $ (2,347) Patents and technology 2,781 (2,575) 2,776 (2,513) Customer relationships 1,789 (882) 1,752 (778) Other 150 (97) 143 (92)
TOTAL $ 8,628 $ (6,100) $ 8,491 $ (5,730) INTANGIBLE ASSETS WITH INDEFINITE LIVES Brands 21,114 — 21,031 —
TOTAL $ 29,742 $ (6,100) $ 29,522 $ (5,730)
Amortization expense of intangible assets was as follows:
Years ended June 30 2021 2020 2019
Intangible asset amortization $ 318 $ 360 $ 349
Estimated amortization expense over the next five fiscal years is as follows:
Years ending June 30 2022 2023 2024 2025 2026
Estimated amortization expense $ 301 $ 289 $ 277 $ 259 $ 243