8. Earnings Per Share

Net earnings attributable to Procter & Gamble less preferred dividends (net of related tax benefits) are divided by the weighted average number of common shares outstanding during the period to calculate basic net earnings per common share. Diluted net earnings per common share are calculated to give effect to stock options and other stock-based awards and assume conversion of preferred stock (see below).

Net earnings attributable to Procter & Gamble and common shares used to calculate basic and diluted net earnings per share were as follows:



	Three Months Ended September 30
Amounts in millions except per share amounts	2014			2013
NET EARNINGS FROM CONTINUING OPERATIONS	$	2,003		$	3,039
Net earnings from discontinued operations	17			18
NET EARNINGS	2,020			3,057
Net earnings attributable to noncontrolling interests	(30		)	(30		)
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE (DILUTED)	1,990			3,027
Preferred dividends, net of tax benefit	(60		)	(58		)
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (BASIC)	1,930			2,969

NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS (BASIC)	$	1,913		$	2,951

NET EARNINGS FROM CONTINUTING OPERATIONS ATTRIBUTABLE TO PROCTER & GAMBLE (DILUTED)	$	1,973		$	3,009

	Three Months Ended September 30
Shares in millions	2014			2013
Basic weighted average common shares outstanding	2,710.6			2,735.2
Effect of dilutive securities
Conversion of preferred shares ⁽¹⁾	110.2			113.4
Exercise of stock options and other unvested equity awards ⁽²⁾	67.2			75.7
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	2,888.0			2,924.3

BASIC NET EARNINGS PER COMMON SHARE ⁽³⁾
Earnings from continuing operations	$	0.70		$	1.08
Earnings from discontinued operations	0.01			0.01
BASIC NET EARNINGS PER COMMON SHARE	0.71			1.09

DILUTED NET EARNINGS PER COMMON SHARE ⁽³⁾
Earnings from continuing operations	$	0.68		$	1.03
Earnings from discontinued operations	0.01			0.01
DILUTED NET EARNINGS PER COMMON SHARE	0.69			1.04


⁽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⁾

Approximately 23 million in the three months ended September 30, 2014 and 22 million in the three months ended September 30, 2013 of the Company's outstanding stock options 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⁾	Basic net earnings per common share and diluted net earnings per common share are calculated on net earnings attributable to Procter & Gamble.