PG 10-K 6/30/2014 Section 1: 10-K (10-K)
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PG 10-K 6/30/2014 Section 1: 10-K (10-K) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark one) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended June 30, 2014 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-434 THE PROCTER & GAMBLE COMPANY One Procter & Gamble Plaza, Cincinnati, Ohio 45202 Telephone (513) 983-1100 IRS Employer Identification No. 31-0411980 State of Incorporation: Ohio Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, without Par Value New York Stock Exchange, NYSE Euronext-Paris Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ 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 and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act). Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o 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 The aggregate market value of the voting stock held by non-affiliates amounted to $221 billion on December 31, 2013. There were 2,707,652,337 shares of Common Stock outstanding as of July 31, 2014. Documents Incorporated by Reference Portions of the Proxy Statement for the 2014 Annual Meeting of Shareholders which will be filed within one hundred and twenty days of the fiscal year ended June 30, 2014 (2014 Proxy Statement) are incorporated by reference into Part III of this report to the extent described herein. The Procter & Gamble Company 11 PART I Item 1. Business. Narrative Description of Business Additional information required by this item is incorporated herein by reference to Management's Discussion and Analysis (MD&A); Note Business Model. Our business model relies on the continued growth 1 to our Consolidated Financial Statements and Note 12 to our and success of existing brands and products, as well as the creation Consolidated Financial Statements. Unless the context indicates of new products. The markets and industry segments in which we otherwise, the terms the "Company," "P&G," "we," "our" or "us" as offer our products are highly competitive. Our products are sold in used herein refer to The Procter & Gamble Company (the registrant) more than 180 countries and territories around the world primarily and its subsidiaries. through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, e-commerce and high- The Procter & Gamble Company is focused on providing branded frequency stores. We utilize our superior marketing and online consumer packaged goods of superior quality and value to improve presence to win with consumers at the "zero moment of truth" - when the lives of the world's consumers. The Company was incorporated in they are searching for information about a brand or product. We work Ohio in 1905, having been built from a business founded in 1837 by collaboratively with our customers to improve the in-store presence of William Procter and James Gamble. Today, we sell our products in our products and win the "first moment of truth" - when a consumer is more than 180 countries and territories. shopping in the store. We must also win the "second moment of Throughout this Form 10-K, we incorporate by reference information truth" - when a consumer uses the product, evaluates how well it met from other documents filed with the Securities and Exchange his or her expectations and decides whether it was a good value. We Commission (SEC). believe we must continue to provide new, innovative products and branding to the consumer in order to grow our business. Research The Company's annual report on Form 10-K, quarterly reports on Form and product development activities, designed to enable sustained 10-Q and current reports on Form 8-K, and amendments thereto, are organic growth, continued to carry a high priority during the past filed electronically with the SEC. The SEC maintains an internet site fiscal year. While many of the benefits from these efforts will not be that contains these reports at: www.sec.gov. You can also access realized until future years, we believe these activities demonstrate our these reports through links from our website at: commitment to future growth. www.pg.com/investors. Key Product Categories. Information on key product categories can Copies of these reports are also available, without charge, by be found in Note 12 to our Consolidated Financial Statements. contacting Computershare Inc., 250 Royall Street, Canton, MA 02021. Key Customers. Our customers include mass merchandisers, grocery Financial Information about Segments stores, membership club stores, drug stores, department stores, As of June 30, 2014, the Company has five reportable segments under salons, distributors, e-commerce and high-frequency stores. Sales to U.S. GAAP: Beauty; Grooming; Health Care; Fabric Care and Home Wal-Mart Stores, Inc. and its affiliates represent approximately 14% of Care; and Baby, Feminine and Family Care. Many of the factors our total revenue in 2014, 2013 and 2012. No other customer necessary for understanding these businesses are similar. Operating represents more than 10% of our net sales. Our top ten customers margins of the individual businesses vary due to the nature of account for approximately 30% of our total unit volume in 2014 and materials and processes used to manufacture the products, the capital 2013 and 31% of our total unit volume in 2012. The nature of our intensity of the businesses and differences in selling, general and business results in no material backlog orders or contracts with the administrative expenses as a percentage of net sales. Net sales growth government. We believe our practices related to working capital items by business is also expected to vary slightly due to the underlying for customers and suppliers are consistent with the industry segments growth of the markets and product categories in which they operate. in which we compete. While none of our reportable segments are highly seasonal, components within certain reportable segments, such as Batteries Sources and Availability of Materials. Almost all of the raw and (Fabric Care and Home Care), Appliances (Grooming) and Prestige packaging materials used by the Company are purchased from others, Fragrances (Beauty) are seasonal. In addition, anticipation or some of which are single-source suppliers. We produce certain raw occurrence of natural disasters, such as hurricanes, can drive materials, primarily chemicals, for further use in the manufacturing unusually high demand for batteries. process. In addition, fuel, natural gas and derivative products are important commodities consumed in our manufacturing process and in Additional information about our reportable segments can be found in the distribution of input materials and finished MD&A and Note 12 to our Consolidated Financial Statements. 12 The Procter & Gamble Company product to customers. The prices we pay for materials and other Total Number of Employees commodities are subject to fluctuation. When prices for these items 2014 118,000 change, we may or may not pass the change to our customers. The 2013 121,000 Company purchases a substantial variety of other raw and packaging materials, none of which is material to our business taken as a whole. 2012 126,000 2011 129,000 Trademarks and Patents. We own or have licenses under patents and 2010 127,000 registered trademarks which are used in connection with our activity 2009 132,000 in all businesses. Some of these patents or licenses cover significant product formulation and processes used to manufacture our products. Financial Information about Foreign and Domestic Operations The trademarks are important to the overall marketing and branding of our products. All major products and trademarks in each business are Net sales in the U.S. account for approximately 35% of total net sales. registered. In part, our success can be attributed to the existence and No other individual country exceeds 10% of total net sales. continued protection of these trademarks, patents and licenses. Operations outside the U.S.