Proctor and Gamble 2012 Annual Report Download - page 20
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Please find page 20 of the 2012 Proctor and Gamble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.18 The Procter & Gamble Company
contractual rights in certain jurisdictions;
• greater risk of uncollectible accounts and longer
collection cycles;
• effective and immediate implementation of control
environment processes across our diverse
operations and employee base; and
• imposition of more or new tariffs, quotas, trade
barriers and similar restrictions on our sales outside
the United States.
We have sizable businesses and maintain local
currency cash balances in a number of foreign countries with
exchange controls, including, but not limited to, Venezuela,
China and India. In addition, some countries where we have
businesses, such as Argentina, have introduced import
restrictions. Our results of operations and/or financial
condition could be adversely impacted if we are unable to
successfully manage these and other risks of international
operations in an increasingly volatile environment.
Fluctuations in exchange rates may have an adverse
impact on our business results or financial condition.
We hold assets and incur liabilities, earn revenues
and pay expenses in a variety of currencies other than the
U.S. dollar. Because our consolidated financial statements
are presented in U.S. dollars, the financial statements of our
subsidiaries outside the United States are translated into U.S.
dollars. Our operations outside of the U.S. generate a
significant portion of our net revenue. Fluctuations in
exchange rates may therefore adversely impact our business
results or financial condition. See also the Financial
Condition and Results of Operations section of the MD&A
and Note 5 to our Consolidated Financial Statements.
We face risks related to changes in the global and
political economic environment, including the global
capital and credit markets.
Our business is impacted by global economic
conditions, which have recently been volatile. Our products
are sold in more than 180 countries around the world. If the
global economy experiences significant disruptions, our
business could be negatively impacted by reduced demand
for our products related to a slow-down in the general
economy, supplier or customer disruptions resulting from
tighter credit markets, temporary interruptions in our ability
to conduct day-to-day transactions through our financial
intermediaries involving the payment to or collection of
funds from our customers, vendors and suppliers and/or
liquidity issues resulting from an inability to access credit
markets to obtain cash to support operations.
Our objective is to maintain credit ratings that
provide us with ready access to global capital and credit
markets. Any downgrade of our current credit ratings by a
credit rating agency could increase our future borrowing
costs and impair our ability to access capital and credit
markets on terms commercially acceptable to us.
We could also be negatively impacted by political
crises in individual countries or regions, including sovereign
risk related to a deterioration in the credit worthiness or a
default by local governments. For example, we could be
adversely impacted by continued instability in the banking
and governmental sectors of certain countries in the
European Union such as Greece, or the negative impact on
economic growth resulting from the combination of federal
income tax increases and government spending restrictions
potentially occurring at the end of calendar year 2012 in the
United States (commonly referred to as the “fiscal cliff”).
Consequently, our success will depend, in part, on
our ability to manage continued global and/or economic
uncertainty, especially in our significant geographical
markets, as well as any political or economic disruption.
These risks could negatively impact our overall liquidity and
financing and borrowing costs, as well as our ability to
collect receipts due from governments, including refunds of
value added taxes, and/or create significant credit risks
relative to our local customers and depository institutions.
If the reputation of the Company or one or more of our
brands erodes significantly, it could have a material
impact on our financial results.
The Company's reputation is the foundation of our
relationships with key stakeholders and other constituencies,
such as customers and suppliers. In addition, many of our
brands have worldwide recognition. This recognition is the
result of the large investments we have made in our products
over many years. The quality and safety of our products is
critical to our business. Our Company also devotes
significant time and resources to programs designed to
protect and preserve our reputation, such as social
responsibility and environmental sustainability. If we are
unable to effectively manage real or perceived issues,
including concerns about safety, quality, efficacy, or similar
matters, these issues could negatively impact sentiments
toward the Company or our products, our ability to operate
freely could be impaired and our financial results could
suffer. Our financial success is directly dependent on the
success of our brands, and the success of these brands can
suffer if our marketing plans or product initiatives do not
have the desired impact on a brand's image or its ability to
attract consumers. Our results could also be negatively
impacted if one of our brands suffers a substantial
impediment to its reputation due to a significant product
recall, product-related litigation, allegations of product
tampering, or the distribution and sale of counterfeit
products. In addition, given the association of our
individual products with the Company, an issue with one of
our products could negatively affect the reputation of our
other products, or the Company as a whole, thereby
potentially hurting results.
Our ability to successfully manage ongoing
organizational change could impact our business results.
We have executed a number of significant business