Proctor and Gamble 2012 Annual Report Download - page 27
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis
Forward-Looking Statements
Certain statements in this report, other than purely historical
information, including estimates, projections, statements
relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those
statements are based, are “forward-looking statements”
within the meaning of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements may appear throughout
this report, including, without limitation, in the following
sections: “Management's Discussion and Analysis” and
“Risk Factors.” These forward-looking statements generally
are identified by the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,”
“will be,” “will continue,” “will likely result” and similar
expressions. Forward-looking statements are based on
current expectations and assumptions that are subject to risks
and uncertainties which may cause actual results to differ
materially from the forward-looking statements. A detailed
discussion of risks and uncertainties that could cause actual
results and events to differ materially from such forward-
looking statements is included in the section titled
"Economic Conditions, Challenges and Risks" and the
section titled “Risk Factors” (Item 1A of this Form 10-K).
Forward-looking statements are made as of the date of this
report and we undertake no obligation to update or revise
publicly any forward-looking statements, whether because of
new information, future events or otherwise.
The following Management's Discussion and Analysis
(MD&A) is intended to provide the reader with an
understanding of P&G's financial condition, results of
operations and cash flows by focusing on changes in certain
key measures from year to year. MD&A is provided as a
supplement to, and should be read in conjunction with, our
Consolidated Financial Statements and accompanying notes.
MD&A is organized in the following sections:
• Overview
• Summary of 2012 Results
• Economic Conditions, Challenges and Risks
• Results of Operations
• Segment Results
• Cash Flow, Financial Condition and Liquidity
• Significant Accounting Policies and Estimates
• Other Information
Throughout MD&A, we refer to measures used by
management to evaluate performance, including unit volume
growth, net sales and net earnings. We also refer to a number
of financial measures that are not defined under accounting
principles generally accepted in the United States of
America (U.S. GAAP), including organic sales growth, core
earnings per share (Core EPS), free cash flow and free cash
flow productivity. Organic sales growth is net sales growth
excluding the impacts of foreign exchange, acquisitions and
divestitures. Core EPS is diluted net earnings per share from
continuing operations excluding certain specified charges.
Free cash flow is operating cash flow less capital spending.
Free cash flow productivity is the ratio of free cash flow to
net earnings. We believe these measures provide investors
with important information that is useful in understanding
our business results and trends. The explanation at the end of
MD&A provides more details on the use and the derivation
of these measures.
Management also uses certain market share and market
consumption estimates to evaluate performance relative to
competition despite some limitations on the availability and
comparability of share and consumption information.
References to market share and market consumption in
MD&A are based on a combination of vendor-reported
consumption and market size data, as well as internal
estimates. All market share references represent the
percentage of sales in dollar terms on a constant currency
basis of our products, relative to all product sales in the
category and are measured on an annual basis versus the
prior 12 month period. References to competitive activity
includes promotional and product initiatives from our
competitors.
OVERVIEW
P&G is a global leader in retail goods focused on providing
branded consumer packaged goods of superior quality and
value to our consumers around the world. Our products are
sold in more than 180 countries primarily through mass
merchandisers, grocery stores, membership club stores, drug
stores, department stores, salons and in high-frequency
stores. We continue to expand our presence in other
channels, including department stores, perfumeries,
pharmacies, salons and e-commerce. We have on-the-ground
operations in approximately 75 countries.
Our market environment is highly competitive with global,
regional and local competitors. In many of the markets and
industry segments in which we sell our products, we
compete against other branded products as well as retailers'
private-label brands. Additionally, many of the product
segments in which we compete are differentiated by price
(referred to as super-premium, premium, mid-tier and value-
tier products). We are well positioned in the industry
segments and markets in which we operate - often holding a
leadership or significant market share position.