Proctor and Gamble 2014 Annual Report Download - page 17

The Procter & Gamble Company 15
manage real or perceived issues, including concerns about
safety, quality, efficacy or similar matters, sentiments toward
the Company or our products could be negatively impacted;
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. Widespread use of social media and
networking sites by consumers has greatly increased the
speed and accessibility of information dissemination.
Negative or inaccurate postings or comments about the
Company could generate adverse publicity that could
damage the reputation of our brands. 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.
Our financial targets assume a consistent level of
productivity improvement. If we are unable to deliver
expected productivity improvements, while continuing to
invest in business growth, our financial results could be
adversely impacted. We continue to execute a number of
significant business and organizational changes, including
acquisitions, divestitures and workforce optimization
projects to support our growth strategies. We expect these
types of changes, which may include many staffing
adjustments as well as employee departures, to continue for
the foreseeable future. Successfully managing these
changes, including retention of particularly key employees,
is critical to our business success. We are generally a build-
from-within company and our success is dependent on
identifying, developing and retaining key employees to
provide uninterrupted leadership and direction for our
business. This includes developing and retaining
organizational capabilities in key growth markets where the
depth of skilled or experienced employees may be limited
and competition for these resources is intense.
Our ability to successfully manage ongoing acquisition,
joint venture and divestiture activities could impact our
business results.
As a company that manages a portfolio of consumer brands,
our ongoing business model involves a certain level of
acquisition, joint venture and divestiture activities. We must
be able to successfully manage the impacts of these
activities, while at the same time delivering against our
business objectives. Specifically, our financial results could
be adversely impacted if: 1) changes in the cash flows or
other market-based assumptions cause the value of acquired
assets to fall below book value, 2) we are unable to offset the
dilutive impacts from the loss of revenue associated with
divested brands, or 3) we are not able to deliver the expected
cost and growth synergies associated with our acquisitions
and joint ventures, which could also have an impact on
goodwill and intangible assets.
Our business is subject to changes in legislation,
regulation and enforcement, and our ability to manage
and resolve pending legal matters in the U.S. and abroad.
Changes in laws, regulations and related interpretations,
including changes in accounting standards, taxation
requirements and increased enforcement actions and
penalties may alter the environment in which we do
business. The increasingly complex and rapidly changing
legal and regulatory environment creates additional
challenges for our ethics and compliance programs. Our
ability to continue to meet these challenges could have an
impact on our legal, reputational and business risk.
As a U.S.-based multinational company, we are subject to
tax regulations in the U.S. and multiple foreign jurisdictions,
some of which are interdependent. For example, certain
income that is earned and taxed in countries outside the U.S.
is not taxed in the U.S., provided those earnings are
indefinitely reinvested outside the U.S. If these or other tax
regulations should change, our financial results could be
impacted. For example, there are increasing calls in the U.S.
from members of leadership in both major U.S. political
parties for “comprehensive tax reform” which may
significantly change the income tax rules that are applicable
to U.S. domiciled corporations, such as P&G. It is very
difficult to assess whether the overall effect of such potential
legislation would be cumulatively positive or negative for
our earnings and cash flows, but such changes could
significantly impact our financial results.
Our ability to manage regulatory, environmental, tax
(including, but not limited to, any audits or other
investigations) and legal matters (including, but not limited
to, product liability, patent and other intellectual property
matters) and to resolve pending legal matters without
significant liability may materially impact our results of
operations and financial position. Furthermore, if pending
legal matters, including the competition law and antitrust
investigations described in Note 11 to our Consolidated
Financial Statements, result in fines or costs in excess of the
amounts accrued to date, that could materially impact our
results of operations and financial position.
A significant change in customer relationships or in
customer demand for our products could have a
significant impact on our business.
We sell most of our products via retail customers, which
consist of mass merchandisers, grocery stores, membership
club stores, drug stores, department stores, salons,
distributors, e-commerce and high-frequency stores. Our
success is dependent on our ability to successfully manage
relationships with our retail trade customers. This includes