Proctor and Gamble 2015 Annual Report Download - page 14

The Procter & Gamble Company 12
PART I
Item 1. usiness.
Additional information required by this item is incorporated
herein by reference to Management's Discussion and Analysis
(MD&A) Note 1 to our Consolidated Financial Statements and
Note 12 to our Consolidated Financial Statements. Unless the
context indicates otherwise, the terms the Company, P&G,
we, our or us as used herein refer to The Procter &
Gamble Company (the registrant) and its subsidiaries.
The Procter & Gamble Company is focused on providing
branded consumer packaged goods of superior quality and
value to improve the lives of the world's consumers. The
Company was incorporated in Ohio in 1905, having been built
from a business founded in 1837 by illiam Procter and James
Gamble. Today, we sell our products in more than 180 countries
and territories.
Throughout this Form 10-K, we incorporate by reference
information from other documents filed with the Securities and
Exchange Commission (SEC).
The Company's Annual Report on Form 10-K, quarterly reports
on Form 10- and current reports on Form 8-K, and
amendments thereto, are filed electronically with the SEC. The
SEC maintains an internet site that contains these reports at:
www.sec.gov. You can also access these reports through links
from our website at: www.pginvestor.com.
Copies of these reports are also available, without charge, by
contacting Computershare Inc., 250 Royall Street, Canton, MA
02021.
Financial Information aout Segments
As of June 30, 2015 the Company has five reportable segments
under U.S. GAAP: eauty, Hair and Personal Care Grooming
Health Care Fabric Care and Home Care and aby, Feminine
and Family Care. Many of the factors necessary for
understanding these businesses are similar. Operating margins
of the individual businesses vary due to the nature of materials
and processes used to manufacture the products, the capital
intensity of the businesses and differences in selling, general
and administrative expenses as a percentage of net sales. Net
sales growth by business is also expected to vary slightly due
to the underlying growth of the markets and product categories
in which they operate. hile none of our reportable segments
are highly seasonal, components within certain reportable
segments, such as Appliances (Grooming) and Prestige
Fragrances (eauty, Hair and Personal Care) are seasonal.
Additional information about our reportable segments can be
found in the MD&Aand Note 12 to our Consolidated Financial
Statements.
Narratie Descrition of Business
Business Model. Our business model relies on the continued
growth and success of existing brands and products, as well as
the creation of new products. The markets and industry
segments in which we offer our products are highly
competitive. Our products are sold in more than 180 countries
and territories around the world primarily through mass
merchandisers, grocery stores, membership club stores, drug
stores, department stores, salons, e-commerce, high-frequency
stores and pharmacies. e utilize our superior marketing and
online presence to win with consumers at the zero moment of
truth - when they are searching for information about a brand
or product. e work collaboratively with our customers to
improve the in-store presence of our products and win the first
moment of truth - when a consumer is shopping in the store.
e must also win the second moment of truth - when a
consumer uses the product, evaluates how well it met his or
her expectations and decides whether it was a good value. e
believe we must continue to provide new, innovative products
and branding to the consumer in order to grow our business.
Research and product development activities, designed to
enable sustained organic growth, continued to carry a high
priority during the past fiscal year. hile many of the benefits
from these efforts will not be realized until future years, we
believe these activities demonstrate our commitment to future
growth.
Ke Product Categories. Information on key product
categories can be found in Note 12 to our Consolidated
Financial Statements.
Ke Customers. Our customers include mass merchandisers,
grocery stores, membership club stores, drug stores,
department stores, salons, distributors, e-commerce and high-
frequency stores. Sales to al-Mart Stores, Inc. and its
affiliates represent approximately 14 of our total revenue in
2015, 2014 and 2013. No other customer represents more than
10 of our net sales. Our top ten customers account for
approximately 33 of our total sales in 2015, 2014 and 2013.
The nature of our business results in no material backlog orders
or contracts with the government. e believe our practices
related to working capital items for customers and suppliers
are consistent with the industry segments in which we compete.
Sources and Aailailit of Materials. Almost all of the raw
and packaging materials used by the Company are purchased
from others, some of which are single-source suppliers. e
produce certain raw materials, primarily chemicals, for further
use in the manufacturing process. In addition, fuel, natural gas
and derivative products are important commodities consumed
in our manufacturing process and in the distribution of input
materials and finished product to customers. The prices we
pay for materials and other commodities are subject to
fluctuation. hen prices for these items change, we may or
may not pass the change to our customers. The Company
purchases a substantial variety of other raw and packaging
materials, none of which is material to our business taken as a
whole.
Trademarks and Patents. e own or have licenses under
patents and registered trademarks which are used in connection
with our activity in all businesses. Some of these patents or
licenses cover significant product formulation and processes