Proctor and Gamble 2013 Annual Report Download - page 75

The Procter & Gamble Company 73
Amounts in millions of dollars except per share amounts or as otherwise specified.
In certain situations, we guarantee loans for suppliers and
customers. The total amount of guarantees issued under
such arrangements is not material.
Off-Balance Sheet Arrangements
We do not have off-balance sheet financing arrangements,
including variable interest entities, that have a material
impact on our financial statements.
Purchase Commitments and Operating Leases
We have purchase commitments for materials, supplies,
services and property, plant and equipment as part of the
normal course of business. Commitments made under take-
or-pay obligations are as follows:
Years ended
June 30 2014 2015 2016 2017 2018
There
after
Purchase
obligations $1,114 $ 383 $ 242 $ 136 $ 74 $ 234
Such amounts represent future purchases in line with
expected usage to obtain favorable pricing. Approximately
20% of our purchase commitments relate to service contracts
for information technology, human resources management
and facilities management activities that have been
outsourced to third-party suppliers. Due to the proprietary
nature of many of our materials and processes, certain
supply contracts contain penalty provisions for early
termination. We do not expect to incur penalty payments
under these provisions that would materially affect our
financial position, results of operations or cash flows.
We also lease certain property and equipment for varying
periods. Future minimum rental commitments under non-
cancelable operating leases, net of guaranteed sublease
income, are as follows:
Years ended
June 30 2014 2015 2016 2017 2018
There
after
Operating
leases $ 254 $ 241 $ 196 $ 161 $ 141 $ 519
Litigation
We are subject to various legal proceedings and claims
arising out of our business which cover a wide range of
matters such as antitrust, trade and other governmental
regulations, product liability, patent and trademark matters,
advertising, contracts, environmental issues, labor and
employments matters and income and other taxes.
As previously disclosed, the Company has had a number of
antitrust matters in Europe. These matters involve a number
of other consumer products companies and/or retail
customers. Several regulatory authorities in Europe have
issued separate decisions pursuant to their investigations
alleging that the Company, along with several other
companies, engaged in violations of competition laws in
those countries. The Company has accrued the assessed
fines for each of the decisions, of which all but $16 has been
paid as of June 30, 2013. Some of those are on appeal. As a
result of our initial and on-going analyses of other formal
complaints, the Company has accrued liabilities for
competition law violations totaling $139 as of June 30, 2013.
While the ultimate resolution of these matters may result in
fines or costs in excess of the amounts reserved, we do not
expect any such incremental losses to materially impact our
financial statements in the period in which they are accrued
and paid, respectively.
With respect to other litigation and claims, while
considerable uncertainty exists, in the opinion of
management and our counsel, the ultimate resolution of the
various lawsuits and claims will not materially affect our
financial position, results of operations or cash flows.
We are also subject to contingencies pursuant to
environmental laws and regulations that in the future may
require us to take action to correct the effects on the
environment of prior manufacturing and waste disposal
practices. Based on currently available information, we do
not believe the ultimate resolution of environmental
remediation will have a material effect on our financial
position, results of operations or cash flows.
NOTE 12
SEGMENT INFORMATION
Under U.S. GAAP, the GBUs (Categories) are aggregated
into five reportable segments:
•Beauty: Beauty Care (Antiperspirant and Deodorant,
Cosmetics, Personal Cleansing, Skin Care); Hair Care
and Color; Prestige (SKII, fragrances); Salon
Professional;
•Grooming: Shave Care (Blades and Razors, Pre- and
Post-Shave Products); Braun and Appliances;
•Health Care: Feminine Care (Feminine Care,
Incontinence); Oral Care (Toothbrush, Toothpaste,
Other Oral Care); Personal Health Care
(Gastrointestinal, Rapid Diagnostics, Respiratory,
Other Personal Health Care, Vitamins/Minerals/
Supplements);
•Fabric Care and Home Care: Fabric Care (Bleach
and Laundry Additives, Fabric Enhancers, Laundry
Detergents); Home Care (Air Care, Dish Care,
Surface Care); Personal Power (Batteries); Pet Care;
Professional;
•Baby Care and Family Care: Baby Care (Baby
Wipes, Diapers and Pants); Family Care (Paper
Towels, Tissues, Toilet Paper).
The accounting policies of the businesses are generally the
same as those described in Note 1. Differences between
these policies and U.S. GAAP primarily reflect income
taxes, which are reflected in the businesses using applicable
blended statutory rates, and the treatment of certain
unconsolidated investees. Certain unconsolidated investees
are managed as integral parts of our businesses for