Broad Organic Top-Line Growth NEW YORK, Oct. 25, 2006
/PRNewswire-FirstCall/ -- Colgate-Palmolive Company (NYSE:CL) today
announced excellent worldwide sales and unit volume growth for
third quarter 2006, with all five operating divisions reporting
sales and profit increases. Worldwide sales and unit volume, as
reported, grew 8.0% and 5.5%, respectively. Excluding divestments,
worldwide sales and unit volume grew 9.5% and 7.0%, respectively.
Global pricing increased 1.5%, and foreign exchange added 1.0%. The
very strong top-line growth was supported by record advertising
spending, which increased absolutely and as a percent of sales.
Third quarter 2006 results include $58.5 million of aftertax
charges related to the 2004 Restructuring Program. As previously
disclosed, effective January 1, 2006, the Company adopted SFAS 123R
related to stock-based compensation, which resulted in an
incremental $18.9 million non-cash, aftertax charge in the current
quarter or approximately $.04 per share, with no such charge in
2005. In the year-ago quarter, restructuring charges and Other
Items totaled $22.5 million aftertax (see Table 3 for 2005
details). As reported, gross profit margin was 55.0%. Excluding
restructuring charges, gross profit margin was 56.5%, an all-time
record and a 140 basis point improvement versus the year ago
period. Reported net income and diluted earnings per share in third
quarter 2006 were $344.1 million and $.63, respectively, including
the restructuring and incremental stock-based compensation charges
noted above. Excluding the above noted items in both periods, net
income in the quarter increased 14% versus third quarter 2005 to an
all-time record $421.5 million, and diluted earnings per share
increased 15% to $.77, also an all-time record. In third quarter
2005, reported net income and diluted earnings per share were
$347.2 million and $.63, respectively, and net income and diluted
earnings per share excluding the above noted items were $369.7
million and $.67, respectively. Operating profit as reported
declined 9% versus third quarter 2005. Excluding the above noted
items in both periods, operating profit rose 15% to an all-time
record level, the largest quarterly increase in more than four
years. On the same basis, operating profit margin grew from 19.8%
to 21.0% of sales. Net cash provided by operations year to date
increased by 5% and increased in the third quarter by 17% versus
the comparable periods of 2005. End of third quarter working
capital was unchanged from the prior year at 2.6% of sales. Reuben
Mark, Chairman and CEO said, "We are very pleased with the
excellent top and bottom line growth, exceeding expectations and
building on the strong growth momentum we saw in the first half.
Colgate's fundamentals are strong and getting stronger. "We are
particularly pleased by the 140 basis point improvement in gross
profit margin, ex-restructuring charges, the largest quarterly
gross profit increase in more than four years. The gross profit
increase funded a record level of advertising spending behind
Colgate brands worldwide while still generating an all-time record
level of operating profit, ex-restructuring and stock-based
compensation charges, with every division contributing to the
strong results." Ian Cook, President and COO further commented,
"I'm delighted that our brand investment spending continues to pay
off. Toothpaste market shares are at a record high here in the U.S.
and continue to strengthen in other key countries around the world
including Mexico, Brazil, the United Kingdom, Russia, Australia and
India. Colgate's share of the manual toothbrush market worldwide
also increased during the quarter to another record high." Mr. Mark
continued, "Looking ahead, our global new product pipeline is full
for both the balance of the year and throughout 2007. We expect our
gross profit margin, before restructuring charges, to be up nicely
for the fourth quarter, full year 2006 and next year as well. "All
this adds to our confidence that Colgate will deliver excellent
quality double-digit E.P.S. growth for this year, excluding
restructuring and stock-based compensation charges, and for 2007
also." At 11:00 a.m. ET today, Colgate will host a conference call
to elaborate on third quarter results. To access this call as a
webcast, please go to Colgate's web site at
http://www.colgate.com/. The following are comments about
divisional performance. See attached Geographic Sales Analysis and
Segment Information schedules for additional information on
divisional sales and operating profit. The information regarding
Europe/South Pacific and Greater Asia/Africa reflects the modified
geographic reporting structure implemented by Colgate effective
January 1, 2006, as previously disclosed. North America (21% of
Company Sales) Positive growth continued in North America, fueled
by new product sales and market share gains. Sales as reported rose
2.0%, on 2.5% volume growth during the quarter. Sales and unit
volume, excluding the divestment of the North American detergent
business, grew 5.0% and 5.5%, respectively, to a record level, on
top of very strong growth in the year ago period. Positive foreign
exchange added 0.5% while pricing declined 1.0%. North American
operating profit increased 2% even after the negative profit impact
of the detergent divestment and strong commercial spending.
Excluding the divestment, operating profit for North America was up
6%. Colgate's leadership of the U.S. toothpaste market continues to
grow, with its ACNielsen market share reaching 37.4% year to date,
up 40 basis points versus the year ago period and over three share
points ahead of the nearest competitor. The strong growth was led
by Colgate Total toothpaste which reached an all-time record high
market share of 15.2% during the quarter. Tom's of Maine toothpaste
strengthened its leadership in the Naturals market and increased
its market share year to date. Colgate's share of the manual
toothbrush market is also at a record high at 23.6% year to date,
up 100 basis points versus year ago. In the U.S., new product
activity is contributing to growth across categories. Successful
new products include Colgate Luminous toothpaste, Colgate 360
Degree manual toothbrush, Palmolive Oxy Plus Odor Eliminator dish
liquid, Irish Spring MicroClean bar soap, Softsoap Brand Pure
Cashmere moisturizing body wash and liquid hand soap, Fabuloso
multi-purpose spray cleaner and Suavitel Ultra fabric conditioner.
Positive growth momentum in the U.S. is expected to continue
throughout the year and into 2007 driven by a full pipeline of new
product launches. Recent introductions include Softsoap Brand
Decorative Collection liquid hand soap with upscale packaging and
fragrances and Palmolive Scrub Buster with Micro Beads dish liquid.
Latin America (25% of Company Sales) Latin American sales grew
15.0% in the third quarter to an all-time record level. Unit volume
for the region grew 12.0%. Every country in the region contributed
to the strong volume gains, led by Brazil, Mexico, Venezuela,
Central America, Colombia and Argentina. Higher pricing contributed
4.0%, partially offset by negative foreign exchange of 1.0%. Latin
American operating profit increased 28%, to an all-time record
level even after a strong double-digit increase in advertising
behind Colgate brands during the quarter. Colgate continues to
build its strong leadership in oral care throughout Latin America
with its regional toothpaste market share at a record 73.8% year to
date. Toothpaste share gains were achieved in nearly every country
and reached record highs in Venezuela, Colombia, Ecuador and Chile.
Colgate's regional share of the manual toothbrush market also
expanded during the quarter led by strong growth in Mexico, Brazil,
Chile and Ecuador. Colgate Max Fresh toothpaste, Colgate 360 Degree
manual toothbrush, Colgate Total and Colgate Anti-Cavity
toothpastes, Protex Oats and Protex Propolis bar soaps, Palmolive
Nutri-Milk shower gel, Lady Speed Stick Double Defense deodorant,
Palmolive Naturals expanded line of hair care products and
Palmolive Hydra Natura ActiFirm and Extra Dry body lotions
contributed to market share gains in the region. Europe/South
Pacific (25% of Company Sales) As reported, Europe/South Pacific
sales increased 7.0% versus year ago, and unit volume grew 3.0%.
Excluding divestments, Europe/South Pacific sales grew 8.0% on
volume growth of 4.0%. Pricing was flat and foreign exchange added
4.0%. Volume gains were achieved in Australia, United Kingdom, the
Nordic countries, Spain, Italy, France, Greece, Poland, the Czech
Republic, Romania, Adria, Hungary and the GABA business. Operating
profit for the region grew 13% to an all-time record level even
after a significant increase in advertising during the quarter.
Colgate maintained its oral care leadership in Europe led by
toothpaste market share gains in the United Kingdom, Spain, Greece,
and Ireland. Successful new products driving these gains include
Colgate Time Control, Colgate Max Fresh and Colgate Sensitive
Multi-Protection toothpastes. Recent innovations contributing to
gains in other categories include Colgate 360 Degree manual
toothbrush, Colgate Plax Sensitive Gentle Care mouth rinse,
Palmolive Naturals with Olive Milk and Palmolive BodYogurt shower
gels, Soupline Aromatherapy fabric conditioner and Ajax
Professional Degreaser and Ajax Professional Double Power spray
cleaners. New products driving strong market share gains throughout
the South Pacific region include Colgate Max Fresh and Colgate
Sensitive Multi- Protection toothpastes, Palmolive Naturals with
Shea Butter and Palmolive Naturals with Olive Milk shower gels, and
Ajax Professional Degreaser and Ajax Double Power spray cleaners.
Greater Asia/Africa (16% of Company Sales) Greater Asia/Africa
sales and unit volume, as reported, increased 5.5% and 2.5%,
respectively. Excluding the divestment of the detergent business in
Southeast Asia, sales and unit volume for the division grew 10.0%
and 7.0%, respectively. Strong volume gains were achieved in nearly
every country in the region led by Hong Kong, Malaysia, Thailand,
Vietnam, India, Russia, Ukraine, Turkey, the Gulf States, Kenya and
South Africa. Colgate sales in Greater China increased 4% with
volume up slightly during the quarter, excluding divestments. For
the division as a whole, pricing increased 3.0% and foreign
exchange was flat. Operating profit for the region increased 13% to
a record level, despite a record level of advertising supporting
Colgate brands during the quarter. Colgate strengthened its oral
care leadership in the Greater Asia region with 9 out of 14
countries reporting toothpaste market share gains led by India and
Russia. Colgate's share of the manual toothbrush market also
strengthened throughout the region with nearly every country
achieving record high shares in the category. Successful new
products driving the oral care growth include Colgate Max Fresh,
Colgate Propolis Fresh, Colgate Total Propolis and Darlie Tea Care
Mint toothpastes, Colgate 360 Degree manual toothbrush and Colgate
MicroSonic battery-powered toothbrush. New products contributing to
growth in other categories in the region include Palmolive
Aromatherapy with Propolis shower gel and liquid hand soap,
Palmolive Naturals shampoo and conditioner, and Protex Deo 12 bar
soap and shower gel. Hill's (13% of Company Sales) Innovative new
products and veterinary endorsements continue to drive growth at
Hill's, a world leader in specialty pet food. Hill's sales and unit
volume grew 10.5% and 5.5%, respectively, to a third quarter record
level. Pricing increased 5.5% while foreign exchange was relatively
flat with the year ago period. Operating profit increased 8% to a
record level during the quarter after a strong double-digit
increase in advertising. Innovative new products contributing to
growth in the U.S. specialty retail channel during the quarter
include Science Diet Lamb Meal & Rice Recipe Large Breed dog
food, Science Diet Lamb Meal & Rice Recipe Small Bites dog food
and Science Diet Indoor Cat food. In the U.S. veterinary channel,
Prescription Diet j/d Canine, a food clinically proven to improve
mobility in dogs with arthritis, and the relaunch of Prescription
Diet d/d Canine and Feline, which addresses a range of inflammatory
skin conditions, continue to succeed. Internationally, growth was
strong led by Belgium, Germany, Denmark, South Africa, Australia,
Brazil, Taiwan and Russia. New products contributing to the
international growth include Prescription Diet j/d Canine,
Prescription Diet Chunks in Gravy pouches and Science Plan Neutered
Cat, a new veterinary exclusive diet. * * * About
Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care, Home
Care and Pet Nutrition. Colgate sells its products in over 200
countries and territories around the world under such
internationally recognized brand names as Colgate, Palmolive,
Mennen, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, Elmex,
Tom's of Maine, Ajax, Axion, Soupline, and Suavitel, as well as
Hill's Science Diet and Hill's Prescription Diet pet foods. For
more information about Colgate's global business, visit the
Company's web site at http://www.colgate.com/. This press release
and the related webcast (other than historical information) may
contain forward-looking statements. Actual events or results may
differ materially from those statements. Investors should consult
the Company's filings with the Securities and Exchange Commission
(including the information set forth under the captions "Risk
Factors" and "Cautionary Statement on Forward-Looking Statements"
in the Company's Form 10-K for the year ended December 31, 2005)
for information about factors that could cause such differences.
Copies of these filings may be obtained upon request from the
Company's Investor Relations Department or the Company's web site
at http://www.colgate.com/. Non-GAAP Financial Measures The
following provides information regarding the non-GAAP measures used
in this earnings release: To supplement Colgate's condensed
consolidated financial statements presented in accordance with
accounting principles generally accepted in the United States of
America (GAAP), the Company has disclosed non-GAAP measures of
operating results that exclude certain items. Gross profit margin,
operating profit, operating profit margin, effective tax rate, net
income, and earnings per share are discussed in this release both
as reported (on a GAAP basis) and excluding the impact of certain
items, which are composed of charges related to the restructuring
program that began in the fourth quarter of 2004 and is expected to
be substantially completed by 2008 (the "2004 Restructuring
Program"), incremental stock-based compensation charges and three
"Other Items" pertaining to 2005, as explained below: -- The
restructuring charges, which are reported in the corporate segment,
include separation-related costs, incremental depreciation and
asset write-downs and other costs related to the implementation of
the 2004 Restructuring Program. In light of their nature and
magnitude, the Company believes these items should be presented
separately to enhance an investor's overall understanding of its
ongoing operations. -- The incremental stock-based compensation
charge, which pertains only to 2006, reflects an incremental
non-cash charge associated with the Company's adoption of Financial
Accounting Standards Board Statement of Financial Accounting
Standards (SFAS) No. 123R, "Share-Based Payment" (SFAS 123R). The
Company adopted SFAS 123R effective January 1, 2006 using the
modified prospective transition method and therefore has not
restated prior periods' results. However, as required by SFAS 123R,
the Company recorded an incremental stock-based compensation charge
related to the expensing of stock options and the accelerated
expense recognition of restricted stock awards granted to
retirement eligible individuals in the results for the three and
nine months ended September 30, 2006. To enhance an investor's
ability to make period over period comparisons, the Company
believes this item should be presented separately for as long as
the prior period does not include the charge. -- The three Other
Items, which pertain only to 2005, are comprised of the gain on
sale of the Company's heavy-duty laundry detergent business in
North America, an income tax charge for incremental repatriation of
foreign earnings related to the American Jobs Creation Act and a
pension charge associated with the remeasurement of certain pension
obligations as required by SFAS No. 88, "Employers' Accounting for
Settlement and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits". The pension charge was a result of the
conversion of one of the Company's international pension plans to a
defined contribution plan for all eligible participants and a lump
sum payment of normal retirement benefits associated with a
retirement plan in the United States. The amount of each such
excluded item for the three and nine months ended September 30,
2005 is set forth in the table entitled "Supplemental Consolidated
Income Statement Information - Components of 2004 Restructuring
Program and Other Items" included with this release. In light of
their nature and magnitude, the Company believes that these three
Other Items should be presented separately to enhance an investor's
overall understanding of its ongoing operations. Management
believes these non-GAAP financial measures provide useful
information to investors regarding the underlying business trends
and performance of the Company's ongoing operations and are useful
for period over period comparisons of such operations. The Company
uses these financial measures internally in its budgeting process
and as factors in determining compensation. While the Company
believes that these financial measures are useful in evaluating the
Company's business, this information should be considered as
supplemental in nature and is not meant to be considered in
isolation or as a substitute for the related financial information
prepared in accordance with GAAP. In addition, these non-GAAP
financial measures may not be the same as similar measures
presented by other companies. See "Consolidated Income Statement
and Supplemental Information - Reconciliation Excluding the 2004
Restructuring Program and Other Items" for the three months ended
September 30, 2006 and 2005 and the nine months ended September 30,
2006 and 2005 included with this release for a reconciliation of
these financial measures to the related GAAP measures. Sales and
unit volume growth, both worldwide and in relevant geographic
divisions, and operating profit in certain geographic divisions are
discussed in this release both as reported and excluding
divestments. Management believes this provides useful information
to investors as it allows comparisons of sales growth and volume
growth and operating profit from ongoing operations. See
"Geographic Sales Analysis, Percentage Changes - Third Quarter 2006
vs. 2005" for a comparison of sales excluding divestments to sales
as reported in accordance with GAAP. The Company defines free cash
flow before dividends as net cash provided by operations less
capital expenditures. As management uses this measure to evaluate
the Company's ability to satisfy current and future obligations,
repurchase stock, pay dividends and fund future business
opportunities, the Company believes that it provides useful
information to investors. Free cash flow before dividends is not a
measure of cash available for discretionary expenditures since the
Company has certain non-discretionary obligations such as debt
service that are not deducted from the measure. Free cash flow
before dividends is not a GAAP measurement and may not be
comparable to similarly titled measures reported by other
companies. (See attached tables for third quarter results.) Table 1
Colgate-Palmolive Company Consolidated Income Statement and
Supplemental Information Reconciliation Excluding the 2004
Restructuring Program and Other Items For the Three Months Ended
September 30, 2006 and 2005 (in Millions Except Per Share Amounts)
(Unaudited) 2006 Adoption Excluding As Impact of Restructuring
Reported Restructuring SFAS 123R & SFAS 123R Net sales $3,143.7
$ - $ - $3,143.7 Cost of sales 1,415.3 47.0 - 1,368.3 Gross profit
1,728.4 (47.0) - 1,775.4 Gross profit margin 55.0% 56.5% Selling,
general and administrative expenses 1,140.3 11.5 28.0 1,100.8 Other
(income) expense, net 38.7 25.5 - 13.2 Operating profit 549.4
(84.0) (28.0) 661.4 Operating profit margin 17.5% 21.0% Interest
expense, net 41.2 - - 41.2 Income before income taxes 508.2 (84.0)
(28.0) 620.2 Provision for income taxes 164.1 (25.5) (9.1) 198.7
Effective tax rate 32.3% 32.0% Net income 344.1 (58.5) (18.9) 421.5
Earnings per common share Basic $0.65 $(0.12) $(0.03) $0.80 Diluted
$0.63 $(0.10) $(0.04) $0.77 Average common shares outstanding Basic
515.3 515.3 515.3 515.3 Diluted 550.4 550.4 550.4 550.4
Colgate-Palmolive Company Consolidated Income Statement and
Supplemental Information Reconciliation Excluding the 2004
Restructuring Program and Other Items For the Three Months Ended
September 30, 2006 and 2005 (in Millions Except Per Share Amounts)
(Unaudited) 2005 Excluding Restructuring Restructuring As Reported
& Other (a) & Other Net sales $2,911.8 $ - $2,911.8 Cost of
sales 1,334.2 25.7 1,308.5 Gross profit 1,577.6 (25.7) 1,603.3
Gross profit margin 54.2% 55.1% Selling, general and administrative
expenses 1,007.0 0.5 1,006.5 Other (income) expense, net (33.7)
(54.7) 21.0 Operating profit 604.3 28.5 575.8 Operating profit
margin 20.8% 19.8% Interest expense, net 36.8 - 36.8 Income before
income taxes 567.5 28.5 539.0 Provision for income taxes 220.3 51.0
169.3 Effective tax rate 38.8% 31.4% Net income 347.2 (22.5) 369.7
Earnings per common share Basic $0.66 $(0.04) $0.70 Diluted $0.63
$(0.04) $0.67 Average common shares outstanding Basic 518.8 518.8
518.8 Diluted 554.3 554.3 554.3 (a) See Supplemental Consolidated
Income Statement Information - Components of 2004 Restructuring
Program and Other Items for details. Note: Basic and diluted
earnings per share for the "As Reported" and "Excluding
Restructuring & SFAS 123R" are computed independently for each
quarter and the nine months presented. As a result of changes in
shares outstanding during the year and rounding, the sum of the
three quarters' earnings per share may not necessarily equal the
earnings per share for the nine months. In addition, the impact of
"Restructuring" and the "Adoption Impact of SFAS 123R" in 2006 on
the basic and diluted earnings per share may not necessarily equal
the earnings per share if calculated independently as a result of
rounding. Table 2 Colgate-Palmolive Company Consolidated Income
Statement and Supplemental Information Reconciliation Excluding the
2004 Restructuring Program and Other Items For the Nine Months
Ended September 30, 2006 and 2005 (in Millions Except Per Share
Amounts) (Unaudited) 2006 Adoption Excluding As Impact of
Restructuring Reported Restructuring SFAS 123R & SFAS 123R Net
sales $9,028.6 $ - $ - $9,028.6 Cost of sales 4,103.6 156.8 -
3,946.8 Gross profit 4,925.0 (156.8) - 5,081.8 Gross profit margin
54.5% 56.3% Selling, general and administrative expenses 3,210.2
30.6 57.4 3,122.2 Other (income) expense, net 187.0 130.3 - 56.7
Operating profit 1,527.8 (317.7) (57.4) 1,902.9 Operating profit
margin 16.9% 21.1% Interest expense, net 119.8 - - 119.8 Income
before income taxes 1,408.0 (317.7) (57.4) 1,783.1 Provision for
income taxes 455.8 (96.5) (18.1) 570.4 Effective tax rate 32.4%
32.0% Net income 952.2 (221.2) (39.3) 1,212.7 Earnings per common
share Basic $1.81 $(0.43) $(0.07) $2.31 Diluted $1.73 $(0.40)
$(0.07) $2.20 Average common shares outstanding Basic 515.4 515.4
515.4 515.4 Diluted 550.7 550.7 550.7 550.7 Colgate-Palmolive
Company Consolidated Income Statement and Supplemental Information
Reconciliation Excluding the 2004 Restructuring Program and Other
Items For the Nine Months Ended September 30, 2006 and 2005 (in
Millions Except Per Share Amounts) (Unaudited) 2005 Excluding
Restructuring Restructuring As Reported & Other (a) & Other
Net sales $8,492.3 $ - $8,492.3 Cost of sales 3,872.0 59.5 3,812.5
Gross profit 4,620.3 (59.5) 4,679.8 Gross profit margin 54.4% 55.1%
Selling, general and administrative expenses 2,910.5 0.5 2,910.0
Other (income) expense, net 71.8 (2.8) 74.6 Operating profit
1,638.0 (57.2) 1,695.2 Operating profit margin 19.3% 20.0% Interest
expense, net 99.3 - 99.3 Income before income taxes 1,538.7 (57.2)
1,595.9 Provision for income taxes 548.5 38.6 509.9 Effective tax
rate 35.6% 32.0% Net income 990.2 (95.8) 1,086.0 Earnings per
common share Basic $1.86 $(0.18) $2.04 Diluted $1.78 $(0.17) $1.95
Average common shares outstanding Basic 521.6 521.6 521.6 Diluted
557.8 557.8 557.8 (a) See Supplemental Consolidated Income
Statement Information - Components of 2004 Restructuring Program
and Other Items for details. Note: Basic and diluted earnings per
share for the "As Reported" and "Excluding Restructuring & SFAS
123R" are computed independently for each quarter and the nine
months presented. As a result of changes in shares outstanding
during the year and rounding, the sum of the three quarters'
earnings per share may not necessarily equal the earnings per share
for the nine months. In addition, the impact of "Restructuring" and
the "Adoption Impact of SFAS 123R" in 2006 on the basic and diluted
earnings per share may not necessarily equal the earnings per share
if calculated independently as a result of rounding. Table 3
Colgate-Palmolive Company Supplemental Consolidated Income
Statement Information Components of The 2004 Restructuring Program
and Other Items (Dollars in Millions) (Unaudited) Three Months
Ended September 30, 2005 North Tax on The 2004 American SFAS 88
Incremental Total Restructuring Detergent Pension Remittances
Restructuring Program Sale Charges (AJCA) & Other Net sales $ -
$ - $ - $ - $ - Cost of sales 25.7 - - - 25.7 Gross profit (25.7) -
- - (25.7) Selling, general and administrative expenses 0.5 - - -
0.5 Other (income) expense, net 13.6 (93.1) 24.8 - (54.7) Operating
profit (39.8) 93.1 (24.8) - 28.5 Interest expense, net - - - - -
Income before income taxes (39.8) 93.1 (24.8) - 28.5 Provision for
income taxes (9.9) 32.5 (8.1) 36.5 51.0 Net income (29.9) 60.6
(16.7) (36.5) (22.5) Nine Months Ended September 30, 2005 North Tax
on The 2004 American SFAS 88 Incremental Total Restructuring
Detergent Pension Remittances Restructuring Program Sale Charges
(AJCA) & Other Net sales $ - $ - $ - $ - $ - Cost of sales 59.5
- - - 59.5 Gross profit (59.5) - - - (59.5) Selling, general and
administrative expenses 0.5 - - - 0.5 Other (income) expense, net
65.5 (93.1) 24.8 - (2.8) Operating profit (125.5) 93.1 (24.8) -
(57.2) Interest expense, net - - - - - Income before income taxes
(125.5) 93.1 (24.8) - (57.2) Provision for income taxes (22.3) 32.5
(8.1) 36.5 38.6 Net income (103.2) 60.6 (16.7) (36.5) (95.8) Table
4 Colgate-Palmolive Company Condensed Consolidated Balance Sheets
As of September 30, 2006, December 31, 2005 and September 30, 2005
(Dollars in Millions) (Unaudited) September 30, December 31,
September 30, 2006 2005 2005 Cash and cash equivalents $ 502.9 $
340.7 $ 376.3 Receivables, net 1,446.3 1,309.4 1,337.2 Inventories
1,001.6 855.8 890.4 Other current assets 304.5 251.2 293.6
Property, plant and equipment, net 2,526.4 2,544.1 2,558.5 Other
assets, including goodwill and intangibles 3,386.8 3,205.9 3,198.9
Total assets $9,168.5 $8,507.1 $8,654.9 Total debt 3,577.9 3,446.2
3,565.4 Other current liabilities 2,409.2 2,214.8 2,210.2 Other
non-current liabilities 1,546.8 1,496.0 1,576.6 Total shareholders'
equity 1,634.6 1,350.1 1,302.7 Total liabilities and shareholders'
equity $9,168.5 $8,507.1 $8,654.9 Supplemental Balance Sheet
Information Debt less cash and marketable securities* $3,044.9
$3,095.2 $3,173.0 Working capital % of sales 2.6% 1.7% 2.6% *
Marketable securities of $30.1, $10.3 and $16.1 as of September 30,
2006, December 31, 2005 and September 30, 2005, respectively, are
included in Other current assets. Table 5 Colgate-Palmolive Company
Condensed Consolidated Statements of Cash Flows For the Nine Months
Ended September 30, 2006 and 2005 (Dollars in Millions) (Unaudited)
2006 2005 Operating Activities Net income $952.2 $990.2 Adjustments
to reconcile net income to net cash provided by operations:
Restructuring, net of cash 187.6 78.6 Depreciation and amortization
243.5 247.4 Gain before tax on sale of non-core product lines -
(93.1) Stock-based compensation expense 91.7 29.8 Cash effects of
changes in: Receivables (122.9) (40.8) Inventories (128.9) (74.2)
Accounts payable and other accruals 122.8 157.8 Other non-current
assets and liabilities 23.9 9.7 Net cash provided by operations
1,369.9 1,305.4 Investing Activities Capital expenditures (251.8)
(257.8) Payment for acquisitions, net of cash acquired (200.0)
(38.5) Sale of non-core product lines - 117.0 Other (18.5) 2.3 Net
cash used in investing activities (470.3) (177.0) Financing
Activities Principal payments on debt (1,011.3) (1,619.8) Proceeds
from issuance of debt 1,116.7 1,623.4 Dividends paid (497.4)
(443.1) Purchases of treasury shares (601.3) (649.5) Proceeds from
exercise of stock options and excess tax benefits 258.5 33.1 Net
cash used in financing activities (734.8) (1,055.9) Effect of
exchange rate changes on Cash and cash equivalents (2.6) (15.8) Net
increase in Cash and cash equivalents 162.2 56.7 Cash and cash
equivalents at beginning of period 340.7 319.6 Cash and cash
equivalents at end of period $502.9 $376.3 Supplemental Cash Flow
Information Free cash flow before dividends (Net cash provided by
operations less capital expenditures) Net cash provided by
operations $1,369.9 $1,305.4 Less: Capital expenditures (251.8)
(257.8) Free cash flow before dividends $1,118.1 $1,047.6 Income
taxes paid $497.9 $439.1 Table 6 Colgate-Palmolive Company Segment
Information For the Three and Nine Months Ended September 30, 2006
and 2005 (Dollars in Millions) (Unaudited) Three Months Ended Nine
Months Ended September 30, September 30, 2006 2005 2006 2005 Net
sales Oral, Personal and Home Care North America $668.1 $653.4
$1,933.1 $1,895.2 Latin America 769.3 669.0 2,203.1 1,908.9
Europe/South Pacific 779.8 728.7 2,192.7 2,171.0 Greater
Asia/Africa 512.5 486.4 1,489.6 1,408.0 Total Oral, Personal and
Home Care $2,729.7 $2,537.5 $7,818.5 $7,383.1 Pet Nutrition 414.0
374.3 1,210.1 1,109.2 Total Net sales $3,143.7 $2,911.8 $9,028.6
$8,492.3 Three Months Ended Nine Months Ended September 30,
September 30, 2006 2005 2006 2005 Operating profit Oral, Personal
and Home Care North America $143.5 $140.6 $418.7 $412.7 Latin
America 220.8 171.9 651.9 514.3 Europe/South Pacific 179.5 159.3
495.1 470.6 Greater Asia/Africa 65.9 58.5 199.3 177.2 Total Oral,
Personal and Home Care $609.7 $530.3 $1,765.0 $1,574.8 Pet
Nutrition 106.7 98.9 318.4 299.7 Corporate (167.0) (24.9) (555.6)
(236.5) Total Operating profit $549.4 $604.3 $1,527.8 $1,638.0
Effective January 1, 2006, the Company modified the geographic
reporting structure of its Oral, Personal and Home Care segment in
order to address evolving markets and more closely align countries
with similar consumer needs and retail trade structures. Management
responsibility for Eastern European operations including Russia,
Turkey, Ukraine and Belarus, transferred to Greater Asia management
and responsibility for countries in the South Pacific, including
Australia, was transferred to European management. The financial
information for 2005 has been reclassified to conform to the new
reporting structure. The Company evaluates segment performance
based on several factors, including Operating profit. The Company
uses Operating profit as a measure of operating segment performance
because it excludes the impact of corporate-driven decisions
related to interest expense and income taxes. Corporate operations
include research and development costs, unallocated overhead costs,
stock-based compensation related to stock options and restricted
stock awards, restructuring and related implementation costs, and
gains and losses on sales of non-core brands and assets. Corporate
operating expenses for the three and nine months ended September
30, 2006 include $84.0 and $317.7 of charges related to the
Company's 2004 Restructuring Program, respectively. Additionally,
Corporate operating expenses for the three and nine months ended
September 30, 2006 include an incremental charge of $28.0 and $57.4
related to the adoption of SFAS 123R, respectively. Corporate
operating expenses for the three and nine months ended September
30, 2005 include $39.8 and $125.5 of charges related to the
Company's 2004 Restructuring Program, respectively. Additionally,
Corporate operating expenses for the three and nine months ended
September 30, 2005 were reduced by a $93.1 gain related to the sale
of the Company's North American detergent brands and were increased
by SFAS 88 pension charges of $24.8. Table 7 Colgate-Palmolive
Company Geographic Sales Analysis Percentage Changes - Third
Quarter 2006 vs 2005 September 30, 2006 (Unaudited) COMPONENTS OF
SALES CHANGE THIRD QUARTER Pricing 3rd Qtr 3rd Qtr Coupons Sales
Sales Consumer & Change Change Ex-Divested Trade Region As
Reported Ex-Divestment Volume Incentives Exchange Total Company
8.0% 9.5% 7.0% 1.5% 1.0% Europe/South Pacific 7.0% 8.0% 4.0% 0.0%
4.0% Latin America 15.0% 15.0% 12.0% 4.0% -1.0% Greater Asia
/Africa 5.5% 10.0% 7.0% 3.0% 0.0% Total International 9.5% 11.0%
7.5% 2.0% 1.5% North America 2.0% 5.0% 5.5% -1.0% 0.5% Total CP
Products 7.5% 9.5% 7.0% 1.5% 1.0% Hill's 10.5% 10.5% 5.5% 5.5%
-0.5% COMPONENTS OF SALES CHANGE NINE MONTHS Pricing 9 Months 9
Months Coupons Sales Sales Consumer & Change Change Ex-Divested
Trade Region As Reported Ex-Divestment Volume Incentives Exchange
Total Company 6.5% 8.5% 6.5% 2.0% 0.0% Europe/South Pacific 1.0%
2.0% 5.0% -1.0% -2.0% Latin America 15.5% 15.5% 9.0% 5.0% 1.5%
Greater Asia /Africa 6.0% 10.5% 7.5% 2.5% 0.5% Total International
7.0% 9.0% 7.5% 2.0% -0.5% North America 2.0% 6.5% 6.5% -0.5% 0.5%
Total CP Products 6.0% 8.0% 6.5% 1.5% 0.0% Hill's 9.0% 9.0% 5.5%
4.5% -1.0% NOTE: The impact of the May 2006 acquisition of Tom's of
Maine on North American sales and volume was 1.5% and 1.0% in the
third quarter and nine months, respectively. DATASOURCE:
Colgate-Palmolive Company CONTACT: Bina Thompson, +1-212-310-3072,
or Hope Spiller, +1-212-310-2291, both of Colgate-Palmolive Company
Web site: http://www.colgate.com/
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