Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net
sales of $4,383 million in third quarter 2011, an increase of 11.0%
versus third quarter 2010. Global unit volume grew 4.5%, pricing
increased 2.0% and foreign exchange was positive 4.5%. Excluding
divested businesses, global unit volume grew 5.0%. The Sanex
acquisition contributed 2.0% to sales and volume growth. Organic
sales (Net sales excluding foreign exchange, acquisitions and
divestments) grew 5.0%.
Net income increased 4% to $643 million in third quarter 2011
and Diluted earnings per share increased 8% to $1.31. Net income
and Diluted earnings per share in third quarter 2010 were $619
million and $1.21, respectively.
As previously announced, consistent with the Company’s focused
business strategy, the Company sold its laundry detergent brands in
Colombia during third quarter 2011, resulting in an aftertax gain
of $135 million ($0.27 per diluted share). This gain was offset by
$128 million of aftertax charges ($0.26 per diluted share)
resulting from the implementation of various business realignment
and other cost-saving initiatives and $5 million of aftertax costs
($0.01 per diluted share) related to a sale of land in Mexico.
Excluding these items, Net income was $641 million, an increase of
4% versus third quarter 2010 and Diluted earnings per share was
$1.31, an increase of 8% versus third quarter 2010.
Gross profit margin was 56.2%, down 320 basis points versus the
year ago quarter. Excluding the costs associated with the business
realignment and other cost-saving initiatives noted above, gross
profit margin was 56.8%, down 260 basis points versus the year ago
quarter, reflecting continued significant increases in raw and
packaging material costs worldwide. These sharp increases were
partially offset by higher pricing and cost savings from the
Company’s funding-the-growth initiatives.
Selling, general and administrative expenses decreased by 130
basis points to 34.0% of Net sales in third quarter 2011 from 35.3%
in third quarter 2010, as overhead expenses decreased by 60 basis
points and advertising decreased by 70 basis points. Worldwide
advertising spending increased 4% versus the year ago quarter to
$450 million.
Operating profit increased 8% to $1,035 million in third quarter
2011 compared to $958 million in third quarter 2010. Excluding the
gain from the sale of the Colombia laundry detergent brands and
other items noted above, operating profit increased 5% to $1,003
million.
Net cash provided by operations year to date was $2,057 million
versus $2,243 million in the comparable 2010 period. Working
capital as a percentage of Net sales was 0.6%, an improvement of
110 basis points versus the year ago period, primarily due to lower
levels of accounts receivable and inventory resulting from ongoing
efforts to improve cash cycle time.
Ian Cook, Chairman, President and Chief Executive Officer
commented on the results and outlook excluding the third quarter
2011 items noted above, “We are pleased with our strong top and
bottom line growth this quarter with worldwide net sales, operating
profit, net income and diluted earnings per share all increasing
versus year ago, despite very sharp increases in material costs, an
intense competitive environment and challenging macroeconomic
conditions worldwide.
“The excellent top line growth was driven by very strong 9.5%
organic sales growth in emerging markets. In developed markets, we
saw a return to positive organic sales growth for the first time in
six quarters, despite continued economic challenges in many
countries. This strong top line momentum should continue in the
balance of the year fueled by new products across all categories
and in all geographies.
“Colgate’s global market shares in toothpaste and manual
toothbrushes are both at record highs year to date. Colgate’s share
of the global toothpaste market strengthened to 44.4% year to date,
up 0.3 share points versus year ago. Our global leadership in
manual toothbrushes also strengthened during the quarter with
Colgate’s global market share in that category reaching 31.8% year
to date, up 0.5 share points versus year ago.
“Reflecting the significantly higher cost environment, we
currently expect gross profit margin for the year to decline
between 150 and 170 basis points versus 2010. We continue to be
sharply focused on our aggressive funding-the-growth initiatives
and anticipate that the benefits from those programs, combined with
our strategic worldwide pricing efforts, will help offset the
impact of the strengthening dollar and enable us to achieve our
profit target of mid-single digit earnings per share growth for the
year, excluding the previously disclosed charge relating to the
transition to hyperinflationary accounting in Venezuela in first
quarter 2010.
“As we look ahead to 2012, while our global budget process is
still in its initial stages and macroeconomic and foreign exchange
volatility remain a challenge, we are planning to improve our
worldwide market shares and volume growth with advertising support
behind many new and existing Colgate products. Consistent with our
long-term strategy, our goal is to return to double-digit earnings
per share growth in 2012.”
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.
North America (18% of Company
Sales)
North America Net sales increased 3.0% in the third quarter.
Unit volume increased 5.0% with 2.5% lower pricing and 0.5%
positive foreign exchange. Organic sales increased 2.5% during the
quarter.
Operating profit in North America decreased 5% in the third
quarter of 2011 to $213 million, or 27.4% of Net sales. This
decrease in Operating profit as a percentage of Net sales was
driven by a decrease in Gross profit as a percentage of Net sales
which was partially offset by a decrease in Selling, general and
administrative expenses as a percentage of Net sales. The decrease
in Gross profit as a percentage of Net sales was due to lower
pricing due to increased promotional investments and higher raw and
packaging material costs, reflecting global commodity cost
increases, which were partially offset by cost savings from the
Company’s funding-the-growth initiatives. The decrease in Selling,
general and administrative expenses as a percentage of Net sales
reflects lower advertising expenses as a percentage of Net
sales.
In the U.S., new product launches including Colgate Optic White
and Colgate Sensitive Pro-Relief toothpastes and the relaunch of
Colgate Total toothpaste are strengthening Colgate’s leadership in
toothpaste, with its share of that market reaching 35.8% year to
date, up 0.5 share points versus year ago. Colgate’s strength in
manual toothbrushes also continued, driven by the success of
Colgate 360° Optic White, Colgate 360° Sensitive Pro-Relief and
Colgate 360° Surround manual toothbrushes.
Successful new products in the U.S. in other categories include
Softsoap brand Pomegranate and Mango Infusions and Softsoap brand
Coconut Scrub bar soaps and Palmolive Soft Touch with Vitamin E
dish liquid.
Latin America (28% of Company
Sales)
Latin America Net sales rose 16.0% during the quarter with unit
volume increasing 4.0%. Excluding divested businesses, Latin
America unit volume grew 6.5%. Volume gains were led by Brazil and
Mexico. Higher pricing added 9.0% and foreign exchange was positive
3.0%. Organic sales for Latin America increased 15.5% during the
quarter.
While Operating profit in Latin America increased 10% in the
third quarter of 2011 to $364 million, driven by strong sales
growth, it decreased as a percentage of Net sales to 29.3%. This
decrease in Operating profit as a percentage of Net sales was due
to a decrease in Gross profit as a percentage of Net sales,
partially offset by a decrease in Selling, general and
administrative expenses as a percentage of Net sales. The decrease
in Gross profit as a percentage of Net sales was driven by higher
raw and packaging material costs, reflecting global commodity cost
increases, which were partially offset by higher pricing and cost
savings from the Company’s funding-the-growth initiatives. The
decrease in Selling, general and administrative expenses as a
percentage of Net sales was primarily due to a reduction in
overhead expenses, partially offset by higher advertising
investments supporting volume growth.
Colgate’s strong leadership in oral care throughout Latin
America continued during the quarter with record high toothpaste
market shares year to date achieved in Venezuela, Central America,
Chile and Peru. Strong sales of Colgate Sensitive Pro-Relief,
Colgate Sensitive Pro-Relief Whitening, Colgate Total and Colgate
Triple Action toothpastes contributed to growth throughout the
region. Colgate strengthened its leadership of the manual
toothbrush market throughout the region, driven by strong sales of
Colgate 360° Surround, Colgate Twister, Colgate Triple Action and
Colgate Zig Zag manual toothbrushes. In mouthwash, Colgate’s market
share is at a record high in the region with gains driven by
Colgate Plax Whitening Tartar Control and Colgate Plax Complete
Care mouthwashes.
Products in other categories contributing to market share gains
included Palmolive Naturals Relaxing Softness Cream and Lavender
and Protex Advanced Clean bar soaps, Lady Speed Stick Stainguard
and Speed Stick Sensitive Power deodorants and Suavitel Dusk fabric
conditioner.
Europe/South Pacific (22% of Company
Sales)
Europe/South Pacific Net sales increased 18.5% during the
quarter. Unit volume increased 10.0% with 2.5% lower pricing and
11.0% positive foreign exchange. The Sanex acquisition added 9.0%
to sales and volume growth for the region. Volume gains were led by
the United Kingdom, Spain and France. Organic sales for
Europe/South Pacific declined 1.5%.
Operating profit in Europe/South Pacific decreased 1% in the
third quarter of 2011 to $196 million, or 20.2% of Net sales. This
decrease in Operating profit as a percentage of Net sales was due
to a decrease in Gross profit as a percentage of Net sales and an
increase in Selling, general and administrative expenses as a
percentage of Net sales. The decrease in Gross profit as a
percentage of Net sales was due to higher raw and packaging
material costs, reflecting global commodity cost increases, which
were partially offset by cost savings from the Company’s
funding-the-growth initiatives. Selling, general and administrative
expenses as a percentage of Net sales increased due to increased
overhead expenses.
Colgate strengthened its oral care leadership in the
Europe/South Pacific region with toothpaste share gains across the
region led by France, Italy, Germany, Greece, Spain, Denmark and
Poland. Successful premium products driving share gains include
Colgate Sensitive Pro-Relief Whitening, elmex Sensitive
Professional, Colgate Max White One and Colgate Max Fresh Night
toothpastes. In the manual toothbrush category, Colgate 360°
Surround toothbrush contributed to share gains in key countries
throughout the region.
Recent premium innovations contributing to strength in other
product categories include Colgate Max White One Sonic Power
battery powered toothbrush, Sanex Zero% and Sanex Dermo Repair
shower gels, Palmolive “Authentic” shower gels and liquid hand
soaps containing Mediterranean inspired fragrances and ingredients,
and the relaunch of Palmolive Aromatherapy and Thermal Spa shower
gels with multi-sensory features.
Greater Asia/Africa (20% of Company
Sales)
Greater Asia/Africa Net sales and unit volume increased 9.5% and
4.0%, respectively, during the quarter. Volume gains in the Greater
China region, India, Russia and Malaysia were partially offset by
volume declines in Turkey and Ukraine. The Sanex acquisition added
0.5% to sales and volume growth for the region. Pricing increased
2.0% and foreign exchange was positive 3.5%. Organic sales for
Greater Asia/Africa increased 5.5%.
While Operating profit in Greater Asia/Africa increased 4% in
the third quarter of 2011 to $202 million driven by strong sales
growth, it decreased as a percentage of Net sales to 23.6%. This
decrease in Operating profit as a percentage of Net sales was due
to a decrease in Gross profit as a percentage of Net sales which
was partially offset by a decrease in Selling, general and
administrative expenses as a percentage of Net sales. The decrease
in Gross profit as a percentage of Net sales was due to higher raw
and packaging material costs, reflecting global commodity cost
increases, partially offset by higher pricing and cost savings from
the Company’s funding-the-growth initiatives. Selling, general and
administrative expenses as a percentage of Net sales decreased due
to lower advertising expenses.
Colgate continued its toothpaste leadership in Greater Asia,
driven by market share gains in Thailand, Malaysia and Turkey.
Successful new products including Colgate Sensitive Pro-Relief
Whitening, Colgate Sensitive Pro-Relief Multi-Protection and
Colgate Max White One toothpastes and the relaunch of Colgate Total
toothpaste contributed to growth throughout the region.
Successful products contributing to growth in other categories
in the region include Colgate 360° Surround and Colgate Max White
One manual toothbrushes, Colgate Plax Fresh Tea mouthwash,
Palmolive Pomegranate and Mango Infusions liquid hand soap,
Palmolive Naturals Black Orchid bar soap, shower gel and liquid
hand soap and Protex Pro Plus bar soap.
Hill’s (12% of Company
Sales)
Hill’s Net sales grew 3.0% during the quarter. Unit volume
decreased 4.0%, pricing increased 3.0% and foreign exchange was
positive 4.0%. The decrease in volume was due to Russia and the
U.S. Hill’s organic sales decreased 1.0% during the quarter.
Hill’s Operating profit decreased 8% in the third quarter of
2011 to $127 million, or 23.6% of Net sales. This decrease in
Operating profit as a percentage of Net sales was due to a decrease
in Gross profit as a percentage of Net sales and an increase in
Selling, general and administrative expenses as a percentage of Net
sales. The decrease in Gross profit as a percentage of Net sales
was due to higher raw and packaging material costs, reflecting
global commodity cost increases, and increased manufacturing
overhead expenses due to increased investments in capacity,
partially offset by cost savings from the Company’s
funding-the-growth initiatives and higher pricing. Selling, general
and administrative expenses increased as a percentage of Net sales
due to increased logistics and overhead expenses.
Recent new product introductions contributing to sales in the
U.S. include Science Diet Ideal Balance Canine, which combines
natural ingredients with the power of advanced nutrition in one
balanced package, Science Diet Savory Stew Canine, Science Diet Age
Defying Feline (11 years plus) and the relaunch of Prescription
Diet c/d Multicare Feline Bladder Health with evidence of improved
efficacy and taste.
New pet food products contributing to international sales
include Science Diet Senior Advanced (15 years plus) Canine and
Feline, reformulated Prescription Diet r/d Canine and Feline, the
relaunch of Prescription Diet c/d Multicare Feline Bladder Health
with evidence of improved efficacy and taste and the relaunch of
Prescription Diet j/d Canine and Feline with upgraded
ingredients.
***
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, Sanex, Ajax, Axion, Fabuloso, Soupline and
Suavitel, as well as Hill’s Science Diet and Hill’s Prescription
Diet. For more information about Colgate’s global business, visit
the Company’s web site at http://www.colgate.com. To learn more
about Colgate’s global oral health education program, Bright
Smiles, Bright Futures™, please visit http://www.colgatebsbf.com. CL-E
Substantially all market share data included in this press
release is compiled from data as measured by ACNielsen.
Cautionary Statement on Forward-Looking
Statements
This press release and the related webcast (other than
historical information) may contain forward-looking statements.
Such statements may relate, for example, to sales or unit volume
growth, organic sales growth, profit or profit margin growth,
earnings growth, financial goals, the impact of currency
devaluations or exchange controls in Venezuela, cost-reduction
plans, tax rates, new product introductions or commercial
investment levels. These statements are made on the basis of our
views and assumptions as of this time and we undertake no
obligation to update these statements. We caution investors that
any such forward-looking statements are not guarantees of future
performance and that 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 caption “Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2010) for information about certain factors that could cause
such differences. Copies of these filings may be obtained upon
request from the Company’s Investor Relations Department or on the
Company’s web site at http://www.colgate.com.
Non-GAAP Financial Measures
The following provides information regarding the non-GAAP
financial measures used in this earnings release and/or the related
webcast:
To supplement Colgate’s condensed income 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, gross profit margin, operating profit, operating profit
margin, net income and diluted earnings per share are discussed
both as reported (on a GAAP basis) and excluding the impact of the
gain on the sale of the Company’s laundry detergent brands in
Colombia, costs associated with various business realignment and
other cost-saving initiatives, costs related to the sale of land in
Mexico and the one-time charge related to the transition to
hyperinflationary accounting in Venezuela as of January 1, 2010.
Management believes these non-GAAP financial measures provide
investors with useful supplemental information regarding the
performance of the Company’s ongoing operations. See “Non-GAAP
Reconciliation” for the three and nine months ended September 30,
2011 and 2010 included with this release for a reconciliation of
these financial measures to the related GAAP measures.
This release discusses organic sales growth, which is Net sales
growth excluding the impact of foreign exchange, acquisitions and
divestments. Management believes this measure provides investors
with useful supplemental information regarding the Company’s
underlying sales trends by presenting sales growth excluding the
external factor of foreign exchange as well as the impact from
acquisitions and divestments. See “Geographic Sales Analysis
Percentage Changes” for the three and nine months ended September
30, 2011 and 2010 included with this release for a comparison of
organic sales growth to sales growth in accordance with GAAP.
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.
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 “Condensed Consolidated Statements of Cash
Flows For the Nine Months Ended September 30, 2011 and 2010” for a
comparison of free cash flow before dividends to net cash provided
by operations as reported in accordance with GAAP.
(See attached tables for third quarter
results.)
Table 1
Colgate-Palmolive Company Consolidated
Income Statements For the Three Months Ended
September 30, 2011 (in Millions Except Per Share
Amounts) (Unaudited) 2011 2010 Net sales $
4,383 $ 3,943 Cost of sales 1,921 1,599 Gross profit
2,462 2,344 Gross profit margin 56.2 % 59.4 %
Selling, general and administrative expenses 1,489 1,391
Other (income) expense, net (62 ) (5 ) Operating profit
1,035 958 Operating profit margin 23.6 % 24.3 %
Interest expense, net 10 13 Income before income taxes 1,025
945 Provision for income taxes 349 300 Effective tax
rate 34.0 % 31.7 % Net income including noncontrolling
interests 676 645 Less: Net income attributable to
noncontrolling interests 33 26 Net income attributable to
Colgate-Palmolive Company $ 643 $ 619 Earnings per common
share Basic $ 1.32 $ 1.26 Diluted $ 1.31 $ 1.21 Average
common shares outstanding Basic 486.7 486.0 Diluted 490.5 509.5
Table 2
Colgate-Palmolive Company
Consolidated Income Statements For the Nine Months
Ended September 30, 2011 (in Millions Except Per
Share Amounts) (Unaudited) 2011 2010 Net
sales $ 12,562 $ 11,586 Cost of sales 5,365 4,732
Gross profit 7,197 6,854 Gross profit margin 57.3 % 59.2 %
Selling, general and administrative expenses 4,314 4,038
Other (income) expense, net (35 ) 232 Operating
profit 2,918 2,584 Operating profit margin 23.2 % 22.3 %
Interest expense, net 37 43 Income before income
taxes 2,881 2,541 Provision for income taxes 952 879
Effective tax rate 33.0 % 34.6 % Net income including
noncontrolling interests 1,929 1,662 Less: Net income
attributable to noncontrolling interests 88 83 Net income
attributable to Colgate-Palmolive Company $ 1,841 $ 1,579
Earnings per common share Basic $ 3.76 $ 3.17 Diluted $ 3.73 $ 3.07
Average common shares outstanding Basic 489.9 489.9 Diluted
493.4 514.7
Table 3
Colgate-Palmolive Company
Non-GAAP Reconciliation For the Three Months Ended
September 30, 2011 and 2010 (in Millions Except Per
Share Amounts) (Unaudited) 2011 2010 Gain on
Business
Colombia
Realignment
Mexico Land As Adjusted As Reported
Brand Sale 1
Initiatives2
Sale 3
Non-GAAP As Reported Cost of sales $ 1,921 $ 28 $ 1,893 $
1,599 Gross profit 2,462 (28 ) 2,490 2,344 Gross
profit margin 56.2 % 56.8 % 59.4 % Selling, general and
administrative expenses 1,489 5 1,484 1,391 Other (income)
expense, net (62 ) $ (207 ) 135 $ 7 3 (5 ) Operating profit
1,035 207 (168 ) (7 ) 1,003 958 Operating profit margin 23.6
% 22.9 % 24.3 % Income before income taxes 1,025 207 (168 )
(7 ) 993 945 Provisions for income taxes 349 72 (39 ) (2 )
318 300
Effective tax rate
34.0 % 32.0 % 31.7 % Net income including noncontrolling
interests 676 135 (129 ) (5 ) 675 645 Net income
attributable to Colgate-Palmolive Company $ 643 $ 135 $ (128 ) $ (5
) 641 $ 619
Earnings per common share 4
Basic $ 1.32 $ 0.28 $ (0.26 ) $ (0.01 ) $ 1.32 $ 1.26 Diluted $
1.31 $ 0.27 $ (0.26 ) $ (0.01 ) $ 1.31 $ 1.21 1
Represents the gain on the sale of the Company's laundry detergent
brands in Colombia. 2 Represents costs associated with
various global business realignment and other cost-saving
initiatives. 3 Represents costs related to the sale of land
in Mexico. 4
The impact of non-GAAP adjustments on the
basic and diluted earnings per share may not necessarily equal the
difference between "As Reported" and "As Adjusted Non-GAAP" as a
result of rounding.
Table 4
Colgate-Palmolive Company Non-GAAP
Reconciliation For the Nine Months Ended September
30, 2011 and 2010 (in Millions Except Per Share
Amounts) (Unaudited) 2011 2010
Gain on
Business
Colombia
Realignment
Mexico Land
As Adjusted
Venezuela
As Adjusted
As Reported
Brand Sale 1
Initiatives2
Sale 3
Non-GAAP
As Reported 4
Hyperinflationary 5
Non-GAAP 4
Cost of sales $ 5,365 $ 28 $ 5,337 $ 4,732 $ 4,732
Gross profit 7,197 (28 ) 7,225 6,854 6,854 Gross profit
margin 57.3 % 57.5 % 59.2 % 59.2 % Selling, general and
administrative expenses 4,314 5 4,309 4,038 4,038 Other
(income) expense, net (35 ) $ (207 ) 135 $ 7 30 232 $ 271 (39 )
Operating profit 2,918 207 (168 ) (7 ) 2,886 2,584 (271 )
2,855 Operating profit margin 23.2 % 23.0 % 22.3 % 24.6 %
Income before income taxes 2,881 207 (168 ) (7 ) 2,849 2,541
(271 ) 2,812 Provisions for income taxes 952 72 (39 ) (2 )
921 879 879
Effective tax rate
33.0 % 32.3 % 34.6 % 31.3 % Net income including
noncontrolling interests 1,929 135 (129 ) (5 ) 1,928 1,662 (271 )
1,933 Net income attributable to Colgate-Palmolive Company $
1,841 $ 135 $ (128 ) $ (5 ) $ 1,839 $ 1,579 $ (271 ) $ 1,850
Earnings per common share 6
Basic $ 3.76 $ 0.28 $ (0.26 ) $ (0.01 ) $ 3.75 $ 3.17 $ (0.55 ) $
3.72 Diluted $ 3.73 $ 0.27 $ (0.26 ) $ (0.01 ) $ 3.73 $ 3.07 $
(0.52 ) $ 3.59 1 Represents the gain on the sale of
the Company's laundry detergent brands in Colombia. 2
Represents costs associated with various global business
realignment and other cost-saving initiatives. 3 Represents
costs related to the sale of land in Mexico. 4
Includes a $46 pretax ($59 aftertax, $0.11
diluted earnings per share) gain related to the remeasurement of
the Venezuelan balance sheet and lower taxes on accrued but unpaid
remittances as a result of the currency devaluation on January 8,
2010.
5
Represents the one-time charge related to
the transition to hyperinflationary accounting in Venezuela as of
January 1, 2010. This amount primarily represents the premium paid
to acquire U.S. dollar-denominated cash and bonds. Prior to January
1, 2010, these assets had been remeasured at the parallel market
rate and then translated for financial reporting purposes at the
official rate of 2.15.
6
The impact of non-GAAP adjustments on the
basic and diluted earnings per share may not necessarily equal the
difference between "As Reported" and "As Adjusted Non-GAAP" as a
result of rounding.
Table 5
Colgate-Palmolive Company Condensed Consolidated
Balance Sheets As of September 30, 2011, December 31,
2010 and September 30, 2010 (Dollars in Millions)
(Unaudited) September 30, December 31, September
30, 2011 2010 2010 Cash and cash equivalents $ 945 $ 490 $
654 Receivables, net 1,677 1,610 1,690 Inventories 1,336 1,222
1,278 Other current assets 485 408 469 Property, plant and
equipment, net 3,615 3,693 3,572 Other assets, including goodwill
and intangibles 4,710 3,749
3,727 Total assets $ 12,768 $ 11,172 $ 11,390
Total debt
$
4,756
$
3,424
$
3,388 Other current liabilities
3,329
3,119 3,117 Other non-current liabilities 1,813
1,812 2,039 Total liabilities 9,898
8,355 8,544 Total Colgate-Palmolive Company shareholders' equity
2,667 2,675 2,672 Noncontrolling interests 203
142 174
Total liabilities and shareholders'
equity
$ 12,768 $ 11,172 $ 11,390
Supplemental Balance Sheet Information Debt less cash, cash
equivalents and marketable securities* $ 3,740 $ 2,860 $ 2,679
Working capital % of sales
0.6
% 0.3 % 1.7 % *
Marketable securities of $72, $74 and $55
as of September 30, 2011, December 31, 2010 and September 30, 2010,
respectively, are included in Other current assets.
Table 6
Colgate-Palmolive Company Condensed Consolidated
Statements of Cash Flows For the Nine Months Ended
September 30, 2011 and 2010 (Dollars in Millions)
(Unaudited) Nine Months Ended September
30, 2011 2010
Operating Activities Net income
including noncontrolling interests $ 1,929 $ 1,662 Adjustments to
reconcile net income including noncontrolling interests to net cash
provided by operations: Depreciation and amortization 315 278
Restructuring, net of cash 130 - Venezuela hyperinflationary
transition charge - 271 Gain before tax on sales of non-core
product lines (207 ) - Voluntary benefits plan contributions (178 )
(35 ) Stock-based compensation expense 102 101 Deferred income
taxes 134 91 Cash effects of changes in: Receivables (127 ) (56 )
Inventories (147 ) (63 ) Accounts payable and other accruals 62 (95
) Other non-current assets and liabilities 44
89
Net cash provided by operations
2,057 2,243
Investing Activities Capital expenditures
(324 ) (318 ) Sale of property and non-core product lines 241 3
Purchases of marketable securities and investments (108 ) (211 )
Proceeds from marketable securities and investments 173 94 Payment
for acquisitions, net of cash acquired (972 ) - Other (8 )
(6 )
Net cash used in investing activities
(998 ) (438 )
Financing Activities Principal payments
on debt (2,720 ) (3,469 ) Proceeds from issuance of debt 4,074
3,709 Dividends paid (850 ) (804 ) Purchases of treasury shares
(1,386 ) (1,385 ) Proceeds from exercise of stock options and
excess tax benefits 316 204 Net cash
used in financing activities (566 ) (1,745 ) Effect of
exchange rate changes on Cash and cash equivalents (38 )
(6 ) Net increase (decrease) in Cash and cash equivalents
455 54 Cash and cash equivalents at beginning of period 490
600 Cash and cash equivalents at end of period
$ 945 $ 654
Supplemental Cash Flow
Information Free cash flow before dividends (Net cash provided
by operations less capital expenditures) Net cash provided by
operations $ 2,057 $ 2,243 Less: Capital expenditures (324 )
(318 ) Free cash flow before dividends $ 1,733 $
1,925 Income taxes paid $ 769 $ 854
Table
7 Segment Information
For the Three and Nine Months Ended September 30, 2011
and 2010 (Dollars in Millions) (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2011 2010 2011 2010
Net sales Oral, Personal and Home Care
North America $ 776 $ 753 $ 2,238 $ 2,274 Latin America 1,243 1,069
3,571 3,130 Europe/South Pacific 972 821 2,661 2,415 Greater
Asia/Africa 855 779 2,484
2,239 Total Oral, Personal and Home Care 3,846
3,422 10,954 10,058 Pet Nutrition 537
521 1,608 1,528
Total
Net sales $ 4,383 $ 3,943 $ 12,562 $
11,586 Three Months Ended
September 30,
Nine Months Ended
September 30,
2011 2010 2011 2010
Operating profit Oral, Personal and Home
Care North America $ 213 $ 224 $ 599 $ 668 Latin America 2 364 332
1,050 975 Europe/South Pacific 196 197 551 572 Greater Asia/Africa
202 195 604 573
Total Oral, Personal and Home Care 975 948 2,804
2,788 Pet Nutrition 127 138 408 413 Corporate 1 (67 )
(128 ) (294 ) (617 )
Total Operating profit
$ 1,035 $ 958
$
2,918 $ 2,584
Note:
The Company evaluates segment performance
based on several factors, including Operating profit. The Company
uses Operating profit as a measure of the operating segment
performance because it excludes the impact of corporate-driven
decisions related to interest expense and income taxes.
1 Corporate operations include stock-based compensation
related to stock options and restricted stock awards, research and
development costs, Corporate overhead costs, restructuring and
related implementation costs and gains and losses on sales of
non-core product lines and assets. In 2011, Corporate
Operating profit also includes a gain on the sale of the Company's
laundry detergent brands in Colombia of $207, costs of $168
associated with various business realignment and other cost-saving
initiatives and costs of $7 related to the sale of land in Mexico.
In 2010, Corporate Operating profit also includes a one-time
$271 charge related to the transition to hyperinflationary
accounting in Venezuela as of January 1, 2010. 2 Latin
America Operating profit for the nine months ended September 30,
2010 includes a $46 pretax gain resulting from the currency
devaluation in Venezuela on January 8, 2010.
Table 8
Colgate-Palmolive Company Geographic Sales
Analysis Percentage Changes - For the Three Months
Ended September 30, 2011 vs 2010 (Unaudited)
COMPONENTS OF SALES CHANGE
Pricing 3rd Qtr Coupons Sales 3rd
Qtr Consumer & Change Organic As
Reported Organic Ex-Divested Trade
Region
As Reported Sales Change
Volume Volume
Volume Incentives
Exchange Total Company (1)
(2) 11.0 % 5.0 % 4.5 % 3.0 % 5.0 % 2.0 % 4.5 %
Europe/South Pacific (1) 18.5 % (1.5 )% 10.0 % 1.0 %
10.0 % (2.5 )% 11.0 %
Latin America (2) 16.0 %
15.5 % 4.0 % 6.5 % 6.5 % 9.0 % 3.0 %
Greater
Asia/Africa 9.5 % 5.5 % 4.0 % 3.5 % 4.0 % 2.0 % 3.5 %
Total International 15.0 % 7.5 % 6.0 % 4.0 % 7.0 % 3.5 % 5.5
%
North America 3.0 % 2.5 % 5.0 % 5.0 % 5.0 % (2.5 )%
0.5 %
Total CP Products 12.5 % 6.0 % 6.0 % 4.0 % 6.5
% 2.0 % 4.5 %
Hill's 3.0 % (1.0 )% (4.0 )% (4.0 )%
(4.0 )% 3.0 % 4.0 %
Emerging Markets
(3) 12.5 % 9.5 % 3.5 % 4.0 % 4.5 % 5.5 % 3.5 %
Developed Markets 10.0 % 0.5 % 6.0 % 2.0 % 6.0 % (1.5 )% 5.5
% Note: (1) The Sanex business was acquired on June 20,
2011. The impact of the Sanex acquisition on third quarter sales
and volume was 2.0% for the Total Company, 9.0% for Europe/South
Pacific region and 0.5% for Greater Asia/Africa region. (2)
The Company's laundry detergent brands in Colombia were sold on
July 29, 2011. The impact of the sale of the Company's laundry
detergent brands in Colombia on third quarter sales and volume was
0.5% for the Total Company and 2.5% for Latin America region.
(3) Emerging Markets include Latin America, Greater
Asia/Africa (excluding Japan) and Central Europe.
Table 9
Colgate-Palmolive Company Geographic Sales
Analysis Percentage Changes - For the Nine Months
Ended September 30, 2011 vs 2010 (Unaudited)
COMPONENTS OF SALES CHANGE
Pricing 9 Months Coupons Sales
9 Months Consumer & Change Organic
As Reported Organic Ex-Divested Trade
Region
As Reported Sales Change
Volume Volume
Volume Incentives
Exchange Total Company (1)
(2) 8.5 % 3.5 % 3.5 % 3.0 % 3.5 % 0.5 % 4.5 %
Europe/South Pacific (1) 10.0 % (1.5 )% 4.0 % 1.0 %
4.0 % (2.5 )% 8.5 %
Latin America (2) 14.0 %
10.5 % 3.0 % 4.0 % 4.0 % 6.5 % 4.5 %
Greater
Asia/Africa 11.0 % 6.5 % 6.5 % 6.0 % 6.5 % 0.5 % 4.0 %
Total International 12.0 % 5.5 % 4.0 % 3.5 % 4.5 % 2.0 % 6.0
%
North America (1.5 )% (2.0 )% 1.5 % 1.5 % 1.5 %
(3.5 )% 0.5 %
Total CP Products 9.0 % 3.5 % 3.5 % 3.0
% 4.0 % 0.5 % 5.0 %
Hill's 5.5 % 1.5 % 0.5 % 0.5 %
0.5 % 1.0 % 4.0 %
Emerging Markets (3)
12.5 % 8.0 % 4.0 % 4.0 % 4.5 % 4.0 % 4.5 %
Developed
Markets 4.5 % (1.0 )% 2.5 % 1.5 % 2.5 % (2.5 )% 4.5 %
Note: (1) The Sanex business was acquired on June 20, 2011.
The impact of the Sanex acquisition on nine months sales and volume
was 0.5% for the Total Company, 3.0% for Europe/South Pacific
region and 0.5% for Greater Asia/Africa region. (2) The
Company's laundry detergent brands in Colombia were sold on July
29, 2011. The impact of the sale of the Company's laundry detergent
brands in Colombia on nine months sales and volume was 0% for the
Total Company and 1.0% for Latin America region. (3)
Emerging Markets include Latin America, Greater Asia/Africa
(excluding Japan) and Central Europe.
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