Colgate Announces 2nd Quarter Results

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 six months ended June 30, 2012 and 2011 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 second quarter results.)

								Table 1
Colgate-Palmolive Company
Condensed Consolidated Income Statements
For the Three Months Ended June 30, 2012 and 2011
(Dollars in Millions Except Per Share Amounts) (Unaudited)
					2012				2011
Net sales				$	4,267			$	4,185
Cost of sales					1,806				1,781
Gross profit					2,461				2,404
Gross profit margin					57.7	%			57.4	%
Selling, general and administrative expenses					1,464				1,421
Other (income) expense, net					15				15
Operating profit					982				968
Operating profit margin					23.0	%			23.1	%
Interest expense, net					6				11
Income before income taxes					976				957
Provision for income taxes					311				311
Effective tax rate					31.9	%			32.5	%
Net income including noncontrolling interests					665				646
Less: Net income attributable to noncontrolling interests					38				24
Net income attributable to Colgate-Palmolive Company				$	627			$	622
Earnings per common share
Basic				$	1.31			$	1.27
Diluted				$	1.30			$	1.26
Average common shares outstanding
Basic					477.3				489.5
Diluted					481.3				493.3

								Table 2
Colgate-Palmolive Company
Condensed Consolidated Income Statements
For the Six Months Ended June 30, 2012 and 2011
(Dollars in Millions Except Per Share Amounts) (Unaudited)
					2012				2011
Net sales				$	8,467			$	8,179
Cost of sales					3,569				3,444
Gross profit					4,898				4,735
Gross profit margin					57.8	%			57.9	%
Selling, general and administrative expenses					2,942				2,825
Other (income) expense, net					36				27
Operating profit					1,920				1,883
Operating profit margin					22.7	%			23.0	%
Interest expense, net					16				27
Income before income taxes					1,904				1,856
Provision for income taxes					606				603
Effective tax rate					31.8	%			32.5	%
Net income including noncontrolling interests					1,298				1,253
Less: Net income attributable to noncontrolling interests					78				55
Net income attributable to Colgate-Palmolive Company				$	1,220			$	1,198
Earnings per common share
Basic				$	2.55			$	2.44
Diluted				$	2.53			$	2.42
Average common shares outstanding
Basic					478.7				491.5
Diluted					482.6				494.9

												Table 3
Colgate-Palmolive Company
Condensed Consolidated Balance Sheets
As of June 30, 2012, December 31, 2011 and June 30, 2011
(Dollars in Millions) (Unaudited)
				June 30,				December 31,				June 30,
					2012				2011				2011
Cash and cash equivalents				$	995			$	878			$	739
Receivables, net					1,785				1,675				1,819
Inventories					1,368				1,327				1,417
Other current assets					687				522				495
Property, plant and equipment, net					3,625				3,668				3,831
Other assets, including goodwill and intangibles					4,693				4,654				4,943
Total assets				$	13,153			$	12,724			$	13,244
Total debt				$	5,363			$	4,810			$	5,011
Other current liabilities					3,271				3,336				3,258
Other non-current liabilities					2,009				2,037				1,831
Total liabilities					10,643				10,183				10,100
Total Colgate-Palmolive Company shareholders' equity					2,306				2,375				2,969
Noncontrolling interests					204				166				175
Total liabilities and shareholders' equity				$	13,153			$	12,724			$	13,244
Supplemental Balance Sheet Information
Debt less cash, cash equivalents and marketable securities*				$	4,282			$	3,860			$	4,219
Working capital % of sales					2.8	%			0.7	%			2.5	%

*

Marketable securities of $86, $72 and $53 as of June 30, 2012, December 31, 2011 and June 30, 2011, respectively, are included in Other current assets.

								Table 4
Colgate-Palmolive Company
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2012 and 2011
(Dollars in Millions) (Unaudited)
					2012				2011
Operating Activities
Net income including noncontrolling interests				$	1,298			$	1,253
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:
Depreciation and amortization					211				202
Restructuring and termination benefits, net of cash					(27	)			(31	)
Voluntary benefit plan contributions					(100	)			(100	)
Stock-based compensation expense					48				56
Deferred income taxes					14				46
Cash effects of changes in:
Receivables					(119	)			(153	)
Inventories					(46	)			(148	)
Accounts payable and other accruals					(148	)			(19	)
Other non-current assets and liabilities					62				48
Net cash provided by operations					1,193				1,154
Investing Activities
Capital expenditures					(189	)			(225	)
Purchases of marketable securities and investments					(219	)			(80	)
Proceeds from sale of marketable securities and investments					71				171
Payment for acquisitions, net of cash acquired					(29	)			(960	)
Other					45				(17	)
Net cash used in investing activities					(321	)			(1,111	)
Financing Activities
Principal payments on debt					(2,307	)			(1,869	)
Proceeds from issuance of debt					2,873				3,433
Dividends paid					(593	)			(568	)
Purchases of treasury shares					(894	)			(1,017	)
Proceeds from exercise of stock options and excess tax benefits					191				220
Net cash used in financing activities					(730	)			199
Effect of exchange rate changes on Cash and cash equivalents					(25	)			7
Net increase (decrease) in Cash and cash equivalents					117				249
Cash and cash equivalents at beginning of period					878				490
Cash and cash equivalents at end of period				$	995			$	739
Supplemental Cash Flow Information
Free cash flow before dividends (Net cash provided by operations less capital expenditures)
Net cash provided by operations				$	1,193			$	1,154
Less: Capital expenditures					(189	)			(225	)
Free cash flow before dividends				$	1,004			$	929
Income taxes paid				$	682			$	513

																Table 5
Colgate-Palmolive Company
Segment Information
For the Three and Six Months Ended June 30, 2012 and 2011
(Dollars in Millions) (Unaudited)
				Three Months Ended June 30,								Six Months Ended June 30,
					2012				2011				2012				2011
Net sales
Oral, Personal and Home Care
North America				$	758			$	744			$	1,513			$	1,462
Latin America					1,269				1,231				2,439				2,328
Europe/South Pacific					850				857				1,704				1,689
Greater Asia/Africa					859				816				1,738				1,629
Total Oral, Personal and Home Care					3,736				3,648				7,394				7,108
Pet Nutrition					531				537				1,073				1,071
Total Net sales				$	4,267			$	4,185			$	8,467			$	8,179
				Three Months Ended June 30,								Six Months Ended June 30,
					2012				2011				2012				2011
Operating profit
Oral, Personal and Home Care
North America				$	196			$	194			$	379			$	386
Latin America					367				360				711				686
Europe/South Pacific					179				170				362				355
Greater Asia/Africa					220				199				440				402
Total Oral, Personal and Home Care					962				923				1,892				1,829
Pet Nutrition					145				140				293				281
Corporate (1)					(125	)			(95	)			(265	)			(227	)
Total Operating Profit				$	982			$	968			$	1,920			$	1,883

		Note:
(1)		Corporate operations includes costs 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.
		Corporate Operating profit for the three months ended June 30, 2012 includes costs of $13 associated with global business realignment and other cost-saving initiatives and costs of $6 related to the sale of land in Mexico.
		Corporate Operating profit for the six months ended June 30, 2012 includes costs of $18 associated with global business realignment and other cost-saving initiatives and costs of $13 related to the sale of land in Mexico.

																						Table 6
Colgate-Palmolive Company
Geographic Sales Analysis Percentage Changes
For the Three Months Ended June 30, 2012 vs 2011
(Unaudited)
										COMPONENTS OF SALES CHANGE
																			Pricing
																			Coupons
				Sales			3 Months												Consumer &
				Change			Organic			As Reported			Organic			Ex-Divested			Trade			Foreign
Region				As Reported			Sales Change			Volume			Volume			Volume			Incentives			Exchange
Total Company (1) (2)				2.0	%		8.0	%		5.0	%		4.5	%		5.5	%		3.5	%		(6.5	)%
Europe/South Pacific (1)				(1.0	)%		1.5	%		9.5	%		3.0	%		9.5	%		(1.5	)%		(9.0	)%
Latin America (2)				3.0	%		15.5	%		6.5	%		9.5	%		9.5	%		6.0	%		(9.5	)%
Greater Asia/Africa (1)				5.0	%		12.0	%		7.5	%		7.0	%		7.5	%		5.0	%		(7.5	)%
Total International				2.5	%		10.0	%		7.5	%		6.5	%		9.0	%		3.5	%		(8.5	)%
North America				2.0	%		2.5	%		(0.5	)%		(0.5	)%		(0.5	)%		3.0	%		(0.5	)%
Total CP Products				2.5	%		8.5	%		6.0	%		5.0	%		7.0	%		3.5	%		(7.0	)%
Hill's				(1.0	)%		2.0	%		(3.0	)%		(3.0	)%		(3.0	)%		5.0	%		(3.0	)%
Emerging Markets (3)				2.5	%		13.0	%		6.5	%		8.0	%		8.0	%		5.0	%		(9.0	)%
Developed Markets				1.0	%		2.5	%		3.0	%		0.5	%		3.0	%		2.0	%		(4.0	)%

Notes:

(1) The Sanex business was acquired on June 20, 2011.

The impact of the Sanex acquisition on second quarter sales and volume was 1.0% for the Total Company, 6.5% for Europe/South Pacific and 0.5% for Greater Asia/Africa.

(2) The Company's laundry detergent business in Colombia was sold on July 29, 2011.

The impact of the sale of the Company's laundry detergent business in Colombia on second quarter sales and volume was 0.5% for the Total Company and 3.0% for Latin America.

(3) Emerging Markets include Latin America, Greater Asia/Africa (excluding Japan) and Central Europe.

																						Table 7
Colgate-Palmolive Company
Geographic Sales Analysis Percentage Changes
For the Six Months Ended June 30, 2012 vs 2011
(Unaudited)
										COMPONENTS OF SALES CHANGE
																			Pricing
																			Coupons
				Sales			6 Months												Consumer &
				Change			Organic			As Reported			Organic			Ex-Divested			Trade			Foreign
Region				As Reported			Sales Change			Volume			Volume			Volume			Incentives			Exchange
Total Company (1) (2)				3.5	%		7.0	%		4.5	%		3.5	%		5.0	%		3.5	%		(4.5	)%
Europe/South Pacific (1)				1.0	%		0.0	%		8.5	%		2.0	%		8.5	%		(2.0	)%		(5.5	)%
Latin America (2)				5.0	%		14.5	%		4.0	%		6.5	%		6.5	%		8.0	%		(7.0	)%
Greater Asia/Africa (1)				6.5	%		11.0	%		7.0	%		6.5	%		7.0	%		4.5	%		(5.0	)%
Total International				4.0	%		9.0	%		6.0	%		5.0	%		7.0	%		4.0	%		(6.0	)%
North America				3.5	%		4.0	%		2.0	%		2.0	%		2.0	%		2.0	%		(0.5	)%
Total CP Products				4.0	%		8.0	%		5.5	%		4.5	%		6.0	%		3.5	%		(5.0	)%
Hill's				0.0	%		2.0	%		(2.0	)%		(2.0	)%		(2.0	)%		4.0	%		(2.0	)%
Emerging Markets (3)				4.5	%		12.5	%		5.0	%		6.0	%		6.0	%		6.5	%		(7.0	)%
Developed Markets				2.5	%		2.0	%		3.5	%		1.0	%		3.5	%		1.0	%		(2.0	)%

Notes:

(1) The Sanex business was acquired on June 20, 2011.

The impact of the Sanex acquisition on six months sales and volume was 1.5% for the Total Company, 6.5% for Europe/South Pacific and 0.5% for Greater Asia/Africa.

(2) The Company's laundry detergent business in Colombia was sold on July 29, 2011.

The impact of the sale of the Company's laundry detergent business in Colombia on six months sales and volume was 0.5% for the Total Company and 2.5% for Latin America.

(3) Emerging Markets include Latin America, Greater Asia/Africa (excluding Japan) and Central Europe.

												Table 8
Colgate-Palmolive Company
Non-GAAP Reconciliations
For the Three Months Ended June 30, 2012 and 2011
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Gross Profit					2012				2011
Gross profit, GAAP				$	2,461			$	2,404
Costs related to the sale of land in Mexico					6				-
Business realignment and other cost-saving initiatives					2				-
Gross profit, non-GAAP				$	2,469			$	2,404
												Basis Point
Gross Profit Margin					2012				2011			Change
Gross profit margin, GAAP					57.7	%			57.4	%		30
Costs related to the sale of land in Mexico					0.1	%			-
Business realignment and other cost-saving initiatives					0.1	%			-
Gross profit margin, non-GAAP					57.9	%			57.4	%		50
Selling, General and Administrative Expenses					2012				2011
Selling, general and administrative expenses, GAAP				$	1,464			$	1,421
Business realignment and other cost-saving initiatives					(5	)			-
Selling, general and administrative expenses, non-GAAP				$	1,459			$	1,421
												Basis Point
Selling, General and Administrative Expenses as a Percentage of Net Sales					2012				2011			Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP					34.3	%			34.0	%		30
Business realignment and other cost-saving initiatives					(0.1	)%			-
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP					34.2	%			34.0	%		20
Other (Income) Expense, Net					2012				2011
Other (income) expense, net, GAAP				$	15			$	15
Business realignment and other cost-saving initiatives					(6	)			-
Other (income) expense, net, non-GAAP				$	9			$	15
Operating Profit					2012				2011			% Change
Operating profit, GAAP				$	982			$	968			1	%
Costs related to the sale of land in Mexico					6				-
Business realignment and other cost-saving initiatives					13				-
Operating profit, non-GAAP				$	1,001			$	968			3	%
												Basis Point
Operating Profit Margin					2012				2011			Change
Operating profit margin, GAAP					23.0	%			23.1	%		(10	)
Costs related to the sale of land in Mexico					0.2	%			-
Business realignment and other cost-saving initiatives					0.3	%			-
Operating profit margin, non-GAAP					23.5	%			23.1	%		40
Net Income Attributable to Colgate-Palmolive Company					2012				2011			% Change
Net income attributable to Colgate-Palmolive Company, GAAP				$	627			$	622			1	%
Costs related to the sale of land in Mexico					5				-
Business realignment and other cost-saving initiatives					9				-
Net income attributable to Colgate-Palmolive Company, non-GAAP				$	641			$	622			3	%
Earnings Per Common Share, Diluted					2012				2011			% Change
Diluted earnings per common share, GAAP				$	1.30			$	1.26			3	%
Costs related to the sale of land in Mexico					0.01				-
Business realignment and other cost-saving initiatives					0.02				-
Diluted earnings per common share, non-GAAP				$	1.33			$	1.26			6	%

												Table 9
Colgate-Palmolive Company
Non-GAAP Reconciliations
For the Six Months Ended June 30, 2012 and 2011
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Gross Profit					2012				2011
Gross profit, GAAP				$	4,898			$	4,735
Costs related to the sale of land in Mexico					13				-
Business realignment and other cost-saving initiatives					4				-
Gross profit, non-GAAP				$	4,915			$	4,735
												Basis Point
Gross Profit Margin					2012				2011			Change
Gross profit margin, GAAP					57.8	%			57.9	%		(10	)
Costs related to the sale of land in Mexico					0.2	%			-
Business realignment and other cost-saving initiatives					-				-
Gross profit margin, non-GAAP					58.0	%			57.9	%		10
Selling, General and Administrative Expenses					2012				2011
Selling, general and administrative expenses, GAAP				$	2,942			$	2,825
Business realignment and other cost-saving initiatives					(12	)			-
Selling, general and administrative expenses, non-GAAP				$	2,930			$	2,825
												Basis Point
Selling, General and Administrative Expenses as a Percentage of Net Sales					2012				2011			Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP					34.7	%			34.5	%		20
Business realignment and other cost-saving initiatives					(0.1	)%			-
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP					34.6	%			34.5	%		10
Other (Income) Expense, Net					2012				2011
Other (income) expense, net, GAAP				$	36			$	27
Business realignment and other cost-saving initiatives					(2	)			-
Other (income) expense, net, non-GAAP				$	34			$	27
Operating Profit					2012				2011			% Change
Operating profit, GAAP				$	1,920			$	1,883			2	%
Costs related to the sale of land in Mexico					13				-
Business realignment and other cost-saving initiatives					18				-
Operating profit, non-GAAP				$	1,951			$	1,883			4	%
												Basis Point
Operating Profit Margin					2012				2011			Change
Operating profit margin, GAAP					22.7	%			23.0	%		(30	)
Costs related to the sale of land in Mexico					0.1	%			-
Business realignment and other cost-saving initiatives					0.2	%			-
Operating profit margin, non-GAAP					23.0	%			23.0	%		-
Net Income Attributable to Colgate-Palmolive Company					2012				2011			% Change
Net income attributable to Colgate-Palmolive Company, GAAP				$	1,220			$	1,198			2	%
Costs related to the sale of land in Mexico					10				-
Business realignment and other cost-saving initiatives					12				-
Net income attributable to Colgate-Palmolive Company, non-GAAP				$	1,242			$	1,198			4	%
Earnings Per Common Share, Diluted					2012				2011			% Change
Diluted earnings per common share, GAAP				$	2.53			$	2.42			5	%
Costs related to the sale of land in Mexico					0.02				-
Business realignment and other cost-saving initiatives					0.02				-
Diluted earnings per common share, non-GAAP				$	2.57			$	2.42			6	%

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