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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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