This excerpt taken from the CL 8-K filed Apr 26, 2006.
Double-Digit EPS Increase Above Expectations
New York, New York, April 26, 2006 Colgate-Palmolive Company (NYSE:CL) today announced strong worldwide sales and unit volume growth for first quarter 2006, with every operating division delivering volume increases. Worldwide sales and unit volume, as reported including divestments, grew 4.5%. Excluding divestments, worldwide sales and unit volume grew 7.0%, on top of 7.5% volume growth in the year ago quarter. Increased global pricing of 1.5% was offset by negative foreign exchange of 1.5%. The strong top line growth was supported by record level advertising spending.
First quarter 2006 results include $46.8 million of aftertax charges related to the 2004 Restructuring Program. As previously disclosed, effective January 1, 2006, the Company adopted FAS 123R related to stock-based compensation, which resulted in an incremental $12.1 million non-cash, aftertax charge in the current quarter or $.02 per share, with no such charge in 2005.
Reported net income and diluted earnings per share were $324.5 million and $.59, respectively, including the restructuring and stock compensation charges noted above. Excluding these items, net income in the quarter increased 11% versus first quarter 2005 to $383.4 million and diluted earnings per share increased 15% to $.70. In first quarter 2005, reported net income and diluted earnings per share were $300.1 million and $.53, respectively, and net income and diluted earnings per share excluding restructuring charges were $344.7 million and $.61, respectively.
As reported, gross profit margin was 54.5%. Excluding restructuring charges, gross profit margin was 56.3%, reaching an all-time record and a 110 basis point improvement versus the year ago quarter.
Operating profit as reported increased 5% versus first quarter 2005. Excluding the restructuring and stock compensation charges, operating profit increased 11% versus first quarter 2005. Worldwide advertising supporting Colgates brands also rose 11% to $297.1 million, a first quarter record, with every operating division increasing their advertising spending as a percent to sales during the quarter.
Net cash provided by operations decreased 10% to $382.5 million versus the year ago period, as higher cash from operations was more than offset by higher income tax payments during the quarter. The increase in first quarter income taxes paid is primarily timing-related and does not change the Companys previously announced expected full year tax range of 31% to 32%. End of first quarter working capital improved versus year ago to 1.5% of sales.
Reuben Mark, Chairman and CEO said, We are very pleased to begin 2006 with excellent top and bottom line growth, exceeding expectations and building on the strong growth momentum we saw in 2005.
We are especially encouraged by the 110 basis point improvement in gross profit margin during the quarter, to an all-time record and the largest quarterly gross profit increase in over three years. This increase, aided by our ongoing savings programs, the benefits from restructuring, increased pricing and a continued shift toward higher margin products, allowed us to fund a double-digit increase in advertising supporting Colgate brands, while at the same time delivering a double-digit increase in earnings per share.
Ian Cook, President and COO further commented, We are delighted that our higher level of advertising support is driving market share gains worldwide.
Unit volume in Oral Care was up significantly in every geographic division, and was up 10% worldwide.
Our global toothpaste leadership continues to expand with market share increases both here in the U.S. and in key countries around the world. Colgates worldwide growth in manual toothbrushes also continues to strengthen, with our global market share in this category increasing versus year ago to another record high.
Mr. Mark continued, Colgates fundamentals are very strong. Despite sharply rising energy costs, we expect our gross profit margin, before restructuring charges, to be up nicely for the year as a result of our ongoing cost-savings initiatives, improved pricing, restructuring and promotional savings.
This quarters strong results add to our confidence that we will deliver double-digit E.P.S. growth for the year, excluding restructuring and stock compensation charges.
At 10:30 a.m. ET today, Colgate will host a conference call to elaborate on first quarter results. To access this call as a webcast, please go to Colgates 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.