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Colgate-Palmolive Annual Report, Year Ended Dec 31, 1993

Filing Date
Filed March 25, 1994
Period End
December 31, 1993
Security
CL
In the record · 2016–202610-K1210-Q338-K102

CL filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 102 current reports (8-K) between 2016 and 2026.

  1. Restructuring8-K · Oct ’17Oct ’17
  2. Leadership change8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Jun ’22Jun ’22
  4. Restructuring8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed March 25, 1994. Cited figures are marked; the original filing is the authoritative source.

Colgate-Palmolive's 1993 10-K shows a company whose underlying operating performance improved sharply while reported net income fell, mainly because of a one-time accounting charge.

Worldwide net sales rose 2% to $7,141.3 milliona, or 7% excluding unfavorable currency effects, with volume up 5%. Gross margin widened to 47.8% from 47.1%, SG&A fell to 34% of sales from 36%, and EBIT rose 14% to $883.0 million. Net income dropped to $189.9 million ($1.08 per share) from $477.0 million, but that figure includes a $358.2 million cumulative after-tax charge from adopting new accounting standards for income taxes, postretirement benefits and postemployment benefits.

Before that charge, income rose 15% to $548.1 millionb, or $3.38 per share. The balance sheet and capital structure changed materially during the year. The company spent $673.0 million to repurchase about 12 million shares and acquired businesses for $222.5 million, including S.C.

Johnson's liquid hand and body soap brands in Europe. Debt rose to $1.55 billionc in total and the debt-to-capitalization ratio climbed to 48% from 30%. Shareholders' equity fell to $1,875.0 million from $2,619.8 million, largely because of the buybacks and the accounting charges.

Operating cash flow improved to $710.4 milliond, or 9.9% of sales, and capital expenditures were $364.3 million. Management's outlook is cautious but constructive. It expects continued recessionary conditions in parts of its developed markets and flags uncertainty in 1994, while pointing to growth in developing markets.

The company also authorized an additional five million share repurchase in early 1994. Regional performance was uneven: Latin America grew strongly, Asia/Africa rose, and Europe and the US/Canada declined.

02—Key points

Key Highlights

  1. Net sales rose 2% to $7,141.3 million, or 7% excluding currency declines; volume grew 5%.
  2. Gross profit margin improved to 47.8% from 47.1%, reflecting a shift toward higher-margin personal care products.
  3. EBIT increased 14% to $883.0 million; the Oral, Personal and Household Care segment grew EBIT 12% to $731.5 million.
  4. Reported 1993 net income was $189.9 million ($1.08 per share), down from $477.0 million, due to a $358.2 million one-time accounting-change charge; income before the charge rose 15% to $548.1 million ($3.38 per share).
  5. Latin America sales grew 16% and Asia/Africa sales grew 20%, while Europe declined 12% (largely from currency translation) and US/Canada fell 4%.
  6. The company repurchased about 12 million shares for $673.0 million and authorized up to five million more shares in early 1994.
  7. Debt-to-capitalization rose to 48% from 30%, and total debt increased to about $1.55 billion, reflecting the buybacks and medium-term note issuance.

03—Questions

Frequently Asked Questions

  1. Why did reported net income fall so sharply in 1993?

    Net income fell to $189.9 million from $477.0 million mainly because of a $358.2 million cumulative after-tax charge recorded in the first quarter of 1993. The charge came from adopting three new accounting standards: SFAS 109 on income taxes, SFAS 106 on postretirement benefits, and SFAS 112 on postemployment benefits. Income before that one-time change rose 15% to $548.1 million.

  2. How strong was the underlying business performance?

    Operating performance was solid. Sales grew 7% excluding currency effects, and volume rose 5%. Gross margin improved to 47.8%, SG&A fell to 34% of sales from 36%, and EBIT grew 14%. Operating cash flow reached $710.4 million, or 9.9% of sales, up from 7.7% in 1992.

  3. What did the company do with its capital in 1993?

    Colgate spent heavily on share repurchases, buying back about 12 million shares for $673.0 million, and on capital expenditures of $364.3 million, which were 5.1% of sales. It also made acquisitions totaling $222.5 million, including the S.C. Johnson liquid soap brands in Europe. Dividends rose 16% to $1.34 per share. Debt increased, and the debt-to-capitalization ratio rose to 48% from 30%.

  4. What is the outlook for 1994?

    Management expects economic conditions in 1994 to be broadly similar to 1993, with continued recession in some major markets creating near-term uncertainty. It points to strong growth opportunities in developing markets and says the company's global brands and capital base position it to keep raising profitability and shareholder value. Capital spending is expected to stay near 5% of sales.

  5. Which regions and segments drove results?

    Asia/Africa and Latin America were the strongest regions, with sales up 20% and 16%, respectively. Europe fell 12%, mainly due to currency translation, and US/Canada fell 4% because of disinflationary pricing. Among segments, Oral, Personal and Household Care grew 1% in sales and 12% in EBIT, while Specialty Marketing (led by Hill's Pet Nutrition) grew sales 6% and EBIT to $156.9 million from $142.9 million.

04—Continue

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