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Colgate-Palmolive Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed March 20, 2002
Period End
December 31, 2001
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 20, 2002. Cited figures are marked; the original filing is the authoritative source.

Colgate-Palmolive's fiscal 2001 10-K shows a company growing volume steadily while improving margins and returning substantial cash to shareholders.

Net sales rose 0.7% to $9,427.8 milliona (1.5% excluding divestments, 5.5% excluding currency effects), driven by 5.0% volume growth. EBIT increased 5% to $1,834.8 million, and diluted EPS rose 11% to $1.89 from $1.70. Gross margin expanded to 55.1% from 54.4%, supported by global sourcing and cost-reduction programs.

Operating cash flow rose 4% to $1,599.6 millionb, and free cash flow reached $862.7 million, which funded $1,230.2 million of share repurchases and $396.7 million of dividends. By segment, Oral, Personal and Household Care remains the core business at 88% of sales, with Latin America and North America the strongest performers. Pet Nutrition (Hill's) grew 5.5% to $1.18 billion with EBIT up 16%.

Currency weakness, particularly in Latin America and Europe, remains the main drag on reported results. Management expects 2002 market conditions to be broadly similar to 2001. Investors should note several risks.

Total debt rose to $3.24 billionc as buybacks were debt-funded, and shareholders' equity fell to $846.4 million, largely because of treasury stock purchases and a $1.49 billion accumulated other comprehensive loss. Pending Brazilian tax and central bank matters total roughly $150 million, and 2002 accounting changes will reclassify about 4% of sales and stop goodwill amortization, which should add roughly $40 million to net income.

02—Key points

Key Highlights

  1. Net sales of $9,427.8M, up 0.7% reported and 1.5% excluding divestments; volume grew 5.0%
  2. EBIT up 5% to $1,834.8M; gross margin improved to 55.1% from 54.4%
  3. Diluted EPS of $1.89, up 11% from $1.70; net income of $1,146.6M
  4. Operating cash flow of $1,599.6M (+4%); free cash flow of $862.7M
  5. Returned capital through $1,230.2M of share repurchases (21.7M shares) and $396.7M of dividends
  6. Pet Nutrition (Hill's) sales up 5.5% to $1,179.3M with EBIT up 16%; Latin America EBIT up 11%
  7. Risk items: Brazilian fine (~$110M) and tax assessment (~$40M) under appeal; shareholders' equity fell to $846.4M; total debt rose to $3.24B

03—Questions

Frequently Asked Questions

  1. How did Colgate perform in 2001 and what drove the results?

    Volume growth of 5.0% was the main driver. Sales rose only 0.7% as reported because of foreign currency weakness, but margin gains and cost controls lifted EBIT 5% and diluted EPS 11%. Oral Care leadership and new products such as Colgate Total Plus Whitening and Softsoap were key contributors.

  2. Why did shareholders' equity drop so sharply?

    Equity fell to $846.4M from $1,468.1M mainly because of $1,230.2M in share repurchases booked as treasury stock and a $1,491.2M accumulated other comprehensive loss, primarily from currency translation (Brazilian real and Argentine peso devaluations). Buybacks are funded largely with debt, so leverage has increased.

  3. What legal and tax risks does the company face?

    The main exposures are a Brazilian Central Bank fine of about $110M tied to 1995 Kolynos acquisition financing filings, and a Brazilian tax assessment of about $40M. Both are under appeal, and management believes it will prevail. Prosecutors are also reviewing broader international fund transfers. Management considers the outcome unlikely to be material to financial position.

  4. How will 2002 accounting changes affect reported results?

    Under EITF guidance, about 4% of sales will be reclassified from SG&A into a reduction of net sales, with no effect on net income. Under SFAS 142, goodwill amortization will stop, which is expected to add about $50M to pre-tax income and about $40M to net income. Transitional impairment charges are not expected to be material.

  5. What is the outlook for 2002?

    Management expects market conditions in 2002 to be broadly similar to 2001 and expects continued momentum, supported by Colgate toothpaste leadership and new products. Risks include Latin American economic uncertainty, euro movements, retail consolidation, and raw material costs.

04—Continue

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