Summary
Colgate-Palmolive Company (CL) filed an 8-K on January 29, 2016, to report on its fourth quarter and full-year 2015 earnings and to disclose a significant accounting change related to its Venezuelan operations. The company announced its earnings for the period ended December 31, 2015, via a press release included as an exhibit. More critically for investors, the filing details a substantial after-tax charge of $1,058 million ($1.18 per diluted share) in the fourth quarter of 2015 due to a change in accounting for its Venezuelan subsidiary. This charge stems from Colgate-Palmolive's decision to cease consolidating its Venezuelan operations and instead account for them using the cost method. This change was necessitated by Venezuela's restrictive exchange control regulations, the limited access to U.S. dollars, and other government controls that significantly impair the company's ability to manage its operations effectively. Consequently, the company's consolidated balance sheet will no longer include the assets and liabilities of its Venezuelan operations, and future earnings from Venezuela will only be recognized as cash is received.
Key Highlights
- 1Colgate-Palmolive announced its Q4 and full-year 2015 earnings via a press release filed with this 8-K.
- 2The company recorded a significant after-tax charge of $1,058 million ($1.18 per diluted share) in Q4 2015.
- 3The charge is primarily due to a change in accounting for Venezuelan operations, moving from consolidation to the cost method.
- 4This accounting change reflects the inability to exchange Venezuelan bolivars for U.S. dollars and other severe operational restrictions in Venezuela.
- 5Consequently, the assets and liabilities of the Venezuelan operations are no longer included in Colgate-Palmolive's consolidated balance sheet.
- 6Future income from Venezuela will be recognized only upon receipt of cash, such as for dividends or royalties.