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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 1-644
----------------
COLGATE-PALMOLIVE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 13-1815595
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 PARK AVENUE, NEW YORK, NEW YORK 10022
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code 212-310-2000
Securities Registered Pursuant to Section 12 (b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
------------------- REGISTERED
----------
$4.25 Preferred Stock, without par New York Stock Exchange
value, cumulative dividend New York Stock Exchange
Common Stock, $1.00 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
At February 28, 1997 the aggregate market value of stock held by non-
affiliates was $15,246.5 million. There were 147,309,385 shares of Common
Stock outstanding as of February 28, 1997.
DOCUMENTS INCORPORATED BY REFERENCE:
DOCUMENTS FORM 10-K REFERENCE
--------- -------------------
Portions of Proxy Statement for the Part III, Items 10 through 13
1997 Annual Meeting
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PART I
ITEM 1. BUSINESS
(a) General Development of the Business
Colgate-Palmolive Company (the "Company") is a corporation which was
organized under the laws of the State of Delaware in 1923. The Company
manufactures and markets a wide variety of products throughout the world for
use by consumers. For recent business developments, refer to the information
set forth under the captions "Results of Operations" and "Liquidity and
Capital Resources" in Part II, Item 7 of this report.
(b) Financial Information About Industry Segments
For information about industry segments refer to the information set forth
under the caption "Results of Operations" in Part II, Item 7 of this report.
(c) Narrative Description of the Business
For information regarding description of the business refer to Note 1 to the
Consolidated Financial Statements included herein; "Average number of
employees" appearing under "Historical Financial Summary" included herein; and
"Research and development" expenses appearing in Note 11 to the Consolidated
Financial Statements included herein.
Compliance with environmental rules and regulations has not significantly
affected the Company's capital expenditures, earnings or competitive position.
Capital expenditures for environmental control facilities totaled $21.6
million in 1996 and are budgeted at $25.1 million for 1997. For future years,
expenditures are expected to be in the same range. The Company has programs
that are designed to ensure that its operations and facilities meet or exceed
all applicable environmental rules and regulations.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
For information concerning geographic area financial data refer to the
information set forth under the caption "Results of Operations" in Part II,
Item 7 of this report.
ITEM 2. PROPERTIES
The Company owns and leases a total of 321 manufacturing, distribution,
research and office facilities worldwide. Corporate headquarters is housed in
leased facilities at 300 Park Avenue, New York, New York.
In the United States, the Company operates 46 facilities, of which 26 are
owned. Major U.S. manufacturing and warehousing facilities used by the Oral,
Personal and Household Care segment are located in Kansas City, Kansas;
Morristown, New Jersey; Jeffersonville, Indiana; and Cambridge, Ohio. The
Company is transforming its former facilities in Jersey City, New Jersey into
a mixed-use complex with the assistance of developers and other investors. The
Pet Nutrition segment has major facilities in Bowling Green, Kentucky; Topeka,
Kansas; and Richmond, Indiana. Research facilities are located throughout the
world with the primary research center for Oral, Personal and Household Care
products located in Piscataway, New Jersey.
Overseas, the Company operates 275 facilities, of which 117 are owned, in
over 70 countries. Major overseas facilities used by the Oral, Personal and
Household Care segment are located in Australia, Brazil, Canada, China,
Colombia, France, Italy, Mexico, Thailand, the United Kingdom and elsewhere
throughout the world. In some areas outside the United States, products are
either manufactured by independent contractors under Company specifications or
are imported from the United States or elsewhere.
2
All facilities operated by the Company are, in general, well maintained and
adequate for the purpose for which they are intended. The Company conducts
continuing reviews of its facilities with the view to modernization and cost
reduction.
ITEM 3. LEGAL PROCEEDINGS
For information regarding legal matters refer to the discussion set forth
under the caption "Outlook" in Part II, Item 7 and Notes 3 and 16 to the
Consolidated Financial Statements included herein. The Company expects shortly
to enter into its undertakings described in Note 16.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
3
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of executive officers as of March 18, 1997:
DATE FIRST
ELECTED
NAME AGE OFFICER PRESENT TITLE
---- --- ---------- -------------
Reuben Mark............. 58 1974 Chairman of the Board and Chief Executive Officer
William S. Shanahan..... 56 1983 President and Chief Operating Officer
Lois D. Juliber......... 48 1991 Executive Vice President
Chief of Operations Developed Markets
David A. Metzler........ 54 1991 Executive Vice President
Chief of Operations High Growth Markets
Stephen C. Patrick...... 47 1990 Chief Financial Officer
Craig B. Tate........... 51 1989 Chief Technological Officer
Andrew D. Hendry........ 49 1991 Senior Vice President
General Counsel and Secretary
John E. Steel........... 67 1991 Senior Vice President
Global Marketing and Sales
Robert J. Joy........... 50 1996 Vice President
Global Human Resources
Ian M. Cook............. 44 1996 President
Colgate--North America
Stephen A. Lister....... 55 1994 President
Colgate--Asia Pacific
Michael J. Tangney...... 52 1993 President
Colgate--Latin America
Javier G. Teruel........ 46 1996 President
Colgate--Europe
Robert C. Wheeler....... 55 1991 Chief Executive Officer
Hill's Pet Nutrition, Inc.
Steven R. Belasco....... 50 1991 Vice President
Taxation
Brian J. Heidtke........ 56 1986 Vice President
Finance and Corporate Treasurer
Peter D. McLeod......... 56 1984 Vice President
Manufacturing Engineering Technology
John H. Tietjen......... 54 1995 Vice President
Global Business Development
Thomas G. Davies........ 56 1995 President
Global Personal Care
Michael S. Roskothen.... 60 1993 President
Global Oral Care
Barrie M. Spelling...... 53 1994 Vice President
Global Business Development
Household Surface Care
4
Each of the executive officers listed above has served the registrant or its
subsidiaries in various executive capacities for the past five years.
The Company By-Laws, paragraph 38, states: The officers of the corporation
shall hold office until their respective successors are chosen and qualified
in their stead, or until they have resigned, retired or been removed in the
manner hereinafter provided. Any officer elected or appointed by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the whole Board of Directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS
Refer to the information regarding the market for the Company's Common Stock
and the quarterly market price information appearing under "Market and
Dividend Information" in Note 13 to the Consolidated Financial Statements
included herein; the information under "Capital Stock and Stock Compensation
Plans" in Note 5 to the Consolidated Financial Statements included herein; and
the "Number of shareholders of record" and "Cash dividends declared and paid
per common share" under the caption "Historical Financial Summary" included
herein.
ITEM 6. SELECTED FINANCIAL DATA
Refer to the information set forth under the caption "Historical Financial
Summary" included herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Dollars in Millions Except Per Share Amounts
RESULTS OF OPERATIONS
1996 1995 1994
-------- -------- --------
WORLDWIDE NET SALES BY BUSINESS SEGMENT AND GEO-
GRAPHIC REGION
Oral, Personal and Household Care
North America.................................. $1,869.0 $1,784.7 $1,623.1
Europe......................................... 2,148.5 2,159.7 1,968.2
Latin America.................................. 2,124.8 1,977.2 1,736.5
Asia/Africa.................................... 1,738.0 1,644.1 1,408.0
-------- -------- --------
Total Oral, Personal and Household Care......... 7,880.3 7,565.7 6,735.8
Total Pet Nutrition and Other*.................. 868.7 792.5 852.1
-------- -------- --------
TOTAL NET SALES................................. $8,749.0 $8,358.2 $7,587.9
======== ======== ========
- --------
* Sales outside North America represented approximately 29%, 29% and 25% of
total sales of Pet Nutrition and Other products in 1996, 1995 and 1994,
respectively.
NET SALES
Worldwide net sales increased 5% to $8,749.0 in 1996 on volume growth of 5%
reflecting increases in every geographic region. Sales in the Oral, Personal
and Household Care segment were up 4% on 5% volume growth.
In 1996, sales in North America rose 5% on the same percentage of volume
growth. Market share climbed for three of the region's key product categories:
toothpaste, dishwashing liquid and deodorants. Products
5
contributing to the sales growth included Colgate Baking Soda & Peroxide
toothpaste, Palmolive antibacterial dishwashing liquid, Speed Stick gel and
Irish Spring Sport soap.
Overall sales in Europe decreased slightly in 1996 on 3% higher volume due
primarily to the negative effects of weaker European currencies. Volume was up
sharply in Russia. New product launches including Colgate Triple Stripe
toothpaste, Fabuloso fabric softener and Ajax Expel cleaner, as well as the
relaunching of Palmolive Shower gel, enabled the region to achieve higher
volume and increase market share for a majority of its core categories.
Sales in Latin America were up 8% on 7% volume growth. Leading the way in
this region were Argentina, Brazil, Chile, Dominican Republic and Ecuador
which were partially offset by the negative impact of Venezuela caused by the
country's economic downturn. Mexican operations are beginning to recover from
the economic downturn of 1995. New product introductions contributed to the
rapid expansion of sales in this region, which is evidenced by the success of
Colgate Total Fresh Stripe toothpaste and Colgate Baking Soda & Peroxide
toothpaste, Protex Fresh soap, Fab Total detergent and Suavitel fabric
softener refills.
The Asia/Africa region posted an overall sales increase of 6% on 7% volume
growth for the year, largely due to a combination of new product introductions
and geographic expansion, especially in China. The successful introductions of
new products elsewhere in the region including Fabuloso fragranced cleaner,
Protex Fresh soap, Dynamo antibacterial detergent, Palmolive Optims Shampoo
and Palmolive Shower Cream also contributed to the volume growth.
Sales for the Pet Nutrition and Other segment increased 10% on 6% volume
growth. Hill's Pet Nutrition completed its transition to a company-owned
distribution and sales network. During 1996, Hill's also relaunched the entire
Science Diet line and added three new products. Due to Hill's' rapid expansion
in international markets, a European manufacturing facility was added in 1996
in order to support this growth.
Worldwide net sales in 1995 increased 10% to $8,358.2, reflecting growth
among all divisions. Asia/Africa with sales growth of 17% on 13% higher volume
and Latin America with 14% sales growth on 21% higher volume led the way on
the strength of oral and personal care product sales. North America posted
overall sales increases of 10% on 9% volume growth, largely due to the
introduction of new products. Sales in Europe were up 10% on flat volumes,
primarily reflecting the positive effects of stronger European currencies.
Sales for the Pet Nutrition and Other segment declined, reflecting the sale of
non-core businesses in 1994, partially offset by a modest sales increase of 2%
at Hill's.
GROSS PROFIT
Gross profit margin was 49.1%, above both the 1995 level of 47.9% and the
1994 level of 48.4%. The 1996 increase reflects cost-reduction programs, focus
on high margin products, the initial benefits of the 1995 restructuring
program and economic recovery in Mexico.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses as a percentage of sales were
35% in 1996, 34% in 1995 and 35% in 1994. The modest increase in 1996
represents increased advertising spending, increased investment in China,
India and Russia as well as slightly higher distribution costs. The Company
continues to focus on expense-containment strategies including the 1995
restructuring program. It is anticipated that these initiatives will provide
incremental funds to further increase investments in research and development
as well as media advertising to support growth.
PROVISION FOR RESTRUCTURED OPERATIONS
In September 1995, the Company announced a major worldwide restructuring of
its manufacturing and administrative operations designed to further enhance
profitable growth over the next several years by generating
6
significant efficiencies and improving competitiveness. The charge included
employee termination costs and expenses associated with the realignment of the
Company's global manufacturing operations, as well as settlement of
contractual obligations. The worldwide restructuring program resulted in a
1995 third quarter pretax charge of $460.5 ($369.2 net of tax) or $2.54 per
share for the year. To date, 14 factories have been closed or reconfigured,
and the realignments in facilities around the world are expected to be
substantially completed during 1997.
OTHER EXPENSE, NET
Other expense, net of other income, consists principally of amortization of
goodwill and other intangible assets, minority interest in earnings of less-
than-100% owned consolidated subsidiaries, earnings from equity investments
and asset sales. Amortization expense increased in each of the three years
presented due to higher levels of intangible assets stemming from the
Company's recent acquisitions, most notably Kolynos in 1995 and Cibaca in
India in 1994.
1995
-----------------------
AS EXCLUDING
1996 REPORTED RESTRUCTURING 1994
-------- -------- ------------- ------
WORLDWIDE EARNINGS BY BUSINESS
SEGMENT
AND GEOGRAPHIC REGION
Oral, Personal and Household Care
North America...................... $ 214.1 $ 24.5 $ 178.3 $148.3
Europe............................. 234.3 59.9 207.8 198.4
Latin America...................... 397.1 313.7 342.9 298.4
Asia/Africa........................ 187.8 153.5 187.5 164.5
-------- ------- -------- ------
Total Oral, Personal and Household
Care............................... 1,033.3 551.6 916.5 809.6
Total Pet Nutrition and Other....... 125.7 53.0 117.7 162.0
-------- ------- -------- ------
Total Segment Earnings.............. 1,159.0 604.6 1,034.2 971.6
Unallocated Expense, Net............ (7.0) (35.7) (4.8) (5.0)
-------- ------- -------- ------
EARNINGS BEFORE INTEREST AND TAXES.. 1,152.0 568.9 1,029.4 966.6
Interest Expense, Net............... (197.4) (205.4) (205.4) (86.7)
-------- ------- -------- ------
INCOME BEFORE INCOME TAXES.......... $ 954.6 $ 363.5 $ 824.0 $879.9
======== ======= ======== ======
EARNINGS BEFORE INTEREST AND TAXES
Earnings before interest and taxes (EBIT) increased 12% in 1996 to $1,152.0
compared with $1,029.4 (excluding restructuring) in the prior year. EBIT for
the Oral, Personal and Household Care segment was up 13% with North America,
Europe and Latin America posting gains of 20%, 13% and 16%, respectively.
Results in Asia/Africa were flat, reflecting a significant increase in
advertising spending in the region. The Pet Nutrition and Other segment
rebounded from 1995 with an increase of 7%.
In 1995, EBIT was impacted by the provision for restructured operations of
$460.5. Excluding this charge, EBIT for the Oral, Personal and Household Care
segment was up 13% with North America, Asia/Africa and Latin America posting
gains of 20%, 14% and 15%, respectively. Results in Europe showed modest
improvement in 1995. Overall EBIT was tempered by the 27% decline in the Pet
Nutrition and Other segment, principally due to the sale of non-core
businesses in 1994 as well as a realignment of the sales force and
distribution at Hill's.
INTEREST EXPENSE, NET
Interest expense, net of interest income, was $197.4 in 1996 compared with
$205.4 in 1995 and $86.7 in 1994. The decrease in 1996 is primarily a result
of lower debt levels for the year. The increase in net interest expense in
1995 versus the prior year is a result of higher debt for the full year,
incurred primarily to finance Kolynos and other acquisitions, and slightly
higher effective interest rates in 1995.
7
INCOME TAXES
The effective tax rate on income was 33.5% in 1996 versus 52.7% in 1995 and
34.1% in 1994. The overall effective rate in 1995 was impacted by the charge
for restructuring, the tax benefit of which was 20% due to the effect of tax
benefits in certain jurisdictions not expected to be realized. Excluding the
charge, the effective income tax rate was 34.3% in 1995. Global tax planning
strategies benefited the effective tax rate in all three years presented.
NET INCOME
Net income was $635.0 in 1996 or $4.19 per share compared with $172.0 in
1995 or $1.04 per share including the provision for restructured operations of
$369.2 or $2.54 per share. Excluding the special charge in 1995, earnings were
$541.2 or $3.58 per share compared with $580.2 or $3.82 per share in 1994.
1996 1995 1994
-------- -------- --------
IDENTIFIABLE ASSETS
Oral, Personal and Household Care
North America.................................... $2,531.4 $2,497.7 $2,416.0
Europe........................................... 1,192.1 1,271.0 1,293.8
Latin America.................................... 2,365.1 2,158.3 845.2
Asia/Africa...................................... 1,045.7 967.2 889.0
-------- -------- --------
Total Oral, Personal and Household Care........... 7,134.3 6,894.2 5,444.0
Total Pet Nutrition and Other..................... 578.6 545.5 509.6
Total Corporate................................... 188.6 202.6 188.8
-------- -------- --------
TOTAL IDENTIFABLE ASSETS.......................... $7,901.5 $7,642.3 $6,142.4
======== ======== ========
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations increased 13% to $917.4 in 1996 compared
with $810.2 in 1995 and $829.4 in 1994. The increase in cash generated by
operating activities in 1996 reflects the Company's improved profitability and
working capital management. Cash generated from operations was used to fund
capital spending, reduce debt levels and increase dividends.
During 1996, long-term debt decreased from $3,029.0 to $2,897.2. The Company
continued to focus on enhancing its debt portfolio, resulting in the
refinancing of a substantial portion of commercial paper and other short-term
borrowings to longer term instruments. In 1996, the Company entered into a
$496.3 loan agreement and obtained a $406.0 term loan with foreign commercial
banks. In addition, the Company issued $100.0 of notes in a private placement
and issued $75.0 of medium-term notes under previously filed shelf
registrations.
As of December 31, 1996, $341.9 of domestic and foreign commercial paper was
outstanding. These borrowings carry a Standard & Poor's rating of A1 and a
Moody's rating of P1. The commercial paper as well as other short-term
borrowings are classified as long-term debt at December 31, 1996, as it is the
Company's intent and ability to refinance such obligations on a long-term
basis. The Company has additional sources of liquidity available in the form
of lines of credit maintained with various banks. At December 31, 1996, such
unused lines of credit amounted to $1,785.7. In addition, at December 31,
1996, the Company had $697.8 available under previously filed shelf
registrations.
During 1995, the Company issued $89.2 of Swiss franc bonds and $71.7 of
Luxembourg franc bonds, both of which were immediately swapped into U.S.
dollar floating rate debt. In addition, $220.0 of medium-term notes were
issued under the shelf registration filed in May 1994. Also in 1995, the
Company obtained a $75.0 term note and filed a shelf registration for $700.0
of debt securities.
During 1994, the Company obtained a $50.0 term note and filed a shelf
registration for $500.0 of debt securities, of which $208.0 medium-term notes
were issued in that year.
8
The Company utilizes interest rate agreements and foreign exchange contracts
to manage interest rate and foreign currency exposures. The principal
objective of such financial derivative contracts is to moderate the effect of
fluctuations in interest rates and foreign exchange rates. The Company, as a
matter of policy, does not speculate in financial markets and therefore does
not hold these contracts for trading purposes. The Company utilizes what are
considered straightforward instruments, such as forward foreign exchange
contracts and non-leveraged interest rate swaps, to accomplish its objectives.
As of December 31, 1996, the Company had $925.9 notional amount of interest
rate swaps outstanding converting floating rate debt to fixed rate debt and
$285.0 of swaps outstanding converting fixed rate debt to floating.
The ratio of net debt to total capitalization (defined as the ratio of the
book values of debt less cash and marketable securities ["net debt"] to net
debt plus equity) decreased to 58% during 1996 from 64% in 1995. The decrease
is primarily the result of higher company earnings in 1996 as well as
effective working capital management and lower acquisitions than in prior
years. The ratio of market debt to market capitalization (defined as above
using fair market values) decreased to 17% during 1996 from 23% in 1995. The
Company primarily uses market value analyses to evaluate its optimal
capitalization.
1996 1995 1994
------ ------ ------
CAPITAL EXPENDITURES
Oral, Personal and Household Care...................... $413.6 $354.9 $343.1
Pet Nutrition and Other................................ 45.4 76.9 57.7
------ ------ ------
TOTAL CAPITAL EXPENDITURES.............................. $459.0 $431.8 $400.8
====== ====== ======
DEPRECIATION AND AMORTIZATION
Oral, Personal and Household Care...................... $286.2 $273.8 $213.0
Pet Nutrition and Other................................ 30.1 26.5 22.1
------ ------ ------
TOTAL DEPRECIATION AND AMORTIZATION..................... $316.3 $300.3 $235.1
====== ====== ======
Capital expenditures were 5.2% of net sales in both 1996 and 1995 and were
5.3% of net sales in 1994. Capital spending continues to be focused primarily
on projects that yield high aftertax returns, thereby reducing the Company's
cost structure. Capital expenditures for 1997 are expected to continue at the
current rate of approximately 5% of net sales.
Other investing activities in 1996, 1995 and 1994 included strategic
acquisitions and equity investments worldwide.
During 1996, the Company acquired the Profiden oral care business in Spain,
the Seprod fabric care business in Jamaica and other regional brands in the
Oral, Personal and Household Care segment. During 1995, the Company acquired
Kolynos in Latin America and Odol oral care products in Argentina and made
other regional investments. During 1994, the Company acquired the Cibaca
toothbrush and toothpaste business in India and several other regional brands
across the Oral, Personal and Household Care segment. The aggregate purchase
price of all 1996, 1995 and 1994 acquisitions was $38.5, $1,321.9 and $149.8,
respectively.
During 1994, the Company repurchased a significant amount of common shares
in the open market and private transactions to provide for employee benefit
plans and to maintain its targeted capital structure. Aggregate repurchases
for the year approximated 6.9 million shares with a total purchase price of
$411.1.
Dividend payments were $296.2 in 1996, up from $276.5 in 1995 and $246.9 in
1994. Common stock dividend payments increased to $1.88 per share in 1996 from
$1.76 per share in 1995 and $1.54 in 1994. The Series B Preference Stock
dividends were declared and paid at the stated rate of $4.88 per share in all
three years.
Internally generated cash flows appear to be adequate to support currently
planned business operations, acquisitions and capital expenditures.
Significant acquisitions, such as the acquisition of Kolynos discussed
previously, would require external financing.
9
The Company is a party to various superfund and other environmental matters
and is contingently liable with respect to lawsuits, taxes and other matters
arising out of the normal course of business. Management proactively reviews
and manages its exposure to, and the impact of, environmental matters. While
it is possible that the Company's cash flows and results of operations in
particular quarterly or annual periods could be affected by the one-time
impacts of the resolution of such contingencies, it is the opinion of
management that the ultimate disposition of these matters, to the extent not
previously provided for, will not have a material impact on the Company's
financial condition or ongoing cash flows and results of operations.
OUTLOOK
Looking forward into 1997, the Company is well positioned for strong growth
in developing markets, particularly Asia and Latin America. However, economic
uncertainty in Venezuela and the pace of recovery in Mexico may continue to
impact overall results from Latin America, and its projected growth may be
tempered until these economies become more stable. In addition, in 1996, the
antitrust regulatory authorities in Brazil approved the acquisition of Kolynos
subject to certain conditions. The Company is currently negotiating
undertakings related to those conditions with the Brazilian authorities. The
undertakings, which the Company hopes to execute soon, are expected to include
a commitment by the Company to suspend the Kolynos trademark on toothpaste
sold in Brazil for four years. During this time, the Company will market an
alternate brand of toothpaste. The Company will continue to use the Kolynos
name in Brazil for other oral care products, such as toothbrushes, mouthwash
and dental floss. The undertakings are also expected to require the Company to
contract manufacture toothpaste on commercial terms for third parties in
Brazil. Although management is confident Kolynos can successfully operate in
Brazil within these conditions, there cannot, of course, be absolute assurance
that the conditions will not have an adverse impact on the Company's
performance in Brazil. The acquisition is discussed further in Notes 3 and 16
to the Consolidated Financial Statements. Competitive pressures in Western
European markets are expected to persist as business in this region will
continue to be affected by slow economic growth, high unemployment and retail
trade consolidation. Movements in foreign currency exchange rates can also
impact future operating results as measured in U.S. dollars. Effective January
1997, the Company changed the functional currency of its Mexican operations
from the Mexican peso to the U.S. dollar. The effect of this change on future
results of operations is not determinable. Savings from the 1995 worldwide
restructuring began in the latter half of 1996 and are expected to reach
$100.0 annually by 1998.
The Company expects the continued success of Colgate Total, using patented
proprietary technology, to bolster worldwide oral care leadership and expects
new products in all other categories to add potential for further growth.
Overall, the global economic situation for 1997 is not expected to be
materially different from that experienced in 1996 and the Company expects its
positive momentum to continue. Historically, the consumer products industry
has been less susceptible to changes in economic growth than many other
industries, and therefore the Company constantly evaluates projects that will
focus operations on opportunities for enhanced growth potential. Over the long
term, Colgate's continued focus on its consumer products business and the
strength of its global brand names, its broad international presence in both
developed and developing markets, and its strong capital base all position the
Company to take advantage of growth opportunities and to continue to increase
profitability and shareholder value.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the "Index to Financial Statements" which is located on page 14 of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and executive officers of the registrant set
forth in the Proxy Statement for the 1997 Annual Meeting is incorporated
herein by reference, as is the text in Part I of this report under the caption
"Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the Proxy Statement for the 1997 Annual Meeting
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of management set forth in the Proxy Statement for the
1997 Annual Meeting is incorporated herein by reference.
(b) There are no arrangements known to the registrant that may at a subsequent
date result in a change in control of the registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the Proxy Statement for the 1997 Annual Meeting
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
See the "Index to Financial Statements" which is located on page 14 of this
report.
(b) Exhibits. See the exhibit index which begins on page 41.
(c) Reports on Form 8-K. None.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Colgate-Palmolive Company
-------------------------
(Registrant)
Date March 18, 1997 By /s/ Reuben Mark
-------------------------
Reuben Mark
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
(a)Principal Executive Officer
/s/ Reuben Mark
---------------------------
Reuben Mark
Chairman of the Board
and Chief Executive Officer
Date March 18, 1997
(b)Principal Financial and Accounting Officer
/s/ Stephen C. Patrick
---------------------------
Stephen C. Patrick
Chief Financial Officer
Date March 18, 1997
(c)Directors:
Vernon R. Alden, Jill K. Conway,
Ronald E. Ferguson, Ellen M. Hancock,
David W. Johnson, John P. Kendall,
Richard J. Kogan, Delano E. Lewis,
Reuben Mark, Howard B. Wentz, Jr.
/s/ Andrew D. Hendry
---------------------------
Andrew D. Hendry
as Attorney-in-Fact
Date March 18, 1997
12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
COLGATE-PALMOLIVE COMPANY
NEW YORK, NEW YORK 10022
13
INDEX TO FINANCIAL STATEMENTS
PAGE
----
FINANCIAL STATEMENTS
Consolidated Statements of Income for the years ended December 31, 1996,
1995 and 1994............................................................ 15
Consolidated Balance Sheets at December 31, 1996 and 1995................. 16
Consolidated Statements of Retained Earnings and Changes in Capital Ac-
counts for the years ended December 31, 1996, 1995 and 1994.............. 17
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994...................................................... 18
Notes to Consolidated Financial Statements................................ 19
Financial Statement Schedules for the years ended December 31, 1996, 1995
and 1994:................................................................ 36
II Valuation and Qualifying Accounts.................................... 36
Report of Independent Public Accountants.................................. 39
SELECTED FINANCIAL DATA
Historical Financial Summary.............................................. 40
All other financial statements and schedules not listed have been omitted
since the required information is included in the financial statements or the
notes thereto or is not applicable or required.
14
COLGATE-PALMOLIVE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Dollars in Millions Except Per Share Amounts
1996 1995 1994
-------- -------- --------
Net sales........................................... $8,749.0 $8,358.2 $7,587.9
Cost of sales....................................... 4,451.1 4,353.1 3,913.3
-------- -------- --------
Gross profit....................................... 4,297.9 4,005.1 3,674.6
Selling, general and administrative expenses........ 3,052.1 2,879.6 2,625.2
Provision for restructured operations............... -- 460.5 --
Other expense, net.................................. 93.8 96.1 82.8
Interest expense, net of interest income of $34.3,
$30.6 and $34.2, respectively...................... 197.4 205.4 86.7
-------- -------- --------
Income before income taxes.......................... 954.6 363.5 879.9
Provision for income taxes.......................... 319.6 191.5 299.7
-------- -------- --------
Net income......................................... $ 635.0 $ 172.0 $ 580.2
======== ======== ========
Earnings per common share, primary.................. $ 4.19 $ 1.04 $ 3.82
======== ======== ========
Earnings per common share, assuming full dilution... $ 3.90 $ 1.02 $ 3.56
======== ======== ========
See Notes to Consolidated Financial Statements.
15
COLGATE-PALMOLIVE COMPANY
CONSOLIDATED BALANCE SHEETS
Dollars in Millions Except Per Share Amount
1996 1995
--------- ---------
ASSETS
Current Assets
Cash and cash equivalents............................... $ 248.2 $ 208.8
Marketable securities................................... 59.6 47.8
Receivables (less allowances of $33.8 and $31.9, respec-
tively)................................................ 1,064.4 1,116.9
Inventories............................................. 770.7 774.8
Other current assets.................................... 229.4 211.9
--------- ---------
Total current assets................................... 2,372.3 2,360.2
Property, plant and equipment, net....................... 2,428.9 2,155.2
Goodwill and other intangibles, net...................... 2,720.4 2,741.7
Other assets............................................. 379.9 385.2
--------- ---------
$ 7,901.5 $ 7,642.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes and loans payable................................. $ 172.3 $ 204.4
Current portion of long-term debt....................... 110.4 37.0
Accounts payable........................................ 751.7 738.7
Accrued income taxes.................................... 93.1 76.7
Other accruals.......................................... 776.8 696.3
--------- ---------
Total current liabilities.............................. 1,904.3 1,753.1
Long-term debt........................................... 2,786.8 2,992.0
Deferred income taxes.................................... 234.3 237.3
Other liabilities........................................ 942.0 980.1
Shareholders' Equity
Preferred stock......................................... 392.7 403.5
Common stock, $1 par value (500,000,000 shares
authorized,
183,213,295 shares issued)............................. 183.2 183.2
Additional paid-in capital.............................. 1,101.6 1,033.7
Retained earnings....................................... 2,731.0 2,392.2
Cumulative translation adjustments...................... (534.7) (513.0)
--------- ---------
3,873.8 3,499.6
Unearned compensation................................... (370.9) (378.0)
Treasury stock, at cost................................. (1,468.8) (1,441.8)
--------- ---------
Total shareholders' equity............................. 2,034.1 1,679.8
--------- ---------
$ 7,901.5 $ 7,642.3
========= =========
See Notes to Consolidated Financial Statements.
16
COLGATE-PALMOLIVE COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Dollars in Millions
1996 1995 1994
-------- -------- --------
Balance, January 1.................................. $2,392.2 $2,496.7 $2,163.4
Add:
Net income......................................... 635.0 172.0 580.2
-------- -------- --------
3,027.2 2,668.7 2,743.6
-------- -------- --------
Deduct:
Dividends declared:
Series B Convertible Preference Stock, net of in-
come taxes....................................... 20.9 21.1 21.1
Preferred stock................................... .5 .5 .5
Common stock...................................... 274.8 254.9 225.3
-------- -------- --------
296.2 276.5 246.9
-------- -------- --------
Balance, December 31................................ $2,731.0 $2,392.2 $2,496.7
======== ======== ========
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL ACCOUNTS
Dollars in Millions
COMMON STOCK ADDITIONAL TREASURY STOCK
------------------- PAID-IN --------------------
SHARES AMOUNT CAPITAL SHARES AMOUNT
----------- ------ ---------- ---------- --------
Balance, January 1, 1994.. 149,256,603 $183.2 $1,000.9 33,956,692 $1,124.0
Shares issued for stock
options.................. 1,803,574 -- 1.6 (1,803,574) (63.4)
Treasury stock acquired... (6,923,325) -- -- 6,923,325 411.1
Other..................... 267,385 -- 17.9 (267,385) (9.3)
----------- ------ -------- ---------- --------
Balance, December 31,
1994..................... 144,404,237 183.2 1,020.4 38,809,058 1,462.4
Shares issued for stock
options.................. 2,252,955 -- 13.7 (2,252,955) (85.5)
Treasury stock acquired... (1,117,099) -- -- 1,117,099 77.7
Other..................... 313,779 -- (.4) (313,779) (12.8)
----------- ------ -------- ---------- --------
Balance, December 31,
1995..................... 145,853,872 183.2 1,033.7 37,359,423 1,441.8
Shares issued for stock
options.................. 2,557,282 -- 44.4 (2,557,282) (100.5)
Treasury stock acquired... (1,798,574) -- -- 1,798,574 149.9
Other..................... 521,238 -- 23.5 (521,238) (22.4)
----------- ------ -------- ---------- --------
Balance, December 31,
1996..................... 147,133,818 $183.2 $1,101.6 36,079,477 $1,468.8
=========== ====== ======== ========== ========
See Notes to Consolidated Financial Statements.
17
COLGATE-PALMOLIVE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in Millions
1996 1995 1994
--------- --------- -------
OPERATING ACTIVITIES
Net income..................................... $ 635.0 $ 172.0 $ 580.2
Adjustments to reconcile net income to net cash
provided by operations:
Restructured operations, net.................. (105.6) 424.9 (39.1)
Depreciation and amortization................. 316.3 300.3 235.1
Deferred income taxes and other, net.......... (23.0) (62.9) 64.7
Cash effects of changes in:
Receivables.................................. (15.4) (44.1) (50.1)
Inventories.................................. (1.2) (26.1) (44.5)
Other current assets......................... -- (42.4) (7.8)
Payables and accruals........................ 111.3 88.5 90.9
--------- --------- -------
Net cash provided by operations............. 917.4 810.2 829.4
--------- --------- -------
INVESTING ACTIVITIES
Capital expenditures........................... (459.0) (431.8) (400.8)
Payment for acquisitions, net of cash acquired. (59.3) (1,300.4) (146.4)
Sale of marketable securities and other invest-
ments......................................... 26.3 6.2 58.4
Other, net..................................... (12.0) (17.2) 31.1
--------- --------- -------
Net cash used for investing activities...... (504.0) (1,743.2) (457.7)
--------- --------- -------
FINANCING ACTIVITIES
Principal payments on debt..................... (1,164.6) (17.1) (88.3)
Proceeds from issuance of debt, net............ 1,077.4 1,220.0 316.4
Proceeds from outside investors................ 8.5 30.5 15.2
Dividends paid................................. (296.2) (276.5) (246.9)
Purchase of common stock....................... (27.4) (9.0) (357.9)
Proceeds from exercise of stock options and
other, net.................................... 30.7 28.3 18.5
--------- --------- -------
Net cash (used for) provided by financing
activities................................. (371.6) 976.2 (343.0)
--------- --------- -------
Effect of exchange rate changes on cash and
cash equivalents.............................. (2.4) (4.3) (2.9)
--------- --------- -------
Net increase in cash and cash equivalents...... 39.4 38.9 25.8
Cash and cash equivalents at beginning of year. 208.8 169.9 144.1
--------- --------- -------
Cash and cash equivalents at end of year....... $ 248.2 $ 208.8 $ 169.9
========= ========= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid............................... $ 253.7 $ 292.5 $ 261.1
Interest paid................................... 229.1 228.6 96.9
Non-cash consideration in payment for acquisi-
tions.......................................... -- 48.9 8.0
Principal payments on ESOP debt, guaranteed by
the Company.................................... (5.0) (4.4) (4.0)
See Notes to Consolidated Financial Statements.
18
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in Millions Except Per Share Amounts
1. NATURE OF OPERATIONS
The Company manufactures and markets a wide variety of products in the U.S.
and around the world in two distinct business segments: Oral, Personal and
Household Care, and Pet Nutrition. Oral, Personal and Household Care
products include toothpastes, oral rinses and toothbrushes, bar and liquid
soaps, shampoos, conditioners, deodorants and antiperspirants, baby and
shave products, laundry and dishwashing detergents, fabric softeners,
cleansers and cleaners, bleaches and other similar items. These products
are sold primarily to wholesale and retail distributors worldwide. Pet
Nutrition products include pet food products manufactured and marketed by
Hill's Pet Nutrition. The principal customers for Pet Nutrition products
are veterinarians and specialty pet retailers. Principal global trademarks
include Colgate, Palmolive, Mennen, Kolynos, Protex, Ajax,
Soupline/Suavitel, Fab, Science Diet and Prescription Diet in addition to
various regional trademarks.
The Company's principal classes of products accounted for the following
percentages of worldwide sales for the past three years:
1996 1995 1994
---- ---- ----
Oral Care..................................................... 30% 30% 26%
Personal Care................................................. 22 22 24
Household Surface Care........................................ 16 16 17
Fabric Care................................................... 18 18 18
Pet Nutrition................................................. 10 9 11
Company products are marketed under highly competitive conditions. Products
similar to those produced and sold by the Company are available from
competitors in the U.S. and overseas. Product quality, brand recognition
and acceptance, and marketing capability largely determine success in the
Company's business segments. The financial and descriptive information on
the Company's geographic area and industry segment data, appearing in the
tables contained in management's discussion, is an integral part of these
financial statements. More than half of the Company's net sales, operating
profit and identifiable assets are attributable to overseas operations.
Transfers between geographic areas are not significant.
The Company's products are generally marketed by a sales force employed by
each individual subsidiary or business unit. In some instances,
distributors and brokers are used. Most raw materials used worldwide are
purchased from others, are available from several sources and are generally
available in adequate supply. Products and commodities such as tallow and
essential oils are subject to wide price variations. No one of the
Company's raw materials represents a significant portion of total material
requirements.
Trademarks are considered to be of material importance to the Company's
business; consequently, the practice is followed of seeking trademark
protection by all available means. Although the Company owns a number of
patents, no one patent is considered significant to the business taken as a
whole.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of Colgate-
Palmolive Company and its majority-owned subsidiaries. Intercompany
transactions and balances have been eliminated. Investments in companies in
which the Company's interest is between 20% and 50% are accounted for using
the equity method. The Company's share of the net income from such
investments is recorded as equity earnings and is classified as other
expense, net in the Consolidated Statements of Income.
19
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
REVENUE RECOGNITION
Sales are recorded at the time products are shipped to trade customers. Net
sales reflect units shipped at selling list prices reduced by promotion
allowances.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent gains and losses at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents. Investments in
short-term securities that do not meet the definition of cash equivalents
are classified as marketable securities. Marketable securities are reported
at cost, which equals market.
INVENTORIES
Inventories are valued at the lower of cost or market. The last-in, first-
out (LIFO) method is used to value substantially all inventories in the
U.S. as well as in certain overseas locations. The remaining inventories
are valued using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, and machinery and equipment are stated at cost.
Depreciation is provided, primarily using the straight-line method, over
estimated useful lives ranging from 3 to 40 years.
GOODWILL AND OTHER INTANGIBLES
Goodwill represents the excess of purchase price over the fair value of
identifiable tangible and intangible net assets of businesses acquired.
Goodwill and other intangibles are amortized on a straight-line basis over
periods not exceeding 40 years. The recoverability of carrying values of
intangible assets is evaluated on a recurring basis. The primary indicators
of recoverability are current and forecasted profitability of a related
acquired business. For the three-year period ended December 31, 1996, there
were no material adjustments to the carrying values of intangible assets
resulting from these evaluations.
INCOME TAXES
Deferred taxes are recognized for the expected future tax consequences of
temporary differences between the amounts carried for financial reporting
and tax purposes. Provision is made currently for taxes payable on
remittances of overseas earnings; no provision is made for taxes on
overseas retained earnings that are deemed to be permanently reinvested.
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The cost of postretirement health care and other benefits is actuarially
determined and accrued over the service period of covered employees.
20
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
TRANSLATION OF OVERSEAS CURRENCIES
The assets and liabilities of subsidiaries, other than those operating in
highly inflationary environments, are translated into U.S. dollars at year-
end exchange rates, with resulting translation gains and losses accumulated
in a separate component of shareholders' equity. Income and expense items
are converted into U.S. dollars at average rates of exchange prevailing
during the year.
For subsidiaries operating in highly inflationary environments,
inventories, goodwill and property, plant and equipment are translated at
the rate of exchange on the date the assets were acquired, while other
assets and liabilities are translated at year-end exchange rates.
Translation adjustments for these operations are included in net income.
GEOGRAPHIC AREAS AND INDUSTRY SEGMENTS
The financial and descriptive information on the Company's geographic area
and industry segment data, appearing in the tables contained in
management's discussion of this report, is an integral part of these
financial statements.
3. ACQUISITIONS
During 1996, the Company acquired the Profiden oral care business in Spain,
the Seprod fabric care business in Jamaica as well as other regional brands
in the Oral, Personal and Household Care segment. The Company also expanded
its investment in the Pet Nutrition segment in the Netherlands. The
aggregate purchase price of all 1996 acquisitions was $38.5.
On January 10, 1995, the Company acquired the worldwide Kolynos oral care
business ("Kolynos") for $1,040.0. Kolynos is an oral care business
operating primarily in South America. The transaction was structured as a
multinational acquisition of assets and stock and was accounted for under
the purchase method of accounting. The net book value of Kolynos assets was
approximately $50.0. As further described in Note 16, during 1996, the
antitrust regulatory authorities in Brazil approved the acquisition subject
to certain conditions.
The following unaudited pro forma summary combines the results of the
operations of the Company and Kolynos as if the acquisition had occurred as
of the beginning of 1994 after giving effect to certain adjustments,
including amortization of goodwill, increased interest expense on the
acquisition debt incurred and the related income tax effects.
SUMMARIZED PRO FORMA COMBINED RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
Net sales...................................................... $7,864.0
Income before income taxes..................................... 835.4
Net income..................................................... 550.9
Primary earnings per common share.............................. 3.62
Fully diluted earnings per common share........................ 3.38
The pro forma financial information is not necessarily indicative of either
the results of operations that would have occurred had the Company and
Kolynos actually been combined during the year ended December 31, 1994, or
the future results of operations of the combined companies. There are
certain other
21
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
benefits that are anticipated to be realized from the implementation of the
Company's integration plans which are not included in the pro forma
information.
In addition, during 1995, the Company acquired the Odol oral care business
in Argentina, the Barbados Cosmetic Products business in the Caribbean as
well as other regional brands in the Oral, Personal and Household Care
Segment. The aggregate purchase price of all 1995 acquisitions was
$1,321.9.
During 1994, the Company acquired the Cibaca toothpaste and toothbrush
business in India, the NSOA laundry soap business in Senegal as well as
several other regional brands in the Oral, Personal and Household Care
segment. The aggregate purchase price of all 1994 acquisitions was $149.8.
All of these acquisitions have been accounted for as purchases, and,
accordingly, the purchase prices were allocated to the net tangible and
intangible assets acquired based on estimated fair values at the dates of
the respective acquisitions. The results of operations have been included
in the Consolidated Financial Statements since the respective acquisition
dates. The inclusion of pro forma financial data for all acquisitions
except Kolynos prior to the dates of acquisition would not have materially
affected reported results.
4. LONG-TERM DEBT AND CREDIT FACILITIES
Long-term debt consists of the following at December 31:
WEIGHTED
AVERAGE
INTEREST RATE MATURITIES 1996 1995
------------- ---------- --------- --------
Notes........................... 7.3% 1997-2025 $ 1,292.9 $1,149.2
ESOP notes, guaranteed by the
Company........................ 8.6 2001-2009 385.2 390.2
Payable to banks................ 5.5 2000-2003 836.0 101.8
Commercial paper and other
short-term borrowings,
reclassified................... 5.1 1997 375.1 1,378.2
Capitalized leases.............. 8.0 9.6
--------- --------
2,897.2 3,029.0
Less: current portion of long-
term debt...................... 110.4 37.0
--------- --------
$ 2,786.8 $2,992.0
========= ========
Commercial paper and certain other short-term borrowings are classified as
long-term debt as it is the Company's intent and ability to refinance such
obligations on a long-term basis. Scheduled maturities of debt outstanding
at December 31, 1996, excluding short-term borrowings reclassified, are as
follows: 1997--$110.4; 1998--$184.9; 1999--$167.1; 2000--$339.6; 2001--
$97.6, and $1,622.5 thereafter. The Company has entered into interest rate
swap agreements and foreign exchange contracts related to certain of these
debt instruments (see Note 12).
At December 31, 1996, the Company had unused credit facilities amounting to
$1,785.7. Commitment fees related to credit facilities are not material.
The weighted average interest rate on short-term borrowings, excluding
amounts reclassified, as of December 31, 1996 and 1995 was 7.5% and 8.3%,
respectively.
The Company's long-term debt agreements include various restrictive
covenants and require the maintenance of certain defined financial ratios
with which the Company is in compliance.
22
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. CAPITAL STOCK AND STOCK COMPENSATION PLANS
PREFERRED STOCK
Preferred Stock consists of 250,000 authorized shares without par value. It
is issuable in series, of which one series of 125,000 shares, designated
$4.25 Preferred Stock, with a stated and redeemable value of $100 per
share, has been issued and is outstanding. The $4.25 Preferred Stock is
redeemable only at the option of the Company.
PREFERENCE STOCK
In 1988, the Company authorized the issuance of 50,000,000 shares of
Preference Stock, without par value. The Series B Convertible Preference
Stock, which is convertible into two shares of common stock, ranks junior
to all series of the Preferred Stock. At December 31, 1996 and 1995,
5,849,039 and 6,014,615 shares of Series B Convertible Preference Stock,
respectively, were outstanding and issued to the Company's ESOP.
SHAREHOLDER RIGHTS PLAN
Under the Company's Shareholder Rights Plan, each share of the Company's
common stock carries with it one Preference Share Purchase Right
("Rights"). The Rights themselves will at no time have voting power or pay
dividends. The Rights become exercisable only if a person or group acquires
20% or more of the Company's common stock or announces a tender offer, the
consummation of which would result in ownership by a person or group of 20%
or more of the common stock. When exercisable, each Right entitles a holder
to buy one two-hundredth of a share of a new series of preference stock at
an exercise price of $87.50.
If the Company is acquired in a merger or other business combination, each
Right will entitle a holder to buy, at the Right's then current exercise
price, a number of the acquiring company's common shares having a market
value of twice such price. In addition, if a person or group acquires 30%
or more of the Company's common stock, other than pursuant to a cash tender
offer for all shares in which such person or group increases its stake from
below 20% to 80% or more of the outstanding shares, each Right will entitle
its holder (other than such person or members of such group) to purchase,
at the Right's then current exercise price, a number of shares of the
Company's common stock having a market value of twice the Right's exercise
price.
Further, at any time after a person or group acquires 30% or more (but less
than 50%) of the Company's common stock, the Board of Directors may, at its
option, exchange part or all of the Rights (other than Rights held by the
acquiring person or group) for shares of the Company's common stock on a
one-for-one basis.
The Company, at the option of its Board of Directors, may redeem the Rights
for $.005 at any time before the acquisition by a person or group of
beneficial ownership of 20% or more of its common stock. The Board of
Directors is also authorized to reduce the 20% and 30% thresholds to not
less than 15%. Unless redeemed earlier, the Rights will expire on October
24, 1998.
INCENTIVE STOCK PLAN
The Company has a plan which provides for grants of restricted stock awards
for officers and other executives of the Company and its major
subsidiaries. A committee of non-employee members of the Board
23
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
of Directors administers the plan. During 1996 and 1995, 126,229 and
237,019 shares, respectively, were awarded to employees in accordance with
the provisions of the plan.
STOCK OPTION PLANS
The Company's 1987 and 1996 Stock Option Plans ("Plans") provide for the
issuance of non-qualified stock options to officers and key employees.
Options are granted at prices not less than the fair market value on the
date of grant. At December 31, 1996, 811,843 shares of common stock were
available for future grants.
The Plans contain an accelerated ownership feature which provides for the
grant of new options when previously owned shares of Company stock are used
to exercise existing options. The number of new options granted under this
feature is equal to the number of shares of previously owned Company stock
used to exercise the original options and to pay the related required U.S.
income tax. The new options are granted at a price equal to the fair market
value on the date of the new grant and have the same expiration date as the
original options exercised.
Stock option plan activity is summarized below:
1996 1995
-------------------------- --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
---------- -------------- ---------- --------------
Options outstanding,
January 1.............. 10,495,895 $57 10,261,408 $51
Granted................. 2,854,611 82 2,581,173 69
Exercised............... (2,557,282) 57 (2,252,955) 44
Canceled or expired..... (85,625) 61 (93,731) 53
---------- ----------
Options outstanding, De-
cember 31.............. 10,707,599 64 10,495,895 57
---------- ----------
Options exercisable, De-
cember 31.............. 6,991,922 58 6,770,039 53
========== ==========
The following table summarizes information relating to currently
outstanding and exercisable options as of December 31, 1996:
WEIGHTED
AVERAGE
REMAINING WEIGHTED WEIGHTED
CONTRACTUAL OPTIONS AVERAGE OPTIONS AVERAGE
RANGE OF EXERCISE PRICES LIFE IN YEARS OUTSTANDING EXERCISE PRICE EXERCISABLE EXERCISE PRICE
------------------------ ------------- ----------- -------------- ----------- --------------
$19.53 - $52.13......... 4 2,385,707 $39 2,385,707 $39
$52.38 - $60.98......... 6 2,408,409 57 1,934,196 57
$61.00 - $72.07......... 7 2,450,844 68 1,434,389 67
$72.31 - $87.06......... 8 2,431,654 80 737,630 78
$87.25 - $99.79......... 5 1,030,985 94 500,000 98
---------- ---------
6 10,707,599 64 6,991,922 58
========== =========
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting
for options granted under the Plan. Accordingly, no compensation expense
has been recognized. Had compensation expense been determined based on the
Black-Scholes option pricing model value at the grant date for awards in
1996 and 1995 consistent with
24
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), the Company's net
income, primary earnings per common share and fully diluted earnings per
common share would have been $621.7, $4.09 per share and $3.82 per share,
respectively in 1996 and $166.1, $1.00 per share and $.98 per share,
respectively in 1995. The SFAS 123 method of accounting has not been
applied to options granted prior to January 1, 1995, and the resulting pro
forma compensation expense may not be indicative of pro forma expense in
future years.
The weighted average Black-Scholes value of grants issued in 1996 and 1995
was $10.81 and $9.45, respectively. The Black-Scholes value of each option
granted is estimated using the Black-Scholes option pricing model with the
following assumptions: option term until exercise ranging from 2 to 4
years, volatility ranging from 17% to 18%, risk free interest rate ranging
from 5.8% to 6.4% and an expected dividend yield of 2.5%. The Black-Scholes
model used by the Company to calculate option values was developed to
estimate the fair value of short-term freely tradable, fully transferable
options without vesting restrictions and was not designed to value reloads,
all of which significantly differ from the Company's stock option awards.
The value of this model is also limited by the inclusion of highly
subjective assumptions which greatly affect calculated values.
6.EMPLOYEE STOCK OWNERSHIP PLAN
In 1989, the Company expanded its employee stock ownership plan (ESOP)
through the introduction of a leveraged ESOP covering certain employees who
have met certain eligibility requirements. The ESOP issued $410.0 of long-
term notes due through 2009 bearing an average interest rate of 8.6%. The
long-term notes, which are guaranteed by the Company, are reflected in the
accompanying Consolidated Balance Sheets. The ESOP used the proceeds of the
notes to purchase 6.3 million shares of Series B Convertible Preference
Stock from the Company. The Stock has a minimum redemption price of $65 per
share and pays semiannual dividends equal to the higher of $2.44 or the
current dividend paid on two common shares for the comparable six-month
period. Each share may be converted by the Trustee into two shares of
common stock.
Dividends on these preferred shares, as well as common shares also held by
the ESOP, are paid to the ESOP trust and, together with contributions, are
used by the ESOP to repay principal and interest on the outstanding notes.
Preferred shares are released for allocation to participants based upon the
ratio of the current year's debt service to the sum of total principal and
interest payments over the life of the loan. At December 31, 1996,
1,275,380 shares were allocated to participant accounts.
Dividends on these preferred shares are deductible for income tax purposes
and, accordingly, are reflected net of their tax benefit in the
Consolidated Statements of Retained Earnings.
Annual expense related to the leveraged ESOP, determined as interest
incurred on the notes, less employee contributions and dividends received
on the shares held by the ESOP, plus the higher of either principal
repayments on the notes or the cost of shares allocated, was $3.9 in 1996,
$8.3 in 1995 and $8.0 in 1994. Similarly, unearned compensation, shown as a
reduction in shareholders' equity, is reduced by the higher of principal
payments or the cost of shares allocated.
Interest incurred on the ESOP's notes amounted to $33.5 in 1996, $33.9 in
1995 and $34.2 in 1994. The Company paid dividends on the stock held by the
ESOP of $31.1 in 1996, $31.7 in 1995 and $32.3 in 1994. Company
contributions to the ESOP were $4.1 in 1996, $6.4 in 1995 and $5.7 in 1994.
Employee contributions to the ESOP were $5.9 in 1996 and $0 in 1995 and
1994.
25
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS
RETIREMENT PLANS
The Company, its U.S. subsidiaries and a majority of its overseas
subsidiaries maintain pension plans covering substantially all of their
employees. Most plans provide pension benefits that are based primarily on
years of service and employees' career earnings. In the Company's principal
U.S. plans, funds are contributed to trustees in accordance with regulatory
limits to provide for current service and for any unfunded projected
benefit obligation over a reasonable period. To the extent these
requirements are exceeded by plan assets, a contribution may not be made in
a particular year. Plan assets consist principally of common stocks,
guaranteed investment contracts with insurance companies, investments in
real estate funds and U.S. Government obligations.
Net periodic pension expense of the plans includes the following
components:
1996 1995 1994
---------------- ----------------- ----------------
U.S. OVERSEAS U.S. OVERSEAS U.S. OVERSEAS
------ -------- ------- -------- ------ --------
Service cost--benefits
earned during the peri-
od..................... $ 24.5 $ 15.1 $ 19.1 $ 15.4 $ 23.1 $17.9
Interest cost on pro-
jected benefit obliga-
tion................... 64.4 17.5 64.5 16.8 63.1 15.3
Actual return on plan
assets................. (96.9) (13.6) (134.7) (13.0) (3.1) (2.2)
Net amortization and de-
ferral................. 26.1 4.0 61.5 4.7 (69.1) (7.0)
------ ------ ------- ------ ------ -----
Net pension expense..... $ 18.1 $ 23.0 $ 10.4 $ 23.9 $ 14.0 $24.0
====== ====== ======= ====== ====== =====
The following table sets forth the funded status of the plans at December
31:
1996 1995
---------------- -----------------
U.S. OVERSEAS U.S. OVERSEAS
------ -------- ------- --------
Plan assets at fair value................ $842.8 $ 171.2 $ 817.5 $ 157.2
------ ------- ------- -------
Actuarial present value of benefit obli-
gations:
Vested obligation....................... 836.2 219.2 806.5 223.5
Nonvested obligation.................... 41.1 16.5 57.7 23.5
------ ------- ------- -------
Accumulated benefit obligation........... 877.3 235.7 864.2 247.0
Additional benefits related to assumed
future compensation levels.............. 48.4 36.2 58.1 37.2
------ ------- ------- -------
Projected benefit obligation............. 925.7 271.9 922.3 284.2
------ ------- ------- -------
Plan assets less than projected benefit
obligation.............................. (82.9) (100.7) (104.8) (127.0)
Deferral of net actuarial changes and
other, net.............................. 75.9 4.9 161.4 6.7
Unrecognized prior service cost.......... 50.9 4.2 21.1 2.1
Unrecognized transition asset............ (21.6) (4.2) (28.3) (3.6)
Additional liability..................... -- (1.2) -- (.2)
------ ------- ------- -------
Prepaid (accrued) pension cost recognized
in the Consolidated Balance Sheets...... $ 22.3 $ (97.0) $ 49.4 $(122.0)
====== ======= ======= =======
26
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The actuarial assumptions used to determine the projected benefit
obligation of the plans were as follows:
OVERSEAS
U.S. (WEIGHTED AVERAGE)
---------------- ----------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ------ ------ ------
Settlement rates.................. 7.50% 7.00% 8.75% 8.23% 8.46% 8.38%
Long-term rates of compensation
increase......................... 5.50 5.50 5.75 5.38 5.47 5.53
Long-term rates of return on plan
assets........................... 9.25 9.25 9.25 10.91 10.50 10.88
When remeasuring the pension obligation, the Company reassesses each
actuarial assumption. The settlement rate assumption is pegged to long-term
bond rates to reflect the cost to satisfy the pension obligation currently,
while the other assumptions reflect the long-term outlook of rates of
compensation increases and return on assets.
OTHER POSTRETIREMENT BENEFITS
The Company and certain of its subsidiaries provide health care and life
insurance benefits for retired employees to the extent not provided by
government-sponsored plans. The Company utilizes a portion of its leveraged
ESOP, in the form of future retiree contributions, to reduce its obligation
to provide these postretirement benefits. Postretirement benefits currently
are not funded.
Postretirement benefits expense includes the following components:
1996 1995 1994
----- ----- -----
Service cost-benefits earned during the period......... $ 1.7 $ 1.9 $ 2.2
Annual ESOP allocation................................. (5.0) (4.2) (5.7)
Interest cost on accumulated postretirement benefit ob-
ligation.............................................. 12.6 13.7 14.2
Amortization of unrecognized net gain.................. (2.2) (3.4) (.1)
----- ----- -----
Net postretirement expense............................ $ 7.1 $ 8.0 $10.6
===== ===== =====
The actuarial present value of postretirement benefit obligations included
in Other liabilities in the Consolidated Balance Sheets is comprised of the
following components, at December 31:
1996 1995
------ ------
Retirees...................................................... $144.8 $145.2
Active participants eligible for retirement................... 1.0 2.0
Other active participants..................................... 6.9 9.2
------ ------
Accumulated postretirement benefit obligation................. 152.7 156.4
Unrecognized net gain......................................... 43.8 44.4
------ ------
Accrued postretirement benefit liability..................... $196.5 $200.8
====== ======
The principal actuarial assumptions used in the measurement of the
accumulated benefit obligation were as follows:
1996 1995 1994
----- ----- -----
Discount rate.......................................... 7.50% 7.00% 8.75%
Current medical cost trend rate........................ 6.50 8.00 10.00
Ultimate medical cost trend rate....................... 5.00 5.00 6.25
Medical cost trend rate decreases ratably to ultimate
in year............................................... 1999 1999 2001
ESOP growth rate....................................... 10.00% 10.00% 10.00%
27
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
When remeasuring the accumulated benefit obligation, the Company reassesses
each actuarial assumption.
The cost of these postretirement medical benefits is dependent upon a
number of factors, the most significant of which is the rate at which
medical costs increase in the future. The effect of a 1% increase in the
assumed medical cost trend rate would increase the accumulated
postretirement benefit obligation by approximately $14.8; annual expense
would not be materially affected.
8. INCOME TAXES
The provision for income taxes consists of the following for the years
ended December 31:
1996 1995 1994
------ ------ ------
United States........................................... $ 67.2 $ 18.0 $ 43.3
Overseas................................................ 252.4 173.5 256.4
------ ------ ------
$319.6 $191.5 $299.7
====== ====== ======
Differences between accounting for financial statement purposes and
accounting for tax purposes result in taxes currently payable being (lower)
higher than the total provision for income taxes as follows:
1996 1995 1994
------- ------ ------
Excess of tax over book depreciation............... $ (15.9) $(18.9) $(32.8)
Net restructuring (spending) accrual............... (26.3) 70.5 (19.0)
Other, net......................................... 21.5 (5.3) 5.6
------- ------ ------
$(20.7) $ 46.3 $(46.2)
======= ====== ======
The components of income before income taxes are as follows for the three
years ended December 31:
1996 1995 1994
------ ------- ------
United States......................................... $171.3 $(121.1) $181.8
Overseas.............................................. 783.3 484.6 698.1
------ ------- ------
$954.6 $ 363.5 $879.9
====== ======= ======
The difference between the statutory United States federal income tax rate
and the Company's global effective tax rate as reflected in the
Consolidated Statements of Income is as follows:
PERCENTAGE OF INCOME BEFORE TAX 1996 1995 1994
------------------------------- ---- ---- ----
Tax at U.S. statutory rate................................. 35.0% 35.0% 35.0%
State income taxes, net of federal benefit................. .3 .6 .6
Earnings taxed at other than U.S. statutory rate........... (1.4) (.4) (.3)
Restructured operations.................................... -- 18.4 --
Other, net................................................. (.4) (.9) (1.2)
---- ---- ----
Effective tax rate......................................... 33.5% 52.7% 34.1%
==== ==== ====
In addition, net tax benefits of $28.9 in 1996 and $6.8 in 1995 were
recorded directly through equity.
28
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of deferred tax assets (liabilities) are as follows at
December 31:
1996 1995
------- -------
Deferred Taxes--Current:
Accrued liabilities...................................... $ 63.7 $ 64.1
Restructuring............................................ 24.5 20.0
Other, net............................................... 28.2 13.9
------- -------
Total deferred taxes current............................. 116.4 98.0
------- -------
Deferred Taxes--Long-term:
Intangible assets........................................ (212.9) (212.2)
Property, plant and equipment............................ (175.7) (215.9)
Postretirement benefits.................................. 73.1 73.1
Restructuring............................................ 50.7 141.1
Tax loss and tax credit carryforwards.................... 116.3 124.8
Other, net............................................... 29.1 (30.0)
Valuation allowance...................................... (114.9) (118.2)
------- -------
Total deferred taxes long-term........................... (234.3) (237.3)
------- -------
Net deferred taxes...................................... $(117.9) $(139.3)
======= =======
The major component of the 1996 and 1995 valuation allowance relates to tax
benefits in certain jurisdictions not expected to be realized.
9. FOREIGN CURRENCY TRANSLATION
Cumulative translation adjustments, which represent the effect of
translating assets and liabilities of the Company's non-U.S. entities,
except those in highly inflationary economies, were as follows:
1996 1995 1994
------- ------- -------
Balance, January 1............................... $(513.0) $(439.3) $(372.9)
Effect of balance sheet translations............. (21.7) (73.7) (66.4)
------- ------- -------
Balance, December 31............................. $(534.7) $(513.0) $(439.3)
======= ======= =======
Foreign currency charges, resulting from the translation of balance sheets
of subsidiaries operating in highly inflationary environments and from
foreign currency transactions, are included in the Consolidated Statements
of Income.
10. EARNINGS PER SHARE
Primary earnings per share are determined by dividing net income, after
deducting preferred stock dividends net of related tax benefits ($21.4 in
1996, $21.6 in 1995 and 1994), by the weighted average number of common
shares outstanding (146.6 million in 1996, 145.2 million in 1995 and 146.2
million in 1994).
Earnings per common share assuming full dilution are calculated assuming
the conversion of all potentially dilutive securities, including
convertible preferred stock and outstanding options, unless the effect of
such conversion is antidilutive. This calculation also assumes reduction of
available income by pro forma ESOP replacement funding, net of income
taxes.
29
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. INCOME STATEMENT INFORMATION
Other expense, net consists of the following for the years ended December
31:
1996 1995 1994
------ ------ ------
Amortization of intangibles.......................... $ 91.7 $ 87.7 $ 56.3
Earnings from equity investments..................... (7.8) (7.3) (1.3)
Minority interest.................................... 33.4 37.1 37.8
Other................................................ (23.5) (21.4) (10.0)
------ ------ ------
$ 93.8 $ 96.1 $ 82.8
====== ====== ======
The following is a comparative summary of certain expense information for
the years ended December 31:
1996 1995 1994
------ ------ ------
Interest incurred...................................... $244.4 $250.7 $130.6
Interest capitalized................................... 12.7 14.7 9.7
------ ------ ------
Interest expense....................................... $231.7 $236.0 $120.9
====== ====== ======
Research and development............................... $162.7 $156.7 $147.1
Maintenance and repairs................................ 107.1 108.2 110.1
Media advertising...................................... 565.9 561.3 543.2
30
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. BALANCE SHEET INFORMATION
Supplemental balance sheet information is as follows:
INVENTORIES 1996 1995
----------- --------- ---------
Raw materials and supplies.............................. $ 311.5 $ 313.8
Work-in-process......................................... 34.3 38.3
Finished goods.......................................... 424.9 422.7
--------- ---------
$ 770.7 $ 774.8
========= =========
Inventories valued under LIFO amounted to $203.7 at December 31, 1996, and
$207.2 at December 31, 1995. The excess of current cost over LIFO cost at
the end of each year was $52.6 and $42.9, respectively.
PROPERTY, PLANT AND EQUIPMENT, NET 1996 1995
---------------------------------- --------- ---------
Land................................................... $ 126.4 $ 126.0
Buildings.............................................. 655.9 623.1
Machinery and equipment................................ 3,048.5 2,850.3
--------- ---------
3,830.8 3,599.4
Accumulated depreciation............................... (1,401.9) (1,444.2)
--------- ---------
$ 2,428.9 $ 2,155.2
========= =========
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 1996 1995
----------------------------------------- --------- ---------
Goodwill and other intangibles......................... $ 3,107.4 $ 3,037.0
Accumulated amortization............................... (387.0) (295.3)
--------- ---------
$ 2,720.4 $ 2,741.7
========= =========
OTHER ACCRUALS 1996 1995
-------------- --------- ---------
Accrued payroll and employee benefits.................. $ 293.0 $ 271.0
Accrued advertising.................................... 135.7 117.6
Accrued interest....................................... 48.6 46.0
Accrued taxes other than income taxes.................. 47.9 51.1
Restructuring accrual.................................. 115.2 100.0
Other.................................................. 136.4 110.6
--------- ---------
$ 776.8 $ 696.3
========= =========
OTHER LIABILITIES 1996 1995
----------------- --------- ---------
Minority interest...................................... $ 232.2 $ 214.1
Pension and other benefits............................. 393.9 411.7
Restructuring accrual.................................. 38.0 175.9
Other.................................................. 277.9 178.4
--------- ---------
$ 942.0 $ 980.1
========= =========
31
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
In assessing the fair value of financial instruments at December 31, 1996
and 1995, the Company has used available market information and other
valuation methodologies. Some judgment is necessarily required in
interpreting market data to develop the estimates of fair value, and,
accordingly, the estimates are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
The estimated fair value of the Company's financial instruments at December
31 are summarized as follows:
1996 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
Assets:
Cash and cash equivalents...... $ 248.2 $ 248.2 $ 208.8 $ 208.8
Marketable securities.......... 59.6 59.6 47.8 47.8
Long-term investments.......... 8.1 7.9 13.3 14.2
Liabilities:
Notes and loans payable........ (172.3) (172.3) (204.4) (204.4)
Long-term debt, including cur-
rent portion.................. (2,897.2) (2,980.6) (3,029.0) (3,161.1)
Other liabilities:
Foreign exchange contracts.... 4.0 4.8 .4 1.3
Interest rate instruments..... (10.3) (.4) (11.0) (68.1)
Equity:
Foreign exchange contracts to
hedge investment
in subsidiaries............... (1.7) (1.4) (2.3) (2.1)
FINANCIAL INSTRUMENTS AND RATE RISK MANAGEMENT
The Company utilizes interest rate agreements and foreign exchange
contracts to manage interest rate and foreign currency exposures. The
principal objective of such contracts is to moderate the effect of
fluctuations in interest rates and foreign exchange rates. The Company, as
a matter of policy, does not speculate in financial markets and therefore
does not hold these contracts for trading purposes. The Company
utilizes what it considers straightforward instruments, such as forward
foreign exchange contracts and non-leveraged interest rate swaps, to
accomplish its objectives.
The Company primarily uses interest rate swap agreements to effectively
convert a portion of its floating rate debt to fixed rate debt in order to
manage interest rate exposures in a manner consistent with achieving a
targeted fixed to variable interest rate ratio. The net effective cash
payment of these financial derivative instruments combined with the related
interest payments on the debt that they hedge are accounted for as interest
expense. Those interest rate instruments that do not qualify as hedge
instruments for accounting purposes are marked to market and carried on the
balance sheets at fair value. As of December 31, 1996 and 1995, the Company
had agreements outstanding with an aggregate notional amount of $1,210.9
and $1,142.2, respectively, with maturities through 2025.
The Company uses forward exchange contracts principally to hedge foreign
currency exposures associated with its net investment in foreign operations
and overseas debt. This hedging minimizes the impact of foreign exchange
rate movements on the Company's financial position. The terms of these
contracts are generally less than five years.
32
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1996 and 1995, the Company had approximately $676.9 and
$972.0, respectively, of outstanding foreign exchange contracts. At
December 31, 1996, approximately 15% of outstanding foreign exchange
contracts served to hedge net investments in foreign subsidiaries, 40%
hedged intercompany loans, 40% hedged third-party firm commitments and the
remaining 5% hedged certain transactions that are anticipated to settle in
accordance with their identified terms. The Company makes net settlements
for foreign exchange contracts at maturity, based on rates agreed to at
inception of the contracts.
Gains and losses from contracts that hedge the Company's investments in its
foreign subsidiaries are shown in the cumulative translation adjustments
account included in shareholders' equity. Gains and losses from contracts
that hedge firm commitments are recorded in the balance sheets as a
component of the related receivable or payable until realized, at which
time they are recognized in the statements of income.
The contracts that hedge anticipated sales and purchases do not qualify as
hedges for accounting purposes. Accordingly, the related gains and losses
are calculated using the current forward foreign exchange rates and are
recorded in the statements of income as other expense, net. These contracts
mature within 15 months.
The Company is exposed to credit loss in the event of nonperformance by
counterparties on interest rate agreements and foreign exchange contracts;
however, nonperformance by these counterparties is considered remote as it
is the Company's policy to contract only with counterparties that have a
long-term debt rating of A or higher. The amount of any such exposure is
generally the unrealized gain on such contracts, which at December 31, 1996
was not significant.
13. MARKET AND DIVIDEND INFORMATION
The Company's common stock and $4.25 Preferred Stock are listed on the New
York Stock Exchange. The trading symbol for the common stock is CL.
Dividends on the common stock have been paid every year since 1895, and the
amount of dividends paid per share has increased for 34 consecutive years.
MARKET PRICE
COMMON STOCK $4.25 PREFERRED STOCK
--------------------------- ---------------------------
QUARTER ENDED 1996 1995 1996 1995
------------- ------------- ------------- ------------- -------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ------ ------ ------ ------ ------
March 31............ $83.00 $68.88 $67.88 $58.63 $73.00 $69.00 $67.00 $62.00
June 30............. 85.63 75.38 77.00 66.25 71.50 67.50 71.00 64.50
September 30........ 88.75 78.13 73.13 65.75 69.00 64.50 71.00 67.50
December 31......... 95.50 86.00 76.38 66.13 72.00 65.50 72.00 69.00
Closing Price....... $92.25 $70.25 $70.00 $72.00
DIVIDENDS PAID PER SHARE
QUARTER ENDED 1996 1995 1996 1995
------------- ------ ------ ------ ------
March 31....................................... $ .47 $ .41 $1.0625 $1.0625
June 30........................................ .47 .41 1.0625 1.0625
September 30................................... .47 .47 1.0625 1.0625
December 31.................................... .47 .47 1.0625 1.0625
----- ----- ------- -------
Total.......................................... $1.88 $1.76 $4.25 $4.25
===== ===== ======= =======
33
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
1996
Net sales.......................... $2,053.7 $2,167.3 $2,230.6 $2,297.4
Gross profit....................... 1,003.3 1,061.0 1,094.8 1,138.8
Net income......................... 143.5 148.9 160.9 181.7
Earnings per common share:
Primary........................... .95 .98 1.06 1.20
Assuming full dilution (1)........ .89 .92 .99 1.12
1995
Net sales.......................... $1,980.3 $2,090.7 $2,134.4 $2,152.8
Gross profit....................... 969.8 980.1 1,024.7 1,030.5
Net income (loss).................. 156.5 143.2 (250.2) (2) 122.5
Earnings (loss) per common share:
Primary........................... 1.05 .95 (1.76) (2) .80
Assuming full dilution (1)........ .97 .88 (1.76) (2) .76
--------
(1) The sum of the quarterly fully diluted earnings (loss) per share
amounts is not equal to the full year because the computations of the
weighted average number of shares outstanding and the potential impact
of dilutive securities for each quarter and for the full year are
required to be made independently.
(2) The third quarter of 1995 includes a provision for restructured
operations of $460.5 ($369.2 aftertax) or $2.54 per share on a primary
basis and $2.50 per share on a fully diluted basis.
15. RESTRUCTURED OPERATIONS
In September 1995, the Company announced a major worldwide restructuring of
its manufacturing and administrative operations designed to further enhance
profitable growth over the next several years by generating significant
efficiencies and improving competitiveness. As a result of this
rationalization, 24 of the 112 factories worldwide will be closed or
significantly reconfigured of which 14 had been closed or reconfigured at
the end of 1996.
The changes are expected to be substantially completed during 1997 in
facilities around the world, but primarily in North America and Europe. The
charge includes employee termination costs, expenses associated with the
realignment of the Company's global manufacturing operations as well as
settlement of contractual obligations.
The worldwide restructuring program resulted in a 1995 pretax charge of
$460.5 ($369.2 net of tax) or $2.54 per share for the year.
A summary of the restructuring reserve established is as follows:
BALANCE AT BALANCE AT
ORIGINAL UTILIZED DECEMBER 31, UTILIZED DECEMBER 31,
RESERVE IN 1995 1995 IN 1996 1996
-------- -------- ------------ -------- ------------
Workforce............... $210.0 $ (4.2) $205.8 $ (93.4) $112.4
Manufacturing plants.... 204.1 (7.2) 196.9 (118.6) 78.3
Settlement of contrac-
tual obligations....... 46.4 (13.5) 32.9 (20.4) 12.5
------ ------ ------ ------- ------
$460.5 $(24.9) $435.6 $(232.4) $203.2
====== ====== ====== ======= ======
34
COLGATE-PALMOLIVE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Of the restructuring reserve remaining as of December 31, 1996 and 1995,
$115.2 and $100.0, respectively, is classified as a current liability,
$38.0 and $175.9, respectively, as a noncurrent liability, and $50.0 and
$159.7, respectively, as a reduction of fixed assets.
16. COMMITMENTS AND CONTINGENCIES
Minimum rental commitments under noncancellable operating leases, primarily
for office and warehouse facilities, are $70.0 in 1997, $58.4 in 1998,
$51.7 in 1999, $47.5 in 2000, $44.7 in 2001 and $193.1 for years
thereafter. Rental expense amounted to $93.3 in 1996, $91.8 in 1995 and
$83.4 in 1994. Contingent rentals, sublease income and capital leases,
which are included in fixed assets, are not significant.
The Company has various contractual commitments to purchase raw materials,
products and services totaling $123.4 that expire through 1998.
The Company is a party to various superfund and other environmental matters
and is contingently liable with respect to lawsuits, taxes and other
matters arising out of the normal course of business. Management
proactively reviews and manages its exposure to, and the impact of,
environmental matters. While it is possible that the Company's cash flows
and results of operations in particular quarterly or annual periods could
be affected by the one-time impacts of the resolution of such
contingencies, it is the opinion of management that the ultimate
disposition of these matters, to the extent not previously provided for,
will not have a material impact on the Company's financial condition or
ongoing cash flows and results of operations.
As discussed in Note 3, the acquisition of Kolynos was reviewed by
antitrust regulatory authorities in Brazil. The antitrust regulatory
authorities in Brazil approved the acquisition subject to certain
conditions. The Company is currently negotiating undertakings related to
those conditions with the Brazilian authorities. Among other things, those
undertakings would result in the substitution by the Company of a new
toothpaste brand for Kolynos in Brazil for four years and the Company
contract manufacturing toothpaste in Brazil for third parties during this
period.
17. SUBSEQUENT EVENT
On March 6, 1997, the Company's Board of Directors approved a two-for-one
common stock split effected in the form of a 100% stock dividend. As a
result of the split, shareholders will receive one additional share of
Colgate common stock for each share they hold as of April 25, 1997. Par
value will remain at $1 per share. Giving retroactive effect for the stock
split, common shares issued as of December 31, 1996 would have been
366,426,590. Earnings per share, after giving retroactive effect to the
two-for-one split, are presented below for each of the three years ended
December 31:
1996 1995 1994
----- ----- -----
Primary.................................................... $2.09 $0.52 $1.91
Fully Diluted.............................................. 1.95 0.51 1.78
Financial information contained elsewhere in this report has not been
adjusted to reflect the impact of the common stock split.
35
COLGATE-PALMOLIVE COMPANY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN MILLIONS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ---------------- ---------- ---------
ADDITIONS
----------------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES OTHER DEDUCTIONS OF PERIOD
----------- ---------- ---------- ----- ---------- ---------
Allowance for doubtful ac-
counts....................... $ 31.9 $11.8 $ -- $9.9(1) $ 33.8
====== ===== ===== ==== ======
Accumulated amortization of
goodwill and other
intangibles.................. $295.3 $91.7 $ -- $-- $387.0
====== ===== ===== ==== ======
Valuation allowance for de-
ferred tax assets............ $118.2 $ -- $ -- $3.3(2) $114.9
====== ===== ===== ==== ======
- --------
NOTES:
(1) Uncollectible accounts written off and cash discounts allowed.
(2) Increase/decrease in allowance for tax loss and tax credit carryforward
benefits which more likely than not will not be utilized in the future.
36
COLGATE-PALMOLIVE COMPANY
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ----------------- ---------- ---------
ADDITIONS
-----------------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES OTHER DEDUCTIONS OF PERIOD
----------- ---------- ---------- ----- ---------- ---------
Allowance for doubtful ac-
counts.................... $ 23.1 $12.5 $ 4.4(4) $ 8.1(1) $ 31.9
====== ===== ===== ===== ======
Accumulated amortization of
goodwill and
other intangibles......... $207.6 $87.7 $ -- $ -- $295.3
====== ===== ===== ===== ======
Valuation allowance for de-
ferred tax assets......... $ 32.4 $69.9(3) $24.4(2) $ 8.5(2) $118.2
====== ===== ===== ===== ======
- --------
NOTES:
(1) Uncollectible accounts written off and cash discounts allowed.
(2) Increase/decrease in allowance for tax loss and tax credit carryforward
benefits which more likely than not will not be utilized in the future.
(3) Allowance for tax benefits from restructured operations in certain
jurisdictions not expected to be realized.
(4) Other adjustments.
37
COLGATE-PALMOLIVE COMPANY
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN MILLIONS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ----------------- ---------- ---------
ADDITIONS
-----------------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES OTHER DEDUCTIONS OF PERIOD
----------- ---------- ---------- ----- ---------- ---------
$5.6(1)
.6(3)
----
Allowance for doubtful ac-
counts....................... $ 24.9 $ 4.4 $ -- $6.2 $ 23.1
====== ===== ===== ==== ======
Accumulated amortization of
goodwill and other
intangibles.................. $151.2 $56.4 $ -- $-- $207.6
====== ===== ===== ==== ======
Valuation allowance for de-
ferred tax assets............ $ 28.3 $ 4.1(2) $ -- $-- $ 32.4
====== ===== ===== ==== ======
- --------
NOTES:
(1) Uncollectible accounts written off and cash discounts allowed.
(2) Allowance for tax loss and tax credit carryforward benefits which more
likely than not will not be utilized in the future.
(3) Other adjustments.
38
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Colgate-Palmolive Company:
We have audited the accompanying consolidated balance sheets of Colgate-
Palmolive Company (a Delaware corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of income, retained
earnings, changes in capital accounts and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements and
the schedules referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Colgate-Palmolive Company
and subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. The schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/S/ ARTHUR ANDERSEN LLP
New York, New York
March 6, 1997
39
COLGATE-PALMOLIVE COMPANY
HISTORICAL FINANCIAL SUMMARY*(1)
Dollars in Millions Except Per Share Amounts
1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- --------
OPERATIONS
Net sales................ $8,749.0 $8,358.2 $7,587.9 $7,141.3 $7,007.2 $6,060.3 $5,691.3 $5,038.8 $4,734.3
Results of operations:
Net income.............. 635.0 172.0(2) 580.2(3) 189.9(4) 477.0 124.9(5) 321.0 280.0 152.7(6)
Per share, primary...... 4.19 1.04(2) 3.82(3) 1.08(4) 2.92 .77(5) 2.28 1.98 1.11(6)
Per share assuming full
dilution............... 3.90 1.02(2) 3.56(3) 1.05(4) 2.74 .75(5) 2.12 1.90 1.10(6)
Depreciation and
amortization expense.... 316.3 300.3 235.1 209.6 192.5 146.2 126.2 97.0 82.0
FINANCIAL POSITION
Working capital.......... 468.0 607.1 648.5 676.4 635.6 596.0 516.0 907.5 710.9
Current ratio............ 1.2 1.3 1.4 1.5 1.5 1.5 1.4 1.9 1.7
Property, plant and
equipment, net.......... 2,428.9 2,155.2 1,988.1 1,766.3 1,596.8 1,394.9 1,362.4 1,105.4 1,021.6
Capital expenditures..... 459.0 431.8 400.8 364.3 318.5 260.7 296.8 210.0 238.7
Total assets............. 7,901.5 7,642.3 6,142.4 5,761.2 5,434.1 4,510.6 4,157.9 3,536.5 3,217.6
Long-term debt........... 2,786.8 2,992.0 1,751.5 1,532.4 946.5 850.8 1,068.4 1,059.5 674.3
Shareholders' equity..... 2,034.1 1,679.8 1,822.9 1,875.0 2,619.8 1,866.3 1,363.6 1,123.2 1,150.6
SHARE AND OTHER
Book value per common
share................... 13.68 11.34 12.45 12.40 16.21 12.54 10.12 8.39 8.24
Cash dividends declared
and paid per common
share 1.88 1.76 1.54 1.34 1.15 1.02 .90 .78 .74(7)
Closing price............ 92.25 70.25 63.38 62.38 55.75 48.88 36.88 31.75 23.50
Number of common shares
outstanding (in
millions)............... 147.1 145.8 144.4 149.3 160.2 147.3 133.2 132.2 138.1
Number of shareholders of
record:
$4.25 Preferred......... 350 380 400 450 470 460 500 500 550
Common.................. 45,500 46,600 44,100 40,300 36,800 34,100 32,000 32,400 33,200
Average number of
employees............... 37,900 38,400 32,800 28,000 28,800 24,900 24,800 24,100 24,700
1987
-----------
OPERATIONS
Net sales................ $4,365.7
Results of operations:
Net income.............. .9(8)
Per share, primary...... .01(8)
Per share assuming full
dilution............... .01(8)
Depreciation and
amortization expense.... 70.1
FINANCIAL POSITION
Working capital.......... 439.5
Current ratio............ 1.3
Property, plant and
equipment, net.......... 1,201.8
Capital expenditures..... 285.8
Total assets............. 3,227.7
Long-term debt........... 694.1
Shareholders' equity..... 941.1
SHARE AND OTHER
Book value per common
share................... 6.77
Cash dividends declared
and paid per common
share .695
Closing price............ 19.63
Number of common shares
outstanding (in
millions)............... 137.2
Number of shareholders of
record:
$4.25 Preferred......... 600
Common.................. 33,900
Average number of
employees............... 37,400
- --------
* On March 6, 1997, the Board of Directors approved a two-for-one common
stock split. Financial information has not been adjusted to reflect the
impact of the split.
(1) All share and per share amounts have been restated to reflect the 1991
two-for-one stock split.
(2) Income in 1995 includes a net provision for restructured operations of
$369.2 ($2.54 per share on a primary basis or $2.50 per share on a fully
diluted basis).
(3) Income in 1994 includes a one-time charge of $5.2 for the sale of a non-
core business, Princess House.
(4) Income in 1993 includes a one-time impact of adopting new mandated
accounting standards, effective in the first quarter of 1993, of $358.2
($2.30 per share on a primary basis or $2.10 per share on a fully diluted
basis).
(5) Income in 1991 includes a net provision for restructured operations of
$243.0 ($1.80 per share on a primary basis or $1.75 per share on a fully
diluted basis).
(6) Income in 1988 includes Hill's service agreement renegotiation net charge
of $42.0 ($.30 per share on both a primary and fully diluted basis).
(7) Due to timing differences, 1988 includes three dividend declarations
totaling $.55 per share and four payments totaling $.74 per share while
all other years include four dividend declarations.
(8) Income in 1987 includes a net provision for restructured operations of
$144.8 ($1.06 per share on a primary basis or $1.05 per share on a fully
diluted basis).
40
COLGATE-PALMOLIVE COMPANY
EXHIBITS TO FORM 10-K
YEAR ENDED DECEMBER 31,1996
COMMISSION FILE NO. 1-644
41
EXHIBIT NO. DESCRIPTION
----------- -----------
3-A Restated Certificate of Incorporation, as amended.
(Registrant hereby incorporates by reference Exhibit 1 to
its Form 8-K dated October 17, 1991, File No. 1-644-2.)
3-B By-laws. (Registrant hereby incorporates by reference
Exhibit 3-B to Amendment No. 1 to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994,
File No. 1-644-2.)
4-A Rights agreement dated as of October 13, 1988 between
registrant and Morgan Shareholder Services Trust Company.
(Registrant hereby incorporates by reference Exhibit I to
its Form 8-A dated October 21, 1988, File No. 1-644-2.)
4-B a) Other instruments defining the rights of security holders,
including indentures.*
b) Colgate-Palmolive Company Employee Stock Ownership Trust
Note Agreement dated as of June 1, 1989. (Registrant hereby
incorporates by reference Exhibit 4-B (b) to its Annual
Report on Form 10-K for the year ended December 31, 1989,
File No. 1-644-2.)
10-A Colgate-Palmolive Company 1977 Stock Option Plan, as
amended. (Registrant hereby incorporates by reference
Exhibit 10-A to its Annual Report on Form 10-K for the year
ended December 31, 1986, File No. 1-644-2.)
10-B a) Colgate-Palmolive Company Executive Incentive Compensation
Plan, as amended. (Registrant hereby incorporates by
reference Exhibit 10-B (a) to its Annual Report on Form 10-K
for the year ended December 31, 1994, File No. 1-644-2.)
b) Colgate-Palmolive, as amended Company Executive Incentive
Compensation Plan Trust. (Registrant hereby incorporates by
reference Exhibit 10-B (b) to its Annual Report on Form 10-K
for the year ended December 31, 1987, File No. 1-644-2.)
10-C a) Colgate-Palmolive Company Supplemental Salaried Employees
Retirement Plan (Registrant hereby incorporates by reference
Exhibit 10-E (Plan only) to its, Annual Report on Form 10-K
for the year ended December 31, 1984, File No. 1-644-2.)
b) Colgate-Palmolive Company Supplemental Spouse's Benefit
Trust. (Registrant hereby incorporates by reference Exhibit
10-C (b) to its Annual Report on Form 10-K for the year
ended December 31, 1987, File No. 1-644-2.)
10-D a) Lease dated August 15, 1978 between Harold Uris, d/b/a Uris
Holding Company, and Colgate-Palmolive Company. (Registrant
hereby incorporates by reference Exhibit 2(b) to its Annual
Report on Form 10-K for the year ended December 31, 1978,
File No. 1-644-2.)
b) First Supplemental Amendment dated as of January 1, 1989,
between The Bank of New York as trustee under the will of
Harold D. Uris, deceased, d/b/a Uris Holding Company, and
Colgate-Palmolive Company. (Registrant hereby incorporates
by reference Exhibit 10-D (b) to its Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, File No. 1-
644.)
c) Second Supplemental Agreement dated as of March 15, 1995,
between The Bank of New York as trustee under the will of
Harold D. Uris, deceased, and Colgate-Palmolive Company.
(Registrant hereby incorporates by reference Exhibit 10-D
(c) to its Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, File No. 1-644.)
10-E a) Colgate-Palmolive Company Executive Severance Plan, as
amended.
b) Colgate-Palmolive Company Executive Severance Plan Trust.
(Registrant hereby incorporates by reference Exhibit 10-E
(b) to its Annual Report on Form 10-K for the year ended
December 31, 1987, File No. 1-644-2.)
10-F Colgate-Palmolive Company Pension Plan for Outside
Directors, as amended. (Registrant hereby incorporates by
reference Exhibit 10-F to its Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996, File No. 1-644.)
EXHIBIT NO. DESCRIPTION
----------- -----------
10-G Colgate-Palmolive Company Stock Plan for Non-Employee
Directors. (Registrant hereby incorporates by reference
Exhibit 10-G to its Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, File No. 1-644.)
10-H Colgate-Palmolive Company Restated and Amended Deferred
Compensation Plan for Non-Employee Directors. (Registrant
hereby incorporates by reference Exhibit 10-H to its Annual
Report on Form 10-K for the year ended December 31, 1991,
File No. 1-644-2.)
10-I Career Achievement Plan. (Registrant hereby incorporates by
reference Exhibit 10-I to its Annual Report on Form 10-K for
the year ended December 31, 1986, File No. 1-644-2.)
10-J Colgate-Palmolive Company 1987 Stock Option Plan, as
amended. (Registrant hereby incorporates by reference
Exhibit 10-J to its Annual Report on Form 10-K for the year
ended December 31, 1992, File No. 1-644-2.)
10-K Stock incentive agreement between Colgate-Palmolive Company
and Reuben Mark, Chairman and Chief Executive Officer, dated
January 13, 1993, pursuant to the Colgate-Palmolive Company
1987 Stock Option Plan, as amended. (Registrant hereby
incorporates by reference Exhibit 10-N to its Annual Report
on Form 10-K for the year ended December 31, 1993, File No.
1-644-2.)
10-L Purchase Agreement among American Home Products Corporation,
Colgate-Palmolive Company and KAC Corp. dated as of January
9, 1995. (Registrant herebY incorporates by reference
Exhibit 2 to its Current Report on Form 8-K dated January
10, 1995, File No. 1-644-2.)
10-M Colgate-Palmolive Company Non-Employee Director Stock Option
Plan.
10-N U.S. $900,000,000 Five Year Credit Agreement dated as of
March 24, 1995. (Registrant hereby incorporates by reference
Exhibit 10-O to its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, File No. 1-644-2.)
10-O U.S. $1,000,000,000 364 Day Credit Agreement dated as of
March 24, 1995. (Registrant hereby incorporates by reference
Exhibit 10-P to its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, File No. 1-644-2.)
10-P Amendment No. 1, dated as of March 22, 1996, to the U.S.
$900,000,000 Five Year Credit Agreement, dated as of March
24, 1995. (Registrant hereby incorporates by reference
Exhibit 10-P to its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, Filed No. 1-664.)
10-Q Amendment No. 1, dated as of March 22, 1996, to the U.S.
$1,000,000,000 364 Day Credit Agreement, dated as of March
24, 1995. (Registrant hereby incorporates by reference
Exhibit 10-Q to its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, Filed No. 1-664.)
10-R Amendment No. 2, dated as of March 23, 1996, to the U.S.
$900,000,000 Five Year Credit Agreement, dated as of March
24, 1995. (Registrant hereby incorporates by reference
Exhibit 10-R to its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, Filed No. 1-664.)
10-S Colgate-Palmolive Company 1996 Stock Option Plan.
(Registrant hereby incorporates by reference Exhibit 10-V to
its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, Filed No. 1-664.)
11 Statement re Computation of Earnings Per Common Share.
12 Statement re Computation of Ratio of Earnings to Fixed
Charges.
21 Subsidiaries of the Registrant.
EXHIBIT NO. DESCRIPTION
----------- -----------
23 Consent of Independent Public Accountants.
24 Powers of Attorney.
27 Financial Data Schedule.
- --------
* Registrant hereby undertakes upon request to furnish the Commission with a
copy of any instrument with respect to long-term debt where the total
amount of securities authorized thereunder does not exceed 10% of the total
assets of the registrant and its subsidiaries on a consolidated basis.
The exhibits indicated above which are not included with the Form 10-K are
available upon request and payment of a reasonable fee approximating the
registrant's cost of providing and mailing the exhibits. Inquiries should be
directed to:
Colgate-Palmolive Company
Office of the Secretary (10-K Exhibits)
300 Park Avenue
New York, New York 10022-7499