Colgate Announces 2nd Quarter 2016 Results
Net income and Diluted earnings per share in second quarter 2016 were
Net income and Diluted earnings per share in second quarter 2015 were
Excluding charges resulting from the 2012 Restructuring Program in both
periods, a net benefit related to a foreign tax matter in 2016 and
charges related to an effective devaluation in
Gross profit margin was 59.9% in second quarter 2016 versus 58.2% in
second quarter 2015. Excluding charges from the 2012 Restructuring
Program in both periods, Gross profit margin was 60.2% in second quarter
2016, an increase of 190 basis points versus the year ago quarter. This
increase was primarily driven by cost savings from the Company's
funding-the-growth initiatives and the 2012 Restructuring Program and
higher pricing, partially offset by higher raw and packaging material
costs, which included foreign exchange transaction costs and the impact
of the deconsolidation of the Company's Venezuelan operations effective
Selling, general and administrative expenses were 34.3% of Net sales in
second quarter 2016 versus 34.0% of Net sales in second quarter 2015.
Excluding charges from the 2012 Restructuring Program in both periods,
Selling, general and administrative expenses increased by 30 basis
points to 34.0% of Net sales in second quarter 2016, due to higher
overhead expenses. Worldwide advertising investment decreased 4% to
Operating profit increased to
Net cash provided by operations year-to-date was
"In the face of continued challenging macroeconomic conditions worldwide, we are pleased to have achieved another quarter of strong organic sales growth, with every operating division contributing. The 4.5% worldwide organic sales growth was led by emerging markets where organic sales grew a strong 6.5%, despite economic challenges in several countries.
"Gross profit margin, operating profit margin and net income as a percent to sales all increased versus the year ago period.
"Colgate's leadership of the global toothpaste market continued during the quarter with its global market share now at 43.8% year-to-date. Our global leadership in manual toothbrushes also continued with Colgate's global market share in that category now at 33.5% year-to-date."
In closing,
"On a GAAP basis, based on current spot rates, we are planning for a year of gross margin expansion and expect high double-digit earnings per share growth, reflecting the impact of the 2015 charge related to the deconsolidation of our Venezuelan operations.
"Excluding the 2015 and 2016 items noted above, based on current spot
rates, we continue to plan for a year of gross margin expansion, and
continue to expect earnings per share to be flat with 2015 on a dollar
basis. This reflects a double-digit increase in earnings per share on a
currency-neutral basis, excluding
At
The following are comments about divisional performance for second quarter 2016 versus the year ago period. See attached Geographic Sales Analysis Percentage Changes and Segment Information tables for additional information on divisional net sales and operating profit.
North America Net sales increased 2.0% in second quarter 2016. Unit volume increased 3.5% with 1.5% lower pricing, while foreign exchange was even with the year ago quarter. Organic sales increased 2.0% during the quarter.
Operating profit in
In the
Successful new products driving volume growth in the
Latin America Net sales decreased 16.5% in second quarter 2016. Unit
volume decreased 13.5% with 9.5% higher pricing, while foreign exchange
was negative 12.5%. Excluding the impact of the deconsolidation of the
Company's Venezuelan operations, unit volume was even with the year ago
quarter as volume gains in
Operating profit in
Colgate strengthened its leadership in toothpaste throughout
Products in other categories contributing to growth throughout the
region include
Europe Net sales increased 0.5% in second quarter 2016. Unit volume
increased 4.0%, pricing decreased 3.0% and foreign exchange was negative
0.5%. Volume gains were led by the
Operating profit in
Colgate maintained its oral care leadership in
Premium innovations contributing to volume growth in other product categories include Sanex Advanced shower oils and body balms, Palmolive Naturals and Palmolive Gourmet shower gels, Palmolive Sensorials line of dish liquids, Palmolive Skin Garden shower gel, bath foam, liquid hand soap, bar soap and body lotion, Sanex Men shower gel and deodorant, Ajax Kitchen Specialist line of spray cleaners and Soupline Complete Care fabric conditioner.
Asia Pacific Net sales decreased 7.0% during second quarter 2016. Unit
volume decreased 3.0%, pricing increased 1.0% and foreign exchange was
negative 5.0%. Excluding divested businesses, unit volume increased
1.0%. Volume gains led by
Operating profit in
Colgate continued its toothpaste leadership in the
Successful products contributing to volume growth in other categories in
the region include
Operating profit in
Colgate continued its toothpaste leadership in
Hill's Pet Nutrition (15% of Company Sales)
Hill's Net sales increased 3.5% in second quarter 2016. Unit volume
increased 1.5% with 2.5% higher pricing, while foreign exchange was
negative 0.5%. Volume gains were led by
Hill's Operating profit increased 11% in second quarter 2016 to
Successful products driving volume growth in the
Successful products driving volume growth internationally include Hill's Prescription Diet Metabolic + Mobility and Metabolic + Urinary, Hill's Prescription Diet Derm Defense, Hill's Prescription Diet i/d Stress and i/d Sensitive, Hill's Science Diet Urinary and Hill's Science Diet Perfect Weight.
***
About
Market Share Information
Management uses market share information as a key indicator to monitor
business health and performance. References to market share in this
press release are based on a combination of consumption and market share
data provided by third-party vendors, primarily Nielsen, and internal
estimates. All market share references represent the percentage of the
dollar value of sales of our products, relative to all product sales in
the category in the countries in which the Company competes and
purchases data (excluding
Cautionary Statement on Forward-Looking Statements
This press release and the related webcast may contain forward-looking
statements. Such statements may relate, for example, to sales or volume
growth, organic sales growth, profit or profit margin growth, earnings
per share growth (including on a currency-neutral basis), financial
goals, the impact of foreign exchange volatility, cost-reduction plans
including the 2012 Restructuring Program, tax rates, new product
introductions or commercial investment levels, among other matters.
These statements are made on the basis of our views and assumptions as
of this time and we undertake no obligation to update these statements
except as required by law. We caution investors that any such
forward-looking statements are not guarantees of future performance and
that actual events or results may differ materially from those
statements. Investors should consult the Company's filings with the
Non-GAAP Financial Measures
The following provides information regarding the non-GAAP financial measures used in this earnings release and/or the related webcast:
This release discusses Net sales growth (GAAP) and organic sales growth,
which is Net sales growth excluding the impact of foreign exchange,
acquisitions, divestments and the deconsolidation of the Company's
Venezuelan operations (non-GAAP). Management believes the organic sales
growth measure provides investors and analysts with useful supplemental
information regarding the Company's underlying sales trends by
presenting sales growth excluding the external factor of foreign
exchange as well as the impact from acquisitions, divestments and the
deconsolidation of the Company's Venezuelan operations. See "Geographic
Sales Analysis Percentage Changes" for the three and six months ended
To supplement Colgate's Condensed Consolidated Statements of Income
presented in accordance with GAAP, the Company has disclosed non-GAAP
measures of operating results that exclude certain items. Worldwide
Gross profit, Gross profit margin, Selling, general and administrative
expenses, Selling, general and administrative expenses as a percentage
of Net sales, Other (income) expense, net, Operating profit, Operating
profit margin, Effective income tax rate, Net income attributable to
The Company uses these financial measures internally in its budgeting process and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company's underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.
The Company defines free cash flow before dividends as Net cash provided
by operations less Capital expenditures. As management uses this measure
to evaluate the Company's ability to satisfy current and future
obligations, repurchase stock, pay dividends and fund future business
opportunities, the Company believes that it provides useful information
to investors. Free cash flow before dividends is not a measure of cash
available for discretionary expenditures since the Company has certain
non-discretionary obligations such as debt service that are not deducted
from the measure. Free cash flow before dividends is not a GAAP
measurement and may not be comparable to similarly titled measures
reported by other companies. See "Condensed Consolidated Statements of
Cash Flows" for the six months ended
Explanatory Note Regarding Currency-Neutral Calculations
Diluted earnings per share growth for second quarter 2016, on a
currency-neutral basis, eliminates from Diluted earnings per share
growth (GAAP) charges resulting from the 2012 Restructuring Program, a
charge related to an effective devaluation in
Management's estimate of earnings per share growth on a currency-neutral
basis for full year 2016 eliminates from earnings per share growth
(GAAP) a charge related to the change of accounting for the Company's
Venezuelan subsidiary, charges resulting from the 2012 Restructuring
Program, charges related to effective devaluations in
(See attached tables for second quarter results.)
|
Table 1 | |||||||
|
||||||||
Condensed Consolidated Statements of Income | ||||||||
For the Three Months Ended |
||||||||
(Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||
2016 | 2015 | |||||||
Net sales | $ | 3,845 | $ | 4,066 | ||||
Cost of sales | 1,541 | 1,699 | ||||||
Gross profit | 2,304 | 2,367 | ||||||
Gross profit margin | 59.9 | % | 58.2 | % | ||||
Selling, general and administrative expenses | 1,320 | 1,381 | ||||||
Other (income) expense, net | 40 | 54 | ||||||
Operating profit |
944 | 932 | ||||||
|
||||||||
Operating profit margin | 24.6 | % | 22.9 | % | ||||
Interest (income) expense, net | 25 | 6 | ||||||
Income before income taxes |
919 | 926 | ||||||
Provision for income taxes | 281 | 310 | ||||||
Effective tax rate | 30.6 | % | 33.5 | % | ||||
Net income including noncontrolling interests |
638 | 616 | ||||||
Less: Net income attributable to noncontrolling interests | 38 | 42 | ||||||
Net income attributable to |
$ | 600 | $ | 574 | ||||
Earnings per common share |
||||||||
Basic | $ | 0.67 | $ | 0.63 | ||||
Diluted | $ | 0.67 | $ | 0.63 | ||||
Average common shares outstanding | ||||||||
Basic | 893.9 | 904.6 | ||||||
Diluted | 901.1 | 912.4 | ||||||
|
Table 2 | |||||||
|
||||||||
Condensed Consolidated Statements of Income | ||||||||
For the Six Months Ended |
||||||||
(Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||
2016 | 2015 | |||||||
Net sales | $ | 7,607 | $ | 8,136 | ||||
Cost of sales | 3,055 | 3,377 | ||||||
Gross profit | 4,552 | 4,759 | ||||||
Gross profit margin | 59.8 | % | 58.5 | % | ||||
Selling, general and administrative expenses | 2,674 | 2,831 | ||||||
Other (income) expense, net | 67 | 136 | ||||||
Operating profit | 1,811 | 1,792 | ||||||
Operating profit margin | 23.8 | % | 22.0 | % | ||||
Interest (income) expense, net | 53 | 14 | ||||||
Income before income taxes | 1,758 | 1,778 | ||||||
Provision for income taxes | 546 | 579 | ||||||
Effective tax rate | 31.1 | % | 32.6 | % | ||||
Net income including noncontrolling interests | 1,212 | 1,199 | ||||||
Less: Net income attributable to noncontrolling interests | 79 | 83 | ||||||
Net income attributable to |
$ | 1,133 | $ | 1,116 | ||||
Earnings per common share | ||||||||
Basic | $ | 1.27 | $ | 1.23 | ||||
Diluted | $ | 1.26 | $ | 1.22 | ||||
Average common shares outstanding | ||||||||
Basic | 893.8 | 906.1 | ||||||
Diluted | 900.7 | 914.4 | ||||||
|
Table 3 | |||||||||||
|
||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||
As of |
||||||||||||
(Dollars in Millions) (Unaudited) | ||||||||||||
|
|
|
||||||||||
2016 | 2015 | 2015 | ||||||||||
Cash and cash equivalents | $ | 1,085 | $ | 970 | $ | 1,059 | ||||||
Receivables, net | 1,575 | 1,427 | 1,691 | |||||||||
Inventories | 1,232 | 1,180 | 1,324 | |||||||||
Other current assets | 722 | 807 | 914 | |||||||||
Property, plant and equipment, net | 3,825 | 3,796 | 4,039 | |||||||||
Other assets, including goodwill and intangibles** | 4,076 | 3,755 | 4,613 | |||||||||
Total assets | $ | 12,515 | $ | 11,935 | $ | 13,640 | ||||||
Total debt** | $ | 6,572 | $ | 6,548 | $ | 6,663 | ||||||
Other current liabilities | 3,718 | 3,232 | 3,709 | |||||||||
Other non-current liabilities | 2,191 | 2,199 | 2,511 | |||||||||
Total liabilities | 12,481 | 11,979 | 12,883 | |||||||||
|
(281 | ) | (299 | ) | 454 | |||||||
Noncontrolling interests | 315 | 255 | 303 | |||||||||
Total liabilities and shareholders' equity | $ | 12,515 | $ | 11,935 | $ | 13,640 | ||||||
Supplemental Balance Sheet Information | ||||||||||||
Debt less cash, cash equivalents and marketable securities* | $ | 5,274 | $ | 5,476 | $ | 5,356 | ||||||
Working capital % of sales | (2.6 | )% | 0.5 | % | (0.2 | )% | ||||||
* |
Marketable securities of |
|
** | To conform to the current year presentation required by the FASB Accounting Standards Update ("ASU") No. 2015-03 "Simplifying the Presentation of Debt Issuance Costs," prior period balances of debt issuance costs have been reclassified from Other assets, including goodwill and intangibles and are now presented as a direct deduction to Total debt. | |
|
Table 4 | |||||||
|
||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
For the Six Months Ended |
||||||||
(Dollars in Millions) (Unaudited) | ||||||||
2016 | 2015 | |||||||
Operating Activities | ||||||||
Net income including noncontrolling interests | $ | 1,212 | $ | 1,199 | ||||
Adjustments to reconcile net income including noncontrolling
interests to net cash provided by |
||||||||
Depreciation and amortization | 215 | 225 | ||||||
Restructuring and termination benefits, net of cash | 8 | 59 | ||||||
|
- | 16 | ||||||
Stock-based compensation expense | 48 | 51 | ||||||
Deferred income taxes | (41 | ) | (60 | ) | ||||
Voluntary benefit plan contribution | (50 | ) | - | |||||
Cash effects of changes in: | ||||||||
Receivables | (132 | ) | (222 | ) | ||||
Inventories | (35 | ) | 8 | |||||
Accounts payable and other accruals | 69 | (77 | ) | |||||
Other non-current assets and liabilities | 26 | 24 | ||||||
Net cash provided by operations | 1,320 | 1,223 | ||||||
Investing Activities | ||||||||
Capital expenditures | (248 | ) | (280 | ) | ||||
Purchases of marketable securities and investments | (183 | ) | (365 | ) | ||||
Proceeds from sale of marketable securities and investments | 87 | 195 | ||||||
Other | 4 | 12 | ||||||
Net cash used in investing activities | (340 | ) | (438 | ) | ||||
Financing Activities | ||||||||
Principal payments on debt | (4,078 | ) | (4,178 | ) | ||||
Proceeds from issuance of debt | 4,123 | 4,686 | ||||||
Dividends paid | (704 | ) | (689 | ) | ||||
Purchases of treasury shares | (482 | ) | (767 | ) | ||||
Proceeds from exercise of stock options and excess tax benefits | 274 | 192 | ||||||
Net cash used in financing activities | (867 | ) | (756 | ) | ||||
Effect of exchange rate changes on Cash and cash equivalents | 2 | (59 | ) | |||||
Net increase (decrease) in Cash and cash equivalents | 115 | (30 | ) | |||||
Cash and cash equivalents at beginning of the period | 970 | 1,089 | ||||||
Cash and cash equivalents at end of the period | $ | 1,085 | $ | 1,059 | ||||
Supplemental Cash Flow Information | ||||||||
Free cash flow before dividends (Net cash provided by operations less Capital expenditures) | ||||||||
Net cash provided by operations | $ | 1,320 | $ | 1,223 | ||||
Less: Capital expenditures | (248 | ) | (280 | ) | ||||
Free cash flow before dividends | $ | 1,072 | $ | 943 | ||||
Income taxes paid | $ | 507 | $ | 640 | ||||
|
Table 5 | |||||||||||||||
|
||||||||||||||||
Segment Information | ||||||||||||||||
For the Three and Six Months Ended |
||||||||||||||||
(Dollars in Millions) (Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
|
||||||||||||||||
Oral, Personal and Home Care | ||||||||||||||||
|
$ | 793 | $ | 780 | $ | 1,593 | $ | 1,569 | ||||||||
|
938 | 1,126 | 1,786 | 2,213 | ||||||||||||
|
606 | 602 | 1,194 | 1,212 | ||||||||||||
|
697 | 752 | 1,440 | 1,544 | ||||||||||||
|
239 | 254 | 470 | 508 | ||||||||||||
Total Oral, Personal and Home Care | 3,273 | 3,514 | 6,483 | 7,046 | ||||||||||||
Pet Nutrition | 572 | 552 | 1,124 | 1,090 | ||||||||||||
Total |
$ | 3,845 | $ | 4,066 | $ | 7,607 | $ | 8,136 | ||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Operating Profit |
||||||||||||||||
Oral, Personal and Home Care | ||||||||||||||||
|
$ | 250 | $ | 223 | $ | 489 | $ | 441 | ||||||||
|
284 | 321 | 531 | 629 | ||||||||||||
|
138 | 147 | 279 | 294 | ||||||||||||
|
219 | 217 | 438 | 447 | ||||||||||||
|
45 | 45 | 88 | 84 | ||||||||||||
Total Oral, Personal and Home Care | 936 | 953 | 1,825 | 1,895 | ||||||||||||
Pet Nutrition | 162 | 146 | 317 | 293 | ||||||||||||
Corporate(1) | (154 | ) | (167 | ) | (331 | ) | (396 | ) | ||||||||
Total Operating Profit |
$ | 944 | $ | 932 | $ | 1,811 | $ | 1,792 | ||||||||
Note: |
(1) Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs, restructuring and related implementation costs and gains and losses on sales of non-core product lines and assets. |
Corporate Operating profit (loss) for the three months ended |
Corporate Operating profit (loss) for the six months ended |
Table 6 |
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|
|||||||||||||||||||||
Geographic Sales Analysis Percentage Changes | |||||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
COMPONENTS OF SALES CHANGE | |||||||||||||||||||||
Pricing | |||||||||||||||||||||
Coupons | |||||||||||||||||||||
Sales | Consumer & | ||||||||||||||||||||
Change | Organic | As Reported | Organic | Ex-Divested | Trade | Foreign | |||||||||||||||
Region |
As Reported |
Sales Change |
Volume (1) |
Volume |
Volume (2) |
Incentives |
Exchange |
||||||||||||||
|
(5.5 | )% | 4.5 | % | (3.0 | )% | 1.5 | % | 1.5 | % | 3.0 | % | (5.5 | )% | |||||||
|
0.5 | % | 1.0 | % | 4.0 | % | 4.0 | % | 4.0 | % | (3.0 | )% | (0.5 | )% | |||||||
|
(16.5 | )% | 9.5 | % | (13.5 | )% | - | % | - | % | 9.5 | % | (12.5 | )% | |||||||
|
(7.0 | )% | 2.0 | % | (3.0 | )% | 1.0 | % | 1.0 | % | 1.0 | % | (5.0 | )% | |||||||
|
(6.0 | )% | 7.5 | % | (1.5 | )% | (1.5 | )% | (1.5 | )% | 9.0 | % | (13.5 | )% | |||||||
|
(9.5 | )% | 5.0 | % | (6.0 | )% | 1.0 | % | 1.0 | % | 4.0 | % | (7.5 | )% | |||||||
|
2.0 | % | 2.0 | % | 3.5 | % | 3.5 | % | 3.5 | % | (1.5 | )% | - | % | |||||||
Total CP Products | (7.0 | )% | 4.5 | % | (4.0 | )% | 1.5 | % | 1.5 | % | 3.0 | % | (6.0 | )% | |||||||
Hill's | 3.5 | % | 4.0 | % | 1.5 | % | 1.5 | % | 1.5 | % | 2.5 | % | (0.5 | )% | |||||||
Emerging Markets (5) | (10.5 | )% | 6.5 | % | (7.0 | )% | 0.5 | % | 0.5 | % | 6.0 | % | (9.5 | )% | |||||||
Developed Markets | 0.5 | % | 2.0 | % | 1.5 | % | 3.0 | % | 3.0 | % | (1.0 | )% | - | % | |||||||
Note: |
(1) Volume includes the impact of acquisitions, divestments and the deconsolidation of the Company's Venezuelan operations, as applicable. |
(2) Ex-Divested Volume excludes the impact of divestments and the deconsolidation of the Company's Venezuelan operations, as applicable. |
(3) Effective |
(4) The sale of the Company's laundry detergent business
in the |
(5) Emerging Markets include |
Table 7 |
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|
|||||||||||||||||||||
Geographic Sales Analysis Percentage Changes | |||||||||||||||||||||
For the Six Months Ended |
|||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
COMPONENTS OF SALES CHANGE | |||||||||||||||||||||
Pricing | |||||||||||||||||||||
Coupons | |||||||||||||||||||||
Sales |
Consumer & | ||||||||||||||||||||
Change | Organic | As Reported | Organic | Ex-Divested | Trade | Foreign | |||||||||||||||
Region |
As Reported |
Sales Change |
Volume (1) |
Volume |
Volume (2) |
Incentives |
Exchange |
||||||||||||||
|
(6.5 | )% | 4.5 | % | (2.0 | )% | 2.5 | % | 2.5 | % | 2.0 | % | (6.5 | )% | |||||||
|
(1.5 | )% | 0.5 | % | 4.0 | % | 4.0 | % | 4.0 | % | (3.5 | )% | (2.0 | )% | |||||||
|
(19.5 | )% | 9.5 | % | (12.0 | )% | 1.0 | % | 1.0 | % | 8.5 | % | (16.0 | )% | |||||||
|
(6.5 | )% | 3.0 | % | (1.0 | )% | 2.5 | % | 2.5 | % | 0.5 | % | (6.0 | )% | |||||||
|
(7.5 | )% | 8.0 | % | (0.5 | )% | (0.5 | )% | (0.5 | )% | 8.5 | % | (15.5 | )% | |||||||
|
(10.5 | )% | 5.5 | % | (4.5 | )% | 2.0 | % | 2.0 | % | 3.5 | % | (9.5 | )% | |||||||
|
1.5 | % | 2.0 | % | 3.5 | % | 3.5 | % | 3.5 | % | (1.5 | )% | (0.5 | )% | |||||||
Total CP Products | (8.0 | )% | 4.5 | % | (2.5 | )% | 2.5 | % | 2.5 | % | 2.0 | % | (7.5 | )% | |||||||
Hill's | 3.0 | % | 4.5 | % | 2.5 | % | 2.5 | % | 2.5 | % | 2.0 | % | (1.5 | )% | |||||||
Emerging Markets (5) |
(12.0 | )% | 7.0 | % | (5.5 | )% | 1.5 | % | 1.5 | % | 5.5 | % | (12.0 | )% | |||||||
Developed Markets | (0.5 | )% | 2.0 | % | 2.0 | % | 3.5 | % | 3.5 | % | (1.5 | )% | (1.0 | )% | |||||||
Note: |
(1) Volume includes the impact of acquisitions, divestments and the deconsolidation of the Company's Venezuelan operations, as applicable. |
(2) Ex-Divested Volume excludes the impact of divestments and the deconsolidation of the Company's Venezuelan operations, as applicable. |
(3) Effective |
(4) The sale of the Company's laundry detergent business
in the |
(5) Emerging Markets include |
Table 8 |
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|
|||||||||||||||||||||||||||||||
Non-GAAP Reconciliations | |||||||||||||||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||||||||||||||
(Dollars in Millions Except Per Share Amounts) (Unaudited) | |||||||||||||||||||||||||||||||
Gross Profit | 2016 | 2015 | |||||||||||||||||||||||||||||
Gross profit, GAAP | $ | 2,304 | $ | 2,367 | |||||||||||||||||||||||||||
2012 Restructuring Program | 12 | 4 | |||||||||||||||||||||||||||||
Gross profit, non-GAAP | $ | 2,316 | $ | 2,371 | |||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
Gross Profit Margin | 2016 | 2015 |
Change |
||||||||||||||||||||||||||||
Gross profit margin, GAAP | 59.9 | % | 58.2 | % | 170 | ||||||||||||||||||||||||||
2012 Restructuring Program | 0.3 | % | 0.1 | % | |||||||||||||||||||||||||||
Gross profit margin, non-GAAP | 60.2 | % | 58.3 | % | 190 | ||||||||||||||||||||||||||
Selling, General and Administrative Expenses | 2016 | 2015 | |||||||||||||||||||||||||||||
Selling, general and administrative expenses, GAAP | $ | 1,320 | $ | 1,381 | |||||||||||||||||||||||||||
2012 Restructuring Program | (14 | ) | (11 | ) | |||||||||||||||||||||||||||
Selling, general and administrative expenses, non-GAAP | $ | 1,306 | $ | 1,370 | |||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
Selling, General and Administrative Expenses as a Percentage of
|
2016 | 2015 | Change | ||||||||||||||||||||||||||||
Selling, general and administrative expenses as a percentage of Net sales, GAAP | 34.3 | % | 34.0 | % | 30 | ||||||||||||||||||||||||||
2012 Restructuring Program | (0.3 | )% | (0.3 | )% | |||||||||||||||||||||||||||
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP | 34.0 | % | 33.7 | % | 30 | ||||||||||||||||||||||||||
Other (Income) Expense, Net | 2016 | 2015 | |||||||||||||||||||||||||||||
Other (income) expense, net, GAAP | $ | 40 | $ | 54 | |||||||||||||||||||||||||||
2012 Restructuring Program | (33 | ) | (37 | ) | |||||||||||||||||||||||||||
|
- | (16 | ) | ||||||||||||||||||||||||||||
Other (income) expense, net, non-GAAP | $ | 7 | $ | 1 | |||||||||||||||||||||||||||
Operating Profit | 2016 | 2015 | % Change | ||||||||||||||||||||||||||||
Operating profit , GAAP | $ | 944 | $ | 932 | 1 | % | |||||||||||||||||||||||||
2012 Restructuring Program | 59 | 52 | |||||||||||||||||||||||||||||
|
- | 16 | |||||||||||||||||||||||||||||
Operating profit, non-GAAP | $ | 1,003 | $ | 1,000 | - | % | |||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
Operating Profit Margin | 2016 | 2015 | Change | ||||||||||||||||||||||||||||
Operating profit margin, GAAP | 24.6 | % | 22.9 | % | 170 | ||||||||||||||||||||||||||
2012 Restructuring Program | 1.5 | % | 1.3 | % | |||||||||||||||||||||||||||
|
- | % | 0.4 | % | |||||||||||||||||||||||||||
Operating profit margin, non-GAAP | 26.1 | % | 24.6 | % | 150 | ||||||||||||||||||||||||||
2016 | |||||||||||||||||||||||||||||||
Income Before |
Provision For |
Net Income |
Less: Income |
Net Income |
Effective Income |
Diluted Earnings |
|||||||||||||||||||||||||
As Reported GAAP |
$ |
919 |
$ |
281 |
$ |
638 |
$ |
38 |
$ |
600 |
30.6 |
% |
$ |
0.67 |
|||||||||||||||||
2012 Restructuring Program | 59 | 14 | 45 | 1 | 44 | (0.4 | )% | 0.05 | |||||||||||||||||||||||
Benefit from a foreign tax matter, net | - | 13 | (13 | ) | - | (13 | ) | 1.3 | % | (0.01 | ) | ||||||||||||||||||||
Non-GAAP | $ | 978 | $ | 308 | $ | 670 | $ | 39 | $ | 631 | 31.5 | % | $ | 0.70 | |||||||||||||||||
2015 | |||||||||||||||||||||||||||||||
Income Before |
Provision For |
Net Income |
Less: Income |
Net income |
Effective Income |
Diluted Earnings |
|||||||||||||||||||||||||
As Reported GAAP |
$ |
926 |
$ |
310 |
$ |
616 |
$ |
42 |
$ |
574 |
33.5 |
% |
$ |
0.63 |
|||||||||||||||||
2012 Restructuring Program | 52 | 12 | 40 | - | 40 | (0.6 | )% | 0.04 | |||||||||||||||||||||||
|
16 | 6 | 10 | - | 10 | 0.1 | % | 0.01 | |||||||||||||||||||||||
Charge for a foreign tax matter | - | (15 | ) | 15 | - | 15 | (1.5 | )% | 0.02 | ||||||||||||||||||||||
Non-GAAP | $ | 994 | $ | 313 | $ | 681 | $ | 42 | $ | 639 | 31.5 | % | $ | 0.70 | |||||||||||||||||
Note: |
(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment. |
(2) The impact of non-GAAP items on the Company's effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes. |
(3) The impact of non-GAAP adjustments on diluted earnings per share may not necessarily equal the difference between "GAAP" and "non-GAAP" as a result of rounding. |
Table 9 |
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Non-GAAP Reconciliations | ||||||||||||||||||||||||||||||||
For the Six Months Ended |
||||||||||||||||||||||||||||||||
(Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||||||||||||||||||||||||||
Gross Profit | 2016 | 2015 | ||||||||||||||||||||||||||||||
Gross profit, GAAP | $ | 4,552 | $ | 4,759 | ||||||||||||||||||||||||||||
2012 Restructuring Program | 20 | 8 | ||||||||||||||||||||||||||||||
Gross profit, non-GAAP | $ | 4,572 | $ | 4,767 | ||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Gross Profit Margin | 2016 | 2015 | Change | |||||||||||||||||||||||||||||
Gross profit margin, GAAP | 59.8 | % | 58.5 | % | 130 | |||||||||||||||||||||||||||
2012 Restructuring Program | 0.3 | % | 0.1 | % | ||||||||||||||||||||||||||||
Gross profit margin, non-GAAP | 60.1 | % | 58.6 | % | 150 | |||||||||||||||||||||||||||
Selling, General and Administrative Expenses | 2016 | 2015 | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses, GAAP | $ | 2,674 | $ | 2,831 | ||||||||||||||||||||||||||||
2012 Restructuring Program | (40 | ) | (29 | ) | ||||||||||||||||||||||||||||
Selling, general and administrative expenses, non-GAAP | $ | 2,634 | $ | 2,802 | ||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Selling, General and Administrative Expenses as a Percentage of
|
2016 | 2015 | Change | |||||||||||||||||||||||||||||
Selling, general and administrative expenses as a percentage of Net sales, GAAP | 35.2 | % | 34.8 | % | 40 | |||||||||||||||||||||||||||
2012 Restructuring Program | (0.6 | )% | (0.4 | )% | ||||||||||||||||||||||||||||
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP | 34.6 | % | 34.4 | % | 20 | |||||||||||||||||||||||||||
Other (Income) Expense, Net | 2016 | 2015 | ||||||||||||||||||||||||||||||
Other (income) expense, net, GAAP | $ | 67 | $ | 136 | ||||||||||||||||||||||||||||
2012 Restructuring Program | (54 | ) | (115 | ) | ||||||||||||||||||||||||||||
|
- | (16 | ) | |||||||||||||||||||||||||||||
Other (income) expense, net, non-GAAP | $ | 13 | $ | 5 | ||||||||||||||||||||||||||||
Operating Profit | 2016 | 2015 | % Change | |||||||||||||||||||||||||||||
Operating profit, GAAP | 1,811 | $ | 1,792 | 1 | % | |||||||||||||||||||||||||||
2012 Restructuring Program | 114 | 152 | ||||||||||||||||||||||||||||||
|
- | 16 | ||||||||||||||||||||||||||||||
Operating profit, non-GAAP | $ | 1,925 | $ | 1,960 | (2 | %) | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating Profit Margin | 2016 | 2015 | Change | |||||||||||||||||||||||||||||
Operating profit margin, GAAP | 23.8 | % | 22.0 | % | 180 | |||||||||||||||||||||||||||
2012 Restructuring Program | 1.5 | % | 1.9 | % | ||||||||||||||||||||||||||||
|
- | % | 0.2 | % | ||||||||||||||||||||||||||||
Operating profit margin, non-GAAP | 25.3 | % | 24.1 | % | 120 | |||||||||||||||||||||||||||
2016 | ||||||||||||||||||||||||||||||||
Income Before |
Provision for |
Net Income |
Less: Income |
Net Income |
Effective Income |
Diluted Earnings |
||||||||||||||||||||||||||
As Reported GAAP |
$ |
1,758 |
$ |
546 |
$ |
1,212 |
$ |
79 |
$ |
1,133 |
31.1 |
% |
$ |
1.26 |
||||||||||||||||||
2012 Restructuring Program | 114 | 31 | 83 | 1 | 82 | (0.2 | )% | 0.09 | ||||||||||||||||||||||||
Benefit from a foreign tax matter, net | - | 13 | (13 | ) | - | (13 | ) | 0.6 | % | (0.01 | ) | |||||||||||||||||||||
Non-GAAP | $ | 1,872 | $ | 590 | $ | 1,282 | $ | 80 | $ | 1,202 | 31.5 | % | $ | 1.33 | ||||||||||||||||||
2015 | ||||||||||||||||||||||||||||||||
Income Before |
Provision For |
Net Income |
Less: Income |
Net Income |
Effective Income |
Diluted Earnings |
||||||||||||||||||||||||||
As Reported GAAP |
$ |
1,778 |
$ |
579 |
$ |
1,199 |
$ |
83 |
$ |
1,116 |
32.6 |
% |
$ |
1.22 |
||||||||||||||||||
2012 Restructuring Program | 152 | 43 | 109 | 2 | 107 | (0.3 | )% | 0.11 | ||||||||||||||||||||||||
|
16 | 6 | 10 | - | 10 | - | 0.01 | |||||||||||||||||||||||||
Charge for a foreign tax matter | - | (15 | ) | 15 | - | 15 | (0.8 | )% | 0.02 | |||||||||||||||||||||||
Non-GAAP | $ | 1,946 | $ | 613 | $ | 1,333 | $ | 85 | $ | 1,248 | 31.5 | % | $ | 1.36 | ||||||||||||||||||
Note: |
(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment. |
(2) The impact of non-GAAP items on the Company's effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes. |
(3) The impact of non-GAAP adjustments on diluted earnings per share may not necessarily equal the difference between "GAAP" and "non-GAAP" as a result of rounding. |
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