Good day, everyone, and welcome to today's Colgate-Palmolive Company Third Quarter 2014 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Today's conference call will include forward-looking statements. These statements are made on the basis of our views and assumptions as of this time and are not guarantees of future performance. Actual events or results may differ materially from these statements. So for information about certain factors that could cause such differences, investors should consult our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, and available on our website, including the information set forth under the captions Risk Factors and Cautionary Statement on forward-looking statements. The conference call will also include a discussion of non-GAAP financial measures, which differ from our results prepared in accordance with GAAP. We will discuss organic sales growth, which is net sales growth, excluding foreign exchange, acquisitions and divestitures. We will also discuss gross profit, gross profit margin, SG&A as a percent of net sales, operating profit, operating profit margin, net income and earnings per share on a diluted basis, excluding the impact of the items described in the press release. A full reconciliation with the corresponding GAAP measures is included in the press release and is posted in the For Investors section of our website at www.colgatepalmolive.com. Just a reminder, there may be a slight delay before the question-and-answer session begins due to the Web simulcast. Now for opening remarks, I would like to turn the call over to Senior Vice President of Investor Relations, Bina Thompson. Please go ahead, Bina.

Thanks, Rochelle, and good morning, and welcome to our third quarter 2014 earnings release conference call. With me this morning are Ian Cook, Chairman, President and CEO; Dennis Hickey, CFO; Victoria Dolan, Corporate Controller; and Elaine Paik, Treasurer. And we're pleased to have reported another quarter of solid organic sales growth. As we all know, business conditions around the world are challenging. We, as others, have seen slowing growth in the emerging markets and continued heightened competitive activity in the developed markets. And the dollar has continued to strengthen in the face of economic uncertainty worldwide. And any economic recovery in the developed markets is muted and tentative at best. However, we think, our focused strategies still serve us well and are well-understood by all our people who are intent on winning on the ground. Innovation is as important as ever and you'll hear not only how new products have helped increase market shares but about more new products slated for the balance of the year. While a strong dollar along with higher material prices has resulted in a modest growth margin decline in the quarter, we continue to believe we will see gross margin expansion over the long term. Our Funding the Growth program is as robust as ever and is expected to deliver full year savings at or above our goal. And while our reported advertising is down as a percent of sales, if you look at the total bucket of commercial spend, it is up both absolutely and as a percent of sales, as impactful and trial-generating in-store activities have supported our robust new product activity. Our Global Growth and Efficiency Program is proceeding smoothly, and as you saw in this morning's press release, we've expanded the program to take advantage of additional savings opportunities, which we…

[Operator Instructions] And we'll take our first question from Dara Mohsenian with Morgan Stanley.

So first, just a clarity question. What level of organic sales growth and FX impact is implied in your 2015 earnings guidance? And the real question is, Brazil and China, clearly weak in the quarter. Obviously, Bina highlighted that trends improved at the end of the quarter but we had heard some hope. I think, last quarter the Q3 trends would improve, which didn't play out as much. So I just was hoping for a bit of a state of the union on what's causing pressure in Brazil and China, if those factors kind of linger going forward and how much visibility you have here that your business has bottomed in those markets?

Yes, thanks, Dara. Well, let me take a little bit of a step back on the world and our categories and include China and Brazil in those comments and then take you forward to 2015. Let me start with the developed world where, I guess, we have been saying for a time that our category growth rates are in the 1% to 2% range, with Europe being at the lower end of that range and the U.S. now creeping up to the higher end of that range and that hasn't really changed. When you then turn to the emerging markets, as we have said on the last couple of calls, we came into the year from a 2013 where the growth rates were between 6% and 8% and said that the growth rates were now likely to be between 5% and 7%. And on the last call, we said that those growth rates had decelerated to the lower end of that range. And what we have seen is that during the third quarter, that has continued to be the case. In other words, those headwinds have not reversed. Now very specific to China, on the last call, we described and explained how the combination of the deceleration in consumer consumption led to a destocking of the extended distribution system in China through distributors and wholesalers and that we thought that would correct itself in response to a question, if I recall, within 60 to 90 days. And somebody said, well, does that mean the China business will come back from a Colgate volume point of view towards the end of the third quarter? Now many of us have just come back from an extended trip to Asia and I'm pleased to say that is precisely what has happened. In other…

And next, we'll move to Chris Ferrara with Wells Fargo.

I guess, Ian, taking that 2015 commentary to EPS, it sounds like, based on where spot rates are today, I think, your '15 EPS preliminary outlook sounds like it would imply your healthy double digit EPS growth into 2015. And I guess, correct that if it's wrong, and if it's not, can you just talk about why you feel that level of confidence, especially with some of the macro trends that are going on out there?

Well, in fact, Chris, thanks for the question, the EPS growth rate for next year, we have tried to be quite specific in guiding to mid to high single digits in dollar terms, not double digits. And that reflects the recent foreign exchange deterioration which, as you know, was very sharp and towards the end of the third quarter and when one goes through the various investor notes that have been written about the business, many people have come to a like conclusion in terms of what they see dollar EPS growth being. So as we said in the release, we're expecting another year of growth. And having been asked the question, we would frame it as 4% to 7% organic. We talk about expansion of the gross margin. And as we go through our budget process, you would imagine that our target continues to be that 50 to 100 basis point expansion and mid to high-single digit EPS growth in dollar terms. And that's the way we're framing and approaching 2015.

And next, we'll move to Wendy Nicholson with Citi.

Could you talk a little bit more about the non-China markets in Asia because -- I mean, if I'm not mistaken, I think, China's only kind of like 20%, 25% of that region, and for the overall organic sales growth to be up only 1%, it still sounds like there's real weakness in the other markets. I know you called out India as being strong actually. So what else is dragging down the numbers, is it the Philippines or Malaysia, like what else is big enough to move the needle there?

That part of the world is heavily influenced by China and India. And when Bina said India was strong, India was strong. And the Southeast Asian countries generally performed very, very well during the quarter. So it really is China and the correction of that Chinese business back to, I stress, this underlying mid-single-digit consumption rate for consumers.

And next, we'll move to Jason English with Goldman Sachs.

Again, a couple of questions on what's going on in a few markets. Let's pick up where you left of on the last one on India. India is strong. I guess, the question is what's strong in India? When we look at some of the Nielsen data out of India, it shows volume decelerating throughout the quarter. At least into July, August now reaching almost down 6% for the category for toothpaste specifically. So I guess, where is the offset or is it just potentially a problem with the data? And then, secondly, we've heard Nestle, we've heard Unilever talk about some of the pricing problems or challenges throughout Europe. You've got another quarter reported here of negative price and promotion. So maybe you can comment a little bit more on what you're seeing in terms of the competitive dynamics and pricing environment throughout Europe?

Well, let's take India first. Without getting into specifics, we have seen consistent double-digit growth in India every quarter this year. We continue to build their market share on toothpaste and on toothbrushes, our leadership market shares. I would also add by the way, with that independent study that happens every year in India, for the fourth straight year, Colgate was voted the most trusted brand in any category in India, which gives you a sense of the consumer loyalty and affection for the brand. One thing we've been doing for a while in India is expanding the strength of our distribution in the rural areas. And I would venture to say, Jason, that when you start getting to that level of distribution without in any way impugning Nielsen or other data sources, the quality of the data becomes perhaps a little bit suspect. In Europe, actually, we were pleased with Europe. There is no question that pricing has become, for some retailer, in some cases, competitor, and other, an approach, a tactic, I guess, to try and build overall growth. So we were pleased to see the volume growth we had in Europe and indeed the modest organic growth along with good-sized margin -- gross margin expansion delivering goods financial results there. And as Bina said in her comments, and I think we have taken this view for some time now in Europe, I think, we are clear-eyed about the growth rates that can be expected there and we have put an extraordinary focus on reorganizing our European business to make it structurally efficient against a flat line growth rate. And I think, we're seeing the benefits of that. And we're also seeing market shares improve, as Bina mentioned in her prepared remarks. So this hubbing that we have moved to in Europe is working very well for us against 1 of the objectives we had, which was to strengthen our executional capability on the ground.

And next, we'll move to Bill Schmitz with Deutsche Bank.

Can you just talk about the Colgate Total growth in the quarter and if this triclosan nonsense is done? And then, I do have a follow-up.

Yes, it was done, Bill, until you raised it.

No one listens to me I promise.

The share is flat. You may have seen Javier's [ph] note where they ran an independent survey, I think, with 2,500 people, which basically suggested that the awareness was vanishingly low. In fact, lower than other ingredients in toothpaste products. And obviously, as you would imagine, we have like tracking data which shows the same thing. So it is a non-issue. Your follow on?

Ian, I just wanted to ask you, is the destocking all done globally now? And do you think the U.S. is like really pulling out? Some of the data points, it seemed like the U.S. is really starting to accelerate in the last month or so.

Yes, let's not get too excited. I think, the U.S. is showing modest acceleration. But these things have tended to be lumpy. But I tried to imply that in my remark on category growth that we are indeed seeing the U.S. upshift towards the higher end of that 2% range. On the destocking, given the vastness of the 2 geographies and the indirect nature of the distribution, China, which we talked about in the second quarter, we believe on the data we see is done, was done by the end of the third quarter. Brazil is on the way to being done and that will be completed during the fourth quarter. There are no other spots of destocking.

And next, we'll move to Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: I want to get a better sense of why you believe that you can go back to double-digit dollar base earnings growth long term, because you haven't done in the past 5 years or so, including this year. And I guess, another way to ask the question is what do you need to get back to that target? And if your answer is macro and FX, then how should we all think about your level of defensiveness and indeed the whole industry's level of defensiveness and macro insensitivity versus history?

Wow. I haven't finished Picasso's book yet so I'm not sure how to answer the question. I think, Ali, the way to think about it perhaps would be on a relative basis. I mean, I think, for the last several years, we have seen things happening in our world that have been truly unusual and volatile events. Many of them having implications both in terms of consumer purchasing behavior and fundamentally foreign exchange, as people run from risk to perceived safety and they impact companies severely in the short term. So while we return to a better macro environment and a more stable foreign exchange environment, I guess, the way to think about it is on a relative basis.

And next, we'll move to Steve Powers with UBS.

Going back to China and Brazil, I guess, one question on China and Brazil and then sort of an unrelated question, if you'll entertain it, on Venezuela. First on, just on the volume declines in China and Brazil, are you able to parse out at all how much of those declines were true unit declines versus negative mix and trade down, because I can see how the unit volumes could reaccelerate substantially and sustainably with inventory rebalancing but a trading down trend or less trade-up anyway might be harder to overcome without macro relief. And then, on Venezuela, it would seem that you're now running the risk of operating at a loss, maybe a material loss in that market with this latest devaluation. Although I know, in your Q, you've got some price relief that's come through, which is good. So I'm trying to balancing those 2 things out. Will Venezuela now be running at a loss? And if so, can you frame for us how far you're willing to go in incurring losses in that market because it's hard to see how things get better before they get worse at least from a currency perspective.

Yes, I mean, to answer the Venezuela question first, Steve, we're not running at a loss. I think, Venezuela is about 3% of the company's sales and about 1% of the company's operating profit. And as you rightly observed, I think we mentioned on the last call that we felt we had been in very constructive discussion with the government relative to pricing. And indeed, we were granted pricing basically across our portfolio in Venezuela, which won't actually move to the marketplace meaningfully until the fourth quarter and will modestly improve our position there. So indeed, we view that as a positive, and certainly, we'll not see Venezuela in a loss-making position. In China and Brazil, we run a dollar-weighted volume anyway. From our reporting point of view, when we look at the information we have from independent trade surveys, we can track that, whether you look at volume or value. The destocking, as I said earlier in China, is now through. And we are back to meeting consumption with our shipments. And in Brazil, it is in like fashion working its way through the system and will be completed in the fourth quarter. It really was the distribution system catching up to the succession of consumer slowdowns but that consumer consumption now seems set mid-single digits and now our shipments are coming back to that.

And we'll move on to Olivia Tong with Bank of America Merrill Lynch.

Can you talk about what's driving that 50 to 100 basis point gross margin acceleration next year when presumably, FX and raw materials are still a drag, at least in the first half, and it sounds like incremental savings don't start kicking in until later in the year and then maybe this is an opportunity to also give the gross margin bridge for this quarter?

I was wondering when somebody would do that. Okay. Let's start with the gross profit roll-forward. So last year, it was 59. In this quarter, we pick up a 50 basis point benefit from pricing. Between the restructuring program and our Funding the Growth savings, we pick up 230 basis points, essentially in line with last year. Material prices sequentially worsened from the 2.5 basis points negative -- 2.5 point negative in the third quarter to 3 and you've got 20 basis points of mix, et cetera, and that brings you to the current year at 58, 640 basis points down. Now if we take that and look forward, first thing to say, our Funding the Growth program remains strong. Secondly, our restructuring program remains strong. Third, given the timing of pricing that we took in the third quarter and the Venezuelan price increases, we are now realizing in the fourth quarter, we expect pricing to be a more significant component of offsetting the material price headwinds. Looking forward, again, we have not finished our budgeting process. But in terms of some of the underlying commodity costs, one would say that there are emerging signs of weakness. And one would also say that in terms of oil, even though there is a lead lag before you get the full benefit of that, we have gone into our budget with a $100 assumption and we know where oil sits today. So it will be a combination of the funding the growth where material prices really end up after we have been through the diligence of our budgeting and pricing.

And Caroline Levy with CLSA will have our next question.

I wonder if you could elaborate a little bit on Europe? And there's been some upheaval in the retail environment there. And is any risk of inventories getting stock in the system there and what are the risks you still see going forward in Europe?

Yes, I think, the risks are pretty much out there for all to see. I'm not sure retailer-specific will be an issue. I think, I know the retailer to whom you are referring. But we have, in those kind of environment, all sorts of checks and balances in terms of inventory against consumption. And I think it highly unlikely that such a situation would arise in the European environment.

And we'll move on to Connie Maneaty with BMO.

A follow-up on Venezuela. Is the pricing you're getting in the fourth quarter, do you view it as a onetime event or do you think the ability to price to offset inflation is coming back? And then, because of the pricing, will the impact of the devaluation in 2015, assuming rates stay the same, be lower than the $0.03 you're expecting in the fourth quarter?

We -- I will offer nothing on 2015, Connie. We really have not got that far at all. And all I can say about the pricing we have received is that the government provided specific direction as to the categories that we were permitted to take pricing in and indeed what the level would be by category and by size within that category. So I think, it would be perhaps naïve to assume that, that would allow companies to take pricing as they wish. And I think, any future pricing would be, likewise, a similar discussion with the government. So I don't necessarily view it as a onetime, but I don't view it as opening the door to companies taking pricing at will.

And next, we'll move on to Alice Longley with Buckingham Research.

I have a couple of follow-up questions on China. You said that demand is growing mid-single digits and I guess you expect your shipments to start growing at that amount -- at that rate starting now. Does that include online sales? And could you also tell us what percentage of your sales there now are online and give us some sense of how quickly that's shifting? And also, how much of that growth is price? And then, finally, I'm just wondering whether the shift to online could be 1 of the reasons that there was an inventory issue. Maybe there was too much inventory in 1 channel versus this other channel that's growing faster?

So to respond Alice thanks for the question, yes, the consumer offtake has returned to that mid-single digits level. And yes, our sales are now servicing that level of consumption. So we saw that in the last month of the quarter. And it would be fair to say that's what we expect going forward. Relative to online, I know in some categories in China, online is a large and fast growth segment or retail environment. But in our business, it's not so. We are represented, but the amount of business done online in our categories is de minimis and I don't think would have in any way, affected the trade destocking. And as we look forward to 2015 in terms of the balance between pricing and volume for a country, again, we haven't finished our budgeting process and I probably wouldn't say anyway.

And we'll move on to Lauren Lieberman with Barclays.

Just wondering if you could talk a little bit about the advertising and commercial investment mix because Bina pointed out in the prepared remarks that the total basket of spending was still [indiscernible] and advertising was down. So what is your, I guess, plan for that over the next couple of quarters? Was this in somewhat reactionary to the more competitive environment in the U.S.? But is it really -- is that the same around the world? If there's a bit more in-store promotion going on versus advertising? What were some of the decisions made and how I guess not permanent but how sticky do you think they'll prove to be?

If I sort of take a 20,000 view around the world, 20,000-foot view around on the world, we have seen in many markets competitors reduce their advertising weight in market and shift spending to price promotion or coupon-driven promotion, perhaps in the quest for short-term volume. You have no choice at some level but to respond to that. So part of it is that. Part of it, as we have said for a long time and we must find a way of being more articulate about it, but part of it is structural in terms of the way you engage with consumers. With the techniques we have today, in-store engagement, the sharper marketing we talked about with consumers, which often comes out of trade spending, can be a very effective way of building trial for a product. So some of it is a conscious shift to techniques that we know work when you can target particular consumers in different retail environments. And as we think forward, our preferred view, as we have said before as well, is that we believe in driving growth, particularly when markets are growing less fast through innovation and innovation supported by advertising that generates trial, not price promotion. And therefore, our planning assumptions or our thinking going forward is that we would see that traditional below-the-line advertising come back. But we would not let ourselves become disadvantaged tactically as time unfolds. But our preferred model is innovation-led advertising, supported with quality execution on the ground that makes your product irresistible in store. By your product, I mean our product.

And we'll move on to Javier Escalante with Consumer Edge Research.

Ian, a little bit of a follow-up to Lauren's question with regards to trader spending and couponing and all that. Do you think that -- are you getting -- now that you shifted more toward trader spending, are you getting the volume lift that you hope or not? And if you did, are you -- are we going to see more of flattish advertising versus trader spending? And related to that, also to what extent -- what are the issues you see that market share gains have slowed, either because Unilever is no longer losing as much share in toothpaste and Procter is more aggressive in some of the key markets like China and Brazil?

Yes, where to start. The -- I think, it's fair to say that the adjustments we made and I think we've talked at the beginning of the year about Mexico and the U.S., as Bina has commented, have been effective in rebuilding our market share. And that was something we believe we had to do in the face of the competitive activity. We don't see that as a permanent strategy and I would come back and say innovation-led, advertising-supported but irresistible in store is the way we would think about prioritizing our spending. In terms of the share discussion, you'd kind of have the go around the world. Suffice it to say, you mentioned China, I would say, in China, we have approaching a 34% market share in China, and both our principal multinational competitors are seeing share decline. And so from an aggression point of view, honestly, we aren't seeing it. And we're not -- we're certainly not seeing it in the market share. So it's a market-by-market thing. And in Mexico and the U.S., it was an adjustment we made. But if you take the world, our preferred approach is innovation, advertising-supported, irresistible in store.

And we'll take our final question from Mark Astrachan with Stifel. Mark S. Astrachan - Stifel, Nicolaus & Company, Incorporated, Research Division: I wanted to talk about your expectation for 4% to 7% sales growth for 2015 in the context of lapping China and Brazil destocking, and now the commentary about pricing coming in Venezuela. So it would seem a bit like growth should be better next year relative to this year. So I guess that they're both sort of the same but how much of that is conservatism, how much of it is an assumption about category growth somewhere going up, going down. Maybe just any other color you could give sort on the underlying expectations for next year would be helpful.

Yes, 4% to 7%, Mark, allows it to get better. But I think, just based on everything you see in the world today, it seemed prudent to widen that range a little because who knows what next year brings. I think, when we speak again after our fourth quarter and we would have been through our budgeting process, we will be in a far better position to perhaps give a sharper guidance at that time. So I think, this brings the call to a close. I thank you all for joining us. Thank you very much for the interest in the company and the questions you always have. And thank you, again, to all those Colgate people who may be listening. We value the work you do. Goodbye.

And that does conclude today's call. We thank you for your participation.