UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-Q
_________________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
ORFor the quarterly period ended September 30, 2020
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)
DELAWAREDelaware13-1815595
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
300 Park Avenue New York, New York10022
New York,New York10022
(Address of principal executive offices)(Zip Code)
(212) 310-2000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valueCLNew York Stock Exchange
0.000% Notes due 2021CL21ANew York Stock Exchange
0.500% Notes due 2026CL26New York Stock Exchange
1.375% Notes due 2034CL34New York Stock Exchange
0.875% Notes due 2039CL39New York Stock Exchange

NO CHANGES
(Former name, former address and former fiscal year, if changed since last report)
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 ☒  No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☒  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)
Smaller reporting company ☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
ClassShares OutstandingDate
Common stock, $1.00 par value878,105,223857,168,831September 30, 20172020






PART I.FINANCIAL INFORMATION




COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Income
 (Dollars(Dollars in Millions Except Per Share Amounts)
(Unaudited)
 
 Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Net sales$4,153 $3,928 $12,147 $11,678 
Cost of sales1,613 1,612 4,773 4,767 
Gross profit2,540 2,316 7,374 6,911 
Selling, general and administrative expenses1,518 1,429 4,386 4,163 
Other (income) expense, net4 31 72 125 
Operating profit1,018 856 2,916 2,623 
Non-service related postretirement costs15 27 56 79 
Interest (income) expense, net36 35 107 113 
Income before income taxes967 794 2,753 2,431 
Provision for income taxes222 167 585 586 
Net income including noncontrolling interests745 627 2,168 1,845 
Less: Net income attributable to noncontrolling interests47 49 120 121 
Net income attributable to Colgate-Palmolive Company$698 $578 $2,048 $1,724 
Earnings per common share, basic$0.81 $0.67 $2.39 $2.00 
Earnings per common share, diluted$0.81 $0.67 $2.38 $2.00 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net sales$3,974
 $3,867
 $11,562
 $11,474
Cost of sales1,591
 1,543
 4,610
 4,598
Gross profit2,383
 2,324
 6,952
 6,876
Selling, general and administrative expenses1,429
 1,322
 4,124
 3,996
Other (income) expense, net27
 (69) 163
 (2)
Operating profit927
 1,071
 2,665
 2,882
Interest (income) expense, net27
 25
 74
 78
Income before income taxes900
 1,046
 2,591
 2,804
Provision for income taxes250
 300
 770
 846
Net income including noncontrolling interests650
 746
 1,821
 1,958
Less: Net income attributable to noncontrolling interests43
 44
 120
 123
Net income attributable to Colgate-Palmolive Company$607
 $702
 $1,701
 $1,835
        
Earnings per common share, basic$0.69
 $0.79
 $1.93
 $2.05
        
Earnings per common share, diluted$0.68
 $0.78
 $1.91
 $2.04
        
Dividends declared per common share *$0.40
 $0.39
 $1.59
 $1.55



* Two dividends were declared in the first quarter of 2017 and 2016.


















See Notes to Condensed Consolidated Financial Statements.


2





COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Comprehensive Income
 (Dollars(Dollars in Millions)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Net income including noncontrolling interests$745 $627 $2,168 $1,845 
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments57 (111)(230)(60)
Retirement plans and other retiree benefit adjustments54 5 84 30 
    Gains (losses) on cash flow hedges1 4 (2)(3)
Total Other comprehensive income (loss), net of tax112 (102)(148)(33)
Total Comprehensive income including noncontrolling interests857 525 2,020 1,812 
Less: Net income attributable to noncontrolling interests47 49 120 121 
Less: Cumulative translation adjustments attributable to noncontrolling interests12 (6)(1)(6)
Total Comprehensive income attributable to noncontrolling interests59 43 119 115 
Total Comprehensive income attributable to Colgate-Palmolive Company$798 $482 $1,901 $1,697 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net income including noncontrolling interests$650
 $746
 $1,821
 $1,958
Other comprehensive income (loss), net of tax:       
Cumulative translation adjustments64
 —
 294
 83
Retirement plans and other retiree benefit adjustments54
 16
 79
 39
Gains (losses) on available-for-sale securities—
 (1) —
 (1)
     Gains (losses) on cash flow hedges(3) 1
 (16) (3)
Total Other comprehensive income (loss), net of tax115
 16
 357
 118
Total Comprehensive income including noncontrolling interests765
 762
 2,178
 2,076
Less: Net income attributable to noncontrolling interests43
 44
 120
 123
Less: Cumulative translation adjustments attributable to noncontrolling interests2
 2
 11
 (3)
Total Comprehensive income attributable to noncontrolling interests45
 46
 131
 120
Total Comprehensive income attributable to Colgate-Palmolive Company$720
 $716
 $2,047
 $1,956


See Notes to Condensed Consolidated Financial Statements.


3



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Balance Sheets
 (Dollars(Dollars in Millions)
(Unaudited)
September 30,
2020		December 31,
2019
Assets
Current Assets
Cash and cash equivalents$989 $883 
Receivables (net of allowances of $88 and $76, respectively)1,292 1,440 
Inventories1,578 1,400 
Other current assets508 456 
Total current assets4,367 4,179 
Property, plant and equipment:  
Cost8,380 8,580 
Less: Accumulated depreciation(4,874)(4,830)
 3,506 3,750 
Goodwill3,711 3,508 
Other intangible assets, net2,838 2,667 
Deferred income taxes208 177 
Other assets836 753 
Total assets$15,466 $15,034 
Liabilities and Shareholders’ Equity  
Current Liabilities  
Notes and loans payable$9 $260 
Current portion of long-term debt256 254 
Accounts payable1,225 1,237 
Accrued income taxes423 370 
Other accruals2,568 1,917 
Total current liabilities4,481 4,038 
Long-term debt6,971 7,333 
Deferred income taxes406 507 
Other liabilities2,535 2,598 
Total liabilities14,393 14,476 
Shareholders’ Equity  
Common stock1,466 1,466 
Additional paid-in capital2,837 2,488 
Retained earnings23,052 22,501 
Accumulated other comprehensive income (loss)(4,421)(4,273)
Unearned compensation(1)(2)
Treasury stock, at cost(22,280)(22,063)
Total Colgate-Palmolive Company shareholders’ equity653 117 
Noncontrolling interests420 441 
Total equity1,073 558 
Total liabilities and equity$15,466 $15,034 
 September 30,
2017		 December 31,
2016
Assets   
Current Assets   
Cash and cash equivalents$1,380
 $1,315
Receivables (net of allowances of $82 and $73, respectively)1,530
 1,411
Inventories1,205
 1,171
Other current assets621
 441
Total current assets4,736
 4,338
Property, plant and equipment: 
  
Cost8,419
 7,942
Less: Accumulated depreciation(4,420) (4,102)
 3,999
 3,840
Goodwill2,216
 2,107
Other intangible assets, net1,343
 1,313
Deferred income taxes265
 301
Other assets216
 224
Total assets$12,775
 $12,123
Liabilities and Shareholders’ Equity 
  
Current Liabilities 
  
Notes and loans payable$7
 $13
Current portion of long-term debt—
 —
Accounts payable1,164
 1,124
Accrued income taxes391
 441
Other accruals2,292
 1,727
Total current liabilities3,854
 3,305
Long-term debt6,520
 6,520
Deferred income taxes196
 246
Other liabilities1,938
 2,035
Total liabilities12,508
 12,106
Shareholders’ Equity 
  
Common stock1,466
 1,466
Additional paid-in capital1,932
 1,691
Retained earnings20,207
 19,922
Accumulated other comprehensive income (loss)(3,834) (4,180)
Unearned compensation(1) (7)
Treasury stock, at cost(19,878) (19,135)
Total Colgate-Palmolive Company shareholders’ equity(108) (243)
Noncontrolling interests375
 260
Total equity267
 17
Total liabilities and equity$12,775
 $12,123


See Notes to Condensed Consolidated Financial Statements.


4




COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
(Unaudited)
Nine Months Ended
 September 30,
 20202019
Operating Activities  
Net income including noncontrolling interests$2,168 $1,845 
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:  
Depreciation and amortization400 386 
Restructuring and termination benefits, net of cash(66)11 
Stock-based compensation expense85 83 
Deferred income taxes(124)79 
Voluntary benefit plan contributions0 (113)
Cash effects of changes in:
Receivables62 (65)
Inventories(214)(69)
Accounts payable and other accruals468 (52)
Other non-current assets and liabilities(23)58 
Net cash provided by (used in) operations2,756 2,163 
Investing Activities  
Capital expenditures(249)(226)
Purchases of marketable securities and investments(109)(152)
Proceeds from sale of marketable securities and investments42 14 
Payment for acquisitions, net of cash acquired(352)(1,711)
Net cash provided by (used in) investing activities(668)(2,075)
Financing Activities  
Principal payments on debt(3,269)(4,184)
Proceeds from issuance of debt2,500 6,008 
Dividends paid(1,162)(1,140)
Purchases of treasury shares(578)(1,024)
Proceeds from exercise of stock options640 490 
Purchases of non-controlling interests in subsidiaries(99)0 
Net cash provided by (used in) financing activities(1,968)150 
Effect of exchange rate changes on Cash and cash equivalents(14)(16)
Net increase (decrease) in Cash and cash equivalents106 222 
Cash and cash equivalents at beginning of the period883 726 
Cash and cash equivalents at end of the period$989 $948 
Supplemental Cash Flow Information  
Income taxes paid$606 $669 
 Nine Months Ended
 September 30,
 2017 2016
Operating Activities   
Net income including noncontrolling interests$1,821
 $1,958
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations: 
  
Depreciation and amortization354
 329
Restructuring and termination benefits, net of cash80
 (1)
Stock-based compensation expense106
 102
Gain on sale of land in Mexico—
 (97)
Deferred income taxes(2) 50
Voluntary benefit plan contributions(81) (53)
Cash effects of changes in:   
Receivables(50) (126)
Inventories16
 4
Accounts payable and other accruals39
 101
Other non-current assets and liabilities12
 50
Net cash provided by operations2,295

2,317
Investing Activities 
  
Capital expenditures(382) (392)
Purchases of marketable securities and investments(301) (271)
Proceeds from sale of marketable securities and investments149
 158
Proceeds from sale of land in Mexico—
 60
Other2
 —
Net cash used in investing activities(532) (445)
Financing Activities 
  
Principal payments on debt(3,551) (5,446)
Proceeds from issuance of debt3,478
 5,447
Dividends paid(1,070) (1,053)
Purchases of treasury shares(1,055) (913)
Proceeds from exercise of stock options431
 418
Net cash used in financing activities(1,767) (1,547)
Effect of exchange rate changes on Cash and cash equivalents69
 3
Net increase (decrease) in Cash and cash equivalents65
 328
Cash and cash equivalents at beginning of the period1,315
 970
Cash and cash equivalents at end of the period$1,380
 $1,298
Supplemental Cash Flow Information 
  
Income taxes paid$820
 $696

See Notes to Condensed Consolidated Financial Statements.


5


COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in Millions)
(Unaudited)
Three Months Ended September 30, 2020
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock		Additional
Paid-in
Capital		Unearned
Compensation		Treasury
Stock		Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, June 30, 2020$1,466 $2,666 $(1)$(22,075)$22,731 $(4,519)$464 
Net income— — — — 698 — 47 
Other comprehensive income (loss), net of tax— — — — — 100 12 
Dividends ($0.44 per share)— — — — (379)— — 
Stock-based compensation expense— 53 — — — — — 
Shares issued for stock options— 130 — 132 — — — 
Shares issued for restricted stock units— (13)— 13 — — — 
Treasury stock acquired— — — (350)— — — 
Noncontrolling interests acquired— — — — — — (99)
Other— 1 — — 2 (2)(4)
Balance, September 30, 2020$1,466 $2,837 $(1)$(22,280)$23,052 $(4,421)$420 
Three Months Ended September 30, 2019
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock		Additional
Paid-in
Capital		Unearned
Compensation		Treasury
Stock		Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, June 30, 2019$1,466 $2,338 $(3)$(21,682)$21,653 $(4,119)$337 
Net income— — — — 578 — 49 
Other comprehensive income (loss), net of tax— — — — — (96)(6)
Dividends ($0.43 per share)— — — — (370)— (2)
Stock-based compensation expense— 49 — — — — — 
Shares issued for stock options— 93 — 128 — — — 
Shares issued for restricted stock units— (14)— 14 — — — 
Treasury stock acquired— — — (360)— — — 
Noncontrolling interests assumed through acquisition— — — — — — 120 
Other— — 2 — (1)— — 
Balance, September 30, 2019$1,466 $2,466 $(1)$(21,900)$21,860 $(4,215)$498 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,357 at September 30, 2020 ($3,209 at September 30, 2019) and $3,402 at June 30, 2020 ($3,104 at June 30, 2019), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,054 at September 30, 2020 ($1,008 at September 30, 2019) and $1,108 at June 30, 2020 ($1,013 at June 30, 2019), respectively.




See Notes to Condensed Consolidated Financial Statements.

6





COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in Millions)
(Unaudited)
Nine Months Ended September 30, 2020
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock		Additional
Paid-in
Capital		Unearned
Compensation		Treasury
Stock		Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2019$1,466 $2,488 $(2)$(22,063)$22,501 $(4,273)$441 
Net income— — — — 2,048 — 120 
Other comprehensive income (loss), net of tax— — — — — (147)(1)
Dividends ($1.75 per share)*— — — — (1,503)— (37)
Stock-based compensation expense— 85 — — — — — 
Shares issued for stock options— 290 — 329 — — — 
Shares issued for restricted stock units— (30)— 30 — — — 
Treasury stock acquired— — — (578)— — — 
Noncontrolling interests acquired— — — — — — (99)
Other— 4 1 2 6 (1)(4)
Balance, September 30, 2020$1,466 $2,837 $(1)$(22,280)$23,052 $(4,421)$420 
Nine Months Ended September 30, 2019
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock		Additional
Paid-in
Capital		Unearned
Compensation		Treasury
Stock		Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2018$1,466 $2,204 $(3)$(21,196)$21,615 $(4,188)$299 
Net income— — — — 1,724 — 121 
Other comprehensive income (loss), net of tax— — — — — (27)(6)
Dividends ($1.71 per share)*— — — — (1,473)— (36)
Stock-based compensation expense— 83 — — — — — 
Shares issued for stock options— 207 — 290 — — — 
Shares issued for restricted stock units— (28)— 28 — — — 
Treasury stock acquired— — — (1,024)— — — 
Noncontrolling interests assumed through acquisition— — — — — — 120 
Other— — 2 2 (6)— — 
Balance, September 30, 2019$1,466 $2,466 $(1)$(21,900)$21,860 $(4,215)$498 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,357 at September 30, 2020 ($3,209 at September 30, 2019) and $3,128 at December 31, 2019 ($3,155 at December 31, 2018), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,054 at September 30, 2020 ($1,008 at September 30, 2019) and $1,138 at December 31, 2019 ($1,038 at December 31, 2018), respectively.

* NaN dividends were declared in each of the first quarters of 2020 and 2019
See Notes to Condensed Consolidated Financial Statements.

7

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



1.    Basis of Presentation
1.Basis of Presentation


The Condensed Consolidated Financial Statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair statement of the results for interim periods. Results of operations for interim periods may not be representative of results to be expected for a full year. Colgate-Palmolive Company (together with its subsidiaries, the “Company” or “Colgate”) reclassifies certain prior year amounts, as applicable, to conform to the current year presentation.


For a complete set of financial statement notes, including the Company’s significant accounting policies, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016,2019, filed with the Securities and Exchange Commission.Commission (the “SEC”).


2.Use of Estimates

2.     Use of Estimates

Provisions for certain expenses, including income taxes, media advertising and consumer promotion, are based on full year assumptions and are included in the accompanying Condensed Consolidated Financial Statements in proportion with estimated annual tax rates, the passage of time or estimated annual sales.sales, as applicable.


3.Recent Accounting Pronouncements

On August 28, 2017,3.    Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”(the “FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, “Derivatives2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This new guidance was effective upon issuance of this ASU for contract modifications and hedging relationships on a prospective basis and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-03, “Codification to Financial Instruments.” This ASU improves and clarifies various financial instruments topics, including the current expected credit losses (“CECL”) standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of this update. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning on January 1, 2020. The new guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2020, the FASB issued ASU No. 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323) and Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The guidance provides clarification of the interaction of rules for Hedging Activities,” amendingequity securities, the eligibility criteria for hedged itemsequity method of accounting and transactions to expand an entity’s ability to hedge nonfinancialforward contracts and financial risk components. The new guidance eliminates the requirement to separately measure and present hedge ineffectiveness and aligns the presentationpurchase options on certain types of hedge gains and losses with the underlying hedge item. The new guidance also simplifies the hedge documentation and hedge effectiveness assessment requirements. Thesecurities. This new guidance is effective for the Company beginning on January 1, 2019,2021, with early adoption permitted. The amended presentation and disclosure requirements must be adopted on a prospective basis, while any amendments to cash flow and net investment hedge relationships that exist on the date of adoption must be applied on a “modified retrospective” basis, meaning a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the year of adoption. While the Company is currently assessing the impact of the new standard on its Consolidated Financial Statements, thisThis new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.


On May 10, 2017,In December 2019, the FASB issued ASU No. 2017-09, “Compensation–Stock Compensation2019-12, “Income taxes (Topic 718)740): Scope of ModificationSimplifying the Accounting for Income Taxes.” clarifying when a changeThis ASU simplifies the accounting for income taxes by removing certain exceptions to the terms or conditions of a share-based payment award must be accounted for as a modification. The newgeneral principles in ASC 740 and also clarifies and amends existing guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. Theimprove consistent application. This new guidance is effective for the Company on a prospective basis beginning on January 1, 2018,2021, with early adoption permitted. This new guidance is not expected to have ana material impact on the Company’s Consolidated Financial Statements as it isStatements.

In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Financial Instruments (Topic 825).” This ASU clarifies three topics related to financial instruments accounting. This new guidance was effective for the Company beginning on January 1, 2020. The new guidance did not have a material impact on the Company’s practice to change either the terms or conditions of share-based payment awards once they are granted.Consolidated Financial Statements.



8
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




On March 10, 2017,In August 2018, the FASB issued ASU No. 2017-07, “Compensation–Retirement Benefits2018-13, “Fair Value Measurement (Topic 715)820): ImprovingDisclosure Framework - Changes to the Presentation of Net Periodic Pension CostDisclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and Net Periodic Postretirement Benefit Cost,” changing the presentation of the net periodic benefit cost on the Statement of Income and limiting the amount of net periodic benefit cost eligible for capitalization to assets.adds new disclosure requirements. The new guidance permits onlydisclosure requirements include disclosing the service cost component of net periodic benefit cost to be eligible for capitalization. The new guidance also requires entities to present the service cost component of net periodic benefit cost together with compensation costs arising from services rendered by employees during the period. Other components of net periodic benefit cost, which include interest, expected return on assets, amortization of prior service costs and actuarialchanges in unrealized gains and losses are required to be presented outsidefor the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of Operating profit. The line item or itemsthe reporting period and the range and weighted average of significant unobservable inputs used to present the other components of net periodic benefit cost must be disclosed in the Notes to the Consolidated Financial Statements, if not separately described on the Statement of Income. The new presentation requirement is required to be adopted on a “full retrospective” basis, meaning the standard is applied to all of the periods presented in the financial statements, while the limitation on capitalization can only be adopted on a prospective basis. Thedevelop Level 3 fair value measurements. This new guidance iswas effective for the Company beginning on January 1, 2018, with early adoption permitted. While2020 and did not have a material impact on the Company is currently assessing the impact of the new standard on itsCompany’s Consolidated Financial Statements, based on its historical results, it anticipates that, as a result of the reclassification, full year Operating profit will increase by approximately $100 annually with no impact on Net income attributable to Colgate-Palmolive Company.Statements.


OnIn January 26, 2017, the FASB issued ASU No. 2017-04, “Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” eliminating the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. TheAny impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard iswas effective for the Company on a prospective basis beginning on January 1, 2020 with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

On January 5, 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which provides additional guidance on evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The guidance requires an entity to evaluate if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the new guidance would define this as an asset acquisition; otherwise, the entity then evaluates whether the asset meets the requirement that a business include, at a minimum, an input and substantive process that together significantly contribute to the ability to create outputs. The guidance is effective for the Company on a prospective basis beginning on January 1, 2018, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

On October 24, 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory,” which eliminates the requirement to defer recognition of income taxes on intra-entity asset transfers until the asset is sold to an outside party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. As permitted, the Company early-adopted the new standard on a “modified retrospective” basis, meaning the standard is applied only to the most recent period presented in the financial statements, as of January 1, 2017. This new guidance did not have a material impact on the Company’s Consolidated Financial Statements.

On August 26, 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company beginning on January 1, 2018, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which amended accounting for income taxes related to share-based compensation, the related classification in the statement of cash flows and share award forfeiture accounting. The new guidance was effective for the Company beginning on January 1, 2017. As required subsequent to the adoption of this new guidance, the Company recognized excess tax benefits of $17 and $43 (resulting from an increase in the fair value of an award from grant date to the vesting or exercise date, as applicable) in the Provision for income taxes as a discrete item during the three and nine months ended September 30, 2017, respectively. These amounts may not necessarily be indicative of future amounts that may be recognized as any excess tax benefits recognized would be dependent on future stock price, employee exercise behavior and applicable tax rates. Prior to January 1, 2017, excess tax benefits were recognized in equity. As permitted, the Company elected to classify excess tax benefits as an operating activity in the Statement of Cash Flows instead of as a financing activity on a prospective basis and did not retrospectively adjust prior periods. Also, as permitted by the new standard, the Company elected to account for forfeitures as they occur.

On March 15, 2016, the FASB issued ASU No. 2016-07, “Investments–Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting,” which eliminated the requirement to retroactively adjust an investment that subsequently qualifies for equity method accounting (as a result of an increase in level of ownership interest or degree of influence) as if the equity method of accounting had been applied during all prior periods that the investment was held. The new standard requires that the investor add the cost of acquiring additional ownership interest in the investee to its current basis and prospectively apply the equity method of accounting. For an available-for-sale investment, any unrealized gains or losses should be recognized in earnings at the date the investment qualifies as an equity method investment. The new guidance was effective for the Company beginning on January 1, 2017, and did not have a material impact on the Company’s Consolidated Financial Statements.


On February 25, 2016, the FASB issued its final standard on lease accounting, ASU No. 2016-02, “Leases (Topic 842),” which supersedes Topic 840, “Leases.” The new accounting standard requires the recognition of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The new standard also provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced disclosures about the Company’s leasing arrangements. Under current accounting standards, substantially all of the Company’s leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This new standard is effective for the Company beginning on January 1, 2019, with early adoption permitted. The standard requires a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the impact of the new standard on its Consolidated Financial Statements.

On January 5,In June 2016, the FASB issued ASU No. 2016-01,2016-13, “Financial Instruments–Overall (Subtopic 825-10): RecognitionInstruments-Credit Losses (Topic 326) Codification Improvements to Financial Instruments-Credit Losses (Topic 326).” Subsequent updates were released in November 2018 (ASU No. 2018-19), November 2019 (ASU No. 2019-10 and Measurement of Financial Assets2019-11) and Financial Liabilities.” The updatedFebruary 2020 (ASU No. 2020-02) that provided additional guidance enhanceson this Topic. This ASU introduces the reportingCECL model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The Company adopted the new standard, which includes amendments to address aspectsprimarily impacts the Company’s trade receivables and related methodology for assessing the collectability of recognition, measurement, presentation and disclosure. The amendment to the standard is effective for the Company beginningits customer accounts, on January 1, 2018. While the Company is currently assessing the impact2020, on a “modified retrospective” basis. The adoption of the new standard, it does not expect this new guidance to have a material impact on its Consolidated Financial Statements.

On July 22, 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in first-out (“LIFO”) and the retail inventory method. The new guidance was effective for the Company beginning on January 1, 2017. This new guidance did not have a material impact on the Company’s Consolidated Financial Statements.

9
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




4.    Acquisitions

Hello Products LLC

On May 28, 2014,January 31, 2020, the FASBCompany acquired Hello Products LLC, an oral care business, for cash consideration of $351. The acquisition was financed with a combination of debt and the International Accounting Standards Board issued their final converged standard on revenue recognition. The standard, issued as ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” by the FASB, provides a comprehensive revenue recognition model for all contracts with customers and supersedes current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when itcash. This acquisition is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to its customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The new standard also includes enhanced disclosures. During 2016, the FASB issued several accounting updates (ASU No. 2016-08, 2016-10 and 2016-12) to clarify implementation guidance and correct unintended applicationpart of the guidance. Company’s strategy to focus on high growth segments within its Oral Care, Personal Care and Pet Nutrition businesses.

The standard allows for either full retrospective adoption or modified retrospective adoption. The Company planstotal purchase price consideration of $351 has been allocated to adopt the new standardnet assets acquired based on January 1, 2018, on a “modified retrospective” basis. The Company has substantially completed its assessment of the new standard and continues to make progress on its implementation. Based on the progress to date, the Company does not expect the new standard will have a material impact on its revenue recognition accounting policy or its Consolidated Financial Statements.their respective preliminary estimated fair values as follows:
Receivables$11 
Inventories13 
Other assets and liabilities, net(4)
Other intangible assets160 
4.GoodwillRestructuring and Related Implementation Charges171 
Fair value of net assets acquired$351 
Other intangible assets acquired include trademarks, valued at $115, which are considered to have a finite useful life of 25 years, and customer relationships valued at $45, which are considered to have a finite useful life of 17 years. Goodwill of $171 was allocated to the North America segment. The Company expects that goodwill will be deductible for tax purposes.

The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in additional adjustments to the preliminary values discussed above. The Company expects to finalize the purchase price allocation no later than the first quarter of 2021.

Pro forma results of operations have not been presented as the impact on the Company’s Condensed Consolidated Financial Statements is not material.

Laboratoires Filorga Cosmétiques (“Filorga”)

On September 19, 2019, the Company acquired the Filorga skin health business ("Filorga") for cash consideration of €1,516 (approximately $1,674), which included interest on the equity purchase price, plus additional consideration of €32 (approximately $38), the majority of which related to repayment of loans from former shareholders of Filorga. Filorga is a premium anti-aging skin health brand focused primarily on facial care. This acquisition is part of the Company’s strategy to focus on high growth segments within its Oral Care, Personal Care and Pet Nutrition businesses, including by expanding its portfolio in premium skin health.
10
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



The total purchase price consideration of $1,712 has been allocated to the net assets acquired based on their respective preliminary estimated fair values as follows:
Cash$30 
Receivables53 
Inventories70 
Other current assets18 
Other intangible assets1,051 
Goodwill923 
Other current liabilities(67)
Deferred income taxes(276)
Noncontrolling interests(90)
Fair value of net assets acquired$1,712 
Other intangible assets acquired include trademarks of $774, which are considered to have an indefinite useful life, and customer relationships of $277, which are considered to have a finite useful life of 14 years. Goodwill of $923 was allocated to the Europe segment. Goodwill will not be deductible for tax purposes.

In the third quarter of 2020, the Company completed the purchase of the outstanding non-controlling interest of Filorga’s joint venture based in Hong Kong and covering the Hong Kong and China markets, for approximately €85 (approximately $99) in cash.

Pro forma results of operations have not been presented as the impact on the Company’s Condensed Consolidated Financial Statements is not material.

Nigeria Joint Venture

On August 15, 2019, the Company acquired a 51% controlling interest in Colgate Tolaram Pte. Ltd., a joint venture which owns the Nigeria-based Hypo Homecare Products Limited, for $31.

Pro forma results of operations have not been presented as the impact on the Company’s Condensed Consolidated Financial Statements is not material.


11
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


5.    Restructuring and Related Implementation Charges
    
InThe Company’s restructuring program (the “Global Growth and Efficiency Program”), which commenced in the fourth quarter of 2012, the Company commenced a restructuring program (as subsequently expanded, as described below, the “Global Growth and Efficiency Program”) for sustained growth. The program’s initiatives are expected to help Colgate ensure sustained solid worldwide growth in unit volume, organic sales, operating profit and earnings per share and enhance its global leadership positions in its core businesses.

On October 23, 2014, the Company’s Board of Directors (the “Board”) approved an expansion of the Global Growth and Efficiency Program to take advantage of additional savings opportunities.

On October 29, 2015, the Board approved the reinvestment of the funds from the sale of the Company’s laundry detergent business in the South Pacific to expand the Global Growth and Efficiency Program and extend it for one year throughconcluded on December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.

Building on the Company’s successful implementation of the Global Growth and Efficiency Program to date, on October 26, 2017, the Board approved an expansion of the Global Growth and Efficiency Program and an extension of the program through December 31, 2019 to take advantage of additional opportunities to streamline the Company’s operations.

2019. Initiatives under the Global Growth and Efficiency Program continue to fit within the program’s three focus areas of expanding commercial hubs, extending shared business services and streamlining global functions and optimizing the global supply chain and facilities.


As a result ofDuring the expansion, cumulative pretax charges resulting fromthree months ended September 30, 2020, the Global Growth and Efficiency Program, once all phases areCompany adjusted the accrual balances related to certain projects approved and implemented, are now estimated to be in the range of $1,730 to $1,885 ($1,280 to $1,380 aftertax) as comparedprior to the previous estimate of $1,500 to $1,585 ($1,120 to $1,170 aftertax). The Company now anticipates that pretax charges for 2017 will approximate $340 to $380 ($250 to $280 aftertax) as compared to the previous estimate of $275 to $360 ($210 to $260 aftertax). It is expected that substantially all charges resulting from the Global Growth and Efficiency Program will be incurred by December 31, 2019.

The pretax charges resulting from the Global Growth and Efficiency Program are currently estimated to be comprised of the following categories: Employee-Related Costs, including severance, pension and other termination benefits (50%); asset-related costs, primarily Incremental Depreciation and Asset Impairments (10%); and Other charges, which include contract termination costs, consisting primarily of related implementation charges resulting directly from exit activities (20%) and the implementation of new strategies (20%). Over the courseconclusion of the Global Growth and Efficiency Program it is currently estimated that approximately 80%to reflect its revised estimate of remaining liabilities. This adjustment resulted in a reduction of $16 ($13 after-tax), of which $3 was recorded in Selling, general and administrative expenses and $13 was recorded in Other (income) expense, net. NaN new restructuring projects were approved for implementation during the nine months ended September 30, 2020.

For the three and nine months ended September 30, 2019 restructuring and implementation-related charges will resultare reflected in cash expenditures.the income statement as follows:

Three Months EndedNine Months Ended
September 30, 2019September 30, 2019
Cost of sales$1 $9 
Selling, general and administrative expenses28 42 
Other (income) expense, net(3)43 
Non-service related postretirement costs1 4 
Total Global Growth and Efficiency Program charges, pretax$27 $98 
Total Global Growth and Efficiency Program charges, aftertax$22 $75 
Restructuring and implementation-related charges in the preceding table and the adjustment recorded in the third quarter of 2020 were recorded in the Corporate segment as these decisions were predominantly centrally directed and controlled and were not included in internal measures of segment operating performance.







12
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




The Company currently expects thatfollowing tables summarize the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15%), Europe (20%), Latin America (5%), Asia Pacific (5%), Africa/Eurasia (5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the implementation of new strategies, noted above, on a global basis. The Company now expects that, when it has been fully implemented, the Global Growth and Efficiency Program will contribute a net reduction of approximately 3,800 to 4,400 positions from the Company’s global employee workforce.activity for restructuring accrual:

Three Months Ended September 30, 2020
Balance at June 30, 2020$64 
Charges (Benefits)(16)
Cash payments(15)
Charges against assets0 
Foreign exchange1 
Other0 
Balance at September 30, 2020$34 
For the three and nine months ended September 30, 2017 and 2016, restructuring and related implementation charges are reflected in the Condensed Consolidated Statements of Income as follows:
Nine Months Ended September 30, 2020
Balance at December 31, 2019$100 
Charges (Benefits)(16)
Cash payments(50)
Charges against assets0 
Foreign exchange0 
Other0 
Balance at September 30, 2020$34 



13
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Cost of sales$16
 $11
 $51
 $31
Selling, general and administrative expenses22
 9
 60
 49
Other (income) expense, net20
 22
 135
 76
Total Global Growth and Efficiency Program charges, pretax$58
 $42
 $246
 $156
        
Total Global Growth and Efficiency Program charges, aftertax$39
 $32
 $185
 $114

Restructuring and related implementation charges in the preceding table are recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance.

Total charges incurred for the Global Growth and Efficiency Program relate to initiatives undertaken by the following reportable operating segments:

Three Months Ended
Nine Months Ended
Program-to-date

September 30,
September 30,
Accumulated Charges

2017
2016
2017
2016

North America27 %
30%
23%
32%
18%
Latin America2 %
3%
3%
5%
3%
Europe(11)%
19%
29%
10%
23%
Asia Pacific7 %
4%
4%
6%
3%
Africa/Eurasia2 %
12%
2%
14%
6%
Hill’s Pet Nutrition
9 %
5%
5%
8%
7%
Corporate64 %
27%
34%
25%
40%

Since the inception of the Global Growth and Efficiency Program in the fourth quarter of 2012, the Company has incurred cumulative pretax charges of $1,474 ($1,092 aftertax) in connection with the implementation of various projects as follows:
 Cumulative Charges
 as of September 30, 2017
Employee-Related Costs$594
Incremental Depreciation88
Asset Impairments29
Other763
Total$1,474

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




The majority of costs incurred since inception relate to the following projects: the implementation of the Company’s overall hubbing strategy; the extension of shared business services and streamlining of global functions; the consolidation of facilities; the closing of the Morristown, New Jersey personal care facility; the simplification and streamlining of the Company’s research and development capabilities and oral care supply chain, both in Europe; redesigning the European commercial organization; restructuring how the Company will provide future retirement benefits to substantially all of the U.S.-based employees participating in the Company’s defined benefit retirement plan by shifting them to the Company’s defined contribution plan.
The following tables summarize the activity for the restructuring and related implementation charges discussed above and the related accruals:
  Three Months Ended September 30, 2017
  
Employee-Related
Costs
 
 
Incremental
Depreciation
 
 
Asset
Impairments
 
 
Other
 
 
Total
 
Balance at June 30, 2017 $138
 $—
 $—
 $116
 $254
Charges 21
 2
 —
 35
 58
Cash payments (16) —
 —
 (42) (58)
Charges against assets (15) (2) —
 —
 (17)
Foreign exchange —
 —
 —
 —
 —
Balance at September 30, 2017 $128
 $—
 $—
 $109
 $237
  Nine Months Ended September 30, 2017
  Employee-Related
Costs
 		 Incremental
Depreciation
 		 Asset
Impairments
 		 Other
 		 Total
 
Balance at December 31, 2016 $56
 $—
 $—
 $125
 $181
Charges 129
 8
 2
 107
 246
Cash payments (43) —
 —
 (124) (167)
Charges against assets (17) (8) (2) —
 (27)
Foreign exchange 3
 —
 —
 1
 4
Balance at September 30, 2017 $128
 $—
 $—
 $109
 $237

Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension and other retiree benefit enhancements amounting to $15 and $17 for the three and nine months ended September 30, 2017, respectively, which are reflected as Charges against assets within Employee-Related Costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension and other retiree benefit liabilities (see Note 9, Retirement Plans and Other Retiree Benefits).

Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.

Other charges consist primarily of charges resulting directly from exit activities and the implementation of new strategies as a result of the Global Growth and Efficiency Program. These charges for the three and nine months ended September 30, 2017 include third-party incremental costs related to the development and implementation of new business and strategic initiatives of $33 and $103, respectively, and contract termination costs and charges resulting directly from exit activities of $2 and $4, respectively. These charges were expensed as incurred.

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


5.6.    Inventories


Inventories by major class are as follows:
September 30,
2020		December 31,
2019
Raw materials and supplies$390 $305 
Work-in-process48 49 
Finished goods1,190 1,056 
       Total Inventories, net$1,628 $1,410 
            Non-current inventory, net$(50)$(10)
              Current Inventories, net$1,578 $1,400 
 September 30,
2017		 December 31,
2016
Raw materials and supplies$249
 $266
Work-in-process47
 42
Finished goods909
 863
Total Inventories$1,205
 $1,171

6.    Shareholders’ Equity

Changes in the components of Shareholders’ Equity for the nine months endedSeptember 30, 2017 are as follows:
 Colgate-Palmolive Company Shareholders’ Equity 
Noncontrolling
Interests
 
Common
Stock
 
Additional
Paid-in
Capital
 
Unearned
Compensation
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
  
Balance, December 31, 2016$1,466
 $1,691
 $(7) $(19,135) $19,922
 $(4,180) $260
Net income 
  
  
  
 1,701
   120
Other comprehensive income (loss), net of tax 
  
  
  
   346
 11
Dividends 
  
  
  
 (1,406)  
 (16)
Stock-based compensation expense 
 106
  
  
  
  
  
Shares issued for stock options 
 166
  
 274
  
  
  
Shares issued for restricted stock units  (33)   33
      
Treasury stock acquired 
  
  
 (1,055)  
  
  
Other 
 2
 6
 5
 (10)  
 

Balance, September 30, 2017$1,466
 $1,932
 $(1) $(19,878) $20,207
 $(3,834) $375

Accumulated other comprehensive income (loss) includes cumulative translation losses of $2,929 and $3,212 at September 30, 2017 and December 31, 2016, respectively, and unrecognized retirement plan and other retiree benefits costs of $898 and $977 at September 30, 2017 and December 31, 2016, respectively.

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


7.    Earnings Per Share

 Three Months Ended
 September 30, 2017 September 30, 2016
 Net income attributable to Colgate-Palmolive Company 
Shares
(millions)
 
Per
Share
 Net income attributable to Colgate-Palmolive Company 
Shares
(millions)
 
Per
Share
Basic EPS$607
 880.7
 $0.69
 $702
 891.9
 $0.79
Stock options and
restricted stock units
  5.6
  
  
 7.3
  
Diluted EPS$607
 886.3
 $0.68
 $702
 899.2
 $0.78

For the three months ended September 30, 20172020 and 2016,2019, earnings per share were as follows:
 Three Months Ended
 September 30, 2020September 30, 2019
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share		Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share
Basic EPS$698 859.0 $0.81 $578 858.7 $0.67 
Stock options and
restricted stock units
2.8   2.5  
Diluted EPS$698 861.8 $0.81 $578 861.2 $0.67 
For the three months ended September 30, 2020 and 2019, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 9,502,3292,693,996 and 1,980,457,16,963,201, respectively.

 Nine Months Ended
 September 30, 2017 September 30, 2016
 Net income attributable to Colgate-Palmolive Company 
Shares
(millions)
 
Per
Share
 Net income attributable to Colgate-Palmolive Company 
Shares
(millions)
 
Per
Share
Basic EPS$1,701
 883.0
 $1.93
 $1,835
 893.2
 $2.05
Stock options and
restricted stock units
  6.3
  
  
 7.0
  
Diluted EPS$1,701
 889.3
 $1.91
 $1,835
 900.2
 $2.04

For the nine months endedSeptember 30, 20172020 and 2016,2019, earnings per share were as follows:
 Nine Months Ended
 September 30, 2020September 30, 2019
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share		Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share
Basic EPS$2,048 857.7 $2.39 $1,724 860.1 $2.00 
Stock options and
restricted stock units
1.8   2.3  
Diluted EPS$2,048 859.5 $2.38 $1,724 862.4 $2.00 
For the nine months ended September 30, 2020 and 2019, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 9,209,06015,862,643 and 1,212,685,18,818,149, respectively.

Basic and diluted earnings per share are computed independently for each quarter and any year-to-date period presented. As a result of changes in the number of shares outstanding during the year and rounding, the sum of the quarters’quarters’ earnings per share may not necessarily equal the earnings per share for any year-to-date period.
14
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




8.8.    Other Comprehensive Income (Loss)


Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the three months ended September 30, 20172020 and 20162019 were as follows:
 20202019
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$5 $45 $(83)$(105)
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period53 41 (14)(10)
Amortization of net actuarial loss, transition and prior service costs (1)
15 13 19 15 
Retirement plans and other retiree benefits adjustments68 54 5 5 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges(1)(1)6 5 
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
2 2 (1)(1)
Gains (losses) on cash flow hedges1 1 5 4 
Total Other comprehensive income (loss)$74 $100 $(73)$(96)
  2017 2016
  Pretax Net of Tax Pretax Net of Tax
         
Cumulative translation adjustments $48
 $62
 $(10) $(2)
Retirement plans and other retiree benefits:        
Net actuarial gain (loss) and prior service costs arising during the period 72
 45
 9
 7
Amortization of net actuarial loss, transition and prior service costs (1)
 15
 9
 15
 9
Retirement plans and other retiree benefits adjustments 87
 54
 24
 16
Available-for-sale securities:        
Unrealized gains (losses) on available-for-sale securities —
 —
 —
 —
Reclassification of (gains) losses into net earnings on available-for-sale securities —
 —
 (1) (1)
Gains (losses) on available-for-sale securities —
 —
 (1) (1)
Cash flow hedges:        
Unrealized gains (losses) on cash flow hedges (8) (5) 1
 —
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
 4
 2
 1
 1
Gains (losses) on cash flow hedges (4) (3) 2
 1
Total Other comprehensive income (loss) $131
 $113
 $15
 $14

(1)These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 9, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 13, Fair Value Measurements and Financial Instruments for additional details.


There were no tax impacts on Other comprehensive income (loss) (“OCI”) attributable to Noncontrolling interests.


COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the nine months endedSeptember 30, 20172020 and 20162019 were as follows:
 20202019
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$(288)$(229)$(33)$(54)
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period55 42 (15)(11)
Amortization of net actuarial loss, transition and prior service costs (1)
55 42 54 41 
Retirement plans and other retiree benefits adjustments110 84 39 30 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges2 1 3 2 
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
(4)(3)(6)(5)
Gains (losses) on cash flow hedges(2)(2)(3)(3)
Total Other comprehensive income (loss)$(180)$(147)$3 $(27)
  2017 2016
  Pretax Net of Tax Pretax Net of Tax
         
Cumulative translation adjustments $208
 $283
 $76
 $86
Retirement plans and other retiree benefits:        
Net actuarial gain (loss) and prior service costs arising during the period 72
 45
 9
 7
Amortization of net actuarial loss, transition and prior service costs (1)
 52
 34
 47
 32
Retirement plans and other retiree benefits adjustments 124
 79
 56
 39
Available-for-sale securities:        
Unrealized gains (losses) on available-for-sale securities —
 —
 —
 —
Reclassification of (gains) losses into net earnings on available-for-sale securities —
 —
 (1) (1)
Gains (losses) on available-for-sale securities —
 —
 (1) (1)
Cash flow hedges:        
Unrealized gains (losses) on cash flow hedges (28) (17) (6) (4)
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
 2
 1
 1
 1
Gains (losses) on cash flow hedges (26) (16) (5) (3)
Total Other comprehensive income (loss) $306
 $346
 $126
 $121

(1)These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 9, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 13, Fair Value Measurements and Financial Instruments for additional details.


There were no tax impacts on Other comprehensive income (loss)OCI attributable to Noncontrolling interests.



15
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




9.9.    Retirement Plans and Other Retiree Benefits


Components of Net periodic benefit cost for the three and nine months ended September 30, 20172020 and 20162019 were as follows:
Three Months Ended September 30, 2020
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202020192020201920202019
Service cost$0 $1 $4 $3 $3 $4 
Interest cost20 22 5 6 10 15 
Expected return on plan assets(29)(29)(6)(4)0 (2)
Amortization of actuarial loss (gain)10 14 2 1 3 4 
Net periodic benefit cost$1 $8 $5 $6 $16 $21 
 Pension Benefits Other Retiree Benefits
 United States International    
 Three Months Ended September 30,
 2017 2016 2017 2016 2017 2016
Service cost$—
 $—
 $4
 $4
 $3
 $4
Interest cost23
 27
 6
 7
 9
 10
ESOP offset—
 —
 —
 —
 (1) —
Expected return on plan assets(28) (27) (5) (6) —
 —
Amortization of transition and prior service costs (credits)—
 —
 —
 —
 —
 —
Amortization of actuarial loss (gain)12
 10
 2
 2
 1
 3
Net periodic benefit cost$7
 $10
 $7
 $7
 $12
 $17


 Pension Benefits Other Retiree Benefits
 United States International    
 Nine Months Ended September 30,
 2017 2016 2017 2016 2017 2016
Service cost$1
 $1
 $11
 $12
 $11
 $10
Interest cost70
 80
 16
 19
 30
 32
ESOP offset—
 —
 —
 —
 (1) (1)
Expected return on plan assets(83) (82) (15) (17) —
 —
Amortization of transition and prior service costs (credits)—
 —
 —
 —
 —
 —
Amortization of actuarial loss (gain)36
 30
 7
 6
 9
 11
Net periodic benefit cost$24
 $29
 $19
 $20
 $49
 $52

Nine Months Ended September 30, 2020
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202020192020201920202019
Service cost$0 $1 $11 $10 $14 $11 
Interest cost57 68 14 16 29 35 
Expected return on plan assets(83)(78)(15)(13)(1)(3)
Amortization of actuarial loss (gain)34 39 7 6 14 9 
Net periodic benefit cost$8 $30 $17 $19 $56 $52 
For the nine months ended September 30, 20172020 and 2016,2019, the Company made voluntary contributions to its U.S. postretirement plans of $81$0 and $53,$113, respectively.

16
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




10.10.    Income Taxes

On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which amended accounting
The provision for income taxes for the nine months ended September 30, 2020 includes $71 of income tax benefits recorded on a discrete period basis of which $45 relates to previously recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance against a deferred tax asset. As more fully described below, both items were previously recorded in connection with the charge recorded by the Company in 2017 and revised in 2018 related to share-based compensation.the Tax Cuts and Jobs Acts (the “TCJA”).

As part of the previously recorded charge for the TCJA, the Company had provided for foreign withholding taxes expected to be paid on the remittance of earnings from certain overseas subsidiaries no longer deemed indefinitely reinvested. As a result of adoptinga recent reorganization of the standard effective January 1, 2017,ownership structure of certain foreign subsidiaries, the Company recognized excess tax benefitsdetermined that 0 withholding taxes are due on the remittance by certain subsidiaries of $17earnings previously deemed reinvested and, $43 (resulting from an increaseaccordingly, in the fair valuefirst quarter of an award from2020, reversed $45 of previously recorded foreign withholding taxes.

Also as part of the grant datepreviously recorded charge for the TCJA, the Company provided a valuation allowance against a deferred tax asset related to foreign tax credit carry-forwards that the vesting or exercise date, as applicable) in the Provision for income taxes as a discrete item during the three and nine months ended September 30, 2017, respectively. These amounts mayCompany did not necessarilyexpect to be indicative of future amounts that may be recognized as any excess tax benefits recognized would be dependent on future stock price, employee exercise behavior and applicable tax rates. Priorable to January 1, 2017, excess tax benefits were recognized in equity. See Note 3, Recent Accounting Pronouncements for additional information.

The Company has taken a tax position in a foreign jurisdiction since 2002 that has been challengeduse due to changes made by the local tax authorities. In May 2015, the Company became aware of several rulings by the Supreme Court in this foreign jurisdiction disallowing certain tax deductions which had the effect of reversing prior decisions. The Company had taken deductions in prior years similar to those disallowed by such court and as a result, as required, reassessed its tax position and increased its unrecognized tax benefits in 2015.

During the quarter ended June 30, 2016, the Supreme Court in this foreign jurisdiction decided the matter in the Company’s favor for the years 2002 through 2005 and, as a result, the Company recorded a net tax benefit of $13, including interest. During the quarter ended September 30, 2016, the Administrative Court in this jurisdiction also decided the matter in the Company’s favor for the years 2008 through 2011 by acknowledging the Supreme Court’s ruling for the years 2002 through 2005, which eliminated the possibility for future appeals.TCJA. As a result of a new operating structure being implemented within one of the Company’s divisions, the Company recorded abelieves the use of these foreign tax benefit of $17, including interest,credit carry-forwards will not be limited in the quarter ended September 30, 2016.

The tax benefit of deductions related to this tax position taken for the years 2006 through 2007future and, 2012 through 2014 totals approximately $15 at current exchange rates. These deductions are currently being challenged by the tax authorities eitheraccordingly, in the lower courts or atfirst quarter of 2020, reversed the administrative level and, if resolved in the Company’s favor, will result in the Company recording additional tax benefits, including interest.previously recorded valuation allowance of $26.


11.Contingencies

11.    Contingencies

As a global company serving consumers in more than 200 countries and territories, the Company is routinely subject to a wide variety of legal proceedings. These include disputes relating to intellectual property, contracts, product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, as well as labor and employment, pension, data privacy and security, environmental and tax matters and consumer class actions. Management proactively reviews and monitors the Company’s exposure to, and the impact of, environmental matters. The Company is party to various environmental matters and, as such, may be responsible for all or a portion of the cleanup, restoration and post-closure monitoring of several sites.


The Company establishes accruals for loss contingencies when it has determined that a loss is probable and that the amount of loss, or range of loss, can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances.


The Company also determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that a loss is reasonably possible and it is able to determine such estimates. For those matters disclosed below for which the amount of any potential losses can be reasonably estimated, the Company currently estimates that the aggregate range of reasonably possible losses in excess of any accrued liabilities is $0 to approximately $250$400 (based on current exchange rates). The estimates included in this amount are based on the Company’s analysis of currently available information and, as new information is obtained, these estimates may change. Due to the inherent subjectivity of the assessments and the unpredictability of outcomes of legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company. Thus, the Company’s exposure and ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued or the range disclosed above.
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



Based on current knowledge, management does not believe that the ultimate resolution of loss contingencies arising from the matters discussed herein will have a material effect on the Company’s consolidated financial position or its ongoing results of operations or cash flows. However, in light of the inherent uncertainties noted above, an adverse outcome in one or more matters could be material to the Company’s results of operations or cash flows for any particular quarter or year.


17
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


Brazilian Matters


There are certain tax and civil proceedings outstanding, as described below, related to the Company’sCompany’s 1995 acquisition of the Kolynos oral care business from Wyeth (the “Seller”).


The Brazilian internal revenue authority has disallowed interest deductions and foreign exchange losses taken by the Company’s Brazilian subsidiary for certain years in connection with the financing of the Kolynos acquisition. The tax assessments with interest, penalties and any court-mandated fees, at the current exchange rate, are approximately $171.$103. This amount includes additional assessments received from the Brazilian internal revenue authority in April 2016 relating to net operating loss carryforwards used by the Company’s Brazilian subsidiary to offset taxable income that had also been deducted from the authority’s original assessments. The Company has been disputing the disallowances by appealing the assessments since October 2001. Appeals are currently pending at the administrative level. In the event the Company is ultimately unsuccessful in its administrative appeals, further appeals are available within the Brazilian federal courts.


In each of September 2015, February 2017, June 2018, April 2019 and September 2020, the Company lost one of its appeals at thean administrative levelappeal and subsequently filed a lawsuitan appeal in Brazilian federal court. In February 2017,Currently, there are 5 appeals pending in the Company lost an additional administrative appeal and filed a similar action in Brazilian federal court. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the disallowances are without merit and that the Company should ultimately prevail. The Company is challenging these disallowances vigorously.
 
In July 2002, the Brazilian Federal Public Attorney filed a civil action against the federal government of Brazil, Laboratorios Wyeth-Whitehall Ltda. (the Brazilian subsidiary of the Seller) and the Company, as represented by its Brazilian subsidiary, in the 6th. Lower Federal Court in the City of São Paulo, seeking to annul an April 2000 decision by the Brazilian Board of Tax Appeals that found in favor of the Seller’s Brazilian subsidiary on the issue of whether it had incurred taxable capital gains as a result of the divestiture of Kolynos. The action seeks to make the Company’s Brazilian subsidiary jointly and severally liable for any tax due from the Seller’s Brazilian subsidiary. The case has been pending since 2002, and the Lower Federal Court has not issued a decision. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the Company should ultimately prevail in this action. The Company is challenging this action vigorously.


In December 2005, the Brazilian internal revenue authority issued to the Company’s Brazilian subsidiary a tax assessment with interest, penalties and any court-mandated fees of approximately $77,$46, at the current exchange rate, based on a claim that certain purchases of U.S. Treasury bills by the subsidiary and their subsequent disposition during the period 2000 to 2001 were subject to a tax on foreign exchange transactions. The Company had been disputing the assessment within the internal revenue authority’s administrative appeals process. However, in November 2015, the Superior Chamber of Administrative Tax Appeals denied the Company’s final administrative appeal, and the Company has filed a lawsuit in the Brazilian federal court. In the event the Company is unsuccessful in this filing,lawsuit, further appeals are available within the Brazilian federal courts. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the tax assessment is without merit and that the Company should ultimately prevail. The Company is challenging this assessment vigorously.

18
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




Competition MattersMatter


Certain of the Company’s subsidiaries have beenwere historically subject to investigations,actions and, in some cases, fines, by governmental authorities in a number of countries related to alleged competition law violations. Substantially all of these matters also have involved other consumer goods companies and/or retail customers. These investigations often continue for several years and can result in substantial fines for violations that are found as well as associated private actions for damages. While the Company cannot predict the final financial impact of pending competition law matters, as these matters may change, the Company evaluates developments in these matters quarterly and accrues liabilities as and when appropriate. The Company’s policy is to comply with antitrust and competition laws and, if a violation of any such laws is found, to take appropriate remedial action and to cooperate fully with any related governmental inquiry. The current status of pending competition law matters as of September 30, 20172020 of such competition law matters pending against the Company during the nine months ended September 30, 2020 is set forth below.


▪In December 2014, the French competition law authority found that 13 consumer goods companies, including the Company’s French subsidiary, exchanged competitively sensitive information related to the French home care and personal care sectors, for which the Company’s French subsidiary was fined $57. In addition, as a result of the Company’s acquisition of the Sanex personal care business in 2011 from Unilever N.V. and Unilever PLC (together with Unilever N.V., “Unilever”), pursuant to a Business and Share Sale and Purchase Agreement (the “Sale and Purchase Agreement”), the French competition law authority found that the Company’s French subsidiary, along with Hillshire Brands Company (formerly Sara Lee Corporation (“Sara Lee”)), were jointly and severally liable for fines of $25 assessed against Sara Lee’s French subsidiary. The Company is entitled to indemnification for this fine from Unilever as provided in the Sale and Purchase Agreement. The fines were confirmed by the Court of Appeal in October 2016. The Company is appealing the decision of the Court of Appeal on behalf of the Company and Sara Lee in the French Supreme Court.

▪In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of parallel imports into Greece. The Company responded to this statement of objections. In July 2017, the Company received the decision from the Greek competition law authority in which the Company was fined $11. The Company appealed the decision to the Greek courts. In April 2019, the Greek courts affirmed the judgment against the Company’s Greek subsidiary, but reduced the fine to $10.5 and dismissed the case against Colgate-Palmolive Company. The Company’s Greek subsidiary and the Greek competition authority have appealed the decision to the Greek Supreme Court.
▪In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of parallel imports into Greece. The Company responded to this statement of objections. In July 2017, the Company received the decision from the Greek competition law authority in which the Company was fined $11 (based on current exchange rates), which approximates reserves previously taken by the Company for this matter. The Company is appealing the decision to the Greek courts.


Talcum Powder Matters


The Company has been named as a defendant in civil actions alleging that certain talcum powder products that were sold prior to 1996 were contaminated with asbestos. Most of these actions involve a number of co-defendants from a variety of different industries, including suppliers of asbestos and manufacturers of products that, unlike the Company’s products, were designed to contain asbestos. As of September 30, 2017,2020, there were 171139 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 174128 cases as of June 30, 2017, 146 cases as of March 31, 20172020 and 115121 cases as of December 31, 2016.2019. During the three months ended September 30, 2017, 222020, 20 new cases were filed and 259 cases were resolved by voluntary dismissal, appealsettlement or settlement.dismissal by the court. During the nine months ended September 30, 2017, 992020, 37 new cases were filed and 4318 cases were resolved by voluntary dismissal, settlement or dismissal by the court. In addition, during the nine months ended September 30, 2020, 1 case that was previously dismissed by the trial court was affirmed on appeal or settlement.and is now closed. The value of the settlements in the quarter and the year-to-date period presented was not material, either individually or in the aggregate, to each such period’s results of operations.


A number of the pending cases are expected to go to trial in 2017. The Company believes that a significant portion of itsthe Company’s costs incurred in defending and resolving these claims has been, and the Company believes will continue to be, covered by insurance policies issued by several primary, excess and excessumbrella insurance carriers, subject to deductibles, exclusions, retentions and policy limits.


While the Company and its legal counsel believe that these cases are without merit and intend to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters. SinceWith the amountexception of any potential losses from these cases currently cannot be reasonably estimated,1 case where the Company received an adverse jury verdict in the second quarter of 2019 that the Company has appealed, the range of reasonably possible losses in excess of accrued liabilities disclosed above does not include any amount relating to these cases.cases because the amount of any possible losses from such cases currently cannot be reasonably estimated.
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


N8

The Company was a defendant in a lawsuit that was brought in Utah federal court by N8 Medical, Inc. (“N8 Medical”), Brigham Young University (“BYU”) and N8 Pharmaceuticals, Inc. (“N8 Pharma”). The complaint, originally filed in November 2013, alleged breach of contract and other torts arising out of the Company’s evaluation of a technology owned by BYU and licensed, at various times, to Ceragenix Pharmaceuticals, Inc., now in bankruptcy, N8 Medical and N8 Pharma.

In 2016, the Company resolved the claims brought by BYU and N8 Medical. These claims were each resolved in an amount that is not material to the Company’s results of operations. In the first quarter of 2017, the court dismissed the claims of N8 Pharma and, in the third quarter of 2017, N8 Pharma appealed the decision.


ERISA Matter


In June 2016, a putative class action claiming that residual annuity payments made to certain participants in the Colgate-Palmolive Company Employees’ Retirement Income Plan (the “Plan”“Plan”) did not comply with the Employee Retirement Income Security Act was filed against the Plan, the Company and certain individuals (the “Company Defendants”“Company Defendants”) in the United States District Court for the Southern District of New York. This action has been certified as a class action.York (the “Court”). The relief sought includes recalculation of benefits, pre- and post-judgment interest and attorneys’ fees. This action was certified as a class action in July 2017. In July 2020, the Court granted in part and denied in part the Company Defendants’ motion for summary judgment and dismissed certain claims on consent of the parties. In August 2020, the Court granted the plaintiffs’ motion for summary judgment on the remaining claims. The Company isand the Plan are contesting this action vigorously. Since the amount of any potential loss from this case currently cannot be reasonably estimated, the range of possible lossesvigorously and, in excess of accrued liabilities disclosed above does not include any amount relatingSeptember 2020, appealed to the case.United States Court of Appeals for the Second Circuit.
19

12.Segment Information

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


12.    Segment Information

The Company operates in two2 product segments: Oral, Personal and Home Care; and Pet Nutrition. 


The operations of the Oral, Personal and Home Care product segment are managed geographically in five5 reportable operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia.


The Company evaluates segment performance based on several factors, including Operating profit. The Company uses Operating profit as a measure of operating segment performance because it excludes the impact of Corporate-driven decisions related to interest expense and income taxes.


The accounting policies of the operating segments are generally the same as those described in Note 2, Summary of Significant Accounting Policies to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019. Intercompany sales have been eliminated. Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs restructuring and related implementation charges and gains and losses on sales of non-core product lines and assets. The Company reports these items within Corporate operations as they relate to Corporate-based responsibilities and decisions and are not included in the internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments.

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



Net sales and Operating profit by segment were as follows:
Three Months Ended Nine Months EndedThree Months EndedNine Months Ended
September 30, September 30, September 30,September 30,
2017 2016 2017 2016 2020201920202019
Net sales       Net sales    
Oral, Personal and Home Care       Oral, Personal and Home Care    
North America$795
 $800
 $2,319
 $2,393
North America$923 $869 $2,801 $2,568 
Latin America985
 924
 2,911
 2,710
Latin America837 881 2,531 2,700 
Europe642
 609
 1,784
 1,803
Europe712 607 2,004 1,798 
Asia Pacific728
 723
 2,111
 2,163
Asia Pacific722 690 1,980 2,035 
Africa/Eurasia251
 250
 738
 720
Africa/Eurasia255 248 736 732 
Total Oral, Personal and Home Care3,401
 3,306
 9,863
 9,789
Total Oral, Personal and Home Care3,449 3,295 10,052 9,833 
Pet Nutrition573
 561
 1,699
 1,685
Pet Nutrition704 633 2,095 1,845 
Total Net sales$3,974
 $3,867
 $11,562
 $11,474
Total Net sales$4,153 $3,928 $12,147 $11,678 
       
Operating profit 
  
    
Oral, Personal and Home Care 
  
    
North America$249
 $273
 $723
 $762
Latin America301
 298
 878
 829
Europe162
 158
 447
 437
Asia Pacific220
 230
 644
 668
Africa/Eurasia44
 50
 134
 138
Total Oral, Personal and Home Care976
 1,009
 2,826
 2,834
Pet Nutrition161
 162
 481
 479
Corporate(210) (100) (642) (431)
Total Operating profit$927
 $1,071
 $2,665
 $2,882
Approximately 75%70% of the Company’s Net sales are generated from markets outside the U.S., with approximately 50%45% of the Company’s Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe).

20
For the three months ended September 30, 2017, Corporate Operating profit (loss) included charges of $58 resulting from the Global Growth and Efficiency Program. For the nine months ended September 30, 2017, Corporate Operating profit (loss) included charges of $246 resulting from the Global Growth and Efficiency Program.

For the three months ended September 30, 2016, Corporate Operating profit (loss) included charges of $42 resulting from the Global Growth and Efficiency Program, a charge of $6 for a previously disclosed litigation matter and a gain of $97 on the sale of land in Mexico. For the nine months ended September 30, 2016, Corporate Operating profit (loss) included charges of $156 resulting from the Global Growth and Efficiency Program, a charge of $6 for a previously disclosed litigation matter and a gain of $97 on the sale of land in Mexico.

For further information regarding the Global Growth and Efficiency Program, refer to Note 4, Restructuring and Related Implementation Charges.
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




The Company’s Net sales of Oral, Personal and Home Care and Pet Nutrition products accounted for the following percentages of the Company’s Net sales:
13.Fair Value Measurements and Financial Instruments

Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
Net sales
Oral Care44 %46 %43 %46 %
Personal Care21 %20 %21 %20 %
Home Care18 %18 %19 %18 %
Pet Nutrition17 %16 %17 %16 %
Total Net sales100 %100 %100 %100 %
Operating profit by segment was as follows:
Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
Operating profit    
Oral, Personal and Home Care    
North America$242 $248 $753 $750 
Latin America250 235 728 718 
Europe169 153 482 452 
Asia Pacific222 193 559 557 
Africa/Eurasia61 48 174 141 
Total Oral, Personal and Home Care944 877 2,696 2,618 
Pet Nutrition196 169 588 501 
Corporate(122)(190)(368)(496)
Total Operating profit$1,018 $856 $2,916 $2,623 
For the three and nine months ended September 30, 2020, Corporate Operating profit (loss) included acquisition-related costs of $0 and $6, respectively, and benefits of $16 in both periods resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019.
For the three and nine months ended September 30, 2019, Corporate Operating profit (loss) included charges of $26 and $94, respectively, resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019 and acquisition-related costs of $18 in both periods.


21
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


13.    Fair Value Measurements and Financial Instruments

The Company uses available market information and other valuation methodologies in assessing the fair value of financial instruments. Judgment is required in interpreting market data to develop the estimates of fair value and, accordingly, changes in assumptions or the estimation methodologies may affect the fair value estimates. The Company is exposed to the risk of credit loss in the event of nonperformance by counterparties to financial instrument contracts; however, nonperformance is considered unlikely and any nonperformance is unlikely to be material, as it is the Company’s policy to contract only with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations.


The Company is exposed to market risk from foreign currency exchange rates, interest rates and commodity price fluctuations. Volatility relating to these exposures is managed on a global basis by utilizing a number of techniques, including working capital management, sourcing strategies, selling price increases, selective borrowings in local currencies and entering into selective derivative instrument transactions, issued with standard features, in accordance with the Company’s treasury and risk management policies, which prohibit the use of derivatives for speculative purposes and leveraged derivatives for any purpose. It is the Company’s policy to enter into derivative instrument contracts with terms that match the underlying exposure being hedged. Hedge ineffectiveness, if any, is not material for any period presented.


The Company’s derivative instruments include interest rate swap contracts, forward-starting interest rate swaps, foreign currency contracts and commodity contracts. The Company utilizes interest rate swap contracts to manage its targeted mix of fixed and floating rate debt, and these swaps are valued using observable benchmark rates (Level 2 valuation). The Company utilizes forward-starting interest rate swaps to mitigate the risk of variability in interest rate for future debt issuances and these swaps are valued using observable benchmark rates (Level 2 valuation). The Company utilizes foreign currency contracts, including forward and swap contracts, option contracts, local currency deposits and local currency borrowings to hedge portions of its foreign currency purchases, assets and liabilities arising in the normal course of business and the net investment in certain foreign subsidiaries. These contracts are valued using observable market rates (Level 2 valuation). Commodity futures contracts are utilized to hedge the purchases of raw materials used in production. These contracts are measured using quoted commodity exchange prices (Level 1 valuation). The duration of foreign currency and commodity contracts generally does not exceed 12 months.

22
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)





The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments which are carried at fair value in the Company’s Consolidated Balance Sheets at September 30, 20172020 and December 31, 2016:2019:
 AssetsLiabilities
  
Account		Fair ValueAccountFair Value
Designated derivative instrumentsSeptember 30, 2020December 31, 2019 September 30, 2020December 31, 2019
Interest rate swap contractsOther current assets$0 $0 Other accruals$0 $0 
Interest rate swap contractsOther assets15 4 Other liabilities0 0 
Forward-starting interest rate swapsOther current assets0 0 Other accruals0 0 
Forward-starting interest rate swapsOther assets0 0 Other liabilities4 0 
Foreign currency contractsOther current assets14 6 Other accruals28 15 
Foreign currency contractsOther assets0 0 Other liabilities29 14 
Commodity contractsOther current assets1 0 Other accruals0 0 
Total designated$30 $10  $61 $29 
Other financial instruments     
Marketable securitiesOther current assets$80 $23    
Total other financial instruments$80 $23    
23
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


 Assets Liabilities
 
 
Account
 Fair Value Account Fair Value
Designated derivative instruments 9/30/17 12/31/16   9/30/17 12/31/16
Interest rate swap contractsOther current assets $—
 $1
 Other accruals $—
 $—
Interest rate swap contractsOther assets —
 1
 Other liabilities 2
 —
Foreign currency contractsOther current assets 9
 29
 Other accruals 36
 4
Foreign currency contractsOther assets —
 5
 Other liabilities 40
 —
Commodity contractsOther current assets —
 —
 Other accruals —
 —
Total designated  $9
 $36
   $78
 $4
            
Derivatives not designated   
  
      
Foreign currency contractsOther current assets $1
 $—
 Other accruals $1
 $—
Total not designated  $1

$—
   $1
 $—
            
Total derivative instruments $10
 $36
   $79
 $4
            
Other financial instruments  
  
    
  
Marketable securitiesOther current assets $186
 $23
    
  
Total other financial instruments $186
 $23
    
  

The carrying amount of cash, cash equivalents, marketable securities, accounts receivable and short-term debt approximated fair value as of September 30, 20172020 and December 31, 2016.2019. The estimated fair value of the Company’s long-term debt, including the current portion, as of September 30, 20172020 and December 31, 2016,2019, was $6,740$8,070 and $6,717,$8,056, respectively, and the related carrying value was $6,520 as of each balance sheet date.$7,227 and $7,587, respectively. The estimated fair value of long-term debt was derived principally from quoted prices on the Company’s outstanding fixed-term notes (Level 2 valuation).


The following amounts were recorded on the Condensed Consolidated Balance Sheet related to the cumulative basis adjustment for fair value hedges as of:
September 30, 2020December 31, 2019
Long-term debt:  
Carrying amount of hedged item$414 $403 
Cumulative hedging adjustment included in the carrying amount15 4 
The following tables present the notional values as of:
 September 30, 2020
 Foreign
Currency
Contracts		Foreign Currency DebtInterest Rate Swaps Forward-Starting Interest Rate SwapsCommodity Contracts 
Total
Fair Value Hedges$586 $0 $400 $0 $0 $986 
Cash Flow Hedges797 0 0 300 16 1,113 
Net Investment Hedges585 3,487 0 0 0 4,072 
 December 31, 2019
 Foreign
Currency
Contracts		Foreign Currency DebtInterest Rate SwapsForward-Starting Interest Rate SwapsCommodity Contracts 
Total
Fair Value Hedges$388 $0 $400 $0 $0 $788 
Cash Flow Hedges761 0 0 0 20 781 
Net Investment Hedges478 3,856 0 0 0 4,334 
24
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




Fair Value Hedges

The Company has designated all interest rate swap contractsfollowing tables present the location and certain foreign currency forward and option contracts as fair value hedges, for which the gain or lossamount of gains (losses) recognized on the derivative and the offsetting gain or loss on the hedged item are recognized in current earnings. The impactCompany’s Condensed Consolidated Statements of foreign currency contracts is primarily recognized in Selling, general and administrative expenses and the impact of interest rate swap contracts is recognized in Interest (income) expense, net.Income:

Three Months Ended September 30,
 20202019
Cost of salesSelling, general and administrative expensesInterest (income) expense, netCost of salesSelling, general and administrative expensesInterest (income) expense, net
Gain (loss) on hedges recognized in income:
Interest rate swaps designated as fair value hedges:
Derivative instrument$0 $0 $2 $0 $0 $(2)
Hedged items0 0 (2)0 0 2 
Foreign currency contracts designated as fair value hedges:
Derivative instrument0 (10)0 0 0 0 
Hedged items0 10 0 0 0 0 
Foreign currency contracts designated as cash flow hedges:
Amount reclassified from OCI(1)0 0 1 0 0 
Commodity contracts designated as cash flow hedges:
Amount reclassified from OCI(1)0 0 0 0 0 
Total gain (loss) on hedges recognized in income$(2)$0 $0 $1 $0 $0 
Activity related to fair value hedges recorded during the three and nine months ended September 30, 2017 and 2016 was as follows:

Nine Months Ended September 30,
 20202019
Cost of salesSelling, general and administrative expensesInterest (income) expense, netCost of salesSelling, general and administrative expensesInterest (income) expense, net
Gain (loss) on hedges recognized in income:
Interest rate swaps designated as fair value hedges:
Derivative instrument$0 $0 $(11)$0 $0 $(15)
Hedged items0 0 11 0 0 15 
Foreign currency contracts designated as fair value hedges:
Derivative instrument0 29 0 0 10 0 
Hedged items0 (29)0 0 (10)0 
Foreign currency contracts designated as cash flow hedges:
Amount reclassified from OCI6 0 0 5 0 0 
Commodity contracts designated as cash flow hedges:
Amount reclassified from OCI(2)0 0 1 0 0 
Total gain (loss) on hedges recognized in income$4 $0 $0 $6 $0 $0 
25
 2017 2016
 
Foreign
Currency
Contracts
 
Interest
Rate
Swaps
 
 
Total
 
Foreign
Currency
Contracts
 
Interest
Rate
Swaps
 
 
Total
Notional Value at September 30,$1,095
 $600
 $1,695
 $239
 $1,250
 $1,489
Three months ended September 30,           
Gain (loss) on derivatives(14) (1) (15) 1
 (6) (5)
Gain (loss) on hedged items14
 1
 15
 (1) 6
 5
Nine months ended September 30,           
Gain (loss) on derivatives(15) (3) (18) (4) 3
 (1)
Gain (loss) on hedged items15
 3
 18
 4
 (3) 1

Cash Flow Hedges

All of the Company’s commodity contracts and certain foreign currency forward contracts have been designated as cash flow hedges, for which the effective portion of the gain or loss is reported as a component of Other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Activity related to cash flow hedges recorded during the three and nine months ended September 30, 2017 and 2016 was as follows:
 2017 2016
 
Foreign
Currency
Contracts
 
Commodity
Contracts
 
 
Total
 
Foreign
Currency
Contracts
 
Commodity
Contracts
 
 
Total
Notional Value at September 30,$724
 $1
 $725
 $690
 $8
 $698
Three months ended September 30,           
Gain (loss) recognized in OCI(8) —
 (8) 3
 (2) 1
Gain (loss) reclassified into Cost of sales(4) —
 (4) (1) —
 (1)
Nine months ended September 30,           
Gain (loss) recognized in OCI(28) —
 (28) (6) —
 (6)
Gain (loss) reclassified into Cost of sales(2) —
 (2) (1) —
 (1)

The net gain (loss) recognized in OCI for both foreign currency contracts and commodity contracts is generally expected to be recognized in Cost of sales within the next twelve months.

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)





Net Investment Hedges


The Company has designated certain foreign currency forwardfollowing table presents the location and option contracts and certain foreign currency-denominated debt as net investment hedges, for which the gain or loss on the instrument is reported as a componentamount of Cumulative translation adjustments within OCI, along with the offsetting gain or loss on the hedged items.unrealized gains (losses) included in OCI:

 Three Months Ended
September 30,
20202019
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI$(7)$7 
Forward-starting interest rate swaps designated as cash flow hedges:
Gain (loss) recognized in OCI4 0 
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI2 (1)
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments(21)23 
Gain (loss) on hedged items21 (23)
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments(171)100 
Gain (loss) on hedged items171 (100)
Total unrealized gain (loss) on hedges recognized in OCI$(1)$6 
Activity related to net investment hedges recorded during the three and nine months ended September 30, 2017 and 2016 was as follows:

 Nine Months Ended
September 30,
20202019
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI$6 $2 
Forward-starting interest rate swaps designated as cash flow hedges:
Gain (loss) recognized in OCI(4)0 
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI0 1 
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments(8)22 
Gain (loss) on hedged items8 (22)
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments(174)105 
Gain (loss) on hedged items174 (105)
Total unrealized gain (loss) on hedges recognized in OCI$2 $3 




26
 2017 2016
 
Foreign
Currency
Contracts
 
Foreign
Currency
Debt
 
 
Total
 
Foreign
Currency
Contracts
 
Foreign
Currency
Debt
 
 
Total
Notional Value at September 30,$749
 $590
 $1,339
 $917
 $1,190
 $2,107
Three months ended September 30,           
Gain (loss) on instruments(23) (22) (45) (4) (13) (17)
Gain (loss) on hedged items22
 22
 44
 4
 13
 17
Nine months ended September 30,           
Gain (loss) on instruments(69) (115) (184) (20) (36) (56)
Gain (loss) on hedged items69
 115
 184
 20
 36
 56

Derivatives not Designated as Hedging Instruments

Derivatives not designated as hedging instruments for the third quarter of 2017 include foreign currency contracts for which the gain or loss on the instrument is recognized in Other (income) expense, net for the three and nine months ended September 30, 2017. During the second quarter of 2017, the Company de-designated foreign currency forward contracts previously designated as net investment hedges and entered into new derivative instruments with offsetting terms. Gains or losses on these de-designated derivatives were substantially offset by gains and losses on the new derivative instruments.

Derivatives not designated as hedging instruments for the third quarter of 2016 consist of a cross-currency swap that serves as an economic hedge of a foreign currency deposit, for which the gain or loss on the instrument and the offsetting gain or loss on the hedged item are recognized in Other (income) expense, net for each period.

Activity related to these contracts during the three and nine months ended September 30, 2017 and 2016 was as follows:
  2017 2016
  Foreign Currency Contracts Foreign Currency Contracts
Notional Value at September 30, $42
 $6
Three months ended September 30,   

Gain (loss) on instruments —
 —
Gain (loss) on hedged items —
 —
Nine months ended September 30,   

Gain (loss) on instruments —
 5
Gain (loss) on hedged items —
 (5)

COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


Other Financial Instruments

Other financial instruments are classified as Other current assets or Other assets.

Other financial instruments classified as Other current assets include marketable securities consisting of bank deposits of $186 with original maturities greater than 90 days carried at fair value (Level 1 valuation) and the current portion of bonds issued by the Argentinian government in the amount of $36 classified as held-to-maturity and carried at amortized cost.

Through its subsidiary in Argentina, the Company has invested in U.S. dollar-linked, devaluation-protected bonds and Argentinian peso-denominated bonds issued by the Argentinian government. As of September 30, 2017, the amortized cost was $36 and their approximate fair value was $36 (Level 2 valuation).

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Executive Overview and Outlook


Business Organization

Colgate-Palmolive Company (together with its subsidiaries, “we,” the “Company” or “Colgate”) seeksis a caring, innovative growth company reimagining a healthier future for people, their pets and our planet. We seek to deliver strong, consistent business results and superior shareholder returns, as well as to provide Colgate people with an innovative and inclusive work environment. We do this by providing consumersdeveloping and selling products globally with products that make theirpeople’s lives healthier and more enjoyable.enjoyable and by embracing our sustainability, diversity, equity and inclusion and social responsibility strategy across our organization.


To this end, the Company isWe are tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition. Within these segments, the Company followswe follow a closely defined business strategy to developgrow our key product categories and increase our overall market leadership positionsshare. Within the categories in key product categories. These product categories are prioritizedwhich we compete, we prioritize our efforts based on their capacity to maximize the use of the organization’s core competencies and strong global equities and to deliver sustainable, profitable long-term growth.


Operationally, the Company iswe are organized along geographic lines with management teams having responsibility for the business and financial results in each region. The Company competesWe compete in more than 200 countries and territories worldwide with established businesses in all regions contributing to the Company’sour sales and profitability. Approximately 75%70% of the Company’sour Net sales are generated from markets outside the U.S., with approximately 50%45% of the Company’sour Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe). This geographic diversity and balance help to reduce the Company’sour exposure to business and other risks in any one country or part of the world.


The Oral, Personal and Home Care product segment is managed geographically in five reportable operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia, all of which sell primarily to a variety of retailtraditional and wholesale customerseCommerce retailers, wholesalers and distributors. The Company, throughThrough Hill’s Pet Nutrition, we also competescompete on a worldwide basis in the pet nutrition market, selling its products principally through authorized pet supply retailers, veterinarians and veterinarians. The Company’seCommerce retailers. We are engaged in manufacturing and sourcing of products are also sold online through various e-commerce platforms and retailers.materials on a global scale and have major manufacturing, warehousing facilities and distribution centers in every region around the world.


On an ongoing basis, management focuses on a variety of key indicators to monitor business health and performance. These indicators include market share, net sales (including volume, pricing and foreign exchange components), organic sales growth (net sales growth excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, and gross profit margin, operating profit, net income and earnings per share, in each case, on a GAAP and non-GAAP basis, as well as measures used to optimize the management of working capital, capital expenditures, cash flow and return on capital. In addition, we review market share data to assess how our brands are performing within their categories on a global and regional basis. The monitoring of these indicators and the Company’sour Code of Conduct and corporate governance practices help to maintain business health and strong internal controls. For additional information regarding non-GAAP financial measures and the Company’s use of market share data and the limitations of such data, see “Non-GAAP Financial Measures” and “Market Share Information” below.


COVID-19

The COVID-19 pandemic and government steps to control the spread of COVID-19 have had and continue to have a profound impact on the way people live, work, interact and shop and have significantly impacted and may continue to impact economic activity around the world. We have a well-established Crisis Management Team (“CMT”) process, and the CMT, together with our senior management team and Colgate people around the world, continue to respond to and manage the challenges presented by COVID-19.

During the nine months ended September 30, 2020 many of the communities in which we manufacture, market and sell our products experienced unprecedented “stay at home” orders, travel or movement restrictions and other government actions to reduce the spread and address the impact of COVID-19, and have implemented varying policies to resume economic activity. The situation continues to be uncertain and varies by geography, as infection rates of COVID-19 continue to increase in many regions throughout the world, and authorities have taken different approaches to address the pandemic and resume economic activity. Because the vast majority of our products (such as oral care products, soaps and other personal hygiene products, home cleaners and pet food) have been deemed essential for the health and well-being of people and their pets, we have, in most instances, been able to continue operating our business.
27
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

In so doing, the health and safety of Colgate employees has been and remains our first priority. Many of our employees globally continued to work from home during the quarter ended September 30, 2020. In those instances where our employees cannot perform their work at home, such as in our factories and in certain of our laboratories, or in geographies where circumstances have allowed us to offer employees the ability to return to the office, often on a voluntary and staggered basis, we have implemented additional health and safety measures and social distancing protocols, consistent with government recommendations and/or requirements, to help to ensure their safety, often at an additional cost. In addition, during the nine months ended September 30, 2020, we have experienced some limited factory closures, particularly in India, and in some cases we have seen increased instances of absenteeism. In addition, some of our suppliers, customers, distributors and service providers have experienced disruptions to their businesses.

We saw a significant increase in demand across many of our categories in the nine months ended September 30, 2020, driven by consumer pantry-loading and increased consumption of our products. This was particularly true in certain categories, such as liquid hand soap, dish liquid, bar soap and cleaners, and we believe that some of the increase in demand in these categories is sustainable in light of changes in consumer behavior related to COVID-19. In other categories, such as oral care and pet food, consumer demand trends have continued to normalize in the quarter ended September 30, 2020. Across our business, changes in consumer demand for our products vary by product category and geography depending on, among other things, the severity of the COVID-19 outbreak and retailer availability. At the same time, during the nine months ended September 30, 2020, we continued to experience declines in certain channels, including professional sales and travel retail, due to the economic slowdown and restricted consumer movement in many geographies throughout the world. We also continue to see changes in the purchasing patterns of our consumers, including the nature and/or frequency of visits by consumers to retailers and dental, veterinary and skin health professionals and a shift in many markets to purchasing our products online. During the nine months ended September 30, 2020, in some instances, we were not able to keep up with the increased consumer demand for our products and our products were at times out of stock on retailers’ shelves. In some cases, we incurred additional costs as we worked to meet this increased demand. Despite continuing to significantly ramp up production of in-demand products, we expect that some of our products may continue to be out of stock on retailers’ shelves for a period of time.

Government actions in response to COVID-19 have impacted and may continue to impact our consumers’ ability to purchase and our ability to manufacture and distribute our products. While we believe that, in the long-term, consumer demand for the products in our categories will continue to be strong, uncertainties continue surrounding the timing and extent of the pandemic and its recovery. These uncertainties include: the impact of the timing and scale of changes to travel and movement restrictions in certain geographies, the availability and widespread distribution and use of a safe and effective COVID-19 vaccine, the timing and impact of consumer pantry-loading and destocking activity in certain markets, product demand trends and the impact of COVID-19 on the global economy. Our retail customers are also being impacted by the global pandemic; their success in addressing COVID-19 and maintaining their operations could impact consumer access to and sales of our products. We expect the ongoing economic impact and health concerns associated with COVID-19 to continue to impact consumer behavior, shopping patterns and consumption preferences despite the lifting of government restrictions and the reopening of economies around the world.

While we currently expect to be able to continue operating our business as described above and we intend to continue to work with government authorities and to follow the necessary protocols to maintain the health and safety of our employees and contract providers, uncertainty resulting from COVID-19 could result in an unforeseen additional disruption to our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs.

For more information about the anticipated COVID-19 impact, see “Outlook” below.











28
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Business Strategy

To achieve itsour business and financial objectives, the Company focuses the organizationwe are focused on initiativesinnovating our core businesses; improving our brand building activities; innovating to gain market share in high growth segments and adjacencies; expanding into new channels and markets; maximizing growth online; and investing to drive and fund growth. The Company seeksconsumption in growing populations. We continue to capture significant opportunities for growth by identifying and meeting consumer needs within its core categories, through its focus on innovation and the deployment of valuable consumer and shopper insights in the development of successful new products regionally, which are then rolled out on a global basis. To enhance these efforts, the Company has developed keydevelop initiatives to build strong relationships with consumers, dental, veterinary and veterinaryskin health professionals and retail customers.traditional and eCommerce retailers. In addition, the Company has strengthened itswe continue to invest behind our brands, not just in terms of advertising, but also to build key growth capabilities in e-commerce, developing its relationships with online-only retailersareas such as innovation and its digital marketing capabilities. Growthdata and analytics. We also continue to broaden our eCommerce offerings, including direct-to-consumer and subscription services. We continue to believe that growth opportunities are greater in those areas of the world in which economic development and rising consumer incomes expand the size and number of markets for the Company’s products. We are also working to integrate our sustainability, diversity, equity and inclusion and social responsibility strategy across our organization.


COLGATE-PALMOLIVE COMPANYWe are also changing the way we work to drive growth and how we approach innovation to respond to the dynamic retail landscape and the evolving preferences of our customers and consumers. The retail landscape, the ease of new entrants into the market in many of our categories and the evolving preferences of our customers and consumers demand that we work differently and faster in an agile, authentic and culturally relevant manner to drive innovation.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



The investments needed to supportdrive growth are supported by strong cash flow performance and our disciplined capital allocation strategy. These investments are developed through continuous, Company-wide initiatives to lower costs and increase effective asset utilization. Through these initiatives, which are referred to as the Company’sour funding-the-growth initiatives, the Company seekswe seek to become even more effective and efficient throughout itsour businesses. These initiatives are designed to reduce costs associated with direct materials, indirect expenses, distribution and logistics, and advertising and promotional materials, among other things, and encompass a wide range of projects, examples of which include raw material substitution, reduction of packaging materials, consolidating suppliers to leverage volumes and increasing manufacturing efficiency through SKU reductions and formulation simplification. The CompanyWe also continuescontinue to prioritize itsour investments toward its higher margin businesses, specificallyin high growth segments within our Oral Care, Personal Care and Pet Nutrition.Nutrition businesses, including by expanding our portfolio in premium skin health.


Effective DecemberSignificant Items Impacting Comparability
On January 31, 2015,2020, the Company concluded it no longer met the accounting criteriaacquired Hello Products LLC (“Hello”), an oral care business, for consolidationcash consideration of its Venezuelan subsidiary (“CP Venezuela”)$351. The acquisition was financed with a combination of debt and began accounting for CP Venezuela using the cost methodcash. This acquisition is part of accounting. As such, effective December 31, 2015, the Company’s Consolidated Balance Sheet no longer includes the assetsstrategy to focus on high growth segments within its Oral Care, Personal Care and liabilities of CP Venezuela. Prior periods have not been restated and CP Venezuela’s Net sales, Operating profit and Net income are included in the Company’s Consolidated Statements of Income through December 31, 2015.

Since January 1, 2016, under the cost method of accounting, the Company no longer includes the local operating results of CP Venezuela in its Consolidated Financial Statements and includes income relating to CP Venezuela onlyPet Nutrition businesses. See Note 4, Acquisitions to the extent it receives cash for sales of inventory to CP Venezuela or for dividends or royalties remitted by CP Venezuela, all of which have been immaterial. Although CP Venezuela’s local operating results are no longer included in the Company’sCondensed Consolidated Financial Statements for accounting purposes, under current tax rules, the Company is required to continue including CP Venezuela in its consolidated U.S. federal income tax return. In the first quarter of 2016, Provisionadditional information.

The provision for income taxes included a $210 U.S.for the nine months ended September 30, 2020 includes $71 of income tax benefit principallybenefits recorded on a discrete period basis of which $45 relates to previously recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance against a deferred tax asset. As more fully described in “Results of Operations-Income Taxes,” and in Note 10, Income Taxes to the Condensed Consolidated Financial Statements, both items were previously recorded in connection with the charge recorded in 2017 and revised in 2018 related to changes in Venezuela’s foreign exchange regime implemented in March 2016.the Tax Cuts and Jobs Act (the “TCJA”).

In the fourth quarter of 2012,On September 19, 2019, the Company commencedacquired Laboratoires Filorga Cosmétiques S.A. (“Filorga”), a skin health business, for cash consideration of €1,548 (approximately $1,712). Filorga is a premium anti-aging skin health brand focused primarily on facial care. The acquisition was financed with a combination of debt and cash. This acquisition is part of our strategy to focus on high growth segments within our Oral Care, Personal Care and Pet Nutrition businesses, including by expanding our portfolio in premium skin health. On July 17, 2020, the Company completed the purchase of the outstanding non-controlling interest of Filorga’s joint venture based in Hong Kong and covering the Hong Kong and China markets for approximately €85 (approximately $99) in cash. See Note 4, Acquisitions to the Condensed Consolidated Financial Statements for additional information.



29
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Our restructuring program, (as subsequently expanded,known as described below, the “Global Growth and Efficiency Program”) for sustained growth.Program,” concluded on December 31, 2019. The program’s initiatives are expectedwere designed to help the Companyus ensure sustained solid worldwide growth in unit volume, organic sales, operating profit and earnings per share and to enhance itsour global leadership positions in itsour core businesses.

On October 23, 2014, During the Company’s Board of Directors (the “Board”)three months ended September 30, 2020, the Company adjusted the accrual balances related to certain projects approved an expansionprior to the conclusion of the Global Growth and Efficiency Program to take advantage of additional savings opportunities. On October 29, 2015, the Board approved the reinvestment of the funds from the sale of the Company’s laundry detergent business in the South Pacific to expand the Global Growth and Efficiency Program and extend it through December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.

Implementation of the Global Growth and Efficiency Program remains on track. Building on the Company’s successful implementation of the Global Growth and Efficiency Program to date, on October 26, 2017, the Board approved an expansion of the Global Growth and Efficiency Program and an extension of the program through December 31, 2019 to take advantage of additional opportunities to streamline the Company’s operations.

The initiatives under the Global Growth and Efficiency Program continue to be focused on the following areas:
▪Expanding Commercial Hubs
▪Extending Shared Business Services and Streamlining Global Functions
▪Optimizing Global Supply Chain and Facilities

As a result of the expansion, savings, substantially all of which are expected to increase future cash flows, are now projected to be in the range of $560 to $635 pretax ($500 to $575 aftertax) annually, once all projects are approved and implemented, as compared to the previousreflect its revised estimate of $455remaining liabilities. This adjustment resulted in a reduction of $16 ($13 after-tax) to $495 pretax ($425 to $475 aftertax). Cumulative pretax charges resulting fromrestructuring accruals as of September 30, 2020. No new restructuring projects were approved for implementation during the Global Growth and Efficiency Program, once all phases are approved and implemented, are now estimated to be in the range of $1,730 to $1,885 ($1,280 to $1,380 aftertax), as compared to the previous estimate of $1,500 to $1,585 ($1,120 to $1,170 aftertax).

In the three and nine months ended September 30, 2017,2020. See Note 5, Restructuring and Related Implementation Charges to the Company incurred aftertax costs of $39 and $185, respectively, associated with the Global Growth and Efficiency Program.Condensed Consolidated Financial Statements for additional information.










30
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Outlook
For more information regarding the Global Growth and Efficiency Program, see “Restructuring and Related Implementation Charges” below.


Looking forward, the Company expectswe expect global macroeconomic, political and market conditions to remain highly challenging, especially due to the COVID-19 pandemic. We have seen short-term improvement in category growth rates due to heightened demand for certain health and hygiene products, particularly liquid hand soap, dish liquid, bar soap and cleaners. While we believe some of this is sustainable due to consumer behavior changes resulting from the COVID-19 pandemic, we have seen increased volatility in consumption rates across all of our categories as a result of the pandemic and it is therefore difficult to predict category growth rates over the next six to twelve months. In the longer term, post COVID-19, we expect category growth rates to continueremain below historical levels, except for the categories discussed above and pet nutrition, where we expect consumption to be slow. remain elevated to some extent for the foreseeable future.

While the global marketplace in which the Company operateswe operate has always been highly competitive, the Company continueswe continue to experience heightened competitive activity in certain markets from strong local competitors, and from other large multinational companies, some of which have greater resources than we do, and from new entrants into the Company does.market in many of our categories. Such activities have included more aggressive product claims and marketing challenges, as well as increased promotional spending and geographic expansion. We have seen increases in promotional activities in certain markets as retailers try aggressively to get consumers back into the stores after prolonged “stay at home” and other government restrictions ease, a trend we expect will continue. We have been negatively affected by changes in the policies or practices of our retail trade customers in key markets, such as inventory de-stocking, limitations on access to shelf space or delisting of our products. In addition, the retail landscape in many of our markets continues to be impacted by the rapid growth of eCommerce retailers, changing consumer preferences (as consumers increasingly shop online) and the emergence of new salesalternative retail channels, for the Company’s products, such as e-commerce,subscription services and direct-to-consumer businesses. These trends have been magnified due to the COVID-19 pandemic in many of our geographies and we plan to continue to invest behind our eCommerce capabilities. This rapid growth in eCommerce and the emergence of alternative retail channels have created and may continue to create pricing pressures and/or adversely affect consumer preferences and market dynamics. Givenour relationships with our key retailers. In addition, given that approximately 75%70% of the Company’sour Net sales originate in markets outside the U.S., the Company continueswe have experienced and will likely continue to experience increasingly volatile foreign currency fluctuations and highhigher raw and packaging material costs. While the Company haswe have taken, and will continue to take, measures to mitigate the effect of these conditions, should theyin the current environment, it may become increasingly difficult to implement certain of these mitigation strategies. Should these conditions persist, they could adversely affect the Company’sour future results.

As discussed above, we continue to closely monitor the impact of COVID-19 on our business. While we have taken, and will continue to take, measures to mitigate the effects of COVID-19, we cannot estimate with certainty the full extent of COVID-19’s impact on our business, results of operations, cash flows and/or financial condition. For additionalmore information onabout factors that could impact our business, including due to COVID-19, see “Risk Factors” in Part II, Item IA of this Quarterly Report and Part I, Item 1A of our Annual Report on Form 10-K for the Company’s results, see “Cautionary Statement on Forward-Looking Statements” below.year ended December 31, 2019.


The Company believes it isIn summary, we believe we are well prepared to meet the challenges ahead due to itsour strong financial condition, experience operating in challenging environments, resilient global supply chain and continued focus on our key priorities: growing sales through engaging with consumers, developing world-class innovation and working with retail partners; driving efficiency on every line of the Company’s strategic initiatives: engagingincome statement to build our brands; innovation for growth; effectivenessincrease margins; generating strong cash flow performance and efficiency;utilizing that cash effectively to enhance total shareholder return; and leading to win. Thiswin by staying true to our culture and focusing on all of our stakeholders. Our key focus is to sustain the underlying momentum of our business, to adapt our financial plans to deliver on 2020, while leaving us well positioned for continued growth in 2021. Our commitment to these priorities, together with the strength of the Company’sour global brands, itsour broad international presence in both developed and emerging markets and cost-saving initiatives, such as the Global Growth and Efficiency Program,our funding-the-growth initiatives, should position us well to manage through the Company wellCOVID-19 pandemic and to increase shareholder value over the long term.








31
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Results of Operations


Three Months


Worldwide Net sales were $3,974$4,153 in the third quarter of 2017,2020, up 3.0%5.5% from the third quarter of 2016, driven by2019, as volume growth of 1.5%5.0% and positivenet selling price increases of 4.5% were partially offset by negative foreign exchange of 1.5%, while net selling prices were flat.4.0%. Acquisitions contributed 2% to volume. Organic sales (Net sales excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, increased 1.5%7.5% in the third quarter of 2017.2020. A reconciliation of net sales growth to organic sales growth is provided under “Non-GAAP Financial Measures” below.


Net sales in the Oral, Personal and Home Care product segment were $3,401$3,449 in the third quarter of 2017,2020, up 3.0%4.5% from the third quarter of 2016, driven by2019, as volume growth of 1.5%4.5% and positivenet selling price increases of 4.5% were partially offset by negative foreign exchange of 1.5%, while net selling prices were flat.4.5%. Acquisitions contributed 2.5% to volume. Organic sales in the Oral, Personal and Home Care product segment increased 1.5%6.5% in the third quarter of 2017.2020.


The Company’s share of the global toothpaste market was 43.5%39.9% on a year-to-date basis, down 0.30.8 share points from the year ago period, and its share of the global manual toothbrush market was 32.6%31.1% on a year-to-date basis, down 0.6up 0.2 share points from the year ago period. Year-to-date market shares in toothpaste were up in North America and Africa/EurasiaLatin America and down in Latin America, Europe, and Asia Pacific and Africa/Eurasia versus the comparable 20162019 period. In the manual toothbrush category, year-to-date market shares were up in Africa/Eurasia and down in North America, Latin America, Europe and Africa/Eurasia and down in Asia Pacific versus the comparable 20162019 period. For additional information regarding market shares, see “Market Share Information” below.


Net sales in the Hill’s Pet Nutrition segment were $573$704 in the third quarter of 2017,2020, up 2.0%11.0% from the third quarter of 2016, driven by2019, due to volume growth of 1.0%6.5% and positivenet selling price increases of 4.5% while foreign exchange of 1.0%, while net selling prices werewas flat. Organic sales in the Hill’s Pet Nutrition segment increased 1.0%11.0% in the third quarter of 2017.2020.

Gross Profit/Margin

Worldwide Gross profit increased to $2,383 in the third quarter of 2017 from $2,324 in the third quarter of 2016. Gross profit in both periods included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Gross profit increased to $2,399 in the third quarter of 2017 from $2,335 in the third quarter of 2016. This increase in Gross profit reflects an increase of $64 resulting from higher Net sales.

Worldwide Gross profit margin decreased to 60.0% in the third quarter of 2017 from 60.1% in the third quarter of 2016. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Gross profit margin was 60.4% in the third quarter of 2017, even with the third quarter of 2016, as cost savings from the Company’s funding-the-growth initiatives (210 bps) were offset by higher raw and packaging material costs (210 bps).
32
  Three Months Ended September 30,
  2017 2016
Gross profit, GAAP $2,383
 $2,324
Global Growth and Efficiency Program 16
 11
Gross profit, non-GAAP $2,399
 $2,335

  Three Months Ended September 30,
  2017 2016 Basis Point Change
Gross profit margin, GAAP 60.0% 60.1% (10)
Global Growth and Efficiency Program 0.4
 0.3
  
Gross profit margin, non-GAAP 60.4% 60.4% —
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Gross Profit/Margin
Selling, General and Administrative Expenses

Selling, general and administrative expensesWorldwide Gross profit increased 8% to $1,429$2,540 in the third quarter of 20172020 from $1,322$2,316 in the third quarter of 2016. Selling, general and administrative expenses2019. Gross profit in both periodsthe third quarter of 2019 included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Selling, generalresulting from the Global Growth and administrative expenses increased to $1,407Efficiency Program in the third quarter of 2017 from $1,3132019, Gross profit increased to $2,540 in the third quarter of 2016, reflecting increased advertising investment of $66 and higher overhead expenses of $28.
Selling, general and administrative expenses as a percentage of Net sales increased to 36.0%2020 from $2,317 in the third quarter of 20172019, an increase of $134 resulting from 34.2%higher Net sales and an increase of $89 resulting from higher Gross profit margin.

Worldwide Gross profit margin increased to 61.2% in the third quarter of 2016.2020 from 59.0% in the third quarter of 2019. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Selling, general and administrative expenses as a percentagethe third quarter of Net sales2019, Gross profit margin increased by 140 bps220 basis points (bps) to 35.4%61.2% in the third quarter of 2017 as compared to 34.0%2020 from 59.0% in the third quarter of 2016.2019. This increase in Gross profit margin was primarily due to increased advertising investment as a percentage of Net sales (140 bps). In the third quarter of 2017, advertising investment increased 19% to $405, as compared with $339 in the third quarter of 2016, and increased as a percentage of Net sales to 10.2% in the third quarter of 2017 from 8.8% in the third quarter of 2016.

  Three Months Ended September 30,
  2017 2016
Selling, general and administrative expenses, GAAP $1,429
 $1,322
Global Growth and Efficiency Program (22) (9)
Selling, general and administrative expenses, non-GAAP $1,407
 $1,313

  Three Months Ended September 30,
  2017 2016 Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP 36.0 % 34.2 % 180
Global Growth and Efficiency Program (0.6) (0.2)  
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP 35.4 % 34.0 % 140

Other (Income) Expense, Net

Other (income) expense, net was $27 in the third quarter of 2017, as compared to $(69) in the third quarter of 2016. Other (income) expense, net in both periods included charges resultingcost savings from the Global GrowthCompany’s funding-the-growth initiatives (250 bps) and Efficiency Program. Other (income) expense, net in the third quarter of 2016 alsohigher pricing (170 bps), partially offset by higher raw and packaging material costs (230 bps), which included a gain on the sale of land in Mexico and a charge for a previously disclosed litigation matter. Excluding these items in both periods as applicable, Other (income) expense, net was $7 in the third quarter of 2017, as compared to $0 in the third quarter of 2016.foreign exchange transaction costs.
Three Months Ended September 30,
20202019
Gross profit, GAAP$2,540 $2,316 
Global Growth and Efficiency Program— 1 
Gross profit, non-GAAP$2,540 $2,317 
Three Months Ended September 30,
20202019Basis Point Change
Gross profit margin, GAAP61.2 %59.0 %220 
Global Growth and Efficiency Program— — 
Gross profit margin, non-GAAP61.2 %59.0 %220 
33
  Three Months Ended September 30,
  2017 2016
Other (income) expense, net, GAAP $27
 $(69)
Global Growth and Efficiency Program (20) (22)
Gain on sale of land in Mexico —
 97
Charge for a previously disclosed litigation matter —
 (6)
Other (income) expense, net, non-GAAP $7
 $—

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Selling, General and Administrative Expenses
Operating Profit

Operating profit decreased 13%Selling, general and administrative expenses increased 6% to $927$1,518 in the third quarter of 20172020 from $1,071$1,429 in the third quarter of 2016.2019. Selling, general and administrative expenses in the third quarter of 2020 included benefits resulting from the Global Growth and Efficiency Program and, in the third quarter of 2019, included charges resulting from the Global Growth and Efficiency Program. Excluding these items in both periods as applicable, Selling, general and administrative expenses increased to $1,521 in the third quarter of 2020 from $1,401 in the third quarter of 2019, reflecting higher overhead expenses of $67 and increased advertising investment of $53.

Selling, general and administrative expenses as a percentage of Net sales increased to 36.6% in the third quarter of 2020 from 36.4% in the third quarter of 2019. Excluding the items described above in both periods as applicable, Selling, general and administrative expenses as a percentage of Net sales increased by 90 bps to 36.6% in the third quarter of 2020 as compared to 35.7% in the third quarter of 2019. This increase was due to increased advertising investment (70 bps) and higher overhead expenses (20 bps), primarily driven by higher logistics costs, both as a percentage of Net sales. In the third quarter of 2020, advertising investment increased as a percentage of Net sales to 11.5% from 10.8% in the third quarter of 2019, or 13% in absolute terms to $476 as compared with $423 in the third quarter of 2019.
Three Months Ended September 30,
20202019
Selling, general and administrative expenses, GAAP$1,518 $1,429 
Global Growth and Efficiency Program3 (28)
Selling, general and administrative expenses, non-GAAP$1,521 $1,401 
Three Months Ended September 30,
20202019Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP36.6 %36.4 %20
Global Growth and Efficiency Program— (0.7)
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP36.6 %35.7 %90
34
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Operating Profit

Operating profit increased 19% to $1,018 in the third quarter of 2020 from $856 in the third quarter of 2019. Operating profit in both periodsthe third quarter of 2020 included chargesbenefits resulting from the Global Growth and Efficiency Program. Operating profit in the third quarter of 2016 also2019 included a gain oncharges resulting from the sale of land in MexicoGlobal Growth and a charge for a previously disclosed litigation matter.Efficiency Program and acquisition-related costs. Excluding these items in both periods as applicable, Operating profit was $985increased to $1,002 in the third quarter of 2017, compared to $1,0222020 from $900 in the third quarter of 2016, a decrease of 4%,2019, as an increase in Gross profit was more thanpartially offset by an increase in Selling, general and administrative expenses.


Operating profit margin was 23.3%24.5% in the third quarter of 2017, a decrease2020, an increase of 440270 bps compared to 27.7%21.8% in the third quarter of 2016.2019. Excluding the items described above in both periods as applicable, Operating profit margin was 24.8%24.1% in the third quarter of 2017, a decrease2020, an increase of 160120 bps as compared to 26.4%22.9% in the third quarter of 2016.2019. This decreaseincrease in Operating profit margin was primarily due to an increase in Gross profit (220 bps), partially offset by an increase in Selling, general and administrative expenses (90 bps), both as a percentage of Net sales (140 bps), reflecting increased advertising investment.sales.

Three Months Ended September 30,
20202019% Change
Operating profit, GAAP$1,018 $856 19 %
Global Growth and Efficiency Program(16)26 — 
Acquisition-related costs— 18 — 
Operating profit, non-GAAP$1,002 $900 11 %
Three Months Ended September 30,
20202019Basis Point Change
Operating profit margin, GAAP24.5 %21.8 %270 
Global Growth and Efficiency Program(0.4)0.7 — 
Acquisition-related costs— 0.4 — 
Operating profit margin, non-GAAP24.1 %22.9 %120 
  Three Months Ended September 30,
  2017 2016 % Change
Operating profit, GAAP $927
 $1,071
 (13)%
Global Growth and Efficiency Program 58
 42
  
Gain on sale of land in Mexico —
 (97)  
Charge for a previously disclosed litigation matter —
 6
  
Operating profit, non-GAAP $985
 $1,022
 (4)%
Non-Service Related Postretirement Costs


Non-service related postretirement costs were $15 in the third quarter of 2020, as compared to $27 in the third quarter of 2019. Non-service related postretirement costs in the third quarter of 2019 included charges resulting from the Global Growth and Efficiency Program. Excluding charges resulting from the Global Growth and Efficiency Program in the third quarter of 2019, Non-service related postretirement costs were $15 in the third quarter of 2020, as compared to $26 in the third quarter of 2019, primarily due to lower interest cost.
  Three Months Ended September 30,
  2017 2016 Basis Point Change
Operating profit margin, GAAP 23.3% 27.7 % (440)
Global Growth and Efficiency Program 1.5
 1.1
  
Gain on sale of land in Mexico —
 (2.5)  
Charge for a previously disclosed litigation matter —
 0.1
  
Operating profit margin, non-GAAP 24.8% 26.4 % (160)


Three Months Ended September 30,
20202019
Non-service related postretirement costs, GAAP$15 $27 
Global Growth and Efficiency Program— (1)
Non-service related postretirement costs, non-GAAP$15 $26 
Interest (Income) Expense, Net


Interest (income) expense, net was $27$36 in the third quarter of 20172020 as compared to $25$35 in the third quarter of 2016, primarily due to higher average interest rates on debt.2019.

35

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Net Income Attributable to Colgate-Palmolive Company and Earnings Per Share


Net income attributable to Colgate-Palmolive Company for the third quarter of 2017 decreased to $607 from $702 in the third quarter of 2016, and Earnings per common share on a diluted basis decreased to $0.68 per share in the third quarter of 2017 from $0.78 in the third quarter of 2016. Net income attributable to Colgate-Palmolive Company in both periods included charges resulting from the Global Growth and Efficiency Program. Net income attributable to Colgate-Palmolive Company in the third quarter of 2016 also2020 increased to $698 from $578 in the third quarter of 2019, and Earnings per common share on a diluted basis increased to $0.81 per share in the third quarter of 2020 from $0.67 in the third quarter of 2019. Net income attributable to Colgate-Palmolive Company in the third quarter of 2020 included a gain onbenefits resulting from the saleGlobal Growth and Efficiency Program, and in the third quarter of land in Mexico, benefits2019 included charges resulting from previously disclosed tax matters (see “Income taxes” below for further information)the Global Growth and a charge for a previously disclosed litigation matter.Efficiency Program and acquisition-related costs.


Excluding the items described above in both periods as applicable, Net income attributable to Colgate-Palmolive Company in the third quarter of 2017 decreased 1%2020 increased 12% to $646,$685 from $614 in the third quarter of 2019, and Earnings per common share on a diluted basis increased 11% to $0.79 in the third quarter of 2017 was $0.73, even with2020 from $0.71 in the third quarter of 2016.2019.
Three Months Ended September 30, 2017Three Months Ended September 30, 2020
Income Before Income Taxes 
Provision For Income Taxes(1)
 Net Income Including Noncontrolling Interests Net Income Attributable To Colgate-Palmolive Company 
Diluted Earnings Per Share(2)
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$900
 $250
 $650
 $607
 $0.68
As Reported GAAP$967 $222 $745 $698 $0.81 
Global Growth and Efficiency Program58
 19
 39
 39
 0.05
Global Growth and Efficiency Program(16)(3)(13)(13)(0.02)
Non-GAAP$958
 $269
 $689
 $646
 $0.73
Non-GAAP$951 $219 $732 $685 $0.79 

Three Months Ended September 30, 2019
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$794 $167 $627 $578 $0.67 
Global Growth and Efficiency Program27 5 22 22 0.03 
Acquisition-related costs18 4 14 14 0.01 
Non-GAAP$839 $176 $663 $614 $0.71 
 Three Months Ended September 30, 2016
 Income Before Income Taxes 
Provision For Income Taxes(1)
 Net Income Including Noncontrolling Interests Net Income Attributable To Colgate-Palmolive Company 
Diluted Earnings Per Share(2)
As Reported GAAP$1,046
 $300
 $746
 $702
 $0.78
Global Growth and Efficiency Program42
 10
 32
 32
 0.04
Gain on sale of land in Mexico(97) (34) (63) (63) (0.07)
Benefits from previously disclosed tax matters—
 22
 (22) (22) (0.02)
Charge for a previously disclosed litigation matter6
 2
 4
 4
 —
Non-GAAP$997
 $300
 $697
 $653
 $0.73

(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 adjustments on diluted earnings per share may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.

36

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Net Sales and Operating Profit by Segment


Oral, Personal and Home Care


North America
Three Months Ended September 30,Three Months Ended September 30,
2017 2016 Change 20202019Change
Net sales$795
 $800
 (0.5)%Net sales$923 $869 6.5 %
Operating profit$249
 $273
 (9)%Operating profit$242 $248 (2)%
% of Net sales31.3% 34.1% (280)bps% of Net sales26.2 %28.5 %(230)bps
Net sales in North America decreased 0.5%increased 6.5% in the third quarter of 20172020 to $795,$923 as a result of volume growth of 3.0% and positive foreign exchange of 0.5% were more than offset by net selling price decreasesincreases of 4.0%.3.5%, while foreign exchange was flat. The Company’s acquisition of Hello contributed 1.5% to volume in North America. Organic sales in North America decreased 1.0%increased 5.0% in the third quarter of 2017.2020. Organic sales growth was led by the United States.


The decreaseincrease in organic sales in North America in the third quarter of 20172020 versus the third quarter of 2016 was due to a decrease in Personal Care and Home Care organic sales, partially offset by an increase in organic sales in the Oral Care category. The decrease in Personal Care was due to a decline in organic sales in the liquid hand soap, underarm protection and shower gel categories. The decrease in Home Care was primarily due to a decline in organic sales in the hand dish and fabric softener categories, partially offset by an increase in organic sales in the liquid cleaners category. The increase in Oral Care was due to organic sales growth in the toothpaste and manual toothbrush categories.

Operating profit in North America decreased 9% in the third quarter of 2017 to $249, or 280 bps to 31.3% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (40 bps) and an increase in Selling, general and administrative expenses (220 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily driven by higher raw and packaging material costs (140 bps) and lower pricing, partially offset by cost savings from the Company’s funding-the-growth initiatives (210 bps) and the Global Growth and Efficiency Program (50 bps). This increase in Selling, general and administrative expenses was due to increased advertising investment (250 bps), partially offset by lower overhead expenses (30 bps).
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


Latin America
 Three Months Ended September 30,
 2017 2016 Change
Net sales$985
 $924
 6.5
%
Operating profit$301
 $298
 1
%
% of Net sales30.6% 32.3% (170)bps

Net sales in Latin America increased 6.5% to $985 in the third quarter of 2017, driven by volume growth of 3.0%, net selling price increases of 2.5% and positive foreign exchange of 1.0%. Organic sales in Latin America increased 5.5% in the third quarter of 2017. Volume gains were led by Brazil and the Southern Cone region.

The increase in organic sales in Latin America in the third quarter of 2017 versus the third quarter of 20162019 was due to increases in Oral Care, Personal Care and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the power toothbrush and toothpaste categories. The increase in Personal Care was primarily due to organic sales growth in the liquid hand soap category, partially offset by declines in organic sales in the skin health and underarm protection categories. The increase in Home Care was primarily due to organic sales growth in the hand dish category, partially offset by a decline in organic sales in the fabric softener category.
Operating profit in North America decreased 2% in the third quarter of 2020 to $242, or 230 bps to 26.2% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was due to increases in Selling, general and administrative expenses (340 bps) and Other (income) expense, net (150 bps), partially offset by an increase in Gross profit (260 bps), all as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (220 bps) and higher pricing, partially offset by higher raw and packaging material costs (70 bps). This increase in Selling, general and administrative expenses was due to higher overhead expenses (190 bps), primarily driven by higher logistics costs, and increased advertising investment (150 bps). The increase in Other (income) expense, net was primarily due to an inventory write off.

Latin America
Three Months Ended September 30,
 20202019Change
Net sales$837 $881 (5.0)%
Operating profit$250 $235 6 %
% of Net sales29.9 %26.7 %320 bps
Net sales in Latin America decreased 5.0% in the third quarter of 2020 to $837, as negative foreign exchange of 16.5% was partially offset by volume growth of 2.0% and net selling price increases of 9.5%. Organic sales in Latin America increased 11.5% in the third quarter of 2020. Organic sales growth was led by Brazil, Argentina, Mexico and Colombia.

The increase in organic sales in Latin America in the third quarter of 2020 versus the third quarter of 2019 was due to increases in Oral Care, Personal Care and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste category.and manual toothbrush categories. The increase in Personal Care was primarily due to organic sales growth in the bar soap, shampoo and shampoo categories.liquid hand soap categories, partially offset by a decline in organic sales in the underarm protection category. The increase in Home Care was primarily due to organic sales growth in the liquid cleaners andhand dish, fabric softener and liquid cleaner categories.


37
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Operating profit in Latin America increased 1%6% in the third quarter of 20172020 to $301, while$250, or 320 bps to 29.9% as a percentage of Net sales, it decreased 170 bps to 30.6% of Net sales. This decreaseincrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (50(260 bps), which was more than offset by an increase and a decrease in Selling, general and administrative expenses (200Other (income) expense, net (50 bps), both as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (170(410 bps), and higher pricing, partially offset by higher raw and packaging material costs (280(580 bps), which included foreign exchange transaction costs. This decrease in Other (income) expense, net was due to a value added tax matter in Brazil.
Europe
 Three Months Ended September 30,
 20202019Change
Net sales$712 $607 17.0 %
Operating profit$169 $153 10 %
% of Net sales23.7 %25.2 %(150)bps
Net sales in Europe increased 17.0% in the third quarter of 2020 to $712 due to volume growth of 12.0%, an increase in net selling prices of 0.5% and positive foreign exchange of 4.5%. The Company’s acquisition of Filorga contributed 9.5% to volume in Europe. Organic sales in Europe increased 3.0% in the third quarter of 2020. Organic sales growth in France, the Netherlands and Denmark were partially offset by an organic sales decline in the United Kingdom.

The increase in organic sales in Europe in the third quarter of 2020 versus the third quarter of 2019 was primarily due to an increase in Personal Care and Home Care organic sales. The increase in Personal Care was primarily due to organic sales growth in the liquid hand soap and body wash categories, partially offset by a decline in organic sales in the underarm protection category. The increase in Home Care was primarily due to organic sales growth in the fabric softener and hand dish categories.

Operating profit in Europe increased 10% in the third quarter of 2020 to $169, while as a percentage of Net sales it decreased 150 bps to 23.7%. This decrease in Operating profit as a percentage of Net sales was due to increases in Selling, general and administrative expenses (330 bps) and Other (income) expense, net (80 bps), partially offset by an increase in Gross profit (260 bps), all as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (200 bps) and favorable mix (140 bps), partially offset by higher raw and packaging material costs (70 bps). This increase in Selling, general and administrative expenses was due to increased advertising investment (100(200 bps) and higher overhead expenses (100(130 bps). This increase in Other (income) expense, net was due to amortization expense related to the Filorga acquisition.



Asia Pacific

 Three Months Ended September 30,
 20202019Change
Net sales$722 $690 4.5 %
Operating profit$222 $193 15 %
% of Net sales30.7 %28.0 %270 bps
Net sales in Asia Pacific increased 4.5% in the third quarter of 2020 to $722 due to volume growth of 2.5% and selling price increases of 2.0%, while foreign exchange was flat. Organic sales in Asia Pacific increased 4.5% in the third quarter of 2020. Organic sales growth was led by Australia, India, the Philippines and the Greater China region.

The increase in organic sales in Asia Pacific in the third quarter of 2020 versus the third quarter of 2019 was due to increases in Oral Care, Personal Care and Home Care organic sales. The increase in Oral Care was primarily due to an increase in organic sales in the toothpaste category. The increase in Personal Care was primarily due to organic sales growth in the liquid hand soap and shampoo categories. The increase in Home Care was primarily due to organic sales growth in the hand dish category.



38
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Europe
 Three Months Ended September 30,
 2017 2016 Change
Net sales$642
 $609
 5.5
%
Operating profit$162
 $158
 3
%
% of Net sales25.2% 25.9% (70)bps

Net salesOperating profit in EuropeAsia Pacific increased 5.5%15% in the third quarter of 20172020 to $642 as volume growth of 3.0% and positive foreign exchange of 4.5% were partially offset by net selling price decreases of 2.0%. Organic sales in Europe increased 1.0% in the third quarter of 2017. Volume gains were led by France, Italy, the Netherlands and Poland.

The increase in organic sales in Europe in the third quarter of 2017 versus the third quarter of 2016 was driven by Oral Care with organic sales growth in the toothpaste category. Home Care also contributed$222, or 270 bps to organic sales growth with gains in the fabric softener category.

Operating profit in Europe increased 3% in the third quarter of 2017 to $162, while30.7% as a percentage of Net sales, it decreased 70 bps to 25.2% of Net sales. This decreaseincrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (10(150 bps), which was more than offset by an increaseand a decrease in Selling, general and administrative expenses (100(110 bps), both as a percentage of Net sales. This increase in Gross profit was primarily driven bydue to cost savings from the Company’s funding-the-growth initiatives (220(230 bps) and the Global Growth and Efficiency Program (20 bps),higher pricing, partially offset by higher raw and packaging material costs (230(140 bps). This increasedecrease in Selling, general and administrative expenses was due to increased advertising investment (190 bps), partially offset by lower overhead expenses (90 bps).

Asia Pacific
 Three Months Ended September 30,
 2017 2016 Change
Net sales$728
 $723
 0.5
%
Operating profit$220
 $230
 (4)%
% of Net sales30.2% 31.8% (160)bps

Net sales in Asia Pacific increased 0.5% in the third quarter of 2017 to $728 as volume and net selling prices were flat, while foreign exchange was positive 0.5%. Organic sales in Asia Pacific were even with the third quarter of 2016. Volume gains in the Greater China region and the Philippines were offset by volume declines in Australia and India.

Organic sales in Asia Pacific in the third quarter of 2017 were even with the third quarter of 2016, as an increase in organic sales in Oral Care was offset by declines in organic sales in the Personal Care category. The increase in Oral Care was due to organic sales growth in the toothpaste category. The decrease in Personal Care was primarily due to declines in organic sales in the bar soap and shampoo categories.

Operating profit in Asia Pacific decreased 4% to $220 in the third quarter of 2017, or 160 bps to 30.2% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (60 bps) and an increase in Selling, general and administrative expenses (90 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily driven by higher costs (330 bps), which were primarily driven by higher raw and packaging material costs, partially offset by cost savings from the Company’s funding-the-growth initiatives (260 bps). This increase in Selling, general and administrative expenses was due to higher overhead expenses (80 bps) and increaseddecreased advertising investment (10(30 bps).
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of FinancialAfrica/Eurasia
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


Africa/Eurasia
Three Months Ended September 30, Three Months Ended September 30,
2017 2016 Change 20202019Change
Net sales$251
 $250
 0.5
%Net sales$255 $248 2.5 %
Operating profit$44
 $50
 (12)%Operating profit$61 $48 27 %
% of Net sales17.5% 20.0% (250)bps% of Net sales23.9 %19.4 %450 bps
Net sales in Africa/Eurasia increased 0.5%2.5% in the third quarter of 20172020 to $251. Volume declines$255, as volume growth of 4.5% were more than offset by6.5% and net selling price increases of 2.5% and the impact of positive6.5% were partially offset by negative foreign exchange of 2.5%10.5%. The Company’s acquisition of a 51% controlling interest in Colgate Tolaram Pte. Ltd., a joint venture which owns the Nigeria-based Hypo Homecare Products Limited (the “Nigeria Joint Venture”), contributed 1.0% to volume in Africa/Eurasia. Organic sales in Africa/Eurasia decreased 2.0%increased 12.0% in the third quarter of 2017. Volume declines in the Sub-Saharan2020. Organic sales growth was led by Russia, South Africa region and the Middle East region were partially offset by volume gains in Russia.Turkey.


The decreaseincrease in organic sales in Africa/Eurasia in the third quarter of 20172020 versus the third quarter of 20162019 was primarily due to a decreaseincreases in Oral Care and Personal Care organic sales. The decreaseincrease in Oral Care was primarily due to a decline in organic sales growth in the toothpaste and manual toothbrush category.categories. The decreaseincrease in Personal Care was primarily due to a decline in organic sales growth in the underarm protectionbody wash, liquid hand soap and shower gelbar soap categories.


Operating profit in Africa/Eurasia decreased 12%increased 27% in the third quarter of 20172020 to $44,$61, or 250450 bps to 17.5%23.9% as a percentage of Net sales. This decreaseincrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (80(50 bps), which was more than offset by an increase and a decrease in Selling, general and administrative expenses (290(390 bps), both as a percentage of Net sales. This increase in Gross profit was mainly driven byprimarily due to cost savings from the Company’s funding-the-growth initiatives (130(290 bps) and the Global Growth and Efficiency Program (20 bps), and higher pricing, partially offset by higher raw and packaging material costs (120(460 bps), which included foreign exchange transaction costs. This decrease in Selling, general and administrative expenses was due to lower overhead expenses (240 bps) and decreased advertising investment (150 bps).






















39
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Hill’s Pet Nutrition
 Three Months Ended September 30,
 20202019Change
Net sales$704 $633 11.0 %
Operating profit$196 $169 16 %
% of Net sales27.8 %26.7 %110 bps
Net sales for Hill’s Pet Nutrition increased 11.0% in the third quarter of 2020 to $704 due to volume growth of 6.5% and net selling price increases of 4.5%, while foreign exchange was flat. Organic sales in Hill’s Pet Nutrition increased 11.0% in the third quarter of 2020. Organic sales growth was led by the United States, Europe, Australia and Canada.

The increase in organic sales in the third quarter of 2020 was primarily due to organic sales growth in the Science Diet and Prescription Diet categories.

Operating profit in Hill’s Pet Nutrition increased 16% in the third quarter of 2020 to $196, or 110 bps to 27.8% as a percentage of Net sales. This increase in Operating profit as a percentage of Net sales was due to an increase in Gross profit (140 bps), partially offset by an increase in Selling, general and administrative expenses (40 bps), both as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (160 bps) and higher pricing, partially offset by higher raw and packaging material costs (130 bps). This increase in Selling, general and administrative expenses was due to increased advertising investment (290 bps).

Hill’s Pet Nutrition
 Three Months Ended September 30,
 2017 2016 Change
Net sales$573
 $561
 2.0
%
Operating profit$161
 $162
 (1)%
% of Net sales28.1% 28.9% (80)bps

Net sales for Hill’s Pet Nutrition increased 2.0% in the third quarter of 2017 to $573, driven by volume growth of 1.0% and positive foreign exchange of 1.0%, while net selling prices were flat. Organic sales in Hill’s Pet Nutrition increased 1.0% in the third quarter of 2017. Volume gains in the United States and Western Europe were partially offset by volume declines in Japan. The volume declines in Japan are primarily attributable to a continued contraction in the market.

The increase in organic sales in the third quarter of 2017 versus the third quarter of 2016 was due to an increase in organic sales in the Prescription Diet category, partially offset by a decline in organic sales in the Advanced Nutrition and Naturals categories.

Operating profit in Hill’s Pet Nutrition decreased 1% in the third quarter of 2017 to $161, or 80 bps to 28.1% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (20 bps), which was more than offset by an increase in Selling, general and administrative expenses (80 bps), both as a percentage of Net sales. This increase in Gross profit was mainly driven by cost savings from the Company’s funding-the-growth initiatives (200 bps), partially offset by higher costs (180 bps), which were primarily driven by higher raw and packaging material costs. This increase in Selling, general and administrative expenses was due to increased advertising investment (130(220 bps), partially offset by lower overhead expenses (50(180 bps).

During the quarter ended March 31, 2019, Hill’s announced a voluntary recall, which was subsequently expanded, of select canned dog food products due to potentially elevated levels of Vitamin D resulting from a supplier error. In the United States, the voluntary recall was conducted in cooperation with the U.S. Food and Drug Administration. Following the announcement of the voluntary recall, and as of September 30, 2020, Hill’s and/or the Company have been named as defendants in 37 putative class action lawsuits, one putative class action filed on behalf of a European Union class and one individual action, all related to the voluntary recall and filed in various jurisdictions in the United States. In addition, two putative class actions related to the voluntary recall have been filed in Canada. Eight of the putative class actions lawsuits in the United States and one of the putative class action lawsuits in Canada have been voluntarily dismissed. Hill’s is entitled to indemnification from the supplier related to the voluntary recall. Sales of products voluntarily recalled represent less than 2% of Hill’s annual Net sales. The sales loss and other costs associated with the voluntary recall and subsequent expansion did not have a material impact on the Company’s Net sales or Operating profit and are not expected to have a material impact in future periods.

Corporate
 Three Months Ended September 30,
 20202019Change
Operating profit (loss)$(122)$(190)(36)%
Operating profit (loss) related to Corporate was ($122) in the third quarter of 2020 as compared to ($190) in the third quarter of 2019. In the third quarter of 2020, Corporate Operating profit (loss) included benefits of $16 resulting from the Global Growth and Efficiency Program. In the third quarter of 2019, Corporate Operating profit (loss) included charges of $26 resulting from the Global Growth and Efficiency Program and acquisition-related costs of $18.

40
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Corporate
 Three Months Ended September 30,
 2017 2016 Change
Operating profit (loss)$(210) $(100) 110%

Operating profit (loss) related to Corporate was ($210) in the third quarter of 2017 as compared to ($100) in the third quarter of 2016. In the third quarter of 2017, Corporate Operating profit (loss) included charges of $58 resulting from the Global Growth and Efficiency Program. In the third quarter of 2016, Corporate Operating profit (loss) included charges of $42 resulting from the Global Growth and Efficiency Program, a gain of $97 on the sale of land in Mexico and a charge of $6 for a previously disclosed litigation matter.

Nine Months


Worldwide Net sales were $11,562$12,147 in the first nine months of 2017,2020, up 1.0%4.0% as compared to the first nine months of 2016,2019, as volume declinesgrowth of 0.5% were more than offset by5.5% and net selling price increases of 1.0% and positive3.0% were partially offset by negative foreign exchange of 0.5%4.5%. Acquisitions contributed 2.0% to volume. Organic sales increased 0.5%6.5% in the first nine months of 2017.2020.


Net sales in the Oral, Personal and Home Care product segment were $9,863$10,052 in the first nine months of 2017,2020, an increase of 1.0%2.0% as compared to the first nine months of 2016,2019, as volume declinesgrowth of 0.5% were more than offset by4.5% and net selling price increases of 1.0% and positive3.0% were partially offset by negative foreign exchange of 0.5%5.5%. Acquisitions contributed 2.0% to volume. Organic sales in the Oral, Personal and Home Care product segment increased 0.5%5.5% in the first nine months of 2017.2020.


The increase in organic sales in the first nine months of 20172020 versus the first nine months of 20162019 was driven by an increase in organic salesdue to increases in Oral Care, partially offset by a decrease in organic sales in Personal Care and Home Care.Care organic sales. The increase in Oral Care was primarily due to organic sales was due to growth in the toothpaste category. The decreaseincrease in Personal Care was primarily due to organic sales was attributable to declinesgrowth in the liquid hand soap, bar soap and body wash categories, partially offset by a decline in organic sales in the underarm protection categories.category. The decreaseincrease in Home Care was primarily due to organic sales was attributable to a declinegrowth in the hand dish category, partially offset by gains in theand liquid cleaners and fabric softenercleaner categories.


Net sales in the Hill’s Pet Nutrition segment were $1,699$2,095 in the first nine months of 2017,2020, an increase of 1.0% as compared to13.5% from the first nine months of 2016,2019, as volume declinesgrowth of 1.5% were more than offset by10.0% and net selling price increases of 2.0% and positive4.5% were partially offset by negative foreign exchange of 0.5%1.0%. Organic sales forin the Hill’s Pet Nutrition segment increased 0.5%14.5% in the first nine months of 2017 as organic sales growth in the Prescription Diet category was partially offset by declines in organic sales in the Advanced Nutrition and Naturals categories.2020.



41
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Net Sales and Operating Profit by SegmentSegment


Net sales and Operating profit by segment were as follows:
 Nine Months Ended September 30,
 2017 2016
Net sales   
Oral, Personal and Home Care   
North America$2,319
 $2,393
Latin America2,911
 2,710
Europe1,784
 1,803
Asia Pacific2,111
 2,163
Africa/Eurasia738
 720
Total Oral, Personal and Home Care9,863
 9,789
Pet Nutrition1,699
 1,685
Total Net sales$11,562
 $11,474
    
Operating profit 
  
Oral, Personal and Home Care 
  
North America$723
 $762
Latin America878
 829
Europe447
 437
Asia Pacific644
 668
Africa/Eurasia134
 138
Total Oral, Personal and Home Care2,826
 2,834
Pet Nutrition481
 479
Corporate(642) (431)
Total Operating profit$2,665
 $2,882


Nine Months Ended September 30,
20202019
Net sales  
Oral, Personal and Home Care  
North America$2,801 $2,568 
Latin America2,531 2,700 
Europe2,004 1,798 
Asia Pacific1,980 2,035 
Africa/Eurasia736 732 
Total Oral, Personal and Home Care10,052 9,833 
Pet Nutrition2,095 1,845 
Total Net sales$12,147 $11,678 
Operating profit
Oral, Personal and Home Care
North America$753 $750 
Latin America728 718 
Europe482 452 
Asia Pacific559 557 
Africa/Eurasia174 141 
Total Oral, Personal and Home Care2,696 2,618 
Pet Nutrition588 501 
Corporate(368)(496)
Total Operating profit$2,916 $2,623 

Within the Oral, Personal and Home Care product segment, North America Net sales decreased 3.0%, as a result of volume declines of 1.0% and net selling price decreases of 2.0%, while foreign exchange was flat. Organic sales in North America decreased 3.0%. Latin America Net sales increased 7.5%9.0%, driven by volume growth of 2.0%,8.5% and net selling price increases of 4.5% and positive1.0%, partially offset by negative foreign exchange of 1.0%0.5%. The Hello acquisition contributed 1.5% to volume in North America. Organic sales in North America increased 8.0%. Latin America Net sales decreased 6.0%, driven by negative foreign exchange of 14.5%, partially offset by volume growth of 0.5% and net selling price increases of 8.0%. Organic sales in Latin America increased 6.5%8.5%. Europe Net sales decreased 1.0%increased 11.5%, asdriven by volume growth of 1.0% was more than12.0%, partially offset by net selling priceprices decreases of 1.0% and negative0.5% while foreign exchange of 1.0%.was flat. The Filorga acquisition contributed 9.0% to volume in Europe. Organic sales in Europe were even with the first nine months of 2016.increased 2.5%. Asia Pacific Net sales decreased 2.5%, as a result ofdriven by volume declines of 1.0%, net selling price decreases of 0.5%3.0% and negative foreign exchange of 1.0%1.5%, partially offset by net selling prices increases of 2.0%. Organic sales in Asia Pacific decreased 1.5%1.0%. Africa/Eurasia Net sales increased 2.5%0.5%, as volume declinesgrowth of 6.0% were more than offset by5.5% and net selling price increases of 4.5% and positive3.5% were partially offset by negative foreign exchange of 4.0%8.5%. The Nigeria Joint Venture contributed 1.5% to volume in Africa/Eurasia. Organic sales in Africa/Eurasia decreased 1.5%increased 7.5%.


In the first nine months of 2017,2020, Operating profit (loss) related to Corporate was ($642)368) as compared to ($431)496) in the first nine months of 2016.2019. In the first nine months of 2017,2020, Corporate Operating profit (loss) included chargesacquisition-related costs of $246$6 and benefits of $16 resulting from the Global Growth and Efficiency Program. In the first nine months of 2016,2019, Corporate Operating profit (loss) included charges$94 of $156charges resulting from the Global Growth and Efficiency Program a gainand acquisition-related costs of $97 on the sale of land in Mexico and a charge of $6 for a previously disclosed litigation matter.$18.
42

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Gross Profit/Margin


Worldwide Gross profit increased to $6,952$7,374 in the first nine months of 20172020 from $6,876$6,911 in the first nine months of 2016.2019. Gross profit in both periodsthe first nine months of 2020 included acquisition-related costs. Gross profit in the first nine months of 2019 included charges resulting from the Global Growth and Efficiency Program. Excluding these chargesitems in both periods as applicable, Gross profit increased to $7,003$7,378 in the first nine months of 20172020 from $6,907$6,920 in the first nine months of 2016. This increase in Gross profit reflects2019, reflecting an increase of $52$287 resulting from higher Net sales and an increase of $44$171 resulting from higher Gross profit margin.

Worldwide Gross profit margin increased to 60.7% in the first nine months of 2017.

Worldwide Gross profit margin was 60.1%2020 from 59.2% in the first nine months of 20172019. Excluding the items described above in both periods as comparedapplicable, Gross profit margin increased by 140 bps to 59.9%60.7% in the first nine months of 2016. Excluding the charges resulting2020, from the Global Growth and Efficiency Program in both periods, Gross profit margin increased by 40 bps to 60.6%59.3% in the first nine months of 2017, from 60.2% in the first nine months of 2016, driven by2019, due to cost savings from the Company’s funding-the-growth initiatives (170(210 bps), and higher pricing (40(120 bps), which were partially offset by higher costs (170 bps), driven by higher raw and packaging material costs (190 bps), which included foreign exchange transaction costs.
Nine Months Ended September 30,
20202019
Gross profit, GAAP$7,374 $6,911 
Acquisition-related costs4 — 
Global Growth and Efficiency Program— 9 
Gross profit, non-GAAP$7,378 $6,920 
  Nine Months Ended September 30,
  2017 2016
Gross profit, GAAP $6,952
 $6,876
Global Growth and Efficiency Program 51
 31
Gross profit, non-GAAP $7,003
 $6,907

Nine Months Ended September 30,
20202019Basis Point Change
Gross profit margin, GAAP60.7 %59.2 %150 
Acquisition-related costs— — 
Global Growth and Efficiency Program— 0.1 
Gross profit margin, non-GAAP60.7 %59.3 %140 
43
  Nine Months Ended September 30,
  2017 2016 Basis Point Change
Gross profit margin, GAAP 60.1% 59.9% 20
Global Growth and Efficiency Program 0.5
 0.3
  
Gross profit margin, non-GAAP 60.6% 60.2% 40

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Selling, General and Administrative Expenses


Selling, general and administrative expenses increased 3%5% to $4,124$4,386 in the first nine months of 20172020 from $3,996$4,163 in the first nine months of 2016.2019. Selling, general and administrative expenses in both periodsthe first nine months of 2020 included benefits resulting from the Global Growth and Efficiency Program. Selling, general and administrative expenses in the first nine months of 2019 included charges resulting from the Global Growth and Efficiency Program. Excluding these charges,items in both periods as applicable, Selling, general and administrative expenses increased to $4,064$4,389 in the first nine months of 20172020 from $3,947$4,121 in the first nine months of 2016,2019, reflecting higher overhead expenses of $137 and increased advertising investment of $73 and higher overhead expenses of $44.$131.


Selling, general and administrative expenses as a percentage of Net sales increased to 35.7%36.1% in the first nine months of 20172020 from 34.8%35.6% in the first nine months of 2016.2019. Excluding charges resulting from the Global Growth and Efficiency Program,items described above in both periods as applicable, Selling, general and administrative expenses as a percentage of Net sales were 35.1%increased by 80 bps to 36.1% in the first nine months of 2017, an increase of 70 bps2020 as compared to 35.3% in the first nine months of 2016.2019. This increase was a result ofdue to increased advertising investment (50(60 bps) and higher overhead expenses (20 bps), both as a percentage of Net sales. In the first nine months of 2017,2020, advertising investment increased 6%as a percentage of Net sales to $1,204, as compared with $1,13111.5% from 10.9% in the first nine months of 2016, while2019, or 10.3% in absolute terms to $1,399, as a percentage of Net sales, it increased to 10.4%compared with $1,268 in the first nine months of 2017 from 9.9% in the first nine months of 2016.2019.
Nine Months Ended September 30,
20202019
Selling, general and administrative expenses, GAAP$4,386 $4,163 
Global Growth and Efficiency Program3 (42)
Selling, general and administrative expenses, non-GAAP$4,389 $4,121 
Nine Months Ended September 30,
20202019Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP36.1 %35.6 %50
Global Growth and Efficiency Program— (0.3)
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP36.1 %35.3 %80
44
  Nine Months Ended September 30,
  2017 2016
Selling, general and administrative expenses, GAAP $4,124
 $3,996
Global Growth and Efficiency Program (60) (49)
Selling, general and administrative expenses, non-GAAP $4,064
 $3,947

  Nine Months Ended September 30,
  2017 2016 Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP 35.7 % 34.8 % 90
Global Growth and Efficiency Program (0.6) (0.4)  
Selling, general and administrative expenses as a percentage of Net sales, non- GAAP 35.1 % 34.4 % 70

Other (Income) Expense, Net

Other (income) expense, net was $163 in the first nine months of 2017, as compared to $(2) in the first nine months of 2016.
Other (income) expense, net in both periods included charges resulting from the Global Growth and Efficiency Program. Other (income) expense, net in the first nine months of 2016 also included a gain on the sale of land in Mexico and a charge for a previously disclosed litigation matter. Excluding these items in both periods as applicable, Other (income) expense, net was $28 in the first nine months of 2017, as compared to $13 in the first nine months of 2016.
  Nine Months Ended September 30,
  2017 2016
Other (income) expense, net, GAAP $163
 $(2)
Global Growth and Efficiency Program (135) (76)
Gain on sale of land in Mexico —
 97
Charge for a previously disclosed litigation matter —
 (6)
Other (income) expense, net, non-GAAP $28
 $13

COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Operating Profit


Operating profit decreased 8%increased 11% to $2,665$2,916 in the first nine months of 20172020 from $2,882$2,623 in the first nine months of 2016.2019. Operating profit in both periodsthe first nine months of 2020 included chargesacquisition-related costs and benefits resulting from the Global Growth and Efficiency Program. Operating profit in the first nine months of 2016 also2019 included a gain oncharges resulting from the sale of land in MexicoGlobal Growth and a charge for a previously disclosed litigation matter.Efficiency Program and acquisitions-related costs. Excluding these items in both periods as applicable, Operating profit for the first nine months of 2017 decreased 1%increased to $2,911 from $2,947$2,906 in the first nine months of 2016,2020 from $2,735 in the first nine months of 2019, primarily due to an increase in Gross profit, partially offset by an increase in Selling, general and administrative expenses, partially offset by higher Gross profit.expenses.


Operating profit margin was 23.0%24.0% in the first nine months of 2017, a decrease2020, an increase of 210150 bps compared to 25.1%22.5% in the first nine months of 2016.2019. Excluding the items described above in both periods as applicable, Operating profit margin was 25.2%, a decrease of 50 bps from 25.7%23.9% in the first nine months of 2016. This decrease2020, an increase of 50 bps compared to 23.4% in the first nine months of 2019, as higher Gross profit (140 bps) was primarily due topartially offset by an increase in Selling, general and administrative expenses (70 bps), partially offset by an increase in Gross profit margin (40(80 bps), both as a percentage of Net sales. This increase

Nine Months Ended September 30,
20202019% Change
Operating profit, GAAP$2,916 $2,623 11 %
Global Growth and Efficiency Program(16)94 
Acquisition-related costs6 18 
Operating profit, non-GAAP$2,906 $2,735 6 %
Nine Months Ended September 30,
20202019Basis Point Change
Operating profit margin, GAAP24.0 %22.5 %150
Global Growth and Efficiency Program(0.1)0.8 
Acquisition-related costs— 0.1 
Operating profit margin, non-GAAP23.9 %23.4 %50
Non-Service Related Postretirement Costs

Non-service related postretirement costs were $56 in Selling, generalthe first nine months of 2020, as compared to $79 in the first nine months of 2019. Non-service related postretirement costs in the first nine months of 2019 included charges resulting from the Global Growth and administrative expenses wasEfficiency Program. Excluding chargers resulting from the Global Growth and Efficiency Program in the first nine months of 2019, Non-service related postretirement costs were $56 in the first nine months of 2020, as compared to $75 in the first nine months of 2019, primarily due to increased advertising investment.lower interest cost.


  Nine Months Ended September 30,
  2017 2016 % Change
Operating profit, GAAP $2,665
 $2,882
 (8)%
Global Growth and Efficiency Program 246
 156
  
Gain on sale of land in Mexico —
 (97)  
Charge for a previously disclosed litigation matter —
 6
  
Operating profit, non-GAAP $2,911
 $2,947
 (1)%

  Nine Months Ended September 30,
  2017 2016 Basis Point Change
Operating profit margin, GAAP 23.0% 25.1 % (210)
Global Growth and Efficiency Program 2.2
 1.4
  
Gain on sale of land in Mexico —
 (0.8)  
Charge for a previously disclosed litigation matter —
 —
  
Operating profit margin, non-GAAP 25.2% 25.7 % (50)

Nine Months Ended September 30,
20202019
Non-service related postretirement costs, GAAP$56 $79 
Global Growth and Efficiency Program— (4)
Non-service related postretirement costs, non-GAAP$56 $75 
Interest (Income) Expense, Net


Interest (income) expense, net was $74$107 in the first nine months of 20172020 as compared to $78$113 in the first nine months of 2016,2019, primarily due to lower average interest expense as a result of lower average debt balances and higher interest incomerates on investments held outside the United States.debt.

45
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Income Taxes


The effective income tax rate was 27.8%23.0% for the third quarter of 20172020 as compared to 28.7%21.0% for the third quarter of 2016.2019. As reflected in the table below, the non-GAAP effective income tax rate was 28.1%23.0% for the quarter ended September 30, 2017,2020, as compared to 30.1%21.0% in the comparable period of 2016. The decrease in the non-GAAP effective income tax rate in the third quarter of 2017 was primarily due to the recognition of $17 of excess tax benefits in the Provision for income taxes in the third quarter of 2017 as a result of the adoption of ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” effective January 1, 2017. See Note 3, Recent Accounting Pronouncements and Note 10, Income Taxes to the Condensed Consolidated Financial Statements, for additional details.2019.


The effective income tax rate was 29.7%21.2% for the first nine months of 20172020 as compared to 30.2%24.1% for the first nine months of 2016.2019. As reflected in the table below, the non-GAAP effective income tax rate was 29.3%23.9% for the first nine months ended September 30, 2017,of 2020, as compared to 31.0%24.1% in the comparable period of 2016. The decrease in the non-GAAP effective income tax rate in the first nine months of 2017 was primarily due to the recognition of $43 of excess tax benefits in the Provision for income taxes during the first nine months of 2017, as a result of the adoption of the new accounting guidance discussed above.2019.


The quarterly provision for income taxes is determined based on the Company’s estimated full year effective income tax rate adjusted by the amount of tax attributable to infrequent or unusual items that are separately recognized on a discrete basis in the income tax provision in the quarter in which they occur. In addition, as discussed above, effective January 1, 2017, excess tax benefits from share-based compensation are now recognized in the Provision for income taxes on a discrete basis. The Company’s current estimate of its full year effective income tax rate before discrete period items is 30.8%24.0%, compared to 31.0%24.3% in the third quarter of 2016.2019. See Note 10, Income Taxes to the Condensed Consolidated Financial Statements for additional details.
Three Months Ended September 30,
20202019
Income Before Income Taxes
Provision For Income Taxes(1)
Effective Income Tax Rate(2)
Income Before Income Taxes
Provision For Income Taxes(1)
Effective Income Tax Rate(2)
As Reported GAAP$967 $222 23.0 %$794 $167 21.0 %
Global Growth and Efficiency Program(16)(3)— 27 5 (0.1)
Acquisition-related costs— — — 18 4 0.1 %
Non-GAAP$951 $219 23.0 %$839 $176 21.0 %
  Three Months Ended September 30,
  2017 2016
  Income Before Income Taxes 
Provision For Income Taxes(1)
 
Effective Income Tax Rate(2)
 Income Before Income Taxes 
Provision For Income Taxes(1)
 
Effective Income Tax Rate(2)
As Reported GAAP $900
 $250
 27.8% $1,046
 $300
 28.7 %
Global Growth and Efficiency Program 58
 19
 0.3
 42
 10
 (0.2)
Gain on sale of land in Mexico —
 —
 —
 (97) (34) (0.6)
Benefits from previously disclosed tax matters —
 —
 —
 —
 22
 2.2
Charge for a previously disclosed litigation matter —
 —
 —
 6
 2
 —
Non-GAAP $958
 $269
 28.1% $997
 $300
 30.1 %

Nine Months Ended September 30,
20202019
Income Before Income Taxes
Provision For Income Taxes(1)
Effective Income Tax Rate(2)
Income Before Income Taxes
Provision For Income Taxes(1)
Effective Income Tax Rate(2)
As Reported GAAP$2,753 $585 21.2 %$2,431 $586 24.1 %
Global Growth and Efficiency Program(16)(3)— 98 23 — 
Subsidiary and operating structure initiatives— 71 2.7 — — — 
Acquisition-related costs6 2 — 18 4 — 
Non-GAAP$2,743 $655 23.9 %$2,547 $613 24.1 %
  Nine Months Ended September 30,
  2017 2016
  Income Before Income Taxes 
Provision For Income Taxes(1)
 
Effective Income Tax Rate(2)
 Income Before Income Taxes 
Provision For Income Taxes(1)
 
Effective Income Tax Rate(2)
As Reported GAAP $2,591
 $770
 29.7 % $2,804
 $846
 30.2 %
Global Growth and Efficiency Program 246
 61
 (0.4) 156
 41
 (0.2)
Gain on sale of land in Mexico —
 —
 —
 (97) (34) (0.2)
Benefits from previously disclosed tax matters —
 —
 —
 —
 35
 1.2
Charge for a previously disclosed litigation matter —
 —
 —
 6
 2
 —
Non-GAAP $2,837
 $831
 29.3 % $2,869
 $890
 31.0 %
(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.

The provision for income taxes for the nine months ended September 30, 2020 includes $71 of income tax benefits recorded on a discrete period basis, of which $45 relates to previously recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance against a deferred tax asset. As more fully described below, both items were previously recorded in connection with the charge recorded by the Company in 2017 and revised in 2018 related to the TCJA.



46
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



The Company has taken a tax position in a foreign jurisdiction since 2002 that has been challenged byAs part of the local tax authorities. In May 2015,previously recorded charge for the TCJA, the Company became awarehad provided for foreign withholding taxes expected to be paid on the remittance of several rulings by the Supreme Court in this foreign jurisdiction disallowingearnings from certain tax deductions, which had the effect of reversing prior decisions. The Company had taken deductions in prior years similar to those disallowed by such court and, as a result, as required, reassessed its tax position and increased its unrecognized tax benefits in 2015.

During the quarter ended June 30, 2016, the Supreme Court in this foreign jurisdiction decided the matter in the Company’s favor for the years 2002 through 2005 and, as a result, the Company recorded a net tax benefit of $13, including interest. During the quarter ended September 30, 2016, the Administrative Court in this jurisdiction also decided the matter in the Company’s favor for the years 2008 through 2011 by acknowledging the Supreme Court’s ruling for the years 2002 through 2005, which eliminated the possibility for future appeals.overseas subsidiaries no longer deemed indefinitely reinvested. As a result of a recent reorganization of the ownership structure of certain foreign subsidiaries, the Company determined that no withholding taxes will be due on the remittance by certain subsidiaries of earnings previously deemed reinvested and, accordingly, reversed $45 of previously recorded a tax benefit of $17, including interest,foreign withholding taxes in the first quarter ended September 30, 2016. Theof 2020.

Also as part of the previously recorded charge for the TCJA, the Company provided a valuation allowance against a deferred tax benefit of deductionsasset related to thisforeign tax position taken forcredit carry-forwards that the years 2006 through 2007 and 2012 through 2014 totals approximately $15 at current exchange rates. These deductions are currently being challengedCompany did not expect to be able to use due to changes made by the TCJA. As a result of a new operating structure being implemented within one of the Company’s divisions, the Company believes the use of these foreign tax authorities eithercredit carry-forwards will not be limited in the lower courts or atfuture and, accordingly, reversed the administrative level and, if resolvedpreviously recorded valuation allowance of $26 in the Company’s favor, will result in the Company recording additional tax benefits, including interest.first quarter of 2020.

47
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)




Net Income Attributable to Colgate-Palmolive Company and Earnings Per Share


Net income attributable to Colgate-Palmolive Company in the first nine months of 2017 decreased2020 increased to $1,701$2,048 from $1,835$1,724 in the comparable 20162019 period. Earnings per common share on a diluted basis decreasedincreased to $1.91$2.38 per share from $2.04$2.00 per share in the comparable 20162019 period. Net income attributable to Colgate-Palmolive Company in both periods included charges resulting from the Global Growth and Efficiency Program. Net income attributable to Colgate-Palmolive Company in the first nine months of 2016 also2020 included a gain onbenefits resulting from the sale of land in Mexico, benefits from previously disclosed tax mattersGlobal Growth and Efficiency Program, acquisition-related costs and a charge for a previously disclosed litigation matter.benefit related to subsidiary and operating structure initiatives. Net income attributable to Colgate-Palmolive Company in the comparable 2019 period included charges resulting from the Global Growth and Efficiency Program and acquisition-related costs.


Excluding the items described above in both periods as applicable, Net income attributable to Colgate-Palmolive Company increased 2% to $1,886 in the first nine months of 20172020 increased 9% to $1,968 from $1,855$1,813 in the first nine months of 20162019, and Earnings per common share on a diluted basis increased 3%9% to $2.12$2.29 in the first nine months of 20172020 from $2.06$2.10 in the first nine months of 2016.2019.

Nine Months Ended September 30, 2020
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$2,753 $585 $2,168 $2,048 $2.38 
Global Growth and Efficiency Program(16)(3)(13)(13)(0.02)
Subsidiary and operating structure initiatives— 71 (71)(71)(0.08)
Acquisition-related costs6 2 4 4 0.01 
Non-GAAP$2,743 $655 $2,088 $1,968 $2.29 
Nine Months Ended September 30, 2017Nine Months Ended September 30, 2019
Income Before Income Taxes 
Provision For Income
Taxes(1)
 Net Income Including Noncontrolling Interests Net Income Attributable To Colgate-Palmolive Company 
Diluted Earnings Per Share(2)
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$2,591
 $770
 $1,821
 $1,701
 $1.91
As Reported GAAP$2,431 $586 $1,845 $1,724 $2.00 
Global Growth and Efficiency Program246
 61
 185
 185
 0.21
Global Growth and Efficiency Program98 23 75 75 0.09 
Acquisition-related costsAcquisition-related costs18 4 14 14 0.01 
Non-GAAP$2,837
 $831
 $2,006
 $1,886
 $2.12
Non-GAAP$2,547 $613 $1,934 $1,813 $2.10 

 Nine Months Ended September 30, 2016
 Income Before Income Taxes 
Provision For Income Taxes(1)
 Net Income Including Noncontrolling Interests Less: Income Attributable To Noncontrolling Interests Net Income Attributable To Colgate-Palmolive Company 
Diluted Earnings Per Share(2)
As Reported GAAP$2,804
 $846
 $1,958
 $123
 $1,835
 $2.04
Global Growth and Efficiency Program156
 41
 115
 1
 114
 0.13
Gain on sale of land in Mexico(97) (34) (63) —
 (63) (0.07)
Benefits from previously disclosed tax matters—
 35
 (35) —
 (35) (0.04)
Charge for a previously disclosed litigation matter6
 2
 4
 —
 4
 —
Non-GAAP$2,869
 $890
 $1,979
 $124
 $1,855
 $2.06

(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 adjustments on diluted earnings per share may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.

48
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Restructuring and Related Implementation Charges

Global Growth and Efficiency Program

In the fourth quarter of 2012, the Company commenced the Global Growth and Efficiency Program. The program’s initiatives are expected to help Colgate ensure sustained solid worldwide growth in unit volume, organic sales, operating profit and earnings per share and enhance its global leadership positions in its core businesses.

The Global Growth and Efficiency Program is expected to produce significant benefits in the Company’s long-term business performance. The major objectives of the program include:

▪
Becoming even stronger on the ground through the continued evolution and expansion of proven global and regional commercial capabilities, which have already been successfully implemented in a number of the Company’s operations around the world.
▪Simplifying and standardizing how work gets done by increasing technology-enabled collaboration and taking advantage of global data and analytic capabilities, leading to smarter and faster decisions.
▪
Reducing structural costs to continue to increase the Company’s gross and operating profit.
▪
Building on Colgate’s current position of strength to enhance its leading market share positions worldwide and ensure sustained sales and earnings growth.

On October 23, 2014, the Board approved an expansion of the Global Growth and Efficiency Program to take advantage of additional savings opportunities. On October 29, 2015, the Board approved the reinvestment of the funds from the sale of the Company’s laundry detergent business in the South Pacific to expand the Global Growth and Efficiency Program and extend it through December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.

Implementation of the Global Growth and Efficiency Program remains on track. Building on the Company’s successful implementation of the Global Growth and Efficiency Program to date, on October 26, 2017, the Board approved an expansion of the Global Growth and Efficiency Program and an extension of the program through December 31, 2019 to take advantage of additional opportunities to streamline the Company’s operations.

The initiatives under the Global Growth and Efficiency Program continue to be focused on the following areas:
▪Expanding Commercial Hubs – Building on the success of the hub structure implemented around the world, streamlining operations in order to drive smarter and faster decision-making, strengthen capabilities available on the ground and improve cost structure.
▪
Extending Shared Business Services and Streamlining Global Functions – Optimizing the Company’s shared service organizational model in all regions of the world and continuing to streamline global functions to improve cost structure.
▪Optimizing Global Supply Chain and Facilities – Continuing to optimize manufacturing efficiencies, global warehouse networks and office locations for greater efficiency, lower cost and speed to bring innovation to market.

As a result of the expansion, savings, substantially all of which are expected to increase future cash flows, are now projected to be in the range of $560 to $635 pretax ($500 to $575 aftertax) annually, once all projects are approved and implemented as compared to the previous estimate of $455 to $495 pretax ($425 to $475 aftertax). The Company continues to expect savings in 2017 to amount to approximately $50 to $60 pretax ($40 to $50 aftertax). Cumulative pretax charges resulting from the Global Growth and Efficiency Program, once all phases are approved and implemented, are now estimated to be in the range of $1,730 to $1,885 ($1,280 to $1,380 aftertax) as compared to the previous estimate of $1,500 to $1,585 ($1,120 to $1,170 aftertax).
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


The Company now anticipates that pretax charges for 2017 will approximate $340 to $380 ($250 to $280 aftertax) as compared to the previous estimate of $275 to $360 ($210 to $260 aftertax). It is expected that substantially all charges resulting from the Global Growth and Efficiency Program will be incurred by December 31, 2019.

The pretax charges resulting from the Global Growth and Efficiency Program are currently estimated to be comprised of the following categories: Employee-Related Costs, including severance, pension and other termination benefits (50%); asset-related costs, primarily Incremental Depreciation and Asset Impairments (10%); and Other charges, which include contract termination costs, consisting primarily of related implementation charges resulting directly from exit activities (20%) and the implementation of new strategies (20%). Over the course of the Global Growth and Efficiency Program, it is currently estimated that approximately 80% of the charges will result in cash expenditures.

The Company expects that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15%), Europe (20%), Latin America (5%), Asia Pacific (5%), Africa/Eurasia (5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the implementation of new strategies, noted above, on a global basis. The Company now expects that, when it has been fully implemented, the Global Growth and Efficiency Program will contribute a net reduction of approximately 3,800 to 4,400 positions from the Company’s global employee workforce.

For the three and nine months ended September 30, 2017 and 2016, restructuring and related implementation charges are reflected in the Condensed Consolidated Statements of Income as follows:
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Cost of sales$16
 $11
 $51
 $31
Selling, general and administrative expenses22
 9
 60
 49
Other (income) expense, net20
 22
 135
 76
Total Global Growth and Efficiency Program charges, pretax$58
 $42
 $246
 $156
        
Total Global Growth and Efficiency Program charges, aftertax$39
 $32
 $185
 $114

Restructuring and related implementation charges in the preceding table are recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance.

Total charges incurred for the Global Growth and Efficiency Program relate to initiatives undertaken by the following reportable operating segments:
 Three Months Ended Nine Months Ended Program-to-date
 September 30, September 30, Accumulated Charges
 2017 2016 2017 2016  
North America27 % 30% 23% 32% 18%
Latin America2 % 3% 3% 5% 3%
Europe(11)% 19% 29% 10% 23%
Asia Pacific7 % 4% 4% 6% 3%
Africa/Eurasia2 % 12% 2% 14% 6%
Hill’s Pet Nutrition
9 % 5% 5% 8% 7%
Corporate64 % 27% 34% 25% 40%


COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


Since the inception of the Global Growth and Efficiency Program in the fourth quarter of 2012, the Company has incurred cumulative pretax charges of $1,474 ($1,092 aftertax) in connection with the implementation of various projects as follows:
 Cumulative Charges
 as of September 30, 2017
Employee-Related Costs$594
Incremental Depreciation88
Asset Impairments29
Other763
Total$1,474

The majority of costs incurred since inception relate to the following projects: the implementation of the Company’s overall hubbing strategy; the extension of shared business services and streamlining of global functions; the consolidation of facilities; the closing of the Morristown, New Jersey personal care facility; the simplification and streamlining of the Company’s research and development capabilities and oral care supply chain, both in Europe; redesigning the European commercial organization; restructuring how the Company will provide future retirement benefits to substantially all of the U.S.-based employees participating in the Company’s defined benefit retirement plan by shifting them to the Company’s defined contribution plan.
The following tables summarize the activity for the restructuring and related implementation charges discussed above and the related accruals:
  Three Months Ended September 30, 2017
  
Employee-Related
Costs
 
 
Incremental
Depreciation
 
 
Asset
Impairments 
 
 
Other 
 
 
Total 
 
Balance at June 30, 2017 $138
 $—
 $—
 $116
 $254
Charges 21
 2
 —
 35
 58
Cash payments (16) —
 —
 (42) (58)
Charges against assets (15) (2) —
 —
 (17)
Foreign exchange —
 —
 —
 —
 —
Balance at September 30, 2017 $128
 $—
 $—
 $109
 $237

  Nine Months Ended September 30, 2017
  
Employee-Related
Costs
 
 
Incremental
Depreciation
 
 
Asset
Impairments 
 
 
Other 
 
 
Total 
 
Balance at December 31, 2016 $56
 $—
 $—
 $125
 $181
Charges 129
 8
 2
 107
 246
Cash payments (43) —
 —
 (124) (167)
Charges against assets (17) (8) (2) —
 (27)
Foreign exchange 3
 —
 —
 1
 4
Balance at September 30, 2017 $128
 $—
 $—
 $109
 $237

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension and other retiree benefit enhancements amounting to $15 and $17 for the three and nine months ended September 30, 2017, respectively, which are reflected as Charges against assets within Employee-Related Costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension and other retiree benefit liabilities (see Note 9, Retirement Plans and Other Retiree Benefits to the Condensed Consolidated Financial Statements).

Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.

Other charges consist primarily of charges resulting directly from exit activities and the implementation of new strategies as a result of the Global Growth and Efficiency Program. These charges for the three and nine months ended September 30, 2017 include third-party incremental costs related to the development and implementation of new business and strategic initiatives of $33 and $103, respectively, and contract termination costs and charges resulting directly from exit activities of $2 and $4, respectively. These charges were expensed as incurred.

Non-GAAP Financial Measures


This Quarterly Report on Form 10-Q discusses certain financial measures on both a GAAP and a non-GAAP basis. The Company uses the non-GAAP financial measures described below internally in its budgeting process, to evaluate segment and overall operating performance and as a factor in determining compensation. The Company believes that these non-GAAP financial measures are useful in evaluating the Company’s underlying business performance and trends; however, 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.


Net sales growth (GAAP) and organic sales growth (Net sales growth excluding the impact of foreign exchange, acquisitions and divestments) (non-GAAP) are discussed in this Quarterly Report on Form 10-Q. 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 of acquisitions and divestments.divestments, as applicable. A reconciliation of organic sales growth to Net sales growth for the three and nine months ended September 30, 20172020 is provided below.


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, Non-service related postretirement costs, effective income tax rate, Net income attributable to Colgate-Palmolive Company and Earnings per share on a diluted basis are discussed in this Quarterly Report on Form 10-Q both on a GAAP basis and excluding, as applicable, the benefits and charges resulting from the Global Growth and Efficiency Program, and, as applicable, a gain on sale of land in Mexico, benefits from previously disclosedthe charge related to U.S. tax mattersreform, acquisition-related costs, and a charge forbenefit related to a previously disclosed litigation matter (non-GAAP).recent reorganization of the ownership structure of certain foreign subsidiaries and a new operating structure being implemented within one of the Company’s divisions. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, gains and losses from certain acquisition, divestitures and certain unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. A reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures for the three and nine months ended September 30, 20172020 and 20162019 is presented within the applicable section of Results of Operations.


COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for the three and nine months ended September 30, 2017:2020:

Three Months Ended September 30, 2020Net Sales Growth
(GAAP)		Foreign
Exchange
Impact		Acquisitions and Divestments
Impact		Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care    
North America6.5%—%1.5%5.0%
Latin America(5.0)%(16.5)%—%11.5%
Europe17.0%4.5%9.5%3.0%
Asia Pacific4.5%—%—%4.5%
Africa/Eurasia2.5%(10.5)%1.0%12.0%
Total Oral, Personal and Home Care4.5%(4.5)%2.5%6.5%
Pet Nutrition11.0%—%—%11.0%
Total Company5.5%(4.0)%2.0%7.5%

49
Three Months Ended September 30, 2017
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care    
North America(0.5)%0.5%—%(1.0)%
Latin America6.5%1.0%—%5.5%
Europe5.5%4.5%—%1.0%
Asia Pacific0.5%0.5%—%0.0%
Africa/Eurasia0.5%2.5%—%(2.0)%
Total Oral, Personal and Home Care3.0%1.5%—%1.5%
Pet Nutrition2.0%1.0%—%1.0%
Total Company3.0%1.5%—%1.5%

Nine Months Ended September 30, 2017
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care    
North America(3.0)%—%—%(3.0)%
Latin America7.5%1.0%—%6.5%
Europe(1.0)%(1.0)%—%0.0%
Asia Pacific(2.5)%(1.0)%—%(1.5)%
Africa/Eurasia2.5%4.0%—%(1.5)%
Total Oral, Personal and Home Care1.0%0.5%—%0.5%
Pet Nutrition1.0%0.5%—%0.5%
Total Company1.0%0.5%—%0.5%




COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Nine Months Ended September 30, 2020Net Sales Growth
(GAAP)		Foreign
Exchange
Impact		Acquisitions and Divestments
Impact		Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care    
North America9.0%(0.5)%1.5%8.0%
Latin America(6.0)%(14.5)%—%8.5%
Europe11.5%—%9.0%2.5%
Asia Pacific(2.5)%(1.5)%—%(1.0)%
Africa/Eurasia0.5%(8.5)%1.5%7.5%
Total Oral, Personal and Home Care2.0%(5.5)%2.0%5.5%
Pet Nutrition13.5%(1.0)%—%14.5%
Total Company4.0%(4.5)%2.0%6.5%

50
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Liquidity and Capital Resources


The Company expects cash flow from operations and debt issuances will be sufficient to meet foreseeable business operating and recurring cash needs (including for debt service, dividends, capital expenditures charges resulting from the Global Growth and Efficiency Program and stock repurchases). The Company believes its strong cash generation and financial position should continue to allow it broad access to global credit and capital markets.


Net cash provided by operations decreased 1%increased 27% to $2,295$2,756 in the first nine months of 2017,2020, compared with $2,317$2,163 in the comparable period of 2016,2019, primarily due to higher net income, improved working capital, lower voluntary contributions to the timing ofCompany’s pension plans and lower income tax payments and higher voluntary contributionsdue to an employee postretirement plan.

timing. The Company continues to be tightly focused on working capital. The Company’s working capital was (5.7%) as a percentage of Net sales in the first nine months of 2020 as compared to (2.8%) in the first nine months of 2019. The Company defines working capital as the difference between current assets (excluding Cash and cash equivalents and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-term debt). The Company’s working capital improved to (4.6%) as a percentage of Net sales in the first nine months of 2017 as compared to (3.4%) in the first nine months of 2016, reflecting the Company’s tight focus on working capital.

Implementation of the Global Growth and Efficiency Program remains on track. Building on the Company’s successful implementation of the Global Growth and Efficiency Program to date, on October 26, 2017, the Board approved an expansion of the Global Growth and Efficiency Program and an extension of the program through December 31, 2019 to take advantage of additional opportunities to streamline the Company’s operations.

As a result of the expansion, total program charges resulting from the Global Growth and Efficiency Program are now estimated to be in the range of $1,730 to $1,885 ($1,280 to $1,380 aftertax) as compared to the previous estimate of $1,500 to $1,585 pretax ($1,120 to $1,170 aftertax). Approximately 80% of total program charges resulting from the Global Growth and Efficiency Program are expected to result in cash expenditures. Savings from the Global Growth and Efficiency Program, substantially all of which are expected to increase future cash flows, are now projected to be in the range of $560 to $635 pretax ($500 to $575 aftertax) annually, once all projects are approved and implemented, as compared to the previous estimate of $455 to $495 pretax ($425 to $475 aftertax).

The Company now anticipates that pretax charges for 2017 will approximate $340 to $380 ($250 to $280 aftertax) as compared to the previous estimate of $275 to $360 ($210 to $260 aftertax). The Company continues to expect savings in 2017 to amount to approximately $50 to $60 pretax ($40 to $50 aftertax). It is anticipated that cash requirements for the Global Growth and Efficiency Program will be funded from operating cash flows. Approximately 75% of the restructuring accrual at September 30, 2017 is expected to be paid in the next twelve months.


Investing activities used $532$668 of cash in the first nine months of 2017,2020, compared with $445$2,075 in the comparable period of 2016. Purchases of marketable securities and investments increased2019. As more fully described below, investing activities in the first nine months of 20172020 included the Company’s acquisition of Hello.

On January 31, 2020, the Company acquired Hello for cash consideration of $351. On September 19, 2019, the Company acquired Filorga for cash consideration of €1,516 (approximately $1,674) plus additional consideration of €32 (approximately $38), the majority of which related to $301repayment of loans from $271former shareholders of Filorga. On August 15, 2019, the Company acquired a 51% controlling interest in the comparable periodNigeria Joint Venture for $31.

These acquisitions were financed with a combination of 2016. Proceeds fromdebt and cash. As a result of the sale of marketable securities and investments decreasedincremental debt related to these acquisitions, in accordance with the Company’s previously announced intention to moderate share repurchases into 2021, the Company continued to moderate its share repurchases in the first nine months of 20172020. In addition, due to $149the uncertainties resulting from $158the COVID-19 pandemic, the Company discontinued all share repurchases other than those pursuant to equity plans during the second quarter of 2020. The Company resumed its moderated share repurchases in the comparable periodthird quarter of 2016.2020.


Capital spending decreasedwas $249 in the first nine months of 20172020 compared to $382 from $392$226 in the comparable period of 2016.2019. Capital expenditures for 2020 are expected to be approximately 2.0% to 2.5% of Net sales. The Company continues to focus its capital spending on projects that are expected to yield high aftertax returns. Capital expenditures for 2017 are expected to be approximately 4.0% of Net sales, which remains higher than the Company’s historical rate of approximately 3.5%, primarily due to the Global Growth and Efficiency Program.

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Financing activities used $1,767$1,968 of cash during the first nine months of 2017,2020, compared with $1,547$150 generated in the comparable period of 2016, reflecting higher purchases2019. This reflects net repayments on debt in the first nine months of treasury shares2020 compared with net proceeds on debt in the comparable period of 2019. This use of cash, as discussed above, was partially offset by lower share repurchases associated with the share repurchase program in the first nine months of 2020 compared with the comparable period of 2019.

On July 17, 2020, the Company completed the purchase of the outstanding non-controlling interest of Filorga’s joint venture based in Hong Kong and higher net principal payments on debt.covering the Hong Kong and China markets for approximately €85 (approximately $99) in cash.


Long-term debt, including the current portion, was even at $6,520decreased to $7,227 as of September 30, 2017 and2020, as compared to $7,587 as of December 31, 20162019, and total debt decreased to $6,527was $7,236 as of September 30, 20172020, as compared to $6,533$7,847 as of December 31, 2016.2019. During the first quarter of 2019, the Company issued €500 of seven-year notes at a fixed coupon rate of 0.500% and €500 of fifteen-year notes at a fixed coupon rate of 1.375%. The debt issuances were under the Company’s shelf registration statement. The debt issuances support itsthe Company’s capital structure strategy objectives of funding its business and growth initiatives while minimizing its risk-adjusted cost of capital. During the third quarter of 2017, the Company issued $500 of thirty-year notes at a fixed rate of 3.70%. The debt issuance was under the Company’s shelf registration statement. Proceeds from the debt issuance in the third quarter of 2017issuances were used for general corporate purposes, which included the retirement of commercial paper, borrowings.and the repayment of the Company’s $500 1.75% fixed rate notes, which became due in March 2019, and €500 floating rate notes, which became due in May 2019.


51
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Domestic and foreign commercial paper outstanding was $383$91 and $0$2,275 as of September 30, 20172020 and 2016,2019, respectively. Commercial paper outstanding as of September 30, 2017 is U.S. dollar-denominated. Proceeds from the outstanding commercial paper in the second quarter of 2017 were used to repay and retire $250 of U.S. dollar-denominated notes, which became due during the second quarter. Proceeds from the outstanding commercial paper in the first quarter of 2017 were used to repay and retire $400 of U.S. dollar-denominated notes, which became due during the first quarter. The average daily balances outstanding for commercial paper in the first nine months of 20172020 and 20162019 were $1,649$1,110 and $1,194,$1,670, respectively. The Company classifies commercial paper and certain current maturities of notes payable as long-term debt when it has the intent and ability to refinance such obligations on a long-term basis, including, if necessary, by utilizing its lineunused lines of credit of approximately $4,500 (including under the facilities discussed below) or by issuing long-term debt pursuant to an effective shelf registration statement. In November 2018, the Company entered into an amended and restated $2,650 revolving credit facility with a syndicate of banks that was scheduled to expire in November 2023. In August 2019, the term of the facility was extended by one year and it now expires in November 2020.2024. In August 2020, the Company entered into a $1,500 364-day credit facility with a syndicate of banks that is scheduled to expire in August 2021. Commitment fees related to the credit facilities are not material.


Certain of the agreements with respect to the Company’s bank borrowings contain financial and other covenants as well as cross-default provisions. Noncompliance with these requirements could ultimately result in the acceleration of amounts owed. The Company is in full compliance with all such requirements and believes the likelihood of noncompliance is remote. Refer to Note 6, Long term Debt and Credit Facilities, on the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for further information about the Company’s long-term debt and credit facilities.


In the first quarter of 2017,2020, the Company increased the annualizedquarterly common stock dividend by 3% to $1.60$0.44 per share from $0.43 per share previously, effective in the second quarter of 2017.2020.


Cash and cash equivalents increased $65$106 during the first nine months of 20172020 to $1,380$989 at September 30, 2017,2020, compared to $1,315$883 at December 31, 2016,2019, most of which ($1,341919 and $1,273,$798, respectively) were held by the Company’s foreign subsidiaries. The Company regularly assesses

During the nine months ended September 30, 2020, COVID-19 did not have a significant impact on the Company’s liquidity for its continued operating and cash needsneeds. For more information regarding the anticipated impact of COVID-19, see “Executive Overview” and the available sources to fund these needs and, as part“Risk Factors” in Part II, Item 1A of this assessment,Quarterly Report and in Part I, Item 1A of the Company determinesCompany’s Annual Report on Form 10-K for the amount of foreign earnings it intends to repatriate to help fund its domestic cash needs and provides applicable U.S. income and foreign withholding taxes on such earnings.

As of year ended December 31, 2016, the Company had approximately $3,400 of undistributed earnings of foreign subsidiaries for which no U.S. income or foreign withholding taxes have been provided as the Company considered such earnings to be indefinitely reinvested outside of the U.S. and, therefore, not subject to such taxes.2019.


In order to fully recognize a $210 U.S. income tax benefit in 2016 principally related to changes in Venezuela’s foreign exchange regime, during the quarter ended March 31, 2016, the Company decided to repatriate in 2016 $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S., and accordingly, recorded a tax charge of $210 during the first quarter of 2016. The Company currently does not anticipate a need to repatriate additional undistributed earnings of foreign subsidiaries. Any future repatriation would be subject to applicable U.S. income and foreign withholding taxes. As the Company operates in over 200 countries and territories throughout the world, and due to the complexities in the tax laws and the assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these earnings were repatriated.

For additional information regarding liquidity and capital resources, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019.

























52
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Goodwill and Indefinite-Lived Intangible Assets

As previously disclosed, as a result of the COVID-19 pandemic, in the first quarter of 2020, the Company determined that a “triggering event” had occurred relative to its recently acquired Filorga skin health business and, as required, performed a quantitative analysis, with the assistance of a third-party valuation firm, of the value of the Filorga reporting unit and its indefinite-life intangible assets. Based on the analysis, the Company determined that the fair value of the Filorga reporting unit and the related indefinite life intangible assets were not impaired.

As of March 31, 2020, the fair value of the Filorga reporting unit exceeded its carrying value by 10%. While Filorga’s performance in the second and third quarters of 2020 was in line with its revised business plan, given the inherent uncertainties in estimating the future impacts of the COVID-19 pandemic on global macroeconomic conditions and on the Filorga business in particular, actual results may differ from management’s current estimates and could have an adverse impact on one or more of the assumptions used in our quantitative models related to the Filorga reporting unit, resulting in potential impairment charges in subsequent periods. A reduction in the long-term growth rate of 50 basis points or an increase in the discount rate of 25 basis points would result in a reduction of the fair value of the Filorga reporting unit of approximately 5%. Given the recent acquisition of Filorga, where there is inherently a lower surplus of fair value over carrying value, management will continue to assess triggering events that may necessitate additional qualitative or quantitative analyses of our reporting units and indefinite-lived intangible assets in future periods.










53
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Market Share Information


Management uses market share information as a key indicator to monitor business health and performance. References to market share in this Quarterly Report on Form 10-Q 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 Venezuela from all periods).
Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce and certain club retailers and discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. We believeThe Company believes that the third-party vendors we useit uses to provide data are reliable, but we haveit has not verified the accuracy or completeness of the data or any assumptions underlying the data. In certain limited circumstances, the COVID-19 pandemic has impacted the ability of our third-party vendors to provide the Company with reliable updated market share data. In addition, market share information calculatedreported by the Company may be different from market share information calculatedreported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.


Cautionary Statement on Forward-Looking Statements


This Quarterly Report on Form 10-Q may contain forward-looking statements (asas that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (“SEC”)SEC in its rules, regulations and releases)releases that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share growth,levels, financial goals, the impact of foreign exchange, volatility,the impact of COVID-19, cost-reduction plans, including the Global Growth and Efficiency Program, tax rates, the need to repatriate undistributed earnings of foreign subsidiaries, new product introductions, commercial investment levels, acquisitions, and divestitures, share repurchases, or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not nor does any other person assume responsibility for the accuracy and completeness of those statements. The Company cautions 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. Actual events or results may differ materially because of factors that affect international businesses and global economic conditions, as well as matters specific to the Company and the markets it serves, including the uncertain economic and political environment in different countries and its effect on consumer spending habits, increased competition and evolving competitive practices, foreign currency rate fluctuations, exchange controls, tariffs, price or profit controls, labor relations, changes in foreign or domestic laws, or regulations or their interpretation, political and fiscal developments, including changes in trade, tax and immigration policies, increased competition and evolving competitive practices (including from the growth of eCommerce and the entry of new competitors and business models), the ability to operate and respond effectively during a pandemic, epidemic or widespread public health concern, including COVID-19, disruptions in global supply chain, the availability and cost of raw and packaging materials, the ability to maintain or increase selling prices as needed, the ability to implement the Global Growth and Efficiency Program as planned or differences between the actual and the estimated costs or savings under such program, changes in the policies of retail trade customers, the emergence of new sales channels, including e-commerce,the growth of eCommerce and the changing retail landscape (as consumers increasingly shop online), the ability to develop innovative new products, the ability to continue lowering costs and operate in an agile manner, the ability to maintain the security of our information technology systems from a cyber-security incident or data breach, the ability to achieve our sustainability goals, the ability to complete acquisitions and divestitures as planned, the ability to successfully integrate acquired businesses, the ability to attract and retain key employees, and the uncertainty of the outcome of legal proceedings, whether or not the Company believes they have merit. For information about these and other factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, refer to the Company’s filings with the SEC (including, but not limited to, the information set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 20162019 and subsequent Quarterly Reports on Form 10-Q).


54
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Quantitative and Qualitative Disclosures about Market Risk


There is no material change in the information reported under Part II, Item 7, “Managing Foreign Currency, Interest Rate, Commodity Price and Credit Risk Exposure” contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.



55



COLGATE-PALMOLIVE COMPANY


Controls and Procedures


Evaluation of Disclosure Controls and Procedures


The Company’s management, under the supervision and with the participation of the Company’s Chairman of the Board, President and Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 20172020 (the “Evaluation”). Based upon the Evaluation, the Company’s Chairman of the Board, President and Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) are effective.


Changes in Internal Control overOver Financial Reporting


ThereThe Company is in the process of upgrading its enterprise IT system to SAP S/4 HANA. This change has not had and is not expected to have a material impact on the Company’s internal controls over financial reporting.

Except as noted above, there were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As part of the Global Growth and Efficiency Program, the Company is implementing a shared business service organization model in all regions of the world. At this time, certain financial transaction processing activities have been transitioned to these shared business services centers. This transition has not materially affected the Company’s internal control over financial reporting.






56



COLGATE-PALMOLIVE COMPANY


PART II.OTHER INFORMATION


Item 1.Legal Proceedings


For information regarding legal matters, please refer to Note 11, Contingencies to the Condensed Consolidated Financial Statements contained in Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.


Item 1A.Risk Factors


ThereWith the exception of the additional risk factor relating to COVID-19 included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which is reproduced below, there have been no material changes from the risk factors disclosed in Part 1, Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019.




We face various risks related to pandemics, epidemics or similar widespread public health concerns, which may have a material adverse effect on our business, results of operations, cash flows and financial condition.



We face various risks related to pandemics, epidemics or similar widespread public health concerns, including the novel coronavirus pandemic (“COVID-19”). A pandemic, epidemic or similar widespread health concern could have, and COVID-19 has had and may continue to have, a variety of impacts on our business, results of operations, cash flows and financial condition, including:

•Our ability to continue to maintain and support the health and safety of our employees, including key employees;
•Volatility in the demand for and availability of our products, which may be caused by the temporary inability of our consumers to purchase our products due to illness, financial hardship, quarantine, government actions mandating the closure of our distributors or retailers or imposing travel or movement restrictions, shifts in demand away from more discretionary or higher priced products to lower priced products, or pantry-loading activity;
•Changes in purchasing patterns of our consumers, including the frequency of visits by consumers to retail locations and a shift to purchasing our products online from eCommerce retailers;
•Inability to meet our customers’ needs and achieve our cost targets due to temporary or long-term disruptions in the manufacture, sourcing and distribution of our products or materials despite our business continuity and contingency plans in place for key manufacturing sites and the supply of raw and packaging materials;
•Failure of third parties on which we rely, including our suppliers, contract manufacturers, customers, commercial banks, joint venture partners and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties;
•Significant changes in the economic and political conditions of the markets in which we operate, which could restrict and have restricted our employees’ ability to work and travel, could mandate and have mandated or caused the closure of certain distributors or retailers, our offices, shared business service centers and/or operating and manufacturing facilities or otherwise could prevent and have prevented us as well as our third-party partners, suppliers or customers from sufficiently staffing operations, including operations necessary for the manufacture, distribution, sale and support of our products; and/or
•Disruptions and volatility in the global capital markets, which may increase the cost of capital and adversely impact our access to capital, and currency and commodity prices.

Despite our efforts to manage these impacts, their ultimate impact also depends on factors beyond our knowledge or control, including the duration, severity and geographic scope of an outbreak, including COVID-19, and the actions taken to contain its spread and mitigate its public health and economic effects.

57


COLGATE-PALMOLIVE COMPANY


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds


On February 19, 2015,June 18, 2018, the Board authorized the repurchase of shares of the Company’s common stock having an aggregate purchase price of up to $5 billion under a new share repurchase program (the “2015“2018 Program”), which replaced a previously authorized share repurchase program. The Board also has authorized share repurchases on an ongoing basis to fulfill certain requirements of the Company’s compensation and benefit programs. The shares are repurchased from time to time in open market or privately negotiated transactions at the Company’s discretion, subject to market conditions, customary blackout periods and other factors.


The following table shows the stock repurchase activity for the three months in the quarter ended September 30, 2017:2020:
Month
Total Number of Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(3)
(in millions)
July 1 through 31, 202027,155 $73.68 — $3,074 
August 1 through 31, 20201,822,418 $77.56 1,795,000 $2,934 
September 1 through 30, 20202,968,503 $76.78 2,888,380 $2,713 
Total4,818,076 $77.06 4,683,380  

(1) Includes share repurchases under the 2018 Program and those associated with certain employee elections under the Company’s compensation and benefit programs
(2)The difference between the total number of shares purchased and the total number of shares purchased as part of publicly
announced plans or programs is 134,696 shares, which represents shares deemed surrendered to the Company to satisfy
certain employee elections under the Company’s compensation and benefit programs.
(3) Includes approximate dollar value of shares that were available to be purchased under the publicly announced plans or programs that were in effect as of September 30, 2020.


Month 
Total Number of Shares Purchased(1)
 Average Price Paid per Share 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
 
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(3)
(in millions)
July 1 through 31, 2017 864,006
 $72.63
 810,000
 $1,717
August 1 through 31, 2017 2,660,807
 $71.52
 2,491,000
 $1,539
September 1 through 30, 2017 1,821,723
 $72.10
 1,756,859
 $1,412
Total 5,346,536
 $71.90
 5,057,859
  


(1)
Includes share repurchases under the 2015 Program and those associated with certain employee elections under the Company’s compensation and benefit programs.
(2)
The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced plans or programs is 288,677 shares, which represents shares deemed surrendered to the Company to satisfy certain employee elections under the Company’s compensation and benefit programs.
(3)
Includes approximate dollar value of shares that were available to be purchased under the publicly announced plans or programs that were in effect as of September 30, 2017.

Item 3.Defaults Upon Senior Securities


None.




Item 4.Mine Safety Disclosures


Not Applicable.




Item 5.Other Information


None.




58



COLGATE-PALMOLIVE COMPANY




Item 6.Exhibits

Exhibit No.Description
10-A
Exhibit No.31-ADescription
10-A
10-B
Amendment, dated September 27, 2017, to the Colgate-Palmolive Company Supplemental Savings and Investment Plan.
12
Computation of Ratio of Earnings to Fixed Charges.
31-A
Certificate of the Chairman of the Board, President and Chief Executive Officer of Colgate-Palmolive Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
31-B
32
101The following materials from Colgate-Palmolive Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017,2020, formatted in Inline eXtensible Business Reporting Language (XBRL)(Inline XBRL): (i) the Condensed Consolidated Statements of Income; (ii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Balance Sheets; (iv) the Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity and (v)(vi) Notes to Condensed Consolidated Financial Statements.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).*





__________

*    Filed herewith.


** Furnished herewith.

59


COLGATE-PALMOLIVE COMPANY
SIGNATURES


Pursuant to the requirements 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)
Principal Executive Officer:
October 27, 201730, 2020/s/ Ian CookNoel R. Wallace
Ian CookNoel R. Wallace
Chairman of the Board, President and

Chief Executive Officer
Principal Financial Officer:
October 27, 201730, 2020/s/ Dennis J. Hickey
Dennis J. Hickey
Chief Financial Officer
Principal Accounting Officer:
October 27, 2017/s/ Henning I. Jakobsen
Henning I. Jakobsen
Chief Financial Officer
Principal Accounting Officer:
October 30, 2020/s/ Philip G. Shotts
Philip G. Shotts
Vice President and Corporate Controller


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