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 June 30, 2022
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
0.500% Notes due 2026CL26New York Stock Exchange
0.300% Notes due 2029CL29New 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 value878,105,223834,120,172SeptemberJune 30, 20172022






PART I.FINANCIAL INFORMATION




COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Income
 (Dollars(Dollars in Millions Except Per Share Amounts)
(Unaudited)
 
 Three Months EndedSix Months Ended
June 30,June 30,
2022202120222021
Net sales$4,484 $4,260 $8,883 $8,604 
Cost of sales1,930 1,704 3,757 3,411 
Gross profit2,554 2,556 5,126 5,193 
Selling, general and administrative expenses1,657 1,568 3,298 3,173 
Other (income) expense, net13 (8)84 20 
Operating profit884 996 1,744 2,000 
Non-service related postretirement costs12 18 50 36 
Interest (income) expense, net31 25 58 54 
Income before income taxes841 953 1,636 1,910 
Provision for income taxes202 212 394 441 
Net income including noncontrolling interests639 741 1,242 1,469 
Less: Net income attributable to noncontrolling interests36 38 80 85 
Net income attributable to Colgate-Palmolive Company$603 $703 $1,162 $1,384 
Earnings per common share, basic$0.72 $0.83 $1.39 $1.63 
Earnings per common share, diluted$0.72 $0.83 $1.38 $1.63 
 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 EndedSix Months Ended
June 30,June 30,
2022202120222021
Net income including noncontrolling interests$639 $741 $1,242 $1,469 
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments(146)106 (66)(52)
Retirement plans and other retiree benefit adjustments13 16 28 18 
    Gains (losses) on cash flow hedges61 (35)102 8 
Total Other comprehensive income (loss), net of tax(72)87 64 (26)
Total Comprehensive income including noncontrolling interests567 828 1,306 1,443 
Less: Net income attributable to noncontrolling interests36 38 80 85 
Less: Cumulative translation adjustments attributable to noncontrolling interests(14)— (16)(3)
Total Comprehensive income attributable to noncontrolling interests22 38 64 82 
Total Comprehensive income attributable to Colgate-Palmolive Company$545 $790 $1,242 $1,361 
 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)
June 30,
2022		December 31,
2021
Assets
Current Assets
Cash and cash equivalents$858 $832 
Receivables (net of allowances of $71 and $78, respectively)1,490 1,297 
Inventories2,012 1,692 
Other current assets800 576 
Total current assets5,160 4,397 
Property, plant and equipment:  
Cost9,014 8,899 
Less: Accumulated depreciation(5,249)(5,169)
 3,765 3,730 
Goodwill3,238 3,284 
Other intangible assets, net2,314 2,462 
Deferred income taxes188 193 
Other assets1,046 974 
Total assets$15,711 $15,040 
Liabilities and Shareholders’ Equity  
Current Liabilities  
Notes and loans payable$16 $39 
Current portion of long-term debt13 12 
Accounts payable1,507 1,479 
Accrued income taxes390 436 
Other accruals2,469 2,085 
Total current liabilities4,395 4,051 
Long-term debt7,957 7,194 
Deferred income taxes426 395 
Other liabilities2,375 2,429 
Total liabilities15,153 14,069 
Shareholders’ Equity  
Common stock, $1 par value (2,000,000,000 shares authorized, 1,465,706,360 shares issued)1,466 1,466 
Additional paid-in capital3,402 3,269 
Retained earnings24,342 24,350 
Accumulated other comprehensive income (loss)(4,306)(4,386)
Unearned compensation— (1)
Treasury stock, at cost(24,736)(24,089)
Total Colgate-Palmolive Company shareholders’ equity168 609 
Noncontrolling interests390 362 
Total equity558 971 
Total liabilities and equity$15,711 $15,040 
 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)
Six Months Ended
 June 30,
 20222021
Operating Activities  
Net income including noncontrolling interests$1,242 $1,469 
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:  
Depreciation and amortization276 274 
Restructuring and termination benefits, net of cash73 (15)
Stock-based compensation expense45 58 
Deferred income taxes(16)(65)
Cash effects of changes in:
Receivables(191)(188)
Inventories(332)(39)
Accounts payable and other accruals(167)(254)
Other non-current assets and liabilities(16)(15)
Net cash provided by (used in) operations914 1,225 
Investing Activities  
Capital expenditures(300)(237)
Purchases of marketable securities and investments(126)(80)
Proceeds from sale of marketable securities and investments35 46 
Payment for acquisition, net of cash acquired(90)— 
Other investing activities(1)(18)
Net cash provided by (used in) investing activities(482)(289)
Financing Activities  
Short-term borrowing (repayment) less than 90 days, net988 451 
Proceeds from issuance of debt14 25 
Dividends paid(814)(796)
Purchases of treasury shares(791)(713)
Proceeds from exercise of stock options236 151 
Other financing activities(18)(2)
Net cash provided by (used in) financing activities(385)(884)
Effect of exchange rate changes on Cash and cash equivalents(21)(3)
Net increase (decrease) in Cash and cash equivalents26 49 
Cash and cash equivalents at beginning of the period832 888 
Cash and cash equivalents at end of the period$858 $937 
Supplemental Cash Flow Information  
Income taxes paid$477 $542 
 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 June 30, 2022
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, March 31, 2022$1,466 $3,355 $— $(24,401)$24,149 $(4,248)$407 
Net income— — — — 603 — 36 
Other comprehensive income (loss), net of tax— — — — — (58)(14)
Dividends ($0.47 per share)— — — — (410)— (42)
Stock-based compensation expense— 16 — — — — — 
Shares issued for stock options— 31 — 44 — — — 
Shares issued for restricted stock units— (1)— 1 — — — 
Treasury stock acquired— — — (381)— — — 
Other— 1 — 1 — — 3 
Balance, June 30, 2022$1,466 $3,402 $— $(24,736)$24,342 $(4,306)$390 
Three Months Ended June 30, 2021
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 March 31, 2021$1,466 $3,011 $— $(23,384)$23,624 $(4,455)$401 
Net income— — — — 703 — 38 
Other comprehensive income (loss), net of tax— — — — �� 87 — 
Dividends ($0.45 per share)— — — — (381)— (42)
Stock-based compensation expense— 20 — — — — — 
Shares issued for stock options— 54 — 58 — — — 
Shares issued for restricted stock units— (1)— 1 — — — 
Treasury stock acquired— — — (341)— — — 
Other— 1 — 1 — — 1 
Balance, June 30, 2021$1,466 $3,085 $— $(23,665)$23,946 $(4,368)$398 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,398 at June 30, 2022 ($3,207 at June 30, 2021) and $3,269 at March 31, 2022 ($3,313 at March 31, 2021), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,015 at June 30, 2022 ($1,160 at June 30, 2021) and $1,030 at March 31, 2022 ($1,176 at March 31, 2021), respectively.

See Notes to Condensed Consolidated Financial Statements.

6


COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in Millions)
(Unaudited)
Six Months Ended June 30, 2022
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, 2021$1,466 $3,269 $(1)$(24,089)$24,350 $(4,386)$362 
Net income— — — — 1,162 — 80 
Other comprehensive income (loss), net of tax— — — — — 80 (16)
Dividends ($1.39 per share)*— — — — (1,170)— (42)
Stock-based compensation expense— 45 — — — — — 
Shares issued for stock options— 108 — 121 — — — 
Shares issued for restricted stock units— (23)— 23 — — — 
Treasury stock acquired— — — (791)— — — 
Other— 3 1 — — — 6 
Balance, June 30, 2022$1,466 $3,402 $— $(24,736)$24,342 $(4,306)$390 
Six Months Ended June 30, 2021
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, 2020$1,466 $2,969 $(1)$(23,045)$23,699 $(4,345)$358 
Net income— — — — 1,384 — 85 
Other comprehensive income (loss), net of tax— — — — — (23)(3)
Dividends ($1.34 per share)*— — — — (1,137)— (42)
Stock-based compensation expense— 58 — — — — — 
Shares issued for stock options— 67 — 80 — — — 
Shares issued for restricted stock units— (12)— 12 — — — 
Treasury stock acquired— — — (713)— — — 
Other— 3 1 1 — — — 
Balance, June 30, 2021$1,466 $3,085 $— $(23,665)$23,946 $(4,368)$398 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,398 at June 30, 2022 ($3,207 at June 30, 2021) and $3,349 at December 31, 2021 ($3,158 at December 31, 2020), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,015 at June 30, 2022 ($1,160 at June 30, 2021) and $1,044 at December 31, 2021 ($1,178 at December 31, 2020), respectively.
* NaN dividends were declared in each of the first quarters of 2022 and 2021.
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, 2016,2021, 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 2022, the Financial Accounting Standards Board (“FASB”(the “FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, “Derivatives2022-02, “Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,Vintage Disclosures.” amending the eligibility criteria for hedged items and transactions to expand an entity’s ability to hedge nonfinancial and financial risk components. The new guidance
This ASU eliminates the requirementaccounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to separately measure and present hedge ineffectiveness and aligns the presentationborrowers experiencing financial difficulty. The amendments also require disclosure of hedge gains and losses with the underlying hedge item. The new guidance also simplifies the hedge documentation and hedge effectiveness assessment requirements. The newcurrent-period gross write-offs by year of origination for financing receivables. This guidance is effective for the Company beginning on January 1, 2019, with early adoption permitted. The amended presentation2023 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, this new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.


On May 10, 2017,In March 2022, the FASB issued ASU No. 2017-09, “Compensation–Stock Compensation2022-01, “Derivatives and Hedging (Topic 718)815): Scope of Modification Accounting,Fair Value Hedging-Portfolio Layer Method.” clarifying when a change toThis ASU clarifies the terms or conditions of a share-based payment award must be accountedaccounting and promotes consistency in reporting for as a modification. The new guidance requires modification accounting ifhedges where the fair value, vesting condition or the classification of the awardportfolio layer method is not the same immediately before and after a change to the terms and conditions of the award. The newapplied. This guidance is effective for the Company on a prospective basis beginning on January 1, 2018, with early adoption permitted. This new guidance2023 and is not expected to have an impact on the Company’s Consolidated Financial Statements as it is not the Company’s practice to change either the terms or conditions of share-based payment awards once they are granted.Statements.


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 November 2021, the FASB issued ASU No. 2017-07, “Compensation–Retirement Benefits2021-10, “Government Assistance (Topic 715): Improving832).” This ASU requires increased disclosure on an annual basis about transactions with domestic, foreign, local, regional and national governments, including entities related to those governments and intergovernmental organizations, that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. This guidance was effective for the Presentation of Net Periodic Pension CostCompany beginning on January 1, 2022 and Net Periodic Postretirement Benefit Cost,” changing the presentation of the net periodic benefit costdid not have a material impact on the Statement of IncomeCompany’s Consolidated Financial Statements.

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and limiting the amount of net periodic benefit cost eligible for capitalization to assets. The new guidance permits only the service cost component of net periodic benefit costContract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities acquired in a business combination to be eligible for capitalization. The new guidance also requires entities to presentrecognized and measured by 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 actuarial gains and losses, are required to be presented outside of Operating profit. The line item or items 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 describedacquirer 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 presentedacquisition date in the financial statements, while the limitation on capitalization can only be adopted on a prospective basis. The newaccordance with ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606).” This guidance is effective for the Company beginning on January 1, 2018, with early adoption permitted. While the Company is currently assessing the impact of the new standard on its 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.

On January 26, 2017, the FASB issued ASU No. 2017-04, “Intangibles–Goodwill2023 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. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard is 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,In March 2020, the FASB issued ASU No. 2017-01, “Business Combinations2020-04, “Reference Rate Reform (Topic 805)848): ClarifyingFacilitation of the DefinitionEffects of a Business,Reference Rate Reform on Financial Reporting,” which provides additional guidance on evaluating whetheroptional expedients and exceptions for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships and other transactions shouldthat reference LIBOR or another reference rate expected to be accounteddiscontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848): Scope,” which clarified that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition due to reference rate reform. These ASUs were effective upon issuance and can be applied prospectively for as acquisitions of assets or businesses.contract modifications and hedging relationships through December 31, 2022. 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 inputhas not had 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.

8
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)




4.    Restructuring and Related Implementation Charges
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, 2016, the FASB issued ASU No. 2016-01, “Financial Instruments–Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated guidance enhances the reporting model for financial instruments which includes amendments to address aspects of recognition, measurement, presentation and disclosure. The amendment to the standard is effective for the Company beginning on January 1, 2018. While the Company is currently assessing the impact 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.

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


On May 28, 2014, the FASB 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 it 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 application of the guidance. The standard allows for either full retrospective adoption or modified retrospective adoption. The Company plans to adopt the new standard 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.
4.Restructuring and Related Implementation Charges
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, 2014,27, 2022, the Company’s Board of Directors (the “Board”) approved an expansion of thea targeted productivity program (the “2022 Global Growth and Efficiency ProgramProductivity Initiative”). The program is intended to take advantage of additional savings opportunities.

On October 29, 2015, the Board approved the reinvestment of the funds from the sale ofreallocate resources towards the Company’s laundry detergent businessstrategic priorities and faster growth businesses, drive efficiencies in the South Pacific to expand the Global GrowthCompany’s operations and Efficiency Program and extend it for one year through 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.

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.to reduce structural costs.


As a resultImplementation of the expansion,2022 Global Productivity Initiative, which is expected to be substantially completed by mid-year 2023, is estimated to result in 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$200 to $1,885$240 ($1,280170 to $1,380$200 aftertax) as compared 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, which 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,following: employee-related costs, including severance, pension and other termination benefits (50%(75%); asset-related costs, primarily Incremental Depreciationaccelerated depreciation and Asset Impairments (10%asset write-downs (15%); and Otherother charges (10%), which include contract termination costs, consisting primarily of related implementationimplementation-related charges resulting directly from exit activities (20%) and the implementation of new strategies (20%). Over the course of the Global Growth and Efficiency Program, itstrategies. It is currently estimated that approximately 80% to 90% of the charges will result in cash expenditures.


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


The Company currently expectsIt is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15%), Europe (20%(5%), Latin America (5%(10%), Europe (45%), Asia Pacific (5%), Africa/Eurasia (5%(15%), Hill’s Pet Nutrition (10%(5%) and Corporate (40%(15%), 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 SeptemberJune 30, 2017 and 2016, restructuring and related implementation2022, charges resulting from the 2022 Global Productivity Initiative, were $8 pretax ($5 aftertax).

For the six months ended June 30, 2022, charges resulting from the 2022 Global Productivity Initiative are reflected in the Condensed Consolidated Statements of Incomeincome statement as follows:
Six Months Ended June 30,
2022
Selling, general and administrative expenses3 
Other (income) expense, net73 
Non-service related postretirement costs14 
Total 2022 Global Productivity Initiative charges, pretax$90 
Total 2022 Global Productivity Initiative charges, aftertax$70 
 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 2022 Global Growth and Efficiency ProgramProductivity Initiative relate to initiatives undertaken by the following reportable operating segments:

Six Months Ended June 30,
2022
North America10 %
Latin America17 %
Europe16 %
Asia Pacific10 %
Africa/Eurasia11 %
Hill's Pet Nutrition10 %
Corporate26 %
Total100 %

9

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 summarizetable summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals:

Six Months Ended June 30, 2022
 Three Months Ended September 30, 2017 Employee-Related
Costs 		Incremental
Depreciation 		Asset
Impairments		OtherTotal
 
Employee-Related
Costs
 
 
Incremental
Depreciation
 
 
Asset
Impairments
 
 
Other
 
 
Total
 
Balance at June 30, 2017 $138
 $—
 $—
 $116
 $254
Balance at December 31, 2021Balance at December 31, 2021$— $— $— $— $— 
Charges 21
 2
 —
 35
 58
Charges88 — — 2 90 
Cash payments (16) —
 —
 (42) (58)
Cash PaymentsCash Payments(13)— — (1)(14)
Charges against assets (15) (2) —
 —
 (17)Charges against assets(14)— — — (14)
Foreign exchange —
 —
 —
 —
 —
Foreign exchange(1)— — — (1)
Balance at September 30, 2017 $128
 $—
 $—
 $109
 $237
Balance at June 30, 2022Balance at June 30, 2022$60 $— $— $1 $61 
  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, written severance policies, 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 $17of $14 for the three and ninesix months ended SeptemberJune 30, 2017, respectively,2022, 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).liabilities.

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 strategies5.    Inventories

Inventories by major class were 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.follows:

June 30,
2022		December 31,
2021
Raw materials and supplies$559 $505 
Work-in-process53 39 
Finished goods1,510 1,248 
       Total Inventories, net$2,122 $1,792 
            Non-current inventory, net$(110)$(100)
              Current Inventories, net$2,012 $1,692 
10
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




5.    Inventories

Inventories by major class are as follows:
 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 SeptemberJune 30, 20172022 and 2016,2021, earnings per share were as follows:
 Three Months Ended
 June 30, 2022June 30, 2021
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share		Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share
Basic EPS$603 836.8 $0.72 $703 845.6 $0.83 
Stock options and
restricted stock units
2.6   3.8  
Diluted EPS$603 839.4 $0.72 $703 849.4 $0.83 
For the three months ended June 30, 2022 and 2021, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 9,502,3293,835,115 and 1,980,457,1,634,728, 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 ninesix months endedSeptember June 30, 20172022 and 2016,2021, earnings per share were as follows:
 Six Months Ended
 June 30, 2022June 30, 2021
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share		Net income attributable to Colgate-Palmolive CompanyShares
(millions)		Per
Share
Basic EPS$1,162 838.7 $1.39 $1,384 847.0 $1.63 
Stock options and
restricted stock units
2.8   3.4  
Diluted EPS$1,162 841.5 $1.38 $1,384 850.4 $1.63 
For the six months ended June 30, 2022 and 2021, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 9,209,0604,136,899 and 1,212,685,2,453,048, 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.
11
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




8.7.    Other Comprehensive Income (Loss)


Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the three months ended SeptemberJune 30, 20172022 and 20162021 were as follows:
 20222021
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$(70)$(132)$71 $106 
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period— — (3)(1)
Amortization of net actuarial loss, transition and prior service costs (1)
19 13 20 17 
Retirement plans and other retiree benefits adjustments19 13 17 16 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges83 66 (49)(38)
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
(6)(5)4 3 
Gains (losses) on cash flow hedges77 61 (45)(35)
Total Other comprehensive income (loss)$26 $(58)$43 $87 
  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 9,8, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 13,11, 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 ninesix months endedSeptember June 30, 20172022 and 20162021 were as follows:
 20222021
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$26 $(50)$(28)$(49)
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period— — (22)(15)
Amortization of net actuarial loss, transition and prior service costs (1)
37 28 42 33 
Retirement plans and other retiree benefits adjustments37 28 20 18 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges141 111 4 3 
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
(11)(9)7 5 
Gains (losses) on cash flow hedges130 102 11 8 
Total Other comprehensive income (loss)$193 $80 $3 $(23)
  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 9,8, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 13,11, Fair Value Measurements and Financial Instruments for additional details.


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



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




9.8.    Retirement Plans and Other Retiree Benefits


Components of Net periodic benefit cost for the three and ninesix months ended SeptemberJune 30, 20172022 and 20162021 were as follows:
Three Months Ended June 30,
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202220212022202120222021
Service cost$1 $1 $3 $4 $6 $7 
Interest cost16 15 — 4 9 9 
Expected return on plan assets(27)(26)1 (4)(1)— 
Amortization of actuarial loss (gain)12 10 1 3 6 7 
Net periodic benefit cost$2 $— $5 $7 $20 $23 
Other postretirement charges4 — (2)— (7)— 
Total pension cost$6 $— $3 $7 $13 $23 
Six Months Ended June 30,
Pension Benefits Other Retiree Benefits Pension BenefitsOther Retiree Benefits
United States International     United StatesInternational  
Three Months Ended September 30,
2017 2016 2017 2016 2017 2016 202220212022202120222021
Service cost$—
 $—
 $4
 $4
 $3
 $4
Service cost$1 $1 $8 $8 $11 $13 
Interest cost23
 27
 6
 7
 9
 10
Interest cost32 30 6 9 19 18 
ESOP offset—
 —
 —
 —
 (1) —
Expected return on plan assets(28) (27) (5) (6) —
 —
Expected return on plan assets(52)(53)(5)(10)(1)— 
Amortization of transition and prior service costs (credits)—
 —
 —
 —
 —
 —
Amortization of actuarial loss (gain)12
 10
 2
 2
 1
 3
Amortization of actuarial loss (gain)23 23 3 6 11 13 
Net periodic benefit cost$7
 $10
 $7
 $7
 $12
 $17
Net periodic benefit cost$4 $1 $12 $13 $40 $44 
Other postretirement chargesOther postretirement charges13 — — — 1 — 
Total pension costTotal pension cost$17 $1 $12 $13 $41 $44 

 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

Other postretirement charges for the three months ended June 30, 2022 included an adjustment of $5 related to the 2022 Global Productivity Initiative. Other postretirement charges for the six months ended June 30, 2022 included pension and other charges of $14, incurred pursuant to the 2022 Global Productivity Initiative.
For the ninethree and six months ended SeptemberJune 30, 20172022 and 2016,2021, the Company made no voluntary contributions to its U.S. postretirement plans of $81 and $53, respectively.plans.

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


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 for income taxes related to share-based compensation. As a result of adopting the standard effective January 1, 2017, the Company recognized excess tax benefits of $17 and $43 (resulting from an increase in the fair value of an award from the 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. 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 challenged 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. As a result, the Company recorded a tax benefit of $17, including interest, in the quarter ended September 30, 2016.

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

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.

13
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



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$450 (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 amountrange 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.


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.$116. 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,$51, 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
14
COLGATE-PALMOLIVE COMPANY
Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


legal counsel, that the tax assessment is without merit and that the Company should ultimately prevail. The Company is challenging this assessment vigorously.
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 as of pendingJune 30, 2022 of such competition law matters as of Septemberpending against the Company during the six months ended June 30, 20172022 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. Mostasbestos and/or caused mesothelioma and other cancers. Many 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 SeptemberJune 30, 2017,2022, there were 171203 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 174 cases as of June 30, 2017, 146186 cases as of March 31, 20172022 and 115171 cases as of December 31, 2016.2021. During the three months ended SeptemberJune 30, 2017,2022, 22 new cases were filed and 255 cases were resolved by voluntary dismissal appeal or settlement. During the ninesix months ended SeptemberJune 30, 2017, 99 new2022, 39 cases were filed and 437 cases were resolved by voluntary dismissal appeal or settlement. The valuevalues of the settlements in the quarter and the year-to-date period presented waswere not material, either individually or in the aggregate, to each such period’sthe Company’s results of operations.operations in either such period.


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 that a portion of such costs will continue to be, covered by insurance policies issued by several primary, excess and excessumbrella insurance carriers, subject to deductibles, exclusions, retentions, policy limits and policy limits.insurance carrier insolvencies.


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. Since the amount of any potential losses from these cases currently cannot be reasonably estimated, the range of reasonably possible losses in excess of accrued liabilities disclosed above does not include any amount relating to these cases.
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. The appeal is currently pending.
15

12.Segment Information

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


10.    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, 2016.2021. 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 EndedSix Months Ended
September 30, September 30, June 30,June 30,
2017 2016 2017 2016 2022202120222021
Net sales       Net sales  
Oral, Personal and Home Care       Oral, Personal and Home Care  
North America$795
 $800
 $2,319
 $2,393
North America$965 $912 $1,891 $1,835 
Latin America985
 924
 2,911
 2,710
Latin America1,019 907 1,973 1,814 
Europe642
 609
 1,784
 1,803
Europe639 709 1,293 1,426 
Asia Pacific728
 723
 2,111
 2,163
Asia Pacific696 673 1,422 1,412 
Africa/Eurasia251
 250
 738
 720
Africa/Eurasia256 265 523 537 
Total Oral, Personal and Home Care3,401
 3,306
 9,863
 9,789
Total Oral, Personal and Home Care3,575 3,466 7,102 7,024 
Pet Nutrition573
 561
 1,699
 1,685
Pet Nutrition909 794 1,781 1,580 
Total Net sales$3,974
 $3,867
 $11,562
 $11,474
Total Net sales$4,484 $4,260 $8,883 $8,604 
       
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).


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.

16
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 EndedSix Months Ended
 June 30,June 30,
 2022202120222021
Net sales
Oral Care44 %43 %44 %44 %
Personal Care19 %20 %19 %20 %
Home Care17 %18 %17 %18 %
Pet Nutrition20 %19 %20 %18 %
Total Net sales100 %100 %100 %100 %
Operating profit by segment was as follows:
Three Months EndedSix Months Ended
 June 30,June 30,
 2022202120222021
Operating profit  
Oral, Personal and Home Care  
North America$196 $200 $359 $402 
Latin America264 254 529 526 
Europe133 166 283 346 
Asia Pacific164 200 370 424 
Africa/Eurasia50 55 94 109 
Total Oral, Personal and Home Care807 875 1,635 1,807 
Pet Nutrition212 212 416 427 
Corporate(135)(91)(307)(234)
Total Operating profit$884 $996 $1,744 $2,000 
Corporate Operating profit (loss) for the three and six months ended June 30, 2022 included charges resulting from the 2022 Global Productivity Initiative of $13 and $76, respectively. Corporate Operating profit (loss) for both the three and six months ended June 30, 2021 included a benefit related to a value-added tax matter in Brazil of $26.


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


11.    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.


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 Condensed Consolidated Balance Sheets at SeptemberJune 30, 20172022 and December 31, 2016:2021:
 AssetsLiabilities
  
Account		Fair ValueAccountFair Value
Designated derivative instrumentsJune 30, 2022December 31, 2021 June 30, 2022December 31, 2021
Interest rate swap contractsOther current assets$— $5 Other accruals$1 $— 
Forward-starting interest rate swapsOther current assets79 — Other accruals— — 
Forward-starting interest rate swapsOther assets44 20 Other liabilities— 21 
Foreign currency contractsOther current assets37 22 Other accruals9 6 
Commodity contractsOther current assets— 2 Other accruals— — 
Total designated$160 $49  $10 $27 
Other financial instruments     
Marketable securitiesOther current assets$120 $34    
Total other financial instruments$120 $34    
18
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 SeptemberJune 30, 20172022 and December 31, 2016.2021. The estimated fair value of the Company’s long-term debt, including the current portion, as of SeptemberJune 30, 20172022 and December 31, 2016,2021, was $6,740$7,613 and $6,717,$7,651, respectively, and the related carrying value was $6,520 as of each balance sheet date.$7,970 and $7,206, 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:
June 30, 2022December 31, 2021
Long-term debt:  
Carrying amount of hedged item$399 $405 
Cumulative hedging adjustment included in the carrying amount1 5 
The following tables present the notional values as of:
 June 30, 2022
 Foreign Currency ContractsForeign Currency DebtInterest Rate Swaps Forward-Starting Interest Rate SwapsCommodity Contracts 
Total
Fair Value Hedges$553 $— $400 $— $— $953 
Cash Flow Hedges851 — — 875 28 1,754 
Net Investment Hedges340 4,728 — — — 5,068 
 December 31, 2021
 Foreign Currency ContractsForeign Currency DebtInterest Rate SwapsForward-Starting Interest Rate SwapsCommodity Contracts 
Total
Fair Value Hedges$566 $— $400 $— $— $966 
Cash Flow Hedges873 — — 700 24 1,597 
Net Investment Hedges173 4,600 — — — 4,773 
19
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 June 30,
 20222021
Cost of salesSelling, general and administrative expensesInterest (income) expense, netCost of salesSelling, general and administrative expensesInterest (income) expense, net
Interest rate swaps designated as fair value hedges:
Derivative instrument$— $— $2 $— $— $2 
Hedged items— — (2)— — (2)
Foreign currency contracts designated as fair value hedges:
Derivative instrument— 12 — — (5)— 
Hedged items— (12)— — 5 — 
Foreign currency contracts designated as cash flow hedges:
Amount reclassified from OCI3 — — (6)— — 
Commodity contracts designated as cash flow hedges:
Amount reclassified from OCI3 — — 2 — — 
Total gain (loss) on hedges recognized in income$6 $— $— $(4)$— $— 
Activity related to fair value hedges recorded during the three and nine months ended September 30, 2017 and 2016 was as follows:
Six Months Ended June 30,
 20222021
Cost of salesSelling, general and administrative expensesInterest (income) expense, netCost of salesSelling, general and administrative expensesInterest (income) expense, net
Interest rate swaps designated as fair value hedges:
Derivative instrument$— $— $6 $— $— $4 
Hedged items— — (6)— — (4)
Foreign currency contracts designated as fair value hedges:
Derivative instrument— 14 — — (5)— 
Hedged items— (14)— — 5 — 
Foreign currency contracts designated as cash flow hedges:
Amount reclassified from OCI5 — — (12)— — 
Commodity contracts designated as cash flow hedges:
Amount reclassified from OCI6 — — 5 — — 
Total gain (loss) on hedges recognized in income$11 $— $— $(7)$— $— 




20
 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
June 30,
20222021
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI$19 $(2)
Forward-starting interest rate swaps designated as cash flow hedges:
Gain (loss) recognized in OCI67 (48)
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI(3)1 
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments9 (19)
Gain (loss) on hedged items(9)19 
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments296 (62)
Gain (loss) on hedged items(296)62 
Total unrealized gain (loss) on hedges recognized in OCI$83 $(49)
Activity related to net investment hedges recorded during the three and nine months ended September 30, 2017 and 2016 was as follows:
 Six Months Ended
June 30,
20222021
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI$13 $4 
Forward-starting interest rate swaps designated as cash flow hedges:
Gain (loss) recognized in OCI124 (2)
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI4 2 
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments3 4 
Gain (loss) on hedged items(3)(4)
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments360 149 
Gain (loss) on hedged items(360)(149)
Total unrealized gain (loss) on hedges recognized in OCI$141 $4 
21
 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,” “us,” “our,” the “Company” or “Colgate”) seeksis a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. We seek to deliver strong, consistent business resultssustainable, profitable growth 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 people’s and their pets’ lives healthier and more enjoyable.enjoyable and by embracing our sustainability and social impact and diversity, equity and inclusion (“DE&I”) strategies 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, distributors, dentists and distributors. The Company, throughskin health professionals. Through 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 also sell certain of our products direct-to-consumer. We are also sold online through various e-commerce platformsengaged in manufacturing and retailers.sourcing of products and materials on a global scale and have major manufacturing facilities, 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 and other 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.
















22
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

COVID-19

The COVID-19 pandemic and government steps to reduce the spread and address the impact of COVID-19 have had and continue to have an impact on the way people live, work, interact and shop.

During the COVID-19 pandemic, many of the communities in which we manufacture, market and sell our products experienced and in some cases continue to experience “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 address the pandemic, resume economic activity and vaccinate their populations. The situation continues to be uncertain, as the impact of COVID-19 remains significant in certain countries, including China, where we have substantial manufacturing facilities. 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, although not always at full capacity. During the COVID-19 pandemic, we have seen increased instances of absenteeism and, in some cases, we have experienced some limited production facility closures and related supply chain disruptions. Furthermore, some of our suppliers, customers, distributors, logistics providers and service providers have experienced disruptions to their businesses.

We saw a significant increase in demand across many of our categories, such as liquid hand soap, dish liquid, bar soap and cleaners, during 2020 as a result of the COVID-19 pandemic, driven by consumer pantry-loading and increased consumption of our products. Consumer demand for most of these categories in the six months ended June 30, 2022 remained above historical levels. We believe that some of the COVID-19-related increase in consumption is sustainable in light of changes in consumer behavior. In addition, during the COVID-19 pandemic, we have experienced and continue to experience disruptions in certain channels, including travel retail. We also witnessed changes in the purchasing patterns of our customers, 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. COVID-19 may continue to impact consumers behavior, shopping patterns and consumption preferences.

The COVID-19 pandemic has 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 COVID-19 pandemic. 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 COVID-19 vaccines, the emergence and spread of COVID-19 variants, 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, including as a result of inflation, and supply chain disruptions. COVID-19 has also disrupted our retail customers, contract manufacturers, logistics providers and other third parties; their ability to address COVID-19 and maintain their operations at full capacity has impacted and may continue to impact sales of and consumer access to our products.

While we currently expect to be able to continue operating our business as described above, 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.

Due primarily to the impact of the COVID-19 pandemic on the Filorga skin health business, in the fourth quarter of 2021, the Company recorded an impairment charge to adjust the carrying values of the indefinite-lived trademark and goodwill of its Filorga reporting unit (together, “Filorga intangible assets”) to their respective fair values. While the fair values of the Filorga intangible assets continue to approximate their respective carrying values, given the inherent uncertainties of estimating the future impacts of the COVID-19 pandemic and inflation on macroeconomic conditions in general, and on the Filorga business and interest rates in particular, actual results may differ from management's current estimates which could potentially result in additional impairment charges in future periods. We continue to believe in the strength of the Filorga brand and remain confident about its long-term growth opportunities.

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



23
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

The War in Ukraine

The war in Ukraine, which began in February 2022, and the related geopolitical tensions have had and continue to have a significant impact on our businesses in Ukraine and Russia, though it has not been material to our Condensed Consolidated Financial Statements. The safety of our employees and partners in Ukraine has been and remains our first priority. While our ability to do business in Ukraine has been significantly impacted, we remain committed to rebuilding our business there and to providing access to essential products to people in the region. In March 2022, we made the decision to suspend the importation and sales of all products in Russia other than essential health and hygiene products for everyday use and ceased all capital investments and media and advertising activities in Russia. While these actions have impacted our Eurasia business, they have not had a material impact on our consolidated results of operations, cash flow or financial condition. During the year ended December 31, 2021 and the six months ended June 30, 2022, our Eurasia business constituted approximately 2% of our consolidated business (the majority of which was Russia). We also continue to monitor the impact of sanctions and export controls imposed in response to the war in Ukraine. The situation is rapidly evolving and significant uncertainties remain regarding the full impact of the war and the related impact on the global economy and geopolitical relations generally, and on our business in particular. We have seen and expect to continue to see the war’s impact on the global economy and our business including, among other things, the cost of raw and packaging materials and commodities (including the price of oil and natural gas), supply chain and logistics challenges and foreign currency volatility. For more information about factors that could impact our business, including due to the war in Ukraine, see “Risk Factors” in Part II, Item 1A of our Quarterly Report for the quarter ended March 31, 2022 and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.






































24
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, we are focused on driving organic sales growth and long-term profitable growth through innovation on our core businesses; leveraging faster growth in adjacent categories; expanding in high-growth channels and markets and delivering margin expansion through operating leverage and efficiency. We are also seeking to maximize the Company focuses the organization on initiatives to driveimpact of our environmental, social and fund growth. The Company seeks to capture significant opportunities for growth by identifyinggovernance programs and meeting consumer needs within its core categories, through its focus on innovation and the deployment of valuable consumer and shopper insightsleading in the development of successful new products regionally,human capital, including our sustainability and social impact and DE&I strategies, which we are then rolled out on a global basis. To enhance these efforts, the Company has developed keyworking to integrate across our organization. We are strengthening our capabilities in areas such as innovation, digital, eCommerce and data and analytics, enabling us to be more responsive in today’s rapidly changing world. In particular, we believe our digital transformation is of paramount importance to our success going forward. We continue to invest behind our brands, including through advertising, and to develop initiatives to build strong relationships with consumers, dental, veterinary and veterinaryskin health professionals and retail customers. In addition, the Company has strengthened its capabilities in e-commerce, developing its relationships with online-only retailerstraditional and its digital marketing capabilities. GrowtheCommerce retailers. 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’sour products.


COLGATE-PALMOLIVE COMPANYWe are also changing the way we work to drive growth and how we approach innovation with focus, empowerment, experimentation and digitization 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 developedsupported 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.

Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of its Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela using the cost method of accounting. As such, effective December 31, 2015, the Company’s Consolidated Balance Sheet no longer includes the assets 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 only 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’s 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, Provision for income taxes included a $210 U.S. income tax benefit principally related to changes in Venezuela’s foreign exchange regime implemented in March 2016.

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 the Company ensure sustained solid worldwide growth in unit volume, organic sales, operating profit and earnings per share and enhance its global leadership positions in its coreNutrition businesses.


Significant Items Impacting Comparability

On October 23, 2014,January 27, 2022, the Company’s Board of Directors (the “Board”) approved an expansion of thea targeted productivity program (the “2022 Global Growth and Efficiency ProgramProductivity Initiative”). The program is intended to take advantage of additional savings opportunities. On October 29, 2015, the Board approved the reinvestment of the funds from the sale ofreallocate resources towards the Company’s laundry detergent businessstrategic priorities and faster growth businesses, drive efficiencies in the South PacificCompany’s operations and streamline the Company’s supply chain 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.

reduce structural costs. Implementation of the 2022 Global GrowthProductivity Initiative, which is expected to be substantially completed by mid-year 2023, is estimated to result in cumulative pretax charges, once all phases are approved and Efficiency Program remains on track. Building onimplemented, in the Company’s successfulrange of $200 to $240 ($170 to $200 aftertax), which is currently estimated to be comprised of the following: employee-related costs, including severance, pension and other termination benefits (75%); asset-related costs, primarily accelerated depreciation and asset write-downs (15%); and other charges (10%), which include contract termination costs, consisting primarily of implementation-related charges resulting directly from exit activities and the implementation of the Global Growth and Efficiency Programnew strategies. It is estimated that 80% to date, on October 26, 2017, the Board approved an expansion90% 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 acharges will result of the expansion,in cash expenditures. Annualized pretax savings substantially all of which are expected to increase future cash flows, are now projected to be in the range of $560$90 to $635 pretax$110 ($50070 to $575$85 aftertax) annually,, once all projects are approved and implemented, as compared toimplemented. For more information regarding the previous estimate of $455 to $495 pretax ($425 to $475 aftertax). Cumulative pretax charges resulting from the2022 Global GrowthProductivity Initiative, see “Restructuring 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).Related Implementation Charges” below.


In the three and ninesix months ended SeptemberJune 30, 2017,2022, the Company incurred aftertaxpretax costs of $39$8 (aftertax costs of $5) and $185,$90 (aftertax costs of $70), respectively, associatedresulting from the 2022 Global Productivity Initiative.

In 2019, we received a favorable judgment regarding certain value-added taxes previously paid in Brazil. As a result of this favorable judgment, during the fourth quarter of 2019, we filed an application with the Global GrowthBrazilian government to recover value-added tax previously paid and Efficiency Program.recorded a benefit. In May 2021, the Brazilian Supreme Court issued a clarifying ruling allowing a higher deduction of state value-added tax when determining the taxable base. In light of this ruling, we recorded an additional benefit of $26 pretax ($20 aftertax) in the three months ended June 30, 2021.





25
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 challengingchallenging. During the six months ended June 30, 2022, all of our divisions experienced significantly higher raw and category growth ratespackaging material costs. We also incurred increased logistics costs due to volume and capacity constraints in the shipping and logistics industry, higher eCommerce demand and the impact of the war in Ukraine. We expect this difficult cost environment to continue throughout 2022. We are taking additional pricing to be slow. try to offset these increases in raw and packaging materials and logistics costs. This may, in turn, negatively impact consumer demand for our products. Additionally, inflation is impacting the broader economy with consumers around the world facing widespread rising prices. Such inflation may negatively impact consumer consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to "private label" or lower-priced brands. Although we continue to devote significant resources to support our brands and market our products at multiple price points, these changes could reduce demand for and sales volumes of our products or result in a shift in our product mix from higher margin to lower margin product offerings.

Given that approximately 70% of our Net sales originate in markets outside the U.S., we have experienced and will likely continue to experience volatile foreign currency fluctuations. As discussed above, we have also experienced higher raw and packaging material and logistics costs. While we have taken, and will continue to take, measures to mitigate the effect of these conditions, such as the 2022 Global Productivity Initiative and our funding-the-growth and revenue growth management initiatives, including additional pricing, in the current environment, it may become increasingly difficult to implement certain of these mitigation strategies. Should these conditions persist, they could adversely affect our future results.

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 been negatively affected by changes in the policies and practices of our trade customers in key markets, such as inventory destocking, fulfillment requirements, limitations on access to shelf space, delisting of our products and certain environmental, sustainability, supply chain and packaging standards or initiatives. In addition, the retail landscape in many of our markets continues to evolve as a result of the rapid growth of eCommerce, changing consumer preferences (as consumers increasingly shop online and via mobile and social applications) and the increased presence of alternative retail channels, such as subscription services and direct-to-consumer businesses. These trends have been magnified due to COVID-19 in many of our geographies and we plan to continue to invest behind our digital and analytics capabilities and higher growth businesses. The rapid growth in eCommerce and the emergence of new salesalternative retail channels forhave created and may continue to create pricing pressures and/or adversely affect our relationships with our key retailers.


As discussed above, we continue to closely monitor the Company’s products, such as e-commerce, may affect consumer preferences and market dynamics. Given that approximately 75%impact of the Company’s Net sales originatewar in markets outsideUkraine and COVID-19 on our business and the U.S.,related uncertainties and risks. Among other things, we expect increased volatility across all of our categories and it is therefore difficult to predict category growth rates in the Company continues to experience volatile foreign currency fluctuations and high raw and packaging material costs.near term. While the Company haswe have taken, and will continue to take, measures to mitigate the effecteffects of these conditions, should they persist, they could adversely affectCOVID-19, we cannot estimate with certainty the Company’s future results.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 the Company’s results,war in Ukraine and COVID-19, see “Cautionary Statement“Risk Factors” in Part II, Item 1A of our Quarterly Report on Forward-Looking Statements” below.Form 10-Q for the quarter ended March 31, 2022 and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.


The Company believes it isWe believe that we are well prepared to meet the challenges ahead due to itsour strong financial condition, broad-based experience operating in challenging environments, resilient global supply chain and continued focusfocused business strategy. Our strategy is based on driving organic sales growth and long-term profitable growth through innovation within our core businesses, leveraging faster growth in adjacent categories, expanding in high-growth channels and markets and delivering margin expansion through operating leverage and efficiency. We are also seeking to maximize the Company’s strategic initiatives: engaging to buildimpact of our brands; innovation for growth; effectivenessenvironmental, social and efficiency;governance programs and leading in the development of human capital, including our sustainability and social impact and DE&I strategies. Our commitment to win. This focus, together withthese priorities, the strength of our brands, the Company’sbreadth of our global brands, its broad international presencefootprint and a commitment to driving efficiency in both developed and emerging markets and initiatives, such as the Global Growth and Efficiency Program,cash generation should position the Companyus well to manage through the challenges presented by COVID-19 and the war in Ukraine and increase shareholder value over the long term.time.
26
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$4,484 in the thirdsecond quarter of 2017,2022, up 3.0%5.5% from the thirdsecond quarter of 2016, driven by2021, due to volume growth of 1.5%0.5% and positivenet selling price increases of 8.5%, partially offset by negative foreign exchange of 1.5%, while net selling prices were flat.3.5%. Organic sales (Net sales excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, increased 1.5%9.0% in the thirdsecond quarter of 2017.2022. 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$3,575 in the thirdsecond quarter of 2017,2022, up 3.0% from the thirdsecond quarter of 2016, driven2021, due to net selling price increases of 7.5%, partially offset by volume growthdeclines of 1.5%0.5% and positivenegative foreign exchange of 1.5%, while net selling prices were flat.4.0%. Organic sales in the Oral, Personal and Home Care product segment increased 1.5%7.0% in the thirdsecond quarter of 2017.2022.


The Company’s share of the global toothpaste market was 43.5%39.6% on a year-to-date basis, down 0.3up 0.2 share points from the year ago period, and its share of the global manual toothbrush market was 32.6%31.3% on a year-to-date basis, downup 0.6 share points from the year ago period. Year-to-date market shares in toothpaste were up in NorthEurope, down in Latin America, Asia Pacific and Africa/Eurasia and downflat in LatinNorth America Europe and Asia Pacific versus the comparable 20162021 period. In the manual toothbrush category, year-to-date market shares were up in North America, down in Latin America and Africa/Eurasia and downflat in North America, Latin America, Europe and Asia Pacific versus the comparable 20162021 period. For additional information regarding market shares, see “Market Share Information” below.


Net sales in the Hill’s Pet Nutrition segment were $573$909 in the thirdsecond quarter of 2017,2022, up 2.0%14.5% from the thirdsecond quarter of 2016, driven by2021, due to volume growth of 1.0%5.5% and positivenet selling price increases of 12.5%, partially offset by negative foreign exchange of 1.0%, while net selling prices were flat.3.5%. Organic sales in the Hill’s Pet Nutrition segment increased 1.0%18.0% in the thirdsecond quarter of 2017.2022.

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).
27
  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 expenses increased 8% to $1,429Worldwide Gross profit remained flat at $2,554 in the thirdsecond quarter of 2017 from $1,3222022 compared to $2,556 in the thirdsecond quarter of 2016. Selling, general and administrative expenses in both periods included charges2021, reflecting a decrease of $135 resulting from the Global Growthlower Gross profit margin and Efficiency Program. Excluding these charges in both periods, Selling, general and administrative expenses increasedan increase of $133 resulting from higher Net sales.

Worldwide Gross profit margin decreased to $1,40757.0% in the thirdsecond quarter of 20172022 from $1,31360.0% in the thirdsecond 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%2021. This decrease in the third quarter of 2017 from 34.2% in the third quarter of 2016. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Selling, general and administrative expenses as a percentage of Net sales increased by 140 bps to 35.4% in the third quarter of 2017 as compared to 34.0% in the third quarter of 2016. This increaseGross profit margin was due to increased advertising investment as a percentage of Net sales (140significantly higher raw and packaging material costs (800 bps). In the third quarter of 2017, advertising investment increased 19% to $405, as compared with $339 in the third quarter of 2016,, partially offset by higher pricing (310 bps) 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 Growth and Efficiency Program. Other (income) expense, net in the third quarter 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 $7 in the third quarter of 2017, as compared to $0 in the third quarter of 2016.Company’s funding-the-growth initiatives (190 bps).
Three Months Ended June 30,
20222021
Gross profit$2,554 $2,556 
Three Months Ended June 30,
20222021Basis Point Change
Gross profit margin57.0 %60.0 %(300)
28
  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$1,657 in the thirdsecond quarter of 20172022 from $1,071$1,568 in the thirdsecond quarter of 2016. Operating profit2021. Selling, general and administrative expenses in both periodsthe second quarter of 2022 included charges resulting from the 2022 Global GrowthProductivity Initiative. Excluding charges resulting from the 2022 Global Productivity Initiative in the second quarter of 2022, Selling, general and Efficiency Program.administrative expenses increased to $1,654 in the second quarter of 2022 from $1,568 in the second quarter of 2021, reflecting higher overhead expenses of $79 and increased advertising investment of $7.

Selling, general and administrative expenses as a percentage of Net sales increased to 37.0% in the second quarter of 2022 from 36.8% in the second quarter of 2021. Excluding charges resulting from the 2022 Global Productivity Initiative in the second quarter of 2022, Selling, general and administrative expenses as a percentage of Net sales increased by 10 bps to 36.9% in the second quarter of 2022 as compared to 36.8% in the second quarter of 2021. This increase was driven predominantly by higher logistics costs (100 bps) impacting all divisions and was partially offset by overhead efficiencies (50 bps) and decreased advertising investment (40 bps). In the second quarter of 2022, advertising investment increased 1.5% in absolute terms to $501 as compared with $494 in the second quarter of 2021, while as a percentage of Net sales advertising investment decreased to 11.2% from 11.6% in the second quarter of 2021.
Three Months Ended June 30,
20222021
Selling, general and administrative expenses, GAAP$1,657 $1,568 
2022 Global Productivity Initiative(3)— 
Selling, general and administrative expenses, non-GAAP$1,654 $1,568 
Three Months Ended June 30,
20222021Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP37.0 %36.8 %20
2022 Global Productivity Initiative(0.1)%— 
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP36.9 %36.8 %10

Other (Income) Expense, Net
Other (income) expense, net was $13 and $(8) in the second quarter of 2022 and 2021, respectively. Other (income) expense, net in the second quarter of 2022 included charges resulting from the 2022 Global Productivity Initiative. Other (income) expense, net in the second quarter of 2021 included a benefit related to a value-added tax matter in Brazil. Excluding these items in both periods as applicable, Other (income) expense, net was $3 and $18 in the second quarter of 2022 and 2021, respectively.

Three Months Ended June 30,
20222021
Other (income) expense, net, GAAP$13 $(8)
2022 Global Productivity Initiative(10)— 
Value-added tax matter in Brazil— 26 
Other (income) expense, net, non-GAAP$3 $18 
29
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 decreased 11% to $884 in the second quarter of 2022 from $996 in the second quarter of 2021. Operating profit in the thirdsecond quarter of 2016 also2022 included charges resulting from the 2022 Global Productivity Initiative. Operating profit in the second quarter of 2021 included a gain on the sale of landbenefit related to a value-added tax matter in Mexico and a charge for a previously disclosed litigation matter.Brazil. Excluding these items in both periods as applicable, Operating profit was $985decreased 8% to $897 in the thirdsecond quarter of 2017, compared to $1,0222022 from $970 in the thirdsecond quarter of 2016, a decrease of 4%, as an increase in Gross profit was more than offset by an increase in Selling, general and administrative expenses.2021.


Operating profit margin was 23.3%19.7% in the thirdsecond quarter of 2017,2022, a decrease of 440370 bps compared to 27.7%23.4% in the thirdsecond quarter of 2016.2021. Excluding the items described above in both periods as applicable, Operating profit margin was 24.8%20.0% in the thirdsecond quarter of 2017,2022, a decrease of 160280 bps as compared to 26.4%22.8% in the thirdsecond quarter of 2016.2021. This decrease in Operating profit margin was primarily due to a decrease in Gross profit (300 bps) and an increase in Selling, general and administrative expenses (10 bps), partially offset by a decrease in Other (income) expense, net (30 bps), all as a percentage of Net sales (140 bps), reflecting increased advertising investment.sales.


  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)%
Three Months Ended June 30,
20222021% Change
Operating profit, GAAP$884 $996 (11)%
2022 Global Productivity Initiative13 — 
Value-added tax matter in Brazil— (26)
Operating profit, non-GAAP$897 $970 (8)%

Three Months Ended June 30,
20222021Basis Point Change
Operating profit margin, GAAP19.7 %23.4 %(370)
2022 Global Productivity Initiative0.3 %— %
Value-added tax matter in Brazil— %(0.6)%
Operating profit margin, non-GAAP20.0 %22.8 %(280)
Non-Service Related Postretirement Costs
  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)


Non-service related postretirement costs were $12 in the second quarter of 2022 as compared to $18 in the second quarter of 2021. Non-service related postretirement costs in the second quarter of 2022 included an adjustment related to the 2022 Global Productivity Initiative. Excluding an adjustment related to the 2022 Global Productivity Initiative in the second quarter of 2022, Non-service related postretirement costs were $17 in the second quarter of 2022 as compared to $18 in the second quarter of 2021.
Three Months Ended June 30,
20222021
Non-service related postretirement costs, GAAP$12 $18 
2022 Global Productivity Initiative5 — 
Non-service related postretirement costs, non-GAAP$17 $18 
Interest (Income) Expense, Net


Interest (income) expense, net was $27$31 in the thirdsecond quarter of 20172022 as compared to $25 in the thirdsecond quarter of 2016,2021, primarily due to higher average interest rates on debt.rates.






30
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 forin the thirdsecond quarter of 20172022 decreased to $607$603 from $702$703 in the thirdsecond quarter of 2016,2021, and Earnings per common share on a diluted basis decreased to $0.68$0.72 per share in the thirdsecond quarter of 20172022 from $0.78$0.83 in the thirdsecond quarter of 2016.2021. Net income attributable to Colgate-Palmolive Company in both periods included charges resulting from the Global Growth and Efficiency Program. Net incomeIncome attributable to Colgate-Palmolive Company in the thirdsecond quarter of 2016 also2022 included charges resulting from the 2022 Global Productivity Initiative, and in the second quarter of 2021 included a gain onbenefit from the sale of landvalue-added tax matter in Mexico, benefits from previously disclosed tax matters (see “Income taxes” below for further information) and a charge for a previously disclosed litigation matter.Brazil.


Excluding the items described above in both periods as applicable, Net income attributable to Colgate-Palmolive Company in the thirdsecond quarter of 20172022 decreased 1%11% to $646,$608 from $683 in the second quarter of 2021, and Earnings per common share on a diluted basis decreased 10% to $0.72 in the thirdsecond quarter of 2017 was $0.73, even with2022 from $0.80 in the thirdsecond quarter of 2016.2021.
Three Months Ended September 30, 2017Three Months Ended June 30, 2022
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 InterestsLess: Income Attributable to Noncontrolling InterestNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$900
 $250
 $650
 $607
 $0.68
As Reported GAAP$841 $202 $639 $36 $603 $0.72 
Global Growth and Efficiency Program58
 19
 39
 39
 0.05
2022 Global Productivity Initiative2022 Global Productivity Initiative8 2 6 1 5 — 
Non-GAAP$958
 $269
 $689
 $646
 $0.73
Non-GAAP$849 $204 $645 $37 $608 $0.72 

Three Months Ended June 30, 2021
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$953 $212 $741 $703 $0.83 
Value-added tax matter in Brazil(26)(6)(20)(20)(0.03)
Non-GAAP$927 $206 $721 $683 $0.80 
 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.

31

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 June 30,
2017 2016 Change 20222021Change
Net sales$795
 $800
 (0.5)%Net sales$965 $912 6.0 %
Operating profit$249
 $273
 (9)%Operating profit$196 $200 (2)%
% of Net sales31.3% 34.1% (280)bps% of Net sales20.3 %21.9 %(160)bps
Net sales in North America decreased 0.5%increased 6.0% in the thirdsecond quarter of 20172022 to $795, as$965, driven by volume growth of 3.0% and positive foreign exchange of 0.5% were more than offset by net selling price decreasesincreases of 4.0%.3.0%, while foreign exchange was flat. Organic sales in North America decreased 1.0%increased 6.0% in the thirdsecond quarter of 2017.2022. Organic sales growth was led by the United States.


The decreaseincrease in organic sales in North America in the thirdsecond quarter of 20172022 versus the thirdsecond quarter of 20162021 was due to a decreaseincreases in Oral Care, 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.sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste and manual toothbrush categories. The increase in Personal Care was primarily due to organic sales growth in the liquid hand soap, bar soap and skin health categories, partially offset by organic sales declines in the body wash and underarm protection categories. The increase in Home Care was primarily due to organic sales growth in the hand dish and fabric softener categories.


Operating profit in North America decreased 9%2% in the thirdsecond quarter of 20172022 to $249,$196, or 280160 bps to 31.3%20.3% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was due to a decrease in Gross profit (210 bps), partially offset by a decrease in Selling, general and administrative expenses (50 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily due to significantly higher raw and packaging material costs (540 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (170 bps) and higher pricing. This decrease in Selling, general and administrative expenses was due to decreased advertising investment (40 bps) and lower overhead expenses (10 bps), as overhead efficiencies (40 bps) more than offset higher logistics costs (30 bps).


























32
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 June 30,
 20222021Change
Net sales$1,019 $907 12.5 %
Operating profit$264 $254 4 %
% of Net sales25.9 %28.0 %(210)bps
Net sales in Latin America increased 12.5% in the second quarter of 2022 to $1,019, driven by net selling price increases of 12.5%, while volume and foreign exchange were flat. Organic sales in Latin America increased 12.5% in the second quarter of 2022. Organic sales growth was led by Colombia, Brazil, Mexico and Argentina.

The increase in organic sales in Latin America in the second quarter of 2022 versus the second quarter of 2021 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 and manual toothbrush categories. The increase in Personal Care was primarily due to organic sales growth in the bar soap and underarm protection categories. The increase in Home Care was primarily due to organic sales growth in the fabric softener and surface cleaners categories.

Operating profit in Latin America increased 4% in the second quarter of 2022 to $264, while as a percentage of Net sales it decreased 210 bps to 25.9%. This decrease in Operating profit as a percentage of Net sales was due to a decrease in Gross profit (330 bps), partially offset by a decrease in Selling, general and administrative expenses (30 bps) and a decrease in Other (income) expense, net (90 bps), all as a percentage of Net sales. This decrease in Gross profit was primarily due to significantly higher raw and packaging material costs (1,080 bps), partially offset by higher pricing and cost savings from the Company’s funding-the-growth initiatives (300 bps). This decrease in Selling, general and administrative expenses was due to decreased advertising investment (40 bps), partially offset by higher overhead expenses (10 bps), as overhead efficiencies (70 bps) were more than offset by higher logistics costs (80 bps). This decrease in Other (income) expense, net was primarily due to a value added tax refund in the second quarter of 2022.
Europe
 Three Months Ended June 30,
 20222021Change
Net sales$639 $709 (10.0)%
Operating profit$133 $166 (20)%
% of Net sales20.8 %23.4 %(260)bps
Net sales in Europe decreased 10.0% in the second quarter of 2022 to $639, driven by volume declines of 3.0% and negative foreign exchange of 10.5%, partially offset by net selling price increases of 3.5%. Organic sales in Europe increased 0.5% in the second quarter of 2022. Organic sales growth was led by Poland and France, partially offset by organic sales declines in the Filorga business.

The increase in organic sales in Europe in the second quarter of 2022 versus the second quarter of 2021 was primarily due to an increase in Oral Care organic sales, partially offset by a decrease in Personal Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste category. The decrease in Personal Care was primarily due to organic sales declines in the skin health and liquid hand soap categories.

Operating profit in Europe decreased 20% in the second quarter of 2022 to $133, or 260 bps to 20.8% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (40(440 bps) and an increase, partially offset by a decrease in Selling, general and administrative expenses (220(190 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily driven bydue to significantly higher raw and packaging material costs (140(750 bps) and lower pricing,, partially offset by cost savings from the Company’s funding-the-growth initiatives (210(170 bps) and the Global Growth and Efficiency Program (50 bps).higher pricing. This increasedecrease in Selling, general and administrative expenses was due to increaseddecreased advertising investment (250(200 bps), partially offset by lowerhigher overhead expenses (30(10 bps), as overhead efficiencies (80 bps) were more than offset by higher logistics costs (90 bps).


33
COLGATE-PALMOLIVE COMPANY
Management’sManagement’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)



Asia Pacific
Latin America
Three Months Ended September 30, Three Months Ended June 30,
2017 2016 Change 20222021Change
Net sales$985
 $924
 6.5
%Net sales$696 $673 3.5 %
Operating profit$301
 $298
 1
%Operating profit$164 $200 (18)%
% of Net sales30.6% 32.3% (170)bps% of Net sales23.6 %29.7 %(610)bps
Net sales in Latin AmericaAsia Pacific increased 6.5% to $9853.5% in the thirdsecond quarter of 2017,2022 to $696, driven by volume growth of 3.0%, and net selling price increases of 2.5% and positive6.0%, partially offset by negative foreign exchange of 1.0%5.5%. Organic sales in Latin AmericaAsia Pacific increased 5.5%9.0% in the thirdsecond quarter of 2017. Volume gains were2022. Organic sales growth was led by Brazilthe Greater China region, Australia and the Southern Cone region.Philippines.


The increase in organic sales in Latin AmericaAsia Pacific in the thirdsecond quarter of 20172022 versus the thirdsecond quarter of 20162021 was primarily 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 PersonalHome Care was primarily due to organic sales growth in the bar soap and shampoo categories. The increase in Home Care was due to organic sales growth in the liquid cleaners and fabric softener and hand dish categories.

Operating profit in Latin America increased 1% in the third quarter of 2017 to $301, while as a percentage of Net sales, it decreased 170 bps to 30.6% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (50 bps), which was more than offset by an increase in Selling, general and administrative expenses (200 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 bps), and higher pricing, partially offset by higher raw and packaging material costs (280 bps). This increase in Selling, general and administrative expenses was due to increased advertising investment (100 bps) and higher overhead expenses (100 bps).  



COLGATE-PALMOLIVE COMPANY
Management’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 sales in Europe increased 5.5% in the third quarter of 2017 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 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, while as a percentage of Net sales, it decreased 70 bps to 25.2% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (10 bps), which was more than offset by an increase in Selling, general and administrative expenses (100 bps), both as a percentage of Net sales. This increase in Gross profit was primarily driven by cost savings from the Company’s funding-the-growth initiatives (220 bps) and the Global Growth and Efficiency Program (20 bps), partially offset by higher raw and packaging material costs (230 bps). This increase 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 $22018% in the thirdsecond quarter of 2017,2022 to $164, or 160610 bps to 30.2%23.6% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (60(120 bps) and an increase in Selling, general and administrative expenses (90(480 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 bydue to significantly higher raw and packaging material costs (610 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (260(250 bps)., and higher pricing. This increase in Selling, general and administrative expenses was due to increased advertising investment (400 bps) and higher overhead expenses (80 bps) and increased advertising investment (10 bps)., driven by higher logistics costs.
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 June 30,
2017 2016 Change 20222021Change
Net sales$251
 $250
 0.5
%Net sales$256 $265 (3.5)%
Operating profit$44
 $50
 (12)%Operating profit$50 $55 (9)%
% of Net sales17.5% 20.0% (250)bps% of Net sales19.5 %20.8 %(130)bps
Net sales in Africa/Eurasia increased 0.5%decreased 3.5% in the thirdsecond quarter of 20172022 to $251. Volume$256, driven by volume declines of 4.5% were more than17.0% and negative foreign exchange of 8.5%, partially offset by net selling price increases of 2.5% and the impact of positive foreign exchange of 2.5%22.0%. Organic sales in Africa/Eurasia decreased 2.0%increased 5.0% in the thirdsecond quarter of 2017. Volume declines in the Sub-Saharan2022. Organic sales growth was led by Turkiye and South Africa, region and the Middle East region were partially offset by volume gainsorganic sales declines in Russia.Russia and Ukraine.


The decreaseincrease in organic sales in Africa/Eurasia in the thirdsecond quarter of 20172022 versus the thirdsecond quarter of 20162021 was primarily due to a decreasean increase 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 manual toothbrush category. The decrease in Personal Care was due to a decline in organic sales in the underarm protection and shower geltoothpaste categories.


Operating profit in Africa/Eurasia decreased 12%9% in the thirdsecond quarter of 20172022 to $44,$50, or 250130 bps to 17.5%19.5% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (80 bps), which was more than offset by an increase in Selling, general and administrative expenses (290(90 bps) partially offset by an increase in Gross profit (20 bps), both as a percentage of Net sales. This increase in Gross profit was mainly driven bydue to higher pricing and cost savings from the Company’s funding-the-growth initiatives (130(150 bps) and the Global Growth and Efficiency Program (20 bps), and higher pricing, partially offset by significantly higher raw and packaging material costs (120(1,040 bps)., which included foreign exchange transaction costs. This increase in Selling, general and administrative expenses was due to increasedhigher overhead expenses (260 bps), driven by higher logistics costs (270 bps), partially offset by decreased advertising investment (290(170 bps).


Hill’sEffective April 1, 2022, Turkiye was designated as a hyper-inflationary economy in accordance with Accounting Standard Codification (“ASC”) Topic 830, “Foreign Currency Matters.” Consequently, the functional currency for the Company's Turkish subsidiary is the U.S. dollar and the impact of Turkish currency fluctuations has been and will be recorded in income. This designation has not had and is not expected to have a material impact on the Company’s Consolidated Financial Statements.
34
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, Three Months Ended June 30,
2017 2016 Change 20222021Change
Net sales$573
 $561
 2.0
%Net sales$909 $794 14.5 %
Operating profit$161
 $162
 (1)%Operating profit$212 $212 — %
% of Net sales28.1% 28.9% (80)bps% of Net sales23.3 %26.7 %(340)bps
Net sales for Hill’s Pet Nutrition increased 2.0%14.5% in the thirdsecond quarter of 20172022 to $573,$909, driven by volume growth of 1.0%5.5% and positivenet selling price increases of 12.5%, partially offset by negative foreign exchange of 1.0%, while net selling prices were flat.3.5%. Organic sales in Hill’s Pet Nutrition increased 1.0%18.0% in the thirdsecond quarter of 2017. Volume gains in2022. Organic sales growth was led by the United States, Europe 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.Australia/New Zealand.


The increase in organic sales in the thirdsecond quarter of 2017 versus the third quarter of 20162022 was primarily due to an increase in organic sales growth in the Prescription Diet category, partially offset by a decline in organic sales in the Advanced Nutritionwellness and Naturalstherapeutic categories.


Operating profit in Hill’s Pet Nutrition decreased 1%was flat in the thirdsecond quarter of 2017 to $161, or 802022 at $212, while as a percentage of Net sales it decreased 340 bps to 28.1% of Net sales.23.3%. This decrease in Operating profit as a percentage of Net sales was primarily due to an increasea decrease in Gross profit (20(450 bps), which was more thanpartially offset by an increasea decrease in Selling, general and administrative expenses (80(150 bps), both as a percentage of Net sales. This increasedecrease in Gross profit was mainly drivenprimarily due to significantlyhigher raw and packaging material costs (900 bps), partially offset by higher pricing and cost savings from the Company’s funding-the-growth initiatives (200(80 bps), partially offset by higher costs (180 bps), which were primarily driven by higher raw and packaging material costs.. This increasedecrease in Selling, general and administrative expenses was due to increaseddecreased advertising investment (130(210 bps), partially offset by lowerhigher overhead expenses (50(60 bps), as higher logistics costs (150 bps) more than offset overhead efficiencies (90 bps).

On April 28, 2022, the Company acquired the manufacturing assets of Nutriamo S.r.l., a canned pet food manufacturer based in Italy, which gives the Company additional capacity for the Hill's wet pet nutrition diets, particularly in Europe. The impact of this acquisition on the Company’s Consolidated Financial Statements was not material.


Corporate
 Three Months Ended June 30,
 20222021Change
Operating profit (loss)$(135)$(91)48 %
Operating profit (loss) related to Corporate was $(135) in the second quarter of 2022 as compared to $(91) in the second quarter of 2021. In the second quarter of 2022, Corporate Operating profit (loss) included charges of $13 resulting from the 2022 Global Productivity Initiative. In the second quarter of 2021, Corporate Operating profit (loss) included a benefit related to a value-added tax matter in Brazil of $26.
35
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.

NineSix Months


Worldwide Net sales were $11,562$8,883 in the first ninesix months of 2017,2022, up 1.0%3.0% as compared to the first ninesix months of 2016, as volume declines of 0.5% were more than offset by2021 due to net selling price increases of 1.0%7.0%, partially offset by volume declines of 0.5%, and positivenegative foreign exchange of 0.5%3.5%. Organic sales increased 0.5%6.5% in the first ninesix months of 2017.2022.


Net sales in the Oral, Personal and Home Care product segment were $9,863$7,102 in the first ninesix months of 2017,2022, an increase of 1.0% as compared to the first ninesix months of 2016, as volume declines of 0.5% were more than offset by2021 due to net selling price increases of 1.0%6.0%, partially offset by volume declines of 1.5% and positivenegative foreign exchange of 0.5%3.5%. Organic sales in the Oral, Personal and Home Care product segment increased 0.5%4.5% in the first ninesix months of 2017.2022.


The increase in organic sales in the first ninesix months of 20172022 versus the first ninesix months of 20162021 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.and manual toothbrush categories. The decreaseincrease in Personal Care was primarily due to organic sales was attributable togrowth in the bar soap and underarm protection categories, partially offset by organic sales declines in the liquid hand soap, body wash and underarm protectionskin health categories. 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 the liquid cleaners and fabric softener and surface cleaners categories.


Net sales in the Hill’s Pet Nutrition segment were $1,699$1,781 in the first ninesix months of 2017,2022, an increase of 1.0% as compared to12.5% from the first ninesix months of 2016, as2021 due to volume declinesgrowth of 1.5% were more than offset by4.5% and net selling price increases of 2.0% and positive11.0%, partially offset by negative foreign exchange of 0.5%3.0%. Organic sales forin the Hill’s Pet Nutrition segment increased 0.5%15.5% in the first ninesix 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.2022.



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 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


Six Months Ended June 30,
20222021
Net sales  
Oral, Personal and Home Care  
North America$1,891 $1,835 
Latin America1,973 1,814 
Europe1,293 1,426 
Asia Pacific1,422 1,412 
Africa/Eurasia523 537 
Total Oral, Personal and Home Care7,102 7,024 
Pet Nutrition1,781 1,580 
Total Net sales$8,883 $8,604 
Operating profit
Oral, Personal and Home Care
North America$359 $402 
Latin America529 526 
Europe283 346 
Asia Pacific370 424 
Africa/Eurasia94 109 
Total Oral, Personal and Home Care1,635 1,807 
Pet Nutrition416 427 
Corporate(307)(234)
Total Operating profit$1,744 $2,000 

Within the Oral, Personal and Home Care product segment, North America Net sales decreasedincreased 3.0%, as a result driven by volume growth of volume declines of 1.0%2.0% and net selling price decreasesincreases of 2.0%1.0%, while foreign exchange was flat. Organic sales in North America decreasedincreased 3.0%. Latin America Net sales increased 7.5%,9.0% driven by volume growth of 2.0%, net selling price increases of 4.5%11.0%, partially offset by volume declines of 1.5% and positivenegative foreign exchange of 1.0%0.5%. Organic sales in Latin America increased 6.5%9.5%. Europe Net sales decreased 1.0%, as9.5% driven by volume growthdeclines of 1.0% was more than offset by net selling price decreases of 1.0%4.0% and negative foreign exchange of 1.0%. Organic sales in Europe were even with the first nine months of 2016. Asia Pacific Net sales decreased 2.5%8.0%, as a result of volume declines of 1.0%, net selling price decreases of 0.5% and negative foreign exchange of 1.0%. Organic sales in Asia Pacific decreased 1.5%. Africa/Eurasia Net sales increased 2.5%, as volume declines of 6.0% were more thanpartially offset by net selling price increases of 4.5%2.5%. Organic sales in Europe decreased 1.5%. Asia Pacific Net sales increased 0.5% driven by net selling price increases of 5.0%, partially offset by volume declines of 0.5% and positivenegative foreign exchange of 4.0%. Organic sales in Asia Pacific increased 4.5%. Africa/Eurasia Net sales decreased 1.5%3.0% driven by volume declines of 11.5% and negative foreign exchange of 9.5%, partially offset by net selling price increases of 18.0%. Organic sales in Africa/Eurasia increased 6.5%.


In the first ninesix months of 2017,2022, Operating profit (loss) related to Corporate was ($642)$(307) as compared to ($431)$(234) in the first ninesix months of 2016. In the first nine months of 2017,2021. Corporate Operating profit (loss) for the six months ended June 30, 2022 included charges of $246 resulting from the 2022 Global Growth and Efficiency Program. In the first nine monthsProductivity Initiative of 2016,$76. Corporate Operating profit (loss) for the first six months of 2021 included chargesa benefit related to a value-added tax matter in Brazil of $156 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.$26.





37
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 increaseddecreased to $6,952$5,126 in the first ninesix months of 20172022 from $6,876$5,193 in the first ninesix months of 2016.2021, reflecting a decrease of $231 resulting from lower Gross profit in both periods included charges resulting from the Global Growthmargin and Efficiency Program. Excluding these charges in both periods, Gross profit increased to $7,003 in the first nine months of 2017 from $6,907 in the first nine months of 2016. This increase in Gross profit reflects an increase of $52$164 resulting from higher Net sales and an increase of $44 resulting from higher Gross profit margin in the first nine months of 2017.sales.



Worldwide Gross profit margin was 60.1%decreased to 57.7% in the first ninesix months of 2017 as compared to 59.9%2022 from 60.4% in the first ninesix months of 2016. Excluding the charges resulting from the Global Growth2021, due to higher raw and Efficiency Program in both periods, Gross profit margin increasedpackaging material costs (700 bps), partially offset by 40 bps to 60.6% in the first nine months of 2017, from 60.2% in the first nine months of 2016, driven byhigher pricing (260 bps) and cost savings from the Company’s funding-the-growth initiatives (170(180 bps), and higher pricing (40 bps), which were partially offset by higher costs (170 bps), driven by higher raw and packaging material costs..
Six Months Ended June 30,
20222021
Gross profit$5,126 $5,193 
Six Months Ended June 30,
20222021Basis Point Change
Gross profit margin57.7 %60.4 %(270)
38
  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,
  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%4% to $4,124$3,298 in the first ninesix months of 20172022 from $3,996$3,173 in the first ninesix months of 2016.2021. Selling, general and administrative expenses in both periodsthe first six months of 2022 included charges resulting from the 2022 Global Growth and Efficiency Program.Productivity Initiative. Excluding these charges resulting from the 2022 Global Productivity Initiative in the first six months of 2022, Selling, general and administrative expenses increased to $4,064$3,295 in the first ninesix months of 20172022 from $3,947$3,173 in the first ninesix months of 2016,2021, reflecting increased advertising investment of $73 and higher overhead expenses of $44.$144 and decreased advertising investment of $22.


Selling, general and administrative expenses as a percentage of Net sales increased to 35.7%37.1% in the first ninesix months of 20172022 from 34.8%36.9% in the first ninesix months of 2016. Excluding charges resulting from2021. This increase was driven by higher logistics costs (150 bps) which impacted all divisions, partially offset by overhead efficiencies (60 bps) and decreased advertising investment (70 bps). In the Global Growth and Efficiency Program, Selling, general and administrative expensesfirst six months of 2022, advertising investment decreased 2.1% in absolute terms to $1,007 as compared with $1,029 in the first six months of 2021, or as a percentage of Net sales were 35.1%to 11.3% from 12.0% in the first ninesix months of 2017, an increase of 70 bps as compared to the first nine months of 2016. This increase was a result of increased advertising investment (50 bps) and higher overhead expenses (20 bps), both as a percentage of Net sales. In the first nine months of 2017, advertising investment increased 6% to $1,204, as compared with $1,131 in the first nine months of 2016, while as a percentage of Net sales, it increased to 10.4% in the first nine months of 2017 from 9.9% in the first nine months of 2016.2021.
Six Months Ended June 30,
20222021
Selling, general and administrative expenses, GAAP$3,298 $3,173 
2022 Global Productivity Initiative(3)— 
Selling, general and administrative expenses3,295 3,173 
  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
Six Months Ended June 30,
20222021Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales37.1 %36.9 %20

  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$84 and $20 in the first ninesix 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 Growth2022 and Efficiency Program.2021, respectively. Other (income) expense, net in the first ninesix months of 2016 also2022 included charges resulting from the 2022 Global Productivity Initiative. Other (income) expense, net in the first six months of 2021 included a gain on the sale of landbenefit related to a value-added tax matter in Mexico and a charge for a previously disclosed litigation matter.Brazil. Excluding these items in both periods as applicable, Other (income) expense, net was $28$11 and $46 in the first ninesix months of 2017, as compared to $13 in the first nine months of 2016.2022 and 2021, respectively.

Six Months Ended June 30,
20222021
Other (income) expense, net, GAAP$84 $20 
2022 Global Productivity Initiative(73)— 
Value-added tax matter in Brazil— 26 
Other (income) expense, net, non-GAAP$11 $46 
39
  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%13% to $2,665$1,744 in the first ninesix months of 20172022 from $2,882$2,000 in the first ninesix months of 2016.2021. Operating profit in both periodsthe first six months of 2022 included charges resulting from the 2022 Global Growth and Efficiency Program.Productivity Initiative. Operating profit in the first ninesix months of 2016 also2021 included a gain on the sale of landbenefit related to a value-added tax matter in Mexico and a charge for a previously disclosed litigation matter.Brazil. Excluding these items in both periods as applicable, Operating profit for the first nine months of 2017 decreased 1% to $2,911 from $2,947$1,820 in the first ninesix months of 2016, primarily2022 from $1,974 in the first six months of 2021, due to a decrease in Gross profit and an increase in Selling, general and administrative expenses, partially offset by higher Gross profit.a decrease in Other (income) expense, net.


Operating profit margin was 23.0%19.6% in the first ninesix months of 2017,2022, a decrease of 210360 bps compared to 25.1%23.2% in the first ninesix months of 2016.2021. Excluding the items described above in both periods as applicable, Operating profit margin was 25.2%,20.5% in the first six months of 2022, a decrease of 50240 bps from 25.7%compared to 22.9% in the first ninesix months of 2016. This decrease was2021, primarily due to a decrease in Gross profit (270 bps) and an increase in Selling, general and administrative expenses (70(20 bps), partially offset by an increasea decrease in Gross profit margin (40Other (income) expense, net (50 bps), bothall as a percentage of Net sales. This increase

Six Months Ended June 30,
20222021% Change
Operating profit, GAAP$1,744 $2,000 (13)%
2022 Global Productivity Initiative76 — 
Value-added tax matter in Brazil— (26)
Operating profit, non-GAAP$1,820 $1,974 (8)%
Six Months Ended June 30,
20222021Basis Point Change
Operating profit margin, GAAP19.6 %23.2 %(360)
2022 Global Productivity Initiative0.9 — 
Value-added tax matter in Brazil— (0.3)
Operating profit margin, non-GAAP20.5 %22.9 %(240)

Non-Service Related Postretirement Costs

Non-service related postretirement costs were $50 in Selling, generalthe first six months of 2022 as compared to $36 in the first six months of 2021. Non-service related postretirement costs in the first six months of 2022 included charges resulting from the 2022 Global Productivity Initiative. Excluding charges resulting from the 2022 Global Productivity Initiative in the first six months of 2022, Non-service related postretirement costs were $36 in the first six months of 2022 and administrative expenses was primarily due to increased advertising investment.2021.

Six Months Ended June 30,
20222021
Non-service related postretirement costs, GAAP$50 $36 
2022 Global Productivity Initiative(14)— 
Non-service related postretirement costs, non-GAAP$36 $36 
  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)


Interest (Income) Expense, Net


Interest (income) expense, net was $74$58 in the first ninesix months of 20172022 as compared to $78$54 in the first ninesix months of 2016,2021, primarily due to lower interest expense as a result of lower average debt balances and higher interest income on investments held outside the United States.rates.


40
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%24.0% for the thirdsecond quarter of 20172022 as compared to 28.7%22.2% for the thirdsecond quarter of 2016.2021.

The effective income tax rate was 24.1% for the first six months of 2022 as compared to 23.1% for the first six months of 2021. As reflected in the table below, the non-GAAP effective income tax rate was 28.1%23.9% for the quarter ended September 30, 2017,first six months of 2022, as compared to 30.1%23.1% 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.2021.


The effective income tax rate was 29.7% for the first nine months of 2017 as compared to 30.2% for the first nine months of 2016. As reflected in the table below, the non-GAAP effective income tax rate was 29.3% for the first nine months ended September 30, 2017, as compared to 31.0% 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.

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%23.3% in 2021. The increase in the third quarterCompany’s full year effective tax rate before discrete period items is primarily driven by the impact of 2016.recently finalized U.S. tax regulations, which place greater restrictions on foreign taxes that are creditable against U.S. taxes on foreign-sourced income.
Three Months Ended June 30,
20222021
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$841 $202 24.0 %$953 $212 22.2 %
2022 Global Productivity Initiative8 2 — %— — — 
Value-added tax matter in Brazil— — — %(26)(6)— 
Non-GAAP$849 $204 24.0 %$927 $206 22.2 %
  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 %

Six Months Ended June 30,
20222021
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$1,636 $394 24.1 %$1,910 $441 23.1 %
2022 Global Productivity Initiative90 19 (0.2)— — — 
Value-added tax matter in Brazil— — — (26)(6)— 
Non-GAAP$1,726 $413 23.9 %1,884 435 23.1 %
  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.



41
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 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. As a result, the Company recorded a tax benefit of $17, including interest, in the quarter ended September 30, 2016. The tax benefit of deductions related to this tax position taken for the years 2006 through 2007 and 2012 through 2014 totals approximately $15 at current exchange rates. These deductions are currently being challenged by the tax authorities either in the lower courts or at the administrative level and, if resolved in the Company’s favor, will result in the Company recording additional tax benefits, including interest.
COLGATE-PALMOLIVE COMPANY
Management’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 ninesix months of 20172022 decreased to $1,701$1,162 from $1,835$1,384 in the comparable 20162021 period. Earnings per common share on a diluted basis decreased to $1.91 per share$1.38 in the first six months of 2022 from $2.04 per share$1.63 in the comparable 20162021 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 ninesix months of 2016 also2022 included charges resulting from the 2022 Global Productivity Initiative. Net income attributable to Colgate-Palmolive Company in the comparable 2021 period included a gain on the sale of landbenefit related to a value-added tax matter in Mexico, benefits from previously disclosed tax matters and a charge for a previously disclosed litigation matter.Brazil.


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 ninesix months of 20172022 decreased 10% to $1,232 from $1,855$1,364 in the first ninesix months of 20162021, and Earnings per common share on a diluted basis increased 3%decreased 9% to $2.12$1.46 in the first ninesix months of 20172022 from $2.06$1.60 in the first ninesix months of 2016.2021.

Six Months Ended June 30, 2022
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsLess: Income Attributable to Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$1,636 $394 $1,242 $80 $1,162 $1.38 
2022 Global Productivity Initiative90 19 71 1 70 0.08 
Non-GAAP$1,726 $413 $1,313 $81 $1,232 $1.46 
Nine Months Ended September 30, 2017Six Months Ended June 30, 2021
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$1,910 $441 $1,469 $1,384 $1.63 
Global Growth and Efficiency Program246
 61
 185
 185
 0.21
Value-added tax matter in BrazilValue-added tax matter in Brazil(26)(6)(20)(20)(0.03)
Non-GAAP$2,837
 $831
 $2,006
 $1,886
 $2.12
Non-GAAP$1,884 $435 $1,449 $1,364 $1.60 

 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.

42
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,January 27, 2022, the Board approved the reinvestment of the funds from the sale of2022 Global Productivity Initiative. The program is intended to reallocate resources towards the Company’s laundry detergent businessstrategic priorities and faster growth businesses, drive efficiencies in the South PacificCompany’s operations and streamline the Company’s supply chain 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.reduce structural costs.


Implementation of the 2022 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 continueProductivity Initiative, which is expected 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 ordersubstantially completed by mid-year 2023, is estimated 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). Cumulativecumulative 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$200 to $1,885$240 ($1,280170 to $1,380$200 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, which 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,following: employee-related costs, including severance, pension and other termination benefits (50%(75%); asset-related costs, primarily Incremental Depreciationaccelerated depreciation and Asset Impairments (10%asset write-downs (15%); and Otherother charges (10%), which include contract termination costs, consisting primarily of related implementationimplementation-related charges resulting directly from exit activities (20%) and the implementation of new strategies (20%). Over the course of the Global Growth and Efficiency Program, itstrategies. It is currently estimated that approximately 80% to 90% of the charges will result in cash expenditures. Annualized pretax savings are projected to be in the range of $90 to $110 ($70 to $85 aftertax), once all projects are approved and implemented.


The Company expectsIt is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15%), Europe (20%(5%), Latin America (5%(10%), Europe (45%), Asia Pacific (5%), Africa/Eurasia (5%(15%), Hill’s Pet Nutrition (10%(5%) and Corporate (40%(15%), which includes substantially all of.

For 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 positionsthree months ended June 30, 2022, charges resulting from the Company’s global employee workforce.2022 Global Productivity Initiative, were $8 pretax ($5 aftertax).


For the three and ninesix months ended SeptemberJune 30, 2017 and 2016, restructuring and related implementation2022, charges resulting from the 2022 Global Productivity Initiative are reflected in the Condensed Consolidated Statements of Incomeincome statement 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
Six Months Ended June 30,
2022
Selling, general and administrative expenses3 
Other (income) expense, net73 
Non-service related postretirement costs14 
Total 2022 Global Productivity Initiative charges, pretax$90 
Total 2022 Global Productivity Initiative charges, aftertax$70 


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 2022 Global Growth and Efficiency ProgramProductivity Initiative relate to initiatives undertaken by the following reportable operating segments:
Six Months Ended June 30,
2022
North America10 %
Latin America17 %
Europe16 %
Asia Pacific10 %
Africa/Eurasia11 %
Hill’s Pet Nutrition10 %
Corporate26 %
Total100 %

43
 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’sManagement’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 summarizetable summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals:

Six Months Ended June 30,
 Three Months Ended September 30, 2017 Employee-Related
Costs 		Incremental
Depreciation 		Asset
Impairments		OtherTotal
 
Employee-Related
Costs
 
 
Incremental
Depreciation
 
 
Asset
Impairments 
 
 
Other 
 
 
Total 
 
Balance at June 30, 2017 $138
 $—
 $—
 $116
 $254
Balance at December 31, 2021Balance at December 31, 2021$— $— $— $— $— 
Charges 21
 2
 —
 35
 58
Charges88 — — 2 90 
Cash payments (16) —
 —
 (42) (58)
Cash PaymentsCash Payments(13)— — (1)(14)
Charges against assets (15) (2) —
 —
 (17)Charges against assets(14)— — — (14)
Foreign exchange —
 —
 —
 —
 —
Foreign exchange(1)— — — (1)
Balance at September 30, 2017 $128
 $—
 $—
 $109
 $237
Balance at June 30, 2022Balance at June 30, 2022$60 $— $— $1 $61 


  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, written severance policies, 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 $17of $14 for the three and ninesix months ended SeptemberJune 30, 2017, respectively,2022, 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 liabilities.
44
COLGATE-PALMOLIVE COMPANY
Management’s Discussion and other retiree benefit liabilities (see Note 9, Retirement PlansAnalysis of Financial
Condition and Other Retiree Benefits to the Condensed Consolidated Financial Statements).Results of Operations

(Dollars in Millions Except Per Share Amounts)
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 ninesix months ended SeptemberJune 30, 20172022 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, theas applicable, charges resulting from the 2022 Global Growth and Efficiency Program and, as applicable, a gain on sale of land in Mexico, benefits from previously disclosed tax mattersProductivity Initiative and a charge forbenefit related to a previously disclosed litigationvalue-added tax matter (non-GAAP).in Brazil. 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 acquisitions, divestitures and certain other 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 ninesix months ended SeptemberJune 30, 20172022 and 20162021 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 ninesix months ended SeptemberJune 30, 2017:2022:

Three Months Ended June 30, 2022Net Sales Growth
(GAAP)		Foreign
Exchange
Impact		Acquisitions and Divestments
Impact		Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care    
North America6.0%—%—%6.0%
Latin America12.5%—%—%12.5%
Europe(10.0)%(10.5)%—%0.5%
Asia Pacific3.5%(5.5)%—%9.0%
Africa/Eurasia(3.5)%(8.5)%—%5.0%
Total Oral, Personal and Home Care3.0%(4.0)%—%7.0%
Pet Nutrition14.5%(3.5)%—%18.0%
Total Company5.5%(3.5)%—%9.0%

45
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)



Six Months Ended June 30, 2022Net Sales Growth
(GAAP)		Foreign
Exchange
Impact		Acquisitions and Divestments
Impact		Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care    
North America3.0%—%—%3.0%
Latin America9.0%(0.5)%—%9.5%
Europe(9.5)%(8.0)%—%(1.5)%
Asia Pacific0.5%(4.0)%—%4.5%
Africa/Eurasia(3.0)%(9.5)%—%6.5%
Total Oral, Personal and Home Care1.0%(3.5)%—%4.5%
Pet Nutrition12.5%(3.0)%—%15.5%
Total Company3.0%(3.5)%—%6.5%

46
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 Growthshare repurchases and Efficiency Program and stock repurchases)acquisitions). 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%25% to $2,295$914 in the first ninesix months of 2017,2022, compared with $2,317$1,225 in the comparable period of 2016,2021, primarily due to higher levels of inventory (driven by increased levels to mitigate the timingrisk of income tax paymentssupply chain and logistics disruptions and higher voluntary contributionsraw and packaging material costs) and lower net income. The Company’s working capital was (1%) as a percentage of Net sales as of June 30, 2022 as compared to an employee postretirement plan.

(3.2%) as of June 30, 2021. 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$482 of cash in the first ninesix months of 2017,2022, compared with $445$289 in the comparable period of 2016. Purchases of marketable securities and investments increased2021. Investing activities in the first ninesix months of 20172022 included the Company’s acquisition of the manufacturing assets of Nutriamo S.r.l.

Capital spending was $300 in the first six months of 2022 compared to $301 from $271$237 in the comparable period of 2016. Proceeds from the sale2021. Capital expenditures for 2022 are expected to be approximately 4.0% to 4.5% of marketable securities and investments decreased in the first nine months of 2017 to $149 from $158 in the comparable period of 2016.

Capital spending decreased in the first nine months of 2017 to $382 from $392 in the comparable period of 2016.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$385 of cash during the first ninesix months of 2017,2022, compared with $1,547$884 used in the comparable period of 2016, reflecting higher purchases2021. This primarily reflects a net increase in commercial paper borrowing in the first six months of treasury shares2022 compared with the comparable period of 2021 and higher net principal payments on debt.proceeds from the exercise of stock options.


Long-term debt, including the current portion, was even at $6,520increased to $7,970 as of SeptemberJune 30, 2017 and December 31, 2016 and total debt decreased to $6,527 as of September 30, 20172022, as compared to $6,533$7,206 as of December 31, 2016.2021, and total debt was $7,986 as of June 30, 2022, as compared to $7,245 as of December 31, 2021. The Company’s 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 2017 were used for general corporate purposes, which included the retirement of commercial paper borrowings.


Domestic and foreign commercial paper outstanding was $383$2,143 and $0$1,808 as of SeptemberJune 30, 20172022 and 2016,2021, 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 ninesix months of 20172022 and 20162021 were $1,649$1,985 and $1,194,$2,029, 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 (including under the facilities discussed below) or by issuing long-term debt pursuant to an effective shelf registration statement. In August 2021, the Company entered into a new $3,000 five-year revolving credit facility with a syndicate of banks for a five-year term expiring August 2026, which replaced, on substantially similar terms, the Company’s $2,650 revolving credit facility that expireswas scheduled to expire in November 2020.2024. Commitment fees related to the credit facility were 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 to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information about the Company’s long-term debt and credit facilities.


In the first quarter of 2017,2022, the Company increased the annualizedquarterly common stock dividend by 3% to $1.60$0.47 per share from $0.45 per share previously, effective in the second quarter of 2017.2022.


Cash and cash equivalents increased $65$26 during the first ninesix months of 20172022 to $1,380$858 at SeptemberJune 30, 2017,2022, compared to $1,315$832 at December 31, 2016, most2021, the majority of which ($1,341826 and $1,273,$784 respectively) werewas held by the Company’s foreign subsidiaries. The Company regularly assesses its cash needs and the available sources to fund these needs and, as part of this assessment, the Company determines 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 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.

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, 2016.2021.
47
COLGATE-PALMOLIVE COMPANY
Management’sManagement’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 or certain 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 use to provide data are reliable, but we have not verified the accuracy or completeness of the data or any assumptions underlying the data. In addition, market share information calculated by the Company may be different from market share information calculated 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,levels, earnings per share growth,levels, financial goals, the impact of foreign exchange volatility, the impact of COVID-19, the impact of the war in Ukraine, cost-reduction plans, including the 2022 Global Growth and Efficiency Program,Productivity Initiative, tax rates, the need to repatriate undistributed earnings of foreign subsidiaries, new product introductions and digital capabilities, 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, ability to manage disruptions in our global supply chain and/or key office facilities, ability to manage the availability and cost of raw and packaging materials and logistics costs, 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 alternative retail channels, the growth of eCommerce and the rapidly changing retail landscape (as consumers increasingly shop online), the ability to develop innovative new sales channels, including e-commerce,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 address the effects of climate change and achieve our sustainability and social impact 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 integrate DE&I initiatives across our organization, the uncertainty of the outcome of legal proceedings, whether or not the Company believes they have merit.merit, and the ability to address uncertain or unfavorable global economic conditions, including inflation, disruptions in the credit markets and tax matters. 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, 20162021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and subsequent Quarterly Reports on Form 10-Q)filings with the SEC).


48
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, 2016.2021.



49

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 SeptemberJune 30, 20172022 (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.






50


COLGATE-PALMOLIVE COMPANY


PART II.OTHER INFORMATION


Item 1.Legal Proceedings


For information regarding legal matters, please refer to Note 11,9, 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 related to the War in Ukraine included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, there have been no material changes from the risk factors disclosed in “Risk Factors” in Part 1, Item 1A. Risk Factors1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021.








51

COLGATE-PALMOLIVE COMPANY


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


On February 19, 2015,March 10, 2022, 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“2022 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 SeptemberJune 30, 2017:2022:
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)
April 1 through 30, 20221,191,907 $79.80 1,191,000 $4,768 
May 1 through 31, 20221,822,395 $76.83 1,819,200 $4,628 
June 1 through 30, 20221,804,593 $77.35 1,803,600 $4,489 
Total4,818,895 $77.76 4,813,800  

(1) Includes share repurchases under the 2022 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 5,095 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 June 30, 2022.

52
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.
COLGATE-PALMOLIVE COMPANY


Item 3.Defaults Upon Senior Securities


None.




Item 4.Mine Safety Disclosures


Not Applicable.




Item 5.Other Information


None.

53




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 SeptemberJune 30, 2017,2022, 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).





__________

* Indicates a management contract or compensatory plan or arrangement.


** Filed herewith.

*** Furnished herewith.

54

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, 2017July 29, 2022/s/ Ian CookNoel R. Wallace
Ian CookNoel R. Wallace
Chairman of the Board, President and

Chief Executive Officer
Principal Financial Officer:
October 27, 2017July 29, 2022/s/ DennisStanley J. HickeySutula III
DennisStanley J. HickeySutula III
Chief Financial Officer
Principal Accounting Officer:
October 27, 2017July 29, 2022/s/ Henning I. JakobsenGregory O. Malcolm
Henning I. JakobsenGregory O. Malcolm
Vice President and Corporate Controller


5855