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 March 31, ~~2018~~2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from________ to________ .

Commission File Number: 1-644

COLGATE-PALMOLIVE COMPANY

(Exact name of registrant as specified in its charter)



DELAWARE	13-1815595
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



300 Park Avenue, New York, New York	10022
(Address of principal executive offices)	(Zip Code)

(212) 310-2000

(Registrant’s telephone number, including area code)

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 ☐~~(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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:



Class	Shares Outstanding	Date
Common stock, $1.00 par value	~~872,320,741~~858,514,915	March 31, ~~2018~~2019

PART I. FINANCIAL INFORMATION

COLGATE-PALMOLIVE COMPANY

Condensed Consolidated Statements of Income

(Dollars in Millions Except Per Share Amounts)

(Unaudited)


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2018		2017 (A)		2019		2018
Net sales	$	4,002	$	3,762	$	3,884	$	4,002
Cost of sales	1,594		1,493		1,597		1,594
Gross profit	2,408		2,269		2,287		2,408
Selling, general and administrative expenses	1,392		1,336		1,365		1,392
Other (income) expense, net	33		21		43		33
Operating profit	983		912		879		983
Non-service related postretirement costs	24		27		25		24
Interest (income) expense, net	35		23		40		35
Income before income taxes	924		862		814		924
Provision for income taxes	246		251		214		246
Net income including noncontrolling interests	678		611		600		678
Less: Net income attributable to noncontrolling interests	44		41		40		44
Net income attributable to Colgate-Palmolive Company	$	634	$	570	$	560	$	634

Earnings per common share, basic	$	0.72	$	0.64	$	0.65	$	0.72

Earnings per common share, diluted	$	0.72	$	0.64	$	0.65	$	0.72

Dividends declared per common share *	$	0.82	$	0.79

* Two dividends were declared in the first quarter of 2018 and 2017.

(A) Prior year amounts have been reclassified to conform to the current year presentation as a result of the adoption of Accounting Standards Update (“ASU”) No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” For further information regarding the impact of the reclassification, see Note 1,~~Basis of Presentation, Note 3, Recent Accounting Pronouncements and Updated Accounting Policies and Note 13, Segment Information to the Condensed Consolidated Financial Statements.~~

See Notes to Condensed Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Condensed Consolidated Statements of Comprehensive Income

(Dollars in Millions)

(Unaudited)


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2018			2017			2019			2018
Net income including noncontrolling interests	$	678		$	611		$	600		$	678
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	108			132			26			108
Retirement plans and other retiree benefit adjustments	14			13			12			14
Gains (losses) on cash flow hedges	(1		)	(10		)	(5		)	(1		)
Total Other comprehensive income (loss), net of tax	121			135			33			121
Total Comprehensive income including noncontrolling interests	799			746			633			799
Less: Net income attributable to noncontrolling interests	44			41			40			44
Less: Cumulative translation adjustments attributable to noncontrolling interests	3			7			5			3
Total Comprehensive income attributable to noncontrolling interests	47			48			45			47
Total Comprehensive income attributable to Colgate-Palmolive Company	$	752		$	698		$	588		$	752

See Notes to Condensed Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Condensed Consolidated Balance Sheets

(Dollars in Millions)

(Unaudited)


	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Assets
Current Assets
Cash and cash equivalents	$	851		$	1,535		$	843		$	726
Receivables (net of allowances of $85 and $77, respectively)	1,644			1,480
Receivables (net of allowances of $84 and $82, respectively)							1,547			1,400
Inventories	1,312			1,221			1,278			1,250
Other current assets	485			403			465			417
Total current assets	4,292			4,639			4,133			3,793
Property, plant and equipment:
Cost	8,648			8,460			8,398			8,336
Less: Accumulated depreciation	(4,561		)	(4,388		)	(4,577		)	(4,455		)
	4,087			4,072			3,821			3,881
Goodwill	2,572			2,218			2,517			2,530
Other intangible assets, net	1,782			1,341			1,612			1,637
Deferred income taxes	187			188			164			152
Other assets	224			218			636			168
Total assets	$	13,144		$	12,676		$	12,883		$	12,161
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and loans payable	$	159		$	11		$	5		$	12
Current portion of long-term debt	—			—			1			—
Accounts payable	1,209			1,212			1,215			1,222
Accrued income taxes	432			354			400			411
Other accruals	2,180			1,831			2,244			1,696
Total current liabilities	3,980			3,408			3,865			3,341
Long-term debt	6,550			6,566			6,655			6,354
Deferred income taxes	249			204			306			235
Other liabilities	2,264			2,255			2,267			2,034
Total liabilities	13,043			12,433			13,093			11,964
Shareholders’ Equity
Common stock	1,466			1,466			1,466			1,466
Additional paid-in capital	2,047			1,984			2,241			2,204
Retained earnings	20,581			20,531			21,436			21,615
Accumulated other comprehensive income (loss)	(3,900		)	(3,855		)	(4,160		)	(4,188		)
Unearned compensation	(2		)	(5		)	(3		)	(3		)
Treasury stock, at cost	(20,441		)	(20,181		)	(21,532		)	(21,196		)
Total Colgate-Palmolive Company shareholders’ equity	(249		)	(60		)	(552		)	(102		)
Noncontrolling interests	350			303			342			299
Total equity	101			243			(210		)	197
Total liabilities and equity	$	13,144		$	12,676		$	12,883		$	12,161

See Notes to Condensed Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Condensed Consolidated Statements of Cash Flows

(Dollars in Millions)

(Unaudited)


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2018			2017			2019			2018
Operating Activities
Net income including noncontrolling interests	$	678		$	611		$	600		$	678
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:
Depreciation and amortization	129			109			128			129
Restructuring and termination benefits, net of cash	(25		)	(9		)	5			(25		)
Stock-based compensation expense	28			35			17			28
Deferred income taxes	13			(51		)	53			13
Voluntary benefit plan contributions	—			(57		)	(102		)	—
Cash effects of changes in:
Receivables	(211		)	(52		)	(145		)	(211		)
Inventories	(33		)	9			(32		)	(33		)
Accounts payable and other accruals	33			98			44			33
Other non-current assets and liabilities	4			(2		)	37			4
Net cash provided by operations	616			691			605			616
Investing Activities
Capital expenditures	(118		)	(121		)	(71		)	(118		)
Purchases of marketable securities and investments	(38		)	(85		)	(27		)	(38		)
Proceeds from sale of marketable securities and investments	—			48
Payment for acquisitions, net of cash acquired	(727		)	—			—			(727		)
Other	2			—			—			2
Net cash used in investing activities	(881		)	(158		)	(98		)	(881		)
Financing Activities
Principal payments on debt	(2,079		)	(805		)	(1,774		)	(2,079		)
Proceeds from issuance of debt	2,226			738			2,076			2,226
Dividends paid	(352		)	(345		)	(366		)	(352		)
Purchases of treasury shares	(351		)	(333		)	(399		)	(351		)
Proceeds from exercise of stock options	119			225			71			119
Net cash used in financing activities	(437		)	(520		)	(392		)	(437		)
Effect of exchange rate changes on Cash and cash equivalents	18			19			2			18
Net increase (decrease) in Cash and cash equivalents	(684		)	32			117			(684		)
Cash and cash equivalents at beginning of the period	1,535			1,315			726			1,535
Cash and cash equivalents at end of the period	$	851		$	1,347		$	843		$	851
Supplemental Cash Flow Information
Income taxes paid	$	163		$	186		$	149		$	163

See Notes to Condensed Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Dollars in Millions)

(Unaudited)



Three Months Ended March 31, 2019
	Colgate-Palmolive Company Shareholders’ Equity																	Noncontrolling Interests
	Common Stock		Additional Paid-in Capital			Unearned Compensation			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)⁽¹⁾
Balance, December 31, 2018	$	1,466	$	2,204		$	(3	)	$	(21,196	)	$	21,615		$	(4,188	)	$	299
Net income												560						40
Other comprehensive income (loss), net of tax															28			5
Dividends ($0.85/per share)*												(734		)				(2		)
Stock-based compensation expense			17
Shares issued for stock options			33						49
Shares issued for restricted stock units			(13		)				13
Treasury stock acquired									(399		)
Other									1			(5		)
Balance, March 31, 2019	$	1,466	$	2,241		$	(3	)	$	(21,532	)	$	21,436		$	(4,160	)	$	342



Three Months Ended March 31, 2018
	Colgate-Palmolive Company Shareholders’ Equity																		Noncontrolling Interests
	Common Stock		Additional Paid-in Capital			Unearned Compensation			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)⁽¹⁾
Balance, December 31, 2017	$	1,466	$	1,984		$	(5	)	$	(20,181	)	$	20,531		$	(3,855	)		$	303
Net income												634							44
Other comprehensive income (loss), net of tax															118				3
Dividends ($0.82/per share)*												(718		)
Stock-based compensation expense			28
Shares issued for stock options			48						77
Shares issued for restricted stock units			(12		)				12
Treasury stock acquired									(351		)
Other			(1		)	3			2			134			(163		)	(2)
Balance, March 31, 2018	$	1,466	$	2,047		$	(2	)	$	(20,441	)	$	20,581		$	(3,900	)		$	350

⁽¹⁾Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,134 at March 31, 2019 ($2,832 at March 31, 2018) and $3,155 at December 31, 2018 ($2,927 at December 31, 2017), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,026 at March 31, 2019 ($1,062 at March 31, 2018) and $1,038 at December 31, 2018 ($923 at December 31, 2017), respectively.

⁽²⁾As a result of the early adoption of ASU 2018-02, the Company reclassified the stranded tax effects in Accumulated other comprehensive income (loss) resulting from the Tax Cuts and Jobs Act (the “TCJA” or “U.S. tax reform”) to Retained earnings. See Note 2, Summary of Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for additional information.

* Two dividends were declared in each of the first quarters of 2019 and 2018.

See Notes to Condensed Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)


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.

The Company adopted Accounting Standards Update (“ASU”) No. 2017-07, “Compensation–Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” on January 1, 2018. For further information regarding the impact of the adoption of ASU No. 2017-07, refer to Note 3, ~~Recent Accounting Pronouncements and Updated Accounting Policies~~ ~~and Note 13,~~ ~~Segment Information~~.

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, ~~2017~~2018, filed with the Securities and Exchange Commission (the “SEC”).


2.	Use of Estimates

Provisions for certain expenses, including income taxes, 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 ~~and Updated Accounting Policies~~

~~Recent Accounting Pronouncements~~

In ~~February~~October 2018, the Financial Accounting Standards Board (“FASB”) issued ~~ASU 2018-02, “Income Statement - Reporting Comprehensive Income~~Accounting Standards Update (“ASU”) No. 2018-16, “Derivatives and Hedging (Topic ~~220)~~815): ~~Reclassification~~Inclusion of ~~Certain Tax Effects from Accumulated Other Comprehensive Income”~~the Secured Overnight Financing Rate (“~~ASU 2018-02”~~SOFR”)~~, which~~ Overnight Index Swap (“OIS”) Rate as Benchmark Interest Rate for Hedge Accounting Purposes.” The new guidance permits the ~~reclassification~~use of ~~stranded tax effects resulting from~~ the ~~Tax Cuts~~OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815. The new guidance was effective for the Company on a prospective basis beginning on January 1, 2019, concurrently with the adoption of ASU 2017-12 and ~~Jobs Act (the “TCJA”~~did not have an impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or ~~“U.S. tax reform”) from Accumulated~~obtain internal-use software. This new guidance is effective for the Company on a prospective or retrospective basis beginning on January 1, 2020, with early adoption permitted. The Company elected to adopt this guidance early, beginning on January 1, 2019 on a prospective basis. The new guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” This new guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and requires certain additional disclosures. This new guidance is effective for the Company on a retrospective basis beginning in the year ending December 31, 2020, with early adoption permitted. While the Company is currently assessing the impact of the new guidance, it 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)

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income ~~(loss)~~for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to ~~Retained earnings.~~develop Level 3 fair value measurements. This new guidance is effective for the Company beginning on January 1, ~~2019,~~2020, with early adoption ~~permitted, and must~~permitted. Certain disclosure requirements in the new guidance will need to be applied ~~either in~~on a retrospective basis and others on a prospective basis. While the ~~period of adoption or retrospectively to periods in which~~Company is currently assessing the ~~effects~~impact of the ~~TCJA are recognized. The Company elected to adopt this~~ new guidance, ~~early, beginning~~it is not expected to have a material impact on ~~January 1, 2018, and reclassified $163 in~~ the ~~current period.~~Company’s Consolidated Financial Statements.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” 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 eliminates the requirement to separately measure and present hedge ineffectiveness and aligns the presentation of hedge gains and losses with the underlying hedge item. The new guidance also simplifies the hedge documentation and hedge effectiveness assessment requirements. The ~~new guidance is effective for the Company beginning on January 1, 2019, with early adoption permitted. The~~ amended presentation and disclosure requirements must be adopted on a prospective basis, while any amendments to cash flow and net investment hedge relationships that exist on the date of adoption must be applied on a “modified retrospective” basis, meaning a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the year of adoption. ~~While~~The new guidance was effective for the Company ~~is currently assessing the impact of the new standard, this new guidance is~~on January 1, 2019 and did not ~~expected to~~ have a material impact on the Company’s Consolidated Financial Statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting,” clarifying when a change to the terms or conditions of a stock-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The new guidance was effective for the Company on a prospective basis beginning on January 1, 2018 and did not impact the Company’s Consolidated Financial Statements as it is not the Company’s practice to change either the terms or conditions of stock-based payment awards once they are granted.

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

In March 2017, the FASB issued ASU No. 2017-07, “Compensation–Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” changing the presentation of the net periodic benefit cost on the Statement of Income and limiting the amount of net periodic benefit cost eligible for capitalization to assets. The new guidance permits only the service cost component of net periodic benefit cost to be eligible for capitalization. The new guidance also requires entities to present the service cost component of net periodic benefit cost together with compensation costs arising from services rendered by employees during the period. The non-service related 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 described on the Statement of Income. The new presentation requirement is required to be adopted on a “full retrospective” basis, meaning the standard is applied to all of the periods presented in the financial statements, while the limitation on capitalization can only be adopted on a prospective basis. Effective January 1, 2018, as required, the Company adopted this standard on a retrospective basis. As permitted by the new guidance, the Company used the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the basis for applying the retrospective presentation requirements. As a result, for all periods presented, only the service related component of pension and other postretirement benefit costs is included in Operating profit. The non-service related components are included in a new line item, “Non-service related postretirement costs,” which is below Operating profit. For the quarter ended March 31, 2017, the Company reclassified $26 and $1 of non-service related components of pension and other postretirement benefit costs from Selling, general and administrative expenses and Other (income) expense, net, respectively, to Non-service related postretirement costs. Adoption of this standard had no effect on Net income attributable to Colgate-Palmolive Company, Earnings per common share or Cash flow.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” eliminating the requirement to calculate ~~the~~ implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. 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 an impact on the Company’s Consolidated Financial Statements.

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

In August 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 was effective for the Company on January 1, 2018. This new guidance did not have an impact on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued its final standard on lease accounting, ASU No. 2016-02, “Leases (Topic 842),” which ~~supersedes~~superseded Topic 840, ~~“Leases.~~“Leases,” which was further modified in ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” ASU No. 2018-11, “Leases (Topic 842) Targeted Improvements” and ASU No. 2019-01 “Leases (Topic 842) Codification Improvements” to clarify the implementation guidance. The new accounting standard ~~requires~~was effective for the Company beginning on January 1, 2019 and required the recognition on the balance sheet of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The Company elected the optional transition method and adopted 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 on a modified retrospective basis with ~~early adoption permitted. The~~no restatement of prior period amounts. As allowed under the new accounting standard, ~~requires a “modified retrospective” adoption, meaning~~ the ~~standard is applied~~Company elected to ~~leases existing~~apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all asset classes at ~~or entered into after,~~ the ~~beginning~~time of ~~the earliest comparative period presented in the financial statements.~~adoption. The Company ~~is currently assessing the impact~~also elected not to separate lease components from non-lease components and to exclude short-term leases from its Consolidated Balance Sheet. The Company’s adoption of the new standard ~~on its Consolidated Financial Statements.~~

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes~~resulted in the recognition of right-of-use assets of $458 and liabilities of $574, with no material cumulative effect adjustment to ~~Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

equity as of the date of adoption. In ~~January 2016,~~connection with the ~~FASB issued ASU No. 2016-01, “Financial Instruments–Overall (Subtopic 825-10): Recognition and Measurement~~adoption of ~~Financial Assets and Financial Liabilities.” The updated~~this 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 was effective foras required, the Company ~~beginning on January 1, 2018~~reclassified certain restructuring reserves incurred in connection with the Global Growth and ~~did not have an impact on the Company’s Consolidated Financial Statements.~~

~~In May 2014, the FASB~~Efficiency Program (see Note 4, Restructuring and ~~the International Accounting Standards Board issued their final converged standard on revenue recognition. The standard, issued~~Related Implementation Charges for additional information) and deferred rent liabilities 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 applyreductions 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 applicationlease assets. Adoption of the ~~guidance. The standard allows for either full retrospective adoption or modified retrospective adoption. The Company adopted the~~ new standard on January 1, 2018, on a “modified retrospective” basis, which did not have a material impact on the Company’s Consolidated Financial Statements. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the 2018 opening balance of retained earnings. Results for periods beginning on or after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the prior accounting guidance under Topic 605, “Revenue Recognition.”

The new accounting standard changes only the timing of when certain of the Company’s sales are recorded and does not change the amount at which sales are recorded. The application of the new accounting standard did not have a material impact on the Company’s Consolidated ~~Financial~~ Statements of Income or Cash Flows. See Note 13, Leases for ~~the period ended March 31, 2018 and is not expected to have a material impact on the Company’s Consolidated Financial Statements in future periods.~~

~~Updated Accounting Policies~~

~~Revenue Recognition Accounting Policy~~

The Company’s revenue contracts represent a single performance obligation to sell its products to trade customers. Sales are recorded at the time control of the products is transferred to trade customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the products. Control is the ability of trade customers to direct the “use of” and “obtain” the benefit from our products. In evaluating the timing of the transfer of control of products to trade customers, the Company considers several control indicators, including significant risks and rewards of products, the Company’s right to payment and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to trade customers.

Net sales reflect the transaction prices for contracts, which include units shipped at selling list prices reduced by variable consideration. Variable consideration includes expected sales returns and the cost of current and continuing promotional programs. Current promotional programs primarily include product listing allowances and co-operative advertising arrangements. Continuing promotional programs are predominantly consumer coupons and volume-based sales incentive arrangements. The cost of promotional programs is estimated using the expected value method considering all reasonably available information, including the Company’s historical experience and its current expectations, and is reflected in the transaction price when sales are recorded. Adjustments to the cost of promotional programs in subsequent periods are generally not material, as the Company’s promotional programs are typically of short duration, thereby reducing the uncertainty inherent in such estimates.

Sales returns are generally accepted at the Company’s discretion and are not material to the Company’s Consolidated Financial Statements. The Company’s contracts with trade customers do not have significant financing components or non-cash consideration and the Company does not have unbilled revenue or significant amounts of prepayments from customers. The Company records Net sales excluding taxes collected on its sales to its trade customers. Shipping and handling activities are accounted for as contract fulfillment costs and classified as Selling, general and administrative expenses.additional information.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)


4.	~~Acquisitions and Divestitures~~

~~Acquisitions~~

In January 2018, the Company acquired all of the outstanding equity interests of Physicians Care Alliance, LLC (“PCA”) and Elta MD Holdings, Inc. (“Elta”), professional skin care businesses, for aggregate cash consideration of approximately $730. With these acquisitions, the Company has entered the professional skin care category, which complements its existing global personal care businesses and resulted in the recognition of additional goodwill.

~~Total purchase price consideration of $730 has been allocated on a preliminary basis to the net assets acquired based on their respective estimated fair values at January 2018, as follows:~~

Recognized amounts of assets acquired and liabilities assumed:
Inventories $ 7
Other current assets 9
Other intangible assets 438
Goodwill 332
Other current liabilities (6 )
Deferred income taxes (50 )
Fair value of net assets acquired $ 730

Based on the Company’s preliminary purchase price allocation, other intangible assets acquired include trademarks of $292 with useful lives of 25 years and customer relationships of $146 with useful lives ranging from 12 to 13 years.

~~Goodwill of $332 was allocated to the North America segment. The Company expects that approximately 40% of the goodwill will be deductible for tax purposes.~~

~~The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in adjustments to the preliminary values discussed above.~~

Pro forma results of operations have not been presented as the impact on the Company’s Condensed Consolidated Financial Statements is not material. The Company expects to finalize the purchase price allocation prior to the end of 2018.


5.4.	Restructuring and Related Implementation Charges

In the fourth quarter of 2012, the Company commenced a restructuring program (the “Global Growth and Efficiency Program”) ~~for sustained growth.~~. The program was expanded in 2014 and expanded and extended in ~~2015. Building on the Company’s successful implementation~~each of ~~the~~2015 and 2017. The program ~~on October 26, 2017, the Board approved an expansion of the Global Growth and Efficiency Program and an extension of the program~~runs through December 31, ~~2019 to take advantage of additional opportunities to streamline the Company’s operations.~~2019.

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

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

~~Including the most recent expansion, cumulative~~Cumulative pretax charges resulting from the Global Growth and Efficiency Program, once all phases are approved and implemented, are estimated to be in the range of ~~$1,730~~$1,820 to ~~$1,885~~$1,870 ($~~1,280~~1,350 to $1,380 aftertax). The Company anticipates that pretax charges for ~~2018~~2019 will approximate $100 to ~~$175~~$150 ($7570 to ~~$125~~$100 aftertax). It is expected that substantially all charges resulting from the Global Growth and Efficiency Program will be incurred by December 31, 2019.

The pretax charges resulting from the Global Growth and Efficiency Program are ~~currently~~ estimated to be comprised of the following categories: Employee-Related Costs, including severance, pension and other termination benefits ~~(50%~~(40%); asset-related costs, primarily Incremental Depreciation and Asset Impairments (10%); and Other charges, which include contract termination costs, consisting primarily of related implementation charges resulting directly from exit activities ~~(20%~~(30%) and the implementation of new strategies (20%). Over the course of the Global Growth and Efficiency Program, it is ~~currently~~ estimated that approximately ~~80%~~75% of the charges will result in cash expenditures.

The Company expects that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15%), Europe (20%), Latin America (5%~~), Europe (20%~~), Asia Pacific (5%), Africa/Eurasia (5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the implementation of new strategies, noted above, on a global basis. The Company expects that, when it has been fully implemented, the Global Growth and Efficiency Program will have contributed a net reduction of approximately ~~3,800~~4,000 to 4,400 positions from the Company’s global employee workforce.

For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, restructuring and related implementation charges are reflected in the Condensed Consolidated Statements of Income as follows:


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2018		2017		2019		2018
Cost of sales	$	6	$	14	$	11	$	6
Selling, general and administrative expenses	5		21		4		5
Other (income) expense, net	13		10		13		13
Non-service related postretirement costs	4		1		1		4
Total Global Growth and Efficiency Program charges, pretax	$	28	$	46	$	29	$	28

Total Global Growth and Efficiency Program charges, aftertax	$	20	$	31	$	22	$	20

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.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

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


	Three Months Ended				Program-to-date		Three Months Ended				Program-to-date
	March 31,				Accumulated Charges		March 31,				Accumulated Charges
	2018		2017				2019		2018
North America	37	%	37	%	19	%	8	%	37	%	18	%
Latin America	12	%	6	%	4	%	40	%	12	%	5	%
Europe	2	%	2	%	21	%	8	%	2	%	19	%
Asia Pacific	18	%	2	%	3	%	6	%	18	%	4	%
Africa/Eurasia	2	%	4	%	6	%	—	%	2	%	6	%
Hill’s Pet Nutrition	19	%	7	%	7	%	12	%	19	%	8	%
Corporate	10	%	42	%	40	%	26	%	10	%	40	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

Since the inception of the Global Growth and Efficiency Program in the fourth quarter of 2012, the Company has incurred cumulative pretax charges of ~~$1,589~~$1,751 ($~~1,173~~1,300 aftertax) in connection with the implementation of various projects as follows:


	Cumulative Charges		Cumulative Charges
	as of March 31, 2018		as of March 31, 2019
Employee-Related Costs	$	646	$	691
Incremental Depreciation	91		97
Asset Impairments	36		58
Other	816		905
Total	$	1,589	$	1,751

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; and the implementation of a Corporate efficiencies program.

The following table summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals:


	Three Months Ended March 31, 2018														Three Months Ended March 31, 2019
	Employee-Related Costs			Incremental Depreciation			Asset Impairments		Other			Total			Employee-Related Costs			Incremental Depreciation			Asset Impairments			Other			Total
Balance at December 31, 2017	$	127		$	—		$	—	$	107		$	234
Balance at December 31, 2018															$	60		$	—		$	—		$	142		$	202
Charges	18			1			—		9			28			10			5			6			8			29
Cash payments	(39		)	—			—		(16		)	(55		)	(16		)	—			—			(8		)	(24		)
Charges against assets	(4		)	(1		)	—		—			(5		)	(1		)	(5		)	(6		)	—			(12		)
Foreign exchange	2			—			—		—			2			(1		)	—			—			—			(1		)
Balance at March 31, 2018	$	104		$	—		$	—	$	100		$	204
Other															—			—			—			(48		)	(48		)
Balance at March 31, 2019															$	52		$	—		$	—		$	94		$	146

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension and other retiree benefit enhancements amounting to $4$1 for the three months ended March 31, ~~2018,~~2019, which are reflected as Charges against assets within Employee-Related Costs in the preceding table 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 ~~10,~~8, Retirement Plans and Other Retiree Benefits for additional information.

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 inventories and 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 months ended March 31, ~~2018~~2019 include third-party incremental costs related to the development and implementation of new business and strategic initiatives of $8$5, and contract termination costs and charges resulting directly from exit activities of ~~$1.~~$3. These charges were expensed as incurred.

Other decreases to the restructuring accruals reflects the reclassification of restructuring accruals to lease assets as a result of the Company’s adoption of ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” on January 1, 2019. See Note 3, Recent Accounting Pronouncements and Note 13, Leases for additional information.

6.5. Inventories

Inventories by major class are as follows:

March 31,
2018 December 31,
2017
Raw materials and supplies $ 258
$ 267
Work-in-process 49
42
Finished goods 1,005
912
Total Inventories $ 1,312
$ 1,221

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~



	March 31, 2019		December 31, 2018
Raw materials and supplies	$	242	$	253
Work-in-process	43		37
Finished goods	993		960
Total Inventories	$	1,278	$	1,250

~~7. Shareholders’ Equity~~

~~Changes in the components of Shareholders’ Equity for the three months ended~~ ~~March 31, 2018~~ ~~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, 2017 $ 1,466
$ 1,984
$ (5 ) $ (20,181 ) $ 20,531
$ (3,855 ) $ 303
Net income

634
44
Other comprehensive income (loss), net of tax

118
3
Dividends

(718 )

Stock-based compensation expense
28

Shares issued for stock options
48

77

Shares issued for restricted stock units (12 ) 12

Treasury stock acquired

(351 )

Other
(1 ) 3
2
134
(163 ) (1)

Balance, March 31, 2018 $ 1,466
$ 2,047
$ (2 ) $ (20,441 ) $ 20,581
$ (3,900 ) $ 350

⁽¹⁾ As a result of the early adoption of ASU 2018-02, the Company reclassified the stranded tax effects in Accumulated other comprehensive income (loss) resulting from the TCJA to Retained earnings. See Note 3, Recent Accounting Pronouncements and Updated Accounting Policies for additional information.

Accumulated other comprehensive income (loss) includes cumulative translation losses of $2,832 and $2,927 at March 31, 2018 and December 31, 2017, respectively, and unrecognized retirement plan and other retiree benefits costs of $1,062 and $923 at March 31, 2018 and December 31, 2017, respectively.

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

8.6. Earnings Per Share

For the three months ended March 31, ~~2018~~2019 and ~~2017~~2018, earnings per share were as follows:


	Three Months Ended										Three Months Ended
	March 31, 2018					March 31, 2017					March 31, 2019					March 31, 2018
	Net income attributable to Colgate-Palmolive Company		Shares (millions)	Per Share		Net income attributable to Colgate-Palmolive Company		Shares (millions)	Per Share		Net income attributable to Colgate-Palmolive Company		Shares (millions)	Per Share		Net income attributable to Colgate-Palmolive Company		Shares (millions)	Per Share
Basic EPS	$	634	875.4	$	0.72	$	570	884.7	$	0.64	$	560	862.0	$	0.65	$	634	875.4	$	0.72
Stock options and restricted stock units			4.5					6.3					1.2					4.5
Diluted EPS	$	634	879.9	$	0.72	$	570	891.0	$	0.64	$	560	863.2	$	0.65	$	634	879.9	$	0.72

For the three months ended March 31, ~~2018~~2019 and ~~2017~~,2018, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 21,980,033 and 16,287,263, ~~and 9,182,150,~~ respectively.


9.	~~Other Comprehensive Income (Loss)~~

~~Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the three months ended~~ ~~March 31, 2018~~ ~~and~~ ~~2017~~ ~~were as follows:~~

2018 2017
Pretax Net of Tax Pretax Net of Tax

Cumulative translation adjustments $ 96
$ 105
$ 103
$ 125
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period —
—
—
—
Amortization of net actuarial loss, transition and prior service costs ⁽¹⁾
18
14
18
13
Retirement plans and other retiree benefits adjustments 18
14
18
13
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges (8 ) (6 ) (13 ) (8 )
Reclassification of (gains) losses into net earnings on cash flow hedges ⁽²⁾
6
5
(3 ) (2 )
Gains (losses) on cash flow hedges (2 ) (1 ) (16 ) (10 )
Total Other comprehensive income (loss) $ 112
$ 118
$ 105
$ 128

⁽¹⁾~~These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 10, Retirement Plans and Other Retiree Benefits for additional details.~~

⁽²⁾~~These (gains) losses are reclassified into Cost of sales. See Note 14, Fair Value Measurements and Financial Instruments for additional details.~~

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

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)


~~10.~~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 March 31, 2019 and 2018 were as follows:



	2019						2018
	Pretax			Net of Tax			Pretax			Net of Tax

Cumulative translation adjustments	$	27		$	21		$	96		$	105
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period	(1		)	(1		)	—			—
Amortization of net actuarial loss, transition and prior service costs ⁽¹⁾	17			13			18			14
Retirement plans and other retiree benefits adjustments	16			12			18			14
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges	(2		)	(2		)	(8		)	(6		)
Reclassification of (gains) losses into net earnings on cash flow hedges ⁽²⁾	(4		)	(3		)	6			5
Gains (losses) on cash flow hedges	(6		)	(5		)	(2		)	(1		)
Total Other comprehensive income (loss)	$	37		$	28		$	112		$	118

⁽¹⁾These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 8, Retirement Plans and Other Retiree Benefits for additional details.

⁽²⁾These (gains) losses are reclassified into Cost of sales. See Note 12, Fair Value Measurements and Financial Instruments for additional details.

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


8.	Retirement Plans and Other Retiree Benefits

Components of Net periodic benefit cost for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 were as follows:


	Pension Benefits												Other Retiree Benefits				Pension Benefits												Other Retiree Benefits
	United States						International										United States						International
	Three Months Ended March 31,																Three Months Ended March 31,
	2018			2017			2018			2017			2018		2017		2019			2018			2019			2018			2019			2018
Service cost	$	—		$	—		$	4		$	4		$	4	$	4	$	—		$	—		$	4		$	4		$	4		$	4
Interest cost	21			24			6			5			10		11		23			21			5			6			11			10
Expected return on plan assets	(29		)	(27		)	(6		)	(5		)	—		—		(26		)	(29		)	(5		)	(6		)	(1		)	—
Amortization of transition and prior service costs (credits)	—			—			—			—			—		—
Amortization of actuarial loss (gain)	12			12			2			2			4		4		13			12			2			2			2			4
Net periodic benefit cost	$	4		$	9		$	6		$	6		$	18	$	19	$	10		$	4		$	6		$	6		$	16		$	18

For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, the Company made voluntary contributions to its U.S. postretirement plans of $0$102 and ~~$57,~~$0, respectively.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)


~~11.~~9.	Income Taxes

On December 22, 2017, the ~~TCJA~~Tax Cuts and Jobs Act (the “TCJA” or “U.S. tax reform”) was enacted, which, among other things, lowered the U.S. corporate income tax rate to 21% from 35% and established a modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries. Beginning in 2018, the TCJA also requires a minimum tax on certain earnings generated by foreign subsidiaries while providing for tax-free repatriation of such earnings through a 100% dividends-received deduction. The Company’s effective income tax rate in 2017 included a provisional charge of $275, recorded in the fourth quarter of 2017, ~~related to~~based on its initial analysis of the ~~TCJA using information and estimates available as of February 15,~~TCJA. During 2018, the ~~date on which~~Company finalized its assessment of the ~~Company filed its Annual Report on Form 10-K for the year ended December 31, 2017. Given the significant complexity~~impact of the TCJA ~~recent~~ and ~~anticipated further~~recognized an additional tax expense of $80 reflecting the impact of transition tax guidance ~~from~~issued by the U.S. Treasury ~~about implementing the TCJA~~ and the ~~potential for additional guidance from~~update of certain estimates and calculations based on information available through the SEC or the FASB related to the TCJA or additional information becoming available, the Company’s provisional charge may be adjusted during 2018 and is expected to be finalized no later than the fourth quarterend of 2018. ~~The aforementioned guidance and additional information regarding the TCJA may also impact the Company’s 2018 effective income tax rate, exclusive of any adjustment to the provisional charge.~~

As a result of the early adoption of ASU 2018-02, the Company reclassified $163 of stranded tax effects in Accumulated other comprehensive income (loss) resulting from the TCJA to Retained earnings in the current period. See Note 3, Recent Accounting Pronouncements and Updated Accounting Policies for additional information.

The ~~Company has taken a~~impact, if any, of further transitional tax ~~position in a foreign jurisdiction since 2002~~guidance that ~~has been challenged~~may be issued 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.

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

~~In 2016, the Supreme Court in the foreign jurisdiction decided the matter~~U.S. Treasury would be reflected in the Company’s ~~favor~~provision for ~~the years 2002 through 2005. Also in 2016, the Administrative Court~~income tax in the foreign jurisdiction 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 of future appeals. As a result, the Company recorded a tax benefit of $30, including interest, in 2016.

~~In March 2018, the lower courts ruled in the Company’s favor for the years 2006, 2007 and 2012 through 2014. Although the lower courts ruled in the Company’s favor, it~~period such guidance is possible that the rulings will be appealed to the Supreme Court. If such appeals are resolved in the Company’s favor, the Company will record additional tax benefits of approximately $15 at current exchange rates.effective.


~~12.~~10.	Contingencies

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

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

The Company also determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that a loss is reasonably possible and it is able to determine such estimates. For those matters disclosed below for which the amount of any potential losses can be reasonably estimated, the Company currently estimates that the aggregate range of reasonably possible losses in excess of any accrued liabilities is $0 to approximately ~~$250~~$225 (based on current exchange rates). The estimates included in this amount are based on the Company’s analysis of currently available information and, as new information is obtained, these estimates may change. Due to the inherent subjectivity of the assessments and the unpredictability of outcomes of legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company. Thus, the Company’s exposure and ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued or the range disclosed above.

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.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

Brazilian Matters

There are certain tax and civil proceedings outstanding, as described below, related to the Company’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 ~~$165.~~$151. 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.

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

In September 2015, the Company lost one of its appeals at the administrative level and filed a lawsuit in Brazilian federal court. In February 2017, the Company lost an additional administrative appeal and filed a lawsuit 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 ~~$74,~~$64, 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 lawsuit, further appeals are available within the Brazilian federal courts. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the tax assessment is without merit and that the Company should ultimately prevail. The Company is challenging this assessment vigorously.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

Competition Matters

Certain of the Company’s subsidiaries have historically been subject to investigations, 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 involved other consumer goods companies and/or retail customers. 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 status of pending competition law matters as of March 31, ~~2018~~2019 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”~~“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~~indemnified for these fines by Unilever pursuant 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~~appealed the decision of the Court of Appeal on behalf of the Company and Sara Lee in the French Supreme Court. In March 2019, the French Supreme Court denied the Company’s appeal.


▪	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 is appealing the decision to the Greek courts.

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~

Talcum Powder Matters

The Company has been named as a defendant in civil actions alleging that certain talcum powder products that were sold prior to 1996 were contaminated with asbestos. Most of these actions involve a number of co-defendants from a variety of different industries, including suppliers of asbestos and manufacturers of products that, unlike the Company’s products, were designed to contain asbestos. As of March 31, ~~2018,~~2019, there were ~~199~~229 individual cases pending against the Company in state and federal courts throughout the United States, as compared to ~~193~~239 cases as of December 31, ~~2017.~~2018. During the three months ended March 31, ~~2018, 25~~2019, 37 new cases were filed and 1947 cases were resolved by voluntary dismissal ~~summary judgment granted in the Company’s favor~~ or settlement. The value of settlements was not material, either individually or in the aggregate, to the Company’s results of operations for the quarter ended March 31, ~~2018.~~2019.

The Company believes that a significant portion of its costs incurred in defending and resolving these claims will be covered by insurance policies issued by several primary, excess and ~~excess~~umbrella insurance carriers, subject to deductibles, exclusions, retentions and policy limits.

While the Company and its legal counsel believe that these cases are without merit and intend to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters. 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)

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 trial court dismissed the claims of N8 Pharma and, in the third quarter of 2017, N8 Pharma appealed the decision. In March 2018, the appellate court upheld the trial court’s dismissal of N8 Pharma’s claim.

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 in the United States District Court for the Southern District of New York. This action has been certified as a class action. The relief sought includes recalculation of benefits, pre- and post-judgment interest and attorneys’ fees. The Company is contesting this action vigorously. Since the amount of any potential loss from this case 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 the case.

~~COLGATE-PALMOLIVE COMPANY~~

~~Notes to Condensed Consolidated Financial Statements (continued)~~

~~(Dollars in Millions Except Share and Per Share Amounts)~~

~~(Unaudited)~~


~~13.~~11.	Segment Information

The Company operates in two 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 five 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.

Effective January 1, 2018, as required, the Company adopted ASU No. 2017-07, “Compensation–Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”), on a retrospective basis. To conform to the current year’s presentation, for the three months ended March 31, 2017, the Company reclassified $27 of non-service related components of pension and other postretirement costs, which was previously deducted from Operating profit, to a new line item, “Non-service related postretirement costs,” which is below Operating profit. The impact of the reclassification from Operating profit by segment is as follows: North America $14, Latin America $2, Europe $2, Asia Pacific $0, Africa/Eurasia $1, Pet Nutrition $6 and Corporate $2.~~The reclassification had no effect on Net income attributable to Colgate-Palmolive Company, Earnings per common share or Cash flow.~~

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, ~~2017.~~2018. 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.

Net sales by segment ~~was~~were as follows:


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2018		2017		2019		2018
Net sales
Oral, Personal and Home Care
North America	$	827	$	760	$	853	$	827
Latin America	929		924		889		929
Europe	648		558		602		648
Asia Pacific	759		720		700		759
Africa/Eurasia	255		246		240		255
Total Oral, Personal and Home Care	3,418		3,208		3,284		3,418
Pet Nutrition	584		554		600		584
Total Net sales	$	4,002	$	3,762	$	3,884	$	4,002

Approximately ~~75%~~70% of the Company’s Net sales are generated from markets outside the U.S., with approximately 50% of the Company’s Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe).

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:


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2018		2017		2019		2018
Net sales
Oral Care	49	%	49	%	48	%	49	%
Personal Care	19	%	18	%	19	%	19	%
Home Care	17	%	18	%	18	%	17	%
Pet Nutrition	15	%	15	%	15	%	15	%
Total Net sales	100	%	100	%	100	%	100	%

Operating profit by segment was as follows:


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2018			2017			2019			2018
Operating profit
Oral, Personal and Home Care
North America	$	257		$	247		$	249		$	257
Latin America	273			271			232			273
Europe	162			142			151			162
Asia Pacific	226			219			189			226
Africa/Eurasia	50			46			46			50
Total Oral, Personal and Home Care	968			925			867			968
Pet Nutrition	164			163			164			164
Corporate	(149		)	(176		)	(152		)	(149		)
Total Operating profit	$	983		$	912		$	879		$	983

For the three months ended March 31, ~~2018,~~2019 and ~~2017,~~2018, Corporate Operating profit (loss) included charges of ~~$24~~$28 and ~~$45,~~$24, respectively, resulting from the Global Growth and Efficiency Program.

For further information regarding the Global Growth and Efficiency Program, refer to Note 5,4, 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)


~~14.~~12.	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, 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 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.

The company adopted ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” beginning on January 1, 2019. Refer to Note 3, Recent Accounting Pronouncements.

The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments which are carried at fair value in the Company’s Consolidated Balance Sheets at March 31, ~~2018~~2019 and December 31, ~~2017:~~2018:

Assets Liabilities

Account
Fair Value Account Fair Value
Designated derivative instruments 3/31/18 12/31/17 3/31/18 12/31/17
Interest rate swap contracts Other current assets $ —
$ —
Other accruals $ 6
$ —
Interest rate swap contracts Other assets —
—
Other liabilities 11
7
Foreign currency contracts Other current assets 5
25
Other accruals 23
20
Foreign currency contracts Other assets —
—
Other liabilities 57
46
Commodity contracts Other current assets —
—
Other accruals —
—
Total designated $ 5
$ 25
$ 97
$ 73

Other financial instruments

Marketable securities Other current assets $ 51
$ 14

Total other financial instruments $ 51
$ 14

The carrying amount of cash, cash equivalents, accounts receivable and short-term debt approximated fair value as of March 31, 2018 and December 31, 2017. The estimated fair value of the Company’s long-term debt, including the current portion, as of March 31, 2018 and December 31, 2017, was $6,659 and $6,799, respectively, and the related carrying value was $6,550 and $6,566, 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).



	Assets					Liabilities
	Account	Fair Value				Account	Fair Value
Designated derivative instruments		3/31/19		12/31/18			3/31/19		12/31/18
Interest rate swap contracts	Other current assets	$	—	$	—	Other accruals	$	—	$	1
Interest rate swap contracts	Other assets	—		—		Other liabilities	4		8
Foreign currency contracts	Other current assets	14		20		Other accruals	13		8
Foreign currency contracts	Other assets	—		—		Other liabilities	15		21
Commodity contracts	Other current assets	—		—		Other accruals	1		—
Total designated		$	14	$	20		$	33	$	38

Other financial instruments
Marketable securities	Other current assets	$	37	$	10
Total other financial instruments		$	37	$	10

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

~~Fair Value Hedges~~The carrying amount of cash, cash equivalents, accounts receivable and short-term debt approximated fair value as of March 31, 2019 and December 31, 2018. The estimated fair value of the Company’s long-term debt, including the current portion, as of March 31, 2019 and December 31, 2018, was $6,783 and $6,434, respectively, and the related carrying value was $6,656 and $6,354, 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 ~~Company has designated all interest rate swap contracts and certain foreign currency forward and option contracts as~~following amounts were recorded on the Condensed Consolidated Balance Sheet related to cumulative basis adjustment for fair value hedges for which the gain or loss on the derivative and the offsetting gain or loss on the hedged item are recognized in current earnings. The impact 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.

~~Activity related to fair value hedges recorded during the three months ended March 31, 2018 and~~ ~~2017~~ ~~was~~ as ~~follows:~~of:

2018
2017
Foreign
Currency
Contracts
Interest
Rate
Swaps

Total

Foreign
Currency
Contracts
Interest
Rate
Swaps

Total
Notional Value at March 31, $ 530

$ 1,000

$ 1,530

$ 246

$ 850

$ 1,096
Three months ended March 31,

Gain (loss) on derivatives (13 )
(10 )
(23 )
2

(2 )
—
Gain (loss) on hedged items 13

10

23

(2 )
2

—

~~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 months ended March 31, 2018 and~~ ~~2017~~ ~~was as follows:~~

2018 2017

Foreign
Currency
Contracts

Commodity
Contracts

Total

Foreign
Currency
Contracts

Commodity
Contracts

Total
Notional Value at March 31, $ 754
$ —
$ 754
$ 667
$ 4
$ 671
Three months ended March 31,
Gain (loss) recognized in OCI (8 ) —
(8 ) (13 ) —
(13 )
Gain (loss) reclassified into Cost of sales 6
—
6
3
—
3



	March 31, 2019		December 31, 2018
Long-term debt:
Carrying amount of hedged item	$	394	$	888
Cumulative hedging adjustment included in the carrying amount	4		10

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~~following table presents the ~~next twelve months.~~notional values as of:



	March 31, 2019
	Foreign Currency Contracts		Foreign Currency Debt		Interest Rate Swaps		Commodity Contracts		Total
Fair Value Hedges	$	708	$	—	$	400	$	—	$	1,108
Cash Flow Hedges	791		—		—		12		803
Net Investment Hedges	490		2,212		—		—		2,702



	December 31, 2018
	Foreign Currency Contracts		Foreign Currency Debt		Interest Rate Swaps		Commodity Contracts		Total
Fair Value Hedges	$	327	$	—	$	900	$	—	$	1,227
Cash Flow Hedges	782		—		—		14		796
Net Investment Hedges	482		1,396		—		—		1,878

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

~~Net Investment Hedges~~The following table presents the location and amount of gains (losses) recognized on the Company’s Condensed Consolidated Statements of Income:



	Three Months Ended March 31,
	2019								2018
	Cost of sales		Selling, general and administrative expenses			Interest (income) expense, net			Cost of sales			Selling, general and administrative expenses			Interest (income) expense, net
Gain (loss) on hedges recognized in income:
Interest rate swaps designated as fair value hedges:
Derivative instrument	$	—	$	—		$	(3	)	$	—		$	—		$	(10	)
Hedged items	—		—			3			—			—			10
Foreign currency contracts designated as fair value hedges:
Derivative instrument	—		(1		)	—			—			(13		)	—
Hedged items	—		1			—			—			13			—
Foreign currency contracts designated as cash flow hedges:
Amount reclassified from OCI	3		—			—			(6		)	—			—
Commodity contracts designated as cash flow hedges:
Amount reclassified from OCI	1		—			—			—			—			—
Total gain (loss) on hedges recognized in income	$	4	$	—		$	—		$	(6	)	$	—		$	—

The following table presents the location and amount of unrealized gains (losses) included in Other Comprehensive Income (OCI):



	Three Months Ended
	March 31,
	2019			2018
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI	$	(3	)	$	(8	)
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI	1			—
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments	6			(18		)
Gain (loss) on hedged items	(6		)	18
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments	29			(19		)
Gain (loss) on hedged items	(29		)	19
Total unrealized gain (loss) on hedges recognized in other comprehensive income (OCI)	$	(2	)	$	(8	)

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

13. Leases

The Company ~~has designated certain foreign currency forward~~adopted ASU No. 2016-02 “Leases (Topic 842)” on January 1, 2019, resulting in the recognition of right-of-use assets of $458 and ~~option contracts~~liabilities of $574. The Company enters into leases for land, office space, warehouses and ~~certain foreign currency-denominated debt as net investment hedges, for which~~equipment. A number of the ~~gain~~leases include one or ~~loss~~more options to renew the lease terms, purchase the leased property or terminate the lease. The exercise of these options is at the Company’s discretion and is therefore recognized on the ~~instrument~~balance sheet when it is ~~reported as a component of Cumulative translation adjustments within OCI, along with~~reasonably certain the ~~offsetting gain or loss on the hedged items.~~Company will exercise such options.

~~Activity related to net investment hedges recorded during~~Substantially all of the Company’s leases are considered operating leases. Finance leases were not material as of March 31, 2019 or for the three months ended March 31, 2019.

As of March 31, 2019, the Company’s right-of use assets and liabilities for operating leases were as follows:



Other assets	$	422

Other accruals	$	161
Other liabilities	369
Total operating lease liabilities	$	530

Lease commitments under noncancellable operating leases were as follows:



Years Ending December 31,	As of March 31, 2019				As of December 31, 2018
2019	$	137		*	$	193
2020	154				165
2021	119				123
2022	97				102
2023	45				51
Thereafter	21				32
Total lease commitments	$	573			$	666
Less: Interest	(43		)
Present value of lease liabilities	$	530

* As of March 31, 2019, $137 represents the lease commitments for the nine-months remaining until December 31, 2019.

The components of the Company’s operating lease cost for the three months ended March 31, ~~2018~~2019 were as follows:



Operating lease cost	$	45
Short-term lease cost	2
Variable lease cost	10
Sublease income	—
Total lease cost	$	57

Short-term lease cost represents the Company’s cost with respect to leases with a duration of 12 months or less and are not reflected on the Company’s Consolidated Balance Sheets. Variable lease costs are comprised of costs such as the Company’s proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance that are not included in the lease liability and are recognized in the period in which they are incurred.

COLGATE-PALMOLIVE COMPANY

Notes to Condensed Consolidated Financial Statements (continued)~~2017~~

(Dollars in Millions Except Share and Per Share Amounts)

(Unaudited)

Supplemental cash flow information related to operating leases for the three months ended March 31, 2019 was as follows:


▪	Payments against amounts included in the measurement of lease liabilities: $57


▪	Lease assets obtained in exchange for lease liabilities: $22

2018 2017

Foreign
Currency
Contracts

Foreign
Currency
Debt

Total

Foreign
Currency
Contracts

Foreign
Currency
Debt

Total
Notional Value at March 31, $ 541
$ 1,233
$ 1,774
$ 655
$ 1,206
$ 1,861
Three months ended March 31,
Gain (loss) on instruments (18 ) (19 ) (37 ) (18 ) (16 ) (34 )
Gain (loss) on hedged items 18
19
37
20
16
36
The weighted-average remaining lease term for operating leases was 4 years. The weighted-average discount rate for operating leases was 4.0%.

~~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 $51 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 $4 classified as held-to-maturity and carried at amortized cost.

~~Through its subsidiary in Argentina,~~There were no material operating leases that the Company ~~has invested in U.S. dollar-linked, devaluation-protected bonds~~had entered into and ~~Argentinian peso-denominated bonds issued by the Argentinian government. As~~that were yet to commence as of March 31, ~~2018, the amortized cost was $4 and their approximate fair value was $4 (Level 2 valuation).~~2019.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Executive Overview

Colgate-Palmolive Company (together with its subsidiaries, the “Company” or “Colgate”) seeks to deliver strong, consistent business results and superior shareholder returns by providing consumers globally with products that make their lives healthier and more enjoyable.

To this end, the Company is tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition. Within these segments, the Company follows a closely defined business strategy to ~~develop~~grow our key product categories and increase our overall market ~~leadership positions~~share. Within the categories in ~~key product categories. These product categories are prioritized~~which the Company competes, the Company prioritizes its efforts based on their capacity to maximize the use of the organization’s core competencies and strong global equities and to deliver sustainable long-term growth.

Operationally, the Company is organized along geographic lines with management teams having responsibility for the business and financial results in each region. The Company competes in more than 200 countries and territories worldwide with established businesses in all regions contributing to the Company’s sales and profitability. Approximately ~~75%~~70% of the Company’s Net sales are generated from markets outside the U.S., with approximately 50% of the Company’s 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’s 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 to a variety of ~~retail~~traditional and ~~wholesale customers~~eCommerce retailers, wholesalers and distributors. The Company, through Hill’s Pet Nutrition, also competes on a worldwide basis in the pet nutrition market, selling its products principally through authorized pet supply retailers, veterinarians and ~~veterinarians. Many of the Company’s products are also sold online through various e-commerce platforms and~~eCommerce retailers.

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, as applicable, 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. The monitoring of these indicators and the Company’s Code of Conduct and corporate governance practices help to maintain business health and strong internal controls. For additional information regarding non-GAAP financial measures, see “Non-GAAP Financial Measures” below.

To achieve its business and financial objectives, the Company focuses the organization on initiatives to drive and fund growth. The Company seeks to capture significant opportunities for growth by identifying and meeting consumer needs within its core categories, through its focus on innovation and the deployment of valuable consumer and shopper insights in the development of successful new ~~products regionally, which are then rolled out on a global basis.~~products. To enhance these efforts, the Company has developed key initiatives to build strong relationships with consumers, dental, veterinary and ~~veterinary~~skin care professionals and ~~retail customers.~~traditional and eCommerce retailers. In addition, the Company has ~~strengthened its capabilities in e-commerce, including by developing its relationships with online-only retailers and enhancing~~enhanced its digital marketing ~~capabilities.~~capabilities and intends to broaden its eCommerce offerings, including direct-to-consumer and subscription services. Growth opportunities are greater in those areas of the world in which economic development and rising consumer incomes expand the size and number of markets for the Company’s products.

~~COLGATE-PALMOLIVE COMPANY~~

~~Management~~’~~s Discussion and Analysis of Financial~~

~~Condition and Results of Operations~~

~~(Dollars in Millions Except Per Share Amounts)~~

The investments needed to support growth are developed through continuous, Company-wide initiatives to lower costs and increase effective asset utilization. Through these initiatives, which are referred to as the Company’s funding-the-growth initiatives, the Company seeks to become even more effective and efficient throughout its 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 Company also continues to prioritize its investments toward its higher margin businesses, specifically Oral Care, Personal Care and Pet Nutrition.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Significant Items Impacting Comparability

In January 2018, the Company acquired all of the outstanding equity interests of Physicians Care Alliance, LLC (“PCA”) and Elta MD Holdings, Inc. (“Elta”), professional skin care businesses, for aggregate cash consideration of approximately $730. With these acquisitions, the Company has entered the professional skin care category, which complements its existing global personal care businesses. See Note 4, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements for additional information.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA” or “U.S. tax reform”) was enacted, which, among other things, lowered the U.S. corporate income tax rate to 21% from 35% and established a modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries. Beginning in 2018, the TCJA also requires a minimum tax on certain future earnings generated by foreign subsidiaries while providing for future tax-free repatriation of such earnings through a 100% dividends-received deduction.

~~As a result~~During 2018, the Company finalized its assessment of the ~~enactment~~impact of the TCJA inand recognized tax expense of $80 reflecting the ~~fourth quarter~~impact of 2017, the Company recorded a provisional charge of $275 based on its initial analysis of the TCJA using information and estimates available as of February 15, 2018, the date on which the Company filed its Annual Report on Form 10-K for the year ended December 31, 2017. Given the significant complexity of the TCJA, recent and anticipated furthertransition tax guidance ~~from~~issued by the U.S. Treasury ~~about implementing the TCJA~~ and the ~~potential for additional~~update of certain estimates and calculations based on information available through the end of 2018. Any further guidance ~~from the SEC or the FASB related~~issued after December 31, 2018 may have an impact to the ~~TCJA or additional information becoming available, the~~ Company’s provisional charge may be adjusted during 2018 and is expected to be finalized no later than the fourth quarter of 2018. The aforementioned guidance and additional information regarding the TCJA may also impact the Company’s 2018 effectiveProvision for income tax ~~rate, exclusive of any adjustment to~~in the ~~provisional charge.~~period such guidance is effective. Refer to “Results of ~~Operations–Income~~Operations-Income Taxes” below for additional details.

The ~~Company is in the midst of a~~Company’s restructuring program known as the “Global Growth and Efficiency Program,” ~~which following the most recent expansion and extension approved by the Company’s Board of Directors (the “Board”) on October 26, 2017,~~ runs through December 31, 2019. 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 to enhance its global leadership positions in its core businesses. Implementation of the Global Growth and Efficiency Program remains on ~~track.~~track and is in its final year.

The initiatives under the Global Growth and Efficiency Program are focused on the following areas:


▪	Expanding Commercial Hubs


▪	Extending Shared Business Services and Streamlining Global Functions


▪	Optimizing Global Supply Chain and Facilities

Savings, substantially all of which are expected to increase future cash flows, are projected to be in the range of ~~$560~~$590 to $635 pretax ($~~500~~550 to $575 aftertax) annually, once all projects are approved and implemented. Cumulative pretax charges resulting from the Global Growth and Efficiency Program, once all phases are approved and implemented, are estimated to be in the range of ~~$1,730~~$1,820 to ~~$1,885~~$1,870 ($~~1,280~~1,350 to $1,380 aftertax).

In the three months ended March 31, 2019 and 2018, the Company incurred aftertax costs of $22 and $20, respectively, resulting from the Global Growth and Efficiency Program.

For more information regarding the Global Growth and Efficiency Program, see “Restructuring and Related Implementation Charges” below and Note 5,4, Restructuring and Related Implementation Charges to the Condensed Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

In addition, effective January 1, 2018, as required, the Company adopted ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” on a retrospective basis. As a result, for all periods presented, only the service related component of pension and other postretirement benefit costs is included in Operating profit. The non-service related components (interest cost, expected return on assets and amortization of actuarial gains and losses) are included in a new line item, “Non-service related postretirement costs,” which is below Operating profit. Adoption of this standard had no effect on Net income attributable to Colgate-Palmolive Company, Earnings per common share or Cash flow. See Note 3, Recent Accounting Pronouncements and Updated Accounting Policies to the Condensed Consolidated Financial Statements for additional information.

Outlook

Looking forward, the Company expects global macroeconomic and market conditions to remain ~~highly challenging with continued low~~challenging. While the Company has recently seen improvement in category growth rates, ~~around~~ the ~~world.~~Company expects category growth rates to remain below historical levels. While the global marketplace in which the Company operates has always been highly competitive, the Company continues 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 the Company does. Such activities have included more aggressive product claims and marketing challenges, as well as increased promotional spending and geographic expansion. The Company has also been negatively affected by changes in the policies or practices of its retail trade customers in key markets, such as inventory ~~de-stocking.~~de-stocking, limitations on access to shelf space or delisting of the Company’s products. In addition, the retail landscape in many of the Company’s markets continues to be impacted by the rapid growth of ~~e-commerce has affected and continues to affect~~eCommerce retailers, changing consumer preferences (as consumers increasingly shop online) and ~~market dynamics. Given~~the emergence of alternative retail channels, such as subscription services and direct-to-consumer businesses. This rapid growth in eCommerce and emergence of alternative retail channels may create pricing pressures and/or adversely affect the Company’s relationships with its key retailers. In addition, given that approximately ~~75%~~70% of the Company’s Net sales originate in markets outside the U.S., the Company has experienced and may continue to experience volatile foreign currency fluctuations and high raw and packaging material costs. While the Company has taken, and will continue to take, measures to mitigate the effect of these conditions, should they persist, they could adversely affect the Company’s future results.

~~The~~In summary, the Company believes it is well prepared to meet the challenges ahead due to its strong financial condition, experience operating in challenging environments and continued focus on the Company’s key priorities: growing sales through engaging with consumers, developing world-class innovation and working with retail partners; driving efficiency on every line of the income statement to increase margins; generating strong cash flow performance and utilizing that cash effectively to enhance total shareholder ~~returns;~~return; and leading to win by staying true to the Company’s culture and focusing on its stakeholders. The Company’s commitment to these priorities, together with the strength of the Company’s global brands, its broad international presence in both developed and emerging markets and cost-saving initiatives, such as the Company’s funding-the-growth initiatives and the Global Growth and Efficiency Program, should position the Company well to increase shareholder value over the long term.

COLGATE-PALMOLIVE COMPANY

Management’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 ~~$4,002~~$3,884 in the first quarter of ~~2018, up 6.5%~~2019, down 3.0% from the first quarter of ~~2017, driven by~~2018, as volume growth of 1.0% and net selling price increases of 2.0% ~~and positive~~were more than offset by negative foreign exchange of ~~4.5%, while net selling prices were flat. The Company’s professional skin care acquisitions increased volume by 0.5%~~6.0%. Organic sales (Net sales excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, increased ~~1.5%~~3.0% in the first quarter of ~~2018.~~2019. 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 ~~$3,418~~$3,284 in the first quarter of ~~2018, up 6.5%~~2019, down 4.0% from the first quarter of ~~2017~~2018, as volume growth of ~~2.5%~~1.0% and ~~positive~~net selling price increases of 1.5% were more than offset by negative foreign exchange of ~~4.5% were partially offset by net selling price decreases of 0.5%. Acquisitions increased volume by 0.5%~~6.5%. Organic sales in the Oral, Personal and Home Care product segment increased ~~1.5%~~2.5% in the first quarter of ~~2018.~~2019.

The Company’s share of the global toothpaste market was ~~42.4%~~41.7% on a year-to-date basis, down ~~0.8~~1.0 share ~~points~~point from the year ago period, and its share of the global manual toothbrush market was ~~32.5%~~31.6% on a year-to-date basis, down ~~0.2~~1.1 share points from the year ago period. Year-to-date market shares in toothpaste were up in ~~Latin America and Europe~~Africa/Eurasia and down in North America, ~~Africa/Eurasia~~Latin America, Europe and Asia Pacific versus the comparable ~~2017~~2018 period. In the manual toothbrush category, year-to-date market shares were updown in North America, Latin America, Europe, Asia Pacific and Africa/Eurasia ~~and down in Europe and Asia Pacific~~ versus the comparable ~~2017~~2018 period. For additional information regarding market shares, see “Market Share Information” below.

Net sales in the Hill’s Pet Nutrition segment were ~~$584~~$600 in the first quarter of ~~2018,~~2019, up ~~5.5%~~3.0% from the first quarter of ~~2017, driven by~~2018, as volume growth of ~~0.5%,~~2.0% and net selling price increases ~~1.0% and positive~~of 4.0% were partially offset by negative foreign exchange of ~~4.0%~~3.0%. Organic sales in the Hill’s Pet Nutrition segment increased ~~1.5%~~6.0% in the first quarter of ~~2018.~~2019.

Gross Profit/Margin

Worldwide Gross profit ~~increased~~decreased to $2,287 in the first quarter of 2019 from $2,408 in the first quarter of ~~2018 from $2,269 in the first quarter of 2017.~~2018. Gross profit in both periods included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Gross profit ~~increased~~decreased to $2,298 in the first quarter of 2019 from $2,414 in the first quarter of ~~2018 from $2,283 in the first quarter of 2017.~~2018. This ~~increase~~decrease in Gross profit reflects ~~an increase of $146 resulting from higher Net sales, partially offset by~~ a decrease of ~~$15~~$72 resulting from lower Net sales and a decrease of $44 resulting from lower Gross profit margin.

Worldwide Gross profit margin decreased to 58.9% in the first quarter of 2019 from 60.2% in the first quarter of ~~2018 from 60.3% in the first quarter of 2017.~~2018. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Gross profit margin decreased by 40110 basis points (bps) to 59.2% in the first quarter of 2019 from 60.3% in the first quarter of ~~2018 from 60.7% in the first quarter of 2017.~~2018. This decrease in Gross profit margin was ~~primarily~~ due to higher raw and packaging material costs ~~(190~~(320 bps), which included foreign exchange transaction costs, partially offset by cost savings from the Company’s funding-the-growth initiatives ~~(130~~(150 bps) and higher pricing (70 bps).


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2019		2018
Gross profit, GAAP	$	2,408	$	2,269	$	2,287	$	2,408
Global Growth and Efficiency Program	6		14		11		6
Gross profit, non-GAAP	$	2,414	$	2,283	$	2,298	$	2,414


	Three Months Ended March 31,						Three Months Ended March 31,
	2018		2017		Basis Point Change		2019		2018		Basis Point Change
Gross profit margin, GAAP	60.2	%	60.3	%	(10	)	58.9	%	60.2	%	(130	)
Global Growth and Efficiency Program	0.1		0.4				0.3		0.1
Gross profit margin, non-GAAP	60.3	%	60.7	%	(40	)	59.2	%	60.3	%	(110	)

COLGATE-PALMOLIVE COMPANY

Management’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 4%~~decreased 2% to $1,365 in the first quarter of 2019 from $1,392 in the first quarter of ~~2018 from $1,336 in the first quarter of 2017.~~2018. Selling, general and administrative expenses in both periods included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Selling, general and administrative expenses ~~increased~~decreased to $1,361 in the first quarter of 2019 from $1,387 in the first quarter of 2018, ~~from $1,315 in the first quarter of 2017,~~ reflecting ~~higher~~lower overhead expenses of ~~$56 and~~$39, partially offset by increased advertising investment of ~~$16.~~$13.

Selling, general and administrative expenses as a percentage of Net sales ~~decreased~~increased to 35.1% in the first quarter of 2019 from 34.8% in the first quarter of ~~2018 from 35.5% in the first quarter of 2017.~~2018. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Selling, general and administrative expenses as a percentage of Net sales ~~decreased~~increased by 30 bps to 35.0% in the first quarter of 2019 as compared to 34.7% in the first quarter of ~~2018 as compared to 35.0% in the first quarter of 2017.~~2018. This ~~decrease~~increase was due to ~~decreased~~increased advertising investment ~~(20~~(60 bps) ~~and~~, partially offset by lower overhead expenses ~~(10~~(30 bps), both as a percentage of Net sales. In the first quarter of ~~2018,~~2019, advertising investment increased ~~4.0% to $416, as compared with $400 in the first quarter of 2017, and decreased~~ as a percentage of Net sales to 11.0% from 10.4% in the first quarter of 2018 ~~from 10.6%~~or 3% in absolute terms to $429, as compared with $416 in the first quarter of ~~2017.~~2018.


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
Selling, general and administrative expenses, GAAP	$	1,392		$	1,336		$	1,365		$	1,392
Global Growth and Efficiency Program	(5		)	(21		)	(4		)	(5		)
Selling, general and administrative expenses, non-GAAP	$	1,387		$	1,315		$	1,361		$	1,387


	Three Months Ended March 31,						Three Months Ended March 31,
	2018		2017		Basis Point Change		2019		2018		Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP	34.8	%	35.5	%	(70	)	35.1	%	34.8	%	30
Global Growth and Efficiency Program	(0.1	)	(0.5	)			(0.1	)	(0.1	)
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP	34.7	%	35.0	%	(30	)	35.0	%	34.7	%	30

~~Other (Income) Expense, Net~~

Other (income) expense, net was $33 in the first quarter of 2018, as compared to $21 in the first quarter of 2017. Other (income) expense, net in both periods included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Other (income) expense, net was $20 in the first quarter of 2018, as compared to $11 in the first quarter of 2017. This increase in Other (income) expense, net was due to the amortization of intangible assets resulting from the professional skin care acquisitions.

Three Months Ended March 31,
2018 2017
Other (income) expense, net, GAAP $ 33
$ 21
Global Growth and Efficiency Program (13 ) (10 )
Other (income) expense, net, non-GAAP $ 20
$ 11

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Operating Profit

Operating profit ~~increased 8%~~decreased 11% to $879 in the first quarter of 2019 from $983 in the first quarter of ~~2018 from $912 in the first quarter of 2017.~~2018. Operating profit in both periods included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Operating profit ~~increased 5%~~decreased 10% to $907 in the first quarter of 2019 from $1,007 in the first quarter of 2018, ~~from $957 in the first quarter of 2017,~~ as ~~an increase~~a decrease in Gross profit was partially offset by ~~an increase~~a decrease in Selling, general and administrative expenses.

Operating profit margin was 22.6% in the first quarter of 2019, a decrease of 200 bps compared to 24.6% in the first quarter of ~~2018, an increase of 40 bps compared to 24.2% in the first quarter of 2017.~~2018. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Operating profit margin was 23.4% in the first quarter of 2019, a decrease of 180 bps compared to 25.2% in the first quarter of ~~2018, a decrease of 20 bps as compared to 25.4% in the first quarter of 2017.~~2018. This decrease in Operating profit margin was primarily due to a decrease in Gross profit ~~(40~~(110 bps)~~, partially offset by a decrease~~ and an increase in Selling, general and administrative expenses (30 bps), both as a percentage of Net sales.


	Three Months Ended March 31,						Three Months Ended March 31,
	2018		2017		% Change		2019		2018		% Change
Operating profit, GAAP	$	983	$	912	8	%	$	879	$	983	(11	)%
Global Growth and Efficiency Program	24		45				28		24
Operating profit, non-GAAP	$	1,007	$	957	5	%	$	907	$	1,007	(10	)%


	Three Months Ended March 31,						Three Months Ended March 31,
	2018		2017		Basis Point Change		2019		2018		Basis Point Change
Operating profit margin, GAAP	24.6	%	24.2	%	40		22.6	%	24.6	%	(200	)
Global Growth and Efficiency Program	0.6		1.2				0.8		0.6
Operating profit margin, non-GAAP	25.2	%	25.4	%	(20	)	23.4	%	25.2	%	(180	)

Non-Service Related Postretirement Costs

Non-service related postretirement costs were $25 in the first quarter of 2019, as compared to $24 in the first quarter of ~~2018, as compared to $27 in the first quarter of 2017.~~2018. Non-service related postretirement costs in both periods included charges resulting from the Global Growth and Efficiency Program. Excluding these charges in both periods, Non-service related postretirement costs were $24 in the first quarter of 2019, as compared to $20 in the first quarter of ~~2018, as compared to $26 in the first quarter of 2017.~~2018.


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
Non-service related postretirement costs, GAAP	$	24		$	27		$	25		$	24
Global Growth and Efficiency Program	(4		)	(1		)	(1		)	(4		)
Non-service related postretirement costs, non-GAAP	$	20		$	26		$	24		$	20

Interest (Income) Expense, Net

Interest (income) expense, net was $40 in the first quarter of 2019 as compared to $35 in the first quarter of 2018, ~~as compared to $23 in the first quarter of 2017,~~ primarily due to higher average interest rates on debt.

COLGATE-PALMOLIVE COMPANY

Management’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 26.3% for the first quarter of 2019 as compared to 26.6% for the first quarter of ~~2018 as compared to 29.1% for the first quarter of 2017.~~2018. As reflected in the table below, the non-GAAP effective income tax rate was ~~26.7%~~26.2% for the first quarter of ~~2018,~~2019, as compared to ~~29.3%~~26.7% in the comparable period of ~~2017.~~2018.

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. The Company’s current estimate of its full year effective income tax rate before discrete period items is ~~27.3%~~26.1%, compared to ~~31.3%~~27.3% in the first quarter of ~~2017 primarily due to the enactment of the TCJA, as discussed in more detail below. See Note 11, Income Taxes to the Condensed Consolidated Financial Statements for additional details.~~2018.


	Three Months Ended March 31,												Three Months Ended March 31,
	2018						2017						2019						2018
	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⁾		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	$	924	$	246	26.6	%	$	862	$	251	29.1	%	$	814	$	214	26.3	%	$	924	$	246	26.6	%
Global Growth and Efficiency Program	28		8		0.1		46		15		0.2		29		7		(0.1	)	28		8		0.1
Non-GAAP	$	952	$	254	26.7	%	$	908	$	266	29.3	%	$	843	$	221	26.2	%	$	952	$	254	26.7	%

⁽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.

On December 22, 2017, the TCJA was enacted, which, among other things, lowered the U.S. corporate income tax rate to 21% from 35% and established a modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries. Beginning in 2018, the TCJA also requires a minimum tax on certain earnings generated by foreign subsidiaries while providing for tax-free repatriation of such earnings through a 100% dividends-received deduction. The Company’s effective income tax rate in 2017 included a provisional charge of $275, recorded in the fourth quarter of 2017, based on its initial analysis of the ~~TCJA using information and estimates available as of February 15,~~TCJA. During 2018, the ~~date on which~~Company finalized its assessment of the ~~Company filed its Annual Report on Form 10-K for the year ended December 31, 2017. Given the significant complexity~~impact of the TCJA ~~recent~~ and ~~anticipated further~~recognized an additional tax expense of $80 reflecting the impact of transition tax guidance ~~from~~issued by the U.S. Treasury ~~about implementing the TCJA~~ and the ~~potential for additional~~update of certain estimates and calculations based on information available through the end of 2018.

The impact, if any, of further transitional tax guidance ~~from~~that may be issued by the ~~SEC or the FASB related to the TCJA or additional information becoming available,~~U.S. Treasury would be reflected in the Company’s provisional charge may be adjusted during 2018 and is expected to be finalized no later than the fourth quarter of 2018. The aforementioned guidance and additional information regarding the TCJA may also impact the Company’s 2018 effectiveprovision for income tax ~~rate, exclusive of any adjustment to~~in the ~~provisional charge.~~period such guidance is effective.

COLGATE-PALMOLIVE COMPANY

Management’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.

In 2016, the Supreme Court in the foreign jurisdiction decided the matter in the Company’s favor for the years 2002 through 2005. Also in 2016, the Administrative Court in the foreign jurisdiction 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 of future appeals. As a result, the Company recorded a tax benefit of $30, including interest, in 2016.

In March 2018, the lower courts ruled in the Company’s favor for the years 2006, 2007 and 2012 through 2014. Although the lower courts ruled in the Company’s favor, it is possible that the rulings will be appealed to the Supreme Court. If such appeals are resolved in the Company’s favor, the Company will record additional tax benefits of approximately $15 at current exchange rates.

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

Net income attributable to Colgate-Palmolive Company for the first quarter of ~~2018 increased~~2019 decreased to ~~$634~~$560 from ~~$570~~$634 in the first quarter of ~~2017,~~2018, and Earnings per common share on a diluted basis ~~increased~~decreased to ~~$0.72~~$0.65 per share in the first quarter of ~~2018~~2019 from ~~$0.64~~$0.72 in the first quarter of ~~2017.~~2018. Net income attributable to Colgate-Palmolive Company in both periods included charges resulting from the Global Growth and Efficiency Program.

Excluding ~~these~~ charges resulting from the Global Growth and Efficiency Program in both periods, Net income attributable to Colgate-Palmolive Company in the first quarter of ~~2018 increased 9%~~2019 decreased 11% to $582 from $654 in the first quarter of 2018, and Earnings per common share on a diluted basis ~~increased 10%~~decreased 9% to $0.67 in the first quarter of 2019 from $0.74 in the first quarter of ~~2018 from $0.67 in the first quarter of 2017.~~2018.


	Three Months Ended March 31, 2018										Three Months Ended March 31, 2019
	Income Before Income Taxes		Provision For Income Taxes⁽¹⁾		Net Income Including Noncontrolling Interests		Net Income Attributable To Colgate-Palmolive Company		Diluted Earnings Per Share⁽²⁾		Income Before Income Taxes		Provision For Income Taxes⁽¹⁾		Net Income Including Noncontrolling Interests		Net Income Attributable To Colgate-Palmolive Company		Diluted Earnings Per Share⁽²⁾
As Reported GAAP	$	924	$	246	$	678	$	634	$	0.72	$	814	$	214	$	600	$	560	$	0.65
Global Growth and Efficiency Program	28		8		20		20		0.02		29		7		22		22		0.02
Non-GAAP	$	952	$	254	$	698	$	654	$	0.74	$	843	$	221	$	622	$	582	$	0.67


	Three Months Ended March 31, 2017										Three Months Ended March 31, 2018
	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 Interests		Net Income Attributable To Colgate-Palmolive Company		Diluted Earnings Per Share⁽²⁾
As Reported GAAP	$	862	$	251	$	611	$	570	$	0.64	$	924	$	246	$	678	$	634	$	0.72
Global Growth and Efficiency Program	46		15		31		31		0.03		28		8		20		20		0.02
Non-GAAP	$	908	$	266	$	642	$	601	$	0.67	$	952	$	254	$	698	$	654	$	0.74

⁽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.

COLGATE-PALMOLIVE COMPANY

Management’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 March 31,									Three Months Ended March 31,
	2018			2017			Change			2019			2018			Change
Net sales	$	827		$	760		9.0		%	$	853		$	827		3.0		%
Operating profit	$	257		$	247		4		%	$	249		$	257		(3	)	%
% of Net sales	31.1		%	32.5		%	(140	)	bps	29.2		%	31.1		%	(190	)	bps

Net sales in North America increased ~~9.0%~~3.0% in the first quarter of ~~2018~~2019 to ~~$827,~~$853, as volume growth of ~~9.0%~~2.0% and ~~positive~~net selling price increases of 1.5% were partially offset by negative foreign exchange of 0.5% ~~were partially offset by net selling price decreases of 0.5%. The Company’s professional skin care acquisitions increased volume by 3.5%~~. Organic sales in North America increased ~~5.0%~~3.5% in the first quarter of ~~2018.~~2019.

The increase in organic sales in North America in the first quarter of ~~2018~~2019 versus the first quarter of ~~2017~~2018 was primarily due to an increase in Oral Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste category.

Operating profit in North America decreased 3% in the first quarter of 2019 to $249, or 190 bps to 29.2% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (160 bps) and an increase in Selling, general and administrative expenses (70 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (270 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (130 bps). This increase in Selling, general and administrative expenses was primarily due to higher overhead expenses (70 bps), driven by higher logistics costs.

Latin America



	Three Months Ended March 31,
	2019			2018			Change
Net sales	$	889		$	929		(4.5	)	%
Operating profit	$	232		$	273		(15	)	%
% of Net sales	26.1		%	29.4		%	(330	)	bps

Net sales in Latin America decreased 4.5% to $889 in the first quarter of 2019, as volume growth of 2.5% and net selling price increases of 3.5% were more than offset by negative foreign exchange of 10.5%. Volume gains were led by Mexico, Brazil and Colombia. Organic sales in Latin America increased 6.0% in the first quarter of 2019.

The increase in organic sales in Latin America in the first quarter of 2019 versus the first quarter of 2018 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.~~category. The increase in Personal Care was primarily due to organic sales growth in the ~~liquid hand~~bar soap and ~~shower gel categories, partially offset by a decline in organic sales in the bar soap category.~~shampoo categories. The increase in Home Care was primarily due to organic sales growth in the fabric softener, liquid cleaner and ~~fabric softener~~hand dish categories.

Operating profit in North America increased 4% in the first quarter of 2018 to $257, while as a percentage of Net sales it decreased 140 bps to 31.1% of Net sales. This decrease in Operating profit as a percentage of Net sales was due to an increase in Selling, general and administrative expenses (100 bps) and an increase in Other (income) expense, net (70 bps), partially offset by an increase in Gross profit (30 bps), all as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (140 bps), partially offset by higher raw and packaging material costs (100 bps). This increase in Selling, general and administrative expenses was due to higher overhead expenses (120 bps), partially offset by decreased advertising investment (20 bps). This increase in Other (income) expense, net was due to the amortization of intangible assets resulting from the professional skin care acquisitions.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Operating profit in Latin America decreased 15% in the first quarter of 2019 to $232, or 330 bps to 26.1% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (230 bps) and an increase in Selling, general and administrative expenses (70 bps), both as a percentage of Net sales. This decrease in Gross profit was due to higher raw and packaging material costs (420 bps), which included foreign exchange transaction costs, partially offset by cost savings from the Company’s funding-the-growth initiatives (160 bps). This increase in Selling, general and administrative expenses was due to higher overhead expenses (40 bps), driven by higher logistics costs, and increased advertising investment (30 bps).

Europe


	Three Months Ended March 31,								Three Months Ended March 31,
	2018			2017			Change		2019			2018			Change
Net sales	$	929		$	924		0.5	%	$	602		$	648		(7.0	)	%
Operating profit	$	273		$	271		1	%	$	151		$	162		(7	)	%
% of Net sales	29.4		%	29.3		%	10	bps	25.1		%	25.0		%	10		bps

Net sales in ~~Latin America increased 0.5% to $929~~Europe decreased 7.0% in the first quarter of ~~2018, driven~~2019 to $602, as volume growth of 1.5% was more than offset by net selling price ~~increases~~decreases of ~~0.5%, while volume~~1.0% and negative foreign exchange ~~were flat.~~of 7.5%. Volume gains ~~in Brazil~~ were ~~offset~~led by ~~volume declines in Mexico.~~the United Kingdom and the Nordic region. Organic sales in ~~Latin America~~Europe increased 0.5% in the first quarter of ~~2018.~~2019.

The increase in organic sales in ~~Latin America~~Europe in the first quarter of ~~2018~~2019 versus the first quarter of ~~2017~~2018 was primarily due to an increase in Oral ~~Care.~~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 ~~manual toothbrush~~toothpaste category. The decrease in Personal Care was primarily due to a decline in organic sales in the underarm protection, bar soap and liquid hand soap categories.

Operating profit in ~~Latin America increased 1%~~Europe decreased 7% in the first quarter of ~~2018~~2019 to ~~$273, or~~$151 and increased 10 bps to ~~29.4%~~25.1% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to ~~a decrease~~an increase in Gross profit (50 bps) partially offset by an increase in Selling, general and administrative expenses ~~(60 bps) and a decrease in Other (income) expense, net (20~~(40 bps), ~~partially offset by a decrease in Gross profit (70 bps), all~~both as a percentage of Net sales. This ~~decrease~~increase in Gross profit was primarily due to ~~higher raw and packaging material costs (210 bps), partially offset by~~ cost savings from the Company’s funding-the-growth initiatives ~~(150~~(80 bps), partially offset by higher raw and packaging material costs (70 bps). This ~~decrease~~increase in Selling, general and administrative expenses was due to ~~decreased~~increased advertising investment ~~(40~~(80 bps) ~~and~~, partially offset by lower overhead expenses ~~(20~~(40 bps).

Asia Pacific



	Three Months Ended March 31,
	2019			2018			Change
Net sales	$	700		$	759		(8.0	)	%
Operating profit	$	189		$	226		(16	)	%
% of Net sales	27.0		%	29.8		%	(280	)	bps

Net sales in Asia Pacific decreased 8.0% in the first quarter of 2019 to $700, due to volume declines of 2.5% and negative foreign exchange of 5.5%, while net selling prices were flat. Volume declines in the Greater China region were partially offset by volume gains in India, Australia, Thailand and the Philippines. Organic sales in Asia Pacific in the first quarter of 2019 decreased 2.5%.

The decrease in organic sales in Asia Pacific in the first quarter of 2019 was due to a decrease in Oral Care organic sales. The decrease in Oral Care was due to declines in organic sales in the toothpaste and manual toothbrush categories.

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 March 31,
2018 2017 Change
Net sales $ 648
$ 558
16.0
%
Operating profit $ 162
$ 142
14
%
% of Net sales 25.0 % 25.4 % (40 ) bps

~~Net sales~~Operating profit in ~~Europe increased 16.0%~~Asia Pacific decreased 16% in the first quarter of ~~2018~~2019 to $648 as volume growth of 4.0% and positive foreign exchange of 14.5% were partially offset by net selling price decreases of 2.5%. Volume gains were led by France and Italy. Organic sales in Europe increased 1.5% in the first quarter of 2018.

The increase in organic sales in Europe in the first quarter of 2018 versus the first quarter of 2017 was primarily due to an increase in Personal Care organic sales. The increase in Personal Care was due to organic sales growth in the shower gel, underarm protection and shampoo categories.

~~Operating profit in Europe increased 14% in the first quarter of 2018 to $162, while as a percentage of Net sales, it decreased 40~~$189, or 280 bps to ~~25.0%~~27.0% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit ~~(90~~(130 bps)~~, partially offset by a decrease~~ and an increase in Selling, general and administrative expenses ~~(30~~(140 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs ~~(120~~(340 bps) ~~and lower pricing,~~, which included foreign exchange transaction costs, partially offset by cost savings from the Company’s funding-the-growth initiatives ~~(110~~(190 bps). This ~~decrease~~increase in Selling, general and administrative expenses was due to ~~lower overhead expenses (90 bps), partially offset by~~ increased advertising investment ~~(60~~(110 bps). and higher overhead expenses (30 bps), driven by higher logistics costs.

~~Asia Pacific~~Africa/Eurasia


	Three Months Ended March 31,									Three Months Ended March 31,
	2018			2017			Change			2019			2018			Change
Net sales	$	759		$	720		5.5		%	$	240		$	255		(6.0	)	%
Operating profit	$	226		$	219		3		%	$	46		$	50		(8	)	%
% of Net sales	29.8		%	30.4		%	(60	)	bps	19.2		%	19.6		%	(40	)	bps

Net sales in ~~Asia Pacific increased 5.5%~~Africa/Eurasia decreased 6.0% in the first quarter of ~~2018~~2019 to ~~$759, driven~~$240, as net selling price increases of 7.0% were more than offset by ~~volume growth of 0.5% and positive~~negative foreign exchange of ~~5.5%~~13.0%, ~~partially offset by net selling price decreases of 0.5%.~~while volume was flat. Volume gains in ~~India~~Russia and the ~~Philippines~~Gulf States were ~~partially~~ offset by volume declines in ~~the Greater China region~~South Africa and ~~Australia.~~Saudi Arabia. Organic sales in ~~Asia Pacific~~Africa/Eurasia increased 7.0% in the first quarter of ~~2018 were even with~~2019.

The increase in organic sales in Africa/Eurasia in the first quarter of ~~2017.~~

~~The organic sales performance in Asia Pacific in~~2019 versus the first quarter of 2018 was primarily due to an increase in ~~organic sales in~~ Oral Care ~~offset by a decline in~~ organic ~~sales in Personal Care.~~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 declines in organic sales in the shampoo~~ and ~~bar soap~~manual toothbrush categories.

Operating profit in ~~Asia Pacific increased 3%~~Africa/Eurasia decreased 8% in the first quarter of ~~2018~~2019 to ~~$226, while as a percentage of Net sales it decreased 60~~$46, or 40 bps to ~~29.8%~~19.2% of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit ~~(90~~(130 bps), partially offset by a decrease in Selling, general and administrative expenses ~~(30~~(80 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily due to higher ~~costs (200 bps), primarily driven by higher~~ raw and packaging material costs (560 bps), which included foreign exchange transaction costs, partially offset by cost savings from the Company’s funding-the-growth initiatives ~~(150~~(170 bps). and higher pricing. This decrease in Selling, general and administrative expenses was due to ~~decreased advertising investment (80~~lower overhead expenses (190 bps), partially offset by ~~higher overhead expenses (50~~increased advertising investment (110 bps).

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

~~Africa/Eurasia~~Hill’s Pet Nutrition


	Three Months Ended March 31,								Three Months Ended March 31,
	2018			2017			Change		2019			2018			Change
Net sales	$	255		$	246		3.5	%	$	600		$	584		3.0		%
Operating profit	$	50		$	46		9	%	$	164		$	164		—		%
% of Net sales	19.6		%	18.7		%	90	bps	27.3		%	28.1		%	(80	)	bps

Net sales ~~in Africa/Eurasia~~for Hill’s Pet Nutrition increased ~~3.5%~~3.0% in the first quarter of ~~2018~~2019 to ~~$255. Net~~$600, as volume growth of 2.0% and net selling price increases of ~~2.5% and positive~~4.0% were partially offset by negative foreign exchange of ~~4.5%~~3.0%. Volume gains in the United States and Western Europe were partially offset by volume declines ~~of 3.5%. Volume declines were mainly driven by~~in South ~~Africa.~~Africa and Russia. Organic sales in ~~Africa/Eurasia decreased 1.0%~~Hill’s Pet Nutrition increased 6.0% in the first quarter of ~~2018.~~2019.

The ~~decrease~~increase in organic sales ~~in Africa/Eurasia~~ in the first quarter of ~~2018~~2019 versus the first quarter of ~~2017 was primarily due to a decrease in Personal Care organic sales, partially offset by an increase in Oral Care organic sales. The decrease in Personal Care~~2018 was due to ~~declines~~increases in organic sales in the ~~underarm protection~~Prescription Diet and ~~shampoo categories. The increase in Oral Care was due to growth~~Advanced Nutrition categories, partially offset by decline in organic sales in the ~~toothpaste and manual toothbrush categories.~~Naturals category.

Operating profit in ~~Africa/Eurasia increased 9%~~Hill’s Pet Nutrition was $164 in the first quarter of 2019, even with the first quarter of 2018, ~~to $50, or 90~~while as a percentage of Net sales it decreased 80 bps to ~~19.6% of Net sales.~~27.3%. This ~~increase~~decrease in Operating profit as a percentage of Net sales was ~~primarily~~ due to a decrease in Gross profit (10 bps) and an increase in Selling, general and administrative expenses ~~(190 bps), partially offset by a decrease in Gross profit~~ (80 bps), both as a percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs ~~(220~~(260 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives ~~(50~~(170 bps) and higher pricing. This ~~decrease~~increase in Selling, general and administrative expenses was due to ~~decreased~~increased advertising investment ~~(120~~(200 bps) ~~and~~, partially offset by lower overhead expenses ~~(70~~(120 bps).

During the quarter ended March 31, 2019, Hill’s ~~Pet Nutrition~~

Three Months Ended March 31,
2018 2017 Change
Net sales $ 584
$ 554
5.5
%
Operating profit $ 164
$ 163
1
%
% of Net sales 28.1 % 29.4 % (130 ) bps

~~Net sales for~~announced a voluntary recall, which was subsequently expanded, of select canned dog food products due to potentially elevated levels of Vitamin D resulting from a supplier error. In the United States, the voluntary recall was conducted in cooperation with the U.S. Food and Drug Administration. Following the announcement of the voluntary recall, and as of March 31, 2019, Hill’s ~~Pet Nutrition increased 5.5%~~and/or the Company have been named as defendants in ~~the first quarter of 2018 to $584, driven by volume growth of 0.5%, net selling price increases of 1.0% and positive foreign exchange of 4.0%. Volume gains~~18 putative class action lawsuits filed in various jurisdictions in the United States ~~Australia~~related to the voluntary recall, two of which were voluntarily dismissed. Hill’s is entitled to indemnification from the supplier related to the voluntary recall. Sales of products voluntarily recalled represent less than 2% of Hill’s annual Net sales. The sales loss and ~~Brazil were partially offset by volume declines in Japan. The volume declines in Japan are primarily attributable to~~other costs associated with the voluntary recall and subsequent expansion did not have a ~~continued contraction in~~material impact on the ~~market. Organic~~Company’s Net sales ~~in Hill’s Pet Nutrition increased 1.5% in the first quarter of 2018.~~

The increase in organic sales in the first quarter of 2018 versus the first quarter of 2017 was due to an increase in organic sales in the Prescription Diet category, partially offset by a decline in organic sales in the Advanced Nutrition and Naturals categories.

or Operating profit for the quarter ended March 31, 2019 and are not expected to have a material impact in Hill’s Pet Nutrition increased 1% in the first quarter of 2018 to $164, while as a percentage of Net sales it decreased 130 bps to 28.1% of Net sales. This decrease in Operating profit as a percentage of Net sales was due to a decrease in Gross profit (60 bps) and an increase in Other (income) expense, net (90 bps), partially offset by a decrease in Selling, general and administrative expenses (20 bps), all as a percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (240 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (140 bps) and higher pricing. This decrease in Selling, general and administrative expenses was due to decreased advertising investment (60 bps), partially offset by higher overhead expenses (40 bps). This increase in Other (income) expense, net was primarily due to the expiration of a foreign sales tax benefit.

~~COLGATE-PALMOLIVE COMPANY~~

~~Management~~’~~s Discussion and Analysis of Financial~~

~~Condition and Results of Operations~~

~~(Dollars in Millions Except Per Share Amounts)~~

future periods.

Corporate

Three Months Ended March 31,
2018 2017 Change
Operating profit (loss) $ (149 ) $ (176 ) (15 ) %



	Three Months Ended March 31,
	2019			2018			Change
Operating profit (loss)	$	(152	)	$	(149	)	2	%

Operating profit (loss) related to Corporate was ($152) in the first quarter of 2019 as compared to ($149) in the first quarter of ~~2018 as compared to ($176) in~~2018. In the first quarter of ~~2017.~~2019, Corporate Operating profit (loss) included charges of $28 resulting from the Global Growth and Efficiency Program. In the first quarter of 2018, Corporate Operating profit (loss) included charges of $24 resulting from the Global Growth and Efficiency Program. ~~In the first quarter of 2017, Corporate Operating profit (loss) included charges of $45 resulting from 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)

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 was expanded in 2014 and expanded and extended in ~~2015. Building on the Company’s successful implementation~~each of ~~the~~2015 and 2017. The program ~~on October 26, 2017, the Board approved an expansion of the Global Growth and Efficiency Program and an extension of the program~~runs through December 31, ~~2019 to take advantage of additional opportunities to streamline the Company’s operations.~~2019.

Initiatives under the Global Growth and Efficiency Program are expected to help the Company ensure sustained solid worldwide growth in unit volume, organic sales, operating profit and earnings per share and to enhance its global leadership positions in its core businesses, producing 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.~~ capabilities.


▪	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~~’sCompany’s gross and operating profit.


▪	Building on ~~Colgate~~’sColgate’s current position of strength to enhance its leading market share positions worldwide and ensure sustained sales and earnings growth.

The initiatives under the Global Growth and Efficiency Program continue to be focused on the following areas:


▪	Expanding Commercial Hubs – Building on the success of the hub structure implemented around the world, streamlining operations in order to drive smarter and faster decision-making, strengthen capabilities available on the ground and improve cost structure.


▪	Extending Shared Business Services and Streamlining Global Functions – Optimizing the Company’s shared service organizational model in all regions of the world and continuing to streamline global functions to improve cost structure.


▪	Optimizing Global Supply Chain and Facilities – Continuing to optimize manufacturing efficiencies, global warehouse networks and office locations for greater efficiency, lower cost and speed to bring innovation to market.

Implementation of the Global Growth and Efficiency Program remains on ~~track.~~track and is in its final year. Savings, substantially all of which are expected to increase future cash flows, are projected to be in the range of ~~$560~~$590 to $635 pretax ($~~500~~550 to $575 aftertax) annually, once all projects are approved and implemented. The Company expects savings in ~~2018~~2019 to be approximately ~~$90~~$25 to ~~$120~~$55 pretax ($~~100~~40 to ~~$125~~$60 aftertax).

Cumulative pretax charges resulting from the Global Growth and Efficiency Program, once all phases are approved and implemented, are estimated to be in the range of ~~$1,730~~$1,820 to ~~$1,885~~$1,870 ($~~1,280~~1,350 to $1,380 aftertax). The Company anticipates that pretax charges for ~~2018~~2019 will approximate $100 to ~~$175~~$150 ($7570 to ~~$125~~$100 aftertax). It is expected that substantially all charges resulting from the Global Growth and Efficiency Program will be incurred by December 31, 2019.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, restructuring and related implementation charges are reflected in the Condensed Consolidated Statements of Income as follows:


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2018		2017		2019		2018
Cost of sales	$	6	$	14	$	11	$	6
Selling, general and administrative expenses	5		21		4		5
Other (income) expense, net	13		10		13		13
Non-service related postretirement costs	4		1		1		4
Total Global Growth and Efficiency Program charges, pretax	$	28	$	46	$	29	$	28

Total Global Growth and Efficiency Program charges, aftertax	$	20	$	31	$	22	$	20

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


	Three Months Ended				Program-to-date		Three Months Ended				Program-to-date
	March 31,				Accumulated Charges		March 31,				Accumulated Charges
	2018		2017				2019		2018
North America	37	%	37	%	19	%	8	%	37	%	18	%
Latin America	12	%	6	%	4	%	40	%	12	%	5	%
Europe	2	%	2	%	21	%	8	%	2	%	19	%
Asia Pacific	18	%	2	%	3	%	6	%	18	%	4	%
Africa/Eurasia	2	%	4	%	6	%	—	%	2	%	6	%
Hill’s Pet Nutrition	19	%	7	%	7	%	12	%	19	%	8	%
Corporate	10	%	42	%	40	%	26	%	10	%	40	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)


	Cumulative Charges		Cumulative Charges
	as of March 31, 2018		as of March 31, 2019
Employee-Related Costs	$	646	$	691
Incremental Depreciation	91		97
Asset Impairments	36		58
Other	816		905
Total	$	1,589	$	1,751

The following table summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals:


	Three Months Ended March 31, 2018														Three Months Ended March 31, 2019
	Employee-Related Costs			Incremental Depreciation			Asset Impairments		Other			Total			Employee-Related Costs			Incremental Depreciation			Asset Impairments			Other			Total
Balance at December 31, 2017	$	127		$	—		$	—	$	107		$	234
Balance at December 31, 2018															$	60		$	—		$	—		$	142		$	202
Charges	18			1			—		9			28			10			5			6			8			29
Cash payments	(39		)	—			—		(16		)	(55		)	(16		)	—			—			(8		)	(24		)
Charges against assets	(4		)	(1		)	—		—			(5		)	(1		)	(5		)	(6		)	—			(12		)
Foreign exchange	2			—			—		—			2			(1		)	—			—			—			(1		)
Balance at March 31, 2018	$	104		$	—		$	—	$	100		$	204
Other															—			—			—			(48		)	(48		)
Balance at March 31, 2019															$	52		$	—		$	—		$	94		$	146

Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension and other retiree benefit enhancements amounting to $4$1 for the three months ended March 31, ~~2018~~,2019, which are reflected as Charges against assets within Employee-Related Costs in the preceding table 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 ~~10,~~8, Retirement Plans and Other Retiree Benefits to the Condensed Consolidated Financial ~~Statements.~~Statements for additional information.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

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 months ended March 31, ~~2018~~2019 include third-party incremental costs related to the development and implementation of new business and strategic initiatives of $8$5 and contract termination costs and charges resulting directly from exit activities of ~~$1.~~$3. These charges were expensed as incurred.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

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 ~~as applicable,~~ 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 ~~as applicable,~~ 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 months ended March 31, ~~2018~~2019 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 the charges resulting from the Global Growth and Efficiency ~~Program (non-GAAP).~~Program. 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 divestitures and certain unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. A reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 is presented within the applicable section of Results of Operations.

The following table provides a quantitative reconciliation of Net sales growth to organic sales growth for the three months ended March 31, ~~2018~~2019:

Three Months Ended March 31, 2018
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care
North America 9.0% 0.5% 3.5% 5.0%
Latin America 0.5% —% —% 0.5%
Europe 16.0% 14.5% —% 1.5%
Asia Pacific 5.5% 5.5% —% —%
Africa/Eurasia 3.5% 4.5% —% (1.0)%
Total Oral, Personal and Home Care 6.5% 4.5% 0.5% 1.5%
Pet Nutrition 5.5% 4.0% —% 1.5%
Total Company 6.5% 4.5% 0.5% 1.5%



Three Months Ended March 31, 2019	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%	(0.5)%	—%	3.5%
Latin America	(4.5)%	(10.5)%	—%	6.0%
Europe	(7.0)%	(7.5)%	—%	0.5%
Asia Pacific	(8.0)%	(5.5)%	—%	(2.5)%
Africa/Eurasia	(6.0)%	(13.0)%	—%	7.0%
Total Oral, Personal and Home Care	(4.0)%	(6.5)%	—%	2.5%
Pet Nutrition	3.0%	(3.0)%	—%	6.0%
Total Company	(3.0)%	(6.0)%	—%	3.0%

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Liquidity and Capital Resources

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

Net cash provided by operations decreased ~~11%~~2% to ~~$616~~$605 in the first three months of ~~2018,~~2019, compared with ~~$691~~$616 in the comparable period of ~~2017,~~2018, primarily due to ~~an increase~~lower net income and higher voluntary contributions to the Company’s pension plans, partially offset by the change in working capital. The Company’s working capital was (3.9%) as a percentage of Net sales in the first three months of 2019 as compared to (2.7%) in the first three months of 2018. This change in working capital as a percent of sales is primarily due to the Company’s adoption of the new lease accounting standard effective January, 1, 2019. See Note 13, Leases for additional information. 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~~Company continues to be tightly focused on working ~~capital was (2.7%) as a percentage of Net sales in the first three months of 2018 as compared to (4.3%) in the first three months of 2017.~~capital.

~~Building on~~In the ~~Company’s successful implementation~~fourth quarter of 2012, the Company commenced the Global Growth and Efficiency ~~Program, on October 26, 2017, the Board approved an expansion~~Program. The program was expanded in 2014 and expanded and extended in each of ~~the Global Growth~~2015 and ~~Efficiency Program and an extension of the~~2017. The program runs through December 31, ~~2019 to take advantage of additional opportunities to streamline the Company’s operations.~~2019.

Implementation of the Global Growth and Efficiency Program remains on ~~track.~~track and is in its final year. Including the most recent expansion, total program charges resulting from the Global Growth and Efficiency Program are estimated to be in the range of ~~$1,730~~$1,820 to ~~$1,885~~$1,870 ($~~1,280~~1,350 to $1,380 aftertax). Approximately ~~80%~~75% 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 projected to be in the range of ~~$560~~$590 to $635 pretax ($~~500~~550 to $575 aftertax) annually, once all projects are approved and implemented.

The Company anticipates that pretax charges for ~~2018~~2019 will approximate $100 to ~~$175~~$150 ($7570 to ~~$125~~$100 aftertax). The Company expects savings in ~~2018~~2019 to amount to approximately ~~$90~~$25 to ~~$120~~$55 pretax ($~~100~~40 to ~~$125~~$60 aftertax). It is anticipated that cash requirements for the Global Growth and Efficiency Program will be funded from operating cash flows. Approximately ~~70%~~80% of the restructuring accrual at March 31, ~~2018~~2019 is expected to be paid in the next twelve months.

Investing activities used ~~$881~~$98 of cash in the first three months of ~~2018,~~2019, compared with ~~$158~~$881 in the comparable period of ~~2017, reflecting~~2018. Investing activities in 2018 includes the Company’s acquisition of the outstanding equity interests of ~~PCA~~Physicians Care Alliance, LLC and Elta MD Holdings, Inc., professional skin care businesses, for aggregate cash consideration of approximately $730. Capital spending was ~~$118~~$71 in the first three months of ~~2018~~2019 compared to ~~$121~~$118 in the comparable period of ~~2017.~~2018. Capital expenditures for ~~2018~~2019 are expected to be approximately ~~3.5%~~2.3% to 2.6% of Net sales. The Company continues to focus its capital spending on projects that are expected to yield high aftertax returns.

Financing activities used ~~$437~~$392 of cash during the first three months of ~~2018,~~2019, compared with ~~$520~~$437 in the comparable period of ~~2017,~~2018, primarily reflecting higher net proceeds ~~from~~on debt in the ~~issuance~~first three months of ~~debt, partially offset by lower proceeds from~~2019 compared to the ~~exercise~~first three months of ~~stock options.~~2018.

Long-term debt, including the current portion, ~~decreased~~increased to ~~$6,550~~$6,656 as of March 31, ~~2018~~2019 as compared to ~~$6,566~~$6,354 as of December 31, ~~2017,~~2018, and total debt increased to ~~$6,709~~$6,661 as of March 31, ~~2018~~2019 as compared to ~~$6,577~~$6,366 as of December 31, ~~2017~~2018 primarily due to higher debt, partially offset by lower outstanding commercial ~~paper as~~paper. During the first quarter of ~~March 31, 2018.~~2019, the Company issued €500 of seven-year notes at a fixed coupon rate of 0.50% and €500 of fifteen-year notes at a fixed coupon rate of 1.375%. The debt issuances were under the Company’s shelf registration statement. The debt issuances support ~~its~~the Company’s capital structure ~~strategy~~ objectives of funding its business and growth initiatives while minimizing its risk-adjusted cost of capital. Proceeds from the debt issuances were used for general corporate purposes, which includes the retirement of commercial paper and the repayment of the Company’s $500 1.75% fixed rate notes which became due March 2019 and €500 floating rate notes which become due May 2019.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Domestic and foreign commercial paper outstanding was ~~$156~~$216 and ~~$633~~$156 as of March 31, 2019 and 2018, ~~and 2017,~~ respectively. ~~Commercial paper outstanding as of March 31, 2018 is U.S. dollar-denominated.~~ The average daily balances outstanding for commercial paper in the first three months of 2019 and 2018 were $1,548 and ~~2017 were~~ $1,936, ~~and $741,~~ 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 line of credit that expires in November ~~2020.~~2023.

Certain of the agreements with respect to the Company’s bank borrowings contain financial and other covenants as well as cross-default provisions. Noncompliance with these requirements could ultimately result in the acceleration of amounts owed. The Company is in full compliance with all such requirements and believes the likelihood of noncompliance is remote. Refer to Note 6, Long term Debt and Credit Facilities, on the Company’s Annual report on Form 10-K for the year ended December 31, 2018 for further information about the Company’s long-term debt and credit facilities.

In the first quarter of ~~2018,~~2019, the Company increased the annualized common stock dividend ~~by 5%~~ to $1.72 per share from $1.68 per share previously, effective in the second quarter of ~~2018.~~2019.

Cash and cash equivalents ~~decreased $684~~increased $117 during the first three months of ~~2018~~2019 to ~~$851~~$843 at March 31, ~~2018,~~2019, compared to ~~$1,535~~$726 at December 31, ~~2017,~~2018, most of which ($~~784~~782 and ~~$1,467,~~$651, respectively) were held by the Company’s foreign subsidiaries.

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, ~~2017~~.2018.

COLGATE-PALMOLIVE COMPANY

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Dollars in Millions Except Per Share Amounts)

Market Share Information

Management uses market share information as a key indicator to monitor business health and performance. References to market share in this Quarterly Report on Form 10-Q are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).

Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce 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 believe~~The Company believes that the third-party vendors ~~we use~~it uses to provide data are reliable, but ~~we have~~it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In addition, market share information ~~calculated~~reported by the Company may be different from market share information ~~calculated~~reported 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 ~~(as~~as that term is defined in the ~~U.S.~~ Private Securities Litigation Reform Act of 1995 or by the ~~Securities and Exchange Commission (“SEC”)~~SEC in its rules, regulations and ~~releases)~~releases that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share growth, financial goals, the impact of foreign exchange volatility, cost-reduction plans including the Global Growth and Efficiency Program, tax rates, U.S. tax reform, ~~the need to repatriate undistributed earnings of foreign subsidiaries,~~ new product introductions, commercial investment levels, acquisitions and divestitures, 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 environment in different countries and its effect on consumer spending habits, increased competition and evolving competitive practices, foreign currency rate fluctuations, exchange controls, 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, disruptions in global supply chain, the availability and cost of raw and packaging materials, the ability to maintain or increase selling prices as needed, the ability to implement the Global Growth and Efficiency Program as planned or differences between the actual and the estimated costs or savings under such program, changes in the policies of retail trade customers, the emergence of new sales channels, the growth of ~~e-commerce,~~eCommerce and the changing retail landscape, the ability to ~~continue lowering~~lower costs, the ability to complete acquisitions and divestitures as planned, the ability to successfully integrate acquired businesses, and the uncertainty of the outcome of legal proceedings, whether or not the Company believes they have merit. For information about these and other factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, refer to the Company’s filings with the SEC (including, but not limited to, the information set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and subsequent Quarterly Reports on Form 10-Q).

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, ~~2017.~~2018.

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 the 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 March 31, ~~2018~~2019 (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 Over Financial Reporting

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 service centers. This transition has not materially affected the Company’s internal control over financial reporting.

COLGATE-PALMOLIVE COMPANY

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal matters, please refer to Note ~~12,~~10, 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

There have been no material changes from the risk factors disclosed in Part 1, Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

COLGATE-PALMOLIVE COMPANY

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

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

The following table shows the stock repurchase activity for the three months in the quarter ended March 31, ~~2018:~~2019:

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)
January 1 through 31, 2018 830,855
$ 74.71
782,350
$ 1,013
February 1 through 28, 2018 2,043,811
$ 70.43
1,867,300
$ 881
March 1 through 31, 2018 1,989,713
$ 69.83
1,936,900
$ 746
Total 4,864,379
$ 70.92
4,586,550



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)
January 1 through 31, 2019	1,388,756	$	61.78	1,333,935	$	4,344
February 1 through 28, 2019	2,161,743	$	65.96	2,001,000	$	4,212
March 1 through 31, 2019	2,547,228	$	66.08	2,500,378	$	4,047
Total	6,097,727	$	65.06	5,835,313

⁽¹⁾Includes share repurchases under the 2018 Program and those associated with certain employee elections under the Company’s compensation and benefit programs.

⁽²⁾The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced plans or programs is 262,414 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 March 31, 2019.

~~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 277,829 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 March 31, 2018.~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

COLGATE-PALMOLIVE COMPANY

Item 6. Exhibits



Exhibit No.		Description
10		~~Colgate-Palmolive Company Supplemental Salaried Employees’ Retirement Plan, amended and restated as~~Form of ~~April 19, 2018.~~

12		~~Computation of Ratio of Earnings~~Performance Stock Unit Award Agreement for the 2019-2021 Performance Cycle (Registrant hereby incorporates by reference Exhibit 99 to ~~Fixed Charges.~~its Current Report on Form 8-K filed on March 20, 2019, File No. 1-644.)

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		Certificate of the Chief Financial Officer of Colgate-Palmolive Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32		Certificate of the ~~Chairman of the Board,~~ President and Chief Executive Officer and the Chief Financial Officer of Colgate-Palmolive Company pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.

101		The following materials from Colgate-Palmolive Company’s Quarterly Report on Form 10-Q for the period ended March 31, ~~2018,~~2019, formatted in eXtensible Business Reporting Language (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.

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:

April ~~27, 2018~~26, 2019	/s/ ~~Ian Cook~~Noel R. Wallace
	~~Ian Cook~~Noel R. Wallace
	~~Chairman of the Board,~~ President and Chief Executive Officer

	Principal Financial Officer:

April ~~27, 2018~~26, 2019	/s/ ~~Dennis J. Hickey~~Henning I. Jakobsen
	~~Dennis J. Hickey~~Henning I. Jakobsen
	Chief Financial Officer

	Principal Accounting Officer:

April ~~27, 2018~~26, 2019	/s/ ~~Henning I. Jakobsen~~Philip G. Shotts
	~~Henning I. Jakobsen~~Philip G. Shotts
	Vice President and ~~Corporate~~ Controller

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