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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, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________ to________ .
Commission File Number: 1-644
COLGATE-PALMOLIVE COMPANY
(Exact name of registrant as specified in its charter)
Delaware13-1815595
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
300 Park Avenue
New York,New York10022
(Address of principal executive offices)(Zip Code)
(212) 310-2000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $1.00 par valueCLNew York Stock Exchange
0.500% Notes due 2026CL26New York Stock Exchange
0.300% Notes due 2029CL29New York Stock Exchange
1.375% Notes due 2034CL34New York Stock Exchange
0.875% Notes due 2039CL39New York Stock Exchange
NO CHANGES
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
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:
ClassShares OutstandingDate
Common stock, $1.00 par value837,941,870March 31, 2022




PART I.    FINANCIAL INFORMATION


COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Income
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
 
 Three Months Ended
March 31,
20222021
Net sales$4,399 $4,344 
Cost of sales1,827 1,707 
Gross profit2,572 2,637 
Selling, general and administrative expenses1,641 1,605 
Other (income) expense, net71 28 
Operating profit860 1,004 
Non-service related postretirement costs38 18 
Interest (income) expense, net27 29 
Income before income taxes795 957 
Provision for income taxes192 229 
Net income including noncontrolling interests603 728 
Less: Net income attributable to noncontrolling interests44 47 
Net income attributable to Colgate-Palmolive Company$559 $681 
Earnings per common share, basic$0.67 $0.80 
Earnings per common share, diluted$0.66 $0.80 



See Notes to Condensed Consolidated Financial Statements.

2



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Comprehensive Income
(Dollars in Millions)
(Unaudited)
Three Months Ended
March 31,
20222021
Net income including noncontrolling interests$603 $728 
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments80 (158)
Retirement plans and other retiree benefit adjustments14 2 
    Gains (losses) on cash flow hedges41 43 
Total Other comprehensive income (loss), net of tax135 (113)
Total Comprehensive income including noncontrolling interests738 615 
Less: Net income attributable to noncontrolling interests44 47 
Less: Cumulative translation adjustments attributable to noncontrolling interests(2)(3)
Total Comprehensive income attributable to noncontrolling interests42 44 
Total Comprehensive income attributable to Colgate-Palmolive Company$696 $571 
See Notes to Condensed Consolidated Financial Statements.

3



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Balance Sheets
(Dollars in Millions)
(Unaudited)
March 31,
2022
December 31,
2021
Assets
Current Assets
Cash and cash equivalents$877 $832 
Receivables (net of allowances of $80 and $78, respectively)
1,532 1,297 
Inventories1,924 1,692 
Other current assets656 576 
Total current assets4,989 4,397 
Property, plant and equipment:  
Cost9,043 8,899 
Less: Accumulated depreciation(5,291)(5,169)
 3,752 3,730 
Goodwill3,292 3,284 
Other intangible assets, net2,415 2,462 
Deferred income taxes193 193 
Other assets1,082 974 
Total assets$15,723 $15,040 
Liabilities and Shareholders’ Equity  
Current Liabilities  
Notes and loans payable$7 $39 
Current portion of long-term debt12 12 
Accounts payable1,582 1,479 
Accrued income taxes473 436 
Other accruals2,492 2,085 
Total current liabilities4,566 4,051 
Long-term debt7,588 7,194 
Deferred income taxes379 395 
Other liabilities2,462 2,429 
Total liabilities14,995 14,069 
Shareholders’ Equity  
Common stock, $1 par value (2,000,000,000 shares authorized, 1,465,706,360 shares issued)
1,466 1,466 
Additional paid-in capital3,355 3,269 
Retained earnings24,149 24,350 
Accumulated other comprehensive income (loss)(4,248)(4,386)
Unearned compensation (1)
Treasury stock, at cost(24,401)(24,089)
Total Colgate-Palmolive Company shareholders’ equity321 609 
Noncontrolling interests407 362 
Total equity728 971 
Total liabilities and equity$15,723 $15,040 
See Notes to Condensed Consolidated Financial Statements.

4



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
(Unaudited)
Three Months Ended
 March 31,
 20222021
Operating Activities  
Net income including noncontrolling interests$603 $728 
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:  
Depreciation and amortization138 137 
Restructuring and termination benefits, net of cash81 (13)
Stock-based compensation expense29 38 
Deferred income taxes(7)6 
Cash effects of changes in:
Receivables(197)(170)
Inventories(215)(40)
Accounts payable and other accruals(28)(75)
Other non-current assets and liabilities(18)(13)
Net cash provided by (used in) operations386 598 
Investing Activities  
Capital expenditures(122)(107)
Purchases of marketable securities and investments(36)(29)
Proceeds from sale of marketable securities and investments14  
Other investing activities3 (6)
Net cash provided by (used in) investing activities(141)(142)
Financing Activities  
Short-term borrowing (repayment) less than 90 days, net413 365 
Proceeds from issuance of debt 5 25 
Dividends paid(378)(376)
Purchases of treasury shares(410)(372)
Proceeds from exercise of stock options171 30 
Other financing activities(5)(6)
Net cash provided by (used in) financing activities(204)(334)
Effect of exchange rate changes on Cash and cash equivalents4 (15)
Net increase (decrease) in Cash and cash equivalents45 107 
Cash and cash equivalents at beginning of the period832 888 
Cash and cash equivalents at end of the period$877 $995 
Supplemental Cash Flow Information  
Income taxes paid$155 $227 
See Notes to Condensed Consolidated Financial Statements.

5



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders Equity
(Dollars in Millions)
(Unaudited)
Three Months Ended March 31, 2022
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2021$1,466 $3,269 $(1)$(24,089)$24,350 $(4,386)$362 
Net income    559  44 
Other comprehensive income (loss), net of tax
     137 (2)
Dividends ($0.92 per share)*
    (760)  
Stock-based compensation expense
 29      
Shares issued for stock options
 77  77    
Shares issued for restricted stock units
 (22) 22    
Treasury stock acquired
   (410)   
Other 2 1 (1) 1 3 
Balance, March 31, 2022$1,466 $3,355 $ $(24,401)$24,149 $(4,248)$407 
Three Months Ended March 31, 2021
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance December 31, 2020$1,466 $2,969 $(1)$(23,045)$23,699 $(4,345)$358 
Net income— — — — 681 — 47 
Other comprehensive income (loss), net of tax
— — — — — (110)(3)
Dividends ($0.89 per share)*
— — — — (756)—  
Stock-based compensation expense
— 38 — — — — — 
Shares issued for stock options
— 13 — 22 — — — 
Shares issued for restricted stock units
— (11)— 11 — — — 
Treasury stock acquired
— — — (372)— — — 
Other— 2 1 — — — (1)
Balance, March 31, 2021$1,466 $3,011 $ $(23,384)$23,624 $(4,455)$401 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,269 at March 31, 2022 ($3,313 at March 31, 2021) and $3,349 at December 31, 2021 ($3,158 at December 31, 2020), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,030 at March 31, 2022 ($1,176 at March 31, 2021) and $1,044 at December 31, 2021 ($1,178 at December 31, 2020), respectively.
* Two dividends were declared in each of the first quarters of 2022 and 2021.
See Notes to Condensed Consolidated Financial Statements.

6


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.

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, 2021, 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, as applicable.

3.    Recent Accounting Pronouncements

In March 2022, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, “Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.”
This ASU eliminates the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. This guidance is effective for the Company beginning on January 1, 2023 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2022, the FASB issued ASU No. 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method.” This ASU clarifies the accounting and promotes consistency in reporting for hedges where the portfolio layer method is applied. This guidance is effective for the Company beginning on January 1, 2023 and is not expected to have an impact on the Company’s Consolidated Financial Statements.

In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832).” This ASU requires increased disclosure on an annual basis about transactions with domestic, foreign, local, regional and national governments, including entities related to those governments and intergovernmental organizations, that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. This guidance was effective for the Company beginning on January 1, 2022 and did not have a material impact on the Company’s Consolidated Financial Statements.

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606).” This guidance is effective for the Company beginning on January 1, 2023 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848): Scope,” which clarified that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition due to reference rate reform. These ASUs were effective upon issuance and can be applied prospectively for contract modifications and hedging relationships through December 31, 2022. The guidance has not had and is not expected to have a material impact on the Company’s Consolidated Financial Statements.
7

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


4.    Restructuring and Related Implementation Charges
    
On January 27, 2022, the Company’s Board of Directors (the “Board”) approved a targeted productivity program (the “2022 Global Productivity Initiative”). The program is intended to reallocate resources towards the Company’s strategic priorities and faster growth businesses, drive efficiencies in the Company’s operations and streamline the Company’s supply chain to reduce structural costs.

Implementation of the 2022 Global Productivity Initiative, which is expected to be substantially completed by mid-year 2023, is estimated to result in cumulative pretax charges, once all phases are approved and implemented, in the range of $200 to $240 ($170 to $200 aftertax), which is currently estimated to be comprised of the following: employee-related costs, including severance, pension and other termination benefits (75%); asset-related costs, primarily accelerated depreciation and asset write-downs (15%); and other charges (10%), which include contract termination costs, consisting primarily of implementation-related charges resulting directly from exit activities and the implementation of new strategies. It is estimated that approximately 80% to 90% of the charges will result in cash expenditures.

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

For the three months ended March 31, 2022, charges resulting from the 2022 Global Productivity Initiative are reflected in the income statement as follows:

Three Months ended March 31,
2022
Other (income) expense, net63 
Non-service related postretirement costs19 
Total 2022 Global Productivity Initiative charges, pretax$82 
Total 2022 Global Productivity Initiative charges, aftertax$65 


Restructuring and related implementation charges in the preceding table are recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance. Total charges incurred for the 2022 Global Productivity Initiative relate to initiatives undertaken by the following reportable operating segments:
Three Months ended March 31,
 2022
North America13 %
Latin America 15 %
Europe 18 %
Asia Pacific11 %
Africa/Eurasia4 %
Hill's Pet Nutrition9 %
Corporate30 %
Total100 %


8

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


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

 Employee-Related
Costs 
Incremental
Depreciation 
Asset
Impairments
OtherTotal
Charges $82 $ $ $ $82 
Cash Payments      
Charges against assets(19)   (19)
Foreign exchange     
Balance at March 31, 2022$63 $ $ $ $63 
Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, written severance policies, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension enhancements amounting to $19 for the three months ended March 31, 2022, which are reflected as Charges against assets within Employee-Related Costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension liabilities.




5.    Inventories

Inventories by major class were as follows:
March 31,
2022
December 31,
2021
Raw materials and supplies$550 $505 
Work-in-process50 39 
Finished goods1,451 1,248 
       Total Inventories, net$2,051 $1,792 
            Non-current inventory, net$(127)$(100)
              Current Inventories, net$1,924 $1,692 
9

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


6.    Earnings Per Share

For the three months ended March 31, 2022 and 2021, earnings per share were as follows:
 Three Months Ended
 March 31, 2022March 31, 2021
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Basic EPS$559 840.6 $0.67 $681 848.6 $0.80 
Stock options and
restricted stock units
3.1   2.8  
Diluted EPS$559 843.7 $0.66 $681 851.4 $0.80 
For the three months ended March 31, 2022 and 2021, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 4,107,848 and 2,721,084, respectively.

10

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


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, 2022 and 2021 were as follows:
 20222021
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$96 $82 $(99)$(155)
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period  (19)(14)
Amortization of net actuarial loss, transition and prior service costs (1)
18 14 22 16 
Retirement plans and other retiree benefits adjustments18 14 3 2 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges58 45 53 41 
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
(5)(4)3 2 
Gains (losses) on cash flow hedges53 41 56 43 
Total Other comprehensive income (loss)$167 $137 $(40)$(110)
(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 11, Fair Value Measurements and Financial Instruments for additional details.

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




8.    Retirement Plans and Other Retiree Benefits

Components of Net periodic benefit cost for the three months ended March 31, 2022 and 2021 were as follows:
Three Months Ended March 31,
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202220212022202120222021
Service cost$ $ $5 $4 $5 $6 
Interest cost16 15 6 5 10 9 
Expected return on plan assets(25)(27)(6)(6)  
Amortization of actuarial loss (gain)11 13 2 3 5 6 
Net periodic benefit cost$2 $1 $7 $6 $20 $21 
Other postretirement charges9  2  8  
Total pension cost$11 $1 $9 $6 $28 $21 
Other postretirement charges for the three months ended March 31, 2022 included pension and other charges amounting to $19 incurred pursuant to the 2022 Global Productivity Initiative.
For the three months ended March 31, 2022 and 2021, the Company made no voluntary contributions to its U.S. postretirement plans.
11

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


9.    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 $475 (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 range 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.

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 $127. 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.

In each of September 2015, February 2017, June 2018, April 2019 and September 2020, the Company lost an administrative appeal and subsequently filed an appeal in Brazilian federal court. Currently, there are five appeals pending in the 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
12

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


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 $56, 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.

Competition Matter

Certain of the Company’s subsidiaries were historically subject to actions and, in some cases, fines, by governmental authorities in a number of countries related to alleged competition law violations. Substantially all of these matters also 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 as of March 31, 2022 of such competition law matters pending against the Company during the three months ended March 31, 2022 is set forth below.

In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of parallel imports into Greece. The Company responded to this statement of objections. In July 2017, the Company received the decision from the Greek competition law authority in which the Company was fined $11. The Company appealed the decision to the Greek courts. In April 2019, the Greek courts affirmed the judgment against the Company’s Greek subsidiary, but reduced the fine to $10.5 and dismissed the case against Colgate-Palmolive Company. The Company’s Greek subsidiary and the Greek competition authority have appealed the decision to the Greek Supreme Court.

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 and/or caused mesothelioma and other cancers. Many of these actions involve a number of co-defendants from a variety of different industries, including suppliers of asbestos and manufacturers of products that, unlike the Company’s products, were designed to contain asbestos. As of March 31, 2022, there were 186 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 171 cases as of December 31, 2021. During the three months ended March 31, 2022, 17 new cases were filed and two cases were resolved by voluntary dismissal. There were no settlements of pending cases in the three months ended March 31, 2022.

A significant portion of the Company’s costs incurred in defending and resolving these claims has been, and the Company believes that a portion of such costs will continue to be, covered by insurance policies issued by several primary, excess and umbrella insurance carriers, subject to deductibles, exclusions, retentions, policy limits and insurance carrier insolvencies.

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

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”) did not comply with the Employee Retirement
13

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


Income Security Act was filed against the Plan, the Company and certain individuals (the “Company Defendants”) in the United States District Court for the Southern District of New York (the “Court”). The relief sought includes recalculation of benefits, pre- and post-judgment interest and attorneys’ fees. This action was certified as a class action in July 2017. In July 2020, the Court granted in part and denied in part the Company Defendants’ motion for summary judgment and dismissed certain claims on consent of the parties. In August 2020, the Court granted the plaintiffs’ motion for summary judgment on the remaining claims. The Company and the Plan are contesting this action vigorously and, in September 2020, appealed to the United States Court of Appeals for the Second Circuit. The appeal is currently pending.
14

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


10.    Segment Information

The Company operates in 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.

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, 2021. Intercompany sales have been eliminated. Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs, restructuring and related implementation charges and gains and losses on sales of non-core product lines and assets. The Company reports these items within Corporate operations as they relate to Corporate-based responsibilities and decisions and are not included in the internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments.

Net sales by segment were as follows:
Three Months Ended
 March 31,
 20222021
Net sales  
Oral, Personal and Home Care  
North America$926 $923 
Latin America954 907 
Europe654 717 
Asia Pacific726 739 
Africa/Eurasia267 272 
Total Oral, Personal and Home Care3,527 3,558 
Pet Nutrition872 786 
Total Net sales$4,399 $4,344 
Approximately 70% of the Company’s Net sales are generated from markets outside the U.S., with approximately 45% of the Company’s Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe).


15

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
 March 31,
 20222021
Net sales
Oral Care45 %45 %
Personal Care18 %19 %
Home Care17 %18 %
Pet Nutrition20 %18 %
Total Net sales100 %100 %
Operating profit by segment was as follows:
Three Months Ended
 March 31,
 20222021
Operating profit  
Oral, Personal and Home Care  
North America$163 $202 
Latin America265 272 
Europe150 180 
Asia Pacific206 224 
Africa/Eurasia44 54 
Total Oral, Personal and Home Care828 932 
Pet Nutrition204 215 
Corporate(172)(143)
Total Operating profit$860 $1,004 
Corporate Operating profit (loss) for the three months ended March 31, 2022 included charges resulting from the 2022 Global Productivity Initiative of $63.


16

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


11.    Fair Value Measurements and Financial Instruments

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

The Company is exposed to market risk from foreign currency exchange rates, interest rates and commodity price fluctuations. Volatility relating to these exposures is managed on a global basis by utilizing a number of techniques, including working capital management, sourcing strategies, selling price increases, selective borrowings in local currencies and entering into selective derivative instrument transactions, issued with standard features, in accordance with the Company’s treasury and risk management policies, which prohibit the use of derivatives for speculative purposes and leveraged derivatives for any purpose. It is the Company’s policy to enter into derivative instrument contracts with terms that match the underlying exposure being hedged.

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

The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments which are carried at fair value in the Company’s Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021:
 AssetsLiabilities
  
Account
Fair ValueAccountFair Value
Designated derivative instrumentsMarch 31, 2022December 31, 2021 March 31, 2022December 31, 2021
Interest rate swap contractsOther current assets$1 $5 Other accruals$ $ 
Forward-starting interest rate swapsOther current assets6  Other accruals  
Forward-starting interest rate swapsOther assets50 20 Other liabilities 21 
Foreign currency contractsOther current assets15 22 Other accruals20 6 
Commodity contractsOther current assets5 2 Other accruals  
Total designated$77 $49  $20 $27 
Other financial instruments     
Marketable securitiesOther current assets$58 $34    
Total other financial instruments$58 $34    
17

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


The carrying amount of cash, cash equivalents, marketable securities, accounts receivable and short-term debt approximated fair value as of March 31, 2022 and December 31, 2021. The estimated fair value of the Company’s long-term debt, including the current portion, as of March 31, 2022 and December 31, 2021, was $7,645 and $7,651, respectively, and the related carrying value was $7,600 and $7,206, respectively. The estimated fair value of long-term debt was derived principally from quoted prices on the Company’s outstanding fixed-term notes (Level 2 valuation).

The following amounts were recorded on the Condensed Consolidated Balance Sheet related to the cumulative basis adjustment for fair value hedges as of:
March 31, 2022December 31, 2021
Long-term debt:  
Carrying amount of hedged item$401 $405 
Cumulative hedging adjustment included in the carrying amount1 5 
The following tables present the notional values as of:
 March 31, 2022
 Foreign Currency ContractsForeign Currency DebtInterest Rate Swaps Forward-Starting Interest Rate SwapsCommodity Contracts 
Total
Fair Value Hedges $537 $ $400 $ $ $937 
Cash Flow Hedges 896   875 25 1,796 
Net Investment Hedges267 4,535    4,802 
 December 31, 2021
 Foreign Currency ContractsForeign Currency DebtInterest Rate SwapsForward-Starting Interest Rate SwapsCommodity Contracts 
Total
Fair Value Hedges $566 $ $400 $ $ $966 
Cash Flow Hedges 873   700 24 1,597 
Net Investment Hedges173 4,600    4,773 
18

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


The following tables present the location and amount of gains (losses) recognized on the Company’s Condensed Consolidated Statements of Income:
Three Months Ended March 31,
 20222021
Cost of sales Selling, general and administrative expensesInterest (income) expense, netCost of salesSelling, general and administrative expensesInterest (income) expense, net
Interest rate swaps designated as fair value hedges:
Derivative instrument$ $ $4 $ $ $2 
Hedged items  (4)  (2)
Foreign currency contracts designated as fair value hedges:
Derivative instrument 2