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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 September 30, 2023
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 value823,372,259September 30, 2023




PART I.    FINANCIAL INFORMATION


COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Income
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
 
 Three Months EndedNine Months Ended
September 30,September 30,
2023202220232022
Net sales$4,915 $4,455 $14,507 $13,338 
Cost of sales2,038 1,907 6,131 5,664 
Gross profit2,877 2,548 8,376 7,674 
Selling, general and administrative expenses1,822 1,634 5,348 4,932 
Other (income) expense, net26 (33)116 51 
Operating profit1,029 947 2,912 2,691 
Non-service related postretirement costs15 15 338 65 
Interest (income) expense, net58 40 170 98 
Income before income taxes956 892 2,404 2,528 
Provision for income taxes209 210 709 604 
Net income including noncontrolling interests747 682 1,695 1,924 
Less: Net income attributable to noncontrolling interests39 64 113 144 
Net income attributable to Colgate-Palmolive Company$708 $618 $1,582 $1,780 
Earnings per common share, basic$0.86 $0.74 $1.91 $2.12 
Earnings per common share, diluted$0.86 $0.74 $1.90 $2.12 



See Notes to Condensed Consolidated Financial Statements.

2



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Comprehensive Income
(Dollars in Millions)
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
2023202220232022
Net income including noncontrolling interests$747 $682 $1,695 $1,924 
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments(79)(161)(9)(227)
Retirement plans and other retiree benefit adjustments32 298 45 327 
    Gains (losses) on cash flow hedges5 (26)1 75 
Total Other comprehensive income (loss), net of tax(42)111 37 175 
Total Comprehensive income including noncontrolling interests705 793 1,732 2,099 
Less: Net income attributable to noncontrolling interests39 64 113 144 
Less: Cumulative translation adjustments attributable to noncontrolling interests(3)(16)(44)(32)
Total Comprehensive income attributable to noncontrolling interests36 48 69 112 
Total Comprehensive income attributable to Colgate-Palmolive Company$669 $745 $1,663 $1,987 
See Notes to Condensed Consolidated Financial Statements.

3



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Balance Sheets
(Dollars in Millions)
(Unaudited)
September 30,
2023
December 31,
2022
Assets
Current Assets
Cash and cash equivalents$951 $775 
Receivables (net of allowances of $83 and $70, respectively)
1,577 1,504 
Inventories1,931 2,074 
Other current assets898 760 
Total current assets5,357 5,113 
Property, plant and equipment:  
Cost9,979 9,583 
Less: Accumulated depreciation(5,570)(5,276)
 4,409 4,307 
Goodwill3,327 3,352 
Other intangible assets, net1,861 1,920 
Deferred income taxes202 135 
Other assets887 904 
Total assets$16,043 $15,731 
Liabilities and Shareholders’ Equity  
Current Liabilities  
Notes and loans payable$18 $11 
Current portion of long-term debt16 14 
Accounts payable1,482 1,551 
Accrued income taxes354 317 
Other accruals2,732 2,111 
Total current liabilities4,602 4,004 
Long-term debt8,690 8,741 
Deferred income taxes430 383 
Other liabilities1,915 1,797 
Total liabilities15,637 14,925 
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 capital3,762 3,546 
Retained earnings24,571 24,573 
Accumulated other comprehensive income (loss)(3,974)(4,055)
Unearned compensation (1)
Treasury stock, at cost(25,834)(25,128)
Total Colgate-Palmolive Company shareholders’ equity(9)401 
Noncontrolling interests415 405 
Total equity406 806 
Total liabilities and equity$16,043 $15,731 
See Notes to Condensed Consolidated Financial Statements.

4



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
(Unaudited)
Nine Months Ended
 September 30,
 20232022
Operating Activities  
Net income including noncontrolling interests$1,695 $1,924 
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:  
Depreciation and amortization417 410 
ERISA litigation matter267  
Restructuring and termination benefits, net of cash(17)51 
Stock-based compensation expense97 105 
Gain on the sale of land (47)
Deferred income taxes(109)(13)
Cash effects of changes in:
Receivables(62)(171)
Inventories150 (422)
Accounts payable and other accruals168 9 
Other non-current assets and liabilities3 37 
Net cash provided by (used in) operations2,609 1,883 
Investing Activities  
Capital expenditures(508)(475)
Purchases of marketable securities and investments(324)(239)
Proceeds from sale of marketable securities and investments264 55 
Payment for acquisitions, net of cash acquired (817)
Proceeds from the sale of land 47 
Other investing activities(31)1 
Net cash provided by (used in) investing activities(599)(1,428)
Financing Activities  
Short-term borrowing (repayment) less than 90 days, net(564)(56)
Principal payments of debt(903)(2)
Proceeds from issuance of debt 1,497 1,513 
Dividends paid(1,243)(1,206)
Purchases of treasury shares(883)(895)
Proceeds from exercise of stock options325 398 
Other financing activities(30)(38)
Net cash provided by (used in) financing activities(1,801)(286)
Effect of exchange rate changes on Cash and cash equivalents(33)(63)
Net increase (decrease) in Cash and cash equivalents176 106 
Cash and cash equivalents at beginning of the period775 832 
Cash and cash equivalents at end of the period$951 $938 
Supplemental Cash Flow Information  
Income taxes paid$726 $690 
Interest paid$243 $104 
See Notes to Condensed Consolidated Financial Statements.

5



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders Equity
(Dollars in Millions)
(Unaudited)

Three Months Ended September 30, 2023
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, June 30, 2023$1,466 $3,688 $ $(25,541)$24,258 $(3,935)$379 
Net income    708  39 
Other comprehensive income (loss), net of tax
     (39)(3)
Dividends ($0.48 per share)
    (395)  
Stock-based compensation expense
 60      
Shares issued for stock options
 29  25    
Shares issued for restricted stock units
 (16) 16    
Treasury stock acquired
   (332)   
Other 1  (2)   
Balance, September 30, 2023
$1,466 $3,762 $ $(25,834)$24,571 $(3,974)$415 
Three Months Ended September 30, 2022
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, June 30, 2022$1,466 $3,402 $ $(24,736)$24,342 $(4,306)$390 
Net income— — — — 618 — 64 
Other comprehensive income (loss), net of tax
— — — — — 127 (16)
Dividends ($0.47 per share)
— — — — (394)— — 
Stock-based compensation expense
— 60 — — — — — 
Shares issued for stock options
— 73 — 73 — — — 
Shares issued for restricted stock units
— (16)— 16 — — — 
Treasury stock acquired
— — — (104)— — — 
Other— (1)— 2 — — (7)
Balance, September 30, 2022
$1,466 $3,518 $ $(24,749)$24,566 $(4,179)$431 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,458 at September 30, 2023 ($3,545 at September 30, 2022) and $3,381 at June 30, 2023 ($3,398 at June 30, 2022), respectively, and unrecognized retirement plan and other retiree benefits costs of $586 at September 30, 2023 ($717 at September 30, 2022) and $618 at June 30, 2023 ($1,015 at June 30, 2022), respectively.







See Notes to Condensed Consolidated Financial Statements.

6



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders Equity
(Dollars in Millions)
(Unaudited)
Nine Months Ended September 30, 2023
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, 2022$1,466 $3,546 $(1)$(25,128)$24,573 $(4,055)$405 
Net income    1,582  113 
Other comprehensive income (loss), net of tax
     81 (44)
Dividends ($1.91 per share)*
    (1,584) (59)
Stock-based compensation expense
 97      
Shares issued for stock options
 145  152    
Shares issued for restricted stock units
 (30) 30    
Treasury stock acquired
   (883)   
Other 4 1 (5)   
Balance, September 30, 2023
$1,466 $3,762 $ $(25,834)$24,571 $(3,974)$415 
Nine Months Ended September 30, 2022
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2021$1,466 $3,269 $(1)$(24,089)$24,350 $(4,386)$362 
Net income— — — — 1,780 — 144 
Other comprehensive income (loss), net of tax
— — — — — 207 (32)
Dividends ($1.86 per share)*
— — — — (1,564)— (42)
Stock-based compensation expense
— 105 — — — — — 
Shares issued for stock options
— 181 — 194 — — — 
Shares issued for restricted stock units
— (39)— 39 — — — 
Treasury stock acquired
— — — (895)— — — 
Other— 2 1 2 — — (1)
Balance, September 30, 2022
$1,466 $3,518 $ $(24,749)$24,566 $(4,179)$431 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,458 at September 30, 2023 ($3,545 at September 30, 2022) and $3,491 at December 31, 2022 ($3,349 at December 31, 2021), respectively, and unrecognized retirement plan and other retiree benefits costs of $586 at September 30, 2023 ($717 at September 30, 2022) and $631 at December 31, 2022 ($1,044 at December 31, 2021), respectively.
* Two dividends were declared in each of the first quarters of 2023 and 2022.
See Notes to Condensed Consolidated Financial Statements.

7


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

1.    Basis of Presentation

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, 2022, 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 October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, “Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In August 2023, the FASB issued ASU No. 2023-05, “Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” This ASU requires a joint venture to initially measure all contributions received upon its formation at fair value. This guidance is applicable to joint ventures with a formation date on or after January 1, 2025 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2023, the FASB issued ASU No. 2023-01, “Leases (Topic 842): Common Control Arrangements.” This ASU clarified the accounting for leasehold improvements for leases under common control. The guidance is effective for the Company beginning on January 1, 2024 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer that uses supplier finance programs to make annual disclosures about the programs’ key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated roll-forward information. The Company adopted the guidance beginning on January 1, 2023, except for the roll-forward information, which is effective for the Company beginning on January 1, 2024. See Note 13, Supplier Finance Programs for additional information.

In March 2022, the FASB issued 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 the year of origination for financing receivables. This guidance was effective for the Company beginning on January 1, 2023 and did not 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 was effective for the Company beginning on January 1, 2023 and did not have an impact on the Company’s Consolidated Financial Statements.

8

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


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 was effective for the Company beginning on January 1, 2023 and did not have an 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. In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief under Topic 848. The Company has completed its evaluation of significant contracts under this ASU. Certain of the reviewed contracts have been modified to apply a new reference rate, primarily the Secured Overnight Financing Rate (SOFR). The guidance has not had a material impact on the Company’s Consolidated Financial Statements.


9

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


4. Acquisitions

Red Collar Pet Foods

On September 30, 2022, the Company acquired a business that operates three dry pet food manufacturing plants in the United States from Red Collar Pet Foods Holdings, Inc. and Red Collar Pet Foods Holdings, L.P. (collectively, “Red Collar Pet Foods”) for cash consideration of $719 to further support the global growth of its Hill’s Pet Nutrition business. The acquisition was financed with a combination of debt and cash and was accounted for as a business combination in accordance with ASC 805.

During the fourth quarter of 2022, the Company finalized its purchase price allocation and the final purchase price of $719 was allocated to the net assets acquired based on their respective estimated fair values as follows:

Inventories$33 
Property, plant and equipment362 
Goodwill413 
Current liabilities(5)
Intangible liability(16)
Deferred income taxes(68)
Fair value of net assets acquired$719 
Goodwill of $413 was allocated to the Pet Nutrition segment. Goodwill will not be deductible for tax purposes.
Pro forma results of operations have not been presented as the impact on the Company’s Consolidated Financial Statements is not material.

Nutriamo S.r.l.

On April 28, 2022, the Company acquired a business that operates a pet food manufacturing plant from Nutriamo S.r.l., a canned pet food manufacturer based in Italy, which gives the Company additional capacity for the Hill’s wet pet nutrition diets, particularly in Europe. This acquisition was accounted for as a business combination in accordance with ASC 805. The impact of this acquisition on the Company’s Consolidated Financial Statements was not material.


10

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


5.    Restructuring and Related Implementation Charges
    
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 2024, 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 (80%); asset-related costs, primarily accelerated depreciation and asset write-downs (10%); 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 (10%), Hill’s Pet Nutrition (10%) and Corporate (15%).

For the three months ended September 30, 2023, charges resulting from the 2022 Global Productivity Initiative were $2 pretax ($2 aftertax). For the three months ended September 30, 2022, charges resulting from the 2022 Global Productivity Initiative were $2 pretax ($2 aftertax).

For the nine months ended September 30, 2023 and September 30, 2022, charges resulting from the 2022 Global Productivity Initiative are reflected in the income statement as follows:

Nine Months Ended September 30,
20232022
Gross Profit$1 $ 
Selling, general and administrative expenses2 4 
Other (income) expense, net22 75 
Non-service related postretirement costs4 13 
Total 2022 Global Productivity Initiative charges, pretax$29 $92 
Total 2022 Global Productivity Initiative charges, aftertax$23 $72 

Restructuring and related implementation charges in the preceding table were 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.















11

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 2022 Global Productivity Initiative relate to initiatives undertaken by the following reportable operating segments:

Nine Months Ended September 30,Program-to-date
Accumulated Charges
 20232022
North America14 %11 %11 %
Latin America 1 %16 %15 %
Europe 20 %16 %19 %
Asia Pacific21 %9 %11 %
Africa/Eurasia10 %12 %11 %
Hill's Pet Nutrition14 %10 %12 %
Corporate20 %26 %21 %
Total100 %100 %100 %

Since the inception of the 2022 Global Productivity Initiative, the Company has incurred cumulative pretax charges of $139 ($110 aftertax) in connection with the implementation of various projects as follows:
Cumulative Charges
 as of September 30, 2023
Employee-Related Costs$125 
Incremental Depreciation 
Asset Impairments1 
Other13 
Total$139 

The following tables summarize the activity for the restructuring and related implementation charges discussed above and the related accruals:


Nine Months Ended September 30, 2023
 Employee-Related
Costs 
Incremental
Depreciation 
Asset
Impairments
OtherTotal
Balance at December 31, 2022
$30 $ $1 $3 $34 
Charges 23   6 29 
Cash Payments (38)  (8)(46)
Charges against assets(4) (1) (5)
Foreign exchange5    5 
Balance at September 30, 2023
$16 $ $ $1 $17 

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 of $4 for the nine months ended September 30, 2023, 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.


12

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



6.    Inventories

Inventories by major class were as follows:
September 30,
2023
December 31,
2022
Raw materials and supplies$568 $666 
Work-in-process52 48 
Finished goods1,414 1,508 
       Total Inventories, net$2,034 $2,222 
            Non-current inventory, net$(103)$(148)
              Current Inventories, net$1,931 $2,074 
13

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


7.    Earnings Per Share

For the three months ended September 30, 2023 and 2022, earnings per share were as follows:
 Three Months Ended
 September 30, 2023September 30, 2022
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Basic EPS$708 825.6 $0.86 $618 835.7 $0.74 
Stock options and
restricted stock units
1.7   2.8  
Diluted EPS$708 827.3 $0.86 $618 838.5 $0.74 
For the three months ended September 30, 2023 and 2022, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 13,538,153 and 2,891,324, respectively.
For the nine months ended September 30, 2023 and 2022, earnings per share were as follows:
 Nine Months Ended
 September 30, 2023September 30, 2022
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Basic EPS$1,582 828.8 $1.91 $1,780 837.7 $2.12 
Stock options and
restricted stock units
1.7   2.7  
Diluted EPS$1,582 830.5 $1.90 $1,780 840.4 $2.12 
For the nine months ended September 30, 2023 and 2022, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 13,504,588 and 3,709,818, respectively.
Basic and diluted earnings per share are computed independently for each quarter and any year-to-date period presented. As a result of changes in the number of shares outstanding during the year and rounding, the sum of the quarters’ earnings per share may not necessarily equal the earnings per share for any year-to-date period.
14

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


8.    Other Comprehensive Income (Loss)

Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the three months ended September 30, 2023 and 2022 were as follows:
 20232022
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$(46)$(76)$(93)$(145)
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period40 27 379 291 
Amortization of net actuarial loss, transition and prior service costs (1)
7 5 9 7 
Retirement plans and other retiree benefit adjustments47 32 388 298 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges3 2 (28)(23)
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
4 3 (4)(3)
Gains (losses) on cash flow hedges7 5 (32)(26)
Total Other comprehensive income (loss)$8 $(39)$263 $127 
(1) These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 9, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 12, Fair Value Measurements and Financial Instruments for additional details.

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

Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the nine months ended September 30, 2023 and 2022 were as follows:
 20232022
PretaxNet of TaxPretaxNet of Tax
Cumulative translation adjustments$60 $35 $(67)$(195)
Retirement plans and other retiree benefits:
Net actuarial gain (loss) and prior service costs arising during the period40 27 379 291 
Amortization of net actuarial loss, transition and prior service costs (1)
23 18 46 36 
Retirement plans and other retiree benefit adjustments63 45 425 327 
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges3 2 113 88 
Reclassification of (gains) losses into net earnings on cash flow hedges (2)
(2)(1)(15)(13)
Gains (losses) on cash flow hedges1 1 98 75 
Total Other comprehensive income (loss)$124 $81 $456 $207 
(1) These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 9, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 12, Fair Value Measurements and Financial Instruments for additional details.

There were no tax impacts on OCI attributable to Noncontrolling interests.


15

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


9.    Retirement Plans and Other Retiree Benefits

Components of Net periodic benefit cost for the three and nine months ended September 30, 2023 and 2022 were as follows:
Three Months Ended September 30,
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202320222023202220232022
Service cost$ $ $3 $2 $2 $5 
Interest cost20 16 6 8 7 11 
Expected return on plan assets(20)(23)(5)(5)  
Amortization of actuarial loss (gain)12 10 1 2 (6)(3)
Net periodic benefit cost$12 $3 $5 $7 $3 $13 
Other postretirement charges (1)    
Total pension cost$12 $2 $5 $7 $3 $13 

Nine Months Ended September 30,
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202320222023202220232022
Service cost$ $1 $9 $10 $6 $16 
Interest cost68 48 22 14 29 30 
Expected return on plan assets(61)(75)(14)(10) (1)
Amortization of actuarial loss (gain)34 33 3 5 (14)8 
Net periodic benefit cost$41 $7 $20 $19 $21 $53 
Other postretirement charges4 12    1 
ERISA litigation matter267      
Total pension cost$312 $19 $20 $19 $21 $54 
There were no other postretirement charges for the three months ended September 30, 2023. Other postretirement charges for the three months ended September 30, 2022 included an adjustment of $1 related to the 2022 Global Productivity Initiative. Other postretirement charges for the nine months ended September 30, 2023 and 2022 included pension and other charges of $4 and $13, respectively, incurred pursuant to the 2022 Global Productivity Initiative.
For the three and nine months ended September 30, 2023 and 2022, the Company made no voluntary contributions to its U.S. postretirement plans.

In the first quarter of 2023, the Company recorded a charge of $267 as a result of a decision of the United States Court of Appeals for the Second Circuit (the “Second Circuit”) affirming a grant of summary judgment to the plaintiffs in a lawsuit under the Employee Retirement Income Security Act seeking the recalculation of benefits and other relief associated with a 2005 residual annuity amendment to the Colgate-Palmolive Company Employees’ Retirement Income Plan (the “Retirement Plan”). The impact of the decision will result in an increase in the obligations of the Retirement Plan, which based on the current funded status of the Retirement Plan will require no immediate cash contribution by the Company. See Note 10, Contingencies for additional information.

In the third quarter of 2022, the Company amended its domestic postretirement plan to limit eligibility for certain existing employees and change the way medical coverage and subsidies are delivered for certain current and future retirees. As required, the Company remeasured the obligation for the domestic postretirement plan, which resulted in the reduction of the projected benefit obligation and a corresponding actuarial gain of $398. The reduction of the projected benefit
16

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


obligation and actuarial gain were primarily due to an increase in the discount rate since December 31, 2021 and the impact of the plan amendment. The actuarial gain was recorded in Accumulated other comprehensive income and is being amortized over future periods.

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 (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 $128. 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, September 2018, April 2019 and August 2020, the Company lost an administrative appeal and subsequently challenged these assessments in the Brazilian federal courts. Currently, there are three lawsuits pending in the Lower Federal Court and two cases have progressed to the Federal Court of Appeals. 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
17

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


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 $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 September 30, 2023 of such competition law matters pending against the Company during the nine months ended September 30, 2023 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 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 September 30, 2023, there were 271 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 251 cases as of June 30, 2023 and 227 cases as of December 31, 2022. During the three months ended September 30, 2023, 33 new cases were filed and 13 cases were resolved by voluntary dismissal or settlement. During the nine months ended September 30, 2023, 136 new cases were filed and 92 cases were resolved by voluntary dismissal, settlement or dismissal by the court. The value of the settlements in the periods presented was not material, either individually or in the aggregate, to such periods’ results of operations.

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 the 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.


18

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


ERISA Matter

In June 2016, a lawsuit was filed in the United States District Court for the Southern District of New York (the “District Court”) against the Retirement Plan, the Company and certain individuals (the “Company Defendants”) claiming that residual annuity payments associated with a 2005 residual annuity amendment to the Retirement Plan were improperly calculated for certain Retirement Plan participants in violation of the Employee Retirement Income Security Act (“ERISA”). The relief sought included 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 dismissed certain claims, and in August 2020 granted the plaintiffs' motion for summary judgment on the remaining claims. In September 2020, the Company appealed to the Second Circuit. In March 2023, the Second Circuit affirmed the grant of summary judgment to the plaintiffs.

In light of the Second Circuit decision, the Company recorded a charge to earnings of $267 in the quarter ended March 31, 2023, which is comprised of the recalculation of benefits and interest. Possible additional charges associated with this matter are expected to be immaterial and, where estimable, are reflected in the range of reasonably possible losses disclosed above. The impact of the decision will result in an increase in the obligations of the Retirement Plan, which based on the current funded status of the Retirement Plan will require no immediate cash contribution by the Company. In June 2023, the Company filed a petition for certiorari to the United States Supreme Court requesting permission for an appeal to that court and that petition was denied in October 2023. Also in June 2023, the plaintiffs filed a motion to enter a revised final judgment in the District Court to address certain unresolved calculation issues, which the Company opposed.
19

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


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.

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, 2022. 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 EndedNine Months Ended
 September 30,September 30,
 2023202220232022
Net sales  
Oral, Personal and Home Care  
North America$990 $958 $2,926 $2,850 
Latin America1,194 997 3,447 2,970 
Europe725 632 2,053 1,925 
Asia Pacific682 709 2,084 2,131 
Africa/Eurasia266 287 822 809 
Total Oral, Personal and Home Care3,857 3,583 11,332 10,685 
Pet Nutrition1,058 872 3,175 2,653 
Total Net sales$4,915