Powerful Strategies
Driving Global Growth
Colgate-Palmolive Company / 2016 Annual Report
Financial Highlights
(Dollars in Millions Except Per Share Amounts)
2016
2015
Change
Worldwide Net Sales
Organic Sales Growth
Gross Profit Margin
Operating Profit
Operating Profit Margin
Net Income Attributable to Colgate-Palmolive Company (1)
Diluted Earnings Per Share (1)
Dividends Paid Per Share
Operating Cash Flow
Year-end Stock Price
$ 15,195
$ 16,034
60.0%
$ 3,837
25.3%
$ 2,441
$ 2.72
$ 1.55
$ 3,141
$ 65.44
58.6%
$ 2,789
17.4%
$ 1,384
$ 1.52
$ 1.50
$ 2,949
$ 66.62
-5.0%
+4.0%
+140 basis points
+38%
+790 basis points
+76%
+79%
+3%
+7%
-2%
(1) Net income attributable to Colgate-Palmolive Company and diluted earnings per share in 2016 include a gain from the sale of land in Mexico, charges related to
the 2012 Restructuring Program and certain other items. Net income attributable to Colgate-Palmolive Company and diluted earnings per share in 2015 include
a gain from the sale of the Company’s laundry detergent business in the South Pacific, a charge related to the deconsolidation of the Company’s Venezuelan
operations, charges related to the 2012 Restructuring Program and certain other items.
North America 21%
Latin America 24%
Europe 16%
Asia Pacific 18%
Africa/Eurasia 6%
Hill’s Pet Nutrition 15%
2016 Net Sales By Geographic Region
2016 Net Sales By Market Maturity
Hill's Pet Nutrition
Hill's Pet Nutrition
Africa/Eurasia
Asia
Dear Colgate Shareholders
Europe/South Pacific
Latin America
North America 21%
Latin America 24%
Europe 16%
Asia Pacific 18%
Africa/Eurasia 6%
Hill’s Pet Nutrition 15%
Gross Profit Margin (1)
(% of sales)
60.3 (1)
Diluted Earnings (2)(3)
($ per share)
Africa/Eurasia
Developed Markets 51%
Asia
Emerging Markets 49%
Europe/South Pacific
Latin America
Dividends Paid (3)
($ per share)
Developed Markets 51%
58.7 (1)
Emerging Markets 49%
58.8 (1)
58.7 (1)
58.3 (1)
58.6
58.5
58.6
60.0
2.68 (2)
2.57
2.93 (2)
2.84 (2)
2.81(2)
2.81(2)
2.38
2.36
2.72
1.33
1.22
58.1
1.52
North America
1.55
1.50
1.42
Emerging Markets
Developed Market
Net Sales
($ billions)
17.4
17.3
17.1
16.0
15.2
’12
’13
’14
’15
’16
’12
’13
’14
’15
’16
’12
’13
’14
’15
’16
’12
’13
’14
’15
’16
(1) 2013-2016 exclude charges related to the 2012 Restructuring Program. 2012 excludes costs related to the sale of land in Mexico. A complete reconciliation
between reported results (GAAP) and results excluding these items (Non-GAAP), including a description of such items, is available on Colgate’s website and
on page 12 of this report.
(2) 2016 excludes a gain from the sale of land in Mexico, charges related to the 2012 Restructuring Program and certain other items. 2015 excludes a gain from
the sale of the Company’s laundry detergent business in the South Pacific, a charge related to the deconsolidation of the Company’s Venezuelan operations,
charges related to the 2012 Restructuring Program and certain other items. 2013 and 2014 exclude charges related to the 2012 Restructuring Program,
remeasurement charges resulting from devaluations and effective devaluations in Venezuela and certain other items. 2012 excludes charges related to the 2012
Restructuring Program and certain other items. A complete reconciliation between reported results (GAAP) and results excluding these items (Non-GAAP),
including a description of such items, is available on Colgate’s website and on page 12 of this report.
(3) All per share amounts have been restated for the 2013 two-for-one stock split.
Cover: Photo taken in South Africa.
In the face of challenging macroeconomic
conditions worldwide, significant foreign
North America
Our market shares remain strong around
the world with Colgate’s leading share of the
exchange volatility and slowing category
global toothpaste market at 44.0% for the
growth, we are pleased to have achieved
Emerging Markets
another year of solid results in 2016. While
net sales declined 5.0%, organic sales,
Developed Market
or net sales excluding foreign exchange,
year. As referenced in the title of this year’s
annual report, Powerful Strategies Driving
Global Growth, we continue to drive our
growth with clear strategies that provide the
acquisitions, divestments and the impact
agility needed to meet the headwinds that
of the deconsolidation of the Company’s
come in any given year. We remain sharply
Venezuelan operations, grew 4.0%. This
focused on our four strategic initiatives,
growth was led by emerging markets where
Engaging To Build Our Brands, Innovation
organic sales grew a strong 6.5%. Gross
For Growth, Effectiveness And Efficiency and
profit margin, operating profit margin and net
Leading To Win, in order to deliver sustained
income as a percent to sales all increased in
profitable growth.
2016. Diluted earnings per share were flat on
a dollar basis but increased double digit on
Strengthening Engagement
a currency-neutral basis, after also excluding
To Build Our Brands
Venezuela’s results in both periods.*
Engaging consumers everywhere with
We maintained our strong balance
integrated marketing campaigns that
sheet and cash flow, which, along with the
deliver our brand messages has long been
Company’s consistent organic sales growth,
a cornerstone of our growth strategy. Now,
led the Board of Directors to authorize a
we are strengthening that engagement by
3% increase in the quarterly cash dividend,
increasing our use of digital media across
effective in the second quarter of 2016. This
the board from websites to social media to
represents our 54th consecutive year of div-
mobile. On a global basis, digital media now
idend increases and our 121st consecutive
accounts for 20% to 25% of our working
year of paying a dividend.
media expenditure, up ten-fold in the last
IAN C OOK
Chairman, President
and Chief Executive Officer
*The Company’s results are discussed
excluding a charge resulting from the
deconsolidation of the Company’s
Venezuelan operations, charges
related to the 2012 Restructuring
Program and certain other items.
A complete reconciliation between
reported results (GAAP) and results
excluding these items (Non-GAAP),
including a description of such items,
is available on Colgate’s website and
on page 12 of this report. Diluted
earnings per share growth for full
year 2016, on a currency-neutral
basis, eliminates from diluted
earnings per share growth (GAAP)
the impact of the items described
above and the period-over-period
changes in foreign exchange rates
in the translation of local currency
results into U.S. dollars. Accordingly,
for purposes of calculating diluted
earnings per share growth for full
year 2016, on a currency-neutral
basis, full year 2016 local currency
results, which include the impact of
foreign currency transaction gains
and losses, are translated into U.S.
dollars using 2015 average foreign
exchange rates by quarter.
1
Financial Highlights
(Dollars in Millions Except Per Share Amounts)
2016
2015
Change
Worldwide Net Sales
Organic Sales Growth
Gross Profit Margin
Operating Profit
Operating Profit Margin
Net Income Attributable to Colgate-Palmolive Company (1)
Diluted Earnings Per Share (1)
Dividends Paid Per Share
Operating Cash Flow
Year-end Stock Price
$ 15,195
$ 16,034
60.0%
$ 3,837
25.3%
$ 2,441
$ 2.72
$ 1.55
$ 3,141
$ 65.44
58.6%
$ 2,789
17.4%
$ 1,384
$ 1.52
$ 1.50
$ 2,949
$ 66.62
-5.0%
+4.0%
+140 basis points
+38%
+790 basis points
+76%
+79%
+3%
+7%
-2%
(1) Net income attributable to Colgate-Palmolive Company and diluted earnings per share in 2016 include a gain from the sale of land in Mexico, charges related to
the 2012 Restructuring Program and certain other items. Net income attributable to Colgate-Palmolive Company and diluted earnings per share in 2015 include
a gain from the sale of the Company’s laundry detergent business in the South Pacific, a charge related to the deconsolidation of the Company’s Venezuelan
operations, charges related to the 2012 Restructuring Program and certain other items.
North America 21%
Latin America 24%
Europe 16%
Asia Pacific 18%
Africa/Eurasia 6%
Hill’s Pet Nutrition 15%
2016 Net Sales By Geographic Region
2016 Net Sales By Market Maturity
Hill's Pet Nutrition
Hill's Pet Nutrition
Africa/Eurasia
Asia
Dear Colgate Shareholders
Europe/South Pacific
Latin America
North America 21%
Latin America 24%
Europe 16%
Asia Pacific 18%
Africa/Eurasia 6%
Hill’s Pet Nutrition 15%
Gross Profit Margin (1)
(% of sales)
60.3 (1)
Diluted Earnings (2)(3)
($ per share)
Africa/Eurasia
Developed Markets 51%
Asia
Emerging Markets 49%
Europe/South Pacific
Latin America
Dividends Paid (3)
($ per share)
Developed Markets 51%
58.7 (1)
Emerging Markets 49%
58.8 (1)
58.7 (1)
58.3 (1)
58.6
58.5
58.6
60.0
2.68 (2)
2.57
2.93 (2)
2.84 (2)
2.81(2)
2.81(2)
2.38
2.36
2.72
1.33
1.22
58.1
1.52
North America
1.55
1.50
1.42
Emerging Markets
Developed Market
Net Sales
($ billions)
17.4
17.3
17.1
16.0
15.2
’12
’13
’14
’15
’16
’12
’13
’14
’15
’16
’12
’13
’14
’15
’16
’12
’13
’14
’15
’16
(1) 2013-2016 exclude charges related to the 2012 Restructuring Program. 2012 excludes costs related to the sale of land in Mexico. A complete reconciliation
between reported results (GAAP) and results excluding these items (Non-GAAP), including a description of such items, is available on Colgate’s website and
on page 12 of this report.
(2) 2016 excludes a gain from the sale of land in Mexico, charges related to the 2012 Restructuring Program and certain other items. 2015 excludes a gain from
the sale of the Company’s laundry detergent business in the South Pacific, a charge related to the deconsolidation of the Company’s Venezuelan operations,
charges related to the 2012 Restructuring Program and certain other items. 2013 and 2014 exclude charges related to the 2012 Restructuring Program,
remeasurement charges resulting from devaluations and effective devaluations in Venezuela and certain other items. 2012 excludes charges related to the 2012
Restructuring Program and certain other items. A complete reconciliation between reported results (GAAP) and results excluding these items (Non-GAAP),
including a description of such items, is available on Colgate’s website and on page 12 of this report.
(3) All per share amounts have been restated for the 2013 two-for-one stock split.
Cover: Photo taken in South Africa.
In the face of challenging macroeconomic
conditions worldwide, significant foreign
North America
Our market shares remain strong around
the world with Colgate’s leading share of the
exchange volatility and slowing category
global toothpaste market at 44.0% for the
growth, we are pleased to have achieved
Emerging Markets
another year of solid results in 2016. While
net sales declined 5.0%, organic sales,
Developed Market
or net sales excluding foreign exchange,
year. As referenced in the title of this year’s
annual report, Powerful Strategies Driving
Global Growth, we continue to drive our
growth with clear strategies that provide the
acquisitions, divestments and the impact
agility needed to meet the headwinds that
of the deconsolidation of the Company’s
come in any given year. We remain sharply
Venezuelan operations, grew 4.0%. This
focused on our four strategic initiatives,
growth was led by emerging markets where
Engaging To Build Our Brands, Innovation
organic sales grew a strong 6.5%. Gross
For Growth, Effectiveness And Efficiency and
profit margin, operating profit margin and net
Leading To Win, in order to deliver sustained
income as a percent to sales all increased in
profitable growth.
2016. Diluted earnings per share were flat on
a dollar basis but increased double digit on
Strengthening Engagement
a currency-neutral basis, after also excluding
To Build Our Brands
Venezuela’s results in both periods.*
Engaging consumers everywhere with
We maintained our strong balance
integrated marketing campaigns that
sheet and cash flow, which, along with the
deliver our brand messages has long been
Company’s consistent organic sales growth,
a cornerstone of our growth strategy. Now,
led the Board of Directors to authorize a
we are strengthening that engagement by
3% increase in the quarterly cash dividend,
increasing our use of digital media across
effective in the second quarter of 2016. This
the board from websites to social media to
represents our 54th consecutive year of div-
mobile. On a global basis, digital media now
idend increases and our 121st consecutive
accounts for 20% to 25% of our working
year of paying a dividend.
media expenditure, up ten-fold in the last
IAN C OOK
Chairman, President
and Chief Executive Officer
*The Company’s results are discussed
excluding a charge resulting from the
deconsolidation of the Company’s
Venezuelan operations, charges
related to the 2012 Restructuring
Program and certain other items.
A complete reconciliation between
reported results (GAAP) and results
excluding these items (Non-GAAP),
including a description of such items,
is available on Colgate’s website and
on page 12 of this report. Diluted
earnings per share growth for full
year 2016, on a currency-neutral
basis, eliminates from diluted
earnings per share growth (GAAP)
the impact of the items described
above and the period-over-period
changes in foreign exchange rates
in the translation of local currency
results into U.S. dollars. Accordingly,
for purposes of calculating diluted
earnings per share growth for full
year 2016, on a currency-neutral
basis, full year 2016 local currency
results, which include the impact of
foreign currency transaction gains
and losses, are translated into U.S.
dollars using 2015 average foreign
exchange rates by quarter.
1
Engaging To Build
Our Brands With
Consumers
Stronger consumer engage-
ment begins with better
insights. We are obtaining
deeper and more meaningful
consumer insights and using
them to strengthen product
development, packaging
and the communications we
deliver through our integrated
marketing campaigns. These
innovative marketing pro-
grams deliver our brand mes-
sages using a combination
of traditional media outlets,
in-store communications and
newer digital outlets, including
social media.
Engaging To Build
Our Brands With
The Profession
Colgate is driving engagement
and building our leadership
with dental and veterinary pro-
fessionals to strengthen their
endorsement of our brands.
Colgate helps educate dental
and veterinary professionals
about the science behind
Colgate and Hill’s products
by being deeply involved
with academia, professional
organizations and conven-
tions, and with public health
activities to improve oral
health, pet health and good
hygiene habits around the
world.
BRAZ IL
Colgate is creating an
emotional connection
with consumers via social
decade and continuing to rise. In some of
We are strengthening our engagement
media and online videos
that support the Colgate
brand message, “Everyone
our businesses, like Hill’s, nearly our entire
with the profession as well, with new
media budget is in digital, as we work to
capabilities. Hill’s representatives are using
influence the consumer when they first begin
technology on their mobile tablets to design
to explore the category.
a “Perfect Vet Clinic,” which lets pet care
deserves a future they can
We are engaging with consumers more
professionals visualize how recommended
smile about.” In Brazil, this
Facebook campaign helped
deeply online by connecting emotionally
Hill’s displays will look in their offices.
with messaging that is more brand-purpose
Technology is also helping us engage with
driven. Our research tells us that this type of
young dental professionals across Europe,
drive Colgate’s toothpaste
messaging has a strong impact on consum-
where we hosted our first virtual dental
market share to a near
record high in 2016.
FRANCE
ers and drives greater return on investment.
conference in 2016. Branded #ColgateTalks,
While consumers want to learn about the
the one-day conference included educational
benefits that products provide, they also
sessions, live chats and virtual networking.
value an emotional connection with their
Over 1,600 young dental professionals
favorite brands. For the Hill’s brand, this
attended the live event and over 16,000
insight led us to create a video described
professionals visited the virtual conference
as a special Mother’s Day message to all
website during the four months that followed.
pet moms. The video shows a number of
dogs and cats “saying thank you” to their
Innovating For Growth
human moms. The video, posted to the Hill’s
Innovation is key to driving growth at
Facebook page, received 13.5 million views
Colgate and has long been embedded
and 71 million organic impressions.
in our culture. Today, more than ever, our
Another terrific example is a social media
approach to innovation is insight driven. We
Through office visits
video campaign for the Tom’s of Maine brand
are competing better locally by tapping into
and online resources,
Colgate educates dental
in the United States. In a series of videos,
insights market-by-market and leveraging
women share their personal stories about
trends across regions. In China, the
when and why they made the decision to
insight that consumers value natural local
professionals on the benefits
switch to Tom’s natural deodorant. These
ingredients rooted in their culture led to
of Colgate products and
provides them with tools to
improve communications
powerful ads helped grow sales for the Tom’s
the launch of Colgate Naturals toothpaste
of Maine brand by over 12% in 2016.
with twin lotus flower for soothing gums.
We have also established a number of
Similarly, in India, Colgate Cibaca Vedshakti
Consumer Engagement Centers in Colgate
toothpaste was developed based on the
with their patients about
locations around the world where Colgate
learning that consumers in that country
oral health. These activities
support more dialogue
on oral health and drive
people can listen and engage with con-
believe in the power of natural ingredients in
sumers and track media activity in real
preventing dental problems.
time. Through these centers, our teams are
We are also gaining an even deeper
getting closer to consumers and having more
understanding of our consumers by immers-
increased recommendations
relevant communications with them. This
ing ourselves in their daily lives. These
for the Colgate brand.
interaction also helps us identify influencers
immersions include deep dives by country,
and trending topics and allows us to track
by consumer group, such as low-income
overall consumer sentiment for our brands.
consumers or millennials, and by topic, such
2
3
Engaging To Build
Our Brands With
Consumers
Stronger consumer engage-
ment begins with better
insights. We are obtaining
deeper and more meaningful
consumer insights and using
them to strengthen product
development, packaging
and the communications we
deliver through our integrated
marketing campaigns. These
innovative marketing pro-
grams deliver our brand mes-
sages using a combination
of traditional media outlets,
in-store communications and
newer digital outlets, including
social media.
Engaging To Build
Our Brands With
The Profession
Colgate is driving engagement
and building our leadership
with dental and veterinary pro-
fessionals to strengthen their
endorsement of our brands.
Colgate helps educate dental
and veterinary professionals
about the science behind
Colgate and Hill’s products
by being deeply involved
with academia, professional
organizations and conven-
tions, and with public health
activities to improve oral
health, pet health and good
hygiene habits around the
world.
BRAZ IL
Colgate is creating an
emotional connection
with consumers via social
decade and continuing to rise. In some of
We are strengthening our engagement
media and online videos
that support the Colgate
brand message, “Everyone
our businesses, like Hill’s, nearly our entire
with the profession as well, with new
media budget is in digital, as we work to
capabilities. Hill’s representatives are using
influence the consumer when they first begin
technology on their mobile tablets to design
to explore the category.
a “Perfect Vet Clinic,” which lets pet care
deserves a future they can
We are engaging with consumers more
professionals visualize how recommended
smile about.” In Brazil, this
Facebook campaign helped
deeply online by connecting emotionally
Hill’s displays will look in their offices.
with messaging that is more brand-purpose
Technology is also helping us engage with
driven. Our research tells us that this type of
young dental professionals across Europe,
drive Colgate’s toothpaste
messaging has a strong impact on consum-
where we hosted our first virtual dental
market share to a near
record high in 2016.
FRANCE
ers and drives greater return on investment.
conference in 2016. Branded #ColgateTalks,
While consumers want to learn about the
the one-day conference included educational
benefits that products provide, they also
sessions, live chats and virtual networking.
value an emotional connection with their
Over 1,600 young dental professionals
favorite brands. For the Hill’s brand, this
attended the live event and over 16,000
insight led us to create a video described
professionals visited the virtual conference
as a special Mother’s Day message to all
website during the four months that followed.
pet moms. The video shows a number of
dogs and cats “saying thank you” to their
Innovating For Growth
human moms. The video, posted to the Hill’s
Innovation is key to driving growth at
Facebook page, received 13.5 million views
Colgate and has long been embedded
and 71 million organic impressions.
in our culture. Today, more than ever, our
Another terrific example is a social media
approach to innovation is insight driven. We
Through office visits
video campaign for the Tom’s of Maine brand
are competing better locally by tapping into
and online resources,
Colgate educates dental
in the United States. In a series of videos,
insights market-by-market and leveraging
women share their personal stories about
trends across regions. In China, the
when and why they made the decision to
insight that consumers value natural local
professionals on the benefits
switch to Tom’s natural deodorant. These
ingredients rooted in their culture led to
of Colgate products and
provides them with tools to
improve communications
powerful ads helped grow sales for the Tom’s
the launch of Colgate Naturals toothpaste
of Maine brand by over 12% in 2016.
with twin lotus flower for soothing gums.
We have also established a number of
Similarly, in India, Colgate Cibaca Vedshakti
Consumer Engagement Centers in Colgate
toothpaste was developed based on the
with their patients about
locations around the world where Colgate
learning that consumers in that country
oral health. These activities
support more dialogue
on oral health and drive
people can listen and engage with con-
believe in the power of natural ingredients in
sumers and track media activity in real
preventing dental problems.
time. Through these centers, our teams are
We are also gaining an even deeper
getting closer to consumers and having more
understanding of our consumers by immers-
increased recommendations
relevant communications with them. This
ing ourselves in their daily lives. These
for the Colgate brand.
interaction also helps us identify influencers
immersions include deep dives by country,
and trending topics and allows us to track
by consumer group, such as low-income
overall consumer sentiment for our brands.
consumers or millennials, and by topic, such
2
3
Engaging To Build
Our Brands With
Our Customers
Colgate works closely with its
retail partners to share exper-
tise and provide shoppers with
the best value and service.
Colgate is engaging its cus-
tomers worldwide by sharing
unique shopper insights,
providing innovative in-store
marketing communications
and merchandising techniques
and developing and executing
joint business planning initia-
tives. These activities ensure
the right product assortment
at each location and help to
make shopping a consumer-
friendly experience that drives
increased sales for both
Colgate and the retailer.
Innovation
For Growth
Developing innovative new
products is a key driver
of our profitable growth.
The Company’s consumer
innovation centers, in
strategic locations throughout
the world, are focused on
developing insight-driven
innovation that provides
value-added new products
across all price points.
Beyond new products,
innovation is embedded
into the Company’s culture
to encourage new ideas
and process improvements
throughout every aspect of
the organization.
MEXICO
Captivating in-store
displays are reinforcing the
Company’s brand messages
as skin care. In Europe, for example, we
workshops to brainstorm collaboratively on
and driving growth for
Colgate and its retail
learned that consumers feel their skin is very
marketing innovations, including ideas for
demanding and they look for products that
in-store displays and other launch support,
can help improve it, are widely available and
to drive growth together.
partners. In Mexico, for
are not too expensive. This led to the launch
example, this “Gracias
Mamá” marketing campaign
of the Sanex Advanced line of shower gels,
Increasing Effectiveness
deodorants, hand creams and body lotions
And Efficiency Everywhere
which delivers skin expertise for specific skin
We believe deeply that business simplifica-
for Suavitel fabric conditioner
needs.
engaged consumers in and
out of the store with the
message, “Thank you Mom,
Implementing Powerful
Commercial Strategies
tion and operational efficiencies increase
our agility so we can be smarter and faster.
Colgate people around the world are more
focused than ever on generating savings to
Colgate’s powerful commercial strategies
fund increased investment for growth.
for all your love.”
support our longstanding commitment to
One major initiative is using advanced
superior go-to-market execution. We are
analytics in our supply chain. For exam-
advancing these strategies to assure that our
ple, we have rolled out a demand-sensing
products continue to be available, visible and
application that has improved our short-term
irresistible wherever consumers shop. That
production forecast by more than 10%. We
means online as well as in traditional retail
are also using advanced modeling to design
stores. While e-commerce is still relatively
our end-to-end supply chain, allowing us to
small in our product categories, our intent is
better allocate capacity and to optimize our
to invest ahead of the growth curve, espe-
warehouse locations and materials sourcing.
cially in must-win areas, such as in China
This initiative delivered more than $7 million
HILL’S PET NUTRITION
Innovative new products
and with our Hill’s business. The objective is
in savings in 2016.
are driving volume growth
worldwide. New Prescription
Diet Derm Defense, Hill’s
to be market leaders online just as we are in
We are also leveraging our SAP enter-
brick-and-mortar stores.
prise-wide planning system to standardize
In addition to our brand-specific research,
and automate our business processes. We
we are investing to understand the general
are developing a new platform to review our
first nutrition specially
thinking and behavior of online shoppers
operating divisions that we call the “Business
formulated to help manage
environmental sensitivities in
and we are optimizing our page and content
Review of the Future.” Standardized reports
design based on analytics and other testing.
populated with real-time data will allow
This work is already paying off in the United
us to review any business at any time we
dogs, is off to a strong start
States, where Colgate is now the market
choose. While still in its early days, we are
in North America, Europe,
Latin America and Australia
and will be rolled out to the
leading manufacturer online in toothpaste
working towards a faster review in real time
and manual toothbrushes.
that allows us to get right to the issues
In Europe, we are taking customer
and spend more time discussing business
engagement to the next level. In 2016, over a
opportunities.
rest of the world in early
week’s time, we hosted a full-day interactive
Our ongoing funding-the-growth
2017.
innovation summit for each of our five largest
cost-saving initiatives continue to generate
retail customers. We presented strategies for
savings across all areas of our business. Our
Colgate’s most important brands and held
Energy Treasure Hunt program, for example,
4
5
Engaging To Build
Our Brands With
Our Customers
Colgate works closely with its
retail partners to share exper-
tise and provide shoppers with
the best value and service.
Colgate is engaging its cus-
tomers worldwide by sharing
unique shopper insights,
providing innovative in-store
marketing communications
and merchandising techniques
and developing and executing
joint business planning initia-
tives. These activities ensure
the right product assortment
at each location and help to
make shopping a consumer-
friendly experience that drives
increased sales for both
Colgate and the retailer.
Innovation
For Growth
Developing innovative new
products is a key driver
of our profitable growth.
The Company’s consumer
innovation centers, in
strategic locations throughout
the world, are focused on
developing insight-driven
innovation that provides
value-added new products
across all price points.
Beyond new products,
innovation is embedded
into the Company’s culture
to encourage new ideas
and process improvements
throughout every aspect of
the organization.
MEXICO
Captivating in-store
displays are reinforcing the
Company’s brand messages
as skin care. In Europe, for example, we
workshops to brainstorm collaboratively on
and driving growth for
Colgate and its retail
learned that consumers feel their skin is very
marketing innovations, including ideas for
demanding and they look for products that
in-store displays and other launch support,
can help improve it, are widely available and
to drive growth together.
partners. In Mexico, for
are not too expensive. This led to the launch
example, this “Gracias
Mamá” marketing campaign
of the Sanex Advanced line of shower gels,
Increasing Effectiveness
deodorants, hand creams and body lotions
And Efficiency Everywhere
which delivers skin expertise for specific skin
We believe deeply that business simplifica-
for Suavitel fabric conditioner
needs.
engaged consumers in and
out of the store with the
message, “Thank you Mom,
Implementing Powerful
Commercial Strategies
tion and operational efficiencies increase
our agility so we can be smarter and faster.
Colgate people around the world are more
focused than ever on generating savings to
Colgate’s powerful commercial strategies
fund increased investment for growth.
for all your love.”
support our longstanding commitment to
One major initiative is using advanced
superior go-to-market execution. We are
analytics in our supply chain. For exam-
advancing these strategies to assure that our
ple, we have rolled out a demand-sensing
products continue to be available, visible and
application that has improved our short-term
irresistible wherever consumers shop. That
production forecast by more than 10%. We
means online as well as in traditional retail
are also using advanced modeling to design
stores. While e-commerce is still relatively
our end-to-end supply chain, allowing us to
small in our product categories, our intent is
better allocate capacity and to optimize our
to invest ahead of the growth curve, espe-
warehouse locations and materials sourcing.
cially in must-win areas, such as in China
This initiative delivered more than $7 million
HILL’S PET NUTRITION
Innovative new products
and with our Hill’s business. The objective is
in savings in 2016.
are driving volume growth
worldwide. New Prescription
Diet Derm Defense, Hill’s
to be market leaders online just as we are in
We are also leveraging our SAP enter-
brick-and-mortar stores.
prise-wide planning system to standardize
In addition to our brand-specific research,
and automate our business processes. We
we are investing to understand the general
are developing a new platform to review our
first nutrition specially
thinking and behavior of online shoppers
operating divisions that we call the “Business
formulated to help manage
environmental sensitivities in
and we are optimizing our page and content
Review of the Future.” Standardized reports
design based on analytics and other testing.
populated with real-time data will allow
This work is already paying off in the United
us to review any business at any time we
dogs, is off to a strong start
States, where Colgate is now the market
choose. While still in its early days, we are
in North America, Europe,
Latin America and Australia
and will be rolled out to the
leading manufacturer online in toothpaste
working towards a faster review in real time
and manual toothbrushes.
that allows us to get right to the issues
In Europe, we are taking customer
and spend more time discussing business
engagement to the next level. In 2016, over a
opportunities.
rest of the world in early
week’s time, we hosted a full-day interactive
Our ongoing funding-the-growth
2017.
innovation summit for each of our five largest
cost-saving initiatives continue to generate
retail customers. We presented strategies for
savings across all areas of our business. Our
Colgate’s most important brands and held
Energy Treasure Hunt program, for example,
4
5
Effectiveness
And Efficiency
Integral to Colgate’s global
strategy is the ability to
generate funds to invest in
business growth. Through
both established efficiency
programs applied to all
aspects of our business and
ongoing identification of new
ways to find savings, the
Company constantly strives
to improve its organizational
capabilities and speed, while
reducing costs.
Leading To Win
At Colgate, employees at all
levels learn to take personal
responsibility for being
leaders, and they commit to
conducting business with the
highest integrity, incorporating
Colgate’s values of Caring,
Continuous Improvement
and Global Teamwork into all
business activities. Colgate
also demonstrates leadership
as a member of the global
community. Through our
sustainability efforts, we are
ensuring that the business
grows responsibly and benefits
those we serve globally, while
promoting the well-being of
future generations.
GLOBAL
Colgate is reducing formula
and fragrance complexity in
its personal care and home
care products by leveraging
the best performing
now conducted at 75% of our sites, has
on the performance of our strategies by
identified more than 1,500 projects and $20
region and category, and on how we are
million in potential savings since the program
strengthening the most important capabili-
fragrances and technologies
began. During this three-day event, a team
ties needed for success.
globally. This initiative is
driving greater efficiency
of Colgate’s global energy experts work with
plant personnel from all areas of operations
Outlook
to “hunt” for savings ideas. Over 600 Colgate
Looking to 2017, we believe the macroeco-
while strengthening the
people have participated in this hands-on,
nomic challenges, foreign exchange volatility
quality and performance of
our products worldwide.
fun event which helps sites strengthen their
energy culture and reduce CO2 emissions.
Leading To Win
and slowing category growth we saw at the
end of 2016 will continue. In light of this,
our overarching priority and objective for
2017 is to focus on profitable growth. Our
Critical to developing strong, effective
new product pipeline is as full as ever and
leaders and to the personal growth of all
will be supported with engaging marketing
Colgate people is establishing a culture that
programs and strong advertising investment.
reinforces our values of Caring, Continuous
To fund this investment, we will be relentless
Improvement and Global Teamwork. One
in our focus on delivering cost savings on all
recent initiative encourages all Colgate peo-
lines of the P&L and on reducing our overall
ple to participate in strengthening internal
cost structure.
GLOBAL
coaching through a series of podcasts and
Over the long run, our discipline and
videos that provide guidance on how to
focus on the fundamentals have served us
Colgate’s “Bright Smiles,
enhance coaching skills to further build one’s
well and will continue to serve us well. We
Bright Futures” oral
health education program
celebrated its 25-year
personal leadership capabilities.
feel confident that our business strategies,
Colgate also demonstrates strong
which we have been deploying for over a
leadership and caring as a member of the
decade, will provide us the agility we need to
global community through our sustainability
continue winning on the ground despite any
anniversary in 2016. To date,
efforts. As part of our Making Every Drop of
headwinds we may face as the year unfolds.
the program has reached
more than 900 million
Water Count commitment, on World Water
As we move ahead together, I wish to
Day in March 2016, Colgate implemented a
thank all Colgate people worldwide for their
global marketing campaign in more than 60
personal commitment to achieving our goals
children in over 80 countries
countries, partnering with over 15 retailers,
with the highest ethical standards, and
with a goal of reaching 1.3
billion children by 2020.
which significantly enhanced awareness for
express appreciation for the support of our
Colgate and its water conservation mes-
consumers, customers, suppliers, sharehold-
sage. Colgate remains fully committed to
ers and directors.
improving the health and well-being of our
communities, making our products more
sustainable and helping to conserve the
planet’s vital resources.
Leadership at Colgate also extends to our
Ian Cook
strong corporate governance principles. Our
Chairman, President
Board of Directors receives regular updates
and Chief Executive Officer
6
7
Effectiveness
And Efficiency
Integral to Colgate’s global
strategy is the ability to
generate funds to invest in
business growth. Through
both established efficiency
programs applied to all
aspects of our business and
ongoing identification of new
ways to find savings, the
Company constantly strives
to improve its organizational
capabilities and speed, while
reducing costs.
Leading To Win
At Colgate, employees at all
levels learn to take personal
responsibility for being
leaders, and they commit to
conducting business with the
highest integrity, incorporating
Colgate’s values of Caring,
Continuous Improvement
and Global Teamwork into all
business activities. Colgate
also demonstrates leadership
as a member of the global
community. Through our
sustainability efforts, we are
ensuring that the business
grows responsibly and benefits
those we serve globally, while
promoting the well-being of
future generations.
GLOBAL
Colgate is reducing formula
and fragrance complexity in
its personal care and home
care products by leveraging
the best performing
now conducted at 75% of our sites, has
on the performance of our strategies by
identified more than 1,500 projects and $20
region and category, and on how we are
million in potential savings since the program
strengthening the most important capabili-
fragrances and technologies
began. During this three-day event, a team
ties needed for success.
globally. This initiative is
driving greater efficiency
of Colgate’s global energy experts work with
plant personnel from all areas of operations
Outlook
to “hunt” for savings ideas. Over 600 Colgate
Looking to 2017, we believe the macroeco-
while strengthening the
people have participated in this hands-on,
nomic challenges, foreign exchange volatility
quality and performance of
our products worldwide.
fun event which helps sites strengthen their
energy culture and reduce CO2 emissions.
Leading To Win
and slowing category growth we saw at the
end of 2016 will continue. In light of this,
our overarching priority and objective for
2017 is to focus on profitable growth. Our
Critical to developing strong, effective
new product pipeline is as full as ever and
leaders and to the personal growth of all
will be supported with engaging marketing
Colgate people is establishing a culture that
programs and strong advertising investment.
reinforces our values of Caring, Continuous
To fund this investment, we will be relentless
Improvement and Global Teamwork. One
in our focus on delivering cost savings on all
recent initiative encourages all Colgate peo-
lines of the P&L and on reducing our overall
ple to participate in strengthening internal
cost structure.
GLOBAL
coaching through a series of podcasts and
Over the long run, our discipline and
videos that provide guidance on how to
focus on the fundamentals have served us
Colgate’s “Bright Smiles,
enhance coaching skills to further build one’s
well and will continue to serve us well. We
Bright Futures” oral
health education program
celebrated its 25-year
personal leadership capabilities.
feel confident that our business strategies,
Colgate also demonstrates strong
which we have been deploying for over a
leadership and caring as a member of the
decade, will provide us the agility we need to
global community through our sustainability
continue winning on the ground despite any
anniversary in 2016. To date,
efforts. As part of our Making Every Drop of
headwinds we may face as the year unfolds.
the program has reached
more than 900 million
Water Count commitment, on World Water
As we move ahead together, I wish to
Day in March 2016, Colgate implemented a
thank all Colgate people worldwide for their
global marketing campaign in more than 60
personal commitment to achieving our goals
children in over 80 countries
countries, partnering with over 15 retailers,
with the highest ethical standards, and
with a goal of reaching 1.3
billion children by 2020.
which significantly enhanced awareness for
express appreciation for the support of our
Colgate and its water conservation mes-
consumers, customers, suppliers, sharehold-
sage. Colgate remains fully committed to
ers and directors.
improving the health and well-being of our
communities, making our products more
sustainable and helping to conserve the
planet’s vital resources.
Leadership at Colgate also extends to our
Ian Cook
strong corporate governance principles. Our
Chairman, President
Board of Directors receives regular updates
and Chief Executive Officer
6
7
Colgate’s Global Brands
Sustainability Commitment
Colgate is pleased to report excellent progress in 2016 on the Company’s 2015-2020 Sustainability Strategy commitment.
The Company was again named to the 2015-2016 Dow Jones Sustainability North America Index, recognized as a U.S. EPA
ENERGY STAR 2016 Partner of the Year for the sixth year in a row and was named to both the CDP Water A List and CDP
Climate A List in 2016. In addition to the highlights below, more about Colgate’s Sustainability Strategy progress is available
on Colgate’s Sustainability website at www.colgatepalmolive.com/sustainability.
People
Promoting Healthier Lives
l Over half of Colgate employees have been invited to take advantage of a Health Risk Assessment tool to
help them self-evaluate health status and understand risks, and to provide confidential feedback to motivate
behavior change.
l Over 21,100 Colgate employees reached the goal of 500 minutes of healthy activity during the June Global
Healthy Activity Challenge, together logging in over 27 million minutes.
l Colgate celebrated World AIDS Day at many sites around the world to increase awareness and improve
education on the subject of HIV/AIDS. Free and confidential testing was also available in some locations.
Contributing to the Communities Where We Live and Work
l The World Health Organization identifies caries, or cavities, as the most chronic global disease. Colgate has
the unique ability to address this issue and improve the oral health of children and their families around the
world. In 2016, Colgate’s “Bright Smiles, Bright Futures” oral health education program celebrated 25 years
of educating children and improving oral health. “Bright Smiles, Bright Futures” reached over 50 million
children in 2016, for a total of over 900 million children since its inception in 1991.
l Hill’s Pet Nutrition has contributed pet food with a retail value of over $288 million to nearly 1,000 pet shelters
since 2002. These donations have helped more than eight million dogs and cats find their forever homes.
Performance
Delivering Products That Delight Consumers and Respect Our Planet
l Approximately 78% of the products evaluated with Colgate’s Product Sustainability Scorecard were
determined to be “more sustainable,” having an improvement in at least one of the following areas:
responsible sourcing and raw materials, energy and greenhouse gases, water, waste, ingredient profile,
packaging and social metrics.(1)
l 78% of our packaging is considered recyclable.(2)
l Colgate has made great strides in its commitment to improving the sustainability profile of our products,
eliminating the use of microbeads, phthalates and parabens as ingredients in our products. In early 2017,
we will also complete the exit of formaldehyde donors as ingredients in our products.
Planet
Making Every Drop of Water Count
l In 2016, Colgate reduced water use per ton of production by over 48% vs. 2002, avoiding enough water use
to fill approximately 20,000 Olympic-sized swimming pools.(3)
l Colgate continues to roll out our Save Water campaign globally to promote water conservation awareness,
with on-package messaging, in-store communications and a partnership with The Nature Conservancy in
the U.S.
l Colgate’s contributions to Water For People’s Everyone Forever program helped them to reach over 100,000
people in 2016 with water, sanitation systems and/or health and hygiene education in Guatemala, Peru and
India.
Reducing Our Impact on Climate and the Environment
l Colgate continues to reduce its absolute greenhouse gas emissions. From 2002-2016 greenhouse gas
emissions have been reduced by 25%.(3)
l Working toward the Company’s goal of “Zero Waste,” Colgate has reduced the amount of waste per ton of
production sent to landfills by over 41% since 2010.(3)
l Colgate continues its progress on our commitment to mobilize resources to achieve zero net deforestation by
2020 as stated in our Policy on No Deforestation.
(1) The performance results are based on review of quantitative and qualitative data for representative products from the product portfolio
evaluated against comparable Colgate products, considering a 2015 baseline, across seven impact areas to characterize likely
improvement in the sustainability profile.
(2) Colgate considers a package recyclable if it: 1) is made of a material that is recyclable, 2) can be separated into materials that are
recyclable, and 3) can be reprocessed into a valuable feedstock. The estimate is by weight.
(3) Subject to final certification by a third-party auditor.
Oral Care 47% of Net Sales
Personal Care 20% of Net Sales
Home Care 18% of Net Sales
Pet Nutrition 15% of Net Sales
8
9
Colgate’s Global Brands
Sustainability Commitment
Colgate is pleased to report excellent progress in 2016 on the Company’s 2015-2020 Sustainability Strategy commitment.
The Company was again named to the 2015-2016 Dow Jones Sustainability North America Index, recognized as a U.S. EPA
ENERGY STAR 2016 Partner of the Year for the sixth year in a row and was named to both the CDP Water A List and CDP
Climate A List in 2016. In addition to the highlights below, more about Colgate’s Sustainability Strategy progress is available
on Colgate’s Sustainability website at www.colgatepalmolive.com/sustainability.
People
Promoting Healthier Lives
l Over half of Colgate employees have been invited to take advantage of a Health Risk Assessment tool to
help them self-evaluate health status and understand risks, and to provide confidential feedback to motivate
behavior change.
l Over 21,100 Colgate employees reached the goal of 500 minutes of healthy activity during the June Global
Healthy Activity Challenge, together logging in over 27 million minutes.
l Colgate celebrated World AIDS Day at many sites around the world to increase awareness and improve
education on the subject of HIV/AIDS. Free and confidential testing was also available in some locations.
Contributing to the Communities Where We Live and Work
l The World Health Organization identifies caries, or cavities, as the most chronic global disease. Colgate has
the unique ability to address this issue and improve the oral health of children and their families around the
world. In 2016, Colgate’s “Bright Smiles, Bright Futures” oral health education program celebrated 25 years
of educating children and improving oral health. “Bright Smiles, Bright Futures” reached over 50 million
children in 2016, for a total of over 900 million children since its inception in 1991.
l Hill’s Pet Nutrition has contributed pet food with a retail value of over $288 million to nearly 1,000 pet shelters
since 2002. These donations have helped more than eight million dogs and cats find their forever homes.
Performance
Delivering Products That Delight Consumers and Respect Our Planet
l Approximately 78% of the products evaluated with Colgate’s Product Sustainability Scorecard were
determined to be “more sustainable,” having an improvement in at least one of the following areas:
responsible sourcing and raw materials, energy and greenhouse gases, water, waste, ingredient profile,
packaging and social metrics.(1)
l 78% of our packaging is considered recyclable.(2)
l Colgate has made great strides in its commitment to improving the sustainability profile of our products,
eliminating the use of microbeads, phthalates and parabens as ingredients in our products. In early 2017,
we will also complete the exit of formaldehyde donors as ingredients in our products.
Planet
Making Every Drop of Water Count
l In 2016, Colgate reduced water use per ton of production by over 48% vs. 2002, avoiding enough water use
to fill approximately 20,000 Olympic-sized swimming pools.(3)
l Colgate continues to roll out our Save Water campaign globally to promote water conservation awareness,
with on-package messaging, in-store communications and a partnership with The Nature Conservancy in
the U.S.
l Colgate’s contributions to Water For People’s Everyone Forever program helped them to reach over 100,000
people in 2016 with water, sanitation systems and/or health and hygiene education in Guatemala, Peru and
India.
Reducing Our Impact on Climate and the Environment
l Colgate continues to reduce its absolute greenhouse gas emissions. From 2002-2016 greenhouse gas
emissions have been reduced by 25%.(3)
l Working toward the Company’s goal of “Zero Waste,” Colgate has reduced the amount of waste per ton of
production sent to landfills by over 41% since 2010.(3)
l Colgate continues its progress on our commitment to mobilize resources to achieve zero net deforestation by
2020 as stated in our Policy on No Deforestation.
(1) The performance results are based on review of quantitative and qualitative data for representative products from the product portfolio
evaluated against comparable Colgate products, considering a 2015 baseline, across seven impact areas to characterize likely
improvement in the sustainability profile.
(2) Colgate considers a package recyclable if it: 1) is made of a material that is recyclable, 2) can be separated into materials that are
recyclable, and 3) can be reprocessed into a valuable feedstock. The estimate is by weight.
(3) Subject to final certification by a third-party auditor.
Oral Care 47% of Net Sales
Personal Care 20% of Net Sales
Home Care 18% of Net Sales
Pet Nutrition 15% of Net Sales
8
9
Board Of Directors
IAN COOK
Chairman, President and Chief Executive Officer
of Colgate-Palmolive Company
Mr. Cook joined Colgate in the United Kingdom in 1976
and progressed through a series of senior management
roles around the world. He became Chief Operating
Officer in 2004, with responsibility for operations in
North America, Europe, Central Europe, Asia and
Africa. In 2005, Mr. Cook was promoted to President
and Chief Operating Officer, responsible for all Colgate
operations worldwide, and was promoted to Chief
Executive Officer in 2007. Elected director in 2007 and
Chairman in 2009. Age 64
JOHN P. BILBREY, INDEPENDENT DIRECTOR
Non-Executive Chairman of The Hershey Company
Mr. Bilbrey has been Non-Executive Chairman of
Hershey since March 2017. He previously served as
President and Chief Executive Officer of Hershey from
2011 and Chairman from 2015 until his retirement in
March 2017. Mr. Bilbrey joined the management team
of Hershey as Senior Vice President, President Hershey
International in 2003, serving as Senior Vice President,
President Hershey North America from 2007 to 2010
and as Executive Vice President and Chief Operating
Officer from 2010 to 2011. He previously spent 22 years
at The Procter & Gamble Company. Elected director in
2015. Age 60
C. MARTIN HARRIS, INDEPENDENT DIRECTOR
Associate Vice President of the Health Enterprise and
Chief Business Officer of the Dell Medical School at the
University of Texas at Austin
Dr. Harris has been Associate Vice President of the
Health Enterprise and Chief Business Officer of the Dell
Medical School at The University of Texas at Austin
since December 2016. Previously, he was CIO and
Chairman of the Information Technology Division of The
Cleveland Clinic Foundation and a Staff Physician for
The Cleveland Clinic Hospital and The Cleveland Clinic
Foundation Department of General Internal Medicine
from 1996 to 2016. Elected director in 2016. Age 60
RICHARD J. KOGAN, INDEPENDENT DIRECTOR, RETIRING
Former President and Chief Executive Officer
of Schering-Plough Corporation, 1996-2003
Mr. Kogan was also Chairman of Schering-Plough
Corporation from 1998 to 2002. Elected director in
1996. We sincerely thank Mr. Kogan for two decades of
distinguished service to Colgate and extend our best
wishes for his retirement. Age 75
LORRIE M. NORRINGTON, INDEPENDENT DIRECTOR
Operating Partner of Lead Edge Capital LLC
Prior to joining Lead Edge in 2013, Ms. Norrington held
several senior management roles at eBay from 2005 to
2010, including President of Global eBay Marketplaces,
Chief Operating Officer of eBay Marketplaces, President
of eBay International and CEO of Shopping.com.
Previously, she held senior roles at Intuit, Inc. and
General Electric Company. Elected director in 2015.
Age 57
JOHN T. CAHILL, INDEPENDENT DIRECTOR
MICHAEL B. POLK, INDEPENDENT DIRECTOR
Vice Chairman of The Kraft Heinz Company
Chief Executive Officer of Newell Brands Inc.
Mr. Cahill has been Vice Chairman of The Kraft
Heinz Company since 2015. He previously served as
Chairman and Chief Executive Officer of Kraft Foods
Group from 2014 to 2015 and Chairman from 2012 to
2014. Prior to joining Kraft Foods, Mr. Cahill was an
industrial partner at Ripplewood Holdings LLC from
2008 to 2011. Mr. Cahill was CEO of The Pepsi Bottling
Group, Inc. from 2001 to 2003, Chairman and CEO
from 2003 to 2006, and Executive Chairman from 2006
to 2007. Elected director in 2005. Age 59
HELENE D. GAYLE, INDEPENDENT DIRECTOR
Chief Executive Officer of McKinsey Social Initiative
Prior to joining McKinsey Social Initiative in 2015, Dr.
Gayle was President and Chief Executive Officer of
CARE USA from 2006 to 2015. Prior to that, Dr. Gayle
was an executive in the Global Health program at the
Bill and Melinda Gates Foundation from 2001 to 2006.
She previously held multiple key positions at the U.S.
Centers for Disease Control. Elected director in 2010.
Age 61
ELLEN M. HANCOCK, INDEPENDENT DIRECTOR
Former President of Jazz Technologies, Inc.
(formerly Acquicor Technology), 2005-2007
Mrs. Hancock previously was Chairman and Chief
Executive Officer of Exodus Communications, Inc.,
Executive Vice President and Chief Operating Officer at
National Semiconductor and Senior Vice President at
IBM. Elected director in 1988. Age 73
More information about Colgate’s corporate governance commitment is
available on Colgate’s Governance website at www.colgatepalmolive.com.
10
Mr. Polk was also President and Chief Executive Officer
of Newell Rubbermaid Inc. from 2011 to 2016. Prior
to joining Newell Rubbermaid in 2011, Mr. Polk held a
series of key positions at Unilever from 2003 to 2011,
including President, Global Foods, Home and Personal
Care. He previously spent 16 years at Kraft Foods.
Elected director in 2014. Age 56
STEPHEN I. SADOVE, INDEPENDENT DIRECTOR
Founding Partner, JW Levin Management Partners LLC
Prior to joining JW Levin Management Partners LLC,
a private equity firm, in 2015, Mr. Sadove was Chief
Executive Officer of Saks Incorporated from 2006 to
2013 and Chairman of Saks Incorporated from 2007 to
2013. Mr. Sadove joined the management team of Saks
as Vice Chairman in 2002, serving as Chief Operating
Officer from 2004 to 2006. He previously held a series
of key positions at Bristol-Myers Squibb. Elected
director in 2007. Age 65
WELCOME
CHARLES A. BANCROFT, INDEPENDENT DIRECTOR
Executive Vice President, Chief Financial Officer
and Global Business Operations of Bristol-Myers
Squibb Company
Mr. Bancroft joined Bristol-Myers Squibb in 1984 and
held a series of positions of increasing responsibility
within Bristol-Myers Squibb’s finance organization,
including international assignments, as well as senior
leadership positions in the global pharmaceutical
business. He became Chief Financial Officer in 2010
and has served in his current role since 2016. Elected
director in 2017. Age 57
Management Team
*Ian Cook
Chairman,
President and Chief
Executive Officer
(See biographical
information on
page 10.)
*Franck J. Moison
Vice Chairman
*Dennis Hickey
Chief Financial
Officer
*Jennifer M. Daniels
Chief Legal Officer
and Secretary
*P. Justin Skala
Chief Operating
Officer, North
America, Europe,
Africa/Eurasia and
Global Sustainability
*Noel Wallace
Chief Operating
Officer, Global
Innovation & Growth
and Hill’s Pet
Nutrition
Biographical information
for the above executives
is available on Colgate’s
Governance website at
www.colgatepalmolive.
com
Issam Bachaalani
VP & GM, Colgate-
India & South Asia
Daniel Bagley
VP, Global R&D
Don Beatty
VP, Hill’s
Pet Nutrition
Angel Dario
Belalcazar
VP, Global R&D
Andrea Bernard
VP, Global Legal
Joseph M. Bertolini
VP, Global Finance
Yves Briantais
VP, Global
Packaging & Design
*Peter Brons-
Poulsen
President & CEO,
Hill’s Pet Nutrition
Marsha Butler
VP, Global
Oral Care
Scott Cain
VP, Global Finance
Burc Cankat
VP & GM,
Colgate-Russia
& Central Asia
James Capraro
VP, Global
Information
Technology
Rosario Carlino
VP, Colgate-
Africa/Eurasia
Antonio Caro
President & GM,
Hill’s Pet Nutrition-
Europe & Russia
Maria Elisa Carvajal
VP, Global Marketing
Communications
Natasha Chen
VP & GM, Colgate-
Southern Europe
Constantina
Christopoulou
VP, Global R&D
Martin J. Collins
VP, Hill’s
Pet Nutrition
*Michael A. Corbo
Chief Supply
Chain Officer
Mike Crowe
Chief Information
Officer
Rich Cuprys
VP, Global R&D
Marianne DeLorenzo
VP, Global
Information
Technology
*Mukul Deoras
Chief Marketing
Officer
William DeVizio
Chief Dental Officer
Robert W. Dietz
VP, Global Facilities
Catherine Dillane
VP, Colgate-
Latin America
Julie Dillon
VP & GM, Colgate-
North America
*Victoria Dolan
Chief Transformation
Officer & Corporate
Controller
Gordon Dumesich
VP & GM, Hill’s
Pet Nutrition-Japan
Philip Durocher
VP & GM, Colgate-
UK & Ireland
*John Faucher
SVP, Investor
Relations
*Jean-Luc Fischer
President, Colgate-
Africa/Eurasia
Betsy Fishbone
VP, Global Legal
Laura Flavin
VP, Global
Human Resources
Nadine Flynn
VP, Global Legal
David Foster
VP, Global
Information
Technology
Scott Geldart
VP & GM, Colgate-
North Africa &
Middle East
Diana Geofroy
VP, Colgate-Mexico
Derek Gordon
VP & GM,
Colgate-Canada
Taylor Gordy
VP, Colgate-
North America
Peter Graylin
VP, Global Legal
*Thomas Greene
Chief Information &
Business Services
Officer
Jan Guifarro
VP, Corporate
Communications &
Community Giving
Elise Halvorson
VP, Enterprise
Risk Management
*Suzan F. Harrison
President,
Global Oral Care
John Hazlin
VP & GM, Global
Personal Care
Raymond Ho
VP, Colgate-
Asia Pacific
Robert Hofmann
VP, Colgate-
Asia Pacific
Bob Holland
VP, Ethics
& Compliance
Henry Hu
VP, Colgate-
Asia Pacific
Nina Huffman
VP, Global Legal
Traci Hughes-Velez
VP, Colgate-Europe
*John J. Huston
SVP, Chief of Staff
Henning Jakobsen
VP & GM,
Colgate-Nordic
N. Jay Jayaraman
VP, Global
Technology
Elyse Kane
VP, Colgate-
North America
Eugene Kelly
VP, Global Diversity
& Inclusion
Iain Kielty
VP, Colgate-
Asia Pacific
Charalabos Klados
VP, Global Legal
Raj Kohli
VP, Global R&D
Kostas Kontopanos
President, Hill’s
Pet Nutrition,
North America
John Kooyman
VP, Colgate-
North America
Wojciech Krol
VP & GM, Colgate-
Central Europe East
Andrea Lagioia
VP & GM,
Colgate-Brazil
Stephen Lau
VP & GM, Colgate-
Greater China
*Al Lee
Chief Ethics &
Compliance Officer
Adriana Leite
VP & GM, Colgate-
Southern Cone
Stephane Lionnet
VP, Colgate-
North America
Javier Llinas
VP, Global
Information
Technology
Diane Loiselle
VP, Hill’s
Pet Nutrition
Moira Loten
VP, Global
Oral Care
Gregory Malcolm
VP, Corporate Audit
*Daniel B. Marsili
Chief Human
Resources Officer
Pablo Mascolo
VP, Colgate-
Latin America
Sally Massey
VP, Global Human
Resources
Lisa Mather
VP, Global Legal
Paul McGarry
VP, Global
Information
Technology
Lori Michelin
VP, Global
Sustainability &
Environmental,
Health & Safety
Thomas Mintel
VP, Global
Toothbrush
Pascal Montilus
VP, Colgate-
North America
Anne-Marie Motte
VP & GM, Colgate-
North America
Francisco Muñoz
VP & GM,
Colgate-Venezuela
Josue M. Muñoz
VP, Global
Supply Chain
*Vinod Nambiar
President, Colgate-
Asia Pacific
Debra Nichols
VP, Hill’s
Pet Nutrition
Eddie Niem
VP & GM,
Hawley & Hazel
Jesper Nordengaard
VP, Hill’s
Pet Nutrition
Godfrey Nthunzi
VP, Colgate-
Africa/Eurasia
Edward Oblon
VP, Hill’s
Pet Nutrition
*Elaine Paik
VP & Corporate
Treasurer
Nancy Pak
VP & GM,
Tom’s of Maine
*Prabha
Parameswaran
President,
Colgate-Europe
Terrell Partee
VP, Global R&D
Chris E. Pedersen
VP & GM, Colgate-
South Pacific
Hector Pedraza
VP & GM,
Colgate-Andina
Brent Peterson
VP, Global Human
Resources
Robert C. Pierce
VP, Global R&D
Spencer Pingel
VP, Global Analytics
Massimo Poli
VP, Colgate-
Latin America
Warren Pruitt
VP, Global
Supply Chain
Ricardo Ramos
President,
Colgate-Mexico
Christopher Rector
VP & GM, Global
Toothbrush
Riccardo Ricci
VP, Colgate-Europe
Lauren Richardson
Chief Procurement
Officer
Michele Ross
VP, Colgate-
Africa/Eurasia
Paolo Rossetto
VP, Colgate-Europe
Debashish Roy
VP, Colgate-
Africa/Eurasia
Caroline Rudd
VP, Global
Oral Care
Bernal Saborio
VP & GM,
Colgate-Caribbean
Arvind Sachdev
VP & GM, Colgate-
Philippines
Ivan Sandoval
VP, Global Legal
David Scharf
VP & GM, Colgate-
Central America
Dany Schmidt
VP & GM,
Colgate-Central
Europe West
Sara Scrittore
VP, Hill’s
Pet Nutrition
Julio Semanate
VP, Colgate-
Latin America
Alain Semeneri
Chief Customer
Officer
Jose Fernando
Serrano
VP, Colgate-
Latin America
Andrew Shepard
VP & GM, Colgate-
Western Europe
Philip Shotts
VP, Global Finance
Rick Spann
VP, Global
Supply Chain
Vangelis Spyridakos
VP, Colgate-Europe
Neil Stout
VP, Global
Toothbrush
Lynne Tapper
VP, Global Human
Resources
Orlando Tenorio
VP, Colgate-
South Africa
Richard Thorogood
VP, Global Insights
Linda Topping
VP, Global
Supply Chain
Ann Tracy
VP, Colgate-Europe
*Panagiotis
Tsourapas
President, Colgate-
Latin America
Bill Van de Graaf
VP & GM, Colgate-
North America
*Patricia Verduin
Chief Technology
Officer
Lucie Claire Vincent
VP & GM, Global
Home Care
Cliff Wilkins
VP, Global Legal
Alan Wolpert
VP & GM, Colgate-
North America
Ruben Young
VP & GM, Colgate-
Greater Indo-China
*Juan Pablo
Zamorano
President, Colgate-
North America
Alberico Zenzola
VP, Global
Supply Chain
*Corporate Officer
11
Board Of Directors
IAN COOK
Chairman, President and Chief Executive Officer
of Colgate-Palmolive Company
Mr. Cook joined Colgate in the United Kingdom in 1976
and progressed through a series of senior management
roles around the world. He became Chief Operating
Officer in 2004, with responsibility for operations in
North America, Europe, Central Europe, Asia and
Africa. In 2005, Mr. Cook was promoted to President
and Chief Operating Officer, responsible for all Colgate
operations worldwide, and was promoted to Chief
Executive Officer in 2007. Elected director in 2007 and
Chairman in 2009. Age 64
JOHN P. BILBREY, INDEPENDENT DIRECTOR
Non-Executive Chairman of The Hershey Company
Mr. Bilbrey has been Non-Executive Chairman of
Hershey since March 2017. He previously served as
President and Chief Executive Officer of Hershey from
2011 and Chairman from 2015 until his retirement in
March 2017. Mr. Bilbrey joined the management team
of Hershey as Senior Vice President, President Hershey
International in 2003, serving as Senior Vice President,
President Hershey North America from 2007 to 2010
and as Executive Vice President and Chief Operating
Officer from 2010 to 2011. He previously spent 22 years
at The Procter & Gamble Company. Elected director in
2015. Age 60
C. MARTIN HARRIS, INDEPENDENT DIRECTOR
Associate Vice President of the Health Enterprise and
Chief Business Officer of the Dell Medical School at the
University of Texas at Austin
Dr. Harris has been Associate Vice President of the
Health Enterprise and Chief Business Officer of the Dell
Medical School at The University of Texas at Austin
since December 2016. Previously, he was CIO and
Chairman of the Information Technology Division of The
Cleveland Clinic Foundation and a Staff Physician for
The Cleveland Clinic Hospital and The Cleveland Clinic
Foundation Department of General Internal Medicine
from 1996 to 2016. Elected director in 2016. Age 60
RICHARD J. KOGAN, INDEPENDENT DIRECTOR, RETIRING
Former President and Chief Executive Officer
of Schering-Plough Corporation, 1996-2003
Mr. Kogan was also Chairman of Schering-Plough
Corporation from 1998 to 2002. Elected director in
1996. We sincerely thank Mr. Kogan for two decades of
distinguished service to Colgate and extend our best
wishes for his retirement. Age 75
LORRIE M. NORRINGTON, INDEPENDENT DIRECTOR
Operating Partner of Lead Edge Capital LLC
Prior to joining Lead Edge in 2013, Ms. Norrington held
several senior management roles at eBay from 2005 to
2010, including President of Global eBay Marketplaces,
Chief Operating Officer of eBay Marketplaces, President
of eBay International and CEO of Shopping.com.
Previously, she held senior roles at Intuit, Inc. and
General Electric Company. Elected director in 2015.
Age 57
JOHN T. CAHILL, INDEPENDENT DIRECTOR
MICHAEL B. POLK, INDEPENDENT DIRECTOR
Vice Chairman of The Kraft Heinz Company
Chief Executive Officer of Newell Brands Inc.
Mr. Cahill has been Vice Chairman of The Kraft
Heinz Company since 2015. He previously served as
Chairman and Chief Executive Officer of Kraft Foods
Group from 2014 to 2015 and Chairman from 2012 to
2014. Prior to joining Kraft Foods, Mr. Cahill was an
industrial partner at Ripplewood Holdings LLC from
2008 to 2011. Mr. Cahill was CEO of The Pepsi Bottling
Group, Inc. from 2001 to 2003, Chairman and CEO
from 2003 to 2006, and Executive Chairman from 2006
to 2007. Elected director in 2005. Age 59
HELENE D. GAYLE, INDEPENDENT DIRECTOR
Chief Executive Officer of McKinsey Social Initiative
Prior to joining McKinsey Social Initiative in 2015, Dr.
Gayle was President and Chief Executive Officer of
CARE USA from 2006 to 2015. Prior to that, Dr. Gayle
was an executive in the Global Health program at the
Bill and Melinda Gates Foundation from 2001 to 2006.
She previously held multiple key positions at the U.S.
Centers for Disease Control. Elected director in 2010.
Age 61
ELLEN M. HANCOCK, INDEPENDENT DIRECTOR
Former President of Jazz Technologies, Inc.
(formerly Acquicor Technology), 2005-2007
Mrs. Hancock previously was Chairman and Chief
Executive Officer of Exodus Communications, Inc.,
Executive Vice President and Chief Operating Officer at
National Semiconductor and Senior Vice President at
IBM. Elected director in 1988. Age 73
More information about Colgate’s corporate governance commitment is
available on Colgate’s Governance website at www.colgatepalmolive.com.
10
Mr. Polk was also President and Chief Executive Officer
of Newell Rubbermaid Inc. from 2011 to 2016. Prior
to joining Newell Rubbermaid in 2011, Mr. Polk held a
series of key positions at Unilever from 2003 to 2011,
including President, Global Foods, Home and Personal
Care. He previously spent 16 years at Kraft Foods.
Elected director in 2014. Age 56
STEPHEN I. SADOVE, INDEPENDENT DIRECTOR
Founding Partner, JW Levin Management Partners LLC
Prior to joining JW Levin Management Partners LLC,
a private equity firm, in 2015, Mr. Sadove was Chief
Executive Officer of Saks Incorporated from 2006 to
2013 and Chairman of Saks Incorporated from 2007 to
2013. Mr. Sadove joined the management team of Saks
as Vice Chairman in 2002, serving as Chief Operating
Officer from 2004 to 2006. He previously held a series
of key positions at Bristol-Myers Squibb. Elected
director in 2007. Age 65
WELCOME
CHARLES A. BANCROFT, INDEPENDENT DIRECTOR
Executive Vice President, Chief Financial Officer
and Global Business Operations of Bristol-Myers
Squibb Company
Mr. Bancroft joined Bristol-Myers Squibb in 1984 and
held a series of positions of increasing responsibility
within Bristol-Myers Squibb’s finance organization,
including international assignments, as well as senior
leadership positions in the global pharmaceutical
business. He became Chief Financial Officer in 2010
and has served in his current role since 2016. Elected
director in 2017. Age 57
Management Team
*Ian Cook
Chairman,
President and Chief
Executive Officer
(See biographical
information on
page 10.)
*Franck J. Moison
Vice Chairman
*Dennis Hickey
Chief Financial
Officer
*Jennifer M. Daniels
Chief Legal Officer
and Secretary
*P. Justin Skala
Chief Operating
Officer, North
America, Europe,
Africa/Eurasia and
Global Sustainability
*Noel Wallace
Chief Operating
Officer, Global
Innovation & Growth
and Hill’s Pet
Nutrition
Biographical information
for the above executives
is available on Colgate’s
Governance website at
www.colgatepalmolive.
com
Issam Bachaalani
VP & GM, Colgate-
India & South Asia
Daniel Bagley
VP, Global R&D
Don Beatty
VP, Hill’s
Pet Nutrition
Angel Dario
Belalcazar
VP, Global R&D
Andrea Bernard
VP, Global Legal
Joseph M. Bertolini
VP, Global Finance
Yves Briantais
VP, Global
Packaging & Design
*Peter Brons-
Poulsen
President & CEO,
Hill’s Pet Nutrition
Marsha Butler
VP, Global
Oral Care
Scott Cain
VP, Global Finance
Burc Cankat
VP & GM,
Colgate-Russia
& Central Asia
James Capraro
VP, Global
Information
Technology
Rosario Carlino
VP, Colgate-
Africa/Eurasia
Antonio Caro
President & GM,
Hill’s Pet Nutrition-
Europe & Russia
Maria Elisa Carvajal
VP, Global Marketing
Communications
Natasha Chen
VP & GM, Colgate-
Southern Europe
Constantina
Christopoulou
VP, Global R&D
Martin J. Collins
VP, Hill’s
Pet Nutrition
*Michael A. Corbo
Chief Supply
Chain Officer
Mike Crowe
Chief Information
Officer
Rich Cuprys
VP, Global R&D
Marianne DeLorenzo
VP, Global
Information
Technology
*Mukul Deoras
Chief Marketing
Officer
William DeVizio
Chief Dental Officer
Robert W. Dietz
VP, Global Facilities
Catherine Dillane
VP, Colgate-
Latin America
Julie Dillon
VP & GM, Colgate-
North America
*Victoria Dolan
Chief Transformation
Officer & Corporate
Controller
Gordon Dumesich
VP & GM, Hill’s
Pet Nutrition-Japan
Philip Durocher
VP & GM, Colgate-
UK & Ireland
*John Faucher
SVP, Investor
Relations
*Jean-Luc Fischer
President, Colgate-
Africa/Eurasia
Betsy Fishbone
VP, Global Legal
Laura Flavin
VP, Global
Human Resources
Nadine Flynn
VP, Global Legal
David Foster
VP, Global
Information
Technology
Scott Geldart
VP & GM, Colgate-
North Africa &
Middle East
Diana Geofroy
VP, Colgate-Mexico
Derek Gordon
VP & GM,
Colgate-Canada
Taylor Gordy
VP, Colgate-
North America
Peter Graylin
VP, Global Legal
*Thomas Greene
Chief Information &
Business Services
Officer
Jan Guifarro
VP, Corporate
Communications &
Community Giving
Elise Halvorson
VP, Enterprise
Risk Management
*Suzan F. Harrison
President,
Global Oral Care
John Hazlin
VP & GM, Global
Personal Care
Raymond Ho
VP, Colgate-
Asia Pacific
Robert Hofmann
VP, Colgate-
Asia Pacific
Bob Holland
VP, Ethics
& Compliance
Henry Hu
VP, Colgate-
Asia Pacific
Nina Huffman
VP, Global Legal
Traci Hughes-Velez
VP, Colgate-Europe
*John J. Huston
SVP, Chief of Staff
Henning Jakobsen
VP & GM,
Colgate-Nordic
N. Jay Jayaraman
VP, Global
Technology
Elyse Kane
VP, Colgate-
North America
Eugene Kelly
VP, Global Diversity
& Inclusion
Iain Kielty
VP, Colgate-
Asia Pacific
Charalabos Klados
VP, Global Legal
Raj Kohli
VP, Global R&D
Kostas Kontopanos
President, Hill’s
Pet Nutrition,
North America
John Kooyman
VP, Colgate-
North America
Wojciech Krol
VP & GM, Colgate-
Central Europe East
Andrea Lagioia
VP & GM,
Colgate-Brazil
Stephen Lau
VP & GM, Colgate-
Greater China
*Al Lee
Chief Ethics &
Compliance Officer
Adriana Leite
VP & GM, Colgate-
Southern Cone
Stephane Lionnet
VP, Colgate-
North America
Javier Llinas
VP, Global
Information
Technology
Diane Loiselle
VP, Hill’s
Pet Nutrition
Moira Loten
VP, Global
Oral Care
Gregory Malcolm
VP, Corporate Audit
*Daniel B. Marsili
Chief Human
Resources Officer
Pablo Mascolo
VP, Colgate-
Latin America
Sally Massey
VP, Global Human
Resources
Lisa Mather
VP, Global Legal
Paul McGarry
VP, Global
Information
Technology
Lori Michelin
VP, Global
Sustainability &
Environmental,
Health & Safety
Thomas Mintel
VP, Global
Toothbrush
Pascal Montilus
VP, Colgate-
North America
Anne-Marie Motte
VP & GM, Colgate-
North America
Francisco Muñoz
VP & GM,
Colgate-Venezuela
Josue M. Muñoz
VP, Global
Supply Chain
*Vinod Nambiar
President, Colgate-
Asia Pacific
Debra Nichols
VP, Hill’s
Pet Nutrition
Eddie Niem
VP & GM,
Hawley & Hazel
Jesper Nordengaard
VP, Hill’s
Pet Nutrition
Godfrey Nthunzi
VP, Colgate-
Africa/Eurasia
Edward Oblon
VP, Hill’s
Pet Nutrition
*Elaine Paik
VP & Corporate
Treasurer
Nancy Pak
VP & GM,
Tom’s of Maine
*Prabha
Parameswaran
President,
Colgate-Europe
Terrell Partee
VP, Global R&D
Chris E. Pedersen
VP & GM, Colgate-
South Pacific
Hector Pedraza
VP & GM,
Colgate-Andina
Brent Peterson
VP, Global Human
Resources
Robert C. Pierce
VP, Global R&D
Spencer Pingel
VP, Global Analytics
Massimo Poli
VP, Colgate-
Latin America
Warren Pruitt
VP, Global
Supply Chain
Ricardo Ramos
President,
Colgate-Mexico
Christopher Rector
VP & GM, Global
Toothbrush
Riccardo Ricci
VP, Colgate-Europe
Lauren Richardson
Chief Procurement
Officer
Michele Ross
VP, Colgate-
Africa/Eurasia
Paolo Rossetto
VP, Colgate-Europe
Debashish Roy
VP, Colgate-
Africa/Eurasia
Caroline Rudd
VP, Global
Oral Care
Bernal Saborio
VP & GM,
Colgate-Caribbean
Arvind Sachdev
VP & GM, Colgate-
Philippines
Ivan Sandoval
VP, Global Legal
David Scharf
VP & GM, Colgate-
Central America
Dany Schmidt
VP & GM,
Colgate-Central
Europe West
Sara Scrittore
VP, Hill’s
Pet Nutrition
Julio Semanate
VP, Colgate-
Latin America
Alain Semeneri
Chief Customer
Officer
Jose Fernando
Serrano
VP, Colgate-
Latin America
Andrew Shepard
VP & GM, Colgate-
Western Europe
Philip Shotts
VP, Global Finance
Rick Spann
VP, Global
Supply Chain
Vangelis Spyridakos
VP, Colgate-Europe
Neil Stout
VP, Global
Toothbrush
Lynne Tapper
VP, Global Human
Resources
Orlando Tenorio
VP, Colgate-
South Africa
Richard Thorogood
VP, Global Insights
Linda Topping
VP, Global
Supply Chain
Ann Tracy
VP, Colgate-Europe
*Panagiotis
Tsourapas
President, Colgate-
Latin America
Bill Van de Graaf
VP & GM, Colgate-
North America
*Patricia Verduin
Chief Technology
Officer
Lucie Claire Vincent
VP & GM, Global
Home Care
Cliff Wilkins
VP, Global Legal
Alan Wolpert
VP & GM, Colgate-
North America
Ruben Young
VP & GM, Colgate-
Greater Indo-China
*Juan Pablo
Zamorano
President, Colgate-
North America
Alberico Zenzola
VP, Global
Supply Chain
*Corporate Officer
11
Reconciliation
Of Non-GAAP Financial Measures
The following is provided to supplement
certain financial measures discussed in
the letter to shareholders and the financial
highlights section of this report both as
reported (GAAP) and excluding the impact
of certain items (Non-GAAP) as explained
at right. 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.
The Company uses these financial measures
internally in its budgeting process, to evaluate
segment and overall operating performance
and as factors in determining compensation.
While the Company believes that these
financial measures are useful in evaluating the
Company’s underlying business performance
and trends, 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.
This report also discusses organic sales
growth, which is net sales growth excluding
the impact of foreign exchange, acquisitions,
divestments and the deconsolidation of the
Company’s Venezuelan operations. For a
reconciliation of organic sales growth to net
sales growth for full year 2016, see page 40 of
the Company’s Annual Report on Form 10-K.
Note: All per share amounts have been restated to reflect
the 2013 two-for-one stock split.
(1) Represents charges related to the 2012 Restructuring
Program that began in the fourth quarter of 2012.
(2) In 2016, represents a gain on the sale of land in Mexico.
In 2012-2014, represents costs related to the sale of land
in Mexico.
(3) Represents charges for previously disclosed litigation
matters.
(4) Represents income tax (benefits) charges related to
previously disclosed tax matters.
(5) Represents a charge resulting from the deconsolidation
of the Company’s Venezuelan operations.
(6) Represents a gain on the sale of the Company’s laundry
detergent business in the South Pacific.
(7) In 2015 and 2014, represents remeasurement charges
related to effective devaluations in Venezuela. In 2013,
represents a charge related to a devaluation in Venezuela.
(8) Represents costs associated with various global business
realignment and other cost-saving initiatives.
12
(Dollars in Millions
Except Per Share Amounts)
Gross Profit Operating
Profit
Margin
Net Diluted
EPS
Income
2016
As Reported (GAAP)
2012 Restructuring Program (1)
Mexico Land Sale (2)
Litigation Matters (3)
Tax Matters (4)
0.3%
60.0% $3,837 $2,441 $2.72
168 0.19
(63) (0.07)
0.01
11
(35) (0.04)
228
(97)
17
–
–
–
–
Excluding Items (Non-GAAP)
60.3% $3,985 $2,522 $2.81
2015
As Reported (GAAP)
Venezuela Deconsolidation (5)
2012 Restructuring Program (1)
Sales Of Non-Core Product Lines (6)
Venezuela Remeasurements (7)
Litigation Matters (3)
Tax Matters (4)
58.6% $2,789 $1,384 $1.52
0.1%
– 1,084
254
(187)
34
14
–
–
–
–
–
1,058 1.16
183 0.20
(120) (0.13)
22 0.02
14 0.02
15 0.02
Excluding Items (Non-GAAP)
58.7% $3,988 $2,556 $2.81
2014
As Reported (GAAP)
2012 Restructuring Program (1)
Venezuela Remeasurements (7)
Litigation Matters (3)
Mexico Land Sale (2)
Tax Matters (4)
0.2%
58.5% $3,557 $2,180 $2.36
208 0.23
214 0.23
41 0.04
–
66 0.07
286
327
41
4
–
–
–
–
–
3
Excluding Items (Non-GAAP)
58.7% $4,215 $2,712 $2.93
2013
As Reported (GAAP)
2012 Restructuring Program (1)
Venezuela Remeasurements (7)
Litigation Matters (3)
Mexico Land Sale (2)
0.2%
58.6% $3,556
371
172
23
18
–
–
–
$2,241 $2.38
278 0.30
111 0.12
23 0.03
0.01
12
Excluding Items (Non-GAAP)
58.8% $4,140 $2,665 $2.84
2012
As Reported (GAAP)
2012 Restructuring Program (1)
Mexico Land Sale (2)
Business Realignment Initiatives (8)
58.1% $3,889
89
24
21
–
0.2%
–
$2,472 $2.57
70 0.07
18 0.02
14 0.02
Excluding Items (Non-GAAP)
58.3% $4,023 $2,574 $2.68
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2016
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
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
300 Park Avenue, New York, New York
(Address of principal executive offices)
13-1815595
(I.R.S. Employer Identification No.)
10022
(Zip Code)
Registrant’s telephone number, including area code 212-310-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock, $1.00 par value
Floating Rate Notes due 2019
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act. Yes
No
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) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
No
The aggregate market value of Colgate-Palmolive Company Common Stock held by non-affiliates as of June 30, 2016
(the last business day of its most recently completed second quarter) was approximately $65.1 billion.
There were 882,856,721 shares of Colgate-Palmolive Company Common Stock outstanding as of January 31, 2017.
Documents
Portions of Proxy Statement for the 2017 Annual Meeting of Stockholders
Form 10-K Reference
Part III, Items 10 through 14
DOCUMENTS INCORPORATED BY REFERENCE:
23663 10K P1 ONLY cc2017.indd 1
2/24/17 12:21 PM
Reconciliation
Of Non-GAAP Financial Measures
The following is provided to supplement
certain financial measures discussed in
the letter to shareholders and the financial
highlights section of this report both as
reported (GAAP) and excluding the impact
of certain items (Non-GAAP) as explained
at right. 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.
The Company uses these financial measures
internally in its budgeting process, to evaluate
segment and overall operating performance
and as factors in determining compensation.
While the Company believes that these
financial measures are useful in evaluating the
Company’s underlying business performance
and trends, 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.
This report also discusses organic sales
growth, which is net sales growth excluding
the impact of foreign exchange, acquisitions,
divestments and the deconsolidation of the
Company’s Venezuelan operations. For a
reconciliation of organic sales growth to net
sales growth for full year 2016, see page 40 of
the Company’s Annual Report on Form 10-K.
Note: All per share amounts have been restated to reflect
the 2013 two-for-one stock split.
(1) Represents charges related to the 2012 Restructuring
Program that began in the fourth quarter of 2012.
(2) In 2016, represents a gain on the sale of land in Mexico.
In 2012-2014, represents costs related to the sale of land
in Mexico.
(3) Represents charges for previously disclosed litigation
matters.
(4) Represents income tax (benefits) charges related to
previously disclosed tax matters.
(5) Represents a charge resulting from the deconsolidation
of the Company’s Venezuelan operations.
(6) Represents a gain on the sale of the Company’s laundry
detergent business in the South Pacific.
(7) In 2015 and 2014, represents remeasurement charges
related to effective devaluations in Venezuela. In 2013,
represents a charge related to a devaluation in Venezuela.
(8) Represents costs associated with various global business
realignment and other cost-saving initiatives.
12
(Dollars in Millions
Except Per Share Amounts)
Gross Profit Operating
Profit
Margin
Net Diluted
EPS
Income
2016
As Reported (GAAP)
2012 Restructuring Program (1)
Mexico Land Sale (2)
Litigation Matters (3)
Tax Matters (4)
0.3%
60.0% $3,837 $2,441 $2.72
168 0.19
(63) (0.07)
0.01
11
(35) (0.04)
228
(97)
17
–
–
–
–
Excluding Items (Non-GAAP)
60.3% $3,985 $2,522 $2.81
2015
As Reported (GAAP)
Venezuela Deconsolidation (5)
2012 Restructuring Program (1)
Sales Of Non-Core Product Lines (6)
Venezuela Remeasurements (7)
Litigation Matters (3)
Tax Matters (4)
58.6% $2,789 $1,384 $1.52
0.1%
– 1,084
254
(187)
34
14
–
–
–
–
–
1,058 1.16
183 0.20
(120) (0.13)
22 0.02
14 0.02
15 0.02
Excluding Items (Non-GAAP)
58.7% $3,988 $2,556 $2.81
2014
As Reported (GAAP)
2012 Restructuring Program (1)
Venezuela Remeasurements (7)
Litigation Matters (3)
Mexico Land Sale (2)
Tax Matters (4)
0.2%
58.5% $3,557 $2,180 $2.36
208 0.23
214 0.23
41 0.04
–
66 0.07
286
327
41
4
–
–
–
–
–
3
Excluding Items (Non-GAAP)
58.7% $4,215 $2,712 $2.93
2013
As Reported (GAAP)
2012 Restructuring Program (1)
Venezuela Remeasurements (7)
Litigation Matters (3)
Mexico Land Sale (2)
0.2%
58.6% $3,556
371
172
23
18
–
–
–
$2,241 $2.38
278 0.30
111 0.12
23 0.03
0.01
12
Excluding Items (Non-GAAP)
58.8% $4,140 $2,665 $2.84
2012
As Reported (GAAP)
2012 Restructuring Program (1)
Mexico Land Sale (2)
Business Realignment Initiatives (8)
58.1% $3,889
89
24
21
–
0.2%
–
$2,472 $2.57
70 0.07
18 0.02
14 0.02
Excluding Items (Non-GAAP)
58.3% $4,023 $2,574 $2.68
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2016
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
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
300 Park Avenue, New York, New York
(Address of principal executive offices)
13-1815595
(I.R.S. Employer Identification No.)
10022
(Zip Code)
Registrant’s telephone number, including area code 212-310-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock, $1.00 par value
Floating Rate Notes due 2019
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act. Yes
No
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) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
No
The aggregate market value of Colgate-Palmolive Company Common Stock held by non-affiliates as of June 30, 2016
(the last business day of its most recently completed second quarter) was approximately $65.1 billion.
There were 882,856,721 shares of Colgate-Palmolive Company Common Stock outstanding as of January 31, 2017.
Documents
Portions of Proxy Statement for the 2017 Annual Meeting of Stockholders
Form 10-K Reference
Part III, Items 10 through 14
DOCUMENTS INCORPORATED BY REFERENCE:
23663 10K P1 ONLY cc2017.indd 1
2/24/17 12:21 PM
Colgate-Palmolive Company
Table of Contents
PART I
Part I
Page
ITEM 1.
BUSINESS
(a) General Development of the Business
Business
Item 1.
Item 1A. Risk Factors
Item 1B.
Item 2.
Item 3.
Item 4.
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.
Signatures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
1
4
11
12
13
16
17
17
18
50
50
51
51
51
52
52
53
53
53
54
54
55
Colgate-Palmolive Company (together with its subsidiaries, the “Company” or “Colgate”) is a leading consumer
products company whose products are marketed in over 200 countries and territories throughout the world. Colgate was
founded in 1806 and incorporated under the laws of the State of Delaware in 1923.
For recent business developments and other information, refer to the information set forth under the captions
“Management’s Discussion and Analysis of Financial Condition and Results of Operations–Executive Overview and
Outlook,” “–Results of Operations,” “–Restructuring and Related Implementation Charges” and “Liquidity and Capital
Resources” in Part II, Item 7 of this report.
(b) Financial Information about Segments
Worldwide Net sales and Operating profit by business segment and geographic region during the last three years
appear under the caption “Results of Operations” in Part II, Item 7 of this report and in Note 15, Segment Information to
the Consolidated Financial Statements.
(c) Narrative Description of the Business
The Company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition. Colgate is a global
leader in Oral Care with the leading toothpaste and manual toothbrush brands throughout many parts of the world
according to market share data. Colgate’s Oral Care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate
Max Fresh, Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer, Colgate Optic White and Colgate Luminous
White toothpastes, Colgate 360° and Colgate Slim Soft manual toothbrushes and Colgate Optic White, Colgate Total and
Colgate Plax mouthwashes. Colgate’s Oral Care business also includes pharmaceutical products for dentists and other oral
health professionals.
Colgate is a leader in many product categories of the Personal Care market with global leadership in liquid hand soap,
which it sells under the Palmolive, Protex and Softsoap brands. Colgate’s Personal Care products also include Palmolive,
Sanex and Softsoap brand shower gels, Palmolive, Irish Spring and Protex bar soaps and Speed Stick, Lady Speed Stick
and Sanex deodorants and antiperspirants. Colgate is the market leader in liquid hand soap in the U.S. with its line of
Softsoap brand products according to market share data. Colgate’s Personal Care business outside the U.S. also includes
Palmolive and Caprice shampoos and conditioners.
Colgate manufactures and markets a wide array of products for the Home Care market, including Palmolive and Ajax
dishwashing liquids, Fabuloso and Ajax household cleaners and Murphy’s Oil Soap. Colgate is a market leader in fabric
softeners with leading brands including Suavitel in Latin America, Soupline in Europe and Cuddly in the South Pacific
according to market share data.
Sales of Oral, Personal and Home Care products accounted for 47%, 20% and 18%, respectively, of the Company’s
total worldwide Net sales in 2016. Geographically, Oral Care is a significant part of the Company’s business in Asia
Pacific, comprising approximately 81% of Net sales in that region for 2016.
Colgate, through its Hill’s Pet Nutrition segment (“Hill’s”), is a world leader in specialty pet nutrition products for
dogs and cats with products marketed in over 80 countries worldwide. Hill’s markets pet foods primarily under three
brands: Hill’s Science Diet, a range of products for everyday nutritional needs; Hill’s Prescription Diet, a range of
therapeutic products to help nutritionally manage disease conditions in dogs and cats; and Hill’s Ideal Balance, a range of
products with natural ingredients. Sales of Pet Nutrition products accounted for 15% of the Company’s total worldwide Net
sales in 2016.
1
Colgate-Palmolive Company
Table of Contents
PART I
Part I
Page
ITEM 1.
BUSINESS
(a) General Development of the Business
Business
Item 1.
Item 1A. Risk Factors
Item 1B.
Item 2.
Item 3.
Item 4.
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.
Signatures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
1
4
11
12
13
16
17
17
18
50
50
51
51
51
52
52
53
53
53
54
54
55
Colgate-Palmolive Company (together with its subsidiaries, the “Company” or “Colgate”) is a leading consumer
products company whose products are marketed in over 200 countries and territories throughout the world. Colgate was
founded in 1806 and incorporated under the laws of the State of Delaware in 1923.
For recent business developments and other information, refer to the information set forth under the captions
“Management’s Discussion and Analysis of Financial Condition and Results of Operations–Executive Overview and
Outlook,” “–Results of Operations,” “–Restructuring and Related Implementation Charges” and “Liquidity and Capital
Resources” in Part II, Item 7 of this report.
(b) Financial Information about Segments
Worldwide Net sales and Operating profit by business segment and geographic region during the last three years
appear under the caption “Results of Operations” in Part II, Item 7 of this report and in Note 15, Segment Information to
the Consolidated Financial Statements.
(c) Narrative Description of the Business
The Company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition. Colgate is a global
leader in Oral Care with the leading toothpaste and manual toothbrush brands throughout many parts of the world
according to market share data. Colgate’s Oral Care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate
Max Fresh, Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer, Colgate Optic White and Colgate Luminous
White toothpastes, Colgate 360° and Colgate Slim Soft manual toothbrushes and Colgate Optic White, Colgate Total and
Colgate Plax mouthwashes. Colgate’s Oral Care business also includes pharmaceutical products for dentists and other oral
health professionals.
Colgate is a leader in many product categories of the Personal Care market with global leadership in liquid hand soap,
which it sells under the Palmolive, Protex and Softsoap brands. Colgate’s Personal Care products also include Palmolive,
Sanex and Softsoap brand shower gels, Palmolive, Irish Spring and Protex bar soaps and Speed Stick, Lady Speed Stick
and Sanex deodorants and antiperspirants. Colgate is the market leader in liquid hand soap in the U.S. with its line of
Softsoap brand products according to market share data. Colgate’s Personal Care business outside the U.S. also includes
Palmolive and Caprice shampoos and conditioners.
Colgate manufactures and markets a wide array of products for the Home Care market, including Palmolive and Ajax
dishwashing liquids, Fabuloso and Ajax household cleaners and Murphy’s Oil Soap. Colgate is a market leader in fabric
softeners with leading brands including Suavitel in Latin America, Soupline in Europe and Cuddly in the South Pacific
according to market share data.
Sales of Oral, Personal and Home Care products accounted for 47%, 20% and 18%, respectively, of the Company’s
total worldwide Net sales in 2016. Geographically, Oral Care is a significant part of the Company’s business in Asia
Pacific, comprising approximately 81% of Net sales in that region for 2016.
Colgate, through its Hill’s Pet Nutrition segment (“Hill’s”), is a world leader in specialty pet nutrition products for
dogs and cats with products marketed in over 80 countries worldwide. Hill’s markets pet foods primarily under three
brands: Hill’s Science Diet, a range of products for everyday nutritional needs; Hill’s Prescription Diet, a range of
therapeutic products to help nutritionally manage disease conditions in dogs and cats; and Hill’s Ideal Balance, a range of
products with natural ingredients. Sales of Pet Nutrition products accounted for 15% of the Company’s total worldwide Net
sales in 2016.
1
For more information regarding the Company’s worldwide Net sales by product category, refer to Note 1, Nature of
Operations and Note 15, Segment Information to the Consolidated Financial Statements.
As of December 31, 2016, the Company employed approximately 36,700 employees.
Employees
For additional information regarding market share data, see “Market Share Information” in Part II, Item 7 of this
Executive Officers of the Registrant
report.
Research and Development
Strong research and development capabilities and alliances enable Colgate to support its many brands with
technologically sophisticated products to meet consumers’ oral, personal and home care and pet nutrition needs. The
Company’s spending related to research and development activities was $289 million in 2016, $274 million in 2015 and
$277 million in 2014.
Distribution; Raw Materials; Competition; Trademarks and Patents
The Company’s Oral, Personal and Home Care products are marketed by a direct sales force at individual operating
subsidiaries or business units, and by distributors or brokers. Pet Nutrition products are sold by authorized pet supply
retailers and veterinarians. The Company’s products are also sold online through various e-commerce platforms and
retailers. The Company’s sales to Wal-Mart Stores, Inc. and its affiliates represent approximately 11% of the Company’s
Net sales in 2016. No other customer represents more than 10% of the Company’s Net sales.
The majority of raw and packaging materials used in the Company’s products are purchased from other companies and
are available from several sources. No single raw or packaging material represents, and no single supplier provides, a
significant portion of the Company’s total material requirements. For certain materials, however, new suppliers may have
to be qualified under industry, governmental and Colgate standards, which can require additional investment and take some
period of time. Raw and packaging material commodities such as resins, pulp, essential oils, tropical oils, tallow, poultry,
corn and soybeans are subject to market price variations.
The Company’s products are sold in a highly competitive global marketplace which has experienced increased trade
concentration and the growing presence of e-commerce retailers, large-format retailers and discounters. Products similar to
those produced and sold by the Company are available from multinational and local competitors in the U.S. and overseas.
Certain of the Company’s competitors are larger and have greater resources than the Company. In certain geographies,
particularly in the emerging markets, the Company also faces strong local competitors, who may be more agile and have
better local consumer insights than the Company. In addition, private label brands sold by retail trade chains are a source of
competition for certain of the Company’s product lines. Product quality, innovation, brand recognition, marketing
capability and acceptance of new products largely determine success in the Company’s operating segments.
Trademarks are considered to be of material importance to the Company’s business. The Company follows a practice
of seeking trademark protection in the U.S. and throughout the world where the Company’s products are sold. Principal
global and regional trademarks include Colgate, Palmolive, Speed Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex,
Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science
Diet, Hill’s Prescription Diet and Hill’s Ideal Balance. The Company’s rights in these trademarks endure for as long as they
are used and/or registered. Although the Company actively develops and maintains a portfolio of patents, no single patent
is considered significant to the business as a whole.
Environmental Matters
The Company has programs that are designed to ensure that its operations and facilities meet or exceed standards
established by applicable environmental rules and regulations. Capital expenditures for environmental control facilities
totaled $60 million for 2016. For future years, expenditures are currently expected to be of a similar magnitude. For
additional information regarding environmental matters refer to Note 13, Commitments and Contingencies to the
Consolidated Financial Statements.
The following is a list of executive officers as of February 23, 2017:
Name
Ian Cook
Franck J. Moison
Dennis J. Hickey
Jennifer M. Daniels
P. Justin Skala
Noel R. Wallace
Victoria L. Dolan
John J. Huston
Delia H. Thompson
Daniel B. Marsili
Patricia Verduin
Mukul Deoras
Age
64
63
68
53
57
52
57
62
67
56
57
53
Date First Elected
Officer
1996
2002
1998
2014
2008
2009
2011
2002
2002
2005
2011
2015
Present Title
Chairman of the Board
President and Chief Executive Officer
Vice Chairman
Chief Financial Officer
Chief Legal Officer and Secretary
Chief Operating Officer,
North America, Europe, Africa/Eurasia
and Global Sustainability
Chief Operating Officer,
Global Innovation and Growth
and Hill’s Pet Nutrition
Chief Transformation Officer
and Corporate Controller
Senior Vice President
Chief of Staff
Chief Investor Relations Officer
Chief Human Resources Officer
Chief Technology Officer
Chief Marketing Officer
Each of the executive officers listed above has served the registrant or its subsidiaries in various executive capacities
for the past five years with the exception of Jennifer M. Daniels, who joined the Company in 2014 as Chief Legal Officer
and Secretary. Ms. Daniels joined the Company from NCR Corporation where she was Senior Vice President, General
Counsel and Secretary. Prior to joining NCR Corporation in 2010, Ms. Daniels was Vice President, General Counsel and
Secretary of Barnes & Noble, Inc., which she joined in 2007.
Under the Company’s By-Laws, the officers of the corporation hold office until their respective successors are chosen
and qualified or until they have resigned, retired or been removed by the affirmative vote of a majority of the Board of
Directors of the Company (the “Board”). There are no family relationships between any of the executive officers, and there
is no arrangement or understanding between any executive officer and any other person pursuant to which the executive
officer was elected.
(d) Financial Information about Geographic Areas
For financial data by geographic region, refer to the information set forth under the caption “Results of Operations” in
Part II, Item 7, of this report and in Note 15, Segment Information to the Consolidated Financial Statements. For a
discussion of risks associated with our international operations, see Item 1A “Risk Factors.”
2
3
For more information regarding the Company’s worldwide Net sales by product category, refer to Note 1, Nature of
Operations and Note 15, Segment Information to the Consolidated Financial Statements.
As of December 31, 2016, the Company employed approximately 36,700 employees.
Employees
For additional information regarding market share data, see “Market Share Information” in Part II, Item 7 of this
Executive Officers of the Registrant
report.
Research and Development
Strong research and development capabilities and alliances enable Colgate to support its many brands with
technologically sophisticated products to meet consumers’ oral, personal and home care and pet nutrition needs. The
Company’s spending related to research and development activities was $289 million in 2016, $274 million in 2015 and
$277 million in 2014.
Distribution; Raw Materials; Competition; Trademarks and Patents
The Company’s Oral, Personal and Home Care products are marketed by a direct sales force at individual operating
subsidiaries or business units, and by distributors or brokers. Pet Nutrition products are sold by authorized pet supply
retailers and veterinarians. The Company’s products are also sold online through various e-commerce platforms and
retailers. The Company’s sales to Wal-Mart Stores, Inc. and its affiliates represent approximately 11% of the Company’s
Net sales in 2016. No other customer represents more than 10% of the Company’s Net sales.
The majority of raw and packaging materials used in the Company’s products are purchased from other companies and
are available from several sources. No single raw or packaging material represents, and no single supplier provides, a
significant portion of the Company’s total material requirements. For certain materials, however, new suppliers may have
to be qualified under industry, governmental and Colgate standards, which can require additional investment and take some
period of time. Raw and packaging material commodities such as resins, pulp, essential oils, tropical oils, tallow, poultry,
corn and soybeans are subject to market price variations.
The Company’s products are sold in a highly competitive global marketplace which has experienced increased trade
concentration and the growing presence of e-commerce retailers, large-format retailers and discounters. Products similar to
those produced and sold by the Company are available from multinational and local competitors in the U.S. and overseas.
Certain of the Company’s competitors are larger and have greater resources than the Company. In certain geographies,
particularly in the emerging markets, the Company also faces strong local competitors, who may be more agile and have
better local consumer insights than the Company. In addition, private label brands sold by retail trade chains are a source of
competition for certain of the Company’s product lines. Product quality, innovation, brand recognition, marketing
capability and acceptance of new products largely determine success in the Company’s operating segments.
Trademarks are considered to be of material importance to the Company’s business. The Company follows a practice
of seeking trademark protection in the U.S. and throughout the world where the Company’s products are sold. Principal
global and regional trademarks include Colgate, Palmolive, Speed Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex,
Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science
Diet, Hill’s Prescription Diet and Hill’s Ideal Balance. The Company’s rights in these trademarks endure for as long as they
are used and/or registered. Although the Company actively develops and maintains a portfolio of patents, no single patent
is considered significant to the business as a whole.
Environmental Matters
The Company has programs that are designed to ensure that its operations and facilities meet or exceed standards
established by applicable environmental rules and regulations. Capital expenditures for environmental control facilities
totaled $60 million for 2016. For future years, expenditures are currently expected to be of a similar magnitude. For
additional information regarding environmental matters refer to Note 13, Commitments and Contingencies to the
Consolidated Financial Statements.
The following is a list of executive officers as of February 23, 2017:
Name
Ian Cook
Franck J. Moison
Dennis J. Hickey
Jennifer M. Daniels
P. Justin Skala
Noel R. Wallace
Victoria L. Dolan
John J. Huston
Delia H. Thompson
Daniel B. Marsili
Patricia Verduin
Mukul Deoras
Age
64
63
68
53
57
52
57
62
67
56
57
53
Date First Elected
Officer
1996
2002
1998
2014
2008
2009
2011
2002
2002
2005
2011
2015
Present Title
Chairman of the Board
President and Chief Executive Officer
Vice Chairman
Chief Financial Officer
Chief Legal Officer and Secretary
Chief Operating Officer,
North America, Europe, Africa/Eurasia
and Global Sustainability
Chief Operating Officer,
Global Innovation and Growth
and Hill’s Pet Nutrition
Chief Transformation Officer
and Corporate Controller
Senior Vice President
Chief of Staff
Chief Investor Relations Officer
Chief Human Resources Officer
Chief Technology Officer
Chief Marketing Officer
Each of the executive officers listed above has served the registrant or its subsidiaries in various executive capacities
for the past five years with the exception of Jennifer M. Daniels, who joined the Company in 2014 as Chief Legal Officer
and Secretary. Ms. Daniels joined the Company from NCR Corporation where she was Senior Vice President, General
Counsel and Secretary. Prior to joining NCR Corporation in 2010, Ms. Daniels was Vice President, General Counsel and
Secretary of Barnes & Noble, Inc., which she joined in 2007.
Under the Company’s By-Laws, the officers of the corporation hold office until their respective successors are chosen
and qualified or until they have resigned, retired or been removed by the affirmative vote of a majority of the Board of
Directors of the Company (the “Board”). There are no family relationships between any of the executive officers, and there
is no arrangement or understanding between any executive officer and any other person pursuant to which the executive
officer was elected.
(d) Financial Information about Geographic Areas
For financial data by geographic region, refer to the information set forth under the caption “Results of Operations” in
Part II, Item 7, of this report and in Note 15, Segment Information to the Consolidated Financial Statements. For a
discussion of risks associated with our international operations, see Item 1A “Risk Factors.”
2
3
(e) Available Information
Significant competition in our industry could adversely affect our business.
The Company’s website address is www.colgatepalmolive.com. The information contained on the Company’s website
is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. The Company makes
available, free of charge, on its website its annual reports on Form 10-K, its quarterly reports on Form 10-Q, its interactive
data files posted pursuant to Rule 405 of Regulation S-T, its current reports on Form 8-K and amendments to such reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon
as reasonably practicable after the Company has electronically filed such material with, or furnished it to, the United States
Securities and Exchange Commission (the “SEC”). Also available on the Company’s website are the Company’s Code of
Conduct and Board Guidelines on Significant Corporate Governance Issues, the charters of the Committees of the Board,
Form SD and the related Conflict Minerals Disclosure and Report, reports under Section 16 of the Exchange Act of
transactions in Company stock by directors and officers and its proxy statements.
ITEM 1A. RISK FACTORS
In addition to the risks described elsewhere in this report, set forth below is a summary of the material risks to an
investment in our securities. These risks are not the only ones we face. Additional risks not presently known to us or that
we currently deem immaterial may also have an adverse effect on us. If any of these risks actually occur, our business,
results of operations, cash flows and financial condition could be materially and adversely impacted, which might cause the
value of our securities to decline.
We face risks associated with significant international operations, including exposure to foreign currency
fluctuations.
We operate on a global basis with approximately 75% of our Net sales originating in markets outside the U.S. While
geographic diversity helps to reduce our exposure to risks in any one country or part of the world, it also means that we are
subject to the full range of risks associated with significant international operations, including, but not limited to:
changes in exchange rates for foreign currencies, which may reduce the U.S. dollar value of revenues, profits and
cash flows from non-U.S. markets or increase our supply costs, as measured in U.S. dollars, in those markets,
exchange controls and other limits on our ability to import or export raw materials or finished product or to
repatriate earnings from overseas,
political or economic instability, social or labor unrest or changing macroeconomic conditions in our markets,
including as a result of volatile commodity prices, including the price of oil,
lack of well-established or reliable legal systems in certain countries where we operate,
foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources,
and
other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax
consequences or the imposition of onerous trade restrictions and/or tariffs, price controls, labor laws, travel or
immigration restrictions, profit controls or other government controls.
These risks could have a significant impact on our ability to sell our products on a competitive basis in international
markets and may adversely affect our business, results of operations, cash flows and financial condition.
In an effort to minimize the impact on earnings of foreign currency rate movements, we engage in a combination of
selling price increases, where permitted, sourcing strategies, cost-containment measures and selective hedging of foreign
currency transactions. However, these measures may not succeed in offsetting any negative impact of foreign currency rate
movements on our business and results of operations.
We face vigorous competition worldwide, including from strong local competitors and from other large, multinational
companies, some of which may have greater resources than we do. We face this competition in several aspects of our
business, including, but not limited to, the pricing of products, promotional activities, new product introductions and
expansion into new geographies. Such competition also extends to administrative and legal challenges of product claims
and advertising. Our ability to compete also depends on the strength of our brands and on our ability to enforce and defend
our intellectual property, including patent, trademark, copyright, trade secret and trade dress rights against infringement
and legal challenges by competitors.
We may be unable to anticipate the timing and scale of such initiatives or challenges by competitors or to successfully
respond to them, which could harm our business. In addition, the cost of responding to such initiatives and challenges,
including management time, out-of-pocket expenses and price reductions, may affect our performance in the relevant
period. A failure to compete effectively could adversely affect our business, results of operations, cash flows and financial
condition.
Our business is subject to legal and regulatory risks in the U.S. and abroad.
Our business is subject to extensive legal and regulatory requirements in the U.S. and abroad. Such legal and
regulatory requirements apply to most aspects of our products, including their development, ingredients, manufacture,
packaging, labeling, storage, transportation, distribution, export, import, advertising and sale. U.S. federal authorities,
including the U.S. Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product
Safety Commission and the Environmental Protection Agency, regulate different aspects of our business, along with
parallel authorities at the state and local levels and comparable authorities overseas. Also, our selling practices are
regulated by competition law authorities in the U.S. and abroad.
New or more stringent legal or regulatory requirements, or more restrictive interpretations of existing requirements,
could adversely impact our business, results of operations, cash flows and financial condition. For example, from time to
time, various regulatory authorities in Europe, the U.S. and other countries request or conduct reviews of the use of various
ingredients in consumer products. Triclosan, an ingredient used by us primarily in Colgate Total toothpaste, is an example
of an ingredient that has undergone reviews by various regulatory authorities worldwide, and Colgate Total toothpaste in
the U.S. is subject to the FDA’s rigorous New Drug Application (“NDA”) process for safety and efficacy. In September
2016, the FDA issued a Final Rule on ingredients permitted in antibacterial consumer soaps in the U.S., which will restrict
the use of 19 active ingredients, including triclosan and triclocarban, as of September 2017. The FDA ruling will impact
our antibacterial bar soap sold in Puerto Rico, which contains triclocarban. Some states and municipalities in the U.S. have
proposed, and Minnesota has passed, legislation banning the sale of certain products containing triclosan. The Minnesota
legislation does not cover Colgate Total toothpaste. In November 2016, Environment and Climate Change Canada
(“ECCC”), the federal environmental authority in Canada, finalized its review of the potential human and environmental
risks of triclosan, concluding that triclosan is not entering the environment in a quantity or concentration or under
conditions that constitute or may constitute a danger in Canada to human life or health and that triclosan is not
bioaccumulative or persistent under Canadian standards, but that triclosan could be entering the environment at levels that
could potentially cause harm to some aquatic organisms. The Canadian government will now work with stakeholders to
ensure triclosan remains at safe levels for the environment, and we will participate in this process. Triclosan is currently
being evaluated under the European Union’s Regulation for the Registration, Evaluation, Authorization and Restriction of
Chemicals (“REACH”), which evaluation process is expected to take multiple years to complete.
4
5
(e) Available Information
Significant competition in our industry could adversely affect our business.
The Company’s website address is www.colgatepalmolive.com. The information contained on the Company’s website
is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. The Company makes
available, free of charge, on its website its annual reports on Form 10-K, its quarterly reports on Form 10-Q, its interactive
data files posted pursuant to Rule 405 of Regulation S-T, its current reports on Form 8-K and amendments to such reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon
as reasonably practicable after the Company has electronically filed such material with, or furnished it to, the United States
Securities and Exchange Commission (the “SEC”). Also available on the Company’s website are the Company’s Code of
Conduct and Board Guidelines on Significant Corporate Governance Issues, the charters of the Committees of the Board,
Form SD and the related Conflict Minerals Disclosure and Report, reports under Section 16 of the Exchange Act of
transactions in Company stock by directors and officers and its proxy statements.
ITEM 1A. RISK FACTORS
In addition to the risks described elsewhere in this report, set forth below is a summary of the material risks to an
investment in our securities. These risks are not the only ones we face. Additional risks not presently known to us or that
we currently deem immaterial may also have an adverse effect on us. If any of these risks actually occur, our business,
results of operations, cash flows and financial condition could be materially and adversely impacted, which might cause the
value of our securities to decline.
We face risks associated with significant international operations, including exposure to foreign currency
fluctuations.
We operate on a global basis with approximately 75% of our Net sales originating in markets outside the U.S. While
geographic diversity helps to reduce our exposure to risks in any one country or part of the world, it also means that we are
subject to the full range of risks associated with significant international operations, including, but not limited to:
changes in exchange rates for foreign currencies, which may reduce the U.S. dollar value of revenues, profits and
cash flows from non-U.S. markets or increase our supply costs, as measured in U.S. dollars, in those markets,
exchange controls and other limits on our ability to import or export raw materials or finished product or to
repatriate earnings from overseas,
political or economic instability, social or labor unrest or changing macroeconomic conditions in our markets,
including as a result of volatile commodity prices, including the price of oil,
lack of well-established or reliable legal systems in certain countries where we operate,
foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources,
and
other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax
consequences or the imposition of onerous trade restrictions and/or tariffs, price controls, labor laws, travel or
immigration restrictions, profit controls or other government controls.
These risks could have a significant impact on our ability to sell our products on a competitive basis in international
markets and may adversely affect our business, results of operations, cash flows and financial condition.
In an effort to minimize the impact on earnings of foreign currency rate movements, we engage in a combination of
selling price increases, where permitted, sourcing strategies, cost-containment measures and selective hedging of foreign
currency transactions. However, these measures may not succeed in offsetting any negative impact of foreign currency rate
movements on our business and results of operations.
We face vigorous competition worldwide, including from strong local competitors and from other large, multinational
companies, some of which may have greater resources than we do. We face this competition in several aspects of our
business, including, but not limited to, the pricing of products, promotional activities, new product introductions and
expansion into new geographies. Such competition also extends to administrative and legal challenges of product claims
and advertising. Our ability to compete also depends on the strength of our brands and on our ability to enforce and defend
our intellectual property, including patent, trademark, copyright, trade secret and trade dress rights against infringement
and legal challenges by competitors.
We may be unable to anticipate the timing and scale of such initiatives or challenges by competitors or to successfully
respond to them, which could harm our business. In addition, the cost of responding to such initiatives and challenges,
including management time, out-of-pocket expenses and price reductions, may affect our performance in the relevant
period. A failure to compete effectively could adversely affect our business, results of operations, cash flows and financial
condition.
Our business is subject to legal and regulatory risks in the U.S. and abroad.
Our business is subject to extensive legal and regulatory requirements in the U.S. and abroad. Such legal and
regulatory requirements apply to most aspects of our products, including their development, ingredients, manufacture,
packaging, labeling, storage, transportation, distribution, export, import, advertising and sale. U.S. federal authorities,
including the U.S. Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product
Safety Commission and the Environmental Protection Agency, regulate different aspects of our business, along with
parallel authorities at the state and local levels and comparable authorities overseas. Also, our selling practices are
regulated by competition law authorities in the U.S. and abroad.
New or more stringent legal or regulatory requirements, or more restrictive interpretations of existing requirements,
could adversely impact our business, results of operations, cash flows and financial condition. For example, from time to
time, various regulatory authorities in Europe, the U.S. and other countries request or conduct reviews of the use of various
ingredients in consumer products. Triclosan, an ingredient used by us primarily in Colgate Total toothpaste, is an example
of an ingredient that has undergone reviews by various regulatory authorities worldwide, and Colgate Total toothpaste in
the U.S. is subject to the FDA’s rigorous New Drug Application (“NDA”) process for safety and efficacy. In September
2016, the FDA issued a Final Rule on ingredients permitted in antibacterial consumer soaps in the U.S., which will restrict
the use of 19 active ingredients, including triclosan and triclocarban, as of September 2017. The FDA ruling will impact
our antibacterial bar soap sold in Puerto Rico, which contains triclocarban. Some states and municipalities in the U.S. have
proposed, and Minnesota has passed, legislation banning the sale of certain products containing triclosan. The Minnesota
legislation does not cover Colgate Total toothpaste. In November 2016, Environment and Climate Change Canada
(“ECCC”), the federal environmental authority in Canada, finalized its review of the potential human and environmental
risks of triclosan, concluding that triclosan is not entering the environment in a quantity or concentration or under
conditions that constitute or may constitute a danger in Canada to human life or health and that triclosan is not
bioaccumulative or persistent under Canadian standards, but that triclosan could be entering the environment at levels that
could potentially cause harm to some aquatic organisms. The Canadian government will now work with stakeholders to
ensure triclosan remains at safe levels for the environment, and we will participate in this process. Triclosan is currently
being evaluated under the European Union’s Regulation for the Registration, Evaluation, Authorization and Restriction of
Chemicals (“REACH”), which evaluation process is expected to take multiple years to complete.
4
5
A decision by a regulatory or governmental authority that triclosan, or any other of our ingredients, should not be used
in certain consumer products or should otherwise be newly regulated, could adversely impact our business, as could
negative reactions by our consumers, trade customers or non-governmental organizations to our use of such ingredients.
Additionally, an inability to develop new or reformulated products containing alternative ingredients or to obtain regulatory
approval of such products on a timely basis could likewise adversely affect our business.
Because of our extensive international operations, we could be adversely affected by violations of the U.S. Foreign
Corrupt Practices Act (the “FCPA”) and similar worldwide anti-bribery laws. The FCPA and similar worldwide anti-bribery
laws generally prohibit companies and their intermediaries from making improper payments to government officials or
other third parties for the purpose of obtaining or retaining business. While our policies mandate compliance with these
anti-bribery laws, we cannot provide assurance that our internal control policies and procedures will always protect us from
reckless or criminal acts committed by our employees, joint-venture partners or agents. Violations of these laws, or
allegations of such violations, could disrupt our business and adversely affect our reputation and our business, results of
operations, cash flows and financial condition.
While it is our policy and practice to comply with all legal and regulatory requirements applicable to our business, a
finding that we are in violation of, or out of compliance with, applicable laws or regulations could subject us to civil
remedies, including fines, damages, injunctions or product recalls, or criminal sanctions, any of which could adversely
affect our business, results of operations, cash flows and financial condition. Even if a claim is unsuccessful, is without
merit or is not fully pursued, the negative publicity surrounding such assertions regarding our products, processes or
business practices could adversely affect our reputation and brand image. For information regarding our legal and
regulatory matters, see Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the Consolidated
Financial Statements.
Increasing dependence on key retailers in developed markets, changes in the policies of our retail trade customers
and the emergence of new sales channels may adversely affect our business.
Our products are sold in a highly competitive global marketplace which has experienced increased trade concentration
and the growing presence of large-format retailers and discounters. With the growing trend toward retail trade
consolidation, we are increasingly dependent on key retailers, and some of these retailers, including large-format retailers,
may have greater bargaining strength than we do. They may use this leverage to demand higher trade discounts, allowances
or slotting fees, which could lead to reduced sales or profitability. The loss of a key customer or a significant reduction in
sales to a key customer could adversely affect our business, results of operations, cash flows and financial condition. For
additional information regarding our customers, see “Distribution; Raw Materials; Competition; Trademarks and Patents”
in Item 1 “Business.”
We may also be negatively affected by changes in the policies or practices of our retail trade customers, such as
inventory de-stocking, limitations on access to shelf space, delisting of our products, environmental or sustainability
initiatives and other conditions. For example, a determination by a key retailer that any of our ingredients should not be
used in certain consumer products could adversely impact our business, results of operations, cash flows and financial
condition. In addition, private label products sold by retail trade chains, which are typically sold at lower prices than
branded products, are a source of competition for certain of our product lines, including liquid hand soaps and shower gels.
The emergence of new sales channels for our products, such as e-commerce, may affect consumer preferences and market
dynamics and could also adversely impact our business, results of operations, cash flows and financial condition.
The growth of our business depends on the successful identification, development and launch of innovative new
products.
Our growth depends on the continued success of existing products, as well as the successful launch of innovative new
products and line extensions. Our ability to launch new products and line extensions and to sustain existing products is
affected by whether we can successfully:
identify, develop and fund technological innovations,
obtain and maintain necessary patent and trademark protection and avoid infringing intellectual property rights of
others,
obtain approvals and registrations of regulated products, including from the FDA and other regulatory bodies in
the U.S. and abroad, and
anticipate and respond to consumer needs and preferences.
The identification, development and introduction of innovative new products and line extensions involve considerable
costs, and any new product or line extension may not generate sufficient customer and consumer interest and sales to
become a profitable product or to cover the costs of its development and promotion. Our ability to achieve a successful
launch of a new product or line extension could also be adversely affected by preemptive actions taken by competitors in
response to the launch, such as increased promotional activities and advertising.
The failure to develop and launch successful new products could hinder the growth of our business and any delay in
the development or launch of a new product could result in us not being the first to market, which could compromise our
competitive position and adversely affect our business, results of operations, cash flows and financial condition.
If, in the course of identifying or developing new products, we are found to have infringed the trademark, trade secret,
copyright, patent or other intellectual property rights of others, directly or indirectly, through the use of third-party ideas or
technologies, such a finding could adversely affect our ability to develop innovative new products and adversely affect our
business, results of operations, cash flows and financial condition. Even if we are not found to infringe a third party’s
intellectual property rights, claims of infringement could adversely affect us, including by increasing costs and by delaying
the launch of new products.
We may not realize the benefits that we expect from our 2012 Restructuring Program.
In the fourth quarter of 2012, we commenced a Global Growth and Efficiency Program for sustained growth, which
was expanded in 2014 and 2015 (the “2012 Restructuring Program”). The 2012 Restructuring Program’s initiatives are
expected to help us ensure sustained solid worldwide growth in unit volume, organic sales and earnings per share and
enhance our global leadership positions in our core businesses. While we are four years into the implementation of the
2012 Restructuring Program and many of the initiatives under the program have been successfully implemented or are
nearing completion, the successful implementation of the remainder of the program presents significant organizational
challenges and in some cases may require successful negotiations with third parties. As a result, we may not be able to
realize all of the remaining anticipated benefits from the 2012 Restructuring Program. Events and circumstances, such as
financial or strategic difficulties, delays and unexpected costs may occur that could result in our not realizing all of the
remaining anticipated benefits or our not realizing such benefits on our expected timetable. In addition, changes in foreign
exchange rates or in tax, labor or immigration laws may result in our not achieving the remaining anticipated cost savings
as measured in U.S. dollars. If we are unable to realize the remaining anticipated savings of the 2012 Restructuring
Program, our ability to fund other initiatives and enhance profitability may be adversely affected. Any failure to implement
the 2012 Restructuring Program in accordance with our expectations could adversely affect our business, results of
operations, cash flows and financial condition. For additional information regarding the 2012 Restructuring Program, refer
to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive
Overview and Outlook” and “– Restructuring and Related Implementation Charges.”
6
7
A decision by a regulatory or governmental authority that triclosan, or any other of our ingredients, should not be used
in certain consumer products or should otherwise be newly regulated, could adversely impact our business, as could
negative reactions by our consumers, trade customers or non-governmental organizations to our use of such ingredients.
Additionally, an inability to develop new or reformulated products containing alternative ingredients or to obtain regulatory
approval of such products on a timely basis could likewise adversely affect our business.
Because of our extensive international operations, we could be adversely affected by violations of the U.S. Foreign
Corrupt Practices Act (the “FCPA”) and similar worldwide anti-bribery laws. The FCPA and similar worldwide anti-bribery
laws generally prohibit companies and their intermediaries from making improper payments to government officials or
other third parties for the purpose of obtaining or retaining business. While our policies mandate compliance with these
anti-bribery laws, we cannot provide assurance that our internal control policies and procedures will always protect us from
reckless or criminal acts committed by our employees, joint-venture partners or agents. Violations of these laws, or
allegations of such violations, could disrupt our business and adversely affect our reputation and our business, results of
operations, cash flows and financial condition.
While it is our policy and practice to comply with all legal and regulatory requirements applicable to our business, a
finding that we are in violation of, or out of compliance with, applicable laws or regulations could subject us to civil
remedies, including fines, damages, injunctions or product recalls, or criminal sanctions, any of which could adversely
affect our business, results of operations, cash flows and financial condition. Even if a claim is unsuccessful, is without
merit or is not fully pursued, the negative publicity surrounding such assertions regarding our products, processes or
business practices could adversely affect our reputation and brand image. For information regarding our legal and
regulatory matters, see Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the Consolidated
Financial Statements.
Increasing dependence on key retailers in developed markets, changes in the policies of our retail trade customers
and the emergence of new sales channels may adversely affect our business.
Our products are sold in a highly competitive global marketplace which has experienced increased trade concentration
and the growing presence of large-format retailers and discounters. With the growing trend toward retail trade
consolidation, we are increasingly dependent on key retailers, and some of these retailers, including large-format retailers,
may have greater bargaining strength than we do. They may use this leverage to demand higher trade discounts, allowances
or slotting fees, which could lead to reduced sales or profitability. The loss of a key customer or a significant reduction in
sales to a key customer could adversely affect our business, results of operations, cash flows and financial condition. For
additional information regarding our customers, see “Distribution; Raw Materials; Competition; Trademarks and Patents”
in Item 1 “Business.”
We may also be negatively affected by changes in the policies or practices of our retail trade customers, such as
inventory de-stocking, limitations on access to shelf space, delisting of our products, environmental or sustainability
initiatives and other conditions. For example, a determination by a key retailer that any of our ingredients should not be
used in certain consumer products could adversely impact our business, results of operations, cash flows and financial
condition. In addition, private label products sold by retail trade chains, which are typically sold at lower prices than
branded products, are a source of competition for certain of our product lines, including liquid hand soaps and shower gels.
The emergence of new sales channels for our products, such as e-commerce, may affect consumer preferences and market
dynamics and could also adversely impact our business, results of operations, cash flows and financial condition.
The growth of our business depends on the successful identification, development and launch of innovative new
products.
Our growth depends on the continued success of existing products, as well as the successful launch of innovative new
products and line extensions. Our ability to launch new products and line extensions and to sustain existing products is
affected by whether we can successfully:
identify, develop and fund technological innovations,
obtain and maintain necessary patent and trademark protection and avoid infringing intellectual property rights of
others,
obtain approvals and registrations of regulated products, including from the FDA and other regulatory bodies in
the U.S. and abroad, and
anticipate and respond to consumer needs and preferences.
The identification, development and introduction of innovative new products and line extensions involve considerable
costs, and any new product or line extension may not generate sufficient customer and consumer interest and sales to
become a profitable product or to cover the costs of its development and promotion. Our ability to achieve a successful
launch of a new product or line extension could also be adversely affected by preemptive actions taken by competitors in
response to the launch, such as increased promotional activities and advertising.
The failure to develop and launch successful new products could hinder the growth of our business and any delay in
the development or launch of a new product could result in us not being the first to market, which could compromise our
competitive position and adversely affect our business, results of operations, cash flows and financial condition.
If, in the course of identifying or developing new products, we are found to have infringed the trademark, trade secret,
copyright, patent or other intellectual property rights of others, directly or indirectly, through the use of third-party ideas or
technologies, such a finding could adversely affect our ability to develop innovative new products and adversely affect our
business, results of operations, cash flows and financial condition. Even if we are not found to infringe a third party’s
intellectual property rights, claims of infringement could adversely affect us, including by increasing costs and by delaying
the launch of new products.
We may not realize the benefits that we expect from our 2012 Restructuring Program.
In the fourth quarter of 2012, we commenced a Global Growth and Efficiency Program for sustained growth, which
was expanded in 2014 and 2015 (the “2012 Restructuring Program”). The 2012 Restructuring Program’s initiatives are
expected to help us ensure sustained solid worldwide growth in unit volume, organic sales and earnings per share and
enhance our global leadership positions in our core businesses. While we are four years into the implementation of the
2012 Restructuring Program and many of the initiatives under the program have been successfully implemented or are
nearing completion, the successful implementation of the remainder of the program presents significant organizational
challenges and in some cases may require successful negotiations with third parties. As a result, we may not be able to
realize all of the remaining anticipated benefits from the 2012 Restructuring Program. Events and circumstances, such as
financial or strategic difficulties, delays and unexpected costs may occur that could result in our not realizing all of the
remaining anticipated benefits or our not realizing such benefits on our expected timetable. In addition, changes in foreign
exchange rates or in tax, labor or immigration laws may result in our not achieving the remaining anticipated cost savings
as measured in U.S. dollars. If we are unable to realize the remaining anticipated savings of the 2012 Restructuring
Program, our ability to fund other initiatives and enhance profitability may be adversely affected. Any failure to implement
the 2012 Restructuring Program in accordance with our expectations could adversely affect our business, results of
operations, cash flows and financial condition. For additional information regarding the 2012 Restructuring Program, refer
to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive
Overview and Outlook” and “– Restructuring and Related Implementation Charges.”
6
7
There is no guarantee that our ongoing efforts to reduce costs will be successful.
Legal claims and proceedings could adversely impact our business.
We develop investments needed to support growth through our continuous, Company-wide initiatives to lower costs
and increase effective asset utilization, which we refer to as our funding-the-growth initiatives. These initiatives are
designed to reduce costs associated with direct materials, indirect expenses, distribution and logistics, and advertising and
promotional materials, among other things. The achievement of our funding-the-growth targets depends on our ability to
successfully identify and realize additional savings opportunities. Events and circumstances, such as financial or strategic
difficulties, delays and unexpected costs may occur that could result in our not realizing all of the anticipated benefits or
our not realizing the anticipated benefits on our expected timetable. If we are unable to realize the anticipated savings of
our funding-the-growth initiatives, our ability to fund other initiatives and achieve our profitability goals may be adversely
affected. Any failure to implement our funding-the-growth initiatives in accordance with our expectations could adversely
affect our business, results of operations, cash flows and financial condition. For additional information regarding our
funding-the-growth initiatives, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Executive Overview and Outlook.”
From time to time, we may be subject to legal claims and proceedings, including disputes relating to intellectual
property, contracts, product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, as
well as labor and employment, privacy, environmental and tax matters and consumer class actions. Regardless of their
merit, these claims can require significant time and expense to investigate and defend. Since litigation is inherently
uncertain, there is no guarantee that we will be successful in defending ourselves against such claims or proceedings, or
that our assessment of the materiality of these matters, including any reserves taken in connection therewith, will be
consistent with the ultimate outcome of such matters. In addition, if one of our products, or a raw material contained in our
products, is perceived or found to be defective or unsafe, we may need to recall some of our products. Whether or not a
legal claim or proceeding is successful, or a recall is required, such assertions could have an adverse effect on our business,
results of operations, cash flows and financial condition, and the negative publicity surrounding them could harm our
reputation and brand image. See Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the
Consolidated Financial Statements for additional information on certain of our legal claims and proceedings.
Damage to our reputation could have an adverse effect on our business.
Disruption in our global supply chain or key office facilities could adversely impact our business.
Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded
We are engaged in manufacturing and sourcing of products and materials on a global scale. Our operations and those
products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our
reputation, such as our Ethics and Compliance, Sustainability, Brand Protection and Product Safety, Regulatory and Quality
initiatives. Adverse publicity about us, our brands, our supply chain or our ingredients regarding health concerns, legal or
regulatory proceedings, environmental impacts (including packaging, energy and water use and waste management) or
other sustainability or policy issues, whether or not deserved, could jeopardize our reputation. In addition, negative posts or
comments about us on any social media website, whether true or untrue, could harm our reputation. The success of our
brands could also suffer if our marketing initiatives do not have the desired impact on a brand's image or its ability to
attract consumers.
Additionally, due to the scale and scope of our business, we must rely on relationships with third parties, including our
suppliers, distributors, contractors, joint venture partners and other external business partners, for certain functions. While
we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over
business operations, governance and compliance, thereby potentially increasing our reputational and legal risk.
In addition, third parties sell counterfeit versions of our products, which are inferior or may pose safety risks. As a
result, consumers of our brands could confuse our products with these counterfeit products, which could cause them to
refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our
business, results of operations, cash flows and financial condition.
Damage to our reputation or loss of consumer confidence in our products for these or any other reasons could
adversely affect our business, results of operations, cash flows and financial condition, as well as require resources to
rebuild our reputation.
Volatility in material and other costs could adversely impact our profitability.
Raw and packaging material commodities such as resins, pulp, essential oils, tropical oils, tallow, poultry, corn and
soybeans are subject to wide price variations. Increases in the costs and availability of these commodities and the costs of
energy, transportation and other necessary services may adversely affect our profit margins if we are unable to pass along
such higher costs in the form of price increases or otherwise achieve cost efficiencies, such as in manufacturing and
distribution.
of our suppliers could be disrupted by a number of factors, including, but not limited to:
environmental events,
strikes and other labor disputes,
disruptions in logistics,
loss or impairment of key manufacturing sites,
loss of key suppliers,
supplier capacity constraints,
raw material and product quality or safety issues,
industrial accidents or other occupational health and safety issues,
the impact on our suppliers of tighter credit or capital markets, and
natural disasters, including climatic events and earthquakes, acts of war or terrorism and other external factors
over which we have no control.
In addition, we purchase certain key raw and packaging materials from single-source suppliers or a limited number of
suppliers and new suppliers may have to be qualified under industry, governmental and Colgate standards, which can
require additional investment and take a significant period of time.
While we believe that the supplies of raw materials needed to manufacture our products are adequate and have
business continuity and contingency plans in place for key manufacturing sites and the supply of raw and packaging
materials, significant disruption of manufacturing or sourcing of products or materials for any of the above reasons could
interrupt product supply and, if not remedied, have an adverse impact on our business, results of operations, cash flows and
financial condition.
In addition, as a result of our clustering of single-country subsidiaries into regional commercial hubs and our
implementation of a global shared service organizational model, certain of our functions, such as marketing, finance and
accounting, and customer service and logistics, have become more concentrated in key office facilities. A significant
disruption to any of our key office facilities for any reason, including natural disasters, acts of war or terrorism, could
adversely affect our business, results of operations, cash flows and financial condition.
8
9
There is no guarantee that our ongoing efforts to reduce costs will be successful.
Legal claims and proceedings could adversely impact our business.
We develop investments needed to support growth through our continuous, Company-wide initiatives to lower costs
and increase effective asset utilization, which we refer to as our funding-the-growth initiatives. These initiatives are
designed to reduce costs associated with direct materials, indirect expenses, distribution and logistics, and advertising and
promotional materials, among other things. The achievement of our funding-the-growth targets depends on our ability to
successfully identify and realize additional savings opportunities. Events and circumstances, such as financial or strategic
difficulties, delays and unexpected costs may occur that could result in our not realizing all of the anticipated benefits or
our not realizing the anticipated benefits on our expected timetable. If we are unable to realize the anticipated savings of
our funding-the-growth initiatives, our ability to fund other initiatives and achieve our profitability goals may be adversely
affected. Any failure to implement our funding-the-growth initiatives in accordance with our expectations could adversely
affect our business, results of operations, cash flows and financial condition. For additional information regarding our
funding-the-growth initiatives, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Executive Overview and Outlook.”
From time to time, we may be subject to legal claims and proceedings, including disputes relating to intellectual
property, contracts, product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, as
well as labor and employment, privacy, environmental and tax matters and consumer class actions. Regardless of their
merit, these claims can require significant time and expense to investigate and defend. Since litigation is inherently
uncertain, there is no guarantee that we will be successful in defending ourselves against such claims or proceedings, or
that our assessment of the materiality of these matters, including any reserves taken in connection therewith, will be
consistent with the ultimate outcome of such matters. In addition, if one of our products, or a raw material contained in our
products, is perceived or found to be defective or unsafe, we may need to recall some of our products. Whether or not a
legal claim or proceeding is successful, or a recall is required, such assertions could have an adverse effect on our business,
results of operations, cash flows and financial condition, and the negative publicity surrounding them could harm our
reputation and brand image. See Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the
Consolidated Financial Statements for additional information on certain of our legal claims and proceedings.
Damage to our reputation could have an adverse effect on our business.
Disruption in our global supply chain or key office facilities could adversely impact our business.
Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded
We are engaged in manufacturing and sourcing of products and materials on a global scale. Our operations and those
products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our
reputation, such as our Ethics and Compliance, Sustainability, Brand Protection and Product Safety, Regulatory and Quality
initiatives. Adverse publicity about us, our brands, our supply chain or our ingredients regarding health concerns, legal or
regulatory proceedings, environmental impacts (including packaging, energy and water use and waste management) or
other sustainability or policy issues, whether or not deserved, could jeopardize our reputation. In addition, negative posts or
comments about us on any social media website, whether true or untrue, could harm our reputation. The success of our
brands could also suffer if our marketing initiatives do not have the desired impact on a brand's image or its ability to
attract consumers.
Additionally, due to the scale and scope of our business, we must rely on relationships with third parties, including our
suppliers, distributors, contractors, joint venture partners and other external business partners, for certain functions. While
we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over
business operations, governance and compliance, thereby potentially increasing our reputational and legal risk.
In addition, third parties sell counterfeit versions of our products, which are inferior or may pose safety risks. As a
result, consumers of our brands could confuse our products with these counterfeit products, which could cause them to
refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our
business, results of operations, cash flows and financial condition.
Damage to our reputation or loss of consumer confidence in our products for these or any other reasons could
adversely affect our business, results of operations, cash flows and financial condition, as well as require resources to
rebuild our reputation.
Volatility in material and other costs could adversely impact our profitability.
Raw and packaging material commodities such as resins, pulp, essential oils, tropical oils, tallow, poultry, corn and
soybeans are subject to wide price variations. Increases in the costs and availability of these commodities and the costs of
energy, transportation and other necessary services may adversely affect our profit margins if we are unable to pass along
such higher costs in the form of price increases or otherwise achieve cost efficiencies, such as in manufacturing and
distribution.
of our suppliers could be disrupted by a number of factors, including, but not limited to:
environmental events,
strikes and other labor disputes,
disruptions in logistics,
loss or impairment of key manufacturing sites,
loss of key suppliers,
supplier capacity constraints,
raw material and product quality or safety issues,
industrial accidents or other occupational health and safety issues,
the impact on our suppliers of tighter credit or capital markets, and
natural disasters, including climatic events and earthquakes, acts of war or terrorism and other external factors
over which we have no control.
In addition, we purchase certain key raw and packaging materials from single-source suppliers or a limited number of
suppliers and new suppliers may have to be qualified under industry, governmental and Colgate standards, which can
require additional investment and take a significant period of time.
While we believe that the supplies of raw materials needed to manufacture our products are adequate and have
business continuity and contingency plans in place for key manufacturing sites and the supply of raw and packaging
materials, significant disruption of manufacturing or sourcing of products or materials for any of the above reasons could
interrupt product supply and, if not remedied, have an adverse impact on our business, results of operations, cash flows and
financial condition.
In addition, as a result of our clustering of single-country subsidiaries into regional commercial hubs and our
implementation of a global shared service organizational model, certain of our functions, such as marketing, finance and
accounting, and customer service and logistics, have become more concentrated in key office facilities. A significant
disruption to any of our key office facilities for any reason, including natural disasters, acts of war or terrorism, could
adversely affect our business, results of operations, cash flows and financial condition.
8
9
A cyber-security incident, data breach or a failure of a key information technology system could adversely impact
our business or reputation.
We rely extensively on information technology systems (“IT Systems”), including some which are managed, hosted,
provided and/or used by third parties and their vendors, in order to conduct our business. Our uses of these systems
include, but are not limited to:
communicating within the Company and with other parties, including our customers and consumers,
ordering and managing materials from suppliers,
converting materials to finished products,
receiving and processing orders from and shipping products to our customers,
marketing products to consumers,
collecting and storing customer, consumer, employee, investor and other stakeholder information and personal
data,
processing transactions, including but not limited to employee payroll, employee and retiree benefits and
payments to customers and vendors,
Uncertain global economic conditions and disruptions in the credit markets may adversely affect our business.
Uncertain global economic conditions could adversely affect our business. Recent global economic trends pose
challenges to our business and could result in declining revenues, profitability and cash flows. Although we continue to
devote significant resources to support our brands and market our products at multiple price points, during periods of
economic uncertainty consumers may reduce consumption or switch to economy brands, which could reduce sales volumes
of our products or result in a shift in our product mix from higher margin to lower margin product offerings. Additionally,
retailers may increase pressure on our selling prices or increase promotional activity for lower-priced or value offerings as
they seek to maintain sales volumes and margins.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets
through our various financing activities, a disruption in the credit markets could negatively impact the availability or cost
of funding. Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or
significantly increase our cost of capital. In addition, if any financial institutions that hold our cash or other investments or
that are parties to our revolving credit facilities supporting our commercial paper program or other financing arrangements,
such as interest rate or foreign exchange hedging instruments, were to declare bankruptcy or become insolvent, they may
be unable to perform under their agreements with us. This could leave us with reduced borrowing capacity or unhedged
against certain interest rate, foreign currency or commodity price exposures. In addition, tighter credit markets may lead to
business disruptions for certain of our suppliers, contract manufacturers or trade customers which could, in turn, adversely
impact our business, results of operations, cash flows and financial condition.
hosting, processing and sharing confidential and proprietary research, business plans and financial information,
Our success depends upon our ability to attract and retain key employees and the succession of senior management.
complying with legal, regulatory and tax requirements,
providing data security, and
handling other processes involved in managing our business.
Although we have a broad array of information security measures in place, our IT Systems, including those of third-
party service providers with whom we have contracted, have been, and will likely continue to be, subject to computer
viruses or other malicious codes, unauthorized access attempts, phishing and other cyber-attacks. We cannot guarantee that
our security efforts will prevent breaches or breakdowns of our, or our third-party service providers’, IT Systems since the
techniques used in these attacks change frequently and may be difficult to detect for periods of time. In addition, although
we have policies and procedures in place to ensure that all personal information collected by the Company or its third-party
service providers is securely maintained, data breaches due to human error or intentional or unintentional conduct have
occurred and likely will continue to occur. Although we have seen no material impact on our business operations from the
cyber-security attacks and data breaches we have experienced to date, if we suffer a loss or disclosure of confidential
business or stakeholder information as a result of a breach of our IT Systems, including those of third-party service
providers with whom we have contracted, we may suffer reputational, competitive and/or business harm, incur significant
costs and be subject to government investigations, civil litigation, fines and/or damages, which may adversely impact our
business, results of operations, cash flows and financial condition.
Furthermore, while we have disaster recovery and business continuity plans in place, if our IT Systems are damaged,
breached or cease to function properly for any reason, including the poor performance of, failure of or cyber-attack on
third-party service providers, catastrophic events, power outages, cyber-security breaches, network outages, failed upgrades
or other similar events and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a
timely basis, we may suffer interruptions in our ability to manage or conduct business, as well as reputational harm and
litigation, which may adversely impact our business, results of operations, cash flows and financial condition.
Our success largely depends on the performance of our management team and other key employees. If we are unable
to attract and retain talented, highly qualified senior management and other key people, our business, results of operations,
cash flows and financial condition could be adversely affected. In addition, if we are unable to effectively provide for the
succession of senior management, including our Chief Executive Officer, our business, results of operations, cash flows
and financial condition may be adversely affected. While we follow a disciplined, ongoing succession planning process and
have succession plans in place for senior management and other key executives, these do not guarantee that the services of
qualified senior executives will continue to be available to us at particular moments in time.
We may pursue acquisitions and divestitures, which could adversely impact our results.
We may pursue acquisitions of brands, businesses or technologies from third parties. Acquisitions involve numerous
risks, including difficulties in the integration of the operations, technologies, services and products of acquired brands or
businesses, the development or launch of products with acquired technologies, the estimation of and assumption of
liabilities and contingencies, personnel turnover and the diversion of management’s attention from other business priorities,
which may adversely impact our business, results of operations, cash flows and financial condition. In addition, we may be
unable to achieve any anticipated benefits or cost savings from acquisitions in the time frame we anticipate, or at all.
Moreover, our pursuit of acquisitions could result in substantial additional debt, exposure to contingent liabilities, such
as litigation (including for infringement of intellectual property) or earn-out obligations, the potential impairment of
goodwill or other intangible assets, or transaction costs, all of which may adversely impact our business, results of
operations, cash flows and financial condition.
We also may periodically divest brands or businesses. These divestitures may adversely impact our results of
operations if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested brands or
businesses, or otherwise achieve the anticipated benefits or cost savings from the divestitures. In addition, businesses under
consideration for, or otherwise subject to, divestiture may be adversely impacted prior to the divestiture, which could
negatively impact our results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
10
11
A cyber-security incident, data breach or a failure of a key information technology system could adversely impact
our business or reputation.
We rely extensively on information technology systems (“IT Systems”), including some which are managed, hosted,
provided and/or used by third parties and their vendors, in order to conduct our business. Our uses of these systems
include, but are not limited to:
communicating within the Company and with other parties, including our customers and consumers,
ordering and managing materials from suppliers,
converting materials to finished products,
receiving and processing orders from and shipping products to our customers,
marketing products to consumers,
collecting and storing customer, consumer, employee, investor and other stakeholder information and personal
data,
processing transactions, including but not limited to employee payroll, employee and retiree benefits and
payments to customers and vendors,
Uncertain global economic conditions and disruptions in the credit markets may adversely affect our business.
Uncertain global economic conditions could adversely affect our business. Recent global economic trends pose
challenges to our business and could result in declining revenues, profitability and cash flows. Although we continue to
devote significant resources to support our brands and market our products at multiple price points, during periods of
economic uncertainty consumers may reduce consumption or switch to economy brands, which could reduce sales volumes
of our products or result in a shift in our product mix from higher margin to lower margin product offerings. Additionally,
retailers may increase pressure on our selling prices or increase promotional activity for lower-priced or value offerings as
they seek to maintain sales volumes and margins.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets
through our various financing activities, a disruption in the credit markets could negatively impact the availability or cost
of funding. Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or
significantly increase our cost of capital. In addition, if any financial institutions that hold our cash or other investments or
that are parties to our revolving credit facilities supporting our commercial paper program or other financing arrangements,
such as interest rate or foreign exchange hedging instruments, were to declare bankruptcy or become insolvent, they may
be unable to perform under their agreements with us. This could leave us with reduced borrowing capacity or unhedged
against certain interest rate, foreign currency or commodity price exposures. In addition, tighter credit markets may lead to
business disruptions for certain of our suppliers, contract manufacturers or trade customers which could, in turn, adversely
impact our business, results of operations, cash flows and financial condition.
hosting, processing and sharing confidential and proprietary research, business plans and financial information,
Our success depends upon our ability to attract and retain key employees and the succession of senior management.
complying with legal, regulatory and tax requirements,
providing data security, and
handling other processes involved in managing our business.
Although we have a broad array of information security measures in place, our IT Systems, including those of third-
party service providers with whom we have contracted, have been, and will likely continue to be, subject to computer
viruses or other malicious codes, unauthorized access attempts, phishing and other cyber-attacks. We cannot guarantee that
our security efforts will prevent breaches or breakdowns of our, or our third-party service providers’, IT Systems since the
techniques used in these attacks change frequently and may be difficult to detect for periods of time. In addition, although
we have policies and procedures in place to ensure that all personal information collected by the Company or its third-party
service providers is securely maintained, data breaches due to human error or intentional or unintentional conduct have
occurred and likely will continue to occur. Although we have seen no material impact on our business operations from the
cyber-security attacks and data breaches we have experienced to date, if we suffer a loss or disclosure of confidential
business or stakeholder information as a result of a breach of our IT Systems, including those of third-party service
providers with whom we have contracted, we may suffer reputational, competitive and/or business harm, incur significant
costs and be subject to government investigations, civil litigation, fines and/or damages, which may adversely impact our
business, results of operations, cash flows and financial condition.
Furthermore, while we have disaster recovery and business continuity plans in place, if our IT Systems are damaged,
breached or cease to function properly for any reason, including the poor performance of, failure of or cyber-attack on
third-party service providers, catastrophic events, power outages, cyber-security breaches, network outages, failed upgrades
or other similar events and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a
timely basis, we may suffer interruptions in our ability to manage or conduct business, as well as reputational harm and
litigation, which may adversely impact our business, results of operations, cash flows and financial condition.
Our success largely depends on the performance of our management team and other key employees. If we are unable
to attract and retain talented, highly qualified senior management and other key people, our business, results of operations,
cash flows and financial condition could be adversely affected. In addition, if we are unable to effectively provide for the
succession of senior management, including our Chief Executive Officer, our business, results of operations, cash flows
and financial condition may be adversely affected. While we follow a disciplined, ongoing succession planning process and
have succession plans in place for senior management and other key executives, these do not guarantee that the services of
qualified senior executives will continue to be available to us at particular moments in time.
We may pursue acquisitions and divestitures, which could adversely impact our results.
We may pursue acquisitions of brands, businesses or technologies from third parties. Acquisitions involve numerous
risks, including difficulties in the integration of the operations, technologies, services and products of acquired brands or
businesses, the development or launch of products with acquired technologies, the estimation of and assumption of
liabilities and contingencies, personnel turnover and the diversion of management’s attention from other business priorities,
which may adversely impact our business, results of operations, cash flows and financial condition. In addition, we may be
unable to achieve any anticipated benefits or cost savings from acquisitions in the time frame we anticipate, or at all.
Moreover, our pursuit of acquisitions could result in substantial additional debt, exposure to contingent liabilities, such
as litigation (including for infringement of intellectual property) or earn-out obligations, the potential impairment of
goodwill or other intangible assets, or transaction costs, all of which may adversely impact our business, results of
operations, cash flows and financial condition.
We also may periodically divest brands or businesses. These divestitures may adversely impact our results of
operations if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested brands or
businesses, or otherwise achieve the anticipated benefits or cost savings from the divestitures. In addition, businesses under
consideration for, or otherwise subject to, divestiture may be adversely impacted prior to the divestiture, which could
negatively impact our results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 2.
PROPERTIES
ITEM 3.
LEGAL PROCEEDINGS
The Company owns or leases approximately 330 properties which include manufacturing, distribution, research and
office facilities worldwide. Our corporate headquarters is located in leased property at 300 Park Avenue, New York, New
York.
In the U.S., the Company operates approximately 70 properties, of which 15 are owned. Major U.S. manufacturing
and warehousing facilities used by the Oral, Personal and Home Care product segment of our business are located in
Greenwood, South Carolina; Morristown, Tennessee; and Cambridge, Ohio. The Pet Nutrition segment has major
manufacturing and warehousing facilities in Bowling Green, Kentucky; Topeka, Kansas; Emporia, Kansas; and Richmond,
Indiana. The primary research center for Oral, Personal and Home Care products is located in Piscataway, New Jersey, and
the primary research center for Pet Nutrition products is located in Topeka, Kansas. Our global data center is also located in
Piscataway, New Jersey.
Overseas, the Company operates approximately 260 properties, of which 74 are owned, in over 80 countries. Major
overseas manufacturing and warehousing facilities used by the Oral, Personal and Home Care product segment of our
business are located in Australia, Brazil, China, Colombia, France, Greece, India, Italy, Mexico, Poland, South Africa,
Thailand, Turkey, Venezuela and Vietnam. The Pet Nutrition segment has major manufacturing and warehousing facilities
in the Czech Republic and the Netherlands.
The Company has shared business service centers in Mexico, Poland and India, which are located in leased properties.
All of the facilities we operate are well maintained and adequate for the purpose for which they are intended.
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, privacy,
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, the Company currently estimates that the aggregate range of reasonably
possible losses in excess of any accrued liabilities is $0 to approximately $225 million (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.
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13
ITEM 2.
PROPERTIES
ITEM 3.
LEGAL PROCEEDINGS
The Company owns or leases approximately 330 properties which include manufacturing, distribution, research and
office facilities worldwide. Our corporate headquarters is located in leased property at 300 Park Avenue, New York, New
York.
In the U.S., the Company operates approximately 70 properties, of which 15 are owned. Major U.S. manufacturing
and warehousing facilities used by the Oral, Personal and Home Care product segment of our business are located in
Greenwood, South Carolina; Morristown, Tennessee; and Cambridge, Ohio. The Pet Nutrition segment has major
manufacturing and warehousing facilities in Bowling Green, Kentucky; Topeka, Kansas; Emporia, Kansas; and Richmond,
Indiana. The primary research center for Oral, Personal and Home Care products is located in Piscataway, New Jersey, and
the primary research center for Pet Nutrition products is located in Topeka, Kansas. Our global data center is also located in
Piscataway, New Jersey.
Overseas, the Company operates approximately 260 properties, of which 74 are owned, in over 80 countries. Major
overseas manufacturing and warehousing facilities used by the Oral, Personal and Home Care product segment of our
business are located in Australia, Brazil, China, Colombia, France, Greece, India, Italy, Mexico, Poland, South Africa,
Thailand, Turkey, Venezuela and Vietnam. The Pet Nutrition segment has major manufacturing and warehousing facilities
in the Czech Republic and the Netherlands.
The Company has shared business service centers in Mexico, Poland and India, which are located in leased properties.
All of the facilities we operate are well maintained and adequate for the purpose for which they are intended.
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, privacy,
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, the Company currently estimates that the aggregate range of reasonably
possible losses in excess of any accrued liabilities is $0 to approximately $225 million (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.
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13
Brazilian Matters
Competition 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, at the current exchange rate, are approximately $143 million. 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. Numerous appeals are currently pending at the administrative level. In the event the Company is ultimately
unsuccessful in its administrative appeals, further appeals are available within the Brazilian federal courts.
In September 2015, the Company lost one of its appeals at the administrative level, and has filed a lawsuit in Brazilian
federal court. In February 2017, the Company lost an additional administrative appeal, and plans to file a similar federal
court action. 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 assessments 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 and penalties of approximately $59 million, 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 Brazilian federal
court. In the event the Company is unsuccessful in this filing, 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.
Certain of the Company’s subsidiaries have 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
have involved other consumer goods companies and/or retail customers. These investigations often continue for several
years and can result in substantial fines for violations that are found, as well as associated private actions for damages.
While the Company cannot predict the final financial impact of pending competition law matters, as these matters may
change, the Company evaluates developments in these matters quarterly and accrues liabilities as and when appropriate.
The Company’s policy is to comply with antitrust and competition laws and, if a violation of any such laws is found, to
take appropriate remedial action and to cooperate fully with any related governmental inquiry. The status of the
competition law matters that were pending in 2016 is set forth below.
European Competition Matters
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 million. In addition,
as a result of the Company’s acquisition of the Sanex personal care business in 2011 from Unilever N.V. and
Unilever PLC (together with Unilever N.V., “Unilever”) pursuant to a Business and Share Sale and Purchase
Agreement (the “Sale and Purchase Agreement”), the French competition law authority found that the
Company’s French subsidiary, along with Hillshire Brands Company (formerly Sara Lee Corporation (“Sara
Lee”)), were jointly and severally liable for fines of $25 million assessed against Sara Lee’s French
subsidiary. The Company is entitled to indemnification for this fine from Unilever as provided in the Sale and
Purchase Agreement. The fines were confirmed by the Court of Appeal in October 2016. The Company is
appealing the decision of the Court of Appeal on behalf of the Company and Sara Lee in the French Supreme
Court.
In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of
parallel imports into Greece. The Company has responded to this statement of objections.
In December 2009, the Swiss competition law authority imposed a fine of $6 million on the Company’s
GABA subsidiary for alleged violations of restrictions on parallel imports into Switzerland, which the
Company appealed. In January 2014, this appeal was denied. The Company had appealed before the Swiss
Supreme Court, but its appeal was denied in June 2016.
In December 2010, the Italian competition law authority found that 16 consumer goods companies, including
the Company’s Italian subsidiary, exchanged competitively sensitive information in the cosmetics sector, for
which the Company’s Italian subsidiary was fined $3 million. The Company had appealed the fine in the
Italian courts, but has decided not to further pursue its appeal.
Australian Competition Matter
In December 2013, the Australian competition law authority instituted civil proceedings in the Sydney registry of the
Federal Court of Australia alleging that three consumer goods companies, including the Company’s Australian subsidiary, a
retailer and a former employee of the Company’s Australian subsidiary violated the Australian competition law by
coordinating the launching and pricing of ultra-concentrated laundry detergents. In 2015, the Company recognized a charge
of $14 million in connection with this matter. In March 2016, the Company and the Australian competition law authority
reached an agreement to settle these proceedings for a total of $14 million, which includes a fine and cost reimbursement to
the competition law authority. The former employee of the Company also reached an agreement to settle. The settlement
agreements were approved by the court in May 2016.
14
15
Brazilian Matters
Competition 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, at the current exchange rate, are approximately $143 million. 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. Numerous appeals are currently pending at the administrative level. In the event the Company is ultimately
unsuccessful in its administrative appeals, further appeals are available within the Brazilian federal courts.
In September 2015, the Company lost one of its appeals at the administrative level, and has filed a lawsuit in Brazilian
federal court. In February 2017, the Company lost an additional administrative appeal, and plans to file a similar federal
court action. 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 assessments 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 and penalties of approximately $59 million, 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 Brazilian federal
court. In the event the Company is unsuccessful in this filing, 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.
Certain of the Company’s subsidiaries have 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
have involved other consumer goods companies and/or retail customers. These investigations often continue for several
years and can result in substantial fines for violations that are found, as well as associated private actions for damages.
While the Company cannot predict the final financial impact of pending competition law matters, as these matters may
change, the Company evaluates developments in these matters quarterly and accrues liabilities as and when appropriate.
The Company’s policy is to comply with antitrust and competition laws and, if a violation of any such laws is found, to
take appropriate remedial action and to cooperate fully with any related governmental inquiry. The status of the
competition law matters that were pending in 2016 is set forth below.
European Competition Matters
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 million. In addition,
as a result of the Company’s acquisition of the Sanex personal care business in 2011 from Unilever N.V. and
Unilever PLC (together with Unilever N.V., “Unilever”) pursuant to a Business and Share Sale and Purchase
Agreement (the “Sale and Purchase Agreement”), the French competition law authority found that the
Company’s French subsidiary, along with Hillshire Brands Company (formerly Sara Lee Corporation (“Sara
Lee”)), were jointly and severally liable for fines of $25 million assessed against Sara Lee’s French
subsidiary. The Company is entitled to indemnification for this fine from Unilever as provided in the Sale and
Purchase Agreement. The fines were confirmed by the Court of Appeal in October 2016. The Company is
appealing the decision of the Court of Appeal on behalf of the Company and Sara Lee in the French Supreme
Court.
In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of
parallel imports into Greece. The Company has responded to this statement of objections.
In December 2009, the Swiss competition law authority imposed a fine of $6 million on the Company’s
GABA subsidiary for alleged violations of restrictions on parallel imports into Switzerland, which the
Company appealed. In January 2014, this appeal was denied. The Company had appealed before the Swiss
Supreme Court, but its appeal was denied in June 2016.
In December 2010, the Italian competition law authority found that 16 consumer goods companies, including
the Company’s Italian subsidiary, exchanged competitively sensitive information in the cosmetics sector, for
which the Company’s Italian subsidiary was fined $3 million. The Company had appealed the fine in the
Italian courts, but has decided not to further pursue its appeal.
Australian Competition Matter
In December 2013, the Australian competition law authority instituted civil proceedings in the Sydney registry of the
Federal Court of Australia alleging that three consumer goods companies, including the Company’s Australian subsidiary, a
retailer and a former employee of the Company’s Australian subsidiary violated the Australian competition law by
coordinating the launching and pricing of ultra-concentrated laundry detergents. In 2015, the Company recognized a charge
of $14 million in connection with this matter. In March 2016, the Company and the Australian competition law authority
reached an agreement to settle these proceedings for a total of $14 million, which includes a fine and cost reimbursement to
the competition law authority. The former employee of the Company also reached an agreement to settle. The settlement
agreements were approved by the court in May 2016.
14
15
Talcum Powder Matters
PART II
The Company has been named as a defendant in civil actions alleging that certain talcum powder products that were
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
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 December 31, 2016, there were 115 individual cases pending against the
Company in state and federal courts throughout the United States and a number of the pending cases are expected to go to
trial in 2017. 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 and excess 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.
N8
The Company is a defendant in a lawsuit pending in Utah federal court brought by N8 Medical, Inc. (“N8 Medical”),
Brigham Young University (“BYU”) and N8 Pharmaceuticals, Inc. (“N8 Pharma”). The complaint, originally filed in
November 2013, alleges 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 the third quarter of 2016, the court indicated that the claims brought by N8 Pharma would be dismissed in their
entirety; N8 Pharma requested that the Court reconsider that decision, but that request was denied. Also in the third quarter
of 2016, the Company and BYU agreed to resolve BYU’s claims and in December 2016, the Company and N8 Medical
agreed to resolve N8 Medical’s claims. These claims were resolved in an amount that is not material to the Company’s
results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
AND ISSUER PURCHASES OF EQUITY SECURITIES
For information regarding the market for the Company’s common stock, including quarterly market prices and
dividends and stock price performance graphs, refer to “Market and Dividend Information” included in Part IV, Item 15 of
this report. For information regarding the number of common shareholders of record, refer to “Historical Financial
Summary” included in Part IV, Item 15 of this report. For information regarding the securities authorized for issuance
under our equity compensation plans, refer to “Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters” included in Part III, Item 12 of this report.
Issuer Purchases of Equity Securities
On February 19, 2015, the Company’s Board of Directors (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 share repurchase program (the
“2015 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, blackout periods and other factors.
The following table shows the stock repurchase activity for each of the three months in the quarter ended
December 31, 2016:
Month
October 1 through 31, 2016
November 1 through 30, 2016
December 1 through 31, 2016
Total
Total Number of
Shares Purchased(1)
824,946
2,694,040
2,723,435
6,242,421
$
$
$
$
Average Price
Paid per Share
72.28
67.93
65.88
67.61
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)
775,000
2,693,900
2,668,707
6,137,607
2,758
2,575
2,399
_______
(1)
Includes share repurchases under the 2015 Program and those associated with certain employee elections under the Company’s compensation and
benefit programs.
(2)
(3)
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 104,814 shares, all of which relate to shares deemed surrendered to the Company to satisfy certain employee elections under the
Company’s compensation and benefit programs.
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 December 31, 2016.
ITEM 6.
SELECTED FINANCIAL DATA
Refer to the information set forth under the caption “Historical Financial Summary” included in Part IV, Item 15 of
this report.
16
17
Talcum Powder Matters
PART II
The Company has been named as a defendant in civil actions alleging that certain talcum powder products that were
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
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 December 31, 2016, there were 115 individual cases pending against the
Company in state and federal courts throughout the United States and a number of the pending cases are expected to go to
trial in 2017. 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 and excess 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.
N8
The Company is a defendant in a lawsuit pending in Utah federal court brought by N8 Medical, Inc. (“N8 Medical”),
Brigham Young University (“BYU”) and N8 Pharmaceuticals, Inc. (“N8 Pharma”). The complaint, originally filed in
November 2013, alleges 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 the third quarter of 2016, the court indicated that the claims brought by N8 Pharma would be dismissed in their
entirety; N8 Pharma requested that the Court reconsider that decision, but that request was denied. Also in the third quarter
of 2016, the Company and BYU agreed to resolve BYU’s claims and in December 2016, the Company and N8 Medical
agreed to resolve N8 Medical’s claims. These claims were resolved in an amount that is not material to the Company’s
results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
AND ISSUER PURCHASES OF EQUITY SECURITIES
For information regarding the market for the Company’s common stock, including quarterly market prices and
dividends and stock price performance graphs, refer to “Market and Dividend Information” included in Part IV, Item 15 of
this report. For information regarding the number of common shareholders of record, refer to “Historical Financial
Summary” included in Part IV, Item 15 of this report. For information regarding the securities authorized for issuance
under our equity compensation plans, refer to “Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters” included in Part III, Item 12 of this report.
Issuer Purchases of Equity Securities
On February 19, 2015, the Company’s Board of Directors (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 share repurchase program (the
“2015 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, blackout periods and other factors.
The following table shows the stock repurchase activity for each of the three months in the quarter ended
December 31, 2016:
Month
October 1 through 31, 2016
November 1 through 30, 2016
December 1 through 31, 2016
Total
Total Number of
Shares Purchased(1)
824,946
2,694,040
2,723,435
6,242,421
$
$
$
$
Average Price
Paid per Share
72.28
67.93
65.88
67.61
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)
775,000
2,693,900
2,668,707
6,137,607
2,758
2,575
2,399
_______
(1)
Includes share repurchases under the 2015 Program and those associated with certain employee elections under the Company’s compensation and
benefit programs.
(2)
(3)
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 104,814 shares, all of which relate to shares deemed surrendered to the Company to satisfy certain employee elections under the
Company’s compensation and benefit programs.
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 December 31, 2016.
ITEM 6.
SELECTED FINANCIAL DATA
Refer to the information set forth under the caption “Historical Financial Summary” included in Part IV, Item 15 of
this report.
16
17
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
To achieve its business and financial objectives, the Company focuses the organization on initiatives to drive and fund
OF OPERATIONS
Executive Overview and Outlook
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 and increase market
leadership positions in key product categories. These product categories are prioritized 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% 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 and
wholesale customers 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 and veterinarians. The
Company’s products are also sold online through various e-commerce platforms and retailers.
Through March 31, 2016, the Oral, Personal and Home Care product segment included the North America, Latin
America, Europe/South Pacific, Asia and Africa/Eurasia geographic operating segments. As a result of management
changes effective April 1, 2016, the Company realigned the geographic structure of its Europe/South Pacific and Asia
reportable operating segments within the Oral, Personal and Home Care product segment. Management responsibility for
the South Pacific operations was transferred from Europe/South Pacific management to Asia management. Accordingly,
commencing with the Company’s financial reporting for the quarter ended June 30, 2016, the results of the South Pacific
operations are reported in the Asia Pacific reportable operating segment, which results in a slight modification to the
geographic components of the Oral, Personal and Home Care product segment, with no impact on historical Company
results overall. The Company has recast its historical geographic segment information to conform to the new reporting
structure. These changes have no impact on the Company’s historical consolidated financial position, results of operations
or cash flows.
On an ongoing basis, management focuses on a variety of key indicators to monitor business health and performance.
These indicators include market share, net sales (including volume, pricing and foreign exchange components), organic
sales growth (net sales growth excluding the impact of foreign exchange, acquisitions, divestments and the deconsolidation
of the Company’s Venezuelan operations) and gross profit margin, operating profit, net income and earnings per share both
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.
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. To enhance these
efforts, the Company has developed key initiatives to build strong relationships with consumers, dental and veterinary
professionals and retail customers. In addition, the Company has strengthened its capabilities in e-commerce, developing
its relationships with online only retailers and its digital marketing capabilities. 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.
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.
In September 2016, the Company’s Mexican subsidiary completed the sale to the United States of America of the
Mexico City site on which its commercial operations, technology center and soap production facility were previously
located and received $60 as the third and final installment of the sale price. The total sale price (including the third
installment and the previously received first and second installments) was $120. The Company recognized a pretax gain of
$97 ($63 aftertax gain) in the third quarter of 2016, net of costs primarily related to site preparation.
Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of its
Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela using the cost method of accounting. As
such, effective December 31, 2015, the Company’s Consolidated Balance Sheet no longer includes the assets and liabilities
of CP Venezuela. As a result of this change in accounting, the Company recorded an aftertax charge of $1,058 ($1,084
pretax) or $1.16 per diluted share in 2015. The charge primarily consists of an impairment of the Company’s investment in
CP Venezuela of $952, which includes intercompany receivables from CP Venezuela, and $111 related to the
reclassification of cumulative translation losses. Prior periods have not been restated and CP Venezuela’s Net sales,
Operating profit and Net income are included in the Company’s Consolidated Statements of Income through December 31,
2015.
Since January 1, 2016, under the cost method of accounting, the Company no longer includes the local operating
results of CP Venezuela in its Consolidated Financial Statements and includes income relating to CP Venezuela only to the
extent it receives cash for sales of inventory to CP Venezuela or for dividends or royalties remitted by CP Venezuela, all of
which have been immaterial. Although CP Venezuela’s local operating results are no longer included in the Company’s
Consolidated Financial Statements for accounting purposes, under current tax rules, the Company is required to continue
including CP Venezuela in its consolidated U.S. federal income tax return. In the first quarter of 2016, Provision for income
taxes included a $210 U.S. income tax benefit principally related to changes in Venezuela’s foreign exchange regime
implemented in March 2016. See Note 11, Income Taxes to the Consolidated Financial Statements for additional details.
Prior to the change in accounting, which was effective December 31, 2015, CP Venezuela’s functional currency was
the U.S. dollar since Venezuela had been designated hyper-inflationary and, as such, Venezuelan currency fluctuations were
reported in income. The Company remeasured the financial statements of CP Venezuela at the end of each month at the rate
at which it expected to remit future dividends which, based on the advice of legal counsel, was the SICAD rate (formerly
known as the SICAD I rate). During the year ended December 31, 2015, the Company incurred pretax losses of $34 ($22
aftertax or $0.02 per diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated
net monetary assets at the quarter-end SICAD rate for the second and third quarters of 2015. The SICAD rate did not
revalue during the fourth quarter of 2015 and was 13.50 bolivares per dollar as of December 31, 2015. The remeasurement
losses incurred in the second and third quarters of 2015 are referred to as the “2015 Venezuela Remeasurements.”
18
19
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
To achieve its business and financial objectives, the Company focuses the organization on initiatives to drive and fund
OF OPERATIONS
Executive Overview and Outlook
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 and increase market
leadership positions in key product categories. These product categories are prioritized 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% 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 and
wholesale customers 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 and veterinarians. The
Company’s products are also sold online through various e-commerce platforms and retailers.
Through March 31, 2016, the Oral, Personal and Home Care product segment included the North America, Latin
America, Europe/South Pacific, Asia and Africa/Eurasia geographic operating segments. As a result of management
changes effective April 1, 2016, the Company realigned the geographic structure of its Europe/South Pacific and Asia
reportable operating segments within the Oral, Personal and Home Care product segment. Management responsibility for
the South Pacific operations was transferred from Europe/South Pacific management to Asia management. Accordingly,
commencing with the Company’s financial reporting for the quarter ended June 30, 2016, the results of the South Pacific
operations are reported in the Asia Pacific reportable operating segment, which results in a slight modification to the
geographic components of the Oral, Personal and Home Care product segment, with no impact on historical Company
results overall. The Company has recast its historical geographic segment information to conform to the new reporting
structure. These changes have no impact on the Company’s historical consolidated financial position, results of operations
or cash flows.
On an ongoing basis, management focuses on a variety of key indicators to monitor business health and performance.
These indicators include market share, net sales (including volume, pricing and foreign exchange components), organic
sales growth (net sales growth excluding the impact of foreign exchange, acquisitions, divestments and the deconsolidation
of the Company’s Venezuelan operations) and gross profit margin, operating profit, net income and earnings per share both
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.
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. To enhance these
efforts, the Company has developed key initiatives to build strong relationships with consumers, dental and veterinary
professionals and retail customers. In addition, the Company has strengthened its capabilities in e-commerce, developing
its relationships with online only retailers and its digital marketing capabilities. 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.
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.
In September 2016, the Company’s Mexican subsidiary completed the sale to the United States of America of the
Mexico City site on which its commercial operations, technology center and soap production facility were previously
located and received $60 as the third and final installment of the sale price. The total sale price (including the third
installment and the previously received first and second installments) was $120. The Company recognized a pretax gain of
$97 ($63 aftertax gain) in the third quarter of 2016, net of costs primarily related to site preparation.
Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of its
Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela using the cost method of accounting. As
such, effective December 31, 2015, the Company’s Consolidated Balance Sheet no longer includes the assets and liabilities
of CP Venezuela. As a result of this change in accounting, the Company recorded an aftertax charge of $1,058 ($1,084
pretax) or $1.16 per diluted share in 2015. The charge primarily consists of an impairment of the Company’s investment in
CP Venezuela of $952, which includes intercompany receivables from CP Venezuela, and $111 related to the
reclassification of cumulative translation losses. Prior periods have not been restated and CP Venezuela’s Net sales,
Operating profit and Net income are included in the Company’s Consolidated Statements of Income through December 31,
2015.
Since January 1, 2016, under the cost method of accounting, the Company no longer includes the local operating
results of CP Venezuela in its Consolidated Financial Statements and includes income relating to CP Venezuela only to the
extent it receives cash for sales of inventory to CP Venezuela or for dividends or royalties remitted by CP Venezuela, all of
which have been immaterial. Although CP Venezuela’s local operating results are no longer included in the Company’s
Consolidated Financial Statements for accounting purposes, under current tax rules, the Company is required to continue
including CP Venezuela in its consolidated U.S. federal income tax return. In the first quarter of 2016, Provision for income
taxes included a $210 U.S. income tax benefit principally related to changes in Venezuela’s foreign exchange regime
implemented in March 2016. See Note 11, Income Taxes to the Consolidated Financial Statements for additional details.
Prior to the change in accounting, which was effective December 31, 2015, CP Venezuela’s functional currency was
the U.S. dollar since Venezuela had been designated hyper-inflationary and, as such, Venezuelan currency fluctuations were
reported in income. The Company remeasured the financial statements of CP Venezuela at the end of each month at the rate
at which it expected to remit future dividends which, based on the advice of legal counsel, was the SICAD rate (formerly
known as the SICAD I rate). During the year ended December 31, 2015, the Company incurred pretax losses of $34 ($22
aftertax or $0.02 per diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated
net monetary assets at the quarter-end SICAD rate for the second and third quarters of 2015. The SICAD rate did not
revalue during the fourth quarter of 2015 and was 13.50 bolivares per dollar as of December 31, 2015. The remeasurement
losses incurred in the second and third quarters of 2015 are referred to as the “2015 Venezuela Remeasurements.”
18
19
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Looking forward, the Company expects global macroeconomic and market conditions to remain highly challenging
and category growth rates continuing to be slow. 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. In addition, the emergence of new sales channels for the
Company’s products, such as e-commerce, may affect consumer preferences and market dynamics. Given that
approximately 75% of the Company’s Net sales originate in markets outside the U.S., the Company continues to
experience volatile foreign currency fluctuations and high raw and packaging material costs, driven by foreign exchange
transaction 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 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 strategic initiatives: engaging to build our
brands; innovation for growth; effectiveness and efficiency; and leading to win. This focus, together with the strength of
the Company’s global brands, its broad international presence in both developed and emerging markets and initiatives, such
as the 2012 Restructuring Program, should position the Company well to increase shareholder value over the long term.
During the year ended December 31, 2014, the Company incurred net pretax losses of $327 ($214 aftertax or $0.23 per
diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets at
the quarter-end SICAD I rate for each of the first three quarters of 2014 (the “2014 Venezuela Remeasurements”). The
SICAD I rate did not revalue during the fourth quarter of 2014 and was 12.00 bolivares per dollar as of December 31,
2014.
Included in the remeasurement losses during 2015 and 2014 were charges related to the devaluation-protected bonds
issued by the Venezuelan government and held by CP Venezuela. Because the official exchange rate remained at 6.30
bolivares per dollar, the devaluation-protected bonds did not revalue at the SICAD rate but remained at the official
exchange rate, resulting in an impairment in the fair value of the bonds.
In the fourth quarter of 2012, the Company commenced a Global Growth and Efficiency Program (as expanded in
2014 and 2015 as described below, the “2012 Restructuring Program”) for sustained growth. The program’s initiatives are
expected to help the Company ensure sustained solid worldwide growth in unit volume, organic sales and earnings per
share and enhance its global leadership positions in its core businesses.
On October 23, 2014, the Company’s Board of Directors (the “Board”) approved an expansion of the 2012
Restructuring Program to take advantage of additional savings opportunities. On October 29, 2015, the Board approved the
reinvestment of the funds from the sale of the Company’s laundry detergent business in the South Pacific to expand the
2012 Restructuring Program and extend it through December 31, 2017. The Board approved the implementation plan for
this expansion on March 10, 2016.
The initiatives under the 2012 Restructuring Program continue to be focused on the following areas:
Expanding Commercial Hubs
Extending Shared Business Services and Streamlining Global Functions
Optimizing Global Supply Chain and Facilities
Cumulative pretax charges resulting from the 2012 Restructuring Program, once all phases are approved and
implemented, are estimated to be $1,405 to $1,585 ($1,050 to $1,170 aftertax). Savings from the 2012 Restructuring
Program, substantially all of which are expected to increase future cash flows, are projected to be approximately $430 to
$495 pretax ($400 to $475 aftertax) annually once all projects are approved and implemented.
In 2016, 2015 and 2014, the Company incurred aftertax costs of $168, $183 and $208, respectively, associated with the
2012 Restructuring Program.
For more information regarding the 2012 Restructuring Program, see “Restructuring and Related Implementation
Charges” below.
In August 2015, the Company completed the sale of its laundry detergent business in the South Pacific to Henkel AG
& Co. KGaA for an aggregate purchase price of approximately 310 Australian dollars ($221) and recorded a pretax gain of
$187 ($120 aftertax or $0.13 per diluted share) in Other (income) expense, net. The gain is net of charges related to the
right-sizing of the Company’s South Pacific business, asset write-offs related to the divested laundry detergent business and
other costs related to the sale. As discussed above, the funds from the sale were reinvested to expand the 2012
Restructuring Program.
20
21
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Looking forward, the Company expects global macroeconomic and market conditions to remain highly challenging
and category growth rates continuing to be slow. 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. In addition, the emergence of new sales channels for the
Company’s products, such as e-commerce, may affect consumer preferences and market dynamics. Given that
approximately 75% of the Company’s Net sales originate in markets outside the U.S., the Company continues to
experience volatile foreign currency fluctuations and high raw and packaging material costs, driven by foreign exchange
transaction 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 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 strategic initiatives: engaging to build our
brands; innovation for growth; effectiveness and efficiency; and leading to win. This focus, together with the strength of
the Company’s global brands, its broad international presence in both developed and emerging markets and initiatives, such
as the 2012 Restructuring Program, should position the Company well to increase shareholder value over the long term.
During the year ended December 31, 2014, the Company incurred net pretax losses of $327 ($214 aftertax or $0.23 per
diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets at
the quarter-end SICAD I rate for each of the first three quarters of 2014 (the “2014 Venezuela Remeasurements”). The
SICAD I rate did not revalue during the fourth quarter of 2014 and was 12.00 bolivares per dollar as of December 31,
2014.
Included in the remeasurement losses during 2015 and 2014 were charges related to the devaluation-protected bonds
issued by the Venezuelan government and held by CP Venezuela. Because the official exchange rate remained at 6.30
bolivares per dollar, the devaluation-protected bonds did not revalue at the SICAD rate but remained at the official
exchange rate, resulting in an impairment in the fair value of the bonds.
In the fourth quarter of 2012, the Company commenced a Global Growth and Efficiency Program (as expanded in
2014 and 2015 as described below, the “2012 Restructuring Program”) for sustained growth. The program’s initiatives are
expected to help the Company ensure sustained solid worldwide growth in unit volume, organic sales and earnings per
share and enhance its global leadership positions in its core businesses.
On October 23, 2014, the Company’s Board of Directors (the “Board”) approved an expansion of the 2012
Restructuring Program to take advantage of additional savings opportunities. On October 29, 2015, the Board approved the
reinvestment of the funds from the sale of the Company’s laundry detergent business in the South Pacific to expand the
2012 Restructuring Program and extend it through December 31, 2017. The Board approved the implementation plan for
this expansion on March 10, 2016.
The initiatives under the 2012 Restructuring Program continue to be focused on the following areas:
Expanding Commercial Hubs
Extending Shared Business Services and Streamlining Global Functions
Optimizing Global Supply Chain and Facilities
Cumulative pretax charges resulting from the 2012 Restructuring Program, once all phases are approved and
implemented, are estimated to be $1,405 to $1,585 ($1,050 to $1,170 aftertax). Savings from the 2012 Restructuring
Program, substantially all of which are expected to increase future cash flows, are projected to be approximately $430 to
$495 pretax ($400 to $475 aftertax) annually once all projects are approved and implemented.
In 2016, 2015 and 2014, the Company incurred aftertax costs of $168, $183 and $208, respectively, associated with the
2012 Restructuring Program.
For more information regarding the 2012 Restructuring Program, see “Restructuring and Related Implementation
Charges” below.
In August 2015, the Company completed the sale of its laundry detergent business in the South Pacific to Henkel AG
& Co. KGaA for an aggregate purchase price of approximately 310 Australian dollars ($221) and recorded a pretax gain of
$187 ($120 aftertax or $0.13 per diluted share) in Other (income) expense, net. The gain is net of charges related to the
right-sizing of the Company’s South Pacific business, asset write-offs related to the divested laundry detergent business and
other costs related to the sale. As discussed above, the funds from the sale were reinvested to expand the 2012
Restructuring Program.
20
21
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Results of Operations
Net Sales
Worldwide Net sales were $15,195 in 2016, down 5.0% from 2015, as net selling price increases of 2.5% were more
than offset by volume declines of 3.0% and negative foreign exchange of 4.5%. Excluding divested businesses and the
impact of the deconsolidation of the Company’s Venezuelan operations, volume increased 1.5%. Organic sales (Net sales
excluding the impact of foreign exchange, acquisitions, divestments and the deconsolidation of the Company’s Venezuelan
operations), a non-GAAP financial measure as discussed below, increased 4.0% in 2016.
Net sales in the Oral, Personal and Home Care product segment were $12,931 in 2016, down 6.5% from 2015, as net
selling price increases of 2.5% were more than offset by volume declines of 4.0% and negative foreign exchange of 5.0%.
Excluding divested businesses and the impact of the deconsolidation of the Company’s Venezuelan operations, volume
increased 1.5%. Organic sales in the Oral, Personal and Home Care product segment increased 4.0% in 2016.
The increase in organic sales in 2016 versus 2015 was driven by an increase in Oral Care organic sales, with the
toothpaste and manual toothbrush categories contributing to growth. Personal Care and Home Care also contributed to
organic sales growth due to strong organic sales in the shower gel and the fabric softener categories, respectively.
The Company’s share of the global toothpaste market was 44.0% for full year 2016, down 0.3 share points from full
year 2015 and its share of the global manual toothbrush market was 33.1% for full year 2016, down 0.3 share points from
full year 2015. Full year 2016 market shares in toothpaste were up in North America and down in Europe and Asia Pacific
versus full year 2015. In the manual toothbrush category, full year 2016 market shares were up in North America and
Europe and down in Latin America, Asia Pacific and Africa/Eurasia versus full year 2015. For additional information
regarding the Company’s use of market share data and limitations on such data, see “Market Share Information” below.
Net sales for Hill’s Pet Nutrition were $2,264 in 2016, an increase of 2.5% from 2015, driven by net selling price
increases of 2.5%, while volume and foreign exchange were flat. Organic sales for Hill’s Pet Nutrition increased 2.5% in
2016.
The increase in organic sales in 2016 versus 2015 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 Natural categories.
Worldwide Net sales were $16,034 in 2015, down 7.0% from 2014, as volume growth of 1.5% and net selling price
increases of 3.0% were more than offset by negative foreign exchange of 11.5%. Organic sales increased 5.0% in 2015.
Gross Profit/Margin
Worldwide Gross profit decreased 3% to $9,123 in 2016 from $9,399 in 2015. Gross profit in both periods included
charges related to the 2012 Restructuring Program. Excluding these items in both periods, Gross profit decreased to $9,169
in 2016 from $9,419 in 2015, reflecting a decrease of $492 resulting from the impact of the deconsolidation of the
Company’s Venezuelan operations effective December 31, 2015 and negative foreign exchange, partially offset by growth
in organic sales. This decrease in Gross profit was partially offset by an increase of $242 resulting from higher Gross profit
margin.
Worldwide Gross profit margin increased to 60.0% in 2016 from 58.6% in 2015. Excluding charges related to the 2012
Restructuring Program in both periods, Gross profit margin increased by 160 basis points (bps) to 60.3% in 2016, from
58.7% in 2015. This increase in Gross profit margin was primarily driven by cost savings from the Company’s funding-the-
growth initiatives (190 bps) and the 2012 Restructuring Program (10 bps) and higher pricing (100 bps), partially offset by
higher costs (170 bps), which included higher raw and packaging material costs driven by significant foreign exchange
transaction costs and the impact of the deconsolidation of the Company’s Venezuelan operations effective December 31,
2015.
Worldwide Gross profit decreased 7% to $9,399 in 2015 from $10,109 in 2014. Gross profit in both periods included
charges related to the 2012 Restructuring Program. Gross profit in 2014 also included costs related to the sale of land in
Mexico. Excluding these items in both periods, Gross profit decreased to $9,419 in 2015 from $10,142 in 2014, due to
lower Net sales ($730), as the growth in organic sales was more than offset by the impact of negative foreign exchange.
Worldwide Gross profit margin increased to 58.6% in 2015 from 58.5% in 2014. Excluding the items described above
in both periods, Gross profit margin was 58.7% in 2015, even with 2014, as cost savings from the Company’s funding-the-
growth initiatives (220 bps) and the 2012 Restructuring Program (20 bps) and higher pricing (130 bps) were offset by
higher costs (370 bps), which included higher raw and packaging material costs, driven by significant foreign exchange
transaction costs.
Gross profit, GAAP
2012 Restructuring Program
Costs related to the sale of land in Mexico
Gross profit, non-GAAP
2016
2015
2014
9,123
$
9,399
$
10,109
46
—
20
—
29
4
9,169
$
9,419
$
10,142
$
$
Gross profit margin, GAAP
2012 Restructuring Program
Gross profit margin, non-GAAP
2016
2015
60.0%
0.3
60.3%
58.6%
0.1
58.7%
Basis Point
Change
140
160
2014
58.5%
0.2
58.7%
Basis Point
Change
10
—
22
23
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Results of Operations
Net Sales
Worldwide Net sales were $15,195 in 2016, down 5.0% from 2015, as net selling price increases of 2.5% were more
than offset by volume declines of 3.0% and negative foreign exchange of 4.5%. Excluding divested businesses and the
impact of the deconsolidation of the Company’s Venezuelan operations, volume increased 1.5%. Organic sales (Net sales
excluding the impact of foreign exchange, acquisitions, divestments and the deconsolidation of the Company’s Venezuelan
operations), a non-GAAP financial measure as discussed below, increased 4.0% in 2016.
Net sales in the Oral, Personal and Home Care product segment were $12,931 in 2016, down 6.5% from 2015, as net
selling price increases of 2.5% were more than offset by volume declines of 4.0% and negative foreign exchange of 5.0%.
Excluding divested businesses and the impact of the deconsolidation of the Company’s Venezuelan operations, volume
increased 1.5%. Organic sales in the Oral, Personal and Home Care product segment increased 4.0% in 2016.
The increase in organic sales in 2016 versus 2015 was driven by an increase in Oral Care organic sales, with the
toothpaste and manual toothbrush categories contributing to growth. Personal Care and Home Care also contributed to
organic sales growth due to strong organic sales in the shower gel and the fabric softener categories, respectively.
The Company’s share of the global toothpaste market was 44.0% for full year 2016, down 0.3 share points from full
year 2015 and its share of the global manual toothbrush market was 33.1% for full year 2016, down 0.3 share points from
full year 2015. Full year 2016 market shares in toothpaste were up in North America and down in Europe and Asia Pacific
versus full year 2015. In the manual toothbrush category, full year 2016 market shares were up in North America and
Europe and down in Latin America, Asia Pacific and Africa/Eurasia versus full year 2015. For additional information
regarding the Company’s use of market share data and limitations on such data, see “Market Share Information” below.
Net sales for Hill’s Pet Nutrition were $2,264 in 2016, an increase of 2.5% from 2015, driven by net selling price
increases of 2.5%, while volume and foreign exchange were flat. Organic sales for Hill’s Pet Nutrition increased 2.5% in
2016.
The increase in organic sales in 2016 versus 2015 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 Natural categories.
Worldwide Net sales were $16,034 in 2015, down 7.0% from 2014, as volume growth of 1.5% and net selling price
increases of 3.0% were more than offset by negative foreign exchange of 11.5%. Organic sales increased 5.0% in 2015.
Gross Profit/Margin
Worldwide Gross profit decreased 3% to $9,123 in 2016 from $9,399 in 2015. Gross profit in both periods included
charges related to the 2012 Restructuring Program. Excluding these items in both periods, Gross profit decreased to $9,169
in 2016 from $9,419 in 2015, reflecting a decrease of $492 resulting from the impact of the deconsolidation of the
Company’s Venezuelan operations effective December 31, 2015 and negative foreign exchange, partially offset by growth
in organic sales. This decrease in Gross profit was partially offset by an increase of $242 resulting from higher Gross profit
margin.
Worldwide Gross profit margin increased to 60.0% in 2016 from 58.6% in 2015. Excluding charges related to the 2012
Restructuring Program in both periods, Gross profit margin increased by 160 basis points (bps) to 60.3% in 2016, from
58.7% in 2015. This increase in Gross profit margin was primarily driven by cost savings from the Company’s funding-the-
growth initiatives (190 bps) and the 2012 Restructuring Program (10 bps) and higher pricing (100 bps), partially offset by
higher costs (170 bps), which included higher raw and packaging material costs driven by significant foreign exchange
transaction costs and the impact of the deconsolidation of the Company’s Venezuelan operations effective December 31,
2015.
Worldwide Gross profit decreased 7% to $9,399 in 2015 from $10,109 in 2014. Gross profit in both periods included
charges related to the 2012 Restructuring Program. Gross profit in 2014 also included costs related to the sale of land in
Mexico. Excluding these items in both periods, Gross profit decreased to $9,419 in 2015 from $10,142 in 2014, due to
lower Net sales ($730), as the growth in organic sales was more than offset by the impact of negative foreign exchange.
Worldwide Gross profit margin increased to 58.6% in 2015 from 58.5% in 2014. Excluding the items described above
in both periods, Gross profit margin was 58.7% in 2015, even with 2014, as cost savings from the Company’s funding-the-
growth initiatives (220 bps) and the 2012 Restructuring Program (20 bps) and higher pricing (130 bps) were offset by
higher costs (370 bps), which included higher raw and packaging material costs, driven by significant foreign exchange
transaction costs.
Gross profit, GAAP
2012 Restructuring Program
Costs related to the sale of land in Mexico
Gross profit, non-GAAP
2016
2015
2014
9,123
$
9,399
$
10,109
46
—
20
—
29
4
9,169
$
9,419
$
10,142
$
$
Gross profit margin, GAAP
2012 Restructuring Program
Gross profit margin, non-GAAP
2016
2015
60.0%
0.3
60.3%
58.6%
0.1
58.7%
Basis Point
Change
140
160
2014
58.5%
0.2
58.7%
Basis Point
Change
10
—
22
23
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Selling, General and Administrative Expenses
Other (Income) Expense, Net
Selling, general and administrative expenses decreased 4% to $5,249 in 2016 from $5,464 in 2015. Selling, general
and administrative expenses in both periods included charges related to the 2012 Restructuring Program. Excluding these
charges in both periods, Selling, general and administrative expenses decreased to $5,172 in 2016 from $5,400 in 2015,
reflecting decreased advertising investment of $63 and lower overhead expenses of $165.
Selling, general and administrative expenses as a percentage of Net sales increased to 34.5% in 2016 from 34.1% in
2015. Excluding charges related to the 2012 Restructuring Program in both periods, Selling, general and administrative
expenses as a percentage of Net sales were 34.0%, an increase of 30 bps as compared to 2015. This increase in 2016 was
driven by increased advertising investment (10 bps) and higher overhead expenses (20 bps), both as a percentage of Net
sales. In 2016, advertising investment decreased 4.2% to $1,428 as compared with $1,491 in 2015, while as a percentage of
Net sales, it increased to 9.4% from 9.3% in 2015.
Selling, general and administrative expenses decreased 9% to $5,464 in 2015 from $5,982 in 2014. Selling, general
and administrative expenses in both periods included charges related to the 2012 Restructuring Program. Excluding these
charges, Selling, general and administrative expenses decreased to $5,400 in 2015 from $5,920 in 2014, reflecting
decreased advertising investment of $293 and lower overhead expenses of $227.
Selling, general and administrative expenses as a percentage of Net sales decreased to 34.1% in 2015 from 34.6% in
2014. Excluding the charges related to the 2012 Restructuring Program, Selling, general and administrative expenses as a
percentage of Net sales were 33.7%, a decrease of 60 bps as compared to 2014. This decrease in 2015 was primarily driven
by decreased advertising investment (100 bps), partially offset by higher overhead expenses (40 bps), both as a percentage
of Net sales. In 2015, advertising investment decreased 16.4% to $1,491 as compared with $1,784 in 2014, largely
reflecting the impact of negative foreign exchange, and decreased as a percentage of Net sales to 9.3% from 10.3% in
2014, in part reflecting a shift from advertising investment to in-store promotional activities.
Selling, general and administrative expenses, GAAP
2012 Restructuring Program
Selling, general and administrative expenses, non-GAAP
2016
2015
2014
$
$
5,249
(77)
5,172
$
$
5,464
(64)
5,400
$
$
5,982
(62)
5,920
Selling, general and administrative expenses as
a percentage of Net sales, GAAP
2012 Restructuring Program
Selling, general and administrative expenses as
a percentage of Net sales, non-GAAP
2016
2015
Basis Point
Change
2014
Basis Point
Change
34.5%
(0.5)
34.1%
(0.4)
34.0%
33.7%
40
30
34.6%
(0.3)
34.3%
(50)
(60)
Other (income) expense, net was $37, $62 and $570 in 2016, 2015 and 2014, respectively. The components of Other
(income) expense, net are presented below:
Other (income) expense, net
2012 Restructuring Program
Amortization of intangible assets
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Equity (income)
Other, net
Total Other (income) expense, net
2016
2015
2014
$
$
105
33
(97)
17
—
—
(10)
(11)
37
$
$
170
33
—
14
34
(187)
(8)
6
62
$
$
195
32
—
41
327
—
(7)
(18)
570
Other (income) expense, net was $37 in 2016 as compared to $62 in 2015. Other (income) expense, net in both periods
included charges related to the 2012 Restructuring Program and charges for previously disclosed litigation matters. Other
(income) expense, net in 2016 also included a gain on the sale of land in Mexico. In 2015, Other (income) expense, net also
included a gain on the sale of the Company’s laundry detergent business in the South Pacific and charges related to the
2015 Venezuela Remeasurements.
Other (income) expense, net was $62 in 2015 as compared to $570 in 2014. In 2014, Other (income) expense, net
included charges related to the 2012 Restructuring Program, the 2014 Venezuela Remeasurements and previously disclosed
litigation matters.
Excluding the items described above in all periods, as applicable, Other (income) expense, net was $12 in 2016, $31 in
2015 and $7 in 2014.
Other (income) expense, net, GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Other (income) expense, net, non-GAAP
2016
2015
2014
$
$
37
(105)
97
(17)
—
—
12
$
$
62
(170)
—
(14)
(34)
187
$
31
$
570
(195)
—
(41)
(327)
—
7
24
25
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Selling, General and Administrative Expenses
Other (Income) Expense, Net
Selling, general and administrative expenses decreased 4% to $5,249 in 2016 from $5,464 in 2015. Selling, general
and administrative expenses in both periods included charges related to the 2012 Restructuring Program. Excluding these
charges in both periods, Selling, general and administrative expenses decreased to $5,172 in 2016 from $5,400 in 2015,
reflecting decreased advertising investment of $63 and lower overhead expenses of $165.
Selling, general and administrative expenses as a percentage of Net sales increased to 34.5% in 2016 from 34.1% in
2015. Excluding charges related to the 2012 Restructuring Program in both periods, Selling, general and administrative
expenses as a percentage of Net sales were 34.0%, an increase of 30 bps as compared to 2015. This increase in 2016 was
driven by increased advertising investment (10 bps) and higher overhead expenses (20 bps), both as a percentage of Net
sales. In 2016, advertising investment decreased 4.2% to $1,428 as compared with $1,491 in 2015, while as a percentage of
Net sales, it increased to 9.4% from 9.3% in 2015.
Selling, general and administrative expenses decreased 9% to $5,464 in 2015 from $5,982 in 2014. Selling, general
and administrative expenses in both periods included charges related to the 2012 Restructuring Program. Excluding these
charges, Selling, general and administrative expenses decreased to $5,400 in 2015 from $5,920 in 2014, reflecting
decreased advertising investment of $293 and lower overhead expenses of $227.
Selling, general and administrative expenses as a percentage of Net sales decreased to 34.1% in 2015 from 34.6% in
2014. Excluding the charges related to the 2012 Restructuring Program, Selling, general and administrative expenses as a
percentage of Net sales were 33.7%, a decrease of 60 bps as compared to 2014. This decrease in 2015 was primarily driven
by decreased advertising investment (100 bps), partially offset by higher overhead expenses (40 bps), both as a percentage
of Net sales. In 2015, advertising investment decreased 16.4% to $1,491 as compared with $1,784 in 2014, largely
reflecting the impact of negative foreign exchange, and decreased as a percentage of Net sales to 9.3% from 10.3% in
2014, in part reflecting a shift from advertising investment to in-store promotional activities.
Selling, general and administrative expenses, GAAP
2012 Restructuring Program
Selling, general and administrative expenses, non-GAAP
2016
2015
2014
$
$
5,249
(77)
5,172
$
$
5,464
(64)
5,400
$
$
5,982
(62)
5,920
Selling, general and administrative expenses as
a percentage of Net sales, GAAP
2012 Restructuring Program
Selling, general and administrative expenses as
a percentage of Net sales, non-GAAP
2016
2015
Basis Point
Change
2014
Basis Point
Change
34.5%
(0.5)
34.1%
(0.4)
34.0%
33.7%
40
30
34.6%
(0.3)
34.3%
(50)
(60)
Other (income) expense, net was $37, $62 and $570 in 2016, 2015 and 2014, respectively. The components of Other
(income) expense, net are presented below:
Other (income) expense, net
2012 Restructuring Program
Amortization of intangible assets
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Equity (income)
Other, net
Total Other (income) expense, net
2016
2015
2014
$
$
105
33
(97)
17
—
—
(10)
(11)
37
$
$
170
33
—
14
34
(187)
(8)
6
62
$
$
195
32
—
41
327
—
(7)
(18)
570
Other (income) expense, net was $37 in 2016 as compared to $62 in 2015. Other (income) expense, net in both periods
included charges related to the 2012 Restructuring Program and charges for previously disclosed litigation matters. Other
(income) expense, net in 2016 also included a gain on the sale of land in Mexico. In 2015, Other (income) expense, net also
included a gain on the sale of the Company’s laundry detergent business in the South Pacific and charges related to the
2015 Venezuela Remeasurements.
Other (income) expense, net was $62 in 2015 as compared to $570 in 2014. In 2014, Other (income) expense, net
included charges related to the 2012 Restructuring Program, the 2014 Venezuela Remeasurements and previously disclosed
litigation matters.
Excluding the items described above in all periods, as applicable, Other (income) expense, net was $12 in 2016, $31 in
2015 and $7 in 2014.
Other (income) expense, net, GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Other (income) expense, net, non-GAAP
2016
2015
2014
$
$
37
(105)
97
(17)
—
—
12
$
$
62
(170)
—
(14)
(34)
187
$
31
$
570
(195)
—
(41)
(327)
—
7
24
25
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Operating Profit
Interest (Income) Expense, Net
Operating profit increased 38% to $3,837 in 2016 from $2,789 in 2015. Operating profit decreased 22% to $2,789 in
2015 from $3,557 in 2014.
In 2016, 2015 and 2014, Operating profit included charges related to the 2012 Restructuring Program and previously
disclosed litigation matters. In 2016, Operating Profit also included a gain on sale of land in Mexico. In 2015 and 2014,
Operating profit included charges related to the 2015 and 2014 Venezuela Remeasurements, respectively. In 2015,
Operating profit also included a charge related to the deconsolidation of the Company’s Venezuelan operations and a gain
on the sale of the Company’s laundry detergent business in the South Pacific. In 2014, Operating profit also included costs
related to the sale of land in Mexico. Excluding these items in all periods, as applicable, Operating profit in 2016 was even
with 2015, primarily due to lower Gross profit which was offset by a decrease in Selling, general and administrative
expenses. Operating profit decreased 5% in 2015 compared to 2014, primarily due to lower Gross profit, partially offset by
a decrease in Selling, general and administrative expenses.
Operating profit margin was 25.3% in 2016, compared with 17.4% in 2015 and 20.6% in 2014. Excluding the items
described above in 2016 and 2015 as applicable, Operating profit margin increased 130 bps to 26.2% in 2016 compared to
24.9% in 2015. This increase is primarily due to an increase in Gross profit (160 bps), partially offset by an increase in
Selling, general and administrative expenses (30 bps), both as a percentage of Net sales. Excluding the items described
above in 2015 and 2014 as applicable, Operating profit margin increased 50 bps in 2015 compared to 2014, primarily due
to a decrease in Selling, general and administrative expenses as a percentage of Net sales (60 bps).
Operating profit, GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela deconsolidation
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent
business
Costs related to the sale of land in Mexico
Operating profit, non-GAAP
2016
2015
% Change
2014
% Change
$
3,837
$
2,789
38 % $
3,557
(22)%
228
(97)
17
—
—
—
—
3,985
$
$
254
—
14
1,084
34
(187)
—
3,988
286
—
41
—
327
—
— % $
4
4,215
(5)%
Operating profit margin, GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela deconsolidation
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent
business
Costs related to the sale of land in Mexico
2016
2015
Basis Point
Change
2014
Basis Point
Change
25.3%
17.4%
790
20.6%
(320)
1.5
(0.7)
0.1
—
—
—
—
1.6
—
0.1
6.8
0.2
(1.2)
—
1.7
—
0.2
—
1.9
—
—
Operating profit margin, non-GAAP
26.2%
24.9%
130
24.4%
50
Interest (income) expense, net was $99 in 2016 compared with $26 in 2015 and $24 in 2014, primarily due to lower
interest income on investments held outside the United States, which reflects the impact of the deconsolidation of the
Company’s Venezuelan operations effective December 31, 2015, and higher interest expense as a result of higher average
interest rates on debt. The change in Interest (income) expense, net from 2014 to 2015 was primarily due to higher interest
expense as a result of higher debt levels.
Income Taxes
The effective income tax rate was 30.8% in 2016, 44.0% in 2015 and 33.8% in 2014. As reflected in the table below,
the non-GAAP effective income tax rate was 31.3% in 2016 and 2015 and 31.5% in 2014.
As Reported GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Benefits from previously disclosed tax matters
Charges for a previously disclosed litigation matter
Non-GAAP
As Reported GAAP
Venezuela deconsolidation (3)
2012 Restructuring Program
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Charge for a previously disclosed litigation matter
Charge for a previously disclosed tax matter
Non-GAAP
As Reported GAAP
2012 Restructuring Program
Venezuela remeasurement charges
Charge for a previously disclosed litigation matter
Costs related to the sale of land in Mexico
Charge for a previously disclosed tax matter
Non-GAAP
2016
Income Before
Income Taxes
Provision For
Income Taxes(1)
Effective Income
Tax Rate (2)
$
$
$
$
$
$
3,738
$
1,152
228
(97)
—
17
59
(34)
35
6
3,886
$
1,218
2015
30.8%
(0.3)
(0.1)
0.9
—
31.3%
Income Before
Income Taxes
Provision For
Income Taxes(1)
Effective Income
Tax Rate (2)
2,763
$
1,084
254
34
(187)
14
—
3,962
$
1,215
26
69
12
(67)
—
(15)
1,240
44.0%
(11.7)
(0.3)
—
(0.2)
(0.1)
(0.4)
31.3%
2014
Income Before
Income Taxes
Provision For
Income Taxes(1)
Effective Income
Tax Rate (2)
3,533
$
286
327
41
4
—
4,191
$
1,194
78
113
—
1
(66)
1,320
33.8%
(0.5)
0.1
(0.3)
—
(1.6)
31.5%
(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.
26
27
(2)
(3)
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.
See Executive Overview and Outlook above and Note 14, Venezuela to the Consolidated Financial Statements.
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Operating Profit
Interest (Income) Expense, Net
Operating profit increased 38% to $3,837 in 2016 from $2,789 in 2015. Operating profit decreased 22% to $2,789 in
2015 from $3,557 in 2014.
In 2016, 2015 and 2014, Operating profit included charges related to the 2012 Restructuring Program and previously
disclosed litigation matters. In 2016, Operating Profit also included a gain on sale of land in Mexico. In 2015 and 2014,
Operating profit included charges related to the 2015 and 2014 Venezuela Remeasurements, respectively. In 2015,
Operating profit also included a charge related to the deconsolidation of the Company’s Venezuelan operations and a gain
on the sale of the Company’s laundry detergent business in the South Pacific. In 2014, Operating profit also included costs
related to the sale of land in Mexico. Excluding these items in all periods, as applicable, Operating profit in 2016 was even
with 2015, primarily due to lower Gross profit which was offset by a decrease in Selling, general and administrative
expenses. Operating profit decreased 5% in 2015 compared to 2014, primarily due to lower Gross profit, partially offset by
a decrease in Selling, general and administrative expenses.
Operating profit margin was 25.3% in 2016, compared with 17.4% in 2015 and 20.6% in 2014. Excluding the items
described above in 2016 and 2015 as applicable, Operating profit margin increased 130 bps to 26.2% in 2016 compared to
24.9% in 2015. This increase is primarily due to an increase in Gross profit (160 bps), partially offset by an increase in
Selling, general and administrative expenses (30 bps), both as a percentage of Net sales. Excluding the items described
above in 2015 and 2014 as applicable, Operating profit margin increased 50 bps in 2015 compared to 2014, primarily due
to a decrease in Selling, general and administrative expenses as a percentage of Net sales (60 bps).
Operating profit, GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela deconsolidation
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent
business
Costs related to the sale of land in Mexico
Operating profit, non-GAAP
2016
2015
% Change
2014
% Change
$
3,837
$
2,789
38 % $
3,557
(22)%
228
(97)
17
—
—
—
—
3,985
$
$
254
—
14
1,084
34
(187)
—
3,988
286
—
41
—
327
—
— % $
4
4,215
(5)%
Operating profit margin, GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela deconsolidation
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent
business
Costs related to the sale of land in Mexico
2016
2015
Basis Point
Change
2014
Basis Point
Change
25.3%
17.4%
790
20.6%
(320)
1.5
(0.7)
0.1
—
—
—
—
1.6
—
0.1
6.8
0.2
(1.2)
—
1.7
—
0.2
—
1.9
—
—
Operating profit margin, non-GAAP
26.2%
24.9%
130
24.4%
50
Interest (income) expense, net was $99 in 2016 compared with $26 in 2015 and $24 in 2014, primarily due to lower
interest income on investments held outside the United States, which reflects the impact of the deconsolidation of the
Company’s Venezuelan operations effective December 31, 2015, and higher interest expense as a result of higher average
interest rates on debt. The change in Interest (income) expense, net from 2014 to 2015 was primarily due to higher interest
expense as a result of higher debt levels.
Income Taxes
The effective income tax rate was 30.8% in 2016, 44.0% in 2015 and 33.8% in 2014. As reflected in the table below,
the non-GAAP effective income tax rate was 31.3% in 2016 and 2015 and 31.5% in 2014.
As Reported GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Benefits from previously disclosed tax matters
Charges for a previously disclosed litigation matter
Non-GAAP
As Reported GAAP
Venezuela deconsolidation (3)
2012 Restructuring Program
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Charge for a previously disclosed litigation matter
Charge for a previously disclosed tax matter
Non-GAAP
As Reported GAAP
2012 Restructuring Program
Venezuela remeasurement charges
Charge for a previously disclosed litigation matter
Costs related to the sale of land in Mexico
Charge for a previously disclosed tax matter
Non-GAAP
2016
Income Before
Income Taxes
Provision For
Income Taxes(1)
Effective Income
Tax Rate (2)
$
$
$
$
$
$
3,738
$
1,152
228
(97)
—
17
59
(34)
35
6
3,886
$
1,218
2015
30.8%
(0.3)
(0.1)
0.9
—
31.3%
Income Before
Income Taxes
Provision For
Income Taxes(1)
Effective Income
Tax Rate (2)
2,763
$
1,084
254
34
(187)
14
—
3,962
$
1,215
26
69
12
(67)
—
(15)
1,240
44.0%
(11.7)
(0.3)
—
(0.2)
(0.1)
(0.4)
31.3%
2014
Income Before
Income Taxes
Provision For
Income Taxes(1)
Effective Income
Tax Rate (2)
3,533
$
286
327
41
4
—
4,191
$
1,194
78
113
—
1
(66)
1,320
33.8%
(0.5)
0.1
(0.3)
—
(1.6)
31.5%
(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.
26
27
(2)
(3)
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.
See Executive Overview and Outlook above and Note 14, Venezuela to the Consolidated Financial Statements.
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
The effective tax rate in 2016 included a $210 U.S. income tax benefit recognized in the first quarter of 2016
principally related to changes in Venezuela’s foreign exchange regime implemented in March 2016. Although, effective
December 31, 2015, the operating results of CP Venezuela are no longer included in the Company’s Consolidated Financial
Statements, under current tax rules, the Company is required to continue including CP Venezuela’s results in its
consolidated U.S. federal income tax return. See Note 11, Income Taxes and Note 14, Venezuela to the Consolidated
Financial Statements. In order to fully recognize the $210 tax benefit in 2016, the Company repatriated an
incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S.,
and accordingly, recorded a tax charge of $210 during the first quarter of 2016.
In 2014, the Company received a notice of an adverse decision in the foreign court regarding a tax position it has taken
since 2002. As a result, as required, the Company reassessed its tax position in light of the decision and concluded it
needed to increase its unrecognized tax benefits by $30 and write off a $36 deferred tax asset. In 2015, the Company
became aware of several Supreme Court rulings in the foreign jurisdiction disallowing certain tax deductions which had the
effect of reversing prior decisions. Since the Company had taken deductions in prior years similar to those now disallowed
by the Court, the Company, as required, reassessed its tax position and increased its unrecognized tax benefits by $15.
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. The
tax benefit of deductions related to this tax position taken for the years 2006 through 2007 and 2012 through 2014 totals
approximately $14 at current exchange rates. These deductions are currently being challenged by the tax authorities in the
foreign jurisdiction either in the lower courts or at the administrative level and, if resolved in the Company’s favor, will
result in the Company recording additional tax benefits, including interest.
The effective income tax rate in all years benefited from tax planning associated with the Company’s global business
initiatives.
Net Income attributable to Colgate-Palmolive Company and Earnings per share, diluted
Net income attributable to Colgate-Palmolive Company was $2,441, or $2.72 per share on a diluted basis, in 2016
compared to $1,384, or $1.52 per share on a diluted basis, in 2015 and $2,180, or $2.36 per share on a diluted basis, in
2014. In 2016, 2015 and 2014, Net income attributable to Colgate-Palmolive Company included aftertax charges related to
the 2012 Restructuring Program and charges for previously disclosed litigation matters. In 2016, Net income attributable to
Colgate-Palmolive Company also included a gain on sale of land in Mexico and benefits from previously disclosed tax
matters. In 2015, Net income attributable to Colgate-Palmolive Company also included a charge related to the
deconsolidation of the Company’s Venezuelan operations and a gain on the sale of the Company’s laundry detergent
business in the South Pacific. In 2015 and 2014, Net income attributable to Colgate-Palmolive Company included charges
related to the 2015 and 2014 Venezuela Remeasurements and previously disclosed tax matters. In 2014, Net income
attributable to Colgate-Palmolive Company included costs related to the sale of land in Mexico.
Excluding the items described above in all years, as applicable, Net income attributable to Colgate-Palmolive
Company decreased 1% to $2,522 in 2016 and Earnings per share, diluted was even at $2.81, and Net income attributable
to Colgate-Palmolive Company decreased 6% to $2,556 in 2015, as compared to $2,712 in 2014, and Earnings per share,
diluted decreased 4% to $2.81 in 2015.
As Reported GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Benefits from previously disclosed
tax matters
Charge for a previously disclosed
litigation matter
Non-GAAP
As Reported GAAP
Venezuela deconsolidation
2012 Restructuring Program
Venezuela remeasurement
charges
Gain on sale of South Pacific
laundry detergent business
Charge for a previously disclosed
litigation matter
Charge for a previously disclosed
tax matter
Non-GAAP
As Reported GAAP
2012 Restructuring Program
Charge for a previously disclosed
tax matter
Charge for a previously disclosed
litigation matter
Venezuela remeasurement
charges
Costs related to the sale of land in
Mexico
Non-GAAP
2016
Income
Before
Income
Taxes
$ 3,738
Provision
For
Income
Taxes(1)
1,152
$
Net Income
Including
Noncontrolling
Interests
Less: Income
Attributable To
Noncontrolling
Interests
Net Income
Attributable
To Colgate-
Palmolive
Company
$
2,586
$
145
$
2,441
Diluted
Earnings
Per
Share(2)
2.72
$
228
(97)
—
17
59
(34)
35
6
169
(63)
(35)
11
1
—
—
—
168
(63)
0.19
(0.07)
(35)
(0.04)
11
0.01
2.81
Diluted
Earnings
Per
Share(2)
1.52
$
1.16
0.20
0.02
(120)
(0.13)
1,384
1,058
183
22
14
15
$ 3,886
$
1,218
$
2,668
$
146
$
2,522
$
2015
Net Income
Including
Noncontrolling
Interests
Less: Income
Attributable To
Noncontrolling
Interests
Net Income
Attributable to
Colgate-
Palmolive
Company
Income
Before
Income
Taxes
$ 2,763
1,084
254
34
(187)
14
—
Provision
For
Income
Taxes(1)
1,215
$
26
69
12
(67)
—
(15)
$
1,548
$
164
$
1,058
185
22
(120)
14
15
—
2
—
—
—
—
$ 3,962
$
1,240
$
2,722
$
166
$
2,556
$
Income Before
Income Taxes
3,533
$
Provision For
Income Taxes(1)
1,194
$
2014
Net Income
Including
Noncontrolling
Interests
Net Income
Attributable to
Colgate-
Palmolive
Company
$
2,339
$
Diluted
Earnings
Per Share(2)
2.36
$
286
—
41
327
4
78
(66)
—
113
1
208
66
41
214
3
2,180
208
66
41
214
3
$
4,191
$
1,320
$
2,871
$
2,712
$
0.02
0.02
2.81
0.23
0.07
0.04
0.23
—
2.93
28
29
(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.
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
The effective tax rate in 2016 included a $210 U.S. income tax benefit recognized in the first quarter of 2016
principally related to changes in Venezuela’s foreign exchange regime implemented in March 2016. Although, effective
December 31, 2015, the operating results of CP Venezuela are no longer included in the Company’s Consolidated Financial
Statements, under current tax rules, the Company is required to continue including CP Venezuela’s results in its
consolidated U.S. federal income tax return. See Note 11, Income Taxes and Note 14, Venezuela to the Consolidated
Financial Statements. In order to fully recognize the $210 tax benefit in 2016, the Company repatriated an
incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S.,
and accordingly, recorded a tax charge of $210 during the first quarter of 2016.
In 2014, the Company received a notice of an adverse decision in the foreign court regarding a tax position it has taken
since 2002. As a result, as required, the Company reassessed its tax position in light of the decision and concluded it
needed to increase its unrecognized tax benefits by $30 and write off a $36 deferred tax asset. In 2015, the Company
became aware of several Supreme Court rulings in the foreign jurisdiction disallowing certain tax deductions which had the
effect of reversing prior decisions. Since the Company had taken deductions in prior years similar to those now disallowed
by the Court, the Company, as required, reassessed its tax position and increased its unrecognized tax benefits by $15.
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. The
tax benefit of deductions related to this tax position taken for the years 2006 through 2007 and 2012 through 2014 totals
approximately $14 at current exchange rates. These deductions are currently being challenged by the tax authorities in the
foreign jurisdiction either in the lower courts or at the administrative level and, if resolved in the Company’s favor, will
result in the Company recording additional tax benefits, including interest.
The effective income tax rate in all years benefited from tax planning associated with the Company’s global business
initiatives.
Net Income attributable to Colgate-Palmolive Company and Earnings per share, diluted
Net income attributable to Colgate-Palmolive Company was $2,441, or $2.72 per share on a diluted basis, in 2016
compared to $1,384, or $1.52 per share on a diluted basis, in 2015 and $2,180, or $2.36 per share on a diluted basis, in
2014. In 2016, 2015 and 2014, Net income attributable to Colgate-Palmolive Company included aftertax charges related to
the 2012 Restructuring Program and charges for previously disclosed litigation matters. In 2016, Net income attributable to
Colgate-Palmolive Company also included a gain on sale of land in Mexico and benefits from previously disclosed tax
matters. In 2015, Net income attributable to Colgate-Palmolive Company also included a charge related to the
deconsolidation of the Company’s Venezuelan operations and a gain on the sale of the Company’s laundry detergent
business in the South Pacific. In 2015 and 2014, Net income attributable to Colgate-Palmolive Company included charges
related to the 2015 and 2014 Venezuela Remeasurements and previously disclosed tax matters. In 2014, Net income
attributable to Colgate-Palmolive Company included costs related to the sale of land in Mexico.
Excluding the items described above in all years, as applicable, Net income attributable to Colgate-Palmolive
Company decreased 1% to $2,522 in 2016 and Earnings per share, diluted was even at $2.81, and Net income attributable
to Colgate-Palmolive Company decreased 6% to $2,556 in 2015, as compared to $2,712 in 2014, and Earnings per share,
diluted decreased 4% to $2.81 in 2015.
As Reported GAAP
2012 Restructuring Program
Gain on sale of land in Mexico
Benefits from previously disclosed
tax matters
Charge for a previously disclosed
litigation matter
Non-GAAP
As Reported GAAP
Venezuela deconsolidation
2012 Restructuring Program
Venezuela remeasurement
charges
Gain on sale of South Pacific
laundry detergent business
Charge for a previously disclosed
litigation matter
Charge for a previously disclosed
tax matter
Non-GAAP
As Reported GAAP
2012 Restructuring Program
Charge for a previously disclosed
tax matter
Charge for a previously disclosed
litigation matter
Venezuela remeasurement
charges
Costs related to the sale of land in
Mexico
Non-GAAP
2016
Income
Before
Income
Taxes
$ 3,738
Provision
For
Income
Taxes(1)
1,152
$
Net Income
Including
Noncontrolling
Interests
Less: Income
Attributable To
Noncontrolling
Interests
Net Income
Attributable
To Colgate-
Palmolive
Company
$
2,586
$
145
$
2,441
Diluted
Earnings
Per
Share(2)
2.72
$
228
(97)
—
17
59
(34)
35
6
169
(63)
(35)
11
1
—
—
—
168
(63)
0.19
(0.07)
(35)
(0.04)
11
0.01
2.81
Diluted
Earnings
Per
Share(2)
1.52
$
1.16
0.20
0.02
(120)
(0.13)
1,384
1,058
183
22
14
15
$ 3,886
$
1,218
$
2,668
$
146
$
2,522
$
2015
Net Income
Including
Noncontrolling
Interests
Less: Income
Attributable To
Noncontrolling
Interests
Net Income
Attributable to
Colgate-
Palmolive
Company
Income
Before
Income
Taxes
$ 2,763
1,084
254
34
(187)
14
—
Provision
For
Income
Taxes(1)
1,215
$
26
69
12
(67)
—
(15)
$
1,548
$
164
$
1,058
185
22
(120)
14
15
—
2
—
—
—
—
$ 3,962
$
1,240
$
2,722
$
166
$
2,556
$
Income Before
Income Taxes
3,533
$
Provision For
Income Taxes(1)
1,194
$
2014
Net Income
Including
Noncontrolling
Interests
Net Income
Attributable to
Colgate-
Palmolive
Company
$
2,339
$
Diluted
Earnings
Per Share(2)
2.36
$
286
—
41
327
4
78
(66)
—
113
1
208
66
41
214
3
2,180
208
66
41
214
3
$
4,191
$
1,320
$
2,871
$
2,712
$
0.02
0.02
2.81
0.23
0.07
0.04
0.23
—
2.93
28
29
(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.
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Segment Results
The Company markets its products in over 200 countries and territories throughout the world in two product segments:
Oral, Personal and Home Care; and Pet Nutrition. The Company evaluates segment performance based on several factors,
including Operating profit. The Company uses Operating profit as a measure of the operating segment performance
because it excludes the impact of corporate-driven decisions related to interest expense and income taxes.
Latin America
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
3,650
1,132
31.0%
4,327
1,209
27.9%
% Change
(15.5) %
(6) %
310 bps
$
$
2014
% Change
(9.5) %
(5) %
4,769
1,279
26.8% 110 bps
Oral, Personal and Home Care
North America
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
3,183
1,030
32.4%
3,149
974
30.9%
% Change
1.0 %
6 %
150 bps
$
$
2014
% Change
1.0 %
5 %
3,124
926
29.6% 130 bps
Net sales in North America increased 1.0% in 2016 to $3,183, driven by volume growth of 2.5%, which was partially
offset by net selling price decreases of 1.0% and negative foreign exchange of 0.5%. Organic sales in North America
increased 1.5% in 2016.
The increase in organic sales in North America in 2016 versus 2015 was driven by Oral Care with strong organic sales
in the toothpaste category. Personal Care also contributed to organic sales growth due to strong sales in the shower gel
category.
Net sales in North America increased 1.0% in 2015 to $3,149, driven by volume growth of 2.0%, which was partially
offset by negative foreign exchange of 1.0%, while net selling prices were flat. Organic sales in North America increased
2.0% in 2015.
Operating profit in North America increased 6% in 2016 to $1,030, or 150 bps to 32.4% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (100 bps) and a decrease in
Selling, general and administrative expenses (70 bps), both as a percentage of Net sales. This increase in Gross profit was
primarily driven by cost savings from the Company’s funding-the-growth initiatives (190 bps), which were partially offset
by higher raw and packaging material costs (70 bps). This decrease in Selling, general and administrative expenses was due
to lower overhead expenses (40 bps) and decreased advertising investment (30 bps), in part reflecting a shift from
advertising investment to in-store promotional activities.
Operating profit in North America increased 5% in 2015 to $974, or 130 bps to 30.9% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (80 bps) and a decrease in
Selling, general and administrative expenses (90 bps), both as a percentage of Net sales. This increase in Gross profit was
primarily driven by cost savings from the Company’s funding-the-growth initiatives (200 bps) and the 2012 Restructuring
Program (10 bps), which were partially offset by higher costs (140 bps), primarily driven by higher raw and packaging
material costs. This decrease in Selling, general and administrative expenses was primarily due to decreased advertising
investment (80 bps), in part reflecting a shift from advertising investment to in-store promotional activities.
Net sales in Latin America decreased 15.5% in 2016 to $3,650, as net selling price increases of 8.5% were more than
offset by volume declines of 14.0% and negative foreign exchange of 10.0%. Excluding the impact of the deconsolidation
of the Company’s Venezuelan operations, volume increased 1.5%, led by volume gains in Mexico, partially offset by
volume declines in Argentina. Organic sales in Latin America increased 10.0% in 2016.
The increase in organic sales in Latin America in 2016 versus 2015 was due to increases in Oral Care, Personal Care
and Home Care organic sales. The increase in Oral Care organic sales was driven by strong organic sales in the toothpaste
and manual toothbrush categories. Personal Care organic sales growth was driven by gains in the bar soap, underarm
protection and shampoo categories. The increase in Home Care organic sales was due to strong organic sales in the fabric
softener and liquid cleaners categories.
Net sales in Latin America decreased 9.5% in 2015 to $4,327, as net selling price increases of 10.5% were more than
offset by volume declines of 1.0% and negative foreign exchange of 19.0%. Organic sales in Latin America increased 9.5%
in 2015. Volume declines in Venezuela and Brazil were partially offset by volume gains in Mexico, Ecuador and Argentina.
Operating profit in Latin America decreased 6% in 2016 to $1,132, while as a percentage of Net sales it increased 310
bps to 31.0% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to an increase in
Gross profit (390 bps), partially offset by an increase in Selling, general and administrative expenses (70 bps), both as a
percentage of Net sales. This increase in Gross profit was mainly driven by cost savings from the Company’s funding-the-
growth initiatives (150 bps) and higher pricing, which were partially offset by higher raw and packaging material costs
(100 bps), which included foreign exchange transaction costs and the impact of the deconsolidation of the Company’s
Venezuelan operations effective December 31, 2015. This increase in Selling, general and administrative expenses was due
to increased advertising investment (90 bps), which was partially offset by lower overhead expenses (20 bps).
Operating profit in Latin America decreased 5% in 2015 to $1,209, while as a percentage of Net sales it increased 110
bps to 27.9% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to a decrease in
Selling, general and administrative expenses (130 bps), partially offset by a decrease in Gross profit (60 bps), both as a
percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (680
bps), driven by foreign exchange transaction costs, and higher manufacturing costs (60 bps), driven by Venezuela, which
were partially offset by cost savings from the Company’s funding-the-growth initiatives (200 bps) and higher pricing. This
decrease in Selling, general and administrative expenses was due to decreased advertising investment (130 bps), in part
reflecting a shift from advertising investment to in-store promotional activities.
30
31
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Segment Results
The Company markets its products in over 200 countries and territories throughout the world in two product segments:
Oral, Personal and Home Care; and Pet Nutrition. The Company evaluates segment performance based on several factors,
including Operating profit. The Company uses Operating profit as a measure of the operating segment performance
because it excludes the impact of corporate-driven decisions related to interest expense and income taxes.
Latin America
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
3,650
1,132
31.0%
4,327
1,209
27.9%
% Change
(15.5) %
(6) %
310 bps
$
$
2014
% Change
(9.5) %
(5) %
4,769
1,279
26.8% 110 bps
Oral, Personal and Home Care
North America
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
3,183
1,030
32.4%
3,149
974
30.9%
% Change
1.0 %
6 %
150 bps
$
$
2014
% Change
1.0 %
5 %
3,124
926
29.6% 130 bps
Net sales in North America increased 1.0% in 2016 to $3,183, driven by volume growth of 2.5%, which was partially
offset by net selling price decreases of 1.0% and negative foreign exchange of 0.5%. Organic sales in North America
increased 1.5% in 2016.
The increase in organic sales in North America in 2016 versus 2015 was driven by Oral Care with strong organic sales
in the toothpaste category. Personal Care also contributed to organic sales growth due to strong sales in the shower gel
category.
Net sales in North America increased 1.0% in 2015 to $3,149, driven by volume growth of 2.0%, which was partially
offset by negative foreign exchange of 1.0%, while net selling prices were flat. Organic sales in North America increased
2.0% in 2015.
Operating profit in North America increased 6% in 2016 to $1,030, or 150 bps to 32.4% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (100 bps) and a decrease in
Selling, general and administrative expenses (70 bps), both as a percentage of Net sales. This increase in Gross profit was
primarily driven by cost savings from the Company’s funding-the-growth initiatives (190 bps), which were partially offset
by higher raw and packaging material costs (70 bps). This decrease in Selling, general and administrative expenses was due
to lower overhead expenses (40 bps) and decreased advertising investment (30 bps), in part reflecting a shift from
advertising investment to in-store promotional activities.
Operating profit in North America increased 5% in 2015 to $974, or 130 bps to 30.9% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (80 bps) and a decrease in
Selling, general and administrative expenses (90 bps), both as a percentage of Net sales. This increase in Gross profit was
primarily driven by cost savings from the Company’s funding-the-growth initiatives (200 bps) and the 2012 Restructuring
Program (10 bps), which were partially offset by higher costs (140 bps), primarily driven by higher raw and packaging
material costs. This decrease in Selling, general and administrative expenses was primarily due to decreased advertising
investment (80 bps), in part reflecting a shift from advertising investment to in-store promotional activities.
Net sales in Latin America decreased 15.5% in 2016 to $3,650, as net selling price increases of 8.5% were more than
offset by volume declines of 14.0% and negative foreign exchange of 10.0%. Excluding the impact of the deconsolidation
of the Company’s Venezuelan operations, volume increased 1.5%, led by volume gains in Mexico, partially offset by
volume declines in Argentina. Organic sales in Latin America increased 10.0% in 2016.
The increase in organic sales in Latin America in 2016 versus 2015 was due to increases in Oral Care, Personal Care
and Home Care organic sales. The increase in Oral Care organic sales was driven by strong organic sales in the toothpaste
and manual toothbrush categories. Personal Care organic sales growth was driven by gains in the bar soap, underarm
protection and shampoo categories. The increase in Home Care organic sales was due to strong organic sales in the fabric
softener and liquid cleaners categories.
Net sales in Latin America decreased 9.5% in 2015 to $4,327, as net selling price increases of 10.5% were more than
offset by volume declines of 1.0% and negative foreign exchange of 19.0%. Organic sales in Latin America increased 9.5%
in 2015. Volume declines in Venezuela and Brazil were partially offset by volume gains in Mexico, Ecuador and Argentina.
Operating profit in Latin America decreased 6% in 2016 to $1,132, while as a percentage of Net sales it increased 310
bps to 31.0% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to an increase in
Gross profit (390 bps), partially offset by an increase in Selling, general and administrative expenses (70 bps), both as a
percentage of Net sales. This increase in Gross profit was mainly driven by cost savings from the Company’s funding-the-
growth initiatives (150 bps) and higher pricing, which were partially offset by higher raw and packaging material costs
(100 bps), which included foreign exchange transaction costs and the impact of the deconsolidation of the Company’s
Venezuelan operations effective December 31, 2015. This increase in Selling, general and administrative expenses was due
to increased advertising investment (90 bps), which was partially offset by lower overhead expenses (20 bps).
Operating profit in Latin America decreased 5% in 2015 to $1,209, while as a percentage of Net sales it increased 110
bps to 27.9% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to a decrease in
Selling, general and administrative expenses (130 bps), partially offset by a decrease in Gross profit (60 bps), both as a
percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (680
bps), driven by foreign exchange transaction costs, and higher manufacturing costs (60 bps), driven by Venezuela, which
were partially offset by cost savings from the Company’s funding-the-growth initiatives (200 bps) and higher pricing. This
decrease in Selling, general and administrative expenses was due to decreased advertising investment (130 bps), in part
reflecting a shift from advertising investment to in-store promotional activities.
30
31
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Europe
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
2,342
579
24.7%
2,411
615
25.5%
% Change
(3.0) %
(6) %
(80) bps
$
$
2014
2,840
712
25.1%
% Change
(15.0) %
(14) %
40 bps
Asia Pacific
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
2,796
887
31.7%
2,937
888
30.2%
% Change
(5.0) %
— %
150 bps
$
$
2014
% Change
(4.5) %
(1) %
3,081
901
29.2% 100 bps
Net sales in Europe decreased 3.0% in 2016 to $2,342, as volume growth of 2.5% was more than offset by net selling
price decreases of 2.5% and negative foreign exchange of 3.0%. Organic sales in Europe were flat in 2016. Volume gains
were led by Germany, the United Kingdom and Poland, partially offset by volume declines in France.
Organic sales increases in Oral Care were offset by declines in organic sales in the Personal Care and Home Care
categories. The toothpaste and manual toothbrush categories contributed to the increase in Oral Care organic sales. The
underarm protection category contributed to the decrease in Personal Care organic sales. The decrease in Home Care
organic sales was due to a decline in organic sales in the liquid cleaners and hand dish categories.
Net sales in Asia Pacific decreased 5.0% in 2016 to $2,796, driven by volume declines of 1.0% and negative foreign
exchange of 4.0%, while net selling prices were flat. Excluding the impact of the divestment of the Company’s laundry
detergent business in the South Pacific, volume increased 2.0%, led by volume gains in the Philippines, Australia and the
Greater China region. Organic sales in Asia Pacific grew 2.0% in 2016.
The increase in organic sales in 2016 versus 2015 was driven by an increase in Oral Care organic sales with the
toothpaste and the manual toothbrush categories contributing to growth. Personal Care and Home Care organic sales also
contributed to organic sales growth with gains in the shampoo and fabric softener categories, respectively.
Net sales in Europe decreased 15.0% in 2015 to $2,411, as volume growth of 3.0% was more than offset by net selling
price decreases of 3.5% and negative foreign exchange of 14.5%. Organic sales in Europe were flat in 2015. Volume gains
in France, the United Kingdom and Poland were partially offset by volume declines in Austria.
Net sales in Asia Pacific decreased 4.5% in 2015 to $2,937, as volume growth of 2.5% was more than offset by net
selling price decreases of 1.0% and negative foreign exchange of 6.0%. Organic sales in Asia Pacific grew 3.0% in 2015.
Volume gains were led by the Philippines, India and the Greater China region.
Operating profit in Europe decreased 6% in 2016 to $579, or 80 bps to 24.7% of Net sales. This decrease in Operating
profit as a percentage of Net sales was primarily due to a decrease in Gross profit (100 bps), partially offset by a decrease
in Selling, general and administrative expenses (50 bps), both as a percentage of Net sales. This decrease in Gross profit
was primarily driven by higher costs (200 bps), primarily due to higher raw and packaging material costs, which included
foreign exchange transaction costs, and lower pricing due to increased in-store promotional activities. These decreases in
Gross profit were partially offset by cost savings from the Company’s funding-the-growth initiatives (160 bps) and the
2012 Restructuring Program (30 bps). This decrease in Selling, general and administrative expenses was due to decreased
advertising investment (100 bps), in part reflecting a shift from advertising investment to in-store promotional activities,
which was partially offset by higher overhead expenses (50 bps).
Operating profit in Europe decreased 14% in 2015 to $615, while as a percentage of Net sales it increased 40 bps to
25.5% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to a decrease in
Selling, general and administrative expenses (60 bps), partially offset by a decrease in Gross Profit (10 bps), both as a
percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (200
bps), driven by foreign exchange transaction costs, and lower pricing due to increased promotional activities, which were
partially offset by cost savings from the Company’s funding-the-growth initiatives (230 bps) and the 2012 Restructuring
Program (70 bps). This decrease in Selling, general and administrative expenses was due to decreased advertising
investment (70 bps), in part reflecting a shift from advertising investment to in-store promotional activities, which was
partially offset by higher overhead expenses (10 bps).
Operating profit in Asia Pacific decreased to $887 in 2016, while as a percentage of Net sales it increased 150 bps to
31.7% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross
profit (50 bps) and a decrease in Selling, general and administrative expenses (40 bps), both as a percentage of Net
sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives
(260 bps) and sales mix, which were partially offset by higher costs (290 bps), primarily driven by raw and packaging
material costs, which included foreign exchange transaction costs. This decrease in Selling, general and administrative
expenses was due to decreased advertising investment (10 bps), in part reflecting a shift from advertising investment to in-
store promotional activities, and lower overhead expenses (30 bps).
Operating profit in Asia Pacific decreased 1% in 2015 to $888, while as a percentage of Net sales, it increased 100 bps
to 30.2% of Net sales. This increase in Operating profit as a percentage of Net sales was due to an increase in Gross profit
(10 bps) and a decrease in Selling, general and administrative expenses (90 bps), both as a percentage of Net sales. This
increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (270 bps),
which were partially offset by higher costs (250 bps), primarily driven by raw and packaging material costs, which
included foreign exchange transaction costs, and lower pricing due to increased promotional activities. This decrease in
Selling, general and administrative expenses was due to decreased advertising investment (60 bps), in part reflecting a shift
from advertising investment to in-store promotional activities, and lower overhead expenses (30 bps).
Africa/Eurasia
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
960
186
19.4%
998
178
17.8%
% Change
(4.0) %
4 %
160 bps
$
$
2014
% Change
(17.5) %
(24) %
1,208
235
19.5% (170) bps
Net sales in Africa/Eurasia decreased 4.0% in 2016 to $960, as net selling price increases of 9.5% were more than
offset by volume declines of 4.0% and negative foreign exchange of 9.5%. Organic sales in Africa/Eurasia grew 5.5% in
2016. Volume declines in the Sub-Saharan Africa region and South Africa were partially offset by volume gains in the Gulf
States.
The increase in organic sales in 2016 versus 2015 was driven by Oral Care with strong sales growth in the toothpaste
and the manual toothbrush categories. Personal Care also contributed to organic sales growth with gains in the shower gel
and bar soap categories.
32
33
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Europe
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
2,342
579
24.7%
2,411
615
25.5%
% Change
(3.0) %
(6) %
(80) bps
$
$
2014
2,840
712
25.1%
% Change
(15.0) %
(14) %
40 bps
Asia Pacific
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
2,796
887
31.7%
2,937
888
30.2%
% Change
(5.0) %
— %
150 bps
$
$
2014
% Change
(4.5) %
(1) %
3,081
901
29.2% 100 bps
Net sales in Europe decreased 3.0% in 2016 to $2,342, as volume growth of 2.5% was more than offset by net selling
price decreases of 2.5% and negative foreign exchange of 3.0%. Organic sales in Europe were flat in 2016. Volume gains
were led by Germany, the United Kingdom and Poland, partially offset by volume declines in France.
Organic sales increases in Oral Care were offset by declines in organic sales in the Personal Care and Home Care
categories. The toothpaste and manual toothbrush categories contributed to the increase in Oral Care organic sales. The
underarm protection category contributed to the decrease in Personal Care organic sales. The decrease in Home Care
organic sales was due to a decline in organic sales in the liquid cleaners and hand dish categories.
Net sales in Asia Pacific decreased 5.0% in 2016 to $2,796, driven by volume declines of 1.0% and negative foreign
exchange of 4.0%, while net selling prices were flat. Excluding the impact of the divestment of the Company’s laundry
detergent business in the South Pacific, volume increased 2.0%, led by volume gains in the Philippines, Australia and the
Greater China region. Organic sales in Asia Pacific grew 2.0% in 2016.
The increase in organic sales in 2016 versus 2015 was driven by an increase in Oral Care organic sales with the
toothpaste and the manual toothbrush categories contributing to growth. Personal Care and Home Care organic sales also
contributed to organic sales growth with gains in the shampoo and fabric softener categories, respectively.
Net sales in Europe decreased 15.0% in 2015 to $2,411, as volume growth of 3.0% was more than offset by net selling
price decreases of 3.5% and negative foreign exchange of 14.5%. Organic sales in Europe were flat in 2015. Volume gains
in France, the United Kingdom and Poland were partially offset by volume declines in Austria.
Net sales in Asia Pacific decreased 4.5% in 2015 to $2,937, as volume growth of 2.5% was more than offset by net
selling price decreases of 1.0% and negative foreign exchange of 6.0%. Organic sales in Asia Pacific grew 3.0% in 2015.
Volume gains were led by the Philippines, India and the Greater China region.
Operating profit in Europe decreased 6% in 2016 to $579, or 80 bps to 24.7% of Net sales. This decrease in Operating
profit as a percentage of Net sales was primarily due to a decrease in Gross profit (100 bps), partially offset by a decrease
in Selling, general and administrative expenses (50 bps), both as a percentage of Net sales. This decrease in Gross profit
was primarily driven by higher costs (200 bps), primarily due to higher raw and packaging material costs, which included
foreign exchange transaction costs, and lower pricing due to increased in-store promotional activities. These decreases in
Gross profit were partially offset by cost savings from the Company’s funding-the-growth initiatives (160 bps) and the
2012 Restructuring Program (30 bps). This decrease in Selling, general and administrative expenses was due to decreased
advertising investment (100 bps), in part reflecting a shift from advertising investment to in-store promotional activities,
which was partially offset by higher overhead expenses (50 bps).
Operating profit in Europe decreased 14% in 2015 to $615, while as a percentage of Net sales it increased 40 bps to
25.5% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to a decrease in
Selling, general and administrative expenses (60 bps), partially offset by a decrease in Gross Profit (10 bps), both as a
percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (200
bps), driven by foreign exchange transaction costs, and lower pricing due to increased promotional activities, which were
partially offset by cost savings from the Company’s funding-the-growth initiatives (230 bps) and the 2012 Restructuring
Program (70 bps). This decrease in Selling, general and administrative expenses was due to decreased advertising
investment (70 bps), in part reflecting a shift from advertising investment to in-store promotional activities, which was
partially offset by higher overhead expenses (10 bps).
Operating profit in Asia Pacific decreased to $887 in 2016, while as a percentage of Net sales it increased 150 bps to
31.7% of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross
profit (50 bps) and a decrease in Selling, general and administrative expenses (40 bps), both as a percentage of Net
sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives
(260 bps) and sales mix, which were partially offset by higher costs (290 bps), primarily driven by raw and packaging
material costs, which included foreign exchange transaction costs. This decrease in Selling, general and administrative
expenses was due to decreased advertising investment (10 bps), in part reflecting a shift from advertising investment to in-
store promotional activities, and lower overhead expenses (30 bps).
Operating profit in Asia Pacific decreased 1% in 2015 to $888, while as a percentage of Net sales, it increased 100 bps
to 30.2% of Net sales. This increase in Operating profit as a percentage of Net sales was due to an increase in Gross profit
(10 bps) and a decrease in Selling, general and administrative expenses (90 bps), both as a percentage of Net sales. This
increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (270 bps),
which were partially offset by higher costs (250 bps), primarily driven by raw and packaging material costs, which
included foreign exchange transaction costs, and lower pricing due to increased promotional activities. This decrease in
Selling, general and administrative expenses was due to decreased advertising investment (60 bps), in part reflecting a shift
from advertising investment to in-store promotional activities, and lower overhead expenses (30 bps).
Africa/Eurasia
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
960
186
19.4%
998
178
17.8%
% Change
(4.0) %
4 %
160 bps
$
$
2014
% Change
(17.5) %
(24) %
1,208
235
19.5% (170) bps
Net sales in Africa/Eurasia decreased 4.0% in 2016 to $960, as net selling price increases of 9.5% were more than
offset by volume declines of 4.0% and negative foreign exchange of 9.5%. Organic sales in Africa/Eurasia grew 5.5% in
2016. Volume declines in the Sub-Saharan Africa region and South Africa were partially offset by volume gains in the Gulf
States.
The increase in organic sales in 2016 versus 2015 was driven by Oral Care with strong sales growth in the toothpaste
and the manual toothbrush categories. Personal Care also contributed to organic sales growth with gains in the shower gel
and bar soap categories.
32
33
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Operating profit in Hill’s Pet Nutrition increased 3% in 2015 to $612, or 140 bps to 27.7% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (60 bps) and a decrease in
Selling, general and administrative expenses (190 bps), which were partially offset by an increase in Other (income)
expense, net (110 bps), all as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from
the Company’s funding-the-growth initiatives (200 bps) and higher pricing, partially offset by higher costs (220 bps),
primarily driven by higher raw and packaging material costs, which included higher foreign exchange transaction costs.
This decrease in Selling, general and administrative expenses was primarily due to decreased advertising investment (170
bps). This increase in Other (income) expense, net was primarily due to the expiration of a foreign sales tax exemption.
Corporate
Operating profit (loss)
$
(630) $
(1,687)
2016
2015
% Change
(63) %
2014
$
(1,088)
% Change
55 %
Corporate operations include Corporate overhead costs, research and development costs, stock-based compensation
expense related to stock options and restricted stock unit awards, restructuring and related implementation costs and gains
and losses on sales of non-core product lines. The components of Operating profit (loss) for the Corporate segment are
presented as follows:
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela deconsolidation
Venezuela remeasurement charges
Costs related to the sale of land in Mexico
Gain on sale of South Pacific laundry detergent business
Corporate overhead costs and other, net
Total Corporate Operating profit (loss)
2016
2015
2014
(228) $
97
(17)
—
—
—
—
(482)
(630) $
(254) $
—
(14)
(1,084)
(34)
—
187
(488)
(1,687) $
(286)
—
(41)
—
(327)
(4)
—
(430)
(1,088)
$
$
Net sales in Africa/Eurasia decreased 17.5% in 2015 to $998, as net selling price increases of 7.5% were more than
offset by volume declines of 1.5% and negative foreign exchange of 23.5%. Organic sales in Africa/Eurasia grew 6.0% in
2015. Volume declines in the Central Asia/Caucasus region and Ukraine were partially offset by volume gains in the Sub-
Saharan Africa region and South Africa.
Operating profit in Africa/Eurasia increased 4% in 2016 to $186, or 160 bps to 19.4% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (300 bps), partially offset by
an increase in Selling, general and administrative expenses (150 bps), both as a percentage of Net sales. This increase in
Gross profit was mainly driven by cost savings from the Company’s funding-the-growth initiatives (170 bps) and higher
pricing, which were partially offset by higher raw and packaging material costs (350 bps), driven by higher foreign
exchange transaction costs. The increase in Selling, general and administrative expenses was due to higher overhead
expenses (120 bps) and increased advertising investment (30 bps).
Operating profit in Africa/Eurasia decreased 24% in 2015 to $178, or 170 bps to 17.8% of Net sales. This decrease in
Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (240 bps), partially offset by a
decrease in Selling, general and administrative expenses (120 bps), both as a percentage of Net sales. This decrease in
Gross profit was primarily due to higher raw and packaging material costs (790 bps), driven by higher foreign exchange
transaction costs, which were partially offset by cost savings from the Company’s funding-the-growth initiatives (260 bps)
and higher pricing. The decrease in Selling, general and administrative expenses was due to decreased advertising
investment (190 bps), in part reflecting a shift from advertising investment to in-store promotional activities, which was
partially offset by higher overhead expenses (70 bps).
Hill’s Pet Nutrition
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
2,264
653
28.8%
2,212
612
27.7%
% Change
2.5 %
7 %
110 bps
$
$
2014
% Change
(2.0) %
3 %
2,255
592
26.3% 140 bps
Net sales for Hill’s Pet Nutrition increased 2.5% in 2016 to $2,264, driven by net selling price increases of 2.5% while
volume and foreign exchange were flat. Organic sales in Hill’s Pet Nutrition increased 2.5% in 2016. Volume gains led by
Russia, Western Europe, South Africa, Canada and Taiwan were offset by volume declines in the United States and Japan.
The volume declines in Japan were attributable to a continued contraction in the market.
The increase in organic sales in 2016 versus 2015 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 Natural categories.
Net sales for Hill’s Pet Nutrition decreased 2.0% in 2015 to $2,212, as volume growth of 3.5% and net selling price
increases of 2.5% were more than offset by negative foreign exchange of 8.0%. Organic sales in Hill’s Pet Nutrition
increased 6.0% in 2015. Volume gains were led by the United States and Taiwan.
Operating profit in Hill’s Pet Nutrition increased 7% in 2016 to $653, or 110 bps to 28.8% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (20 bps), a decrease in
Selling, general and administrative expenses (10 bps), and a decrease in Other (income) expense, net (80 bps), all as a
percentage of Net sales. This increase in Gross profit was primarily driven by cost savings from the Company’s funding-
the-growth initiatives (190 bps) and higher pricing, partially offset by higher costs (270 bps), primarily driven by higher
raw and packaging material costs, which included higher foreign exchange transaction costs. This decrease in Selling,
general and administrative expenses was primarily due to lower overhead expenses (10 bps). This decrease in Other
(income) expense, net was in part due to a foreign sales tax benefit.
34
35
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Operating profit in Hill’s Pet Nutrition increased 3% in 2015 to $612, or 140 bps to 27.7% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (60 bps) and a decrease in
Selling, general and administrative expenses (190 bps), which were partially offset by an increase in Other (income)
expense, net (110 bps), all as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from
the Company’s funding-the-growth initiatives (200 bps) and higher pricing, partially offset by higher costs (220 bps),
primarily driven by higher raw and packaging material costs, which included higher foreign exchange transaction costs.
This decrease in Selling, general and administrative expenses was primarily due to decreased advertising investment (170
bps). This increase in Other (income) expense, net was primarily due to the expiration of a foreign sales tax exemption.
Corporate
Operating profit (loss)
$
(630) $
(1,687)
2016
2015
% Change
(63) %
2014
$
(1,088)
% Change
55 %
Corporate operations include Corporate overhead costs, research and development costs, stock-based compensation
expense related to stock options and restricted stock unit awards, restructuring and related implementation costs and gains
and losses on sales of non-core product lines. The components of Operating profit (loss) for the Corporate segment are
presented as follows:
2012 Restructuring Program
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela deconsolidation
Venezuela remeasurement charges
Costs related to the sale of land in Mexico
Gain on sale of South Pacific laundry detergent business
Corporate overhead costs and other, net
Total Corporate Operating profit (loss)
2016
2015
2014
(228) $
97
(17)
—
—
—
—
(482)
(630) $
(254) $
—
(14)
(1,084)
(34)
—
187
(488)
(1,687) $
(286)
—
(41)
—
(327)
(4)
—
(430)
(1,088)
$
$
Net sales in Africa/Eurasia decreased 17.5% in 2015 to $998, as net selling price increases of 7.5% were more than
offset by volume declines of 1.5% and negative foreign exchange of 23.5%. Organic sales in Africa/Eurasia grew 6.0% in
2015. Volume declines in the Central Asia/Caucasus region and Ukraine were partially offset by volume gains in the Sub-
Saharan Africa region and South Africa.
Operating profit in Africa/Eurasia increased 4% in 2016 to $186, or 160 bps to 19.4% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (300 bps), partially offset by
an increase in Selling, general and administrative expenses (150 bps), both as a percentage of Net sales. This increase in
Gross profit was mainly driven by cost savings from the Company’s funding-the-growth initiatives (170 bps) and higher
pricing, which were partially offset by higher raw and packaging material costs (350 bps), driven by higher foreign
exchange transaction costs. The increase in Selling, general and administrative expenses was due to higher overhead
expenses (120 bps) and increased advertising investment (30 bps).
Operating profit in Africa/Eurasia decreased 24% in 2015 to $178, or 170 bps to 17.8% of Net sales. This decrease in
Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (240 bps), partially offset by a
decrease in Selling, general and administrative expenses (120 bps), both as a percentage of Net sales. This decrease in
Gross profit was primarily due to higher raw and packaging material costs (790 bps), driven by higher foreign exchange
transaction costs, which were partially offset by cost savings from the Company’s funding-the-growth initiatives (260 bps)
and higher pricing. The decrease in Selling, general and administrative expenses was due to decreased advertising
investment (190 bps), in part reflecting a shift from advertising investment to in-store promotional activities, which was
partially offset by higher overhead expenses (70 bps).
Hill’s Pet Nutrition
Net sales
Operating profit
% of Net sales
2016
2015
$
$
$
$
2,264
653
28.8%
2,212
612
27.7%
% Change
2.5 %
7 %
110 bps
$
$
2014
% Change
(2.0) %
3 %
2,255
592
26.3% 140 bps
Net sales for Hill’s Pet Nutrition increased 2.5% in 2016 to $2,264, driven by net selling price increases of 2.5% while
volume and foreign exchange were flat. Organic sales in Hill’s Pet Nutrition increased 2.5% in 2016. Volume gains led by
Russia, Western Europe, South Africa, Canada and Taiwan were offset by volume declines in the United States and Japan.
The volume declines in Japan were attributable to a continued contraction in the market.
The increase in organic sales in 2016 versus 2015 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 Natural categories.
Net sales for Hill’s Pet Nutrition decreased 2.0% in 2015 to $2,212, as volume growth of 3.5% and net selling price
increases of 2.5% were more than offset by negative foreign exchange of 8.0%. Organic sales in Hill’s Pet Nutrition
increased 6.0% in 2015. Volume gains were led by the United States and Taiwan.
Operating profit in Hill’s Pet Nutrition increased 7% in 2016 to $653, or 110 bps to 28.8% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (20 bps), a decrease in
Selling, general and administrative expenses (10 bps), and a decrease in Other (income) expense, net (80 bps), all as a
percentage of Net sales. This increase in Gross profit was primarily driven by cost savings from the Company’s funding-
the-growth initiatives (190 bps) and higher pricing, partially offset by higher costs (270 bps), primarily driven by higher
raw and packaging material costs, which included higher foreign exchange transaction costs. This decrease in Selling,
general and administrative expenses was primarily due to lower overhead expenses (10 bps). This decrease in Other
(income) expense, net was in part due to a foreign sales tax benefit.
34
35
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Restructuring and Related Implementation Charges
2012 Restructuring Program
In the fourth quarter of 2012, the Company commenced the 2012 Restructuring Program. The program’s initiatives are
expected to help Colgate ensure sustained solid worldwide growth in unit volume, organic sales and earnings per share and
enhance its global leadership positions in its core businesses.
The 2012 Restructuring Program is expected to produce significant benefits in the Company’s long-term business
performance. The major objectives of the program include:
Becoming even stronger on the ground through the continued evolution and expansion of proven global and
regional commercial capabilities, which have already been successfully implemented in a number of the
Company’s operations around the world.
Simplifying and standardizing how work gets done by increasing technology-enabled collaboration and
taking advantage of global data and analytic capabilities, leading to smarter and faster decisions.
Reducing structural costs to continue to increase the Company’s gross and operating profit.
Building on Colgate’s current position of strength to enhance its leading market share positions worldwide
and ensure sustained sales and earnings growth.
On October 23, 2014, the Board approved an expansion of the 2012 Restructuring Program to take advantage of
additional savings opportunities. On October 29, 2015, the Board approved the reinvestment of the funds from the sale of
the Company’s laundry detergent business in the South Pacific to expand the 2012 Restructuring Program and extend it
through December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.
The initiatives under the 2012 Restructuring Program continue to be focused on the following areas:
Expanding Commercial Hubs - Building on the success of this structure already implemented in several
divisions, continuing to cluster single-country subsidiaries into more efficient regional hubs, 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 - Implementing the Company’s
shared service organizational model in all regions of the world. While initially focused on finance and
accounting, these shared services are now being expanded to additional functional areas to streamline global
functions.
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.
Cumulative pretax charges resulting from the 2012 Restructuring Program, once all phases are approved and
implemented, are estimated to be $1,405 to $1,585 ($1,050 to $1,170 aftertax). The pretax charges resulting from the 2012
Restructuring Program are currently estimated to be comprised of the following categories: Employee-Related Costs,
including severance, pension and other termination benefits (50%); asset-related costs, primarily Incremental Depreciation
and Asset Impairments (10%); and Other charges, which include contract termination costs, consisting primarily of related
implementation charges resulting directly from exit activities (20%) and the implementation of new strategies (20%). Over
the course of the 2012 Restructuring Program, it is currently estimated that approximately 75% of the charges will result in
cash expenditures. Anticipated pretax charges for 2017 are expected to approximate $180 to $360 ($140 to $260 aftertax).
It is expected that substantially all charges resulting from the 2012 Restructuring Program will be incurred by December
31, 2017.
It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to
initiatives undertaken in North America (15%), Europe (20%), Latin America (5%), Asia Pacific (5%), Africa/Eurasia
(5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the
implementation of new strategies, noted above, on a global basis. It is expected that, when it has been fully implemented,
the 2012 Restructuring Program will contribute a net reduction of approximately 3,300 to 3,800 positions from the
Company’s global employee workforce.
Savings from the 2012 Restructuring Program, substantially all of which are expected to increase future cash flows,
are projected to be in the range of $430 to $495 pretax ($400 to $475 aftertax) annually, once all projects are approved and
implemented. Savings in 2017 are expected to amount to approximate $40 to $60 pretax ($30 to $50 aftertax).
For the years ended December 31, 2016, 2015 and 2014, restructuring and related implementation charges are
reflected in the Consolidated Statements of Income as follows:
Cost of sales
Selling, general and administrative expenses
Other (income) expense, net
Total 2012 Restructuring Program charges, pretax
Total 2012 Restructuring Program charges, aftertax
2016
2015
2014
$
$
$
46
77
105
228
168
$
$
$
20
64
170
254
183
$
$
$
29
62
195
286
208
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 2012 Restructuring Program relate to initiatives undertaken by the following reportable
operating segments:
North America
Latin America
Europe (1)
Asia Pacific (1)
Africa/Eurasia
Hill’s Pet Nutrition
Corporate
2016
2015
2014
Program-to-date
Accumulated Charges
35%
5%
12%
4%
14%
7%
23%
21%
3%
14%
4%
5%
5%
48%
11%
4%
20%
3%
3%
10%
49%
17%
4%
22%
3%
7%
7%
40%
(1) The Company has recast its historical geographic segment information to conform to the new reporting structure. See “Executive Overview and
Outlook” above for additional details.
36
37
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Restructuring and Related Implementation Charges
2012 Restructuring Program
In the fourth quarter of 2012, the Company commenced the 2012 Restructuring Program. The program’s initiatives are
expected to help Colgate ensure sustained solid worldwide growth in unit volume, organic sales and earnings per share and
enhance its global leadership positions in its core businesses.
The 2012 Restructuring Program is expected to produce significant benefits in the Company’s long-term business
performance. The major objectives of the program include:
Becoming even stronger on the ground through the continued evolution and expansion of proven global and
regional commercial capabilities, which have already been successfully implemented in a number of the
Company’s operations around the world.
Simplifying and standardizing how work gets done by increasing technology-enabled collaboration and
taking advantage of global data and analytic capabilities, leading to smarter and faster decisions.
Reducing structural costs to continue to increase the Company’s gross and operating profit.
Building on Colgate’s current position of strength to enhance its leading market share positions worldwide
and ensure sustained sales and earnings growth.
On October 23, 2014, the Board approved an expansion of the 2012 Restructuring Program to take advantage of
additional savings opportunities. On October 29, 2015, the Board approved the reinvestment of the funds from the sale of
the Company’s laundry detergent business in the South Pacific to expand the 2012 Restructuring Program and extend it
through December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.
The initiatives under the 2012 Restructuring Program continue to be focused on the following areas:
Expanding Commercial Hubs - Building on the success of this structure already implemented in several
divisions, continuing to cluster single-country subsidiaries into more efficient regional hubs, 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 - Implementing the Company’s
shared service organizational model in all regions of the world. While initially focused on finance and
accounting, these shared services are now being expanded to additional functional areas to streamline global
functions.
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.
Cumulative pretax charges resulting from the 2012 Restructuring Program, once all phases are approved and
implemented, are estimated to be $1,405 to $1,585 ($1,050 to $1,170 aftertax). The pretax charges resulting from the 2012
Restructuring Program are currently estimated to be comprised of the following categories: Employee-Related Costs,
including severance, pension and other termination benefits (50%); asset-related costs, primarily Incremental Depreciation
and Asset Impairments (10%); and Other charges, which include contract termination costs, consisting primarily of related
implementation charges resulting directly from exit activities (20%) and the implementation of new strategies (20%). Over
the course of the 2012 Restructuring Program, it is currently estimated that approximately 75% of the charges will result in
cash expenditures. Anticipated pretax charges for 2017 are expected to approximate $180 to $360 ($140 to $260 aftertax).
It is expected that substantially all charges resulting from the 2012 Restructuring Program will be incurred by December
31, 2017.
It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to
initiatives undertaken in North America (15%), Europe (20%), Latin America (5%), Asia Pacific (5%), Africa/Eurasia
(5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the
implementation of new strategies, noted above, on a global basis. It is expected that, when it has been fully implemented,
the 2012 Restructuring Program will contribute a net reduction of approximately 3,300 to 3,800 positions from the
Company’s global employee workforce.
Savings from the 2012 Restructuring Program, substantially all of which are expected to increase future cash flows,
are projected to be in the range of $430 to $495 pretax ($400 to $475 aftertax) annually, once all projects are approved and
implemented. Savings in 2017 are expected to amount to approximate $40 to $60 pretax ($30 to $50 aftertax).
For the years ended December 31, 2016, 2015 and 2014, restructuring and related implementation charges are
reflected in the Consolidated Statements of Income as follows:
Cost of sales
Selling, general and administrative expenses
Other (income) expense, net
Total 2012 Restructuring Program charges, pretax
Total 2012 Restructuring Program charges, aftertax
2016
2015
2014
$
$
$
46
77
105
228
168
$
$
$
20
64
170
254
183
$
$
$
29
62
195
286
208
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 2012 Restructuring Program relate to initiatives undertaken by the following reportable
operating segments:
North America
Latin America
Europe (1)
Asia Pacific (1)
Africa/Eurasia
Hill’s Pet Nutrition
Corporate
2016
2015
2014
Program-to-date
Accumulated Charges
35%
5%
12%
4%
14%
7%
23%
21%
3%
14%
4%
5%
5%
48%
11%
4%
20%
3%
3%
10%
49%
17%
4%
22%
3%
7%
7%
40%
(1) The Company has recast its historical geographic segment information to conform to the new reporting structure. See “Executive Overview and
Outlook” above for additional details.
36
37
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Since the inception of the 2012 Restructuring Program in the fourth quarter of 2012, the Company has incurred
cumulative pretax charges of $1,228 ($907 aftertax) in connection with the implementation of various projects as follows:
Employee-Related Costs
Incremental Depreciation
Asset Impairments
Other
Total
Cumulative Charges
as of December 31, 2016
$
$
465
80
27
656
1,228
The majority of costs incurred since inception relate to the following projects: the implementation of the Company’s
overall hubbing strategy; the consolidation of facilities; the extension of shared business services and streamlining of
global functions; the simplification and streamlining of the Company’s research and development capabilities and oral care
supply chain, both in Europe; the closing of the Morristown, New Jersey personal care facility; and restructuring how the
Company will provide future retirement benefits to substantially all of the U.S.-based employees participating in the
Company’s defined benefit retirement plan by shifting them to the Company’s defined contribution plan.
The following table summarizes the activity for the restructuring and related implementation charges discussed above
and the related accruals:
Employee-Related
Costs
Incremental
Depreciation
Asset
Impairments
Other
Total
Balance at January 1, 2014
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2014
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2015
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2016
$
$
$
$
116
73
(95)
(5)
(4)
—
85
109
(85)
(17)
(8)
—
84
61
(84)
(4)
(1)
—
56
$
$
$
$
— $
25
—
(25)
—
—
— $
20
—
(20)
—
—
— $
9
—
(9)
—
—
— $
— $
1
—
(1)
—
—
— $
5
—
(5)
—
—
— $
20
—
(20)
—
—
— $
42
187
(117)
—
(5)
—
107
120
(94)
—
(2)
—
131
138
(153)
—
—
9
125
$
$
$
$
158
286
(212)
(31)
(9)
—
192
254
(179)
(42)
(10)
—
215
228
(237)
(33)
(1)
9
181
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, $17 and $5 for the
years ended December 31, 2016, 2015 and 2014, respectively, 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, Retirement Plans and Other
Retiree Benefits to the Consolidated Financial Statements).
Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived
assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to
write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against
assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.
Other charges consist primarily of charges resulting directly from exit activities and the implementation of new
strategies as a result of the 2012 Restructuring Program. These charges for the years ended December 31, 2016, 2015 and
2014 include third-party incremental costs related to the development and implementation of new business and strategic
initiatives of $116, $65 and $65, respectively, and contract termination costs and charges resulting directly from exit
activities of $21, $8 and $40, respectively, directly related to the 2012 Restructuring Program. These charges were
expensed as incurred. Also included in Other charges for the years ended December 31, 2016, 2015 and 2014 are other exit
costs of $1, $47 and $82, respectively, related to the consolidation of facilities.
Non-GAAP Financial Measures
This Annual Report on Form 10-K discusses certain financial measures on both a GAAP and a non-GAAP basis. The
Company uses the non-GAAP financial measures described below internally in its budgeting process, to evaluate segment
and overall operating performance and as a factor in determining compensation. The Company believes that these non-
GAAP financial measures are useful in evaluating the Company’s underlying business performance and trends; however,
this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a
substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial
measures may not be the same as similar measures presented by other companies.
Net sales growth (GAAP) and organic sales growth (Net sales growth excluding the impact of foreign exchange,
acquisitions, divestments and the deconsolidation of the Company’s Venezuelan operations) (non-GAAP) are discussed in
this Annual Report on Form 10-K. Management believes the organic sales growth measure provides investors and analysts
with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth
excluding the external factor of foreign exchange, as well as the impact of acquisitions, divestments and the
deconsolidation of the Company’s Venezuelan operations. A reconciliation of organic sales growth to Net sales growth for
the years ended December 31, 2016 and 2015 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, effective income tax rate, Net income attributable to Colgate-Palmolive Company and Earnings per share on a
diluted basis are discussed in this Annual Report on Form 10-K both on a GAAP basis and, as applicable, excluding
charges resulting from the 2012 Restructuring Program, a gain on the sale of land in Mexico, benefits from previously
disclosed tax matters, a charge from a previously disclosed tax matter, charges from previously disclosed litigation matters,
costs related to the sale of land in Mexico, a gain on the sale of the Company’s South Pacific laundry detergent business,
charges related to effective devaluations in Venezuela and a charge for the deconsolidation of the Company’s Venezuelan
operations (non-GAAP). 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 years ended December 31, 2016, 2015 and 2014 is presented within the applicable section of Results of Operations.
38
39
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Since the inception of the 2012 Restructuring Program in the fourth quarter of 2012, the Company has incurred
cumulative pretax charges of $1,228 ($907 aftertax) in connection with the implementation of various projects as follows:
Employee-Related Costs
Incremental Depreciation
Asset Impairments
Other
Total
Cumulative Charges
as of December 31, 2016
$
$
465
80
27
656
1,228
The majority of costs incurred since inception relate to the following projects: the implementation of the Company’s
overall hubbing strategy; the consolidation of facilities; the extension of shared business services and streamlining of
global functions; the simplification and streamlining of the Company’s research and development capabilities and oral care
supply chain, both in Europe; the closing of the Morristown, New Jersey personal care facility; and restructuring how the
Company will provide future retirement benefits to substantially all of the U.S.-based employees participating in the
Company’s defined benefit retirement plan by shifting them to the Company’s defined contribution plan.
The following table summarizes the activity for the restructuring and related implementation charges discussed above
and the related accruals:
Employee-Related
Costs
Incremental
Depreciation
Asset
Impairments
Other
Total
Balance at January 1, 2014
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2014
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2015
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2016
$
$
$
$
116
73
(95)
(5)
(4)
—
85
109
(85)
(17)
(8)
—
84
61
(84)
(4)
(1)
—
56
$
$
$
$
— $
25
—
(25)
—
—
— $
20
—
(20)
—
—
— $
9
—
(9)
—
—
— $
— $
1
—
(1)
—
—
— $
5
—
(5)
—
—
— $
20
—
(20)
—
—
— $
42
187
(117)
—
(5)
—
107
120
(94)
—
(2)
—
131
138
(153)
—
—
9
125
$
$
$
$
158
286
(212)
(31)
(9)
—
192
254
(179)
(42)
(10)
—
215
228
(237)
(33)
(1)
9
181
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, $17 and $5 for the
years ended December 31, 2016, 2015 and 2014, respectively, 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, Retirement Plans and Other
Retiree Benefits to the Consolidated Financial Statements).
Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived
assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to
write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against
assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.
Other charges consist primarily of charges resulting directly from exit activities and the implementation of new
strategies as a result of the 2012 Restructuring Program. These charges for the years ended December 31, 2016, 2015 and
2014 include third-party incremental costs related to the development and implementation of new business and strategic
initiatives of $116, $65 and $65, respectively, and contract termination costs and charges resulting directly from exit
activities of $21, $8 and $40, respectively, directly related to the 2012 Restructuring Program. These charges were
expensed as incurred. Also included in Other charges for the years ended December 31, 2016, 2015 and 2014 are other exit
costs of $1, $47 and $82, respectively, related to the consolidation of facilities.
Non-GAAP Financial Measures
This Annual Report on Form 10-K discusses certain financial measures on both a GAAP and a non-GAAP basis. The
Company uses the non-GAAP financial measures described below internally in its budgeting process, to evaluate segment
and overall operating performance and as a factor in determining compensation. The Company believes that these non-
GAAP financial measures are useful in evaluating the Company’s underlying business performance and trends; however,
this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a
substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial
measures may not be the same as similar measures presented by other companies.
Net sales growth (GAAP) and organic sales growth (Net sales growth excluding the impact of foreign exchange,
acquisitions, divestments and the deconsolidation of the Company’s Venezuelan operations) (non-GAAP) are discussed in
this Annual Report on Form 10-K. Management believes the organic sales growth measure provides investors and analysts
with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth
excluding the external factor of foreign exchange, as well as the impact of acquisitions, divestments and the
deconsolidation of the Company’s Venezuelan operations. A reconciliation of organic sales growth to Net sales growth for
the years ended December 31, 2016 and 2015 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, effective income tax rate, Net income attributable to Colgate-Palmolive Company and Earnings per share on a
diluted basis are discussed in this Annual Report on Form 10-K both on a GAAP basis and, as applicable, excluding
charges resulting from the 2012 Restructuring Program, a gain on the sale of land in Mexico, benefits from previously
disclosed tax matters, a charge from a previously disclosed tax matter, charges from previously disclosed litigation matters,
costs related to the sale of land in Mexico, a gain on the sale of the Company’s South Pacific laundry detergent business,
charges related to effective devaluations in Venezuela and a charge for the deconsolidation of the Company’s Venezuelan
operations (non-GAAP). 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 years ended December 31, 2016, 2015 and 2014 is presented within the applicable section of Results of Operations.
38
39
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for each of the
Liquidity and Capital Resources
years ended December 31, 2016 and 2015 versus the prior year:
Year ended December 31, 2016
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Year ended December 31, 2015
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and
Divestments
Impact (1)
Organic
Sales Growth
(Non-GAAP)
1.0%
(15.5)%
(3.0)%
(5.0)%
(4.0)%
(6.5)%
2.5%
(5.0)%
(0.5)%
(10.0)%
(3.0)%
(4.0)%
(9.5)%
(5.0)%
—%
(4.5)%
—%
(15.5)%
—%
(3.0)%
—%
(5.5)%
—%
(4.5)%
1.5%
10.0%
—%
2.0%
5.5%
4.0%
2.5%
4.0%
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and
Divestments
Impact (1)
Organic
Sales Growth
(Non-GAAP)
1.0%
(9.5)%
(15.0)%
(4.5)%
(17.5)%
(8.0)%
(2.0)%
(7.0)%
(1.0)%
(19.0)%
(14.5)%
(6.0)%
(23.5)%
(12.0)%
(8.0)%
(11.5)%
—%
—%
(0.5)%
(1.5)%
—%
(0.5)%
—%
(0.5)%
2.0%
9.5%
—%
3.0%
6.0%
4.5%
6.0%
5.0%
(1) Represents the impact of acquisitions, divestments and the deconsolidation of the Company’s Venezuelan operations, as applicable.
Market Share Information
Management uses market share information as a key indicator to monitor business health and performance. References
to market share in this Annual Report on Form 10-K 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. 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 that the third-party vendors we use to
provide data are reliable, but we have not verified the accuracy or completeness of the data or any assumptions underlying
the data. In addition, market share information calculated by the Company may be different from market share information
calculated by other companies due to differences in category definitions, the use of data from different countries, internal
estimates and other factors.
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, costs resulting from the
2012 Restructuring 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.
Cash Flow
Net cash provided by operations was $3,141 in 2016, compared to $2,949 in 2015 and $3,298 in 2014. Net cash
provided by operations for 2016 increased due to strong operating earnings and the timing of income tax payments,
partially offset by the impact of the deconsolidation of the Company’s Venezuelan operations effective December 31, 2015
and voluntary contributions to employee postretirement plans. The decrease in 2015 as compared to 2014 was due to: a
decrease in Operating profit excluding a charge related to the change in accounting for the Company’s Venezuelan
operations, charges related to the 2012 Restructuring Program, charges related to the 2015 and 2014 Venezuela
Remeasurements, a gain on the sale of the Company’s laundry detergent business in the South Pacific, costs related to the
sale of land in Mexico and charges for previously disclosed litigation matters in both periods, as applicable; higher income
tax payments; and a payment for a previously disclosed litigation matter.
The Company defines working capital as the difference between current assets (excluding Cash and cash equivalents
and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-
term debt). The Company’s working capital as a percentage of Net sales was (2.2)% and 0.5% in 2016 and 2015,
respectively. This decrease is primarily due to the Company’s tight focus on working capital and the impact of reclassifying
current deferred tax assets to noncurrent deferred tax assets upon the adoption of a new accounting standard.
Approximately 75% of total program charges related to the 2012 Restructuring Program, estimated to be $1,405 to
$1,585 pretax ($1,050 to $1,170 aftertax), are expected to result in cash expenditures. Savings from the 2012 Restructuring
Program are projected to be in the range of $430 to $495 pretax ($400 to $475 aftertax) annually, once all projects are
approved and implemented, substantially all of which are expected to increase future cash flows. The anticipated pretax
charges for 2017 are expected to amount to approximately $180 to $360 ($140 to $260 aftertax) and savings in 2017 are
expected to approximate $40 to $60 pretax ($30 to $50 aftertax). It is anticipated that cash requirements for the 2012
Restructuring Program will continue to be funded from operating cash flows. Approximately 60% of the restructuring
accrual at December 31, 2016 is expected to be paid before year end 2017.
Investing activities used $499 of cash in 2016, compared to $685 and $859 during 2015 and 2014, respectively.
Purchases of marketable securities and investments decreased in 2016 to $336 from $742 in 2015, due to the
deconsolidation of the Company’s Venezuelan operations, a decrease in bank deposits with original maturities greater than
90 days and a decrease in purchases by the Company’s Argentinian subsidiary of U.S. dollar-linked fixed interest rate
government bonds. Proceeds from the sale of marketable securities and investments decreased in 2016 to $378 from $599
in 2015, due to the deconsolidation of the Company’s Venezuelan operations and an increase in proceeds from the
redemption of bank deposits with original maturities greater than 90 days, partially offset by higher proceeds from the
Company’s Argentinian subsidiary’s investment in U.S. dollar-linked fixed interest rate government bonds.
In September 2016, the Company’s Mexican subsidiary completed the sale to the United States of America of the
Mexico City site on which its commercial operations, technology center and soap production facility were previously
located and received $60 as the third and final installment of the sale price. The total sale price (including the third
installment and the previously received first and second installments) was $120. The Company recognized a pretax gain of
$97 ($63 aftertax gain) in the third quarter of 2016, net of costs primarily related to site preparation.
In August 2015, the Company completed the sale of its laundry detergent business in the South Pacific to Henkel AG
& Co. KGaA for an aggregate purchase price of approximately 310 Australian dollars ($221) and recorded a pretax gain of
$187 ($120 aftertax or $0.13 per diluted share). The gain is net of charges related to the right-sizing of the Company’s
South Pacific business, asset write-offs related to the divested laundry detergent business and other costs related to the sale.
As discussed above, the funds from the sale were reinvested to expand the 2012 Restructuring Program.
40
41
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for each of the
Liquidity and Capital Resources
years ended December 31, 2016 and 2015 versus the prior year:
Year ended December 31, 2016
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Year ended December 31, 2015
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and
Divestments
Impact (1)
Organic
Sales Growth
(Non-GAAP)
1.0%
(15.5)%
(3.0)%
(5.0)%
(4.0)%
(6.5)%
2.5%
(5.0)%
(0.5)%
(10.0)%
(3.0)%
(4.0)%
(9.5)%
(5.0)%
—%
(4.5)%
—%
(15.5)%
—%
(3.0)%
—%
(5.5)%
—%
(4.5)%
1.5%
10.0%
—%
2.0%
5.5%
4.0%
2.5%
4.0%
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and
Divestments
Impact (1)
Organic
Sales Growth
(Non-GAAP)
1.0%
(9.5)%
(15.0)%
(4.5)%
(17.5)%
(8.0)%
(2.0)%
(7.0)%
(1.0)%
(19.0)%
(14.5)%
(6.0)%
(23.5)%
(12.0)%
(8.0)%
(11.5)%
—%
—%
(0.5)%
(1.5)%
—%
(0.5)%
—%
(0.5)%
2.0%
9.5%
—%
3.0%
6.0%
4.5%
6.0%
5.0%
(1) Represents the impact of acquisitions, divestments and the deconsolidation of the Company’s Venezuelan operations, as applicable.
Market Share Information
Management uses market share information as a key indicator to monitor business health and performance. References
to market share in this Annual Report on Form 10-K 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. 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 that the third-party vendors we use to
provide data are reliable, but we have not verified the accuracy or completeness of the data or any assumptions underlying
the data. In addition, market share information calculated by the Company may be different from market share information
calculated by other companies due to differences in category definitions, the use of data from different countries, internal
estimates and other factors.
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, costs resulting from the
2012 Restructuring 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.
Cash Flow
Net cash provided by operations was $3,141 in 2016, compared to $2,949 in 2015 and $3,298 in 2014. Net cash
provided by operations for 2016 increased due to strong operating earnings and the timing of income tax payments,
partially offset by the impact of the deconsolidation of the Company’s Venezuelan operations effective December 31, 2015
and voluntary contributions to employee postretirement plans. The decrease in 2015 as compared to 2014 was due to: a
decrease in Operating profit excluding a charge related to the change in accounting for the Company’s Venezuelan
operations, charges related to the 2012 Restructuring Program, charges related to the 2015 and 2014 Venezuela
Remeasurements, a gain on the sale of the Company’s laundry detergent business in the South Pacific, costs related to the
sale of land in Mexico and charges for previously disclosed litigation matters in both periods, as applicable; higher income
tax payments; and a payment for a previously disclosed litigation matter.
The Company defines working capital as the difference between current assets (excluding Cash and cash equivalents
and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-
term debt). The Company’s working capital as a percentage of Net sales was (2.2)% and 0.5% in 2016 and 2015,
respectively. This decrease is primarily due to the Company’s tight focus on working capital and the impact of reclassifying
current deferred tax assets to noncurrent deferred tax assets upon the adoption of a new accounting standard.
Approximately 75% of total program charges related to the 2012 Restructuring Program, estimated to be $1,405 to
$1,585 pretax ($1,050 to $1,170 aftertax), are expected to result in cash expenditures. Savings from the 2012 Restructuring
Program are projected to be in the range of $430 to $495 pretax ($400 to $475 aftertax) annually, once all projects are
approved and implemented, substantially all of which are expected to increase future cash flows. The anticipated pretax
charges for 2017 are expected to amount to approximately $180 to $360 ($140 to $260 aftertax) and savings in 2017 are
expected to approximate $40 to $60 pretax ($30 to $50 aftertax). It is anticipated that cash requirements for the 2012
Restructuring Program will continue to be funded from operating cash flows. Approximately 60% of the restructuring
accrual at December 31, 2016 is expected to be paid before year end 2017.
Investing activities used $499 of cash in 2016, compared to $685 and $859 during 2015 and 2014, respectively.
Purchases of marketable securities and investments decreased in 2016 to $336 from $742 in 2015, due to the
deconsolidation of the Company’s Venezuelan operations, a decrease in bank deposits with original maturities greater than
90 days and a decrease in purchases by the Company’s Argentinian subsidiary of U.S. dollar-linked fixed interest rate
government bonds. Proceeds from the sale of marketable securities and investments decreased in 2016 to $378 from $599
in 2015, due to the deconsolidation of the Company’s Venezuelan operations and an increase in proceeds from the
redemption of bank deposits with original maturities greater than 90 days, partially offset by higher proceeds from the
Company’s Argentinian subsidiary’s investment in U.S. dollar-linked fixed interest rate government bonds.
In September 2016, the Company’s Mexican subsidiary completed the sale to the United States of America of the
Mexico City site on which its commercial operations, technology center and soap production facility were previously
located and received $60 as the third and final installment of the sale price. The total sale price (including the third
installment and the previously received first and second installments) was $120. The Company recognized a pretax gain of
$97 ($63 aftertax gain) in the third quarter of 2016, net of costs primarily related to site preparation.
In August 2015, the Company completed the sale of its laundry detergent business in the South Pacific to Henkel AG
& Co. KGaA for an aggregate purchase price of approximately 310 Australian dollars ($221) and recorded a pretax gain of
$187 ($120 aftertax or $0.13 per diluted share). The gain is net of charges related to the right-sizing of the Company’s
South Pacific business, asset write-offs related to the divested laundry detergent business and other costs related to the sale.
As discussed above, the funds from the sale were reinvested to expand the 2012 Restructuring Program.
40
41
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Capital expenditures in 2016 were $593, a decrease from $691 in 2015 and $757 in 2014. Capital expenditures
decreased in 2016 primarily due to lower spending on the 2012 Restructuring Program as it is entering its final stages. The
Company continues to focus its capital spending on projects that are expected to yield high aftertax returns. Capital
expenditures for 2017 are expected to be approximately 4.0% of Net sales, which remains higher than the historical rate of
approximately 3.5% primarily due to the 2012 Restructuring Program.
Financing activities used $2,233 of cash during 2016 compared to $2,276 and $2,170 during 2015 and 2014,
respectively. The decrease in cash used in 2016 as compared to 2015 was primarily due to lower purchases of treasury
shares and higher proceeds from the exercise of stock options and excess tax benefits, partially offset by lower net proceeds
from the issuance of debt. The increase in cash used in 2015 as compared to 2014 was primarily due to higher principal
payments on debt, higher dividends paid and higher purchases of treasury shares, which were partially offset by higher
proceeds from the issuances of debt.
Long-term debt, including the current portion, decreased to $6,520 as of December 31, 2016, as compared to $6,544 as
of December 31, 2015 and total debt decreased to $6,533 as of December 31, 2016 as compared to $6,548 as of
December 31, 2015. The Company’s debt issuances support its capital structure strategy objectives of funding its business
and growth initiatives while minimizing its risk-adjusted cost of capital. During the third quarter of 2015, the Company
issued $600 of thirty-year notes at a fixed rate of 4.00%. During the second quarter of 2015 the Company issued €500 of
euro-denominated four-year notes at a variable rate. The debt issuances in 2015 were under the Company’s shelf
registration statement. Proceeds from the debt issuances in the second and third quarters of 2015 were used for general
corporate purposes, which included the retirement of commercial paper borrowings.
At December 31, 2016, the Company had access to unused domestic and foreign lines of credit of $2,927 (including
under the facilities discussed below) and could also issue medium-term notes pursuant to an effective shelf registration
statement. In November 2011, the Company entered into a five-year revolving credit facility with a capacity of $1,850 with
a syndicate of banks. This facility was extended for an additional year in 2012 and again in 2013. In 2014, the Company
entered into an amendment of this facility whereby the facility was extended for an additional year to November 2019 and
the capacity of the facility was increased to $2,370. In 2016, the facility was extended for an additional year to November
2020. The Company also has the ability to draw $165 from a revolving credit facility that expires in November 2017.
Commitment fees related to the credit facilities are not material.
Domestic and foreign commercial paper outstanding was $295 and $5 as of December 31, 2016 and December 31,
2015, respectively. The average daily balances outstanding for commercial paper in 2016 and 2015 were $1,642 and
$1,989, 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.
The following is a summary of the Company’s commercial paper and global short-term borrowings as of
December 31, 2016 and 2015:
2016
2015
Dividend payments in 2016 were $1,508, an increase from $1,493 in 2015 and $1,446 in 2014. Dividend payments
increased to $1.55 per share in 2016 from $1.50 per share in 2015 and $1.42 per share in 2014. In the first quarter of 2016,
the Company’s Board increased the quarterly common stock cash dividend to $0.39 per share from $0.38 per share,
effective in the second quarter of 2016.
The Company repurchases shares of its common stock in the open market and in private transactions to maintain its
targeted capital structure and to fulfill certain requirements of its compensation and benefit plans. On February 19, 2015,
the Board authorized the repurchase of shares of the Company’s common stock having an aggregate purchase price of up to
$5,000 under a share repurchase program (the “2015 Program”), which replaced the previous program approved by the
Board in 2011 (the “2011 Program”). The Company commenced repurchase of shares of the Company’s common stock
under the 2015 Program beginning February 19, 2015. The Board also has authorized share repurchases on an ongoing
basis to fulfill certain requirements of the Company’s compensation and benefit programs.
Aggregate share repurchases in 2016 consisted of 18.3 million common shares under the 2015 Program and 1.0
million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of $1,335.
Aggregate repurchases in 2015 consisted of 19.9 million common shares under the 2015 Program, 1.7 million common
shares under the 2011 Program and 1.2 million common shares to fulfill the requirements of compensation and benefit
plans, for a total purchase price of $1,551. Aggregate repurchases in 2014 consisted of 21.7 million common shares under
the 2011 Program and 1.5 million common shares to fulfill the requirements of compensation and benefit plans, for a total
purchase price of $1,530.
Cash and cash equivalents increased $345 during 2016 to $1,315 at December 31, 2016, compared to $970 at
December 31, 2015, most of which ($1,273 and $932, respectively) were held by the Company’s foreign subsidiaries. The
Company regularly assesses its cash needs and the available sources to fund these needs and, as part of this assessment, the
Company determines the amount of foreign earnings it intends to repatriate to help fund its domestic cash needs and
provides applicable U.S. income and foreign withholding taxes on such earnings.
As of December 31, 2016, the Company had approximately $3,400 of undistributed earnings of foreign subsidiaries
for which no U.S. income or foreign withholding taxes have been provided as the Company considered such earnings to be
indefinitely reinvested outside of the U.S. and, therefore, not subject to such taxes.
In order to fully recognize a $210 U.S. income tax benefit in 2016 principally related to changes in Venezuela’s foreign
exchange regime, during the quarter ended March 31, 2016, the Company decided to repatriate in 2016 $1,500 of earnings
of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S., and accordingly, recorded a tax
charge of $210. The Company currently does not anticipate a need to repatriate additional undistributed earnings of foreign
subsidiaries. Any future repatriation would be subject to applicable U.S. income and foreign withholding taxes. As the
Company operates in over 200 countries and territories throughout the world and due to the complexities in the tax laws
and the assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these
earnings were repatriated.
Weighted
Average Interest
Rate
1.6 %
(0.3)%
Payable to banks
Commercial paper
Total
Maturities Outstanding
13
$
295
308
2017
2017
$
Weighted Average
Interest Rate
1.8%
—%
Maturities Outstanding
4
$
5
9
2016
2016
$
Certain of the facilities 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. See Note 6, Long-Term Debt and Credit Facilities to the Consolidated Financial Statements for further information
about the Company’s long-term debt and credit facilities.
42
43
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Capital expenditures in 2016 were $593, a decrease from $691 in 2015 and $757 in 2014. Capital expenditures
decreased in 2016 primarily due to lower spending on the 2012 Restructuring Program as it is entering its final stages. The
Company continues to focus its capital spending on projects that are expected to yield high aftertax returns. Capital
expenditures for 2017 are expected to be approximately 4.0% of Net sales, which remains higher than the historical rate of
approximately 3.5% primarily due to the 2012 Restructuring Program.
Financing activities used $2,233 of cash during 2016 compared to $2,276 and $2,170 during 2015 and 2014,
respectively. The decrease in cash used in 2016 as compared to 2015 was primarily due to lower purchases of treasury
shares and higher proceeds from the exercise of stock options and excess tax benefits, partially offset by lower net proceeds
from the issuance of debt. The increase in cash used in 2015 as compared to 2014 was primarily due to higher principal
payments on debt, higher dividends paid and higher purchases of treasury shares, which were partially offset by higher
proceeds from the issuances of debt.
Long-term debt, including the current portion, decreased to $6,520 as of December 31, 2016, as compared to $6,544 as
of December 31, 2015 and total debt decreased to $6,533 as of December 31, 2016 as compared to $6,548 as of
December 31, 2015. The Company’s debt issuances support its capital structure strategy objectives of funding its business
and growth initiatives while minimizing its risk-adjusted cost of capital. During the third quarter of 2015, the Company
issued $600 of thirty-year notes at a fixed rate of 4.00%. During the second quarter of 2015 the Company issued €500 of
euro-denominated four-year notes at a variable rate. The debt issuances in 2015 were under the Company’s shelf
registration statement. Proceeds from the debt issuances in the second and third quarters of 2015 were used for general
corporate purposes, which included the retirement of commercial paper borrowings.
At December 31, 2016, the Company had access to unused domestic and foreign lines of credit of $2,927 (including
under the facilities discussed below) and could also issue medium-term notes pursuant to an effective shelf registration
statement. In November 2011, the Company entered into a five-year revolving credit facility with a capacity of $1,850 with
a syndicate of banks. This facility was extended for an additional year in 2012 and again in 2013. In 2014, the Company
entered into an amendment of this facility whereby the facility was extended for an additional year to November 2019 and
the capacity of the facility was increased to $2,370. In 2016, the facility was extended for an additional year to November
2020. The Company also has the ability to draw $165 from a revolving credit facility that expires in November 2017.
Commitment fees related to the credit facilities are not material.
Domestic and foreign commercial paper outstanding was $295 and $5 as of December 31, 2016 and December 31,
2015, respectively. The average daily balances outstanding for commercial paper in 2016 and 2015 were $1,642 and
$1,989, 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.
The following is a summary of the Company’s commercial paper and global short-term borrowings as of
December 31, 2016 and 2015:
2016
2015
Dividend payments in 2016 were $1,508, an increase from $1,493 in 2015 and $1,446 in 2014. Dividend payments
increased to $1.55 per share in 2016 from $1.50 per share in 2015 and $1.42 per share in 2014. In the first quarter of 2016,
the Company’s Board increased the quarterly common stock cash dividend to $0.39 per share from $0.38 per share,
effective in the second quarter of 2016.
The Company repurchases shares of its common stock in the open market and in private transactions to maintain its
targeted capital structure and to fulfill certain requirements of its compensation and benefit plans. On February 19, 2015,
the Board authorized the repurchase of shares of the Company’s common stock having an aggregate purchase price of up to
$5,000 under a share repurchase program (the “2015 Program”), which replaced the previous program approved by the
Board in 2011 (the “2011 Program”). The Company commenced repurchase of shares of the Company’s common stock
under the 2015 Program beginning February 19, 2015. The Board also has authorized share repurchases on an ongoing
basis to fulfill certain requirements of the Company’s compensation and benefit programs.
Aggregate share repurchases in 2016 consisted of 18.3 million common shares under the 2015 Program and 1.0
million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of $1,335.
Aggregate repurchases in 2015 consisted of 19.9 million common shares under the 2015 Program, 1.7 million common
shares under the 2011 Program and 1.2 million common shares to fulfill the requirements of compensation and benefit
plans, for a total purchase price of $1,551. Aggregate repurchases in 2014 consisted of 21.7 million common shares under
the 2011 Program and 1.5 million common shares to fulfill the requirements of compensation and benefit plans, for a total
purchase price of $1,530.
Cash and cash equivalents increased $345 during 2016 to $1,315 at December 31, 2016, compared to $970 at
December 31, 2015, most of which ($1,273 and $932, respectively) were held by the Company’s foreign subsidiaries. The
Company regularly assesses its cash needs and the available sources to fund these needs and, as part of this assessment, the
Company determines the amount of foreign earnings it intends to repatriate to help fund its domestic cash needs and
provides applicable U.S. income and foreign withholding taxes on such earnings.
As of December 31, 2016, the Company had approximately $3,400 of undistributed earnings of foreign subsidiaries
for which no U.S. income or foreign withholding taxes have been provided as the Company considered such earnings to be
indefinitely reinvested outside of the U.S. and, therefore, not subject to such taxes.
In order to fully recognize a $210 U.S. income tax benefit in 2016 principally related to changes in Venezuela’s foreign
exchange regime, during the quarter ended March 31, 2016, the Company decided to repatriate in 2016 $1,500 of earnings
of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S., and accordingly, recorded a tax
charge of $210. The Company currently does not anticipate a need to repatriate additional undistributed earnings of foreign
subsidiaries. Any future repatriation would be subject to applicable U.S. income and foreign withholding taxes. As the
Company operates in over 200 countries and territories throughout the world and due to the complexities in the tax laws
and the assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these
earnings were repatriated.
Weighted
Average Interest
Rate
1.6 %
(0.3)%
Payable to banks
Commercial paper
Total
Maturities Outstanding
13
$
295
308
2017
2017
$
Weighted Average
Interest Rate
1.8%
—%
Maturities Outstanding
4
$
5
9
2016
2016
$
Certain of the facilities 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. See Note 6, Long-Term Debt and Credit Facilities to the Consolidated Financial Statements for further information
about the Company’s long-term debt and credit facilities.
42
43
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
The following represents the scheduled maturities of the Company’s contractual obligations as of December 31, 2016:
Foreign Exchange Risk
Long-term debt including current portion(1)
Net cash interest payments on long-term debt(2)
Leases
Purchase obligations(3)
Total
Total
2017
2018
2019
2020
2021
Thereafter
$
5,575
$ — $ 698
$1,025
$ 248
$ 297
$
3,307
1,394
860
820
128
178
534
121
160
141
118
143
110
106
130
24
104
104
7
817
145
4
$
8,649
$ 840
$1,120
$1,396
$ 508
$ 512
$
4,273
_______
(1) The Company classifies commercial paper and notes maturing within the next 12 months as long-term debt when it has the intent
(2)
and ability to refinance such obligations on a long-term basis. The amounts in this table exclude such obligations.
Includes the net interest payments on fixed and variable rate debt and associated interest rate swaps. Interest payments associated
with floating rate instruments are based on management’s best estimate of projected interest rates for the remaining term of variable
rate debt.
(3) The Company had outstanding contractual obligations with suppliers at the end of 2016 for the purchase of raw, packaging and
other materials and services in the normal course of business. These purchase obligation amounts represent only those items which
are based on agreements that are legally binding and that specify all significant terms including minimum quantity, price and term
and do not represent total anticipated purchases.
Long-term liabilities associated with the Company’s postretirement plans are excluded from the table above due to the
uncertainty of the timing of these cash disbursements. The amount and timing of cash funding related to these benefit plans
will generally depend on local regulatory requirements, various economic assumptions (the most significant of which are
detailed in “Critical Accounting Policies and Use of Estimates” below) and voluntary Company contributions. Based on
current information, the Company is not required to make a mandatory contribution to its qualified U.S. pension plan in
2017. Management’s best estimate of voluntary contributions the Company will make to U.S. pension plans for the year
ending December 31, 2017 is approximately $57. In addition, total benefit payments to be paid to participants for the year
ending December 31, 2017 from the Company’s assets are estimated to be approximately $81.
Additionally, liabilities for unrecognized income tax benefits are excluded from the table above as the Company is
unable to reasonably predict the ultimate amount or timing of a settlement of such liabilities. See Note 11, Income Taxes to
the Consolidated Financial Statements for more information.
As more fully described in Part I, Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the
Consolidated Financial Statements, the Company has commitments and contingencies with respect to lawsuits,
environmental matters, taxes and other matters arising in the ordinary course of business.
Off-Balance Sheet Arrangements
The Company does not have off-balance sheet financing or unconsolidated special purpose entities.
Managing Foreign Currency, Interest Rate, Commodity Price and Credit Risk Exposure
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, 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. The Company’s treasury and risk management policies prohibit the use of derivatives for
speculative purposes and leveraged derivatives for any purpose.
The sensitivity of our financial instruments to market fluctuations is discussed below. See Note 2, Summary of
Significant Accounting Policies and Note 7, Fair Value Measurements and Financial Instruments to the Consolidated
Financial Statements for further discussion of derivatives and hedging policies and fair value measurements.
As the Company markets its products in over 200 countries and territories, it is exposed to currency fluctuations
related to manufacturing and selling its products in currencies other than the U.S. dollar. The Company manages its foreign
currency exposures through a combination of cost-containment measures, sourcing strategies, selling price increases and
the hedging of certain costs in an effort to minimize the impact on earnings of foreign currency rate movements. See the
“Results of Operations” section above for discussion of the foreign exchange impact on Net sales in each operating
segment.
The assets and liabilities of foreign subsidiaries are translated into U.S. dollars at year-end exchange rates with
resulting translation gains and losses accumulated in a separate component of shareholders’ equity. Income and expense
items are translated into U.S. dollars at average rates of exchange prevailing during the year.
Prior to the deconsolidation of the Company’s Venezuelan operations, which was effective December 31, 2015, the
functional currency for CP Venezuela was the U.S. dollar since Venezuela was designated as hyper-inflationary, and
Venezuelan currency fluctuations were reported in income. The local currency-denominated non-monetary assets of the
Venezuelan operations, including inventories and property, plant and equipment were remeasured at their historical
exchange rates, while local currency-denominated monetary assets and liabilities were remeasured at period-end exchange
rates. Remeasurement adjustments for these operations were included in Net income attributable to Colgate-Palmolive
Company. Refer to “Executive Overview and Outlook” above and to Note 14, Venezuela to the Consolidated Financial
Statements for further discussion of the Company’s Venezuelan operations.
The Company primarily utilizes foreign currency contracts, including forward and swap contracts, option contracts,
foreign and local currency deposits and local currency borrowings to hedge portions of its exposures relating to foreign
currency purchases, assets and liabilities created in the normal course of business and the net investment in certain foreign
subsidiaries. The duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued
using observable market rates.
The Company’s foreign currency forward contracts that qualify for cash flow hedge accounting resulted in net
unrealized gains of $20 and $35 at December 31, 2016 and 2015, respectively. Changes in the fair value of cash flow
hedges are recorded in Other comprehensive income (loss) and are reclassified into earnings in the same period or periods
during which the underlying hedged transaction is recognized in earnings. At the end of 2016, an unfavorable 10% change
in exchange rates would have resulted in a net unrealized loss of $45.
Interest Rate Risk
The Company manages its mix of fixed and floating rate debt against its target with debt issuances and by entering into
interest rate swaps in order to mitigate fluctuations in earnings and cash flows that may result from interest rate volatility.
The notional amount, interest payment and maturity date of the swaps generally match the principal, interest payment and
maturity date of the related debt, and the swaps are valued using observable benchmark rates.
Based on year-end 2016 variable rate debt levels, a 1% increase in interest rates would have increased Interest
(income) expense, net by $13 in 2016.
Commodity Price Risk
The Company is exposed to price volatility related to raw materials used in production, such as resins, pulp, essential
oils, tropical oils, tallow, poultry, corn and soybeans. The Company manages its raw material exposures through a
combination of cost containment measures, ongoing productivity initiatives and the limited use of commodity hedging
contracts. Futures contracts are used on a limited basis, primarily in the Hill’s Pet Nutrition segment, to manage volatility
related to anticipated raw material inventory purchases of certain traded commodities.
The Company’s open commodity derivative contracts, which qualify for cash flow hedge accounting, resulted in net
unrealized losses of $0 in December 31, 2016 and 2015. At the end of 2016, an unfavorable 10% change in commodity
futures prices would have resulted in a net unrealized loss of $1.
44
45
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
The following represents the scheduled maturities of the Company’s contractual obligations as of December 31, 2016:
Foreign Exchange Risk
Long-term debt including current portion(1)
Net cash interest payments on long-term debt(2)
Leases
Purchase obligations(3)
Total
Total
2017
2018
2019
2020
2021
Thereafter
$
5,575
$ — $ 698
$1,025
$ 248
$ 297
$
3,307
1,394
860
820
128
178
534
121
160
141
118
143
110
106
130
24
104
104
7
817
145
4
$
8,649
$ 840
$1,120
$1,396
$ 508
$ 512
$
4,273
_______
(1) The Company classifies commercial paper and notes maturing within the next 12 months as long-term debt when it has the intent
(2)
and ability to refinance such obligations on a long-term basis. The amounts in this table exclude such obligations.
Includes the net interest payments on fixed and variable rate debt and associated interest rate swaps. Interest payments associated
with floating rate instruments are based on management’s best estimate of projected interest rates for the remaining term of variable
rate debt.
(3) The Company had outstanding contractual obligations with suppliers at the end of 2016 for the purchase of raw, packaging and
other materials and services in the normal course of business. These purchase obligation amounts represent only those items which
are based on agreements that are legally binding and that specify all significant terms including minimum quantity, price and term
and do not represent total anticipated purchases.
Long-term liabilities associated with the Company’s postretirement plans are excluded from the table above due to the
uncertainty of the timing of these cash disbursements. The amount and timing of cash funding related to these benefit plans
will generally depend on local regulatory requirements, various economic assumptions (the most significant of which are
detailed in “Critical Accounting Policies and Use of Estimates” below) and voluntary Company contributions. Based on
current information, the Company is not required to make a mandatory contribution to its qualified U.S. pension plan in
2017. Management’s best estimate of voluntary contributions the Company will make to U.S. pension plans for the year
ending December 31, 2017 is approximately $57. In addition, total benefit payments to be paid to participants for the year
ending December 31, 2017 from the Company’s assets are estimated to be approximately $81.
Additionally, liabilities for unrecognized income tax benefits are excluded from the table above as the Company is
unable to reasonably predict the ultimate amount or timing of a settlement of such liabilities. See Note 11, Income Taxes to
the Consolidated Financial Statements for more information.
As more fully described in Part I, Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the
Consolidated Financial Statements, the Company has commitments and contingencies with respect to lawsuits,
environmental matters, taxes and other matters arising in the ordinary course of business.
Off-Balance Sheet Arrangements
The Company does not have off-balance sheet financing or unconsolidated special purpose entities.
Managing Foreign Currency, Interest Rate, Commodity Price and Credit Risk Exposure
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, 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. The Company’s treasury and risk management policies prohibit the use of derivatives for
speculative purposes and leveraged derivatives for any purpose.
The sensitivity of our financial instruments to market fluctuations is discussed below. See Note 2, Summary of
Significant Accounting Policies and Note 7, Fair Value Measurements and Financial Instruments to the Consolidated
Financial Statements for further discussion of derivatives and hedging policies and fair value measurements.
As the Company markets its products in over 200 countries and territories, it is exposed to currency fluctuations
related to manufacturing and selling its products in currencies other than the U.S. dollar. The Company manages its foreign
currency exposures through a combination of cost-containment measures, sourcing strategies, selling price increases and
the hedging of certain costs in an effort to minimize the impact on earnings of foreign currency rate movements. See the
“Results of Operations” section above for discussion of the foreign exchange impact on Net sales in each operating
segment.
The assets and liabilities of foreign subsidiaries are translated into U.S. dollars at year-end exchange rates with
resulting translation gains and losses accumulated in a separate component of shareholders’ equity. Income and expense
items are translated into U.S. dollars at average rates of exchange prevailing during the year.
Prior to the deconsolidation of the Company’s Venezuelan operations, which was effective December 31, 2015, the
functional currency for CP Venezuela was the U.S. dollar since Venezuela was designated as hyper-inflationary, and
Venezuelan currency fluctuations were reported in income. The local currency-denominated non-monetary assets of the
Venezuelan operations, including inventories and property, plant and equipment were remeasured at their historical
exchange rates, while local currency-denominated monetary assets and liabilities were remeasured at period-end exchange
rates. Remeasurement adjustments for these operations were included in Net income attributable to Colgate-Palmolive
Company. Refer to “Executive Overview and Outlook” above and to Note 14, Venezuela to the Consolidated Financial
Statements for further discussion of the Company’s Venezuelan operations.
The Company primarily utilizes foreign currency contracts, including forward and swap contracts, option contracts,
foreign and local currency deposits and local currency borrowings to hedge portions of its exposures relating to foreign
currency purchases, assets and liabilities created in the normal course of business and the net investment in certain foreign
subsidiaries. The duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued
using observable market rates.
The Company’s foreign currency forward contracts that qualify for cash flow hedge accounting resulted in net
unrealized gains of $20 and $35 at December 31, 2016 and 2015, respectively. Changes in the fair value of cash flow
hedges are recorded in Other comprehensive income (loss) and are reclassified into earnings in the same period or periods
during which the underlying hedged transaction is recognized in earnings. At the end of 2016, an unfavorable 10% change
in exchange rates would have resulted in a net unrealized loss of $45.
Interest Rate Risk
The Company manages its mix of fixed and floating rate debt against its target with debt issuances and by entering into
interest rate swaps in order to mitigate fluctuations in earnings and cash flows that may result from interest rate volatility.
The notional amount, interest payment and maturity date of the swaps generally match the principal, interest payment and
maturity date of the related debt, and the swaps are valued using observable benchmark rates.
Based on year-end 2016 variable rate debt levels, a 1% increase in interest rates would have increased Interest
(income) expense, net by $13 in 2016.
Commodity Price Risk
The Company is exposed to price volatility related to raw materials used in production, such as resins, pulp, essential
oils, tropical oils, tallow, poultry, corn and soybeans. The Company manages its raw material exposures through a
combination of cost containment measures, ongoing productivity initiatives and the limited use of commodity hedging
contracts. Futures contracts are used on a limited basis, primarily in the Hill’s Pet Nutrition segment, to manage volatility
related to anticipated raw material inventory purchases of certain traded commodities.
The Company’s open commodity derivative contracts, which qualify for cash flow hedge accounting, resulted in net
unrealized losses of $0 in December 31, 2016 and 2015. At the end of 2016, an unfavorable 10% change in commodity
futures prices would have resulted in a net unrealized loss of $1.
44
45
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Credit Risk
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 with diverse, credit-worthy counterparties based upon both strong credit ratings
and other credit considerations.
Recent Accounting Pronouncements
On October 24, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory,” which
eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside
party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets
other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The
guidance is effective for the Company on January 1, 2018 and early adoption is permitted. The standard requires a
“modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as
of the beginning of the period of adoption. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On August 26, 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments,” which clarifies how certain cash receipts and payments are to be presented in
the statement of cash flows. The guidance is effective for the Company on January 1, 2018 and early adoption is permitted.
This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.
On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting,” which amends accounting for income taxes related to
share-based compensation, the related classification in the statement of cash flows and share award forfeiture accounting.
This guidance requires recognition of excess tax benefits and deficiencies (resulting from an increase or decrease in the fair
value of an award from grant date to the vesting or exercise date) in the provision for income taxes as a discrete item in the
quarterly period in which they occur. Currently, excess tax benefits are recognized in equity. In addition, these amounts will
be classified as an operating activity in the Statement of Cash Flows instead of as a financing activity.
For the years 2014 to 2016, the Company recognized excess tax benefits in equity in the range of $55 to $63 per year.
These amounts may not necessarily be indicative of future amounts that may be recognized subsequent to the adoption of
this new standard, as any excess tax benefits recognized would be dependent on future stock prices, employee exercise
behavior and applicable tax rates. The new guidance was effective for the Company beginning on January 1, 2017.
On March 15, 2016, the FASB issued ASU No. 2016-07, “Investments–Equity Method and Joint Ventures (Topic 323):
Simplifying the Transition to the Equity Method of Accounting,” which eliminates the requirement to retroactively adjust
an investment that subsequently qualifies for equity method accounting (as a result of an increase in level of ownership
interest or degree of influence) as if the equity method of accounting had been applied during all prior periods that the
investment was held. The new standard requires that the investor add the cost of acquiring additional ownership interest in
the investee to its current basis and prospectively adopt the equity method of accounting. Any unrealized gains or losses in
an available-for-sale investment that subsequently qualifies as an equity method investment should be recognized in
earnings at the date the investment qualifies as an equity method investment. The new guidance was effective for the
Company beginning on January 1, 2017. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On February 25, 2016, the FASB issued its final standard on lease accounting, ASU No. 2016-02, “Leases (Topic
842),” which supersedes Topic 840, “Leases.” The new accounting standard requires the recognition of right-of-use assets
and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The new standard also
provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced
disclosures about the Company’s leasing arrangements. Under current accounting standards, substantially all of the
Company’s leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This
new standard is effective for the Company beginning on January 1, 2019, with early adoption permitted. The standard
requires a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the
beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the
impact of the new standard on its Consolidated Financial Statements.
On January 5, 2016, the FASB issued ASU No. 2016-01, “Financial Instruments–Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated guidance enhances the reporting
model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation
and disclosure. The amendment to the standard is effective for the Company beginning on January 1, 2018. While the
Company is currently assessing the impact of the new standard, it does not expect this new guidance to have a material
impact on its Consolidated Financial Statements.
On November 20, 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification
of Deferred Taxes,” which simplifies the presentation of deferred income taxes. Under the new accounting standard,
deferred tax assets and liabilities are required to be classified as noncurrent, eliminating the prior requirement to separate
deferred tax assets and liabilities into current and noncurrent. As permitted, the Company early-adopted the new standard
on March 31, 2016, on a prospective basis, and did not retrospectively adjust prior periods.
On July 22, 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of
Inventory,” which simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with
a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by
methods other than last-in, first-out (“LIFO”) and the retail inventory method. The new guidance was effective for the
Company beginning on January 1, 2017. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On May 28, 2014, the FASB and the International Accounting Standards Board issued their final converged standard
on revenue recognition. The standard, issued as ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”
by the FASB, provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes
current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the
measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize
revenue to depict the transfer of goods or services to 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 which are significantly more
comprehensive than those in existing revenue standards. This new guidance is effective for the Company beginning on
January 1, 2018. During 2016, the FASB issued several accounting updates (ASU No. 2016-08, 2016-10 and 2016-12) to
clarify implementation guidance and correct unintended application of the guidance. The standard allows for either “full
retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective”
adoption, meaning the standard is applied only to the most current period presented in the financial statements. The
Company continues to make progress in its implementation and assessment of the new standard and while the completion
of this assessment is still ongoing, based on the progress to date, the Company does not expect the new standard will have a
material impact on its revenue recognition accounting policy or its Consolidated Financial Statements.
46
47
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Credit Risk
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 with diverse, credit-worthy counterparties based upon both strong credit ratings
and other credit considerations.
Recent Accounting Pronouncements
On October 24, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory,” which
eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside
party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets
other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The
guidance is effective for the Company on January 1, 2018 and early adoption is permitted. The standard requires a
“modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as
of the beginning of the period of adoption. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On August 26, 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments,” which clarifies how certain cash receipts and payments are to be presented in
the statement of cash flows. The guidance is effective for the Company on January 1, 2018 and early adoption is permitted.
This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.
On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting,” which amends accounting for income taxes related to
share-based compensation, the related classification in the statement of cash flows and share award forfeiture accounting.
This guidance requires recognition of excess tax benefits and deficiencies (resulting from an increase or decrease in the fair
value of an award from grant date to the vesting or exercise date) in the provision for income taxes as a discrete item in the
quarterly period in which they occur. Currently, excess tax benefits are recognized in equity. In addition, these amounts will
be classified as an operating activity in the Statement of Cash Flows instead of as a financing activity.
For the years 2014 to 2016, the Company recognized excess tax benefits in equity in the range of $55 to $63 per year.
These amounts may not necessarily be indicative of future amounts that may be recognized subsequent to the adoption of
this new standard, as any excess tax benefits recognized would be dependent on future stock prices, employee exercise
behavior and applicable tax rates. The new guidance was effective for the Company beginning on January 1, 2017.
On March 15, 2016, the FASB issued ASU No. 2016-07, “Investments–Equity Method and Joint Ventures (Topic 323):
Simplifying the Transition to the Equity Method of Accounting,” which eliminates the requirement to retroactively adjust
an investment that subsequently qualifies for equity method accounting (as a result of an increase in level of ownership
interest or degree of influence) as if the equity method of accounting had been applied during all prior periods that the
investment was held. The new standard requires that the investor add the cost of acquiring additional ownership interest in
the investee to its current basis and prospectively adopt the equity method of accounting. Any unrealized gains or losses in
an available-for-sale investment that subsequently qualifies as an equity method investment should be recognized in
earnings at the date the investment qualifies as an equity method investment. The new guidance was effective for the
Company beginning on January 1, 2017. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On February 25, 2016, the FASB issued its final standard on lease accounting, ASU No. 2016-02, “Leases (Topic
842),” which supersedes Topic 840, “Leases.” The new accounting standard requires the recognition of right-of-use assets
and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The new standard also
provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced
disclosures about the Company’s leasing arrangements. Under current accounting standards, substantially all of the
Company’s leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This
new standard is effective for the Company beginning on January 1, 2019, with early adoption permitted. The standard
requires a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the
beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the
impact of the new standard on its Consolidated Financial Statements.
On January 5, 2016, the FASB issued ASU No. 2016-01, “Financial Instruments–Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated guidance enhances the reporting
model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation
and disclosure. The amendment to the standard is effective for the Company beginning on January 1, 2018. While the
Company is currently assessing the impact of the new standard, it does not expect this new guidance to have a material
impact on its Consolidated Financial Statements.
On November 20, 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification
of Deferred Taxes,” which simplifies the presentation of deferred income taxes. Under the new accounting standard,
deferred tax assets and liabilities are required to be classified as noncurrent, eliminating the prior requirement to separate
deferred tax assets and liabilities into current and noncurrent. As permitted, the Company early-adopted the new standard
on March 31, 2016, on a prospective basis, and did not retrospectively adjust prior periods.
On July 22, 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of
Inventory,” which simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with
a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by
methods other than last-in, first-out (“LIFO”) and the retail inventory method. The new guidance was effective for the
Company beginning on January 1, 2017. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On May 28, 2014, the FASB and the International Accounting Standards Board issued their final converged standard
on revenue recognition. The standard, issued as ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”
by the FASB, provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes
current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the
measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize
revenue to depict the transfer of goods or services to 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 which are significantly more
comprehensive than those in existing revenue standards. This new guidance is effective for the Company beginning on
January 1, 2018. During 2016, the FASB issued several accounting updates (ASU No. 2016-08, 2016-10 and 2016-12) to
clarify implementation guidance and correct unintended application of the guidance. The standard allows for either “full
retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective”
adoption, meaning the standard is applied only to the most current period presented in the financial statements. The
Company continues to make progress in its implementation and assessment of the new standard and while the completion
of this assessment is still ongoing, based on the progress to date, the Company does not expect the new standard will have a
material impact on its revenue recognition accounting policy or its Consolidated Financial Statements.
46
47
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America requires management to use judgment and make estimates. The level of uncertainty in estimates and
assumptions increases with the length of time until the underlying transactions are completed. Actual results could
ultimately differ from those estimates. The accounting policies that are most critical in the preparation of the Company’s
Consolidated Financial Statements are those that are both important to the presentation of the Consolidated Financial
Statements and require significant or complex judgments and estimates on the part of management. The Company’s critical
accounting policies are reviewed periodically with the Audit Committee of the Board of Directors.
In certain instances, accounting principles generally accepted in the United States of America allow for the selection of
alternative accounting methods. The Company’s significant policies that involve the selection of alternative methods are
accounting for shipping and handling costs and inventories.
Shipping and handling costs may be reported as either a component of Cost of sales or Selling, general and
administrative expenses. The Company reports such costs, primarily related to warehousing and outbound freight,
in the Consolidated Statements of Income as a component of Selling, general and administrative expenses.
Accordingly, the Company’s Gross profit margin is not comparable with the gross profit margin of those
companies that include shipping and handling charges in cost of sales. If such costs had been included in Cost of
sales, Gross profit margin would have decreased by 750 bps, from 60.0% to 52.5% in 2016 and decreased by 770
bps in 2015 and 2014, respectively, with no impact on reported earnings.
The Company accounts for inventories using both the first-in, first-out (“FIFO”) method (75% of inventories) and
the LIFO method (25% of inventories). There would have been no material impact on reported earnings for 2016,
2015 or 2014 had all inventories been accounted for under the FIFO method.
The areas of accounting that involve significant or complex judgments and estimates are pensions and other retiree
benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances,
legal and other contingency reserves and, prior to the deconsolidation of the Company’s Venezuelan operations, the
selection of the exchange rate used to remeasure the financial statements of CP Venezuela.
In pension accounting, the most significant actuarial assumptions are the discount rate and the long-term rate of
return on plan assets. The discount rate used to measure the benefit obligation for U.S. defined benefit plans was
4.27%, 4.93% and 4.24% as of December 31, 2016, 2015 and 2014, respectively. The discount rate used to
measure the benefit obligation for other U.S. postretirement plans was 4.41%, 4.97% and 4.36% as of December
31, 2016, 2015 and 2014, respectively. Discount rates used for the U.S. and international defined benefit and other
postretirement plans are based on a yield curve constructed from a portfolio of high-quality bonds whose
projected cash flows approximate the projected benefit payments of the plans. The assumed long-term rate of
return on plan assets for U.S. plans was 6.80% as of December 31, 2016, 2015 and 2014. In determining the long-
term rate of return, the Company considers the nature of the plans’ investments and the historical rate of return.
Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year
periods were 6%, 8%, 5%, 6% and 8%, respectively. In addition, the current assumed rate of return for the U.S.
plans is based upon the nature of the plans’ investments with a target asset allocation of approximately 53% in
fixed income securities, 27% in equity securities and 20% in real estate and other investments. A 1% change in the
assumed rate of return on plan assets of the U.S. pension plans would impact future Net income attributable to
Colgate-Palmolive Company by approximately $10. A 1% change in the discount rate for the U.S. pension plans
would impact future Net income attributable to Colgate-Palmolive Company by approximately $2. A third
assumption is the long-term rate of compensation increase, a change in which would partially offset the impact of
a change in either the discount rate or the long-term rate of return. This rate was 3.50% as of December 31, 2016,
2015 and 2014. Refer to Note 10, Retirement Plans and Other Retiree Benefits to the Consolidated Financial
Statements for further discussion of the Company’s pension and other postretirement plans.
The assumption requiring the most judgment in accounting for other postretirement benefits is the medical cost
trend rate. The Company reviews external data and its own historical trends for health care costs to determine the
medical cost trend rate. The assumed rate of increase for the U.S. postretirement benefit plans is 6.33% for 2017,
declining to 4.75% by 2022 and remaining at 4.75% for the years thereafter. The effect on the total of service and
interest cost components of a 1% increase in the assumed long-term medical cost trend rate would decrease Net
income attributable to Colgate-Palmolive Company by $6.
The Company recognizes the cost of employee services received in exchange for awards of equity instruments,
such as stock options and restricted stock units, based on the fair value of those awards at the date of grant. The
Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair value of
stock option awards. The weighted-average estimated fair value of each stock option award granted in the year
ended December 31, 2016 was $8.10. The Black-Scholes model uses various assumptions to determine the fair
value of stock option awards. These assumptions include the expected term of stock option awards, expected
volatility rate, risk-free interest rate and expected dividend yield. While these assumptions do not require
significant judgment, as the significant inputs are determined from historical experience or independent third-
party sources, changes in these inputs could result in significant changes in the fair value of stock option
awards. A one-year change in expected term would result in a change in fair value of approximately 7%. A 1%
change in volatility would change fair value by approximately 7%.
Goodwill and indefinite life intangible assets, such as the Company’s global brands, are subject to impairment
tests at least annually. The Company performs either a quantitative or qualitative assessment to determine the fair
value of its reporting units for goodwill and fair value of its indefinite life intangible assets. The asset impairment
analysis is generally performed using an income method, which requires several estimates, including future cash
flows consistent with management’s strategic plans, sales growth rates, foreign exchange rates and the selection of
a discount rate. For the Company’s goodwill impairment analysis, fair value is also determined using the market
approach, which is generally derived from metrics of comparable publicly traded companies. When multiple
valuation methodologies are used, the results are weighted appropriately. Qualitative factors, in addition to those
quantitative measures discussed above, include assessments of general macroeconomic conditions, industry-
specific considerations and historical financial performance.
The estimated fair value of the Company’s intangible assets substantially exceeds the recorded carrying value,
except for the intangible assets acquired in the Sanex acquisition in 2011, which were recorded at fair value. The
estimated fair value of the Company’s reporting units also substantially exceeds the recorded carrying value.
Therefore, it is not reasonably likely that significant changes in these estimates would occur that would result in
an impairment charge related to these assets. Asset impairment analysis related to certain fixed assets in
connection with the 2012 Restructuring Program requires management’s best estimate of net realizable values.
The recognition and measurement of uncertain tax positions involves consideration of the amounts and
probabilities of various outcomes that could be realized upon ultimate resolution.
Tax valuation allowances are established to reduce deferred tax assets, such as tax loss carryforwards, to net
realizable value. Factors considered in estimating net realizable value include historical results by tax jurisdiction,
carryforward periods, income tax strategies and forecasted taxable income.
Legal and other contingency reserves are based on management’s assessment of the risk of potential loss, which
includes consultation with outside legal counsel and other advisors. Such assessments are reviewed each period
and revised based on current facts and circumstances, if necessary. While it is possible that the Company’s cash
flows and results of operations in a particular quarter or year could be materially affected by the impact of such
contingencies, based on current knowledge it is the opinion of management that these matters will not have a
material effect on the Company’s financial position, or its ongoing results of operations or cash flows. Refer to
Note 13, Commitments and Contingencies to the Consolidated Financial Statements for further discussion of the
Company’s contingencies.
48
49
(Dollars in Millions Except Per Share Amounts)
(Dollars in Millions Except Per Share Amounts)
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America requires management to use judgment and make estimates. The level of uncertainty in estimates and
assumptions increases with the length of time until the underlying transactions are completed. Actual results could
ultimately differ from those estimates. The accounting policies that are most critical in the preparation of the Company’s
Consolidated Financial Statements are those that are both important to the presentation of the Consolidated Financial
Statements and require significant or complex judgments and estimates on the part of management. The Company’s critical
accounting policies are reviewed periodically with the Audit Committee of the Board of Directors.
In certain instances, accounting principles generally accepted in the United States of America allow for the selection of
alternative accounting methods. The Company’s significant policies that involve the selection of alternative methods are
accounting for shipping and handling costs and inventories.
Shipping and handling costs may be reported as either a component of Cost of sales or Selling, general and
administrative expenses. The Company reports such costs, primarily related to warehousing and outbound freight,
in the Consolidated Statements of Income as a component of Selling, general and administrative expenses.
Accordingly, the Company’s Gross profit margin is not comparable with the gross profit margin of those
companies that include shipping and handling charges in cost of sales. If such costs had been included in Cost of
sales, Gross profit margin would have decreased by 750 bps, from 60.0% to 52.5% in 2016 and decreased by 770
bps in 2015 and 2014, respectively, with no impact on reported earnings.
The Company accounts for inventories using both the first-in, first-out (“FIFO”) method (75% of inventories) and
the LIFO method (25% of inventories). There would have been no material impact on reported earnings for 2016,
2015 or 2014 had all inventories been accounted for under the FIFO method.
The areas of accounting that involve significant or complex judgments and estimates are pensions and other retiree
benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances,
legal and other contingency reserves and, prior to the deconsolidation of the Company’s Venezuelan operations, the
selection of the exchange rate used to remeasure the financial statements of CP Venezuela.
In pension accounting, the most significant actuarial assumptions are the discount rate and the long-term rate of
return on plan assets. The discount rate used to measure the benefit obligation for U.S. defined benefit plans was
4.27%, 4.93% and 4.24% as of December 31, 2016, 2015 and 2014, respectively. The discount rate used to
measure the benefit obligation for other U.S. postretirement plans was 4.41%, 4.97% and 4.36% as of December
31, 2016, 2015 and 2014, respectively. Discount rates used for the U.S. and international defined benefit and other
postretirement plans are based on a yield curve constructed from a portfolio of high-quality bonds whose
projected cash flows approximate the projected benefit payments of the plans. The assumed long-term rate of
return on plan assets for U.S. plans was 6.80% as of December 31, 2016, 2015 and 2014. In determining the long-
term rate of return, the Company considers the nature of the plans’ investments and the historical rate of return.
Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year
periods were 6%, 8%, 5%, 6% and 8%, respectively. In addition, the current assumed rate of return for the U.S.
plans is based upon the nature of the plans’ investments with a target asset allocation of approximately 53% in
fixed income securities, 27% in equity securities and 20% in real estate and other investments. A 1% change in the
assumed rate of return on plan assets of the U.S. pension plans would impact future Net income attributable to
Colgate-Palmolive Company by approximately $10. A 1% change in the discount rate for the U.S. pension plans
would impact future Net income attributable to Colgate-Palmolive Company by approximately $2. A third
assumption is the long-term rate of compensation increase, a change in which would partially offset the impact of
a change in either the discount rate or the long-term rate of return. This rate was 3.50% as of December 31, 2016,
2015 and 2014. Refer to Note 10, Retirement Plans and Other Retiree Benefits to the Consolidated Financial
Statements for further discussion of the Company’s pension and other postretirement plans.
The assumption requiring the most judgment in accounting for other postretirement benefits is the medical cost
trend rate. The Company reviews external data and its own historical trends for health care costs to determine the
medical cost trend rate. The assumed rate of increase for the U.S. postretirement benefit plans is 6.33% for 2017,
declining to 4.75% by 2022 and remaining at 4.75% for the years thereafter. The effect on the total of service and
interest cost components of a 1% increase in the assumed long-term medical cost trend rate would decrease Net
income attributable to Colgate-Palmolive Company by $6.
The Company recognizes the cost of employee services received in exchange for awards of equity instruments,
such as stock options and restricted stock units, based on the fair value of those awards at the date of grant. The
Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair value of
stock option awards. The weighted-average estimated fair value of each stock option award granted in the year
ended December 31, 2016 was $8.10. The Black-Scholes model uses various assumptions to determine the fair
value of stock option awards. These assumptions include the expected term of stock option awards, expected
volatility rate, risk-free interest rate and expected dividend yield. While these assumptions do not require
significant judgment, as the significant inputs are determined from historical experience or independent third-
party sources, changes in these inputs could result in significant changes in the fair value of stock option
awards. A one-year change in expected term would result in a change in fair value of approximately 7%. A 1%
change in volatility would change fair value by approximately 7%.
Goodwill and indefinite life intangible assets, such as the Company’s global brands, are subject to impairment
tests at least annually. The Company performs either a quantitative or qualitative assessment to determine the fair
value of its reporting units for goodwill and fair value of its indefinite life intangible assets. The asset impairment
analysis is generally performed using an income method, which requires several estimates, including future cash
flows consistent with management’s strategic plans, sales growth rates, foreign exchange rates and the selection of
a discount rate. For the Company’s goodwill impairment analysis, fair value is also determined using the market
approach, which is generally derived from metrics of comparable publicly traded companies. When multiple
valuation methodologies are used, the results are weighted appropriately. Qualitative factors, in addition to those
quantitative measures discussed above, include assessments of general macroeconomic conditions, industry-
specific considerations and historical financial performance.
The estimated fair value of the Company’s intangible assets substantially exceeds the recorded carrying value,
except for the intangible assets acquired in the Sanex acquisition in 2011, which were recorded at fair value. The
estimated fair value of the Company’s reporting units also substantially exceeds the recorded carrying value.
Therefore, it is not reasonably likely that significant changes in these estimates would occur that would result in
an impairment charge related to these assets. Asset impairment analysis related to certain fixed assets in
connection with the 2012 Restructuring Program requires management’s best estimate of net realizable values.
The recognition and measurement of uncertain tax positions involves consideration of the amounts and
probabilities of various outcomes that could be realized upon ultimate resolution.
Tax valuation allowances are established to reduce deferred tax assets, such as tax loss carryforwards, to net
realizable value. Factors considered in estimating net realizable value include historical results by tax jurisdiction,
carryforward periods, income tax strategies and forecasted taxable income.
Legal and other contingency reserves are based on management’s assessment of the risk of potential loss, which
includes consultation with outside legal counsel and other advisors. Such assessments are reviewed each period
and revised based on current facts and circumstances, if necessary. While it is possible that the Company’s cash
flows and results of operations in a particular quarter or year could be materially affected by the impact of such
contingencies, based on current knowledge it is the opinion of management that these matters will not have a
material effect on the Company’s financial position, or its ongoing results of operations or cash flows. Refer to
Note 13, Commitments and Contingencies to the Consolidated Financial Statements for further discussion of the
Company’s contingencies.
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49
(Dollars in Millions Except Per Share Amounts)
Prior to the deconsolidation of the Company’s Venezuelan operations, the selection of the exchange rate used to
remeasure the financial statements of CP Venezuela required careful consideration by management given the
various currency exchange mechanisms that exist in Venezuela. Although access to U.S. dollars in Venezuela had
been challenging, because the majority of the products in CP Venezuela’s portfolio were designated as “essential”
by the Venezuelan government, historically CP Venezuela’s access to U.S. dollars at the official rate of 6.30
bolivares per dollar was generally sufficient to settle most of its U.S. dollar obligations for imported materials.
However, the Company believed this rate was not applicable to foreign investments and could not be used to pay
dividends. The Company also gave consideration to using the SIMADI rate to remeasure the financial statements
of CP Venezuela; however, CP Venezuela did not participate in the SIMADI market through December 31, 2015
and had no intention to do so. As a result, the Company remeasured the financial statements of CP Venezuela at
the rate at which it believed was applicable for the remittance of future dividends which, based on the advice of
legal counsel, was the SICAD rate.
Refer to “Executive Overview and Outlook” above and to Note 14, Venezuela to the Consolidated Financial
Statements for further discussion of the Company’s Venezuelan operations.
The Company generates revenue through the sale of well-known consumer products to trade customers under
established trading terms. While the recognition of revenue and receivables requires the use of estimates, there is a short
time frame (typically less than 60 days) between the shipment of product and cash receipt, thereby reducing the level of
uncertainty in these estimates. Refer to Note 2, Summary of Significant Accounting Policies to the Consolidated Financial
Statements for further description of the Company’s significant accounting policies.
Cautionary Statement on Forward-Looking Statements
This Annual Report on Form 10-K may contain forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and
releases. Such statements may relate, for example, to sales or volume growth, organic sales growth, profit or profit margin
growth, earnings growth, financial goals, the impact of foreign exchange volatility, cost-reduction plans including the 2012
Restructuring Program, tax rates, 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, except as required by law. 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, 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, the availability and cost of raw and packaging
materials, the ability to maintain or increase selling prices as needed, the ability to implement the 2012 Restructuring
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 ability to continue lowering costs, the ability to complete acquisitions and
divestitures as planned 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 Part I, Item 1A “Risk Factors.”
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Managing Foreign Currency, Interest Rate, Commodity Price and Credit Risk Exposure” in Part II, Item 7.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See “Index to Financial Statements.”
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, under the supervision and with the participation of the Company’s Chairman of the
Board, President and Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of
the design and operation of the Company’s disclosure controls and procedures as of December 31, 2016 (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
Exchange Act) are effective.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management, under the supervision and
with the participation of the Company’s Chairman of the Board, President and Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the Company’s internal control over financial reporting based upon the framework in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and concluded that it is effective as of December 31, 2016.
The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2016, and has expressed an
unqualified opinion in their report, which appears in this report.
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 2012 Restructuring Program, the Company is implementing a shared
business service organization model in all regions of the world. This implementation is expected to continue in a phased
approach in future years. At this time, certain financial transaction processing activities have been transitioned to these
shared business services centers. The Company does not expect this transition to materially affect its internal control over
financial reporting.
ITEM 9B. OTHER INFORMATION
None.
50
51
(Dollars in Millions Except Per Share Amounts)
Prior to the deconsolidation of the Company’s Venezuelan operations, the selection of the exchange rate used to
remeasure the financial statements of CP Venezuela required careful consideration by management given the
various currency exchange mechanisms that exist in Venezuela. Although access to U.S. dollars in Venezuela had
been challenging, because the majority of the products in CP Venezuela’s portfolio were designated as “essential”
by the Venezuelan government, historically CP Venezuela’s access to U.S. dollars at the official rate of 6.30
bolivares per dollar was generally sufficient to settle most of its U.S. dollar obligations for imported materials.
However, the Company believed this rate was not applicable to foreign investments and could not be used to pay
dividends. The Company also gave consideration to using the SIMADI rate to remeasure the financial statements
of CP Venezuela; however, CP Venezuela did not participate in the SIMADI market through December 31, 2015
and had no intention to do so. As a result, the Company remeasured the financial statements of CP Venezuela at
the rate at which it believed was applicable for the remittance of future dividends which, based on the advice of
legal counsel, was the SICAD rate.
Refer to “Executive Overview and Outlook” above and to Note 14, Venezuela to the Consolidated Financial
Statements for further discussion of the Company’s Venezuelan operations.
The Company generates revenue through the sale of well-known consumer products to trade customers under
established trading terms. While the recognition of revenue and receivables requires the use of estimates, there is a short
time frame (typically less than 60 days) between the shipment of product and cash receipt, thereby reducing the level of
uncertainty in these estimates. Refer to Note 2, Summary of Significant Accounting Policies to the Consolidated Financial
Statements for further description of the Company’s significant accounting policies.
Cautionary Statement on Forward-Looking Statements
This Annual Report on Form 10-K may contain forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and
releases. Such statements may relate, for example, to sales or volume growth, organic sales growth, profit or profit margin
growth, earnings growth, financial goals, the impact of foreign exchange volatility, cost-reduction plans including the 2012
Restructuring Program, tax rates, 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, except as required by law. 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, 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, the availability and cost of raw and packaging
materials, the ability to maintain or increase selling prices as needed, the ability to implement the 2012 Restructuring
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 ability to continue lowering costs, the ability to complete acquisitions and
divestitures as planned 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 Part I, Item 1A “Risk Factors.”
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Managing Foreign Currency, Interest Rate, Commodity Price and Credit Risk Exposure” in Part II, Item 7.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See “Index to Financial Statements.”
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, under the supervision and with the participation of the Company’s Chairman of the
Board, President and Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of
the design and operation of the Company’s disclosure controls and procedures as of December 31, 2016 (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
Exchange Act) are effective.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management, under the supervision and
with the participation of the Company’s Chairman of the Board, President and Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the Company’s internal control over financial reporting based upon the framework in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and concluded that it is effective as of December 31, 2016.
The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2016, and has expressed an
unqualified opinion in their report, which appears in this report.
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 2012 Restructuring Program, the Company is implementing a shared
business service organization model in all regions of the world. This implementation is expected to continue in a phased
approach in future years. At this time, certain financial transaction processing activities have been transitioned to these
shared business services centers. The Company does not expect this transition to materially affect its internal control over
financial reporting.
ITEM 9B. OTHER INFORMATION
None.
50
51
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
(a) The information regarding security ownership of certain beneficial owners and management set forth in the 2017
PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
See “Executive Officers of the Registrant” in Part I, Item 1 of this report.
Additional information required by this Item relating to directors, executive officers and corporate governance of the
Company and information regarding compliance with Section 16(a) of the Exchange Act is incorporated herein by
reference to the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders (the “2017 Proxy Statement”).
Code of Ethics
The Company’s Code of Conduct promotes the highest ethical standards in all of the Company’s business dealings.
The Code of Conduct satisfies the SEC’s requirements for a Code of Ethics for senior financial officers and applies to all
Company employees, including the Chairman, President and Chief Executive Officer, the Chief Financial Officer and the
Chief Transformation Officer and Corporate Controller, and the Company’s directors. The Code of Conduct is available on
the Company’s website at www.colgatepalmolive.com. Any amendment to the Code of Conduct will promptly be posted on
the Company’s website. It is the Company’s policy not to grant waivers of the Code of Conduct. In the extremely unlikely
event that the Company grants an executive officer a waiver from a provision of the Code of Conduct, the Company will
promptly disclose such information by posting it on its website or by using other appropriate means in accordance with
SEC rules.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive compensation set forth in the 2017 Proxy Statement is incorporated herein by
reference.
Proxy Statement is incorporated herein by reference.
(b) The registrant does not know of any arrangements that may at a subsequent date result in a change in control of
the registrant.
(c) Equity compensation plan information as of December 31, 2016:
(a)
(b)
Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights
(in thousands)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(in thousands)
46,637 (1) $
57.14 (2)
39,151 (3)
Not applicable
46,637
$
Not applicable
57.14
Not applicable
39,151
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
_______
(1)
Consists of 43,692 options outstanding and 2,945 restricted stock units awarded but not yet vested under the Company’s 2013
Incentive Compensation Plan, as more fully described in Note 8, Capital Stock and Stock-Based Compensation Plans to the
Consolidated Financial Statements.
(2)
(3)
Includes the weighted-average exercise price of stock options outstanding of $61.00 and restricted stock units of $0.00.
Amount includes 28,401 options available for issuance and 10,750 restricted stock units available for issuance under the
Company’s 2013 Incentive Compensation Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information regarding certain relationships and related transactions and director independence set forth in the
2017 Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information regarding auditor fees and services set forth in the 2017 Proxy Statement is incorporated herein by
reference.
52
53
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
(a) The information regarding security ownership of certain beneficial owners and management set forth in the 2017
PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
See “Executive Officers of the Registrant” in Part I, Item 1 of this report.
Additional information required by this Item relating to directors, executive officers and corporate governance of the
Company and information regarding compliance with Section 16(a) of the Exchange Act is incorporated herein by
reference to the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders (the “2017 Proxy Statement”).
Code of Ethics
The Company’s Code of Conduct promotes the highest ethical standards in all of the Company’s business dealings.
The Code of Conduct satisfies the SEC’s requirements for a Code of Ethics for senior financial officers and applies to all
Company employees, including the Chairman, President and Chief Executive Officer, the Chief Financial Officer and the
Chief Transformation Officer and Corporate Controller, and the Company’s directors. The Code of Conduct is available on
the Company’s website at www.colgatepalmolive.com. Any amendment to the Code of Conduct will promptly be posted on
the Company’s website. It is the Company’s policy not to grant waivers of the Code of Conduct. In the extremely unlikely
event that the Company grants an executive officer a waiver from a provision of the Code of Conduct, the Company will
promptly disclose such information by posting it on its website or by using other appropriate means in accordance with
SEC rules.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive compensation set forth in the 2017 Proxy Statement is incorporated herein by
reference.
Proxy Statement is incorporated herein by reference.
(b) The registrant does not know of any arrangements that may at a subsequent date result in a change in control of
the registrant.
(c) Equity compensation plan information as of December 31, 2016:
(a)
(b)
Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights
(in thousands)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(in thousands)
46,637 (1) $
57.14 (2)
39,151 (3)
Not applicable
46,637
$
Not applicable
57.14
Not applicable
39,151
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
_______
(1)
Consists of 43,692 options outstanding and 2,945 restricted stock units awarded but not yet vested under the Company’s 2013
Incentive Compensation Plan, as more fully described in Note 8, Capital Stock and Stock-Based Compensation Plans to the
Consolidated Financial Statements.
(2)
(3)
Includes the weighted-average exercise price of stock options outstanding of $61.00 and restricted stock units of $0.00.
Amount includes 28,401 options available for issuance and 10,750 restricted stock units available for issuance under the
Company’s 2013 Incentive Compensation Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information regarding certain relationships and related transactions and director independence set forth in the
2017 Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information regarding auditor fees and services set forth in the 2017 Proxy Statement is incorporated herein by
reference.
52
53
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Financial Statement Schedules
See “Index to Financial Statements.”
(b) Exhibits
See “Exhibits to Form 10-K.”
ITEM 16. FORM 10-K SUMMARY
None.
COLGATE-PALMOLIVE COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
Date: February 23, 2017
By
/s/ Ian Cook
Ian Cook
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February
23, 2017, by the following persons on behalf of the registrant and in the capacities indicated.
(a) Principal Executive Officer
(d) Directors:
/s/ Ian Cook
Ian Cook
Charles A. Bancroft, John P. Bilbrey,
John T. Cahill, Helene D. Gayle,
Ellen M. Hancock, C. Martin Harris,
Richard J. Kogan, Lorrie M. Norrington,
Michael B. Polk, Stephen I. Sadove
/s/ Jennifer M. Daniels
Jennifer M. Daniels
As Attorney-in-Fact
/s/ Ian Cook
Ian Cook
Chairman of the Board, President and
Chief Executive Officer
(b) Principal Financial Officer
/s/ Dennis J. Hickey
Dennis J. Hickey
Chief Financial Officer
(c) Principal Accounting Officer
/s/ Victoria L. Dolan
Victoria L. Dolan
Chief Transformation Officer and
Corporate Controller
54
55
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Financial Statement Schedules
See “Index to Financial Statements.”
(b) Exhibits
See “Exhibits to Form 10-K.”
ITEM 16. FORM 10-K SUMMARY
None.
COLGATE-PALMOLIVE COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
Date: February 23, 2017
By
/s/ Ian Cook
Ian Cook
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February
23, 2017, by the following persons on behalf of the registrant and in the capacities indicated.
(a) Principal Executive Officer
(d) Directors:
/s/ Ian Cook
Ian Cook
Charles A. Bancroft, John P. Bilbrey,
John T. Cahill, Helene D. Gayle,
Ellen M. Hancock, C. Martin Harris,
Richard J. Kogan, Lorrie M. Norrington,
Michael B. Polk, Stephen I. Sadove
/s/ Jennifer M. Daniels
Jennifer M. Daniels
As Attorney-in-Fact
/s/ Ian Cook
Ian Cook
Chairman of the Board, President and
Chief Executive Officer
(b) Principal Financial Officer
/s/ Dennis J. Hickey
Dennis J. Hickey
Chief Financial Officer
(c) Principal Accounting Officer
/s/ Victoria L. Dolan
Victoria L. Dolan
Chief Transformation Officer and
Corporate Controller
54
55
Index to Financial Statements
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014
Consolidated Balance Sheets as of December 31, 2016 and 2015
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014
Notes to Consolidated Financial Statements
Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2016, 2015 and 2014
Selected Financial Data
Market and Dividend Information
Historical Financial Summary
Page
57
58
59
60
61
62
63
104
105
107
All other financial statements and schedules not listed have been omitted since the required information is included in
the financial statements or the notes thereto or is not applicable or required.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Colgate-Palmolive Company
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all
material respects, the financial position of Colgate-Palmolive Company and its subsidiaries (the “Company”) at
December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in
the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control
- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). The Company’s management is responsible for these financial statements and the
financial statement schedule, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual
Report on Internal Control over Financial Reporting, appearing under Item 9A. Our responsibility is to express
opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control
over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis
for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
56
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
February 23, 2017
57
Index to Financial Statements
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014
Consolidated Balance Sheets as of December 31, 2016 and 2015
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014
Notes to Consolidated Financial Statements
Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2016, 2015 and 2014
Selected Financial Data
Market and Dividend Information
Historical Financial Summary
Page
57
58
59
60
61
62
63
104
105
107
All other financial statements and schedules not listed have been omitted since the required information is included in
the financial statements or the notes thereto or is not applicable or required.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Colgate-Palmolive Company
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all
material respects, the financial position of Colgate-Palmolive Company and its subsidiaries (the “Company”) at
December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in
the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control
- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). The Company’s management is responsible for these financial statements and the
financial statement schedule, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual
Report on Internal Control over Financial Reporting, appearing under Item 9A. Our responsibility is to express
opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control
over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis
for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
56
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
February 23, 2017
57
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Income
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
2016
2015
2014
$
15,195
$
16,034
$
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Other (income) expense, net
Charge for Venezuela accounting change
Operating profit
Interest (income) expense, net
Income before income taxes
Provision for income taxes
Net income including noncontrolling interests
Less: Net income attributable to noncontrolling interests
Net income attributable to Colgate-Palmolive Company
Earnings per common share, basic
Earnings per common share, diluted
$
$
$
6,072
9,123
5,249
37
—
3,837
99
3,738
1,152
2,586
145
2,441
2.74
2.72
$
$
$
6,635
9,399
5,464
62
1,084
2,789
26
2,763
1,215
1,548
164
1,384
1.53
1.52
$
$
$
17,277
7,168
10,109
5,982
570
—
3,557
24
3,533
1,194
2,339
159
2,180
2.38
2.36
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Comprehensive Income
For the years ended December 31,
(Dollars in Millions)
Net income including noncontrolling interests
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments
Retirement plan and other retiree benefit adjustments
Gains (losses) on available-for-sale securities
Gains (losses) on cash flow hedges
Total Other comprehensive income (loss), net of tax
Total Comprehensive income including noncontrolling interests
Less: Net income attributable to noncontrolling interests
Less: Cumulative translation adjustments attributable to
noncontrolling interests
Total Comprehensive income attributable to noncontrolling interests
Total Comprehensive income attributable to Colgate-Palmolive
Company
2016
2015
2014
$
2,586
$
1,548
$
2,339
(137)
(109)
(1)
5
(242)
2,344
145
(12)
133
(645)
196
(7)
2
(454)
1,094
164
(11)
153
(685)
(329)
(48)
2
(1,060)
1,279
159
(4)
155
$
2,211
$
941
$
1,124
See Notes to Consolidated Financial Statements.
58
See Notes to Consolidated Financial Statements.
59
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Income
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
2016
2015
2014
$
15,195
$
16,034
$
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Other (income) expense, net
Charge for Venezuela accounting change
Operating profit
Interest (income) expense, net
Income before income taxes
Provision for income taxes
Net income including noncontrolling interests
Less: Net income attributable to noncontrolling interests
Net income attributable to Colgate-Palmolive Company
Earnings per common share, basic
Earnings per common share, diluted
$
$
$
6,072
9,123
5,249
37
—
3,837
99
3,738
1,152
2,586
145
2,441
2.74
2.72
$
$
$
6,635
9,399
5,464
62
1,084
2,789
26
2,763
1,215
1,548
164
1,384
1.53
1.52
$
$
$
17,277
7,168
10,109
5,982
570
—
3,557
24
3,533
1,194
2,339
159
2,180
2.38
2.36
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Comprehensive Income
For the years ended December 31,
(Dollars in Millions)
Net income including noncontrolling interests
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments
Retirement plan and other retiree benefit adjustments
Gains (losses) on available-for-sale securities
Gains (losses) on cash flow hedges
Total Other comprehensive income (loss), net of tax
Total Comprehensive income including noncontrolling interests
Less: Net income attributable to noncontrolling interests
Less: Cumulative translation adjustments attributable to
noncontrolling interests
Total Comprehensive income attributable to noncontrolling interests
Total Comprehensive income attributable to Colgate-Palmolive
Company
2016
2015
2014
$
2,586
$
1,548
$
2,339
(137)
(109)
(1)
5
(242)
2,344
145
(12)
133
(645)
196
(7)
2
(454)
1,094
164
(11)
153
(685)
(329)
(48)
2
(1,060)
1,279
159
(4)
155
$
2,211
$
941
$
1,124
See Notes to Consolidated Financial Statements.
58
See Notes to Consolidated Financial Statements.
59
COLGATE-PALMOLIVE COMPANY
Consolidated Balance Sheets
As of December 31,
(Dollars in Millions Except Share and Per Share Amounts)
Assets
Current Assets
Cash and cash equivalents
Receivables (net of allowances of $73 and $59, respectively)
Inventories
Other current assets
Total current assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Deferred income taxes
Other assets
Total assets
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and loans payable
Current portion of long-term debt
Accounts payable
Accrued income taxes
Other accruals
Total current liabilities
Long-term debt
Deferred income taxes
Other liabilities
Total liabilities
Commitments and contingent liabilities
Shareholders’ Equity
Common stock, $1 par value (2,000,000,000 shares authorized, 1,465,706,360 shares issued)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Unearned compensation
Treasury stock, at cost
Total Colgate-Palmolive Company shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
$
$
2016
2015
(A)
$
1,315
$
1,411
1,171
441
4,338
3,840
2,107
1,313
301
224
970
1,427
1,180
807
4,384
3,796
2,103
1,346
67
239
$
13
—
1,124
441
1,727
3,305
6,520
246
2,035
12,106
—
1,466
1,691
19,922
(4,180)
(7)
(19,135)
(243)
260
17
4
298
1,110
277
1,845
3,534
6,246
233
1,966
11,979
—
1,466
1,438
18,861
(3,950)
(12)
(18,102)
(299)
255
(44)
$
12,123
$
11,935
12,123
$
11,935
Net income
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in Millions)
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-In
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interests
Balance, January 1, 2014
Net income
Other comprehensive income (loss), net
of tax
Dividends
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
$
1,466
$
1,004
$
(33) $ (15,633) $
17,952
$
(2,451) $
2,180
(1,300)
(1,056)
131
100
(77)
78
225
77
(1,530)
(1)
13
Balance, December 31, 2014
$
1,466
$
1,236
$
(20) $ (16,862) $
18,832
$
(3,507) $
Other comprehensive income (loss), net
of tax
Dividends
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
125
90
(69)
56
243
69
(1,551)
(1)
8
1,384
(1,355)
(443)
Balance, December 31, 2015
$
1,466
$
1,438
$
(12) $ (18,102) $
18,861
$
(3,950) $
Net income
Other comprehensive income (loss), net
of tax
Dividends
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
2,441
(1,380)
(230)
123
128
(60)
62
242
60
(1,335)
5
Balance, December 31, 2016
$
1,466
$
1,691
$
(7) $ (19,135) $
19,922
$
(4,180) $
260
231
159
(4)
(146)
240
164
(11)
(138)
255
145
(12)
(128)
(A) Prior year amounts have been reclassified to conform to the current year presentation of debt issuance costs required by Accounting
Standards Update (“ASU”) No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs.” See Note 2, Summary of
Significant Accounting Policies to the Consolidated Financial Statements for additional information.
See Notes to Consolidated Financial Statements.
See Notes to Consolidated Financial Statements.
60
61
COLGATE-PALMOLIVE COMPANY
Consolidated Balance Sheets
As of December 31,
(Dollars in Millions Except Share and Per Share Amounts)
Assets
Current Assets
Cash and cash equivalents
Receivables (net of allowances of $73 and $59, respectively)
Inventories
Other current assets
Total current assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Deferred income taxes
Other assets
Total assets
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and loans payable
Current portion of long-term debt
Accounts payable
Accrued income taxes
Other accruals
Total current liabilities
Long-term debt
Deferred income taxes
Other liabilities
Total liabilities
Commitments and contingent liabilities
Shareholders’ Equity
Common stock, $1 par value (2,000,000,000 shares authorized, 1,465,706,360 shares issued)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Unearned compensation
Treasury stock, at cost
Total Colgate-Palmolive Company shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
$
$
2016
2015
(A)
$
1,315
$
1,411
1,171
441
4,338
3,840
2,107
1,313
301
224
970
1,427
1,180
807
4,384
3,796
2,103
1,346
67
239
$
13
—
1,124
441
1,727
3,305
6,520
246
2,035
12,106
—
1,466
1,691
19,922
(4,180)
(7)
(19,135)
(243)
260
17
4
298
1,110
277
1,845
3,534
6,246
233
1,966
11,979
—
1,466
1,438
18,861
(3,950)
(12)
(18,102)
(299)
255
(44)
$
12,123
$
11,935
12,123
$
11,935
Net income
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in Millions)
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-In
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interests
Balance, January 1, 2014
Net income
Other comprehensive income (loss), net
of tax
Dividends
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
$
1,466
$
1,004
$
(33) $ (15,633) $
17,952
$
(2,451) $
2,180
(1,300)
(1,056)
131
100
(77)
78
225
77
(1,530)
(1)
13
Balance, December 31, 2014
$
1,466
$
1,236
$
(20) $ (16,862) $
18,832
$
(3,507) $
Other comprehensive income (loss), net
of tax
Dividends
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
125
90
(69)
56
243
69
(1,551)
(1)
8
1,384
(1,355)
(443)
Balance, December 31, 2015
$
1,466
$
1,438
$
(12) $ (18,102) $
18,861
$
(3,950) $
Net income
Other comprehensive income (loss), net
of tax
Dividends
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
2,441
(1,380)
(230)
123
128
(60)
62
242
60
(1,335)
5
Balance, December 31, 2016
$
1,466
$
1,691
$
(7) $ (19,135) $
19,922
$
(4,180) $
260
231
159
(4)
(146)
240
164
(11)
(138)
255
145
(12)
(128)
(A) Prior year amounts have been reclassified to conform to the current year presentation of debt issuance costs required by Accounting
Standards Update (“ASU”) No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs.” See Note 2, Summary of
Significant Accounting Policies to the Consolidated Financial Statements for additional information.
See Notes to Consolidated Financial Statements.
See Notes to Consolidated Financial Statements.
60
61
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Cash Flows
For the years ended December 31,
(Dollars in Millions)
Operating Activities
Net income including noncontrolling interests
$
2,586
$
1,548
$
2,339
Adjustments to reconcile net income including noncontrolling interests to net cash
2016
2015
2014
provided by operations:
Depreciation and amortization
Restructuring and termination benefits, net of cash
Venezuela remeasurement charges
Charge for a foreign tax matter
Stock-based compensation expense
Gain on sale of land in Mexico
Gain on sale of South Pacific laundry detergent business
Charge for Venezuela accounting change
Deferred income taxes
Voluntary benefit plan contributions
Cash effects of changes in:
Receivables
Inventories
Accounts payable and other accruals
Other non-current assets and liabilities
Net cash provided by operations
Investing Activities
Capital expenditures
Sale of property and non-core product lines
Purchases of marketable securities and investments
Proceeds from sale of marketable securities and investments
Proceeds from sale of land in Mexico
Proceeds from sale of South Pacific laundry detergent business
Payment for acquisitions, net of cash acquired
Reduction in cash due to Venezuela accounting change
Other
Net cash used in investing activities
Financing Activities
Principal payments on debt
Proceeds from issuance of debt
Dividends paid
Purchases of treasury shares
Proceeds from exercise of stock options and excess tax benefits
Net cash used in financing activities
Effect of exchange rate changes on Cash and cash equivalents
Net (decrease) increase in Cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Cash Flow Information
Income taxes paid
Interest paid
443
(9)
—
—
123
(97)
—
—
56
(53)
(17)
(4)
100
13
449
69
34
—
125
—
(187)
1,084
(51)
—
(75)
(13)
(67)
33
3,141
2,949
(593)
—
(336)
378
60
—
(5)
—
(3)
(499)
(7,274)
7,438
(1,508)
(1,335)
446
(2,233)
(64)
345
970
1,315
932
162
$
$
$
(691)
9
(742)
599
—
221
(13)
(75)
7
(685)
(9,181)
9,602
(1,493)
(1,551)
347
(2,276)
(107)
(119)
1,089
970
1,259
131
$
$
$
442
64
327
66
131
—
—
—
18
(2)
(109)
(60)
57
25
3,298
(757)
24
(340)
283
—
—
(87)
—
18
(859)
(8,525)
8,960
(1,446)
(1,530)
371
(2,170)
(142)
127
962
1,089
1,009
133
$
$
$
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Millions Except Share and Per Share Amounts)
1.
Nature of Operations
The Company manufactures and markets a wide variety of products in the U.S. and around the world in two product
segments: Oral, Personal and Home Care; and Pet Nutrition. Oral, Personal and Home Care products include toothpaste,
toothbrushes and mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and
antiperspirants, laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches and other similar
items. These products are sold primarily to retail trade customers and wholesale distributors worldwide. Pet Nutrition
products include specialty pet nutrition products manufactured and marketed by Hill’s Pet Nutrition. The principal
customers for Pet Nutrition products are authorized pet supply retailers and veterinarians. Products from both product
segments are also sold to e-commerce retailers. Principal global and regional trademarks include Colgate, Palmolive, Speed
Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex, Ajax, Axion,
Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet, Hill’s Prescription Diet and Hill’s Ideal Balance.
The Company’s principal classes of products accounted for the following percentages of worldwide Net sales for the
past three years:
Oral Care
Personal Care
Home Care
Pet Nutrition
Total
2016
2015
2014
47%
20%
18%
15%
100%
47%
20%
19%
14%
100%
46%
21%
20%
13%
100%
2.
Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Colgate-Palmolive Company and its majority-owned or
controlled subsidiaries. Intercompany transactions and balances have been eliminated. The Company’s investments in
consumer products companies with interests ranging between 20% and 50%, where the Company has significant influence
over the investee, are accounted for using the equity method. Net income (loss) from such investments is recorded in Other
(income) expense, net in the Consolidated Statements of Income. As of December 31, 2016 and 2015, equity method
investments included in Other assets in the Consolidated Balance Sheets were $38 and $34, respectively. Unrelated third
parties hold the remaining ownership interests in these investments. Investments with less than a 20% interest are
accounted for using the cost method. Effective December 31, 2015, the Company concluded it no longer met the
accounting criteria for consolidation of its Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela
using the cost method of accounting. As a result, effective December 31, 2015, CP Venezuela’s net assets and operating
results are no longer included in the Company’s Consolidated Financial Statements. See Note 14, Venezuela for further
information.
See Notes to Consolidated Financial Statements.
62
63
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Cash Flows
For the years ended December 31,
(Dollars in Millions)
Operating Activities
Net income including noncontrolling interests
$
2,586
$
1,548
$
2,339
Adjustments to reconcile net income including noncontrolling interests to net cash
2016
2015
2014
provided by operations:
Depreciation and amortization
Restructuring and termination benefits, net of cash
Venezuela remeasurement charges
Charge for a foreign tax matter
Stock-based compensation expense
Gain on sale of land in Mexico
Gain on sale of South Pacific laundry detergent business
Charge for Venezuela accounting change
Deferred income taxes
Voluntary benefit plan contributions
Cash effects of changes in:
Receivables
Inventories
Accounts payable and other accruals
Other non-current assets and liabilities
Net cash provided by operations
Investing Activities
Capital expenditures
Sale of property and non-core product lines
Purchases of marketable securities and investments
Proceeds from sale of marketable securities and investments
Proceeds from sale of land in Mexico
Proceeds from sale of South Pacific laundry detergent business
Payment for acquisitions, net of cash acquired
Reduction in cash due to Venezuela accounting change
Other
Net cash used in investing activities
Financing Activities
Principal payments on debt
Proceeds from issuance of debt
Dividends paid
Purchases of treasury shares
Proceeds from exercise of stock options and excess tax benefits
Net cash used in financing activities
Effect of exchange rate changes on Cash and cash equivalents
Net (decrease) increase in Cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Cash Flow Information
Income taxes paid
Interest paid
443
(9)
—
—
123
(97)
—
—
56
(53)
(17)
(4)
100
13
449
69
34
—
125
—
(187)
1,084
(51)
—
(75)
(13)
(67)
33
3,141
2,949
(593)
—
(336)
378
60
—
(5)
—
(3)
(499)
(7,274)
7,438
(1,508)
(1,335)
446
(2,233)
(64)
345
970
1,315
932
162
$
$
$
(691)
9
(742)
599
—
221
(13)
(75)
7
(685)
(9,181)
9,602
(1,493)
(1,551)
347
(2,276)
(107)
(119)
1,089
970
1,259
131
$
$
$
442
64
327
66
131
—
—
—
18
(2)
(109)
(60)
57
25
3,298
(757)
24
(340)
283
—
—
(87)
—
18
(859)
(8,525)
8,960
(1,446)
(1,530)
371
(2,170)
(142)
127
962
1,089
1,009
133
$
$
$
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements
(Dollars in Millions Except Share and Per Share Amounts)
1.
Nature of Operations
The Company manufactures and markets a wide variety of products in the U.S. and around the world in two product
segments: Oral, Personal and Home Care; and Pet Nutrition. Oral, Personal and Home Care products include toothpaste,
toothbrushes and mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and
antiperspirants, laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches and other similar
items. These products are sold primarily to retail trade customers and wholesale distributors worldwide. Pet Nutrition
products include specialty pet nutrition products manufactured and marketed by Hill’s Pet Nutrition. The principal
customers for Pet Nutrition products are authorized pet supply retailers and veterinarians. Products from both product
segments are also sold to e-commerce retailers. Principal global and regional trademarks include Colgate, Palmolive, Speed
Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex, Ajax, Axion,
Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet, Hill’s Prescription Diet and Hill’s Ideal Balance.
The Company’s principal classes of products accounted for the following percentages of worldwide Net sales for the
past three years:
Oral Care
Personal Care
Home Care
Pet Nutrition
Total
2016
2015
2014
47%
20%
18%
15%
100%
47%
20%
19%
14%
100%
46%
21%
20%
13%
100%
2.
Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Colgate-Palmolive Company and its majority-owned or
controlled subsidiaries. Intercompany transactions and balances have been eliminated. The Company’s investments in
consumer products companies with interests ranging between 20% and 50%, where the Company has significant influence
over the investee, are accounted for using the equity method. Net income (loss) from such investments is recorded in Other
(income) expense, net in the Consolidated Statements of Income. As of December 31, 2016 and 2015, equity method
investments included in Other assets in the Consolidated Balance Sheets were $38 and $34, respectively. Unrelated third
parties hold the remaining ownership interests in these investments. Investments with less than a 20% interest are
accounted for using the cost method. Effective December 31, 2015, the Company concluded it no longer met the
accounting criteria for consolidation of its Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela
using the cost method of accounting. As a result, effective December 31, 2015, CP Venezuela’s net assets and operating
results are no longer included in the Company’s Consolidated Financial Statements. See Note 14, Venezuela for further
information.
See Notes to Consolidated Financial Statements.
62
63
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Use of Estimates
Goodwill and Other Intangibles
The preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America requires management to use judgment and make estimates that affect the reported amounts of assets and
liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with
the length of time until the underlying transactions are completed. As such, the most significant uncertainty in the
Company’s assumptions and estimates involved in preparing the financial statements includes pension and other retiree
benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances,
legal and other contingency reserves and, prior to the deconsolidation of the Company’s Venezuelan operations, the
selection of the exchange rate used to remeasure the financial statements of CP Venezuela (see Note 14, Venezuela).
Additionally, the Company uses available market information and other valuation methodologies in assessing the fair value
of financial instruments and retirement plan assets. 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. Actual results could ultimately differ from those estimates.
Revenue Recognition
Sales are recorded at the time products are shipped to trade customers and when risk of ownership transfers. Net sales
reflect units shipped at selling list prices reduced by sales returns and the cost of current and continuing promotional
programs. Current promotional programs, such as product listing allowances and co-operative advertising arrangements,
are recorded in the period incurred. Continuing promotional programs are predominantly consumer coupons and volume-
based sales incentive arrangements with trade customers. The redemption cost of consumer coupons is based on historical
redemption experience and is recorded when coupons are distributed. Volume-based incentives offered to trade customers
are based on the estimated cost of the program and are recorded as products are sold.
Shipping and Handling Costs
Shipping and handling costs are classified as Selling, general and administrative expenses and were $1,140, $1,235
and $1,326 for the years ended December 31, 2016, 2015 and 2014, respectively.
Marketing Costs
The Company markets its products through advertising and other promotional activities. Advertising costs are included
in Selling, general and administrative expenses and are expensed as incurred. Certain consumer and trade promotional
programs, such as consumer coupons, are recorded as a reduction of sales.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the time of
purchase to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. The cost of approximately 75% of inventories is determined using
the first-in, first-out (“FIFO”) method. The cost of all other inventories, in the U.S. and Mexico, is determined using the
last-in, first-out (“LIFO”) method.
Goodwill and indefinite life intangible assets, such as the Company’s global brands, are subject to impairment tests at
least annually. These tests were performed and did not result in an impairment charge. Other intangible assets with finite
lives, such as local brands and trademarks, customer relationships and non-compete agreements, are amortized over their
estimated useful lives, generally ranging from 5 to 40 years. Amortization expense related to intangible assets is included in
Other (income) expense, net, which is included in Operating profit.
Income Taxes
The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax
assets and liabilities are recognized based upon the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates that will be in effect at the time such differences are expected to reverse. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Provision is made currently for taxes payable on remittances of
overseas earnings; no provision is made for taxes on overseas retained earnings that are deemed to be indefinitely
reinvested.
The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements
uncertain tax positions that the Company has taken or expects to take on an income tax return. The Company recognizes
interest expense and penalties related to unrecognized tax benefits within Provision for income taxes.
Financial Instruments
Derivative instruments are recorded as assets and liabilities at estimated fair value based on available market
information. The Company’s derivative instruments that qualify for hedge accounting are designated as either fair value
hedges, cash flow hedges or net investment hedges. For fair value hedges, changes in the fair value of the derivative, as
well as the offsetting changes in the fair value of the hedged item, are recognized in earnings each period. For cash flow
hedges, changes in the fair value of the derivative are recorded in Other comprehensive income (loss) and are recognized in
earnings when the offsetting effect of the hedged item is also recognized in earnings. For hedges of the net investment in
foreign subsidiaries, changes in the fair value of the derivative are recorded in Other comprehensive income (loss) to offset
the change in the value of the net investment being hedged. Cash flows related to hedges are classified in the same category
as the cash flows from the hedged item in the Consolidated Statements of Cash Flows.
The Company may also enter into certain foreign currency and interest rate instruments that economically hedge
certain of its risks but do not qualify for hedge accounting. Changes in fair value of these derivative instruments, based on
quoted market prices, are recognized in earnings each period. The Company’s derivative instruments and other financial
instruments are more fully described in Note 7, Fair Value Measurements and Financial Instruments along with the related
fair value measurement considerations.
Stock-Based Compensation
The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as
stock options and restricted stock units, based on the fair value of those awards at the date of grant over the requisite
service period. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair
value of stock option awards. Stock-based compensation plans, related expenses and assumptions used in the Black-
Scholes option pricing model are more fully described in Note 8, Capital Stock and Stock-Based Compensation Plans.
Property, Plant and Equipment
Currency Translation
Land, buildings and machinery and equipment are stated at cost. Depreciation is provided, primarily using the straight-
line method, over estimated useful lives ranging from 3 to 15 years for machinery and equipment and up to 40 years for
buildings. Depreciation attributable to manufacturing operations is included in Cost of sales. The remaining component of
depreciation is included in Selling, general and administrative expenses.
The assets and liabilities of foreign subsidiaries, other than those operating in highly inflationary environments, are
translated into U.S. dollars at year-end exchange rates with resulting translation gains and losses accumulated in a separate
component of shareholders’ equity. Income and expense items are translated into U.S. dollars at average rates of exchange
prevailing during the year.
64
65
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Use of Estimates
Goodwill and Other Intangibles
The preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America requires management to use judgment and make estimates that affect the reported amounts of assets and
liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with
the length of time until the underlying transactions are completed. As such, the most significant uncertainty in the
Company’s assumptions and estimates involved in preparing the financial statements includes pension and other retiree
benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances,
legal and other contingency reserves and, prior to the deconsolidation of the Company’s Venezuelan operations, the
selection of the exchange rate used to remeasure the financial statements of CP Venezuela (see Note 14, Venezuela).
Additionally, the Company uses available market information and other valuation methodologies in assessing the fair value
of financial instruments and retirement plan assets. 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. Actual results could ultimately differ from those estimates.
Revenue Recognition
Sales are recorded at the time products are shipped to trade customers and when risk of ownership transfers. Net sales
reflect units shipped at selling list prices reduced by sales returns and the cost of current and continuing promotional
programs. Current promotional programs, such as product listing allowances and co-operative advertising arrangements,
are recorded in the period incurred. Continuing promotional programs are predominantly consumer coupons and volume-
based sales incentive arrangements with trade customers. The redemption cost of consumer coupons is based on historical
redemption experience and is recorded when coupons are distributed. Volume-based incentives offered to trade customers
are based on the estimated cost of the program and are recorded as products are sold.
Shipping and Handling Costs
Shipping and handling costs are classified as Selling, general and administrative expenses and were $1,140, $1,235
and $1,326 for the years ended December 31, 2016, 2015 and 2014, respectively.
Marketing Costs
The Company markets its products through advertising and other promotional activities. Advertising costs are included
in Selling, general and administrative expenses and are expensed as incurred. Certain consumer and trade promotional
programs, such as consumer coupons, are recorded as a reduction of sales.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the time of
purchase to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. The cost of approximately 75% of inventories is determined using
the first-in, first-out (“FIFO”) method. The cost of all other inventories, in the U.S. and Mexico, is determined using the
last-in, first-out (“LIFO”) method.
Goodwill and indefinite life intangible assets, such as the Company’s global brands, are subject to impairment tests at
least annually. These tests were performed and did not result in an impairment charge. Other intangible assets with finite
lives, such as local brands and trademarks, customer relationships and non-compete agreements, are amortized over their
estimated useful lives, generally ranging from 5 to 40 years. Amortization expense related to intangible assets is included in
Other (income) expense, net, which is included in Operating profit.
Income Taxes
The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax
assets and liabilities are recognized based upon the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates that will be in effect at the time such differences are expected to reverse. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Provision is made currently for taxes payable on remittances of
overseas earnings; no provision is made for taxes on overseas retained earnings that are deemed to be indefinitely
reinvested.
The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements
uncertain tax positions that the Company has taken or expects to take on an income tax return. The Company recognizes
interest expense and penalties related to unrecognized tax benefits within Provision for income taxes.
Financial Instruments
Derivative instruments are recorded as assets and liabilities at estimated fair value based on available market
information. The Company’s derivative instruments that qualify for hedge accounting are designated as either fair value
hedges, cash flow hedges or net investment hedges. For fair value hedges, changes in the fair value of the derivative, as
well as the offsetting changes in the fair value of the hedged item, are recognized in earnings each period. For cash flow
hedges, changes in the fair value of the derivative are recorded in Other comprehensive income (loss) and are recognized in
earnings when the offsetting effect of the hedged item is also recognized in earnings. For hedges of the net investment in
foreign subsidiaries, changes in the fair value of the derivative are recorded in Other comprehensive income (loss) to offset
the change in the value of the net investment being hedged. Cash flows related to hedges are classified in the same category
as the cash flows from the hedged item in the Consolidated Statements of Cash Flows.
The Company may also enter into certain foreign currency and interest rate instruments that economically hedge
certain of its risks but do not qualify for hedge accounting. Changes in fair value of these derivative instruments, based on
quoted market prices, are recognized in earnings each period. The Company’s derivative instruments and other financial
instruments are more fully described in Note 7, Fair Value Measurements and Financial Instruments along with the related
fair value measurement considerations.
Stock-Based Compensation
The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as
stock options and restricted stock units, based on the fair value of those awards at the date of grant over the requisite
service period. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair
value of stock option awards. Stock-based compensation plans, related expenses and assumptions used in the Black-
Scholes option pricing model are more fully described in Note 8, Capital Stock and Stock-Based Compensation Plans.
Property, Plant and Equipment
Currency Translation
Land, buildings and machinery and equipment are stated at cost. Depreciation is provided, primarily using the straight-
line method, over estimated useful lives ranging from 3 to 15 years for machinery and equipment and up to 40 years for
buildings. Depreciation attributable to manufacturing operations is included in Cost of sales. The remaining component of
depreciation is included in Selling, general and administrative expenses.
The assets and liabilities of foreign subsidiaries, other than those operating in highly inflationary environments, are
translated into U.S. dollars at year-end exchange rates with resulting translation gains and losses accumulated in a separate
component of shareholders’ equity. Income and expense items are translated into U.S. dollars at average rates of exchange
prevailing during the year.
64
65
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
For subsidiaries operating in highly inflationary environments, local currency-denominated non-monetary assets,
including inventories, goodwill and property, plant and equipment, are remeasured at their historical exchange rates, while
local currency-denominated monetary assets and liabilities are remeasured at year-end exchange rates. Remeasurement
adjustments for these operations are included in Net income attributable to Colgate-Palmolive Company. Prior to the
deconsolidation of the Company’s Venezuelan operations, CP Venezuela was designated as hyper-inflationary and the
functional currency for CP Venezuela was the U.S. dollar. See Note 14, Venezuela for further information.
Recent Accounting Pronouncements
On October 24, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory,” which
eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside
party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets
other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The
guidance is effective for the Company on January 1, 2018 and early adoption is permitted. The standard requires a
“modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as
of the beginning of the period of adoption. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On August 26, 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments,” which clarifies how certain cash receipts and payments are to be presented in
the statement of cash flows. The guidance is effective for the Company on January 1, 2018 and early adoption is permitted.
This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.
On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting,” which amends accounting for income taxes related to
share-based compensation, the related classification in the statement of cash flows and share award forfeiture accounting.
This guidance requires recognition of excess tax benefits and deficiencies (resulting from an increase or decrease in the fair
value of an award from grant date to the vesting or exercise date) in the provision for income taxes as a discrete item in the
quarterly period in which they occur. Currently, excess tax benefits are recognized in equity. In addition, these amounts will
be classified as an operating activity in the Statement of Cash Flows instead of as a financing activity.
For the years 2014 to 2016, the Company recognized excess tax benefits in equity in the range of $55 to $63 per year.
These amounts may not necessarily be indicative of future amounts that may be recognized subsequent to the adoption of
this new standard, as any excess tax benefits recognized would be dependent on future stock prices, employee exercise
behavior and applicable tax rates. The new guidance was effective for the Company beginning on January 1, 2017.
On March 15, 2016, the FASB issued ASU No. 2016-07, “Investments–Equity Method and Joint Ventures (Topic 323):
Simplifying the Transition to the Equity Method of Accounting,” which eliminates the requirement to retroactively adjust
an investment that subsequently qualifies for equity method accounting (as a result of an increase in level of ownership
interest or degree of influence) as if the equity method of accounting had been applied during all prior periods that the
investment was held. The new standard requires that the investor add the cost of acquiring additional ownership interest in
the investee to its current basis and prospectively adopt the equity method of accounting. Any unrealized gains or losses in
an available-for-sale investment that subsequently qualifies as an equity method investment should be recognized in
earnings at the date the investment qualifies as an equity method investment. The new guidance was effective for the
Company beginning on January 1, 2017. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On February 25, 2016, the FASB issued its final standard on lease accounting, ASU No. 2016-02, “Leases (Topic
842),” which supersedes Topic 840, “Leases.” The new accounting standard requires the recognition of right-of-use assets
and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The new standard also
provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced
disclosures about the Company’s leasing arrangements. Under current accounting standards, substantially all of the
Company’s leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This
new standard is effective for the Company beginning on January 1, 2019, with early adoption permitted. The standard
requires a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the
beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the
impact of the new standard on its Consolidated Financial Statements.
On January 5, 2016, the FASB issued ASU No. 2016-01, “Financial Instruments–Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated guidance enhances the reporting
model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation
and disclosure. The amendment to the standard is effective for the Company beginning on January 1, 2018. While the
Company is currently assessing the impact of the new standard, it does not expect this new guidance to have a material
impact on its Consolidated Financial Statements.
On November 20, 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification
of Deferred Taxes,” which simplifies the presentation of deferred income taxes. Under the new accounting standard,
deferred tax assets and liabilities are required to be classified as noncurrent, eliminating the prior requirement to separate
deferred tax assets and liabilities into current and noncurrent. As permitted, the Company early-adopted the new standard
on March 31, 2016, on a prospective basis, and did not retrospectively adjust prior periods.
On July 22, 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of
Inventory,” which simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with
a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by
methods other than LIFO and the retail inventory method. The new guidance was effective for the Company beginning on
January 1, 2017. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial
Statements.
On May 28, 2014, the FASB and the International Accounting Standards Board issued their final converged standard
on revenue recognition. The standard, issued as ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”
by the FASB, provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes
current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the
measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize
revenue to depict the transfer of goods or services to 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 which are significantly more
comprehensive than those in existing revenue standards. This new guidance is effective for the Company beginning on
January 1, 2018. During 2016, the FASB issued several accounting updates (ASU No. 2016-08, 2016-10 and 2016-12) to
clarify implementation guidance and correct unintended application of the guidance. The standard allows for either “full
retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective”
adoption, meaning the standard is applied only to the most current period presented in the financial statements. The
Company continues to make progress in its implementation and assessment of the new standard and while the completion
of this assessment is still ongoing, based on the progress to date, the Company does not expect the new standard will have a
material impact on its revenue recognition accounting policy or its Consolidated Financial Statements.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. The Company adopted
ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” on January 1, 2016. To conform to the current
year’s presentation, debt issuance costs have been reclassified from Other assets and are now presented as a direct
deduction to the carrying amount of the related debt balance at December 31, 2015. The reclassification had no further
effect on the Company’s Consolidated Financial Statements.
66
67
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
For subsidiaries operating in highly inflationary environments, local currency-denominated non-monetary assets,
including inventories, goodwill and property, plant and equipment, are remeasured at their historical exchange rates, while
local currency-denominated monetary assets and liabilities are remeasured at year-end exchange rates. Remeasurement
adjustments for these operations are included in Net income attributable to Colgate-Palmolive Company. Prior to the
deconsolidation of the Company’s Venezuelan operations, CP Venezuela was designated as hyper-inflationary and the
functional currency for CP Venezuela was the U.S. dollar. See Note 14, Venezuela for further information.
Recent Accounting Pronouncements
On October 24, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory,” which
eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside
party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets
other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The
guidance is effective for the Company on January 1, 2018 and early adoption is permitted. The standard requires a
“modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as
of the beginning of the period of adoption. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On August 26, 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments,” which clarifies how certain cash receipts and payments are to be presented in
the statement of cash flows. The guidance is effective for the Company on January 1, 2018 and early adoption is permitted.
This new guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.
On March 30, 2016, the FASB issued ASU No. 2016-09, “Compensation–Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting,” which amends accounting for income taxes related to
share-based compensation, the related classification in the statement of cash flows and share award forfeiture accounting.
This guidance requires recognition of excess tax benefits and deficiencies (resulting from an increase or decrease in the fair
value of an award from grant date to the vesting or exercise date) in the provision for income taxes as a discrete item in the
quarterly period in which they occur. Currently, excess tax benefits are recognized in equity. In addition, these amounts will
be classified as an operating activity in the Statement of Cash Flows instead of as a financing activity.
For the years 2014 to 2016, the Company recognized excess tax benefits in equity in the range of $55 to $63 per year.
These amounts may not necessarily be indicative of future amounts that may be recognized subsequent to the adoption of
this new standard, as any excess tax benefits recognized would be dependent on future stock prices, employee exercise
behavior and applicable tax rates. The new guidance was effective for the Company beginning on January 1, 2017.
On March 15, 2016, the FASB issued ASU No. 2016-07, “Investments–Equity Method and Joint Ventures (Topic 323):
Simplifying the Transition to the Equity Method of Accounting,” which eliminates the requirement to retroactively adjust
an investment that subsequently qualifies for equity method accounting (as a result of an increase in level of ownership
interest or degree of influence) as if the equity method of accounting had been applied during all prior periods that the
investment was held. The new standard requires that the investor add the cost of acquiring additional ownership interest in
the investee to its current basis and prospectively adopt the equity method of accounting. Any unrealized gains or losses in
an available-for-sale investment that subsequently qualifies as an equity method investment should be recognized in
earnings at the date the investment qualifies as an equity method investment. The new guidance was effective for the
Company beginning on January 1, 2017. This new guidance is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
On February 25, 2016, the FASB issued its final standard on lease accounting, ASU No. 2016-02, “Leases (Topic
842),” which supersedes Topic 840, “Leases.” The new accounting standard requires the recognition of right-of-use assets
and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The new standard also
provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced
disclosures about the Company’s leasing arrangements. Under current accounting standards, substantially all of the
Company’s leases are considered operating leases and, as such, are not recognized on the Consolidated Balance Sheet. This
new standard is effective for the Company beginning on January 1, 2019, with early adoption permitted. The standard
requires a “modified retrospective” adoption, meaning the standard is applied to leases existing at, or entered into after, the
beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the
impact of the new standard on its Consolidated Financial Statements.
On January 5, 2016, the FASB issued ASU No. 2016-01, “Financial Instruments–Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated guidance enhances the reporting
model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation
and disclosure. The amendment to the standard is effective for the Company beginning on January 1, 2018. While the
Company is currently assessing the impact of the new standard, it does not expect this new guidance to have a material
impact on its Consolidated Financial Statements.
On November 20, 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification
of Deferred Taxes,” which simplifies the presentation of deferred income taxes. Under the new accounting standard,
deferred tax assets and liabilities are required to be classified as noncurrent, eliminating the prior requirement to separate
deferred tax assets and liabilities into current and noncurrent. As permitted, the Company early-adopted the new standard
on March 31, 2016, on a prospective basis, and did not retrospectively adjust prior periods.
On July 22, 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of
Inventory,” which simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with
a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by
methods other than LIFO and the retail inventory method. The new guidance was effective for the Company beginning on
January 1, 2017. This new guidance is not expected to have a material impact on the Company’s Consolidated Financial
Statements.
On May 28, 2014, the FASB and the International Accounting Standards Board issued their final converged standard
on revenue recognition. The standard, issued as ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”
by the FASB, provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes
current revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the
measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize
revenue to depict the transfer of goods or services to 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 which are significantly more
comprehensive than those in existing revenue standards. This new guidance is effective for the Company beginning on
January 1, 2018. During 2016, the FASB issued several accounting updates (ASU No. 2016-08, 2016-10 and 2016-12) to
clarify implementation guidance and correct unintended application of the guidance. The standard allows for either “full
retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective”
adoption, meaning the standard is applied only to the most current period presented in the financial statements. The
Company continues to make progress in its implementation and assessment of the new standard and while the completion
of this assessment is still ongoing, based on the progress to date, the Company does not expect the new standard will have a
material impact on its revenue recognition accounting policy or its Consolidated Financial Statements.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. The Company adopted
ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” on January 1, 2016. To conform to the current
year’s presentation, debt issuance costs have been reclassified from Other assets and are now presented as a direct
deduction to the carrying amount of the related debt balance at December 31, 2015. The reclassification had no further
effect on the Company’s Consolidated Financial Statements.
66
67
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
3.
Acquisitions and Divestitures
Sale of Land in Mexico
In September 2016, the Company’s Mexican subsidiary completed the sale to the United States of America of the
Mexico City site on which its commercial operations, technology center and soap production facility were previously
located and received $60 as the third and final installment of the sale price. The total sale price (including the third
installment and the previously received first and second installments) was $120. The Company recognized a pretax gain of
$97 ($63 aftertax or $0.07 per diluted share) in the third quarter of 2016, net of costs primarily related to site preparation.
Sale of Laundry Detergent Business in the South Pacific
In August 2015, the Company completed the sale of its laundry detergent business in the South Pacific to Henkel AG
& Co. KGaA for an aggregate purchase price of approximately 310 Australian dollars ($221) and recorded a pretax gain of
$187 ($120 aftertax or $0.13 per diluted share) in Other (income) expense, net. The gain is net of charges related to the
right-sizing of the Company’s South Pacific business, asset write-offs related to the divested laundry detergent business and
other costs related to the sale. The funds from the sale were reinvested to expand the 2012 Restructuring Program (see Note
4, Restructuring and Related Implementation Changes).
Myanmar Acquisition
On October 3, 2014, the Company acquired an oral care business in Myanmar for $62 in cash plus additional
consideration contingent upon achievement of performance targets under a distribution services agreement.
4.
Restructuring and Related Implementation Charges
In the fourth quarter of 2012, the Company commenced a Global Growth and Efficiency Program (as expanded in
2014 and 2015 as described below, the “2012 Restructuring Program”) for sustained growth. The program’s initiatives are
expected to help Colgate ensure sustained solid worldwide growth in unit volume, organic sales and earnings per share and
enhance its global leadership positions in its core businesses.
On October 23, 2014, the Company’s Board of Directors (the “Board”) approved an expansion of the 2012
Restructuring Program to take advantage of additional savings opportunities.
Recognizing the macroeconomic challenges around the world and the successful implementation of the 2012
Restructuring Program, on October 29, 2015, the Board approved the reinvestment of the funds from the sale of the
Company’s laundry detergent business in the South Pacific to expand the 2012 Restructuring Program and extend it for one
year through December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.
Initiatives under the 2012 Restructuring Program will 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. Cumulative pretax charges resulting from the 2012 Restructuring Program, once all phases are
approved and implemented, are estimated to be $1,405 to $1,585 ($1,050 to $1,170 aftertax).
The pretax charges resulting from the 2012 Restructuring Program are currently estimated to be comprised of the
following categories: Employee-Related Costs, including severance, pension and other termination benefits (50%); asset-
related costs, primarily Incremental Depreciation and Asset Impairments (10%); and Other charges, which include contract
termination costs, consisting primarily of related implementation charges resulting directly from exit activities (20%) and
the implementation of new strategies (20%). Over the course of the 2012 Restructuring Program, it is currently estimated
that approximately 75% of the charges will result in cash expenditures. Anticipated pretax charges for 2017 are expected to
approximate $180 to $360 ($140 to $260 aftertax). It is expected that substantially all charges resulting from the 2012
Restructuring Program will be incurred by December 31, 2017.
It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to
initiatives undertaken in North America (15%), Europe (20%), Latin America (5%), Asia Pacific (5%), Africa/Eurasia
(5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the
implementation of new strategies, noted above, on a global basis. It is expected that, when it has been fully implemented,
the 2012 Restructuring Program will contribute a net reduction of approximately 3,300 to 3,800 positions from the
Company’s global employee workforce.
For the years ended December 31, 2016, 2015 and 2014, restructuring and related implementation charges are
reflected in the Consolidated Statements of Income as follows:
Cost of sales
Selling, general and administrative expenses
Other (income) expense, net
Total 2012 Restructuring Program charges, pretax
Total 2012 Restructuring Program charges, aftertax
2016
2015
2014
$
$
$
46
77
105
228
168
$
$
$
20
64
170
254
183
$
$
$
29
62
195
286
208
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 2012 Restructuring Program relate to initiatives undertaken by the following reportable
operating segments:
North America
Latin America
Europe (1)
Asia Pacific (1)
Africa/Eurasia
Hill’s Pet Nutrition
Corporate
2016
2015
2014
Program-to-date
Accumulated Charges
35%
5%
12%
4%
14%
7%
23%
21%
3%
14%
4%
5%
5%
48%
11%
4%
20%
3%
3%
10%
49%
17%
4%
22%
3%
7%
7%
40%
(1) The Company has recast its historical geographic segment information to conform to the reporting structure effective as of April 1,
2016. See Note 15, Segment Information for additional details.
Since the inception of the 2012 Restructuring Program in the fourth quarter of 2012, the Company has incurred
cumulative pretax charges of $1,228 ($907 aftertax) in connection with the implementation of various projects as follows:
Employee-Related Costs
Incremental Depreciation
Asset Impairments
Other
Total
Cumulative Charges
as of December 31, 2016
$
$
465
80
27
656
1,228
68
69
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
3.
Acquisitions and Divestitures
Sale of Land in Mexico
In September 2016, the Company’s Mexican subsidiary completed the sale to the United States of America of the
Mexico City site on which its commercial operations, technology center and soap production facility were previously
located and received $60 as the third and final installment of the sale price. The total sale price (including the third
installment and the previously received first and second installments) was $120. The Company recognized a pretax gain of
$97 ($63 aftertax or $0.07 per diluted share) in the third quarter of 2016, net of costs primarily related to site preparation.
Sale of Laundry Detergent Business in the South Pacific
In August 2015, the Company completed the sale of its laundry detergent business in the South Pacific to Henkel AG
& Co. KGaA for an aggregate purchase price of approximately 310 Australian dollars ($221) and recorded a pretax gain of
$187 ($120 aftertax or $0.13 per diluted share) in Other (income) expense, net. The gain is net of charges related to the
right-sizing of the Company’s South Pacific business, asset write-offs related to the divested laundry detergent business and
other costs related to the sale. The funds from the sale were reinvested to expand the 2012 Restructuring Program (see Note
4, Restructuring and Related Implementation Changes).
Myanmar Acquisition
On October 3, 2014, the Company acquired an oral care business in Myanmar for $62 in cash plus additional
consideration contingent upon achievement of performance targets under a distribution services agreement.
4.
Restructuring and Related Implementation Charges
In the fourth quarter of 2012, the Company commenced a Global Growth and Efficiency Program (as expanded in
2014 and 2015 as described below, the “2012 Restructuring Program”) for sustained growth. The program’s initiatives are
expected to help Colgate ensure sustained solid worldwide growth in unit volume, organic sales and earnings per share and
enhance its global leadership positions in its core businesses.
On October 23, 2014, the Company’s Board of Directors (the “Board”) approved an expansion of the 2012
Restructuring Program to take advantage of additional savings opportunities.
Recognizing the macroeconomic challenges around the world and the successful implementation of the 2012
Restructuring Program, on October 29, 2015, the Board approved the reinvestment of the funds from the sale of the
Company’s laundry detergent business in the South Pacific to expand the 2012 Restructuring Program and extend it for one
year through December 31, 2017. The Board approved the implementation plan for this expansion on March 10, 2016.
Initiatives under the 2012 Restructuring Program will 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. Cumulative pretax charges resulting from the 2012 Restructuring Program, once all phases are
approved and implemented, are estimated to be $1,405 to $1,585 ($1,050 to $1,170 aftertax).
The pretax charges resulting from the 2012 Restructuring Program are currently estimated to be comprised of the
following categories: Employee-Related Costs, including severance, pension and other termination benefits (50%); asset-
related costs, primarily Incremental Depreciation and Asset Impairments (10%); and Other charges, which include contract
termination costs, consisting primarily of related implementation charges resulting directly from exit activities (20%) and
the implementation of new strategies (20%). Over the course of the 2012 Restructuring Program, it is currently estimated
that approximately 75% of the charges will result in cash expenditures. Anticipated pretax charges for 2017 are expected to
approximate $180 to $360 ($140 to $260 aftertax). It is expected that substantially all charges resulting from the 2012
Restructuring Program will be incurred by December 31, 2017.
It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to
initiatives undertaken in North America (15%), Europe (20%), Latin America (5%), Asia Pacific (5%), Africa/Eurasia
(5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the
implementation of new strategies, noted above, on a global basis. It is expected that, when it has been fully implemented,
the 2012 Restructuring Program will contribute a net reduction of approximately 3,300 to 3,800 positions from the
Company’s global employee workforce.
For the years ended December 31, 2016, 2015 and 2014, restructuring and related implementation charges are
reflected in the Consolidated Statements of Income as follows:
Cost of sales
Selling, general and administrative expenses
Other (income) expense, net
Total 2012 Restructuring Program charges, pretax
Total 2012 Restructuring Program charges, aftertax
2016
2015
2014
$
$
$
46
77
105
228
168
$
$
$
20
64
170
254
183
$
$
$
29
62
195
286
208
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 2012 Restructuring Program relate to initiatives undertaken by the following reportable
operating segments:
North America
Latin America
Europe (1)
Asia Pacific (1)
Africa/Eurasia
Hill’s Pet Nutrition
Corporate
2016
2015
2014
Program-to-date
Accumulated Charges
35%
5%
12%
4%
14%
7%
23%
21%
3%
14%
4%
5%
5%
48%
11%
4%
20%
3%
3%
10%
49%
17%
4%
22%
3%
7%
7%
40%
(1) The Company has recast its historical geographic segment information to conform to the reporting structure effective as of April 1,
2016. See Note 15, Segment Information for additional details.
Since the inception of the 2012 Restructuring Program in the fourth quarter of 2012, the Company has incurred
cumulative pretax charges of $1,228 ($907 aftertax) in connection with the implementation of various projects as follows:
Employee-Related Costs
Incremental Depreciation
Asset Impairments
Other
Total
Cumulative Charges
as of December 31, 2016
$
$
465
80
27
656
1,228
68
69
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The majority of costs incurred since inception relate to the following projects: the implementation of the Company’s
overall hubbing strategy; the consolidation of facilities; the extension of shared business services and streamlining of
global functions; the simplification and streamlining of the Company’s research and development capabilities and oral care
supply chain, both in Europe; the closing of the Morristown, New Jersey personal care facility; and 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.
Other charges consist primarily of charges resulting directly from exit activities and the implementation of new
strategies as a result of the 2012 Restructuring Program. These charges for the years ended December 31, 2016, 2015 and
2014 include third-party incremental costs related to the development and implementation of new business and strategic
initiatives of $116, $65 and $65, respectively, and contract termination costs and charges resulting directly from exit
activities of $21, $8 and $40, respectively, directly related to the 2012 Restructuring Program. These charges were
expensed as incurred. Also included in Other charges for the years ended December 31, 2016, 2015 and 2014 are other exit
costs of $1, $47 and $82, respectively, related to the consolidation of facilities.
The following table summarizes the activity for the restructuring and related implementation charges discussed above
and the related accruals:
5.
Goodwill and Other Intangible Assets
Total
The net carrying value of Goodwill as of December 31, 2016 and 2015, by segment was as follows:
Balance at January 1, 2014
$
116
$
— $
— $
Employee-Related
Costs
Incremental
Depreciation
Asset
Impairments
Other
42
$
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2014
$
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2015
$
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2016
$
73
(95)
(5)
(4)
—
85
109
(85)
(17)
(8)
—
84
61
(84)
(4)
(1)
—
56
$
$
$
25
—
(25)
—
—
1
—
(1)
—
—
187
(117)
—
(5)
—
— $
— $
107
$
20
—
(20)
—
—
5
—
(5)
—
—
120
(94)
—
(2)
—
— $
— $
131
$
9
—
(9)
—
—
20
—
(20)
—
—
138
(153)
—
—
9
— $
— $
125
$
158
286
(212)
(31)
(9)
—
192
254
(179)
(42)
(10)
—
215
228
(237)
(33)
(1)
9
181
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, $17 and $5 for the
years ended December 31, 2016, 2015 and 2014, respectively, 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, Retirement Plans and Other
Retiree Benefits).
Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived
assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to
write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against
assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.
Oral, Personal and Home Care
North America
Latin America
Europe (1)
Asia Pacific (1)
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Goodwill
2016
2015
$
$
336
260
1,233
187
76
2,092
15
2,107
$
$
333
224
1,268
188
75
2,088
15
2,103
(1) The Company has recast its historical geographic segment information to conform to the reporting structure effective as of April 1,
2016. See Note 15, Segment Information for additional details.
The change in the amount of Goodwill in each year is primarily due to the impact of foreign currency translation.
Other intangible assets as of December 31, 2016 and 2015 were comprised of the following:
2016
2015
Trademarks
Other finite life intangible assets
Indefinite life intangible assets
Total Other intangible assets
Gross
Carrying
Amount
$
$
539
231
938
1,708
$
Accumulated
Amortization
$
Gross
Carrying
Amount
545
216
951
1,712
Net
222
153
938
1,313
$
$
$
Accumulated
Amortization
$
Net
243
152
951
1,346
(302) $
(64)
—
(366) $
(317) $
(78)
—
(395) $
The changes in the net carrying amounts of Other intangible assets during 2016, 2015 and 2014 were primarily due to
amortization expense of $33, $33 and $32, respectively, as well as the impact of foreign currency translation. Annual
estimated amortization expense for each of the next five years is expected to be approximately $30.
70
71
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The majority of costs incurred since inception relate to the following projects: the implementation of the Company’s
overall hubbing strategy; the consolidation of facilities; the extension of shared business services and streamlining of
global functions; the simplification and streamlining of the Company’s research and development capabilities and oral care
supply chain, both in Europe; the closing of the Morristown, New Jersey personal care facility; and 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.
Other charges consist primarily of charges resulting directly from exit activities and the implementation of new
strategies as a result of the 2012 Restructuring Program. These charges for the years ended December 31, 2016, 2015 and
2014 include third-party incremental costs related to the development and implementation of new business and strategic
initiatives of $116, $65 and $65, respectively, and contract termination costs and charges resulting directly from exit
activities of $21, $8 and $40, respectively, directly related to the 2012 Restructuring Program. These charges were
expensed as incurred. Also included in Other charges for the years ended December 31, 2016, 2015 and 2014 are other exit
costs of $1, $47 and $82, respectively, related to the consolidation of facilities.
The following table summarizes the activity for the restructuring and related implementation charges discussed above
and the related accruals:
5.
Goodwill and Other Intangible Assets
Total
The net carrying value of Goodwill as of December 31, 2016 and 2015, by segment was as follows:
Balance at January 1, 2014
$
116
$
— $
— $
Employee-Related
Costs
Incremental
Depreciation
Asset
Impairments
Other
42
$
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2014
$
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2015
$
Charges
Cash payments
Charges against assets
Foreign exchange
Other
Balance at December 31, 2016
$
73
(95)
(5)
(4)
—
85
109
(85)
(17)
(8)
—
84
61
(84)
(4)
(1)
—
56
$
$
$
25
—
(25)
—
—
1
—
(1)
—
—
187
(117)
—
(5)
—
— $
— $
107
$
20
—
(20)
—
—
5
—
(5)
—
—
120
(94)
—
(2)
—
— $
— $
131
$
9
—
(9)
—
—
20
—
(20)
—
—
138
(153)
—
—
9
— $
— $
125
$
158
286
(212)
(31)
(9)
—
192
254
(179)
(42)
(10)
—
215
228
(237)
(33)
(1)
9
181
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, $17 and $5 for the
years ended December 31, 2016, 2015 and 2014, respectively, 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, Retirement Plans and Other
Retiree Benefits).
Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived
assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to
write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against
assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.
Oral, Personal and Home Care
North America
Latin America
Europe (1)
Asia Pacific (1)
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Goodwill
2016
2015
$
$
336
260
1,233
187
76
2,092
15
2,107
$
$
333
224
1,268
188
75
2,088
15
2,103
(1) The Company has recast its historical geographic segment information to conform to the reporting structure effective as of April 1,
2016. See Note 15, Segment Information for additional details.
The change in the amount of Goodwill in each year is primarily due to the impact of foreign currency translation.
Other intangible assets as of December 31, 2016 and 2015 were comprised of the following:
2016
2015
Trademarks
Other finite life intangible assets
Indefinite life intangible assets
Total Other intangible assets
Gross
Carrying
Amount
$
$
539
231
938
1,708
$
Accumulated
Amortization
$
Gross
Carrying
Amount
545
216
951
1,712
Net
222
153
938
1,313
$
$
$
Accumulated
Amortization
$
Net
243
152
951
1,346
(302) $
(64)
—
(366) $
(317) $
(78)
—
(395) $
The changes in the net carrying amounts of Other intangible assets during 2016, 2015 and 2014 were primarily due to
amortization expense of $33, $33 and $32, respectively, as well as the impact of foreign currency translation. Annual
estimated amortization expense for each of the next five years is expected to be approximately $30.
70
71
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
6.
Long-Term Debt and Credit Facilities
Long-term debt consisted of the following at December 31:
Notes
Commercial paper
Less: Current portion of long-term debt
Total
Weighted
Average
Interest Rate
2.0%
(0.3)%
2017
2078
Maturities
-
2017
2016
$ 6,225
295
6,520
—
$ 6,520
2015
$ 6,539
5
6,544
298
$ 6,246
The weighted-average interest rate on short-term borrowings of $13 in 2016 and $4 in 2015 included in Notes and
loans payable in the Consolidated Balance Sheets as of December 31, 2016 and 2015 was 1.6% and 1.8%, respectively.
The Company classifies commercial paper and notes maturing within the next twelve months as long-term debt when
it has the intent and ability to refinance such obligations on a long-term basis. Excluding such obligations, scheduled
maturities of long-term debt and capitalized leases outstanding as of December 31, 2016, were as follows:
Years Ended December 31,
2017
2018
2019
2020
2021
Thereafter
$
—
698
1,025
248
297
3,307
The Company has entered into interest rate swap agreements and foreign exchange contracts related to certain of these
debt instruments. See Note 7, Fair Value Measurements and Financial Instruments for further information about the
Company’s financial instruments.
During the third quarter of 2015, the Company issued $600 of thirty-year notes at a fixed rate of 4.00%. During the
second quarter of 2015, the Company issued €500 of euro-denominated four-year notes at a variable rate.
The Company’s debt issuances support its capital structure strategy objectives of funding its business and growth
initiatives while minimizing its risk-adjusted cost of capital. The debt issuances in 2015 were under the Company’s shelf
registration statement. The debt issuance during the third quarter of 2015 was U.S. dollar-denominated. Proceeds from the
debt issuances in the second and third quarters of 2015 were used for general corporate purposes which included the
retirement of commercial paper borrowings.
At December 31, 2016, the Company had access to unused domestic and foreign lines of credit of $2,927 (including
under the facilities discussed below) and could also issue medium-term notes pursuant to an effective shelf registration
statement. In November 2011, the Company entered into a five-year revolving credit facility with a capacity of $1,850 with
a syndicate of banks. This facility was extended for an additional year in 2012 and again in 2013. In 2014, the Company
entered into an amendment of this facility whereby the facility was extended for an additional year to November 2019 and
the capacity of the facility was increased to $2,370. In 2016, the facility was extended for an additional year to November
2020. The Company also has the ability to draw $165 from a revolving credit facility that expires in November 2017.
Commitment fees related to the credit facilities are not material.
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Certain 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.
7.
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. Provided below are details of the Company’s exposures by type of risk and derivative instruments by type of
hedge designation.
Valuation Considerations
Assets and liabilities carried at fair value are classified as follows:
Level 1: Based upon quoted market prices in active markets for identical assets or liabilities.
Level 2: Based upon observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Based upon unobservable inputs reflecting the reporting entity’s own assumptions.
Foreign Exchange Risk
As the Company markets its products in over 200 countries and territories, it is exposed to currency fluctuations
related to manufacturing and selling its products in currencies other than the U.S. dollar. The Company manages its foreign
currency exposures through a combination of cost containment measures, sourcing strategies, selling price increases and
the hedging of certain costs in an effort to minimize the impact on earnings of foreign currency rate movements.
The Company primarily utilizes foreign currency contracts, including forward and swap contracts, option contracts,
foreign and 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. The
duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued using observable
market rates (Level 2 valuation).
Interest Rate Risk
The Company manages its targeted mix of fixed and floating rate debt with debt issuances and by entering into interest
rate swaps in order to mitigate fluctuations in earnings and cash flows that may result from interest rate volatility. The
notional amount, interest payment and maturity date of the swaps generally match the principal, interest payment and
maturity date of the related debt, and the swaps are valued using observable benchmark rates (Level 2 valuation).
72
73
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
6.
Long-Term Debt and Credit Facilities
Long-term debt consisted of the following at December 31:
Notes
Commercial paper
Less: Current portion of long-term debt
Total
Weighted
Average
Interest Rate
2.0%
(0.3)%
2017
2078
Maturities
-
2017
2016
$ 6,225
295
6,520
—
$ 6,520
2015
$ 6,539
5
6,544
298
$ 6,246
The weighted-average interest rate on short-term borrowings of $13 in 2016 and $4 in 2015 included in Notes and
loans payable in the Consolidated Balance Sheets as of December 31, 2016 and 2015 was 1.6% and 1.8%, respectively.
The Company classifies commercial paper and notes maturing within the next twelve months as long-term debt when
it has the intent and ability to refinance such obligations on a long-term basis. Excluding such obligations, scheduled
maturities of long-term debt and capitalized leases outstanding as of December 31, 2016, were as follows:
Years Ended December 31,
2017
2018
2019
2020
2021
Thereafter
$
—
698
1,025
248
297
3,307
The Company has entered into interest rate swap agreements and foreign exchange contracts related to certain of these
debt instruments. See Note 7, Fair Value Measurements and Financial Instruments for further information about the
Company’s financial instruments.
During the third quarter of 2015, the Company issued $600 of thirty-year notes at a fixed rate of 4.00%. During the
second quarter of 2015, the Company issued €500 of euro-denominated four-year notes at a variable rate.
The Company’s debt issuances support its capital structure strategy objectives of funding its business and growth
initiatives while minimizing its risk-adjusted cost of capital. The debt issuances in 2015 were under the Company’s shelf
registration statement. The debt issuance during the third quarter of 2015 was U.S. dollar-denominated. Proceeds from the
debt issuances in the second and third quarters of 2015 were used for general corporate purposes which included the
retirement of commercial paper borrowings.
At December 31, 2016, the Company had access to unused domestic and foreign lines of credit of $2,927 (including
under the facilities discussed below) and could also issue medium-term notes pursuant to an effective shelf registration
statement. In November 2011, the Company entered into a five-year revolving credit facility with a capacity of $1,850 with
a syndicate of banks. This facility was extended for an additional year in 2012 and again in 2013. In 2014, the Company
entered into an amendment of this facility whereby the facility was extended for an additional year to November 2019 and
the capacity of the facility was increased to $2,370. In 2016, the facility was extended for an additional year to November
2020. The Company also has the ability to draw $165 from a revolving credit facility that expires in November 2017.
Commitment fees related to the credit facilities are not material.
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Certain 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.
7.
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. Provided below are details of the Company’s exposures by type of risk and derivative instruments by type of
hedge designation.
Valuation Considerations
Assets and liabilities carried at fair value are classified as follows:
Level 1: Based upon quoted market prices in active markets for identical assets or liabilities.
Level 2: Based upon observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Based upon unobservable inputs reflecting the reporting entity’s own assumptions.
Foreign Exchange Risk
As the Company markets its products in over 200 countries and territories, it is exposed to currency fluctuations
related to manufacturing and selling its products in currencies other than the U.S. dollar. The Company manages its foreign
currency exposures through a combination of cost containment measures, sourcing strategies, selling price increases and
the hedging of certain costs in an effort to minimize the impact on earnings of foreign currency rate movements.
The Company primarily utilizes foreign currency contracts, including forward and swap contracts, option contracts,
foreign and 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. The
duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued using observable
market rates (Level 2 valuation).
Interest Rate Risk
The Company manages its targeted mix of fixed and floating rate debt with debt issuances and by entering into interest
rate swaps in order to mitigate fluctuations in earnings and cash flows that may result from interest rate volatility. The
notional amount, interest payment and maturity date of the swaps generally match the principal, interest payment and
maturity date of the related debt, and the swaps are valued using observable benchmark rates (Level 2 valuation).
72
73
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Commodity Price Risk
The Company is exposed to price volatility related to raw materials used in production, such as resins, pulp, essential
oils, tropical oils, tallow, poultry, corn and soybeans. The Company manages its raw material exposures through a
combination of cost containment measures, sourcing strategies, ongoing productivity initiatives and the limited use of
commodity hedging contracts. Futures contracts are used on a limited basis, primarily in the Hill’s Pet Nutrition segment,
to manage volatility related to raw material inventory purchases of certain traded commodities, and these contracts are
measured using quoted commodity exchange prices (Level 1 valuation). The duration of the commodity contracts generally
does not exceed 12 months.
Credit Risk
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 with diverse, credit-worthy counterparties based upon both strong credit ratings
and other credit considerations.
The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments
at December 31, 2016 and December 31, 2015:
Assets
Liabilities
Account
Fair Value
Account
Fair Value
Designated derivative
instruments
Interest rate swap contracts
Other current
assets
Interest rate swap contracts
Other assets
Foreign currency contracts
Foreign currency contracts
Commodity contracts
Total designated
Other current
assets
Other assets
Other current
assets
Derivatives not designated
Foreign currency contracts
Total not designated
Other assets
Total derivative instruments
Other financial instruments
Marketable securities
Total other financial
instruments
Other current
assets
12/31/16
12/31/15
12/31/16
12/31/15
$
— Other accruals
$
— $
—
4
—
—
4
$
—
— $
4
$
$
$
$
—
—
5
—
—
5
—
—
5
$
$
$
$
$
$
1
1
29
5
—
36
—
7 Other liabilities
131 Other accruals
— Other liabilities
— Other accruals
$
138
13 Other liabilities
— $
13
36
$
151
23
23
$
$
61
61
The carrying amount of cash, cash equivalents, accounts receivable and short-term debt approximated fair value as of
December 31, 2016 and 2015. The estimated fair value of the Company’s long-term debt, including the current portion, as
of December 31, 2016 and 2015, was $6,717 and $6,767, respectively, and the related carrying value was $6,520 and
$6,544, 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).
Fair Value Hedges
The Company has designated all interest rate swap contracts and certain foreign currency forward and option contracts
as 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 each period presented was as follows:
Foreign
Currency
Contracts
Notional Value at December 31,
$
204
$
Gain (loss) on derivatives
Gain (loss) on hedged items
Cash Flow Hedges
5
(5)
2016
Interest
Rate
Swaps
1,250
(5)
5
Foreign
Currency
Contracts
2015
Interest
Rate
Swaps
Total
$
573
(3)
3
1,250
(4)
4
$ 1,823
(7)
7
Total
$ 1,454
$
—
—
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 each period presented was as follows:
2016
Foreign
Currency
Contracts
Commodity
Contracts
Total
2015
Foreign
Currency
Contracts
Commodity
Contracts
Notional Value at December 31,
$
643
$
Gain (loss) recognized in OCI
Gain (loss) reclassified into Cost of sales
12
4
7
(1)
—
$
650
$
745
$
11
4
19
17
9
(1)
(1)
Total
$
754
18
16
The net gain (loss) recognized in OCI for both foreign currency contracts and commodity contracts is generally
expected to be recognized in Cost of sales within the next twelve months.
74
75
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Commodity Price Risk
The Company is exposed to price volatility related to raw materials used in production, such as resins, pulp, essential
oils, tropical oils, tallow, poultry, corn and soybeans. The Company manages its raw material exposures through a
combination of cost containment measures, sourcing strategies, ongoing productivity initiatives and the limited use of
commodity hedging contracts. Futures contracts are used on a limited basis, primarily in the Hill’s Pet Nutrition segment,
to manage volatility related to raw material inventory purchases of certain traded commodities, and these contracts are
measured using quoted commodity exchange prices (Level 1 valuation). The duration of the commodity contracts generally
does not exceed 12 months.
Credit Risk
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 with diverse, credit-worthy counterparties based upon both strong credit ratings
and other credit considerations.
The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments
at December 31, 2016 and December 31, 2015:
Assets
Liabilities
Account
Fair Value
Account
Fair Value
Designated derivative
instruments
Interest rate swap contracts
Other current
assets
Interest rate swap contracts
Other assets
Foreign currency contracts
Foreign currency contracts
Commodity contracts
Total designated
Other current
assets
Other assets
Other current
assets
Derivatives not designated
Foreign currency contracts
Total not designated
Other assets
Total derivative instruments
Other financial instruments
Marketable securities
Total other financial
instruments
Other current
assets
12/31/16
12/31/15
12/31/16
12/31/15
$
— Other accruals
$
— $
—
4
—
—
4
$
—
— $
4
$
$
$
$
—
—
5
—
—
5
—
—
5
$
$
$
$
$
$
1
1
29
5
—
36
—
7 Other liabilities
131 Other accruals
— Other liabilities
— Other accruals
$
138
13 Other liabilities
— $
13
36
$
151
23
23
$
$
61
61
The carrying amount of cash, cash equivalents, accounts receivable and short-term debt approximated fair value as of
December 31, 2016 and 2015. The estimated fair value of the Company’s long-term debt, including the current portion, as
of December 31, 2016 and 2015, was $6,717 and $6,767, respectively, and the related carrying value was $6,520 and
$6,544, 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).
Fair Value Hedges
The Company has designated all interest rate swap contracts and certain foreign currency forward and option contracts
as 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 each period presented was as follows:
Foreign
Currency
Contracts
Notional Value at December 31,
$
204
$
Gain (loss) on derivatives
Gain (loss) on hedged items
Cash Flow Hedges
5
(5)
2016
Interest
Rate
Swaps
1,250
(5)
5
Foreign
Currency
Contracts
2015
Interest
Rate
Swaps
Total
$
573
(3)
3
1,250
(4)
4
$ 1,823
(7)
7
Total
$ 1,454
$
—
—
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 each period presented was as follows:
2016
Foreign
Currency
Contracts
Commodity
Contracts
Total
2015
Foreign
Currency
Contracts
Commodity
Contracts
Notional Value at December 31,
$
643
$
Gain (loss) recognized in OCI
Gain (loss) reclassified into Cost of sales
12
4
7
(1)
—
$
650
$
745
$
11
4
19
17
9
(1)
(1)
Total
$
754
18
16
The net gain (loss) recognized in OCI for both foreign currency contracts and commodity contracts is generally
expected to be recognized in Cost of sales within the next twelve months.
74
75
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Net Investment Hedges
The Company has designated certain foreign currency forward and option contracts and certain foreign currency-
denominated debt as net investment hedges, for which the gain or loss on the instrument is reported as a component of
Cumulative translation adjustments within OCI, along with the offsetting gain or loss on the hedged items.
At December 31, 2014, Other current assets included marketable securities and the current portion of bonds issued by
the Venezuelan government. Effective December 31, 2015, the Company began accounting for CP Venezuela using the cost
method of accounting and as a result its Consolidated Balance Sheet as of December 31, 2015 no longer includes the assets
and liabilities of CP Venezuela.
The following table presents a reconciliation of the Venezuelan bonds at fair value for the twelve months ended
Activity related to net investment hedges recorded during each period presented was as follows:
December 31, 2015 and 2014:
Foreign
Currency
Contracts
2016
Foreign
Currency
Debt
Foreign
Currency
Contracts
Total
2015
Foreign
Currency
Debt
Total
Notional Value at December 31,
$
498
$
1,118
$ 1,616
$
645
$
800
$ 1,445
Gain (loss) on instruments
Gain (loss) on hedged items
22
(25)
35
(35)
57
(60)
73
(73)
48
(48)
121
(121)
Derivatives Not Designated as Hedging Instruments
Derivatives not designated as hedging instruments for each period consist of a cross-currency swap that serves as an
economic hedge of a foreign currency deposit, for which the gain or loss on the instrument and the offsetting gain or loss
on the hedged item are recognized in Other (income) expense, net for each period. Derivatives not designated as hedging
instruments also include foreign currency contracts for which the gain or loss on the instrument is recognized in Other
(income) expense, net for the twelve months ended December 31, 2016.
Beginning balance as of January 1
Unrealized gain (loss) on investment
Purchases and sales during the period
Venezuela deconsolidation
Ending balance as of December 31
2015
2014
$
$
$
399
(17)
12
(394)
— $
685
(341)
55
—
399
Unrealized loss on investment for the years ended December 31, 2015 and 2014 consisted primarily of a loss in the
amount of $50 and $324, respectively, related to the remeasurement of the bolivar-denominated fixed interest rate bonds
and the devaluation-protected bonds in Venezuela as a result of the effective devaluations in the those periods. For further
information regarding Venezuela, refer to Note 14, Venezuela.
8.
Capital Stock and Stock-Based Compensation Plans
Preference Stock
Activity related to these contracts during each period presented was as follows:
The Company has the authority to issue 50,262,150 shares of preference stock.
Notional Value at December 31,
Gain (loss) on instruments
Gain (loss) on hedged items
Other Financial Instruments
2016
2015
Foreign Currency
Contracts
Foreign Currency
Contracts
$
4
$
5
(5)
102
11
(4)
Other financial instruments are classified as Other current assets or Other assets.
Included in Other current assets at December 31, 2016 are marketable securities, which consist of bank deposits of $23
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 $48 classified as held-to-maturity and carried at amortized cost.
The long-term portion of these bonds in the amount of $4 is included in Other assets.
Through its subsidiary in Argentina, the Company has invested in U.S. dollar-linked devaluation-protected bonds and
Argentinian peso-denominated bonds issued by the Argentinian government. As of December 31, 2016 and 2015, the
amortized cost of these bonds was $52 and $61, respectively, and their approximate fair value was $64 and $77,
respectively (Level 2 valuation).
Stock Repurchases
On February 19, 2015, the Board authorized the repurchase of shares of the Company’s common stock having an
aggregate purchase price of up to $5,000 under a share repurchase program (the “2015 Program”), which replaced a
previously authorized share repurchase program. The Company commenced repurchase of shares of the Company’s
common stock under the 2015 Program beginning February 19, 2015. 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 Company repurchased its common stock at a cost of
$1,335 during 2016 under the 2015 Program.
The Company may use either authorized and unissued shares or treasury shares to meet share requirements resulting
from the exercise of stock options and the vesting of restricted stock unit awards.
76
77
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Net Investment Hedges
The Company has designated certain foreign currency forward and option contracts and certain foreign currency-
denominated debt as net investment hedges, for which the gain or loss on the instrument is reported as a component of
Cumulative translation adjustments within OCI, along with the offsetting gain or loss on the hedged items.
At December 31, 2014, Other current assets included marketable securities and the current portion of bonds issued by
the Venezuelan government. Effective December 31, 2015, the Company began accounting for CP Venezuela using the cost
method of accounting and as a result its Consolidated Balance Sheet as of December 31, 2015 no longer includes the assets
and liabilities of CP Venezuela.
The following table presents a reconciliation of the Venezuelan bonds at fair value for the twelve months ended
Activity related to net investment hedges recorded during each period presented was as follows:
December 31, 2015 and 2014:
Foreign
Currency
Contracts
2016
Foreign
Currency
Debt
Foreign
Currency
Contracts
Total
2015
Foreign
Currency
Debt
Total
Notional Value at December 31,
$
498
$
1,118
$ 1,616
$
645
$
800
$ 1,445
Gain (loss) on instruments
Gain (loss) on hedged items
22
(25)
35
(35)
57
(60)
73
(73)
48
(48)
121
(121)
Derivatives Not Designated as Hedging Instruments
Derivatives not designated as hedging instruments for each period consist of a cross-currency swap that serves as an
economic hedge of a foreign currency deposit, for which the gain or loss on the instrument and the offsetting gain or loss
on the hedged item are recognized in Other (income) expense, net for each period. Derivatives not designated as hedging
instruments also include foreign currency contracts for which the gain or loss on the instrument is recognized in Other
(income) expense, net for the twelve months ended December 31, 2016.
Beginning balance as of January 1
Unrealized gain (loss) on investment
Purchases and sales during the period
Venezuela deconsolidation
Ending balance as of December 31
2015
2014
$
$
$
399
(17)
12
(394)
— $
685
(341)
55
—
399
Unrealized loss on investment for the years ended December 31, 2015 and 2014 consisted primarily of a loss in the
amount of $50 and $324, respectively, related to the remeasurement of the bolivar-denominated fixed interest rate bonds
and the devaluation-protected bonds in Venezuela as a result of the effective devaluations in the those periods. For further
information regarding Venezuela, refer to Note 14, Venezuela.
8.
Capital Stock and Stock-Based Compensation Plans
Preference Stock
Activity related to these contracts during each period presented was as follows:
The Company has the authority to issue 50,262,150 shares of preference stock.
Notional Value at December 31,
Gain (loss) on instruments
Gain (loss) on hedged items
Other Financial Instruments
2016
2015
Foreign Currency
Contracts
Foreign Currency
Contracts
$
4
$
5
(5)
102
11
(4)
Other financial instruments are classified as Other current assets or Other assets.
Included in Other current assets at December 31, 2016 are marketable securities, which consist of bank deposits of $23
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 $48 classified as held-to-maturity and carried at amortized cost.
The long-term portion of these bonds in the amount of $4 is included in Other assets.
Through its subsidiary in Argentina, the Company has invested in U.S. dollar-linked devaluation-protected bonds and
Argentinian peso-denominated bonds issued by the Argentinian government. As of December 31, 2016 and 2015, the
amortized cost of these bonds was $52 and $61, respectively, and their approximate fair value was $64 and $77,
respectively (Level 2 valuation).
Stock Repurchases
On February 19, 2015, the Board authorized the repurchase of shares of the Company’s common stock having an
aggregate purchase price of up to $5,000 under a share repurchase program (the “2015 Program”), which replaced a
previously authorized share repurchase program. The Company commenced repurchase of shares of the Company’s
common stock under the 2015 Program beginning February 19, 2015. 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 Company repurchased its common stock at a cost of
$1,335 during 2016 under the 2015 Program.
The Company may use either authorized and unissued shares or treasury shares to meet share requirements resulting
from the exercise of stock options and the vesting of restricted stock unit awards.
76
77
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
A summary of common stock and treasury stock activity for the three years ended December 31, is as follows:
Balance, January 1, 2014
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2014
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2015
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2016
Stock-Based Compensation
Common
Stock
Outstanding
919,946,575
Treasury
Stock
545,759,785
(23,131,081)
7,977,124
1,919,527
906,712,145
23,131,081
(7,977,124)
(1,919,527)
558,994,215
(22,802,784)
7,394,839
1,434,318
892,738,518
22,802,784
(7,394,839)
(1,434,318)
572,967,842
(19,271,304)
8,536,639
1,105,110
883,108,963
19,271,304
(8,536,639)
(1,105,110)
582,597,397
The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as
stock options and restricted stock units, based on the fair value of those awards at the date of grant. The fair value of
restricted stock units, generally based on market prices, is amortized on a straight-line basis over the requisite service
period. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite
service period for each separately vesting portion of the award. Awards to employees eligible for retirement prior to the
award becoming fully vested are recognized as compensation cost from the grant date through the date that the employee
first becomes eligible to retire and is no longer required to provide service to earn the award.
The Company has one incentive compensation plan, which was approved by the Company’s stockholders on May 10,
2013, pursuant to which it issues restricted stock units and stock options to employees and shares of common stock and
stock options to non-employee directors. The Personnel and Organization Committee of the Board of Directors, which is
comprised entirely of independent directors, administers the incentive compensation plan. Previously, the Company issued
these awards pursuant to four different stockholder-approved plans. The total stock-based compensation expense charged
against pretax income for these plans was $123, $125 and $131 for the years ended December 31, 2016, 2015 and 2014,
respectively. The total income tax benefit recognized on stock-based compensation was approximately $40, $39 and $42
for the years ended December 31, 2016, 2015 and 2014, respectively.
Stock-based compensation expense is recorded within Selling, general and administrative expenses in the Corporate
segment as these amounts are not included in internal measures of segment operating performance.
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The Company uses the Black-Scholes option pricing model to determine the fair value of stock option awards. The
weighted-average estimated fair value of stock options granted in the years ended December 31, 2016, 2015 and 2014 was
$8.10, $7.25 and $7.60, respectively. Fair value is estimated using the Black-Scholes option pricing model with the
assumptions summarized in the following table:
Expected term of options
Expected volatility rate
Risk-free interest rate
Expected dividend yield
2016
4.5 years
16.7%
1.2%
2.1%
2015
4.5 years
17.6%
1.5%
2.5%
2014
4.5 years
17.1%
1.6%
2.3%
The weighted-average expected term of options granted each year was determined with reference to historical exercise
and post-vesting cancellation experience, the vesting period of the awards and contractual term of the awards, among other
factors. Expected volatility incorporates implied share-price volatility derived from exchange traded options on the
Company’s common stock. The risk-free interest rate for the expected term of the option is based on the yield of a zero-
coupon U.S. Treasury bond with a maturity period equal to the option’s expected term.
Restricted Stock Units
The Company grants restricted stock unit awards to officers and other employees. Awards vest at the end of the
restriction period, which is generally three years. As of December 31, 2016, approximately 10,750,000 shares of common
stock were available for future restricted stock unit awards.
A summary of restricted stock unit activity during 2016 is presented below:
Restricted stock units as of January 1, 2016
Activity:
Granted
Vested
Forfeited
Restricted stock units as of December 31, 2016
Shares
(in thousands)
3,166
933
(1,048)
(106)
2,945
Weighted Average
Grant Date Fair Value
Per Award
$
$
61
70
58
59
66
As of December 31, 2016, there was $56 of total unrecognized compensation expense related to nonvested restricted
stock unit awards, which will be recognized over a weighted-average period of 2.1 years. The total fair value of shares
vested during the years ended December 31, 2016, 2015 and 2014 was $61, $70 and $71, respectively.
Stock Options
The Company issues non-qualified stock options to non-employee directors, officers and other employees. Stock
options generally have a contractual term of six years and vest over three years. As of December 31, 2016, 28,401,438
shares of common stock were available for future stock option grants.
78
79
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
A summary of common stock and treasury stock activity for the three years ended December 31, is as follows:
Balance, January 1, 2014
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2014
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2015
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2016
Stock-Based Compensation
Common
Stock
Outstanding
919,946,575
Treasury
Stock
545,759,785
(23,131,081)
7,977,124
1,919,527
906,712,145
23,131,081
(7,977,124)
(1,919,527)
558,994,215
(22,802,784)
7,394,839
1,434,318
892,738,518
22,802,784
(7,394,839)
(1,434,318)
572,967,842
(19,271,304)
8,536,639
1,105,110
883,108,963
19,271,304
(8,536,639)
(1,105,110)
582,597,397
The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as
stock options and restricted stock units, based on the fair value of those awards at the date of grant. The fair value of
restricted stock units, generally based on market prices, is amortized on a straight-line basis over the requisite service
period. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite
service period for each separately vesting portion of the award. Awards to employees eligible for retirement prior to the
award becoming fully vested are recognized as compensation cost from the grant date through the date that the employee
first becomes eligible to retire and is no longer required to provide service to earn the award.
The Company has one incentive compensation plan, which was approved by the Company’s stockholders on May 10,
2013, pursuant to which it issues restricted stock units and stock options to employees and shares of common stock and
stock options to non-employee directors. The Personnel and Organization Committee of the Board of Directors, which is
comprised entirely of independent directors, administers the incentive compensation plan. Previously, the Company issued
these awards pursuant to four different stockholder-approved plans. The total stock-based compensation expense charged
against pretax income for these plans was $123, $125 and $131 for the years ended December 31, 2016, 2015 and 2014,
respectively. The total income tax benefit recognized on stock-based compensation was approximately $40, $39 and $42
for the years ended December 31, 2016, 2015 and 2014, respectively.
Stock-based compensation expense is recorded within Selling, general and administrative expenses in the Corporate
segment as these amounts are not included in internal measures of segment operating performance.
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The Company uses the Black-Scholes option pricing model to determine the fair value of stock option awards. The
weighted-average estimated fair value of stock options granted in the years ended December 31, 2016, 2015 and 2014 was
$8.10, $7.25 and $7.60, respectively. Fair value is estimated using the Black-Scholes option pricing model with the
assumptions summarized in the following table:
Expected term of options
Expected volatility rate
Risk-free interest rate
Expected dividend yield
2016
4.5 years
16.7%
1.2%
2.1%
2015
4.5 years
17.6%
1.5%
2.5%
2014
4.5 years
17.1%
1.6%
2.3%
The weighted-average expected term of options granted each year was determined with reference to historical exercise
and post-vesting cancellation experience, the vesting period of the awards and contractual term of the awards, among other
factors. Expected volatility incorporates implied share-price volatility derived from exchange traded options on the
Company’s common stock. The risk-free interest rate for the expected term of the option is based on the yield of a zero-
coupon U.S. Treasury bond with a maturity period equal to the option’s expected term.
Restricted Stock Units
The Company grants restricted stock unit awards to officers and other employees. Awards vest at the end of the
restriction period, which is generally three years. As of December 31, 2016, approximately 10,750,000 shares of common
stock were available for future restricted stock unit awards.
A summary of restricted stock unit activity during 2016 is presented below:
Restricted stock units as of January 1, 2016
Activity:
Granted
Vested
Forfeited
Restricted stock units as of December 31, 2016
Shares
(in thousands)
3,166
933
(1,048)
(106)
2,945
Weighted Average
Grant Date Fair Value
Per Award
$
$
61
70
58
59
66
As of December 31, 2016, there was $56 of total unrecognized compensation expense related to nonvested restricted
stock unit awards, which will be recognized over a weighted-average period of 2.1 years. The total fair value of shares
vested during the years ended December 31, 2016, 2015 and 2014 was $61, $70 and $71, respectively.
Stock Options
The Company issues non-qualified stock options to non-employee directors, officers and other employees. Stock
options generally have a contractual term of six years and vest over three years. As of December 31, 2016, 28,401,438
shares of common stock were available for future stock option grants.
78
79
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
A summary of stock option activity during 2016 is presented below:
10.
Retirement Plans and Other Retiree Benefits
Retirement Plans
The Company and certain of its U.S. and overseas subsidiaries maintain defined benefit retirement plans. Benefits
under these plans are based primarily on years of service and employees’ career earnings.
Effective January 1, 2014, the Company provides all future retirement benefits through the Company’s defined
contribution plan. As a result, service after December 31, 2013 is not considered for participants in the Company’s U.S.
defined benefit retirement plan. Participants in the Company’s U.S. defined benefit retirement plan whose retirement
benefit was determined under the cash balance formula continue to earn interest credits on their vested balances as of
December 31, 2013 but no longer receive pay credits. Participants whose retirement benefit was determined under the final
average earnings formula continue to have their final average earnings adjusted for pay increases until termination of
employment.
In the Company’s principal U.S. plans and certain funded overseas plans, funds are contributed to trusts in accordance
with regulatory limits to provide for current service and for any unfunded projected benefit obligation over a reasonable
period. The target asset allocation for the Company’s defined benefit plans is as follows:
Asset Category
Equity securities
Fixed income securities
Real estate and other investments
Total
United States
International
27%
53%
20%
100%
41%
40%
19%
100%
Options outstanding, January 1, 2016
Granted
Exercised
Forfeited or expired
Options outstanding, December 31, 2016
Options exercisable, December 31, 2016
Shares
(in thousands)
43,920
9,163
(8,903)
(488)
43,692
26,396
$
$
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Life
(in years)
Intrinsic Value
of Unexercised
In-the-Money
Options
56
73
46
60
61
57
4
3
$
$
261
236
As of December 31, 2016, there was $49 of total unrecognized compensation expense related to options, which will be
recognized over a weighted-average period of 1.7 years. The total intrinsic value of options exercised during the years
ended December 31, 2016, 2015 and 2014 was $221, $200 and $211, respectively.
The benefits of tax deductions in excess of grant date fair value resulting from the exercise of stock options and
vesting of restricted stock unit awards for the years ended December 31, 2016, 2015 and 2014 was $59, $55 and $63,
respectively. Through December 31, 2016 these amounts were recognized in equity and were reported as a financing cash
flow. Effective January 1, 2017, as a result of the required adoption of ASU No. 2016-09, excess tax benefits will be
recognized in the provision for income taxes as a discrete item in the quarterly period in which they occur and classified as
an operating cash flow. Cash proceeds received from options exercised for the years ended December 31, 2016, 2015 and
2014 were $386, $299 and $314, respectively.
9.
Employee Stock Ownership Plan
In 1989, the Company expanded its Employee Stock Ownership Plan (“ESOP”) through the introduction of a
leveraged ESOP that funds certain benefits for employees who have met eligibility requirements. As of December 31, 2016
and 2015, there were 21,082,162 and 23,636,184 shares of common stock, respectively, outstanding and issued to the
Company’s ESOP.
During 2000, the ESOP entered into a loan agreement with the Company under which the benefits of the ESOP may be
extended through 2035. As of December 31, 2016, the ESOP had outstanding borrowings from the Company of $7, which
represents unearned compensation shown as a reduction in Shareholders’ equity.
Dividends on stock held by the ESOP are paid to the ESOP trust and, together with cash contributions from the
Company, are (a) used by the ESOP to repay principal and interest, (b) credited to participant accounts or (c) used for
contributions to the Company’s defined contribution plans. Stock is allocated to participants based upon the ratio of the
current year’s debt service to the sum of total outstanding principal and interest payments over the life of the debt. As of
December 31, 2016, 16,409,918 shares of common stock had been released and allocated to participant accounts and
4,672,244 shares of common stock were available for future allocation to participant accounts.
Dividends on the stock used to repay principal and interest or credited to participant accounts are deductible for
income tax purposes and, accordingly, are reflected net of their tax benefit in the Consolidated Statements of Changes in
Shareholders’ Equity.
Annual expense related to the ESOP was $0, $0, and $2 in 2016, 2015 and 2014, respectively.
The Company paid dividends on the shares held by the ESOP of $35 in 2016, $38 in 2015 and $40 in 2014. The
Company contributed to the ESOP $0, $0 and $2 in 2016, 2015 and 2014, respectively.
80
81
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
A summary of stock option activity during 2016 is presented below:
10.
Retirement Plans and Other Retiree Benefits
Retirement Plans
The Company and certain of its U.S. and overseas subsidiaries maintain defined benefit retirement plans. Benefits
under these plans are based primarily on years of service and employees’ career earnings.
Effective January 1, 2014, the Company provides all future retirement benefits through the Company’s defined
contribution plan. As a result, service after December 31, 2013 is not considered for participants in the Company’s U.S.
defined benefit retirement plan. Participants in the Company’s U.S. defined benefit retirement plan whose retirement
benefit was determined under the cash balance formula continue to earn interest credits on their vested balances as of
December 31, 2013 but no longer receive pay credits. Participants whose retirement benefit was determined under the final
average earnings formula continue to have their final average earnings adjusted for pay increases until termination of
employment.
In the Company’s principal U.S. plans and certain funded overseas plans, funds are contributed to trusts in accordance
with regulatory limits to provide for current service and for any unfunded projected benefit obligation over a reasonable
period. The target asset allocation for the Company’s defined benefit plans is as follows:
Asset Category
Equity securities
Fixed income securities
Real estate and other investments
Total
United States
International
27%
53%
20%
100%
41%
40%
19%
100%
Options outstanding, January 1, 2016
Granted
Exercised
Forfeited or expired
Options outstanding, December 31, 2016
Options exercisable, December 31, 2016
Shares
(in thousands)
43,920
9,163
(8,903)
(488)
43,692
26,396
$
$
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Life
(in years)
Intrinsic Value
of Unexercised
In-the-Money
Options
56
73
46
60
61
57
4
3
$
$
261
236
As of December 31, 2016, there was $49 of total unrecognized compensation expense related to options, which will be
recognized over a weighted-average period of 1.7 years. The total intrinsic value of options exercised during the years
ended December 31, 2016, 2015 and 2014 was $221, $200 and $211, respectively.
The benefits of tax deductions in excess of grant date fair value resulting from the exercise of stock options and
vesting of restricted stock unit awards for the years ended December 31, 2016, 2015 and 2014 was $59, $55 and $63,
respectively. Through December 31, 2016 these amounts were recognized in equity and were reported as a financing cash
flow. Effective January 1, 2017, as a result of the required adoption of ASU No. 2016-09, excess tax benefits will be
recognized in the provision for income taxes as a discrete item in the quarterly period in which they occur and classified as
an operating cash flow. Cash proceeds received from options exercised for the years ended December 31, 2016, 2015 and
2014 were $386, $299 and $314, respectively.
9.
Employee Stock Ownership Plan
In 1989, the Company expanded its Employee Stock Ownership Plan (“ESOP”) through the introduction of a
leveraged ESOP that funds certain benefits for employees who have met eligibility requirements. As of December 31, 2016
and 2015, there were 21,082,162 and 23,636,184 shares of common stock, respectively, outstanding and issued to the
Company’s ESOP.
During 2000, the ESOP entered into a loan agreement with the Company under which the benefits of the ESOP may be
extended through 2035. As of December 31, 2016, the ESOP had outstanding borrowings from the Company of $7, which
represents unearned compensation shown as a reduction in Shareholders’ equity.
Dividends on stock held by the ESOP are paid to the ESOP trust and, together with cash contributions from the
Company, are (a) used by the ESOP to repay principal and interest, (b) credited to participant accounts or (c) used for
contributions to the Company’s defined contribution plans. Stock is allocated to participants based upon the ratio of the
current year’s debt service to the sum of total outstanding principal and interest payments over the life of the debt. As of
December 31, 2016, 16,409,918 shares of common stock had been released and allocated to participant accounts and
4,672,244 shares of common stock were available for future allocation to participant accounts.
Dividends on the stock used to repay principal and interest or credited to participant accounts are deductible for
income tax purposes and, accordingly, are reflected net of their tax benefit in the Consolidated Statements of Changes in
Shareholders’ Equity.
Annual expense related to the ESOP was $0, $0, and $2 in 2016, 2015 and 2014, respectively.
The Company paid dividends on the shares held by the ESOP of $35 in 2016, $38 in 2015 and $40 in 2014. The
Company contributed to the ESOP $0, $0 and $2 in 2016, 2015 and 2014, respectively.
80
81
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
At December 31, 2016 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for
At December 31, 2015 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for
each major asset category were as follows:
each major asset category were as follows:
Level of
Valuation
Input
Level 1
Level 1
Level 1
Level 1
Level 2
Level 2
Cash and cash equivalents
U.S. common stocks
International common stocks
Pooled funds(1)
Fixed income securities(2)
Guaranteed investment contracts(3)
Investments valued using NAV per share(4)
Domestic, developed and emerging markets equity
funds
Fixed income funds(5)
Hedge funds(6)
Multi-Asset funds(7)
Real estate funds(8)
Pension Plans
United States
International
Other Retiree
Benefit Plans
$
$
27
127
—
134
767
1
1,056
323
118
96
52
43
632
13
3
3
84
22
49
174
155
155
3
3
19
335
—
509
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Level of
Valuation
Input
Level 1
Level 1
Level 1
Level 2
Level 2
Cash and cash equivalents
U.S. common stocks
Pooled funds(1)
Fixed income securities(2)
Guaranteed investment contracts(3)
Investments valued using NAV per share(4)
Domestic, developed and emerging markets equity
funds
Fixed income funds(5)
Hedge funds(6)
Multi-Asset funds(7)
Real estate funds(8)
Pension Plans
United States
International
Other Retiree
Benefit Plans
$
$
16
126
112
718
1
973
309
123
131
49
39
651
13
3
76
24
52
168
158
165
6
4
19
352
—
520
$
$
—
1
1
6
—
8
3
1
1
—
1
6
—
14
Other assets and liabilities, net(9)
Total Investments
(42)
1,646
$
$
Other assets and liabilities, net(9)
Total Investments
—
1,624
$
$
_______
(1) Pooled funds primarily invest in U.S. and foreign equity securities, debt and money market securities.
(2) The fixed income securities are traded over the counter and certain of these securities lack daily pricing or liquidity and as such are
classified as Level 2. As of December 31, 2016 and 2015, approximately 50% of the U.S. pension plan fixed income portfolio was
invested in U.S. treasury or agency securities, with the remainder invested in other government bonds and corporate bonds.
(3) The guaranteed investment contracts (“GICs”) represent contracts with insurance companies measured at the cash surrender value
of each contract. The Level 2 valuation reflects that the cash surrender value is based principally on a referenced pool of investment
funds with active redemption.
(4)
In accordance with ASU 2015-07, investments that are measured at fair value using net asset value (“NAV”) per share as a practical
expedient have not been classified in the fair value hierarchy. The Company has applied ASU 2015-07 retrospectively for the year
ended December 31, 2016. The NAV is based on the value of the underlying investments owned, minus its liabilities, divided by the
number of shares outstanding. There are no unfunded commitments related to these investments. Redemption notice period
primarily ranges from 0-3 months and redemption frequency windows range from daily to quarterly.
(5) Fixed income funds primarily invest in U.S. government and investment grade corporate bonds.
(6) Consists of investments in underlying hedge fund strategies that are primarily implemented through the use of long and short equity
and fixed income securities and derivative instruments such as futures and options.
(7) Multi-Asset funds primarily invest across a variety of asset classes, including global stocks and bonds, as well as alternative
strategies.
(8) Real estate is valued using the NAV per unit of funds that are invested in real estate property. The investment value of the real estate
property is determined quarterly using independent market appraisals as determined by the investment manager.
(9) This category primarily includes unsettled trades for investments purchased and sold and dividend receivables.
82
83
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
At December 31, 2016 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for
At December 31, 2015 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for
each major asset category were as follows:
each major asset category were as follows:
Level of
Valuation
Input
Level 1
Level 1
Level 1
Level 1
Level 2
Level 2
Cash and cash equivalents
U.S. common stocks
International common stocks
Pooled funds(1)
Fixed income securities(2)
Guaranteed investment contracts(3)
Investments valued using NAV per share(4)
Domestic, developed and emerging markets equity
funds
Fixed income funds(5)
Hedge funds(6)
Multi-Asset funds(7)
Real estate funds(8)
Pension Plans
United States
International
Other Retiree
Benefit Plans
$
$
27
127
—
134
767
1
1,056
323
118
96
52
43
632
13
3
3
84
22
49
174
155
155
3
3
19
335
—
509
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Level of
Valuation
Input
Level 1
Level 1
Level 1
Level 2
Level 2
Cash and cash equivalents
U.S. common stocks
Pooled funds(1)
Fixed income securities(2)
Guaranteed investment contracts(3)
Investments valued using NAV per share(4)
Domestic, developed and emerging markets equity
funds
Fixed income funds(5)
Hedge funds(6)
Multi-Asset funds(7)
Real estate funds(8)
Pension Plans
United States
International
Other Retiree
Benefit Plans
$
$
16
126
112
718
1
973
309
123
131
49
39
651
13
3
76
24
52
168
158
165
6
4
19
352
—
520
$
$
—
1
1
6
—
8
3
1
1
—
1
6
—
14
Other assets and liabilities, net(9)
Total Investments
(42)
1,646
$
$
Other assets and liabilities, net(9)
Total Investments
—
1,624
$
$
_______
(1) Pooled funds primarily invest in U.S. and foreign equity securities, debt and money market securities.
(2) The fixed income securities are traded over the counter and certain of these securities lack daily pricing or liquidity and as such are
classified as Level 2. As of December 31, 2016 and 2015, approximately 50% of the U.S. pension plan fixed income portfolio was
invested in U.S. treasury or agency securities, with the remainder invested in other government bonds and corporate bonds.
(3) The guaranteed investment contracts (“GICs”) represent contracts with insurance companies measured at the cash surrender value
of each contract. The Level 2 valuation reflects that the cash surrender value is based principally on a referenced pool of investment
funds with active redemption.
(4)
In accordance with ASU 2015-07, investments that are measured at fair value using net asset value (“NAV”) per share as a practical
expedient have not been classified in the fair value hierarchy. The Company has applied ASU 2015-07 retrospectively for the year
ended December 31, 2016. The NAV is based on the value of the underlying investments owned, minus its liabilities, divided by the
number of shares outstanding. There are no unfunded commitments related to these investments. Redemption notice period
primarily ranges from 0-3 months and redemption frequency windows range from daily to quarterly.
(5) Fixed income funds primarily invest in U.S. government and investment grade corporate bonds.
(6) Consists of investments in underlying hedge fund strategies that are primarily implemented through the use of long and short equity
and fixed income securities and derivative instruments such as futures and options.
(7) Multi-Asset funds primarily invest across a variety of asset classes, including global stocks and bonds, as well as alternative
strategies.
(8) Real estate is valued using the NAV per unit of funds that are invested in real estate property. The investment value of the real estate
property is determined quarterly using independent market appraisals as determined by the investment manager.
(9) This category primarily includes unsettled trades for investments purchased and sold and dividend receivables.
82
83
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Equity securities in the U.S. plans include investments in the Company’s common stock representing 7% of U.S. plan
assets at December 31, 2016 and December 31, 2015. No shares of the Company’s common stock were purchased or sold
by the U.S. plans in 2016 or 2015. The plans received dividends on the Company’s common stock of $3 in 2016 and 2015.
Other Retiree Benefits
Change in Benefit Obligations
Pension Plans
2015
2016
2015
2016
International
United States
Other Retiree
Benefit Plans
2015
2016
The Company and certain of its subsidiaries provide health care and life insurance benefits for retired employees to the
Benefit obligations at beginning of year
$ 2,201
$2,406
$ 802
$ 916
$ 862
$ 1,011
extent not provided by government-sponsored plans.
The Company uses a December 31 measurement date for its defined benefit and other retiree benefit plans.
Summarized information for the Company’s defined benefit and other retiree benefit plans is as follows:
Service cost
Interest cost
Participants’ contributions
Acquisitions/plan amendments
Actuarial loss (gain)
Foreign exchange impact
Termination benefits (1)
Curtailments and settlements
Benefit payments
Other (2)
Benefit obligations at end of year
Change in Plan Assets
1
105
—
—
129
—
3
—
(141)
—
2
100
—
—
(189)
—
16
—
(134)
—
$ 2,298
$2,201
16
25
2
1
76
(47)
—
(37)
(36)
(2)
$ 800
20
28
2
3
(3)
(75)
—
(16)
(38)
(35)
$ 802
13
43
—
—
39
1
1
—
(36)
—
$ 923
Fair value of plan assets at beginning of year
$ 1,624
$ 520
$ 552
$
14
44
—
—
(154)
(14)
1
—
(40)
—
862
41
—
13
—
—
—
(40)
—
14
$1,771
(33)
20
—
—
—
(134)
—
88
75
—
—
—
(141)
—
46
54
20
35
2
(43)
(33)
(36)
(1)
$ 509
2
(35)
(14)
(38)
(2)
$ 520
$
$
14
1
21
—
—
—
(36)
—
$ 1,646
$1,624
$ — $
$ 2,298
$2,201
$ 800
$ 802
$ 923
$
862
1,646
1,624
509
$ (652) $ (577) $ (291) $ (282) $ (923) $
520
—
14
(848)
$
$ — $ — $
8
(12)
(287)
$ (652) $ (577) $ (291) $ (282) $ (923) $
$ — $ —
(41)
(807)
(848)
17
(12)
(287)
(21)
(556)
(24)
(628)
(44)
(879)
$ 962
$ 852
$ 254
$ 219
2
2
5
7
$ 964
$ 854
$ 259
$ 226
$ 330
(2)
$ 328
$
$
305
(2)
303
Actual return on plan assets
Company contributions
Participants’ contributions
Foreign exchange impact
Settlements and acquisitions
Benefit payments
Other
Fair value of plan assets at end of year
Funded Status
Benefit obligations at end of year
Fair value of plan assets at end of year
Net amount recognized
Amounts Recognized in Balance Sheet
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net amount recognized
Amounts Recognized in Accumulated Other
Comprehensive Income (Loss)
Actuarial loss
Transition/prior service cost
84
85
Accumulated benefit obligation
$ 2,230
$2,100
$ 739
$ 739
$ — $ —
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Equity securities in the U.S. plans include investments in the Company’s common stock representing 7% of U.S. plan
assets at December 31, 2016 and December 31, 2015. No shares of the Company’s common stock were purchased or sold
by the U.S. plans in 2016 or 2015. The plans received dividends on the Company’s common stock of $3 in 2016 and 2015.
Other Retiree Benefits
Change in Benefit Obligations
Pension Plans
2015
2016
2015
2016
International
United States
Other Retiree
Benefit Plans
2015
2016
The Company and certain of its subsidiaries provide health care and life insurance benefits for retired employees to the
Benefit obligations at beginning of year
$ 2,201
$2,406
$ 802
$ 916
$ 862
$ 1,011
extent not provided by government-sponsored plans.
The Company uses a December 31 measurement date for its defined benefit and other retiree benefit plans.
Summarized information for the Company’s defined benefit and other retiree benefit plans is as follows:
Service cost
Interest cost
Participants’ contributions
Acquisitions/plan amendments
Actuarial loss (gain)
Foreign exchange impact
Termination benefits (1)
Curtailments and settlements
Benefit payments
Other (2)
Benefit obligations at end of year
Change in Plan Assets
1
105
—
—
129
—
3
—
(141)
—
2
100
—
—
(189)
—
16
—
(134)
—
$ 2,298
$2,201
16
25
2
1
76
(47)
—
(37)
(36)
(2)
$ 800
20
28
2
3
(3)
(75)
—
(16)
(38)
(35)
$ 802
13
43
—
—
39
1
1
—
(36)
—
$ 923
Fair value of plan assets at beginning of year
$ 1,624
$ 520
$ 552
$
14
44
—
—
(154)
(14)
1
—
(40)
—
862
41
—
13
—
—
—
(40)
—
14
$1,771
(33)
20
—
—
—
(134)
—
88
75
—
—
—
(141)
—
46
54
20
35
2
(43)
(33)
(36)
(1)
$ 509
2
(35)
(14)
(38)
(2)
$ 520
$
$
14
1
21
—
—
—
(36)
—
$ 1,646
$1,624
$ — $
$ 2,298
$2,201
$ 800
$ 802
$ 923
$
862
1,624
1,646
509
$ (652) $ (577) $ (291) $ (282) $ (923) $
520
—
14
(848)
$
$ — $ — $
8
(12)
(287)
$ (652) $ (577) $ (291) $ (282) $ (923) $
$ — $ —
(41)
(807)
(848)
17
(12)
(287)
(21)
(556)
(24)
(628)
(44)
(879)
$ 962
$ 852
$ 254
$ 219
2
2
5
7
$ 964
$ 854
$ 259
$ 226
$ 330
(2)
$ 328
$
$
305
(2)
303
Actual return on plan assets
Company contributions
Participants’ contributions
Foreign exchange impact
Settlements and acquisitions
Benefit payments
Other
Fair value of plan assets at end of year
Funded Status
Benefit obligations at end of year
Fair value of plan assets at end of year
Net amount recognized
Amounts Recognized in Balance Sheet
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net amount recognized
Amounts Recognized in Accumulated Other
Comprehensive Income (Loss)
Actuarial loss
Transition/prior service cost
84
85
Accumulated benefit obligation
$ 2,230
$2,100
$ 739
$ 739
$ — $ —
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Weighted-Average Assumptions Used to Determine Benefit
Obligations
Discount rate
Long-term rate of return on plan assets
Long-term rate of compensation increase
ESOP growth rate
Medical cost trend rate of increase
Pension Plans
2015
2016
2015
2016
International
United States
Other Retiree
Benefit Plans
2015
2016
4.27% 4.93% 2.59% 3.17% 4.41% 4.97%
6.80% 6.80% 4.14% 4.62% 6.80% 6.80%
3.50% 3.50% 2.58% 2.78%
—% —%
—% —%
—%
—%
—% 10.00% 10.00%
—% 6.33% 6.67%
—%
—%
_________
(1) Represents pension and other retiree benefit enhancements incurred in 2016 and 2015 pursuant to the 2012 Restructuring Program.
(2) Other in International Pension Plans for 2015 includes a $33 impact related to the deconsolidation of the Company’s Venezuelan
operations. See Note 14, Venezuela.
The overall investment objective of the plans is to balance risk and return so that obligations to employees are met.
The Company evaluates its long-term rate of return on plan assets on an annual basis. In determining the long-term rate of
return, the Company considers the nature of the plans’ investments and the historical rates of return. The assumed rate of
return as of December 31, 2016 for the U.S. plans was 6.80%. Average annual rates of return for the U.S. plans for the most
recent 1-year, 5-year, 10-year, 15-year and 25-year periods were 6%, 8%, 5%, 6%, and 8%, respectively. Similar
assessments were performed in determining rates of return on international pension plan assets to arrive at the Company’s
2016 weighted-average rate of return of 4.14%.
The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease
from 6.33% in 2017 to 4.75% by 2022, remaining at 4.75% for the years thereafter. Changes in the assumed rate can have a
significant effect on amounts reported. A 1% change in the assumed medical cost trend rate would have the following
approximate effect:
Accumulated postretirement benefit obligation
Total of service and interest cost components
One percentage point
Increase
Decrease
$
$
119
9
(96)
(7)
Expected mortality is a key assumption in the measurement for pension and other postretirement benefit obligations.
For the Company’s U.S. plans, this assumption was updated as of December 31, 2016 in order to reflect the Society of
Actuaries’ updated mortality improvement scale published in October 2016. This resulted in a decrease of 1% and 2% to
the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively. This
assumption was previously updated for the Company’s U.S. plans as of December 31, 2015 in order to reflect the Society
of Actuaries’ mortality tables and mortality improvement scale published in October 2015 which resulted in a decrease of
1% and 2% to the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively.
Plans with projected benefit obligations in excess of plan assets and plans with accumulated benefit obligations in
excess of plan assets as of December 31 consisted of the following:
Benefit Obligation Exceeds Fair Value of Plan Assets
Projected benefit obligation
Fair value of plan assets
Accumulated benefit obligation
Fair value of plan assets
Years Ended December 31,
2016
2015
$
$
2,973
2,024
2,840
2,003
2,667
1,792
2,499
1,772
Summarized information regarding the net periodic benefit costs for the Company’s defined benefit and other retiree
benefit plans is as follows:
Pension Plans
2016
2014
2016
2015
United States
2015
International
2014
Other Retiree Benefit Plans
2014
2015
2016
Components of Net Periodic
Benefit Cost
Service cost
Interest cost
Annual ESOP allocation
$
1
$
2
$
1
$ 16
$ 20
$ 17
$ 13
$
105
—
100
—
102
—
25
—
28
—
35
—
Expected return on plan assets
(109)
(117)
(112)
(23)
(28)
(29)
Amortization of transition and
prior service costs (credits)
Amortization of actuarial loss
—
41
—
44
1
37
—
8
2
11
4
6
Net periodic benefit cost
$ 38
$ 29
$ 29
$ 26
$ 33
$ 33
$ 69
Other postretirement charges
3
16
5
11
Total pension cost
$ 41
$ 45
$ 34
$ 37
(1)
$ 32
(8)
$ 25
1
$ 70
$
$
43
—
(1)
—
14
14
44
—
(2)
—
25
81
1
82
$ 11
42
(1)
(3)
3
16
$ 68
—
$ 68
Weighted-Average Assumptions
Used to Determine Net
Periodic Benefit Cost
Discount rate
4.93% 4.24% 4.96% 3.17% 3.06% 3.99% 4.97%
4.36% 5.24%
Long-term rate of return on plan
assets
Long-term rate of compensation
increase
ESOP growth rate
Medical cost trend rate of
increase
6.80% 6.80% 6.80% 4.62% 5.05% 5.50% 6.80%
6.80% 6.80%
3.50% 3.50% 3.50% 2.78% 2.83% 3.02%
—%
—%
—%
—% —% —% —% —% —% 10.00% 10.00% 10.00%
—% —% —% —% —% —% 6.67%
7.00% 7.00%
Other postretirement charges in 2016, 2015 and 2014 include pension and other benefit enhancements amounting to
$4, $17 and $5 respectively, incurred pursuant to the 2012 Restructuring Program. Other postretirement charges in 2016
also includes $11 related to pension plan settlements incurred primarily pursuant to the 2012 Restructuring Program.
86
87
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Weighted-Average Assumptions Used to Determine Benefit
Obligations
Discount rate
Long-term rate of return on plan assets
Long-term rate of compensation increase
ESOP growth rate
Medical cost trend rate of increase
Pension Plans
2015
2016
2015
2016
International
United States
Other Retiree
Benefit Plans
2015
2016
4.27% 4.93% 2.59% 3.17% 4.41% 4.97%
6.80% 6.80% 4.14% 4.62% 6.80% 6.80%
3.50% 3.50% 2.58% 2.78%
—% —%
—% —%
—%
—%
—% 10.00% 10.00%
—% 6.33% 6.67%
—%
—%
_________
(1) Represents pension and other retiree benefit enhancements incurred in 2016 and 2015 pursuant to the 2012 Restructuring Program.
(2) Other in International Pension Plans for 2015 includes a $33 impact related to the deconsolidation of the Company’s Venezuelan
operations. See Note 14, Venezuela.
The overall investment objective of the plans is to balance risk and return so that obligations to employees are met.
The Company evaluates its long-term rate of return on plan assets on an annual basis. In determining the long-term rate of
return, the Company considers the nature of the plans’ investments and the historical rates of return. The assumed rate of
return as of December 31, 2016 for the U.S. plans was 6.80%. Average annual rates of return for the U.S. plans for the most
recent 1-year, 5-year, 10-year, 15-year and 25-year periods were 6%, 8%, 5%, 6%, and 8%, respectively. Similar
assessments were performed in determining rates of return on international pension plan assets to arrive at the Company’s
2016 weighted-average rate of return of 4.14%.
The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease
from 6.33% in 2017 to 4.75% by 2022, remaining at 4.75% for the years thereafter. Changes in the assumed rate can have a
significant effect on amounts reported. A 1% change in the assumed medical cost trend rate would have the following
approximate effect:
Accumulated postretirement benefit obligation
Total of service and interest cost components
One percentage point
Increase
Decrease
$
$
119
9
(96)
(7)
Expected mortality is a key assumption in the measurement for pension and other postretirement benefit obligations.
For the Company’s U.S. plans, this assumption was updated as of December 31, 2016 in order to reflect the Society of
Actuaries’ updated mortality improvement scale published in October 2016. This resulted in a decrease of 1% and 2% to
the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively. This
assumption was previously updated for the Company’s U.S. plans as of December 31, 2015 in order to reflect the Society
of Actuaries’ mortality tables and mortality improvement scale published in October 2015 which resulted in a decrease of
1% and 2% to the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively.
Plans with projected benefit obligations in excess of plan assets and plans with accumulated benefit obligations in
excess of plan assets as of December 31 consisted of the following:
Benefit Obligation Exceeds Fair Value of Plan Assets
Projected benefit obligation
Fair value of plan assets
Accumulated benefit obligation
Fair value of plan assets
Years Ended December 31,
2016
2015
$
$
2,973
2,024
2,840
2,003
2,667
1,792
2,499
1,772
Summarized information regarding the net periodic benefit costs for the Company’s defined benefit and other retiree
benefit plans is as follows:
Pension Plans
2016
2014
2016
2015
United States
2015
International
2014
Other Retiree Benefit Plans
2014
2015
2016
Components of Net Periodic
Benefit Cost
Service cost
Interest cost
Annual ESOP allocation
$
1
$
2
$
1
$ 16
$ 20
$ 17
$ 13
$
105
—
100
—
102
—
25
—
28
—
35
—
Expected return on plan assets
(109)
(117)
(112)
(23)
(28)
(29)
Amortization of transition and
prior service costs (credits)
Amortization of actuarial loss
—
41
—
44
1
37
—
8
2
11
4
6
Net periodic benefit cost
$ 38
$ 29
$ 29
$ 26
$ 33
$ 33
$ 69
Other postretirement charges
3
16
5
11
Total pension cost
$ 41
$ 45
$ 34
$ 37
(1)
$ 32
(8)
$ 25
1
$ 70
$
$
43
—
(1)
—
14
14
44
—
(2)
—
25
81
1
82
$ 11
42
(1)
(3)
3
16
$ 68
—
$ 68
Weighted-Average Assumptions
Used to Determine Net
Periodic Benefit Cost
Discount rate
4.93% 4.24% 4.96% 3.17% 3.06% 3.99% 4.97%
4.36% 5.24%
Long-term rate of return on plan
assets
Long-term rate of compensation
increase
ESOP growth rate
Medical cost trend rate of
increase
6.80% 6.80% 6.80% 4.62% 5.05% 5.50% 6.80%
6.80% 6.80%
3.50% 3.50% 3.50% 2.78% 2.83% 3.02%
—%
—%
—%
—% —% —% —% —% —% 10.00% 10.00% 10.00%
—% —% —% —% —% —% 6.67%
7.00% 7.00%
Other postretirement charges in 2016, 2015 and 2014 include pension and other benefit enhancements amounting to
$4, $17 and $5 respectively, incurred pursuant to the 2012 Restructuring Program. Other postretirement charges in 2016
also includes $11 related to pension plan settlements incurred primarily pursuant to the 2012 Restructuring Program.
86
87
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The Company made voluntary contributions of $53, $0 and $2 in 2016, 2015 and 2014, respectively, to its U.S.
Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in
retirement plans.
the current provision for taxes being higher (lower) than the total Provision for income taxes as follows:
The estimated actuarial loss and the estimated transition/prior service cost for defined benefit and other retiree benefit
plans that will be amortized from Accumulated other comprehensive income (loss) into net periodic benefit cost over the
next fiscal year is as follows:
Net actuarial loss
Net transition and prior service cost
Expected Contributions and Benefit Payments
Pension
Plans
$
Other Retiree
Benefit Plans
17
$
—
57
—
Management’s best estimate of voluntary contributions the Company will make to U.S. pension plans for the year
ending December 31, 2017 is approximately $57. Actual funding may differ from current estimates depending on the
variability of the market value of the assets as compared to the obligation and other market or regulatory conditions.
Total benefit payments to be paid to participants for the year ending December 31, 2017 from the Company’s assets
are estimated to be approximately $81. Total benefit payments expected to be paid to participants from plan assets, or
directly from the Company’s assets to participants in unfunded plans, are as follows:
Years Ended December 31,
2017
2018
2019
2020
2021
2022-2026
11.
Income Taxes
Pension Plans
$
United
States
137
137
140
144
150
733
$
International
37
$
32
32
34
36
202
Other
Retiree
Benefit
Plans
$
45
46
46
47
48
256
219
215
218
225
234
1,191
The components of Income before income taxes are as follows for the three years ended December 31:
2016
2015
2014
United States
International
Total Income before income taxes
$
$
1,191
2,547
3,738
$
$
1,118
1,645
2,763
The Provision for income taxes consists of the following for the three years ended December 31:
United States
International
Total Provision for income taxes
2016
2015
$
$
395
757
1,152
$
$
376
839
1,215
$
$
$
$
1,094
2,439
3,533
2014
348
846
1,194
Goodwill and intangible assets
Property, plant and equipment
Pension and other retiree benefits
Stock-based compensation
Tax loss and tax credit carryforwards
Other, net
Total deferred tax benefit (provision)
2016
2015
2014
$
$
$
18
(3)
—
15
5
(106)
(71) $
3
(25)
36
11
(4)
98
119
$
$
(40)
(13)
19
11
5
(19)
(37)
The difference between the statutory U.S. federal income tax rate and the Company’s global effective tax rate as
reflected in the Consolidated Statements of Income is as follows:
Percentage of Income before income taxes
2016
2015
2014
Tax at United States statutory rate
State income taxes, net of federal benefit
Earnings taxed at other than United States statutory rate
(Benefit) charge for previously disclosed tax matters(1)
(Benefit) on Venezuela remeasurement(2)
Tax charge on incremental repatriation of foreign earnings(2)
Venezuela deconsolidation(3)
Other, net
35.0%
0.5
(2.7)
(0.8)
(5.6)
5.6
—
(1.2)
30.8%
35.0%
1.0
(3.6)
0.5
—
—
12.8
(1.7)
44.0%
35.0%
0.7
(2.3)
1.9
—
—
—
(1.5)
33.8%
_________
(1) The benefit from a previously disclosed tax matter in 2016 relates to several Supreme Court and Administrative Court rulings in a foreign
jurisdiction allowing certain tax deductions which had the effect of reversing prior decisions. The charge for a previously disclosed tax matter in
2015 relates to several Supreme Court rulings in a foreign jurisdiction disallowing certain tax deductions which had the effect of reversing prior
decisions. The charge for a foreign tax matter in 2014 relates to a notice of an adverse decision in a foreign court regarding a tax position taken in
prior years.
(2) The effective tax rate in 2016 included a $210 U.S. income tax benefit recognized in the first quarter of 2016 principally related to changes in
Venezuela’s foreign exchange regime implemented in March 2016. Although, effective December 31, 2015, the operating results of CP Venezuela
are no longer included in the Company’s Consolidated Financial Statements, under current tax rules, the Company is required to continue including
CP Venezuela’s results in its consolidated U.S. federal income tax return. In order to fully recognize the $210 tax benefit in 2016, the Company
repatriated an incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S., and
accordingly, recorded a tax charge of $210 during the first quarter of 2016.
(3)
See Note 14, Venezuela.
Total
Effective tax rate
88
89
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The Company made voluntary contributions of $53, $0 and $2 in 2016, 2015 and 2014, respectively, to its U.S.
Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in
retirement plans.
the current provision for taxes being higher (lower) than the total Provision for income taxes as follows:
The estimated actuarial loss and the estimated transition/prior service cost for defined benefit and other retiree benefit
plans that will be amortized from Accumulated other comprehensive income (loss) into net periodic benefit cost over the
next fiscal year is as follows:
Net actuarial loss
Net transition and prior service cost
Expected Contributions and Benefit Payments
Pension
Plans
$
Other Retiree
Benefit Plans
17
$
—
57
—
Management’s best estimate of voluntary contributions the Company will make to U.S. pension plans for the year
ending December 31, 2017 is approximately $57. Actual funding may differ from current estimates depending on the
variability of the market value of the assets as compared to the obligation and other market or regulatory conditions.
Total benefit payments to be paid to participants for the year ending December 31, 2017 from the Company’s assets
are estimated to be approximately $81. Total benefit payments expected to be paid to participants from plan assets, or
directly from the Company’s assets to participants in unfunded plans, are as follows:
Years Ended December 31,
2017
2018
2019
2020
2021
2022-2026
11.
Income Taxes
Pension Plans
$
United
States
137
137
140
144
150
733
$
International
37
$
32
32
34
36
202
Other
Retiree
Benefit
Plans
$
45
46
46
47
48
256
219
215
218
225
234
1,191
The components of Income before income taxes are as follows for the three years ended December 31:
2016
2015
2014
United States
International
Total Income before income taxes
$
$
1,191
2,547
3,738
$
$
1,118
1,645
2,763
The Provision for income taxes consists of the following for the three years ended December 31:
United States
International
Total Provision for income taxes
2016
2015
$
$
395
757
1,152
$
$
376
839
1,215
$
$
$
$
1,094
2,439
3,533
2014
348
846
1,194
Goodwill and intangible assets
Property, plant and equipment
Pension and other retiree benefits
Stock-based compensation
Tax loss and tax credit carryforwards
Other, net
Total deferred tax benefit (provision)
2016
2015
2014
$
$
$
18
(3)
—
15
5
(106)
(71) $
3
(25)
36
11
(4)
98
119
$
$
(40)
(13)
19
11
5
(19)
(37)
The difference between the statutory U.S. federal income tax rate and the Company’s global effective tax rate as
reflected in the Consolidated Statements of Income is as follows:
Percentage of Income before income taxes
2016
2015
2014
Tax at United States statutory rate
State income taxes, net of federal benefit
Earnings taxed at other than United States statutory rate
(Benefit) charge for previously disclosed tax matters(1)
(Benefit) on Venezuela remeasurement(2)
Tax charge on incremental repatriation of foreign earnings(2)
Venezuela deconsolidation(3)
Other, net
35.0%
0.5
(2.7)
(0.8)
(5.6)
5.6
—
(1.2)
30.8%
35.0%
1.0
(3.6)
0.5
—
—
12.8
(1.7)
44.0%
35.0%
0.7
(2.3)
1.9
—
—
—
(1.5)
33.8%
_________
(1) The benefit from a previously disclosed tax matter in 2016 relates to several Supreme Court and Administrative Court rulings in a foreign
jurisdiction allowing certain tax deductions which had the effect of reversing prior decisions. The charge for a previously disclosed tax matter in
2015 relates to several Supreme Court rulings in a foreign jurisdiction disallowing certain tax deductions which had the effect of reversing prior
decisions. The charge for a foreign tax matter in 2014 relates to a notice of an adverse decision in a foreign court regarding a tax position taken in
prior years.
(2) The effective tax rate in 2016 included a $210 U.S. income tax benefit recognized in the first quarter of 2016 principally related to changes in
Venezuela’s foreign exchange regime implemented in March 2016. Although, effective December 31, 2015, the operating results of CP Venezuela
are no longer included in the Company’s Consolidated Financial Statements, under current tax rules, the Company is required to continue including
CP Venezuela’s results in its consolidated U.S. federal income tax return. In order to fully recognize the $210 tax benefit in 2016, the Company
repatriated an incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S., and
accordingly, recorded a tax charge of $210 during the first quarter of 2016.
(3)
See Note 14, Venezuela.
Total
Effective tax rate
88
89
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The components of deferred tax assets (liabilities) are as follows at December 31:
Unrecognized tax benefits activity for the years ended December 31, 2016, 2015 and 2014 is summarized below:
Deferred tax liabilities:
Goodwill and intangible assets
Property, plant and equipment
Other
Deferred tax assets:
Pension and other retiree benefits
Tax loss and tax credit carryforwards
Accrued liabilities
Stock-based compensation
Other
Net deferred income taxes
Deferred taxes included within:
Assets:
Other current assets(1)
Deferred income taxes
Liabilities:
Deferred income taxes
Net deferred income taxes
2016
2015
(451) $
(380)
(202)
(1,033)
599
34
246
127
82
1,088
55
$
(458)
(380)
(150)
(988)
541
30
235
123
151
1,080
92
2016
2015
— $
301
(246)
55
$
258
67
(233)
92
$
$
$
$
________
(1) As permitted, the Company early adopted ASU 2015-17 on March 31, 2016 on a prospective basis. The new guidance eliminated the
requirement to separate deferred income taxes into current and noncurrent. See Note 2, Summary of Significant Accounting Policies
for additional details.
Applicable U.S. income and foreign withholding taxes have not been provided on approximately $3,400 of
undistributed earnings of foreign subsidiaries at December 31, 2016. These earnings have been and currently are
considered to be indefinitely reinvested outside of the U.S. and currently are not subject to such taxes. As the Company
operates in over 200 countries and territories throughout the world and due to the complexities in the tax laws and the
assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these earnings
were repatriated.
In addition, net tax benefit of $85 in 2016, net tax expense of $78 in 2015, and net tax benefit of $251 in 2014
recorded directly through equity predominantly include current and future tax impacts related to employee equity
compensation and benefit plans.
The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements
uncertain tax positions that the Company has taken or expects to take on an income tax return.
Unrecognized tax benefits:
Balance, January 1
Increases as a result of tax positions taken during the current year
Decreases of tax positions taken during prior years
Increases of tax positions taken during prior years
Decreases as a result of settlements with taxing authorities and the expiration of
statutes of limitations
Effect of foreign currency rate movements
Balance, December 31
2016
2015
2014
$
$
186
9
(45)
71
(18)
(2)
201
$
$
218
20
(25)
61
(79)
(9)
186
$
$
199
23
(11)
32
(10)
(15)
218
If all of the unrecognized tax benefits for 2016 above were recognized, approximately $180 would impact the effective
tax rate and would result in a cash outflow of approximately $175. Although it is possible that the amount of unrecognized
benefits with respect to our uncertain tax positions will increase or decrease in the next 12 months, the Company does not
expect material changes.
The Company recognized approximately $2, $2 and $4 of interest expense related to the above unrecognized tax
benefits within income tax expense in 2016, 2015 and 2014, respectively. The Company had accrued interest of
approximately $17, $16 and $24 as of December 31, 2016, 2015 and 2014, respectively.
The Company and its subsidiaries file U.S. federal income tax returns as well as income tax returns in many state and
foreign jurisdictions. All U.S. federal income tax returns through December 31, 2011 have been audited by the IRS and
there are limited matters which the Company plans to appeal for years 2010 through 2011, the settlement of which is not
expected to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. With a
few exceptions, the Company is no longer subject to U.S. state and local income tax examinations for income tax returns
through December 31, 2011. In addition, the Company has subsidiaries in various foreign jurisdictions that have statutes of
limitations for tax audits generally ranging from three to six years.
12.
Earnings Per Share
For the years ended December 31, 2016, 2015 and 2014, earnings per share were as follows:
2016
2015
2014
Net
income
attributable
to Colgate-
Palmolive
Company
$
2,441
Net
income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
Net
income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
Shares
(millions)
Per
Share
891.8
$ 2.74
$
1,384
902.2
$ 1.53
$
2,180
915.1
$ 2.38
6.6
7.5
9.2
Basic EPS
Stock options and
restricted stock
units
Diluted EPS
$
2,441
898.4
$ 2.72
$
1,384
909.7
$ 1.52
$
2,180
924.3
$ 2.36
Basic earnings per common share is computed by dividing net income available for common stockholders by the
weighted-average number of shares of common stock outstanding for the period.
Diluted earnings per common share is computed using the treasury stock method on the basis of the weighted-average
number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period.
Dilutive potential common shares include outstanding stock options and restricted stock units.
90
91
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The components of deferred tax assets (liabilities) are as follows at December 31:
Unrecognized tax benefits activity for the years ended December 31, 2016, 2015 and 2014 is summarized below:
Deferred tax liabilities:
Goodwill and intangible assets
Property, plant and equipment
Other
Deferred tax assets:
Pension and other retiree benefits
Tax loss and tax credit carryforwards
Accrued liabilities
Stock-based compensation
Other
Net deferred income taxes
Deferred taxes included within:
Assets:
Other current assets(1)
Deferred income taxes
Liabilities:
Deferred income taxes
Net deferred income taxes
2016
2015
(451) $
(380)
(202)
(1,033)
599
34
246
127
82
1,088
55
$
(458)
(380)
(150)
(988)
541
30
235
123
151
1,080
92
2016
2015
— $
301
(246)
55
$
258
67
(233)
92
$
$
$
$
________
(1) As permitted, the Company early adopted ASU 2015-17 on March 31, 2016 on a prospective basis. The new guidance eliminated the
requirement to separate deferred income taxes into current and noncurrent. See Note 2, Summary of Significant Accounting Policies
for additional details.
Applicable U.S. income and foreign withholding taxes have not been provided on approximately $3,400 of
undistributed earnings of foreign subsidiaries at December 31, 2016. These earnings have been and currently are
considered to be indefinitely reinvested outside of the U.S. and currently are not subject to such taxes. As the Company
operates in over 200 countries and territories throughout the world and due to the complexities in the tax laws and the
assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these earnings
were repatriated.
In addition, net tax benefit of $85 in 2016, net tax expense of $78 in 2015, and net tax benefit of $251 in 2014
recorded directly through equity predominantly include current and future tax impacts related to employee equity
compensation and benefit plans.
The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements
uncertain tax positions that the Company has taken or expects to take on an income tax return.
Unrecognized tax benefits:
Balance, January 1
Increases as a result of tax positions taken during the current year
Decreases of tax positions taken during prior years
Increases of tax positions taken during prior years
Decreases as a result of settlements with taxing authorities and the expiration of
statutes of limitations
Effect of foreign currency rate movements
Balance, December 31
2016
2015
2014
$
$
186
9
(45)
71
(18)
(2)
201
$
$
218
20
(25)
61
(79)
(9)
186
$
$
199
23
(11)
32
(10)
(15)
218
If all of the unrecognized tax benefits for 2016 above were recognized, approximately $180 would impact the effective
tax rate and would result in a cash outflow of approximately $175. Although it is possible that the amount of unrecognized
benefits with respect to our uncertain tax positions will increase or decrease in the next 12 months, the Company does not
expect material changes.
The Company recognized approximately $2, $2 and $4 of interest expense related to the above unrecognized tax
benefits within income tax expense in 2016, 2015 and 2014, respectively. The Company had accrued interest of
approximately $17, $16 and $24 as of December 31, 2016, 2015 and 2014, respectively.
The Company and its subsidiaries file U.S. federal income tax returns as well as income tax returns in many state and
foreign jurisdictions. All U.S. federal income tax returns through December 31, 2011 have been audited by the IRS and
there are limited matters which the Company plans to appeal for years 2010 through 2011, the settlement of which is not
expected to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. With a
few exceptions, the Company is no longer subject to U.S. state and local income tax examinations for income tax returns
through December 31, 2011. In addition, the Company has subsidiaries in various foreign jurisdictions that have statutes of
limitations for tax audits generally ranging from three to six years.
12.
Earnings Per Share
For the years ended December 31, 2016, 2015 and 2014, earnings per share were as follows:
2016
2015
2014
Net
income
attributable
to Colgate-
Palmolive
Company
$
2,441
Net
income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
Net
income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
Shares
(millions)
Per
Share
891.8
$ 2.74
$
1,384
902.2
$ 1.53
$
2,180
915.1
$ 2.38
6.6
7.5
9.2
Basic EPS
Stock options and
restricted stock
units
Diluted EPS
$
2,441
898.4
$ 2.72
$
1,384
909.7
$ 1.52
$
2,180
924.3
$ 2.36
Basic earnings per common share is computed by dividing net income available for common stockholders by the
weighted-average number of shares of common stock outstanding for the period.
Diluted earnings per common share is computed using the treasury stock method on the basis of the weighted-average
number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period.
Dilutive potential common shares include outstanding stock options and restricted stock units.
90
91
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
As of December 31, 2016, 2015 and 2014, the average number of stock options that were anti-dilutive and not
In September 2015, the Company lost one of its appeals at the administrative level, and has filed a lawsuit in Brazilian
included in diluted earnings per share calculations were 3,187,485, 3,228,359 and 1,729,511, respectively. As of
December 31, 2016, 2015 and 2014, the average number of restricted stock units that were anti-dilutive and not included in
diluted earnings per share calculations were 2,693, 120 and 2,311, respectively.
13.
Commitments and Contingencies
Minimum rental commitments under noncancellable operating leases, primarily for office and warehouse facilities, are
$178 in 2017, $160 in 2018, $143 in 2019, $130 in 2020, $104 in 2021 and $145 thereafter. Rental expense amounted to
$204 in 2016, $214 in 2015 and $234 in 2014. Capital leases included in fixed assets, contingent rentals and sublease
income are not significant. The Company has various contractual commitments to purchase raw, packaging and other
materials totaling approximately $820 at December 31, 2016.
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, privacy,
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, the Company currently estimates that the aggregate range of reasonably
possible losses in excess of any accrued liabilities is $0 to approximately $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.
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, at the current exchange rate, are approximately $143. 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. Numerous 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.
federal court. In February 2017, the Company lost an additional administrative appeal, and plans to file a similar federal
court action. 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 assessments 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 and penalties of approximately $59, 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 Brazilian federal
court. In the event the Company is unsuccessful in this filing, 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 Matters
Certain of the Company’s subsidiaries have 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
have involved other consumer goods companies and/or retail customers. These investigations often continue for several
years and can result in substantial fines for violations that are found, as well as associated private actions for damages.
While the Company cannot predict the final financial impact of pending competition law matters, as these matters may
change, the Company evaluates developments in these matters quarterly and accrues liabilities as and when appropriate.
The Company’s policy is to comply with antitrust and competition laws and, if a violation of any such laws is found, to
take appropriate remedial action and to cooperate fully with any related governmental inquiry. The status of the
competition law matters that were pending in 2016 is set forth below.
European Competition Matters
In December 2014, the French competition law authority found that 13 consumer goods companies, including
the Company’s French subsidiary, exchanged competitively sensitive information related to the French home
care and personal care sectors, for which the Company’s French subsidiary was fined $57. In addition, as a
result of the Company’s acquisition of the Sanex personal care business in 2011 from Unilever N.V. and
Unilever PLC (together with Unilever N.V., “Unilever”) pursuant to a Business and Share Sale and Purchase
Agreement (the “Sale and Purchase Agreement”), the French competition law authority found that the
Company’s French subsidiary, along with Hillshire Brands Company (formerly Sara Lee Corporation (“Sara
Lee”)), were jointly and severally liable for fines of $25 assessed against Sara Lee’s French subsidiary. The
Company is entitled to indemnification for this fine from Unilever as provided in the Sale and Purchase
Agreement. The fines were confirmed by the Court of Appeal in October 2016. The Company is appealing the
decision of the Court of Appeal on behalf of the Company and Sara Lee in the French Supreme Court.
92
93
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
As of December 31, 2016, 2015 and 2014, the average number of stock options that were anti-dilutive and not
In September 2015, the Company lost one of its appeals at the administrative level, and has filed a lawsuit in Brazilian
included in diluted earnings per share calculations were 3,187,485, 3,228,359 and 1,729,511, respectively. As of
December 31, 2016, 2015 and 2014, the average number of restricted stock units that were anti-dilutive and not included in
diluted earnings per share calculations were 2,693, 120 and 2,311, respectively.
13.
Commitments and Contingencies
Minimum rental commitments under noncancellable operating leases, primarily for office and warehouse facilities, are
$178 in 2017, $160 in 2018, $143 in 2019, $130 in 2020, $104 in 2021 and $145 thereafter. Rental expense amounted to
$204 in 2016, $214 in 2015 and $234 in 2014. Capital leases included in fixed assets, contingent rentals and sublease
income are not significant. The Company has various contractual commitments to purchase raw, packaging and other
materials totaling approximately $820 at December 31, 2016.
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, privacy,
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, the Company currently estimates that the aggregate range of reasonably
possible losses in excess of any accrued liabilities is $0 to approximately $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.
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, at the current exchange rate, are approximately $143. 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. Numerous 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.
federal court. In February 2017, the Company lost an additional administrative appeal, and plans to file a similar federal
court action. 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 assessments 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 and penalties of approximately $59, 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 Brazilian federal
court. In the event the Company is unsuccessful in this filing, 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 Matters
Certain of the Company’s subsidiaries have 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
have involved other consumer goods companies and/or retail customers. These investigations often continue for several
years and can result in substantial fines for violations that are found, as well as associated private actions for damages.
While the Company cannot predict the final financial impact of pending competition law matters, as these matters may
change, the Company evaluates developments in these matters quarterly and accrues liabilities as and when appropriate.
The Company’s policy is to comply with antitrust and competition laws and, if a violation of any such laws is found, to
take appropriate remedial action and to cooperate fully with any related governmental inquiry. The status of the
competition law matters that were pending in 2016 is set forth below.
European Competition Matters
In December 2014, the French competition law authority found that 13 consumer goods companies, including
the Company’s French subsidiary, exchanged competitively sensitive information related to the French home
care and personal care sectors, for which the Company’s French subsidiary was fined $57. In addition, as a
result of the Company’s acquisition of the Sanex personal care business in 2011 from Unilever N.V. and
Unilever PLC (together with Unilever N.V., “Unilever”) pursuant to a Business and Share Sale and Purchase
Agreement (the “Sale and Purchase Agreement”), the French competition law authority found that the
Company’s French subsidiary, along with Hillshire Brands Company (formerly Sara Lee Corporation (“Sara
Lee”)), were jointly and severally liable for fines of $25 assessed against Sara Lee’s French subsidiary. The
Company is entitled to indemnification for this fine from Unilever as provided in the Sale and Purchase
Agreement. The fines were confirmed by the Court of Appeal in October 2016. The Company is appealing the
decision of the Court of Appeal on behalf of the Company and Sara Lee in the French Supreme Court.
92
93
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of
parallel imports into Greece. The Company has responded to this statement of objections.
In December 2009, the Swiss competition law authority imposed a fine of $6 on the Company’s GABA
subsidiary for alleged violations of restrictions on parallel imports into Switzerland, which the Company
appealed. In January 2014, this appeal was denied. The Company had appealed before the Swiss Supreme
Court, but its appeal was denied in June 2016.
In December 2010, the Italian competition law authority found that 16 consumer goods companies, including
the Company’s Italian subsidiary, exchanged competitively sensitive information in the cosmetics sector, for
which the Company’s Italian subsidiary was fined $3. The Company had appealed the fine in the Italian
courts, but has decided not to further pursue its appeal.
Australian Competition Matter
In December 2013, the Australian competition law authority instituted civil proceedings in the Sydney registry of the
Federal Court of Australia alleging that three consumer goods companies, including the Company’s Australian subsidiary, a
retailer and a former employee of the Company’s Australian subsidiary violated the Australian competition law by
coordinating the launching and pricing of ultra-concentrated laundry detergents. In 2015, the Company recognized a charge
of $14 in connection with this matter. In March 2016, the Company and the Australian competition law authority reached
an agreement to settle these proceedings for a total of $14, which includes a fine and cost reimbursement to the competition
law authority. The former employee of the Company also reached an agreement to settle. The settlement agreements were
approved by the court in May 2016.
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 December 31, 2016, there were 115 individual cases pending against the
Company in state and federal courts throughout the United States and a number of the pending cases are expected to go to
trial in 2017. 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 and excess insurance carriers, subject to deductibles,
exclusions, retentions and policy limits.
14.
Venezuela
Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of CP
Venezuela and began accounting for CP Venezuela using the cost method of accounting. As such, effective December 31,
2015, the Company’s Consolidated Balance Sheet no longer includes the assets and liabilities of CP Venezuela. As a result
of this change in accounting, the Company recorded an aftertax charge of $1,058 ($1,084 pretax) or $1.16 per diluted share
in 2015. The charge primarily consists of an impairment of the Company’s investment in CP Venezuela of $952, which
includes intercompany receivables from CP Venezuela, and $111 related to the reclassification of cumulative translation
losses. Prior periods have not been restated and CP Venezuela’s Net sales, Operating profit and Net income are included in
the Company’s Consolidated Statements of Income through December 31, 2015.
Since January 1, 2016, under the cost method of accounting, the Company no longer includes the local operating
results of CP Venezuela in its Consolidated Financial Statements and includes income relating to CP Venezuela only to the
extent it receives cash for sales of inventory to CP Venezuela or for dividends or royalties remitted by CP Venezuela, all of
which have been immaterial. Although CP Venezuela’s local operating results are no longer included in the Company’s
Consolidated Financial Statements for accounting purposes, under current tax rules, the Company is required to continue
including CP Venezuela in its consolidated U.S. federal income tax return. In the first quarter of 2016, provision for income
taxes included a $210 U.S. income tax benefit principally related to changes in Venezuela’s foreign exchange regime
implemented in March 2016. See Note 11, Income Taxes for additional details.
Prior to the change in accounting, which was effective December 31, 2015, CP Venezuela’s functional currency was
the U.S. dollar since Venezuela had been designated hyper-inflationary and, as such, Venezuelan currency fluctuations were
reported in income. The Company remeasured the financial statements of CP Venezuela at the end of each month at the rate
at which it expected to remit future dividends which, based on the advice of legal counsel, was the SICAD rate (formerly
known as the SICAD I rate). During the year ended December 31, 2015, the Company incurred pretax losses of $34 ($22
aftertax or $0.02 per diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated
net monetary assets at the quarter-end SICAD rate for the second and third quarters of 2015. The SICAD rate did not
revalue during the fourth quarter of 2015 and was 13.50 bolivares per dollar as of December 31, 2015.
During the year ended December 31, 2014, the Company incurred net pretax losses of $327 ($214 aftertax or $0.23 per
diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets at
the quarter-end SICAD I rate for each of the first three quarters of 2014. The SICAD I rate did not revalue during the
fourth quarter of 2014 and was 12.00 bolivares per dollar as of December 31, 2014.
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.
Included in the remeasurement losses during 2015 and 2014 were charges related to the devaluation-protected bonds
issued by the Venezuelan government and held by CP Venezuela. Because the official exchange rate remained at 6.30
bolivares per dollar, the devaluation-protected bonds did not revalue at the SICAD rate but remained at the official
exchange rate, resulting in an impairment in the fair value of the bonds.
N8
15.
Segment Information
The Company is a defendant in a lawsuit pending in Utah federal court brought by N8 Medical, Inc. (“N8 Medical”),
Brigham Young University (“BYU”) and N8 Pharmaceuticals, Inc. (“N8 Pharma”). The complaint, originally filed in
November 2013, alleges 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 the third quarter of 2016, the court indicated that the claims brought by N8 Pharma would be dismissed in their
entirety; N8 Pharma requested that the Court reconsider that decision, but that request was denied. Also in the third quarter
of 2016, the Company and BYU agreed to resolve BYU’s claims and in December 2016, the Company and N8 Medical
agreed to resolve N8 Medical’s claims. These claims were resolved in an amount that is not material to the Company’s
results of operations.
The Company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition.
Effective April 1, 2016, 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.
Through March 31, 2016, the Oral, Personal and Home Care product segment included the North America, Latin
America, Europe/South Pacific, Asia and Africa/Eurasia geographic operating segments. As a result of management
changes effective April 1, 2016, the Company realigned the geographic structure of its Europe/South Pacific and Asia
reportable operating segments. Management responsibility for the South Pacific operations was transferred from Europe/
South Pacific management to Asia management. Accordingly, commencing with the Company’s financial reporting for the
quarter ended June 30, 2016, the results of the South Pacific operations are reported in the Asia Pacific reportable operating
segment. The Company has recast its historical geographic segment information to conform to the new reporting structure.
94
95
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of
parallel imports into Greece. The Company has responded to this statement of objections.
In December 2009, the Swiss competition law authority imposed a fine of $6 on the Company’s GABA
subsidiary for alleged violations of restrictions on parallel imports into Switzerland, which the Company
appealed. In January 2014, this appeal was denied. The Company had appealed before the Swiss Supreme
Court, but its appeal was denied in June 2016.
In December 2010, the Italian competition law authority found that 16 consumer goods companies, including
the Company’s Italian subsidiary, exchanged competitively sensitive information in the cosmetics sector, for
which the Company’s Italian subsidiary was fined $3. The Company had appealed the fine in the Italian
courts, but has decided not to further pursue its appeal.
Australian Competition Matter
In December 2013, the Australian competition law authority instituted civil proceedings in the Sydney registry of the
Federal Court of Australia alleging that three consumer goods companies, including the Company’s Australian subsidiary, a
retailer and a former employee of the Company’s Australian subsidiary violated the Australian competition law by
coordinating the launching and pricing of ultra-concentrated laundry detergents. In 2015, the Company recognized a charge
of $14 in connection with this matter. In March 2016, the Company and the Australian competition law authority reached
an agreement to settle these proceedings for a total of $14, which includes a fine and cost reimbursement to the competition
law authority. The former employee of the Company also reached an agreement to settle. The settlement agreements were
approved by the court in May 2016.
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 December 31, 2016, there were 115 individual cases pending against the
Company in state and federal courts throughout the United States and a number of the pending cases are expected to go to
trial in 2017. 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 and excess insurance carriers, subject to deductibles,
exclusions, retentions and policy limits.
14.
Venezuela
Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of CP
Venezuela and began accounting for CP Venezuela using the cost method of accounting. As such, effective December 31,
2015, the Company’s Consolidated Balance Sheet no longer includes the assets and liabilities of CP Venezuela. As a result
of this change in accounting, the Company recorded an aftertax charge of $1,058 ($1,084 pretax) or $1.16 per diluted share
in 2015. The charge primarily consists of an impairment of the Company’s investment in CP Venezuela of $952, which
includes intercompany receivables from CP Venezuela, and $111 related to the reclassification of cumulative translation
losses. Prior periods have not been restated and CP Venezuela’s Net sales, Operating profit and Net income are included in
the Company’s Consolidated Statements of Income through December 31, 2015.
Since January 1, 2016, under the cost method of accounting, the Company no longer includes the local operating
results of CP Venezuela in its Consolidated Financial Statements and includes income relating to CP Venezuela only to the
extent it receives cash for sales of inventory to CP Venezuela or for dividends or royalties remitted by CP Venezuela, all of
which have been immaterial. Although CP Venezuela’s local operating results are no longer included in the Company’s
Consolidated Financial Statements for accounting purposes, under current tax rules, the Company is required to continue
including CP Venezuela in its consolidated U.S. federal income tax return. In the first quarter of 2016, provision for income
taxes included a $210 U.S. income tax benefit principally related to changes in Venezuela’s foreign exchange regime
implemented in March 2016. See Note 11, Income Taxes for additional details.
Prior to the change in accounting, which was effective December 31, 2015, CP Venezuela’s functional currency was
the U.S. dollar since Venezuela had been designated hyper-inflationary and, as such, Venezuelan currency fluctuations were
reported in income. The Company remeasured the financial statements of CP Venezuela at the end of each month at the rate
at which it expected to remit future dividends which, based on the advice of legal counsel, was the SICAD rate (formerly
known as the SICAD I rate). During the year ended December 31, 2015, the Company incurred pretax losses of $34 ($22
aftertax or $0.02 per diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated
net monetary assets at the quarter-end SICAD rate for the second and third quarters of 2015. The SICAD rate did not
revalue during the fourth quarter of 2015 and was 13.50 bolivares per dollar as of December 31, 2015.
During the year ended December 31, 2014, the Company incurred net pretax losses of $327 ($214 aftertax or $0.23 per
diluted common share) related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets at
the quarter-end SICAD I rate for each of the first three quarters of 2014. The SICAD I rate did not revalue during the
fourth quarter of 2014 and was 12.00 bolivares per dollar as of December 31, 2014.
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.
Included in the remeasurement losses during 2015 and 2014 were charges related to the devaluation-protected bonds
issued by the Venezuelan government and held by CP Venezuela. Because the official exchange rate remained at 6.30
bolivares per dollar, the devaluation-protected bonds did not revalue at the SICAD rate but remained at the official
exchange rate, resulting in an impairment in the fair value of the bonds.
N8
15.
Segment Information
The Company is a defendant in a lawsuit pending in Utah federal court brought by N8 Medical, Inc. (“N8 Medical”),
Brigham Young University (“BYU”) and N8 Pharmaceuticals, Inc. (“N8 Pharma”). The complaint, originally filed in
November 2013, alleges 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 the third quarter of 2016, the court indicated that the claims brought by N8 Pharma would be dismissed in their
entirety; N8 Pharma requested that the Court reconsider that decision, but that request was denied. Also in the third quarter
of 2016, the Company and BYU agreed to resolve BYU’s claims and in December 2016, the Company and N8 Medical
agreed to resolve N8 Medical’s claims. These claims were resolved in an amount that is not material to the Company’s
results of operations.
The Company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition.
Effective April 1, 2016, 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.
Through March 31, 2016, the Oral, Personal and Home Care product segment included the North America, Latin
America, Europe/South Pacific, Asia and Africa/Eurasia geographic operating segments. As a result of management
changes effective April 1, 2016, the Company realigned the geographic structure of its Europe/South Pacific and Asia
reportable operating segments. Management responsibility for the South Pacific operations was transferred from Europe/
South Pacific management to Asia management. Accordingly, commencing with the Company’s financial reporting for the
quarter ended June 30, 2016, the results of the South Pacific operations are reported in the Asia Pacific reportable operating
segment. The Company has recast its historical geographic segment information to conform to the new reporting structure.
94
95
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
These changes have no impact on the Company’s historical consolidated financial position, results of operations or cash
flows.
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. 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 costs 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.
Approximately 75% 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). Oral, Personal and Home Care sales to Wal-Mart Stores, Inc. and its affiliates
represent approximately 11% of the Company's Net sales in 2016. No other customer represents more than 10% of Net
sales.
In 2016, Corporate Operating profit (loss) includes charges of $228 resulting from the 2012 Restructuring Program,
$17 for a previously disclosed litigation matter and a gain of $97 on the sale of land in Mexico. In 2015, Corporate
Operating profit (loss) included a charge of $1,084 related to the deconsolidation of the Company’s Venezuelan operations,
$254 related to the 2012 Restructuring Program, $34 related to the remeasurement of CP Venezuela’s local currency-
denominated net monetary assets as a result of effective devaluations and $14 for a previously disclosed litigation matter
and a gain of $187 on the sale of the Company’s laundry detergent business in the South Pacific. In 2014, Corporate
Operating profit (loss) included charges of $286 related to the 2012 Restructuring Program, $327 related to the
remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of a devaluation and $41 for
a previously disclosed litigation matter and costs of $4 related to the sale of land in Mexico.
Net sales
Oral, Personal and Home Care
North America(1)
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition(2)
Total Net sales
2016
2015
2014
$
3,183
$
3,149
$
3,650
2,342
2,796
960
12,931
2,264
4,327
2,411
2,937
998
13,822
2,212
$
15,195
$
16,034
$
3,124
4,769
2,840
3,081
1,208
15,022
2,255
17,277
_________
(1) Net sales in the U.S. for Oral, Personal and Home Care were $2,932, $2,896 and $2,835 in 2016, 2015 and 2014, respectively.
(2) Net sales in the U.S. for Pet Nutrition were $1,243, $1,223 and $1,149 in 2016, 2015 and 2014, respectively.
Operating profit
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate
Total Operating profit
Capital expenditures
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate
Total Capital expenditures
Depreciation and amortization
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate
2016
2015
2014
$
1,030
$
974
$
1,132
579
887
186
3,814
653
(630)
3,837
$
1,209
615
888
178
3,864
612
(1,687)
2,789
$
$
926
1,279
712
901
235
4,053
592
(1,088)
3,557
2016
2015
2014
$
151
$
2016
$
$
94
51
120
17
433
38
122
593
54
76
64
96
7
297
53
93
2015
$
$
$
$
$
207
110
40
121
12
490
34
167
691
47
88
67
99
8
309
52
88
2014
136
205
74
151
14
580
40
137
757
43
93
77
85
10
308
52
82
442
Total Depreciation and amortization
$
443
$
449
$
96
97
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
These changes have no impact on the Company’s historical consolidated financial position, results of operations or cash
flows.
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. 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 costs 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.
Approximately 75% 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). Oral, Personal and Home Care sales to Wal-Mart Stores, Inc. and its affiliates
represent approximately 11% of the Company's Net sales in 2016. No other customer represents more than 10% of Net
sales.
In 2016, Corporate Operating profit (loss) includes charges of $228 resulting from the 2012 Restructuring Program,
$17 for a previously disclosed litigation matter and a gain of $97 on the sale of land in Mexico. In 2015, Corporate
Operating profit (loss) included a charge of $1,084 related to the deconsolidation of the Company’s Venezuelan operations,
$254 related to the 2012 Restructuring Program, $34 related to the remeasurement of CP Venezuela’s local currency-
denominated net monetary assets as a result of effective devaluations and $14 for a previously disclosed litigation matter
and a gain of $187 on the sale of the Company’s laundry detergent business in the South Pacific. In 2014, Corporate
Operating profit (loss) included charges of $286 related to the 2012 Restructuring Program, $327 related to the
remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of a devaluation and $41 for
a previously disclosed litigation matter and costs of $4 related to the sale of land in Mexico.
Net sales
Oral, Personal and Home Care
North America(1)
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition(2)
Total Net sales
2016
2015
2014
$
3,183
$
3,149
$
3,650
2,342
2,796
960
12,931
2,264
4,327
2,411
2,937
998
13,822
2,212
$
15,195
$
16,034
$
3,124
4,769
2,840
3,081
1,208
15,022
2,255
17,277
_________
(1) Net sales in the U.S. for Oral, Personal and Home Care were $2,932, $2,896 and $2,835 in 2016, 2015 and 2014, respectively.
(2) Net sales in the U.S. for Pet Nutrition were $1,243, $1,223 and $1,149 in 2016, 2015 and 2014, respectively.
Operating profit
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate
Total Operating profit
Capital expenditures
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate
Total Capital expenditures
Depreciation and amortization
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate
2016
2015
2014
$
1,030
$
974
$
1,132
579
887
186
3,814
653
(630)
3,837
$
1,209
615
888
178
3,864
612
(1,687)
2,789
$
$
926
1,279
712
901
235
4,053
592
(1,088)
3,557
2016
2015
2014
$
151
$
2016
$
$
94
51
120
17
433
38
122
593
54
76
64
96
7
297
53
93
2015
$
$
$
$
$
207
110
40
121
12
490
34
167
691
47
88
67
99
8
309
52
88
2014
136
205
74
151
14
580
40
137
757
43
93
77
85
10
308
52
82
442
Total Depreciation and amortization
$
443
$
449
$
96
97
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
2016
2015
2014
17.
Supplemental Balance Sheet Information
Inventories by major class are as follows at December 31:
Identifiable assets(1)
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate(2)
Total Identifiable assets(3)
$
$
2,685
2,314
3,554
2,006
499
11,058
1,009
56
12,123
$
$
2,622
2,314
3,308
2,031
476
10,751
1,006
178
11,935
$
$
2,326
3,693
3,669
2,070
510
12,268
1,051
121
13,440
____________
(1) Prior year amounts have been reclassified to conform to the current year presentation of debt issuance costs required by ASU No.
2015-03, “Simplifying the Presentation of Debt Issuance Costs.” See Note 2 to the Consolidated Financial Statements for additional
information.
(2)
In 2016, Corporate identifiable assets primarily consist of derivative instruments (24%) and investments in equity securities
(68%). In 2015, Corporate identifiable assets primarily consist of derivative instruments (76%) and investments in equity securities
(23%). In 2014, Corporate identifiable assets primarily consist of derivative instruments (72%) and investments in equity securities
(25%).
(3) Long-lived assets in the U.S., primarily property, plant and equipment and goodwill and other intangibles represented
approximately one-third of total long-lived assets of $7,642, $7,420 and $8,086 in 2016, 2015 and 2014, respectively.
16.
Supplemental Income Statement Information
Other (income) expense, net
2012 Restructuring Program
Amortization of intangible assets
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Equity (income)
Other, net
Total Other (income) expense, net
Interest (income) expense, net
Interest incurred
Interest capitalized
Interest income
Total Interest (income) expense, net
Research and development
Advertising
2016
2015
2014
$
$
$
$
105
33
(97)
17
—
—
(10)
(11)
37
2016
155
(6)
(50)
99
$
$
$
$
170
33
—
14
34
(187)
(8)
6
62
2015
139
(6)
(107)
26
$
$
$
$
195
32
—
41
327
—
(7)
(18)
570
2014
134
(4)
(106)
24
2016
2015
2014
$
$
289
1,428
$
$
274
1,491
$
$
277
1,784
Inventories
Raw materials and supplies
Work-in-process
Finished goods
Total Inventories
2016
2015
$
$
266
$
42
863
261
45
874
1,171
$
1,180
Inventories valued under LIFO amounted to $278 and $268 at December 31, 2016 and 2015, respectively. The excess
of current cost over LIFO cost at the end of each year was $30 and $6, respectively. The liquidations of LIFO inventory
quantities had no material effect on income in 2016, 2015 and 2014.
Property, plant and equipment, net
Land
Buildings
Manufacturing machinery and equipment
Other equipment
Accumulated depreciation
Total Property, plant and equipment, net
Other accruals
Accrued advertising and coupon redemption
Accrued payroll and employee benefits
Accrued taxes other than income taxes
Restructuring accrual
Pension and other retiree benefits
Accrued interest
Derivatives
Other
Total Other accruals
Other liabilities
Pension and other retiree benefits
Restructuring accrual
Other
Total Other liabilities
2016
2015
$
$
$
$
$
$
147
1,544
4,971
1,280
7,942
(4,102)
3,840
2016
491
309
112
112
80
29
4
590
1,727
2016
1,794
69
172
2,035
$
$
$
$
$
$
153
1,492
5,166
1,248
8,059
(4,263)
3,796
2015
512
322
121
119
74
36
5
656
1,845
2015
1,650
96
220
1,966
98
99
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
2016
2015
2014
17.
Supplemental Balance Sheet Information
Inventories by major class are as follows at December 31:
Identifiable assets(1)
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate(2)
Total Identifiable assets(3)
$
$
2,685
2,314
3,554
2,006
499
11,058
1,009
56
12,123
$
$
2,622
2,314
3,308
2,031
476
10,751
1,006
178
11,935
$
$
2,326
3,693
3,669
2,070
510
12,268
1,051
121
13,440
____________
(1) Prior year amounts have been reclassified to conform to the current year presentation of debt issuance costs required by ASU No.
2015-03, “Simplifying the Presentation of Debt Issuance Costs.” See Note 2 to the Consolidated Financial Statements for additional
information.
(2)
In 2016, Corporate identifiable assets primarily consist of derivative instruments (24%) and investments in equity securities
(68%). In 2015, Corporate identifiable assets primarily consist of derivative instruments (76%) and investments in equity securities
(23%). In 2014, Corporate identifiable assets primarily consist of derivative instruments (72%) and investments in equity securities
(25%).
(3) Long-lived assets in the U.S., primarily property, plant and equipment and goodwill and other intangibles represented
approximately one-third of total long-lived assets of $7,642, $7,420 and $8,086 in 2016, 2015 and 2014, respectively.
16.
Supplemental Income Statement Information
Other (income) expense, net
2012 Restructuring Program
Amortization of intangible assets
Gain on sale of land in Mexico
Charges for previously disclosed litigation matters
Venezuela remeasurement charges
Gain on sale of South Pacific laundry detergent business
Equity (income)
Other, net
Total Other (income) expense, net
Interest (income) expense, net
Interest incurred
Interest capitalized
Interest income
Total Interest (income) expense, net
Research and development
Advertising
2016
2015
2014
$
$
$
$
105
33
(97)
17
—
—
(10)
(11)
37
2016
155
(6)
(50)
99
$
$
$
$
170
33
—
14
34
(187)
(8)
6
62
2015
139
(6)
(107)
26
$
$
$
$
195
32
—
41
327
—
(7)
(18)
570
2014
134
(4)
(106)
24
2016
2015
2014
$
$
289
1,428
$
$
274
1,491
$
$
277
1,784
Inventories
Raw materials and supplies
Work-in-process
Finished goods
Total Inventories
2016
2015
$
$
266
$
42
863
261
45
874
1,171
$
1,180
Inventories valued under LIFO amounted to $278 and $268 at December 31, 2016 and 2015, respectively. The excess
of current cost over LIFO cost at the end of each year was $30 and $6, respectively. The liquidations of LIFO inventory
quantities had no material effect on income in 2016, 2015 and 2014.
Property, plant and equipment, net
Land
Buildings
Manufacturing machinery and equipment
Other equipment
Accumulated depreciation
Total Property, plant and equipment, net
Other accruals
Accrued advertising and coupon redemption
Accrued payroll and employee benefits
Accrued taxes other than income taxes
Restructuring accrual
Pension and other retiree benefits
Accrued interest
Derivatives
Other
Total Other accruals
Other liabilities
Pension and other retiree benefits
Restructuring accrual
Other
Total Other liabilities
2016
2015
$
$
$
$
$
$
147
1,544
4,971
1,280
7,942
(4,102)
3,840
2016
491
309
112
112
80
29
4
590
1,727
2016
1,794
69
172
2,035
$
$
$
$
$
$
153
1,492
5,166
1,248
8,059
(4,263)
3,796
2015
512
322
121
119
74
36
5
656
1,845
2015
1,650
96
220
1,966
98
99
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(4) Represents reclassification of losses on the Venezuela bonds into Other (income) expense, net due to an impairment in the fair value
of the bonds as a result of the effective devaluations in the second and third quarters of 2015 and the first and third quarters of 2014.
(5) These (gains) losses are reclassified into Cost of sales. See Note 7, Fair Value Measurements and Financial Instruments for
additional details.
There were no tax impacts on Other comprehensive income (loss) attributable to Noncontrolling interests.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) is comprised of cumulative foreign currency translation gains and
losses, unrecognized pension and other retiree benefit costs, unrealized gains and losses from derivative instruments
designated as cash flow hedges and unrealized gains and losses on available-for-sale securities. At December 31, 2016 and
2015, Accumulated other comprehensive income (loss) consisted primarily of aftertax unrecognized pension and other
retiree benefit costs of $977 and $868, respectively, and cumulative foreign currency translation adjustments of $3,212 and
$3,087, respectively. Foreign currency translation adjustments in 2016 primarily reflect losses from the Mexican peso and
the Euro, partially offset by gains from the Brazilian real. In 2015, foreign currency translation adjustments primarily
reflect losses from the Euro, the Brazilian real, the Mexican peso and the Swiss franc.
18.
Supplemental Other Comprehensive Income (Loss) Information
Other comprehensive income (loss) components attributable to Colgate-Palmolive Company before tax and net of tax
during the years ended December 31 were as follows:
Cumulative translation adjustments
Reclassification due to Venezuela
deconsolidation(1)
Cumulative translation adjustments
Pension and other benefits:
Net actuarial gain (loss), prior
service costs and settlements
during the period
Amortization of net actuarial loss,
transition and prior service costs(2)
Reclassification due to Venezuela
deconsolidation(1)
Retirement Plan and other retiree benefit
adjustments
Available-for-sale securities:
Unrealized gains (losses) on available-
for-sale securities(3)
Reclassification of (gains) losses
into net earnings on available-
for-sale securities(4)
Reclassification due to Venezuela
deconsolidation(1)
Gains (losses) on available-for-sale
securities
Cash flow hedges:
Unrealized gains (losses) on cash flow
hedges
2016
2015
2014
Pre-tax Net of Tax
Pre-tax Net of Tax
Pre-tax Net of Tax
$
(97) $
(125) $
(721) $
(745) $
(663) $
(681)
—
(97)
—
(125)
111
(610)
111
(634)
—
(663)
—
(681)
(231)
(152)
182
115
(580)
(374)
63
—
43
—
82
44
52
29
67
—
45
—
(168)
(109)
308
196
(513)
(329)
—
(1)
—
(1)
(18)
(12)
(341)
(222)
14
(10)
(14)
11
(6)
(7)
267
—
174
—
(74)
(48)
—
(1)
—
(1)
11
8
18
12
9
Reclassification of (gains) losses
into net earnings on cash flow
hedges(5)
Gains (losses) on cash flow hedges
Total Other comprehensive income
(loss)
_________
(1) Represents reclassifications from Accumulated other comprehensive income (loss) due to the deconsolidation of the Company’s
(16)
2
(10)
2
(1,246) $
(443) $
(230) $
(314) $
(259) $
(5)
4
(3)
5
(4)
$
7
(1,056)
6
(4)
2
Venezuelan operations. Cumulative translation, net actuarial gain (loss) and unrealized gains (losses) on available-for-sale securities
were reclassified into the Charge for Venezuela accounting change on the Consolidated Statement of Income.
(2) 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.
(3) For the year ended December 31, 2015, these amounts included pretax net losses of $50 related to the remeasurement of the bolivar-
denominated fixed interest rate bonds and the devaluation-protected bonds in Venezuela.
For the year ended December 31, 2014, these amounts included pretax losses of $324 related to the remeasurement of the bolivar-
denominated fixed interest rate bonds and the devaluation-protected bonds in Venezuela.
100
101
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(4) Represents reclassification of losses on the Venezuela bonds into Other (income) expense, net due to an impairment in the fair value
of the bonds as a result of the effective devaluations in the second and third quarters of 2015 and the first and third quarters of 2014.
(5) These (gains) losses are reclassified into Cost of sales. See Note 7, Fair Value Measurements and Financial Instruments for
additional details.
There were no tax impacts on Other comprehensive income (loss) attributable to Noncontrolling interests.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) is comprised of cumulative foreign currency translation gains and
losses, unrecognized pension and other retiree benefit costs, unrealized gains and losses from derivative instruments
designated as cash flow hedges and unrealized gains and losses on available-for-sale securities. At December 31, 2016 and
2015, Accumulated other comprehensive income (loss) consisted primarily of aftertax unrecognized pension and other
retiree benefit costs of $977 and $868, respectively, and cumulative foreign currency translation adjustments of $3,212 and
$3,087, respectively. Foreign currency translation adjustments in 2016 primarily reflect losses from the Mexican peso and
the Euro, partially offset by gains from the Brazilian real. In 2015, foreign currency translation adjustments primarily
reflect losses from the Euro, the Brazilian real, the Mexican peso and the Swiss franc.
18.
Supplemental Other Comprehensive Income (Loss) Information
Other comprehensive income (loss) components attributable to Colgate-Palmolive Company before tax and net of tax
during the years ended December 31 were as follows:
Cumulative translation adjustments
Reclassification due to Venezuela
deconsolidation(1)
Cumulative translation adjustments
Pension and other benefits:
Net actuarial gain (loss), prior
service costs and settlements
during the period
Amortization of net actuarial loss,
transition and prior service costs(2)
Reclassification due to Venezuela
deconsolidation(1)
Retirement Plan and other retiree benefit
adjustments
Available-for-sale securities:
Unrealized gains (losses) on available-
for-sale securities(3)
Reclassification of (gains) losses
into net earnings on available-
for-sale securities(4)
Reclassification due to Venezuela
deconsolidation(1)
Gains (losses) on available-for-sale
securities
Cash flow hedges:
Unrealized gains (losses) on cash flow
hedges
2016
2015
2014
Pre-tax Net of Tax
Pre-tax Net of Tax
Pre-tax Net of Tax
$
(97) $
(125) $
(721) $
(745) $
(663) $
(681)
—
(97)
—
(125)
111
(610)
111
(634)
—
(663)
—
(681)
(231)
(152)
182
115
(580)
(374)
63
—
43
—
82
44
52
29
67
—
45
—
(168)
(109)
308
196
(513)
(329)
—
(1)
—
(1)
(18)
(12)
(341)
(222)
14
(10)
(14)
11
(6)
(7)
267
—
174
—
(74)
(48)
—
(1)
—
(1)
11
8
18
12
9
Reclassification of (gains) losses
into net earnings on cash flow
hedges(5)
Gains (losses) on cash flow hedges
Total Other comprehensive income
(loss)
_________
(1) Represents reclassifications from Accumulated other comprehensive income (loss) due to the deconsolidation of the Company’s
(10)
2
(16)
2
(1,246) $
(230) $
(443) $
(314) $
(259) $
(5)
4
(3)
5
(4)
$
7
(1,056)
6
(4)
2
Venezuelan operations. Cumulative translation, net actuarial gain (loss) and unrealized gains (losses) on available-for-sale securities
were reclassified into the Charge for Venezuela accounting change on the Consolidated Statement of Income.
(2) 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.
(3) For the year ended December 31, 2015, these amounts included pretax net losses of $50 related to the remeasurement of the bolivar-
denominated fixed interest rate bonds and the devaluation-protected bonds in Venezuela.
For the year ended December 31, 2014, these amounts included pretax losses of $324 related to the remeasurement of the bolivar-
denominated fixed interest rate bonds and the devaluation-protected bonds in Venezuela.
100
101
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(9) Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common
share for the third quarter of 2016 include $32 of aftertax charges related to the 2012 Restructuring Program, a $63 aftertax gain on the
sale of land in Mexico, a $4 aftertax charge for a previously disclosed litigation matter and $22 of benefits from previously disclosed
tax matters.
(10) Gross profit for the fourth quarter of 2016 includes $15 of charges related to the 2012 Restructuring Program.
(11) Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common
share for the fourth quarter of 2016 include $54 of aftertax charges related to the 2012 Restructuring Program and a $7 aftertax charge
for a previously disclosed litigation matter.
(12) Gross profit for the full year of 2015 includes $20 of charges related to the 2012 Restructuring Program.
(13) Net income (loss) including noncontrolling interests for the full year of 2015 includes $185 of aftertax charges related to the 2012
Restructuring Program. Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss) per common share for the
full year of 2015 include a $1,058 aftertax charge related to the deconsolidation of the Company’s Venezuelan operations, $183 of
aftertax charges related to the 2012 Restructuring Program, $22 of aftertax charges related to the remeasurement of CP Venezuela’s
local currency-denominated net monetary assets as a result of effective devaluations, a $120 aftertax gain on the sale of the Company’s
laundry detergent business in the South Pacific, a $15 charge for a previously disclosed tax matter and a $14 aftertax charge for a
previously disclosed litigation matter.
(14) Gross profit for the first quarter of 2015 includes $4 of charges related to the 2012 Restructuring Program.
(15) Net income (loss) including noncontrolling interests for the first quarter of 2015 includes $69 of aftertax charges related to the 2012
Restructuring Program. Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss) per common share include
$67 of aftertax charges related to the 2012 Restructuring Program.
(16) Gross profit for the second quarter of 2015 includes $4 of charges related to the 2012 Restructuring Program.
(17) Net income (loss) including noncontrolling interests, Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss)
per common share for the second quarter of 2015 include $40 of aftertax charges related to the 2012 Restructuring Program, $10 of
aftertax charges related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of an
effective devaluation and a $15 charge for a previously disclosed tax matter.
(18) Gross profit for the third quarter of 2015 includes $3 of charges related to the 2012 Restructuring Program.
(19) Net income (loss) including noncontrolling interests, Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss)
per common share for the third quarter of 2015 include $35 of aftertax charges related to the 2012 Restructuring Program, $12 of
aftertax charges related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of an
effective devaluation and a $120 aftertax gain on sale of the Company’s laundry detergent business in the South Pacific.
(20) Gross profit for the fourth quarter of 2015 includes $9 of charges related to the 2012 Restructuring Program.
(21) Net income (loss) including noncontrolling interests, Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss)
per common share for the fourth quarter of 2015 include a $1,058 aftertax charge related to the deconsolidation of the Company’s
Venezuelan operations, $41 of aftertax charges related to the 2012 Restructuring Program and a $14 aftertax charge for a previously
disclosed litigation matter.
(22) The computation for Diluted (loss) per common share for the fourth quarter of 2015 excludes 6.6 million of incremental common
shares outstanding during the period as they were anti-dilutive.
19.
Quarterly Financial Data (Unaudited)
2016
Net sales
Gross profit
Net income including noncontrolling
interests
Net income attributable to Colgate-
Palmolive Company
Earnings per common share:
Basic
Diluted
2015
Net sales
Gross profit
Net income (loss) including
noncontrolling interests
Net income (loss) attributable to
Colgate-Palmolive Company
Earnings (loss) per common share:
Basic
Diluted
Total
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 15,195
$
9,123 (1)
2,586 (2)
2,441 (2)
2.74 (2)
2.72 (2)
3,762
2,248 (3)
$
3,845
2,304 (6)
$
3,867
2,324 (8)
$
3,721
2,247 (10)
574 (4)
(4)
(5)
533
0.60 (4)
0.59 (4)
638 (7)
600 (7)
0.67 (7)
0.67 (7)
746 (9)
702 (9)
0.79 (9)
0.78 (9)
628 (11)
606 (11)
0.68 (11)
0.68 (11)
$ 16,034
$
9,399 (12)
1,548 (13)
1,384 (13)
4,070
2,392 (14)
$
4,066
2,367 (16)
$
3,999
2,347 (18)
$
3,899
2,293 (20)
583 (15)
542 (15)
616 (17)
574 (17)
770 (19)
(421) (21)
726 (19)
(458) (21)
1.53 (13)
0.60 (15)
0.63 (17)
0.81 (19)
1.52 (13)
0.59 (15)
0.63 (17)
0.80 (19)
(0.51) (21)
(21)
(0.51)
(22)
____________
Note: Basic and diluted earnings (loss) per share are computed independently for each quarter and the year-to-date period
presented. Accordingly, the sum of the quarterly earnings (loss) per common share may not necessarily equal the
earnings (loss) per share for the year-to-date period.
(1) Gross profit for the full year of 2016 includes $46 of charges related to the 2012 Restructuring Program.
(2) Net income including noncontrolling interests for the full year of 2016 includes $169 of aftertax charges related to the 2012
Restructuring Program. Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of
2016 include $168 of aftertax charges related to the 2012 Restructuring Program, a $63 aftertax gain on the sale of land in Mexico,
$11 of aftertax charges for a previously disclosed litigation matter and $35 of benefits from previously disclosed tax matters.
(3) Gross profit for the first quarter of 2016 includes $8 of charges related to the 2012 Restructuring Program.
(4) Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common
share for the first quarter of 2016 include $38 of aftertax charges related to the 2012 Restructuring Program.
(5)
In the first quarter of 2016, provision for income taxes included a $210 U.S. income tax benefit principally related to changes in
Venezuela’s foreign exchange regime implemented in March 2016. In order to fully recognize the $210 tax benefit in 2016, the
Company repatriated an incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside
of the U.S., and accordingly, recorded a tax charge of $210 during the first quarter of 2016. See Note 11, Income Taxes.
(6) Gross profit for the second quarter of 2016 includes $12 of charges related to the 2012 Restructuring Program.
(7) Net income including noncontrolling interests for the second quarter of 2016 includes $45 of aftertax charges related to the 2012
Restructuring Program and a $13 benefit from a previously disclosed tax matter. Net income attributable to Colgate-Palmolive
Company and earnings per common share include $44 of aftertax charges related to the 2012 Restructuring Program and a $13 benefit
from a previously disclosed tax matter.
(8) Gross profit for the third quarter of 2016 includes $11 of charges related to the 2012 Restructuring Program.
102
103
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(9) Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common
share for the third quarter of 2016 include $32 of aftertax charges related to the 2012 Restructuring Program, a $63 aftertax gain on the
sale of land in Mexico, a $4 aftertax charge for a previously disclosed litigation matter and $22 of benefits from previously disclosed
tax matters.
(10) Gross profit for the fourth quarter of 2016 includes $15 of charges related to the 2012 Restructuring Program.
(11) Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common
share for the fourth quarter of 2016 include $54 of aftertax charges related to the 2012 Restructuring Program and a $7 aftertax charge
for a previously disclosed litigation matter.
(12) Gross profit for the full year of 2015 includes $20 of charges related to the 2012 Restructuring Program.
(13) Net income (loss) including noncontrolling interests for the full year of 2015 includes $185 of aftertax charges related to the 2012
Restructuring Program. Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss) per common share for the
full year of 2015 include a $1,058 aftertax charge related to the deconsolidation of the Company’s Venezuelan operations, $183 of
aftertax charges related to the 2012 Restructuring Program, $22 of aftertax charges related to the remeasurement of CP Venezuela’s
local currency-denominated net monetary assets as a result of effective devaluations, a $120 aftertax gain on the sale of the Company’s
laundry detergent business in the South Pacific, a $15 charge for a previously disclosed tax matter and a $14 aftertax charge for a
previously disclosed litigation matter.
(14) Gross profit for the first quarter of 2015 includes $4 of charges related to the 2012 Restructuring Program.
(15) Net income (loss) including noncontrolling interests for the first quarter of 2015 includes $69 of aftertax charges related to the 2012
Restructuring Program. Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss) per common share include
$67 of aftertax charges related to the 2012 Restructuring Program.
(16) Gross profit for the second quarter of 2015 includes $4 of charges related to the 2012 Restructuring Program.
(17) Net income (loss) including noncontrolling interests, Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss)
per common share for the second quarter of 2015 include $40 of aftertax charges related to the 2012 Restructuring Program, $10 of
aftertax charges related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of an
effective devaluation and a $15 charge for a previously disclosed tax matter.
(18) Gross profit for the third quarter of 2015 includes $3 of charges related to the 2012 Restructuring Program.
(19) Net income (loss) including noncontrolling interests, Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss)
per common share for the third quarter of 2015 include $35 of aftertax charges related to the 2012 Restructuring Program, $12 of
aftertax charges related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of an
effective devaluation and a $120 aftertax gain on sale of the Company’s laundry detergent business in the South Pacific.
(20) Gross profit for the fourth quarter of 2015 includes $9 of charges related to the 2012 Restructuring Program.
(21) Net income (loss) including noncontrolling interests, Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss)
per common share for the fourth quarter of 2015 include a $1,058 aftertax charge related to the deconsolidation of the Company’s
Venezuelan operations, $41 of aftertax charges related to the 2012 Restructuring Program and a $14 aftertax charge for a previously
disclosed litigation matter.
(22) The computation for Diluted (loss) per common share for the fourth quarter of 2015 excludes 6.6 million of incremental common
shares outstanding during the period as they were anti-dilutive.
19.
Quarterly Financial Data (Unaudited)
2016
Net sales
Gross profit
Net income including noncontrolling
interests
Net income attributable to Colgate-
Palmolive Company
Earnings per common share:
Basic
Diluted
2015
Net sales
Gross profit
Net income (loss) including
noncontrolling interests
Net income (loss) attributable to
Colgate-Palmolive Company
Earnings (loss) per common share:
Basic
Diluted
Total
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 15,195
$
9,123 (1)
2,586 (2)
2,441 (2)
2.74 (2)
2.72 (2)
3,762
2,248 (3)
$
3,845
2,304 (6)
$
3,867
2,324 (8)
$
3,721
2,247 (10)
574 (4)
(4)
(5)
533
0.60 (4)
0.59 (4)
638 (7)
600 (7)
0.67 (7)
0.67 (7)
746 (9)
702 (9)
0.79 (9)
0.78 (9)
628 (11)
606 (11)
0.68 (11)
0.68 (11)
$ 16,034
$
9,399 (12)
1,548 (13)
1,384 (13)
4,070
2,392 (14)
$
4,066
2,367 (16)
$
3,999
2,347 (18)
$
3,899
2,293 (20)
583 (15)
542 (15)
616 (17)
574 (17)
770 (19)
(421) (21)
726 (19)
(458) (21)
1.53 (13)
0.60 (15)
0.63 (17)
0.81 (19)
1.52 (13)
0.59 (15)
0.63 (17)
0.80 (19)
(0.51) (21)
(21)
(0.51)
(22)
____________
Note: Basic and diluted earnings (loss) per share are computed independently for each quarter and the year-to-date period
presented. Accordingly, the sum of the quarterly earnings (loss) per common share may not necessarily equal the
earnings (loss) per share for the year-to-date period.
(1) Gross profit for the full year of 2016 includes $46 of charges related to the 2012 Restructuring Program.
(2) Net income including noncontrolling interests for the full year of 2016 includes $169 of aftertax charges related to the 2012
Restructuring Program. Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of
2016 include $168 of aftertax charges related to the 2012 Restructuring Program, a $63 aftertax gain on the sale of land in Mexico,
$11 of aftertax charges for a previously disclosed litigation matter and $35 of benefits from previously disclosed tax matters.
(3) Gross profit for the first quarter of 2016 includes $8 of charges related to the 2012 Restructuring Program.
(4) Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common
share for the first quarter of 2016 include $38 of aftertax charges related to the 2012 Restructuring Program.
(5)
In the first quarter of 2016, provision for income taxes included a $210 U.S. income tax benefit principally related to changes in
Venezuela’s foreign exchange regime implemented in March 2016. In order to fully recognize the $210 tax benefit in 2016, the
Company repatriated an incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside
of the U.S., and accordingly, recorded a tax charge of $210 during the first quarter of 2016. See Note 11, Income Taxes.
(6) Gross profit for the second quarter of 2016 includes $12 of charges related to the 2012 Restructuring Program.
(7) Net income including noncontrolling interests for the second quarter of 2016 includes $45 of aftertax charges related to the 2012
Restructuring Program and a $13 benefit from a previously disclosed tax matter. Net income attributable to Colgate-Palmolive
Company and earnings per common share include $44 of aftertax charges related to the 2012 Restructuring Program and a $13 benefit
from a previously disclosed tax matter.
(8) Gross profit for the third quarter of 2016 includes $11 of charges related to the 2012 Restructuring Program.
102
103
COLGATE-PALMOLIVE COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Millions)
Additions
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Other Deductions
Balance at
End of Period
Year Ended December 31, 2016
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
Year Ended December 31, 2015
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
Year Ended December 31, 2014
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
$
$
$
$
$
$
59
$
— $
18
$ — $
— $ — $
4
$
— $
54
$
— $
7
$ — $
— $ — $
2
$
— $
67
6
$
$
— $ — $
— $ — $
13
6
$
$
73
—
59
—
54
—
COLGATE-PALMOLIVE COMPANY
Market and Dividend Information
The Company’s common stock is listed on the New York Stock Exchange and its trading symbol is CL. Dividends on
the common stock have been paid every year since 1895, and the Company’s regular common stock dividend payments
have increased for 54 consecutive years.
Market Price of Common Stock
Quarter Ended
March 31
June 30
September 30
December 31
Year-end Closing Price
Dividends Paid Per Common Share
Quarter Ended
March 31
June 30
September 30
December 31
Total
2016
2015
High
$ 70.72
73.20
75.27
73.62
Low
$ 62.45
68.96
70.86
64.63
High
$ 71.46
70.08
69.08
69.23
Low
$ 65.12
65.34
60.37
63.72
$65.44
$66.62
2016
2015
$
$
0.38
0.39
0.39
0.39
1.55
$
$
0.36
0.38
0.38
0.38
1.50
104
105
COLGATE-PALMOLIVE COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Millions)
Additions
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Other Deductions
Balance at
End of Period
Year Ended December 31, 2016
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
Year Ended December 31, 2015
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
Year Ended December 31, 2014
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
$
$
$
$
$
$
59
$
— $
18
$ — $
— $ — $
4
$
— $
54
$
— $
7
$ — $
— $ — $
2
$
— $
67
6
$
$
— $ — $
— $ — $
13
6
$
$
73
—
59
—
54
—
COLGATE-PALMOLIVE COMPANY
Market and Dividend Information
The Company’s common stock is listed on the New York Stock Exchange and its trading symbol is CL. Dividends on
the common stock have been paid every year since 1895, and the Company’s regular common stock dividend payments
have increased for 54 consecutive years.
Market Price of Common Stock
Quarter Ended
March 31
June 30
September 30
December 31
Year-end Closing Price
Dividends Paid Per Common Share
Quarter Ended
March 31
June 30
September 30
December 31
Total
2016
2015
High
$ 70.72
73.20
75.27
73.62
Low
$ 62.45
68.96
70.86
64.63
High
$ 71.46
70.08
69.08
69.23
Low
$ 65.12
65.34
60.37
63.72
$65.44
$66.62
2016
2015
$
$
0.38
0.39
0.39
0.39
1.55
$
$
0.36
0.38
0.38
0.38
1.50
104
105
COLGATE-PALMOLIVE COMPANY
Market and Dividend Information
Stock Price Performance Graphs
The following graphs compare cumulative total shareholder returns on Colgate-Palmolive Company common stock
against the S&P Composite-500 Stock Index and two peer company indices for the twenty-year, ten-year and five-year
periods each ended December 31, 2016. The peer company indices are comprised of consumer products companies that
have both domestic and international businesses. In 2016, to ensure more accurate and useful comparisons for investors,
the Company determined to increase the size of the peer group to lessen the likelihood of the performance of a single
company distorting the results. For 2016, the peer company index consisted of Avon Products, Inc., Campbell Soup
Company, The Clorox Company, The Coca-Cola Company, ConAgra Foods, Inc., The Estee Lauder Companies, Inc.,
General Mills, Inc., Johnson & Johnson, Kellogg Company, Kimberly-Clark Corporation, The Kraft Heinz Company,
Mondelez International, Inc., PepsiCo, Inc., The Procter & Gamble Company, Reckitt Benckiser Group plc and Unilever
N.V. This index is identified as the “New Peer Group” on the graphs. Last year, the peer company index consisted of Avon
Products, Inc., Beiersdorf AG, The Clorox Company, Kimberly-Clark Corporation, The Procter & Gamble Company,
Reckitt Benckiser Group plc and Unilever N.V. The prior year index is identified as the “Old Peer Group” on the graphs.
These performance graphs do not constitute soliciting material, are not deemed filed with the Securities and Exchange
Commission and are not incorporated by reference in any of the Company’s filings under the Securities Act of 1933 or the
Exchange Act, whether made before or after the date of this Annual Report on Form 10-K and irrespective of any general
incorporation language in any such filing, except to the extent the Company specifically incorporates these performance
graphs by reference therein.
COLGATE-PALMOLIVE COMPANY
Historical Financial Summary
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
Continuing Operations
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Net sales
$15,195
$16,034
$17,277
$17,420
$17,085
$16,734
$15,564
$15,327
$15,330
$13,790
Results of operations:
Net income
attributable to
Colgate-Palmolive
Company
Per common share,
basic
Per common share,
diluted
Depreciation and
2,441 (1)
1,384 (2)
2,180 (3)
2,241 (4)
2,472 (5)
2,431 (6)
2,203 (7)
2,291
1,957 (8)
1,737 (9)
2.74 (1)
1.53 (2)
2.38 (3)
2.41 (4)
2.60 (5)
2.49 (6)
2.22 (7)
2.26
1.91 (8)
1.67 (9)
2.72 (1)
1.52 (2)
2.36 (3)
2.38 (4)
2.57 (5)
2.47 (6)
2.16 (7)
2.18
1.83 (8)
1.6 (9)
amortization expense
443
449
442
439
425
421
376
351
348
334
Financial Position
Current ratio
Property, plant and
equipment, net
Capital expenditures
Total assets(10)
Long-term debt(10)
Colgate-Palmolive
Company
shareholders’ equity
Share and Other
Book value per common
share
Cash dividends declared
and paid per common
share
Closing price
Number of common
shares outstanding
(in millions)
Number of common
shareholders of
record
Number of employees
1.3
1.2
1.2
1.1
1.2
1.2
1.0
1.1
1.3
1.1
3,840
593
12,123
6,520
3,796
691
11,935
6,246
4,080
757
4,083
670
13,440
13,859
5,625
4,732
3,842
565
13,379
4,911
3,668
537
12,711
4,417
3,693
3,516
3,119
3,015
550
575
684
583
11,163
11,125
9,970
10,104
2,806
2,812
3,576
3,214
(243)
(299)
1,145
2,305
2,189
2,375
2,675
3,116
1,923
2,286
0.03
(0.04)
1.55
2.79
2.6
2.71
2.95
3.26
2.04
2.37
1.55
65.44
1.50
66.62
1.42
69.19
1.33
65.21
1.22
52.27
1.14
46.20
1.02
40.19
0.86
41.08
0.78
34.27
0.70
38.98
883.1
892.7
906.7
919.9
935.8
960.0
989.8
988.4
1,002.8
1,018.0
23,600
36,700
24,400
37,900
25,400
26,900
37,700
37,400
27,600
37,700
28,900
38,600
29,900
30,600
31,400
32,200
39,200
38,100
36,600
36,000
Note: All per share amounts and numbers of shares outstanding were adjusted for the two-for-one stock split of the Company’s
common stock in 2013.
(1)
Net income including noncontrolling interests for the full year of 2016 includes $169 of aftertax charges related to the 2012
Restructuring Program. Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2016
include $168 of aftertax charges related to the 2012 Restructuring Program, a $63 aftertax gain on the sale of land in Mexico, $11 of
aftertax charges for a previously disclosed litigation matter and $35 of benefits from previously disclosed tax matters.
106
107
COLGATE-PALMOLIVE COMPANY
Market and Dividend Information
Stock Price Performance Graphs
The following graphs compare cumulative total shareholder returns on Colgate-Palmolive Company common stock
against the S&P Composite-500 Stock Index and two peer company indices for the twenty-year, ten-year and five-year
periods each ended December 31, 2016. The peer company indices are comprised of consumer products companies that
have both domestic and international businesses. In 2016, to ensure more accurate and useful comparisons for investors,
the Company determined to increase the size of the peer group to lessen the likelihood of the performance of a single
company distorting the results. For 2016, the peer company index consisted of Avon Products, Inc., Campbell Soup
Company, The Clorox Company, The Coca-Cola Company, ConAgra Foods, Inc., The Estee Lauder Companies, Inc.,
General Mills, Inc., Johnson & Johnson, Kellogg Company, Kimberly-Clark Corporation, The Kraft Heinz Company,
Mondelez International, Inc., PepsiCo, Inc., The Procter & Gamble Company, Reckitt Benckiser Group plc and Unilever
N.V. This index is identified as the “New Peer Group” on the graphs. Last year, the peer company index consisted of Avon
Products, Inc., Beiersdorf AG, The Clorox Company, Kimberly-Clark Corporation, The Procter & Gamble Company,
Reckitt Benckiser Group plc and Unilever N.V. The prior year index is identified as the “Old Peer Group” on the graphs.
These performance graphs do not constitute soliciting material, are not deemed filed with the Securities and Exchange
Commission and are not incorporated by reference in any of the Company’s filings under the Securities Act of 1933 or the
Exchange Act, whether made before or after the date of this Annual Report on Form 10-K and irrespective of any general
incorporation language in any such filing, except to the extent the Company specifically incorporates these performance
graphs by reference therein.
COLGATE-PALMOLIVE COMPANY
Historical Financial Summary
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
Continuing Operations
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Net sales
$15,195
$16,034
$17,277
$17,420
$17,085
$16,734
$15,564
$15,327
$15,330
$13,790
Results of operations:
Net income
attributable to
Colgate-Palmolive
Company
Per common share,
basic
Per common share,
diluted
Depreciation and
2,441 (1)
1,384 (2)
2,180 (3)
2,241 (4)
2,472 (5)
2,431 (6)
2,203 (7)
2,291
1,957 (8)
1,737 (9)
2.74 (1)
1.53 (2)
2.38 (3)
2.41 (4)
2.60 (5)
2.49 (6)
2.22 (7)
2.26
1.91 (8)
1.67 (9)
2.72 (1)
1.52 (2)
2.36 (3)
2.38 (4)
2.57 (5)
2.47 (6)
2.16 (7)
2.18
1.83 (8)
1.6 (9)
amortization expense
443
449
442
439
425
421
376
351
348
334
Financial Position
Current ratio
Property, plant and
equipment, net
Capital expenditures
Total assets(10)
Long-term debt(10)
Colgate-Palmolive
Company
shareholders’ equity
Share and Other
Book value per common
share
Cash dividends declared
and paid per common
share
Closing price
Number of common
shares outstanding
(in millions)
Number of common
shareholders of
record
Number of employees
1.3
1.2
1.2
1.1
1.2
1.2
1.0
1.1
1.3
1.1
3,840
593
12,123
6,520
3,796
691
11,935
6,246
4,080
757
4,083
670
13,440
13,859
5,625
4,732
3,842
565
13,379
4,911
3,668
537
12,711
4,417
3,693
3,516
3,119
3,015
550
575
684
583
11,163
11,125
9,970
10,104
2,806
2,812
3,576
3,214
(243)
(299)
1,145
2,305
2,189
2,375
2,675
3,116
1,923
2,286
0.03
(0.04)
1.55
2.79
2.6
2.71
2.95
3.26
2.04
2.37
1.55
65.44
1.50
66.62
1.42
69.19
1.33
65.21
1.22
52.27
1.14
46.20
1.02
40.19
0.86
41.08
0.78
34.27
0.70
38.98
883.1
892.7
906.7
919.9
935.8
960.0
989.8
988.4
1,002.8
1,018.0
23,600
36,700
24,400
37,900
25,400
26,900
37,700
37,400
27,600
37,700
28,900
38,600
29,900
30,600
31,400
32,200
39,200
38,100
36,600
36,000
Note: All per share amounts and numbers of shares outstanding were adjusted for the two-for-one stock split of the Company’s
common stock in 2013.
(1)
Net income including noncontrolling interests for the full year of 2016 includes $169 of aftertax charges related to the 2012
Restructuring Program. Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2016
include $168 of aftertax charges related to the 2012 Restructuring Program, a $63 aftertax gain on the sale of land in Mexico, $11 of
aftertax charges for a previously disclosed litigation matter and $35 of benefits from previously disclosed tax matters.
106
107
COLGATE-PALMOLIVE COMPANY
Historical Financial Summary
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Net income (loss) including noncontrolling interests for the full year of 2015 includes $185 of aftertax charges related to the 2012
Restructuring Program. Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss) per common share for the full
year of 2015 include a $1,058 aftertax charge related to the change in accounting for the Company’s Venezuelan operations, $183 of
aftertax charges related to the 2012 Restructuring Program, $22 of aftertax charges related to the remeasurement of CP Venezuela’s local
currency-denominated net monetary assets as a result of effective devaluations, $120 aftertax gain on the sale of the South Pacific
laundry detergent business, a $14 aftertax charge for a previously disclosed litigation matter and a $15 charge for a previously disclosed
tax matter.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2014 include $208 of aftertax charges related to the 2012 Restructuring Program, $214 of aftertax charges related to the
remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of effective devaluations, $41 of charges
for previously disclosed litigation matters, $3 of aftertax costs related to the sale of land in Mexico and a $66 charge for a previously
disclosed tax matter.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2013 include $278 of aftertax charges related to the 2012 Restructuring Program, a $111 aftertax charge related to the remeasurement
of CP Venezuela’s local currency-denominated net monetary assets as a result of a devaluation, a $23 charge for a previously disclosed
litigation matter and $12 of aftertax costs related to the sale of land in Mexico.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2012 include $70 of aftertax charges related to the 2012 Restructuring Program, $18 of aftertax costs related to the sale of land in
Mexico and $14 of aftertax costs associated with various business realignment and other cost-saving initiatives.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2011 include an aftertax gain of $135 on the sale of the non-core laundry detergent business in Colombia, offset by $147 of aftertax
costs associated with various business realignment and other cost-saving initiatives, $9 of aftertax costs related to the sale of land in
Mexico and a $21 charge for a previously disclosed litigation matter.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2010 include a $271 one-time charge related to the transition to hyperinflationary accounting in Venezuela, $61 of aftertax charges for
termination benefits related to overhead reduction initiatives, a $30 aftertax gain on sales of non-core product lines and a $31
benefit related to the reorganization of an overseas subsidiary.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2008 include $113 of aftertax charges related to the 2004 Restructuring Program.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2007 include a $29 aftertax gain for the sale of the Company’s household bleach business in Latin America and an income tax benefit
of $74 related to the reduction of a tax loss carryforward valuation allowance in Brazil, partially offset by tax provisions for the
recapitalization of certain overseas subsidiaries. These gains were more than offset by $184 of aftertax charges related to the 2004
Restructuring Program, $10 of pension settlement charges and $8 of charges related to the limited voluntary recall of certain Hill’s Pet
Nutrition feline products.
Prior year amounts have been reclassified to conform to the current year presentation of debt issuance costs required by Accounting
Standards Update (“ASU”) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” See Note 2 to the Consolidated
Financial Statements for additional information.
108
COLGATE-PALMOLIVE COMPANY
EXHIBITS TO FORM 10-K
YEAR ENDED DECEMBER 31, 2016
Commission File No. 1-644
Exhibit No.
Description
3-A
3-B
Restated Certificate of Incorporation, as amended. (Registrant hereby incorporates by reference Exhibit 3-
A to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 1-644.)
By-laws, as amended. (Registrant hereby incorporates by reference Exhibit 3.1 to its Current Report on
Form 8-K filed on January 15, 2016, File No. 1-644.)
4
a)
Indenture, dated as of November 15, 1992, between the Company and The Bank of New York Mellon
(formerly known as The Bank of New York) as Trustee. (Registrant hereby incorporates by reference
Exhibit 4.1 to its Registration Statement on Form S-3 and Post-Effective Amendment No. 1 filed on June
26, 1992, Registration No. 33-48840.)*
b)
Colgate-Palmolive Company Employee Stock Ownership Trust Agreement dated as of June 1, 1989, as
amended. (Registrant hereby incorporates by reference Exhibit 4-B (b) to its Quarterly Report on Form
10-Q for the quarter ended June 30, 2000, File No. 1-644.)
10-A a)
Colgate-Palmolive Company 2013 Incentive Compensation Plan. (Registrant hereby incorporates by
reference Annex B to its 2013 Notice of Annual Meeting and Proxy Statement.)
b)
c)
Form of Nonqualified Stock Option Agreement used in connection with grants under the 2013 Incentive
Compensation Plan. (Registrant hereby incorporates by reference Exhibit 10 to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2016.)
Form of Restricted Stock Unit Award Agreement used in connection with grants under the 2013 Incentive
Compensation Plan. (Registrant hereby incorporates by reference Exhibit 10-A (c) to its Annual Report
on Form 10-K for the year ended December 31, 2013.)
10-B a)
Colgate-Palmolive Company 2009 Executive Incentive Compensation Plan. (Registrant hereby
incorporates by reference Appendix A to its 2009 Notice of Meeting and Proxy Statement.)
b)
c)
d)
Colgate-Palmolive Company Executive Incentive Compensation Plan Trust, as amended. (Registrant
hereby incorporates by reference Exhibit 10-B (b) to its Annual Report on Form 10-K for the year ended
December 31, 1987, File No. 1-644.)
Amendment, dated as of October 29, 2007, to the Colgate-Palmolive Company Executive Incentive
Compensation Plan Trust. (Registrant hereby incorporates by reference Exhibit 10-A (b) to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Form of Restricted Stock Award Agreement used in connection with grants to employees under the 2009
Colgate-Palmolive Company Executive Incentive Compensation Plan. (Registrant hereby incorporates
by reference Exhibit 10-P to its Annual Report on Form 10-K for the year ended December 31, 2009, File
No. 1-644.)
10-C a)
Colgate-Palmolive Company Supplemental Salaried Employees’ Retirement Plan, amended and restated
as of September 1, 2010. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2010, File No. 1-644.)
109
COLGATE-PALMOLIVE COMPANY
Historical Financial Summary
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Net income (loss) including noncontrolling interests for the full year of 2015 includes $185 of aftertax charges related to the 2012
Restructuring Program. Net income (loss) attributable to Colgate-Palmolive Company and earnings (loss) per common share for the full
year of 2015 include a $1,058 aftertax charge related to the change in accounting for the Company’s Venezuelan operations, $183 of
aftertax charges related to the 2012 Restructuring Program, $22 of aftertax charges related to the remeasurement of CP Venezuela’s local
currency-denominated net monetary assets as a result of effective devaluations, $120 aftertax gain on the sale of the South Pacific
laundry detergent business, a $14 aftertax charge for a previously disclosed litigation matter and a $15 charge for a previously disclosed
tax matter.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2014 include $208 of aftertax charges related to the 2012 Restructuring Program, $214 of aftertax charges related to the
remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of effective devaluations, $41 of charges
for previously disclosed litigation matters, $3 of aftertax costs related to the sale of land in Mexico and a $66 charge for a previously
disclosed tax matter.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2013 include $278 of aftertax charges related to the 2012 Restructuring Program, a $111 aftertax charge related to the remeasurement
of CP Venezuela’s local currency-denominated net monetary assets as a result of a devaluation, a $23 charge for a previously disclosed
litigation matter and $12 of aftertax costs related to the sale of land in Mexico.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2012 include $70 of aftertax charges related to the 2012 Restructuring Program, $18 of aftertax costs related to the sale of land in
Mexico and $14 of aftertax costs associated with various business realignment and other cost-saving initiatives.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2011 include an aftertax gain of $135 on the sale of the non-core laundry detergent business in Colombia, offset by $147 of aftertax
costs associated with various business realignment and other cost-saving initiatives, $9 of aftertax costs related to the sale of land in
Mexico and a $21 charge for a previously disclosed litigation matter.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2010 include a $271 one-time charge related to the transition to hyperinflationary accounting in Venezuela, $61 of aftertax charges for
termination benefits related to overhead reduction initiatives, a $30 aftertax gain on sales of non-core product lines and a $31
benefit related to the reorganization of an overseas subsidiary.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2008 include $113 of aftertax charges related to the 2004 Restructuring Program.
Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and earnings per common share
in 2007 include a $29 aftertax gain for the sale of the Company’s household bleach business in Latin America and an income tax benefit
of $74 related to the reduction of a tax loss carryforward valuation allowance in Brazil, partially offset by tax provisions for the
recapitalization of certain overseas subsidiaries. These gains were more than offset by $184 of aftertax charges related to the 2004
Restructuring Program, $10 of pension settlement charges and $8 of charges related to the limited voluntary recall of certain Hill’s Pet
Nutrition feline products.
Prior year amounts have been reclassified to conform to the current year presentation of debt issuance costs required by Accounting
Standards Update (“ASU”) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” See Note 2 to the Consolidated
Financial Statements for additional information.
108
COLGATE-PALMOLIVE COMPANY
EXHIBITS TO FORM 10-K
YEAR ENDED DECEMBER 31, 2016
Commission File No. 1-644
Exhibit No.
Description
3-A
3-B
Restated Certificate of Incorporation, as amended. (Registrant hereby incorporates by reference Exhibit 3-
A to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 1-644.)
By-laws, as amended. (Registrant hereby incorporates by reference Exhibit 3.1 to its Current Report on
Form 8-K filed on January 15, 2016, File No. 1-644.)
4
a)
Indenture, dated as of November 15, 1992, between the Company and The Bank of New York Mellon
(formerly known as The Bank of New York) as Trustee. (Registrant hereby incorporates by reference
Exhibit 4.1 to its Registration Statement on Form S-3 and Post-Effective Amendment No. 1 filed on June
26, 1992, Registration No. 33-48840.)*
b)
Colgate-Palmolive Company Employee Stock Ownership Trust Agreement dated as of June 1, 1989, as
amended. (Registrant hereby incorporates by reference Exhibit 4-B (b) to its Quarterly Report on Form
10-Q for the quarter ended June 30, 2000, File No. 1-644.)
10-A a)
Colgate-Palmolive Company 2013 Incentive Compensation Plan. (Registrant hereby incorporates by
reference Annex B to its 2013 Notice of Annual Meeting and Proxy Statement.)
b)
c)
Form of Nonqualified Stock Option Agreement used in connection with grants under the 2013 Incentive
Compensation Plan. (Registrant hereby incorporates by reference Exhibit 10 to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2016.)
Form of Restricted Stock Unit Award Agreement used in connection with grants under the 2013 Incentive
Compensation Plan. (Registrant hereby incorporates by reference Exhibit 10-A (c) to its Annual Report
on Form 10-K for the year ended December 31, 2013.)
10-B a)
Colgate-Palmolive Company 2009 Executive Incentive Compensation Plan. (Registrant hereby
incorporates by reference Appendix A to its 2009 Notice of Meeting and Proxy Statement.)
b)
c)
d)
Colgate-Palmolive Company Executive Incentive Compensation Plan Trust, as amended. (Registrant
hereby incorporates by reference Exhibit 10-B (b) to its Annual Report on Form 10-K for the year ended
December 31, 1987, File No. 1-644.)
Amendment, dated as of October 29, 2007, to the Colgate-Palmolive Company Executive Incentive
Compensation Plan Trust. (Registrant hereby incorporates by reference Exhibit 10-A (b) to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Form of Restricted Stock Award Agreement used in connection with grants to employees under the 2009
Colgate-Palmolive Company Executive Incentive Compensation Plan. (Registrant hereby incorporates
by reference Exhibit 10-P to its Annual Report on Form 10-K for the year ended December 31, 2009, File
No. 1-644.)
10-C a)
Colgate-Palmolive Company Supplemental Salaried Employees’ Retirement Plan, amended and restated
as of September 1, 2010. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2010, File No. 1-644.)
109
Exhibit No.
Description
Exhibit No.
Description
b)
c)
d)
e)
Amended and Restated Colgate-Palmolive Company Supplemental Salaried Employees’ Retirement Plan
Trust, dated August 2, 1990. (Registrant hereby incorporates by reference Exhibit 10-B (b) to its
Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Amendment, dated as of October 29, 2007, to the Amended and Restated Colgate-Palmolive Company
Supplemental Salaried Employee Trust. (Registrant hereby incorporates by reference Exhibit 10-B (c) to
its Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Amendment, dated as of December 31, 2013, to the Colgate-Palmolive Company Supplemental Salaried
Employees’ Retirement Plan. (Registrant hereby incorporates by reference Exhibit 10-C (d) to its Annual
Report on Form 10-K for the year ended December 31, 2013.)
Amendment, dated as of January 1, 2016 to the Colgate-Palmolive Company Supplemental Salaried
Employees’ Retirement Plan.**
10-D a)
Colgate-Palmolive Company Executive Severance Plan, as amended and restated through September 12,
2013. (Registrant hereby incorporates by reference Exhibit 10-A to its Current Report on Form 8-K filed
on September 16, 2013, File No. 1-644.)
b)
Colgate-Palmolive Company Executive Severance Plan Trust. (Registrant hereby incorporates by
reference Exhibit 10-E (b) to its Annual Report on Form 10-K for the year ended December 31, 1987, File
No. 1-644.)
10-E
Colgate-Palmolive Company Pension Plan for Outside Directors, as amended and restated. (Registrant
hereby incorporates by reference Exhibit 10-D to its Annual Report on Form 10-K for the year ended
December 31, 1999, File No. 1-644.)
10-F
a)
Colgate-Palmolive Company Restated and Amended Deferred Compensation Plan for Non-Employee
Directors, as amended. (Registrant hereby incorporates by reference Exhibit 10-H to its Annual Report on
Form 10-K for the year ended December 31, 1997, File No. 1-644.)
b)
Amendment, dated as of September 12, 2007, to the Colgate-Palmolive Company Restated and Amended
Deferred Compensation Plan for Non-Employee Directors. (Registrant hereby incorporates by reference
Exhibit 10-F to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File No.
1-644.)
10-G
10-H
10-I
a)
Colgate-Palmolive Company Deferred Compensation Plan, amended and restated as of September 12,
2007. (Registrant hereby incorporates by reference Exhibit 10-G to its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2007, File No. 1-644.)
Colgate-Palmolive Company Above and Beyond Plan – Officer Level. (Registrant hereby incorporates by
reference Exhibit 10-A to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004,
File No. 1-644.)
Five Year Credit Agreement dated as of November 4, 2011, Amended and Restated as of July 27, 2015 by
Amendment Number 2 thereto (the “Amended and Restated Credit Agreement”), among Colgate-
Palmolive Company as Borrower, Citibank, N.A. as Administrative Agent and the Lenders party thereto.
(Registrant hereby incorporates by reference Exhibit 10 to its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2015, File No. 1-644.)
b)
Amendment No. 1 dated as of November 4, 2016 to the Amended and Restated Credit Agreement, among
Colgate-Palmolive Company, as Borrower, Citibank, N.A., as Administrative Agent, and the Lenders
party thereto.**
10-J
10-K
Colgate-Palmolive Company Supplemental Savings and Investment Plan, amended and restated as of
September 1, 2010. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2010, File No. 1-644.)
Form of Indemnification Agreement between Colgate-Palmolive Company and its directors, executive
officers and certain key employees. (Registrant hereby incorporates by reference Exhibit 10-B to its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, File No. 1-644.)
10-L
a)
Colgate-Palmolive Company 2005 Non-Employee Director Stock Option Plan. (Registrant hereby
incorporates by reference Appendix C to its 2005 Notice of Meeting and Proxy Statement.)
b)
c)
d)
e)
f)
g)
h)
Form of Award Agreement used in connection with grants to non-employee directors under the Colgate-
Palmolive Company 2005 Non-Employee Director Stock Option Plan. (Registrant hereby incorporates by
reference Exhibit 10-B to its Current Report on Form 8-K dated May 4, 2005, File No. 1-644.)
Amendment, dated as of September 7, 2006, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2006, File No. 1-644.)
Amendment, dated as of December 7, 2006, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-S (d) to its Annual
Report on Form 10-K for the year ended December 31, 2006, File No. 1-644.)
Amendment, dated as of October 29, 2007, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-J to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Amendment, dated as of January 13, 2011, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2011, File No. 1-644.)
Amendment, dated as of July 14, 2011, to the Colgate-Palmolive Company 2005 Non-Employee Director
Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2011, File No. 1-644.)
Amendment, dated as of May 11, 2012, to the Colgate-Palmolive Company 2005 Stock Plan for Non-
Employee Directors. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report
on Form 10-Q for the quarter ended June 30, 2012, File No. 1-644.)
10-M a)
Colgate-Palmolive Company 2005 Employee Stock Option Plan. (Registrant hereby incorporates by
reference Appendix B to its 2005 Notice of Meeting and Proxy Statement.)
b)
c)
d)
Form of Award Agreement used in connection with grants to employees under the Colgate-Palmolive
Company 2005 Employee Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-A
to its Current Report on Form 8-K dated May 4, 2005, File No. 1-644.)
Amendment, dated as of September 7, 2006, to the Colgate-Palmolive Company 2005 Employee Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report on Form
10-Q for the quarter ended September 30, 2006, File No. 1-644.)
Amendment, dated as of December 7, 2006, to the Colgate-Palmolive Company 2005 Employee Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit 10-T (d) to its Annual Report on Form
10-K for the year ended December 31, 2006, File No. 1-644.)
110
111
Exhibit No.
Description
Exhibit No.
Description
b)
c)
d)
e)
Amended and Restated Colgate-Palmolive Company Supplemental Salaried Employees’ Retirement Plan
Trust, dated August 2, 1990. (Registrant hereby incorporates by reference Exhibit 10-B (b) to its
Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Amendment, dated as of October 29, 2007, to the Amended and Restated Colgate-Palmolive Company
Supplemental Salaried Employee Trust. (Registrant hereby incorporates by reference Exhibit 10-B (c) to
its Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Amendment, dated as of December 31, 2013, to the Colgate-Palmolive Company Supplemental Salaried
Employees’ Retirement Plan. (Registrant hereby incorporates by reference Exhibit 10-C (d) to its Annual
Report on Form 10-K for the year ended December 31, 2013.)
Amendment, dated as of January 1, 2016 to the Colgate-Palmolive Company Supplemental Salaried
Employees’ Retirement Plan.**
10-D a)
Colgate-Palmolive Company Executive Severance Plan, as amended and restated through September 12,
2013. (Registrant hereby incorporates by reference Exhibit 10-A to its Current Report on Form 8-K filed
on September 16, 2013, File No. 1-644.)
b)
Colgate-Palmolive Company Executive Severance Plan Trust. (Registrant hereby incorporates by
reference Exhibit 10-E (b) to its Annual Report on Form 10-K for the year ended December 31, 1987, File
No. 1-644.)
10-E
Colgate-Palmolive Company Pension Plan for Outside Directors, as amended and restated. (Registrant
hereby incorporates by reference Exhibit 10-D to its Annual Report on Form 10-K for the year ended
December 31, 1999, File No. 1-644.)
10-F
a)
Colgate-Palmolive Company Restated and Amended Deferred Compensation Plan for Non-Employee
Directors, as amended. (Registrant hereby incorporates by reference Exhibit 10-H to its Annual Report on
Form 10-K for the year ended December 31, 1997, File No. 1-644.)
b)
Amendment, dated as of September 12, 2007, to the Colgate-Palmolive Company Restated and Amended
Deferred Compensation Plan for Non-Employee Directors. (Registrant hereby incorporates by reference
Exhibit 10-F to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File No.
1-644.)
10-G
10-H
10-I
a)
Colgate-Palmolive Company Deferred Compensation Plan, amended and restated as of September 12,
2007. (Registrant hereby incorporates by reference Exhibit 10-G to its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2007, File No. 1-644.)
Colgate-Palmolive Company Above and Beyond Plan – Officer Level. (Registrant hereby incorporates by
reference Exhibit 10-A to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004,
File No. 1-644.)
Five Year Credit Agreement dated as of November 4, 2011, Amended and Restated as of July 27, 2015 by
Amendment Number 2 thereto (the “Amended and Restated Credit Agreement”), among Colgate-
Palmolive Company as Borrower, Citibank, N.A. as Administrative Agent and the Lenders party thereto.
(Registrant hereby incorporates by reference Exhibit 10 to its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2015, File No. 1-644.)
b)
Amendment No. 1 dated as of November 4, 2016 to the Amended and Restated Credit Agreement, among
Colgate-Palmolive Company, as Borrower, Citibank, N.A., as Administrative Agent, and the Lenders
party thereto.**
10-J
10-K
Colgate-Palmolive Company Supplemental Savings and Investment Plan, amended and restated as of
September 1, 2010. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2010, File No. 1-644.)
Form of Indemnification Agreement between Colgate-Palmolive Company and its directors, executive
officers and certain key employees. (Registrant hereby incorporates by reference Exhibit 10-B to its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, File No. 1-644.)
10-L
a)
Colgate-Palmolive Company 2005 Non-Employee Director Stock Option Plan. (Registrant hereby
incorporates by reference Appendix C to its 2005 Notice of Meeting and Proxy Statement.)
b)
c)
d)
e)
f)
g)
h)
Form of Award Agreement used in connection with grants to non-employee directors under the Colgate-
Palmolive Company 2005 Non-Employee Director Stock Option Plan. (Registrant hereby incorporates by
reference Exhibit 10-B to its Current Report on Form 8-K dated May 4, 2005, File No. 1-644.)
Amendment, dated as of September 7, 2006, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2006, File No. 1-644.)
Amendment, dated as of December 7, 2006, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-S (d) to its Annual
Report on Form 10-K for the year ended December 31, 2006, File No. 1-644.)
Amendment, dated as of October 29, 2007, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-J to its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2007, File No. 1-644.)
Amendment, dated as of January 13, 2011, to the Colgate-Palmolive Company 2005 Non-Employee
Director Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2011, File No. 1-644.)
Amendment, dated as of July 14, 2011, to the Colgate-Palmolive Company 2005 Non-Employee Director
Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2011, File No. 1-644.)
Amendment, dated as of May 11, 2012, to the Colgate-Palmolive Company 2005 Stock Plan for Non-
Employee Directors. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report
on Form 10-Q for the quarter ended June 30, 2012, File No. 1-644.)
10-M a)
Colgate-Palmolive Company 2005 Employee Stock Option Plan. (Registrant hereby incorporates by
reference Appendix B to its 2005 Notice of Meeting and Proxy Statement.)
b)
c)
d)
Form of Award Agreement used in connection with grants to employees under the Colgate-Palmolive
Company 2005 Employee Stock Option Plan. (Registrant hereby incorporates by reference Exhibit 10-A
to its Current Report on Form 8-K dated May 4, 2005, File No. 1-644.)
Amendment, dated as of September 7, 2006, to the Colgate-Palmolive Company 2005 Employee Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report on Form
10-Q for the quarter ended September 30, 2006, File No. 1-644.)
Amendment, dated as of December 7, 2006, to the Colgate-Palmolive Company 2005 Employee Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit 10-T (d) to its Annual Report on Form
10-K for the year ended December 31, 2006, File No. 1-644.)
110
111
Exhibit No.
Description
The exhibits indicated above that are not included with the Form 10-K are available upon request and payment of a
reasonable fee approximating the registrant’s cost of providing and mailing the exhibits. Inquiries should be directed to:
Colgate-Palmolive Company
Office of the Secretary (10-K Exhibits)
300 Park Avenue
New York, NY 10022-7499
e)
f)
g)
Action, dated as of October 29, 2007, taken pursuant to the Colgate-Palmolive Company 2005 Employee
Stock Option Plan and Colgate-Palmolive Company 1997 Stock Option Plan. (Registrant hereby
incorporates by reference Exhibit 10-I to its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007, File No. 1-644.)
Amendment, dated as of February 26, 2009, to the Colgate-Palmolive Company 2005 Employee Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit 10-S (f) to its Annual Report on Form
10-K for the year ended December 31, 2008, File No. 1-644.)
Amendment, dated as of July 14, 2011, to the Colgate-Palmolive Company 2005 Employee Stock Option
Plan. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2011, File No. 1-644.)
Business and Share Sale and Purchase Agreement dated as of March 22, 2011 among Unilever N.V.,
Unilever plc, Colgate-Palmolive Company Sarl and Colgate-Palmolive Company relating to the Sanex
personal care business. (Registrant hereby incorporates by reference Exhibit 10-C to its Quarterly Report
on Form 10-Q for the quarter ended March 31, 2011, File No. 1-644.)
Computation of Ratio of Earnings to Fixed Charges.**
Subsidiaries of the Registrant.**
Consent of Independent Registered Public Accounting Firm.**
Powers of Attorney.**
10-N
12
21
23
24
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
101
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.**
The following materials from Colgate-Palmolive Company’s Annual Report on Form 10-K for the year
ended December 31, 2016, formatted in eXtensible Business Reporting Language (XBRL): (i) the
Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated
Statements of Changes in Shareholders’ Equity, (iv) the Consolidated Statements of Comprehensive
Income, (v) the Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements,
and (vii) Financial Statement Schedule.
__________
* Registrant hereby undertakes to furnish the Commission, upon request, with a copy of any instrument with respect to
long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of
the registrant and its subsidiaries on a consolidated basis.
** Filed herewith.
112
113
Exhibit No.
Description
The exhibits indicated above that are not included with the Form 10-K are available upon request and payment of a
reasonable fee approximating the registrant’s cost of providing and mailing the exhibits. Inquiries should be directed to:
Colgate-Palmolive Company
Office of the Secretary (10-K Exhibits)
300 Park Avenue
New York, NY 10022-7499
e)
f)
g)
Action, dated as of October 29, 2007, taken pursuant to the Colgate-Palmolive Company 2005 Employee
Stock Option Plan and Colgate-Palmolive Company 1997 Stock Option Plan. (Registrant hereby
incorporates by reference Exhibit 10-I to its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007, File No. 1-644.)
Amendment, dated as of February 26, 2009, to the Colgate-Palmolive Company 2005 Employee Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit 10-S (f) to its Annual Report on Form
10-K for the year ended December 31, 2008, File No. 1-644.)
Amendment, dated as of July 14, 2011, to the Colgate-Palmolive Company 2005 Employee Stock Option
Plan. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2011, File No. 1-644.)
Business and Share Sale and Purchase Agreement dated as of March 22, 2011 among Unilever N.V.,
Unilever plc, Colgate-Palmolive Company Sarl and Colgate-Palmolive Company relating to the Sanex
personal care business. (Registrant hereby incorporates by reference Exhibit 10-C to its Quarterly Report
on Form 10-Q for the quarter ended March 31, 2011, File No. 1-644.)
Computation of Ratio of Earnings to Fixed Charges.**
Subsidiaries of the Registrant.**
Consent of Independent Registered Public Accounting Firm.**
Powers of Attorney.**
10-N
12
21
23
24
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
101
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.**
The following materials from Colgate-Palmolive Company’s Annual Report on Form 10-K for the year
ended December 31, 2016, formatted in eXtensible Business Reporting Language (XBRL): (i) the
Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated
Statements of Changes in Shareholders’ Equity, (iv) the Consolidated Statements of Comprehensive
Income, (v) the Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements,
and (vii) Financial Statement Schedule.
__________
* Registrant hereby undertakes to furnish the Commission, upon request, with a copy of any instrument with respect to
long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of
the registrant and its subsidiaries on a consolidated basis.
** Filed herewith.
112
113
EXHIBIT 12
Shareholder Information
COLGATE-PALMOLIVE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions Except Per Share Amounts)
Earnings:
Income before income taxes
Add:
Fixed charges
Less:
Income from equity investees
Capitalized interest
Income as adjusted
Fixed Charges:
Interest on indebtedness and amortization
of debt expense discount or premium
Rents of one-third representative of interest
factor
Capitalized interest
Total fixed charges
Ratio of earnings to fixed charges
2016
2015
2014
2013
2012
$
3,738
$
2,763
$ 3,533
$ 3,565
$ 3,874
229
216
212
196
157
(10)
(6)
3,951
$
(8)
(6)
2,965
(7)
(4)
$ 3,734
(5)
(3)
$ 3,753
(7)
(1)
$ 4,023
149
$
133
$
130
$
116
$
80
74
6
229
17.3
$
77
6
216
13.7
$
78
4
212
17.6
$
77
3
196
19.1
$
76
1
157
25.6
$
$
$
Corporate Offices
Colgate-Palmolive Company
300 Park Avenue
New York, NY 10022-7499
(212) 310-2000
Stock Exchange
The common stock of Colgate-
Palmolive Company is listed
and traded on The New York
Stock Exchange under the
symbol CL.
Transfer Agent and Registrar
Our transfer agent, Computershare, can
assist you with a variety of shareholder
services, including change of address,
transfer of stock to another person,
questions about dividend checks, direct
deposit of dividends and Colgate’s
Direct Stock Purchase Plan:
Computershare
PO Box 30170
College Station, TX 77842-3170
1-800-756-8700 or (201) 680-6578
E-mail:
shrrelations@
cpushareownerservices.com
Website:
www.computershare.com/investor
Hearing impaired:
TDD 1-800-231-5469
Direct Stock Purchase Plan
A Direct Stock Purchase Plan is avail-
able through Computershare, our trans-
fer agent. The Plan includes dividend
reinvestment options, offers optional
cash investments by check or automat-
ic monthly payments, as well as many
other features. If you would like to learn
more about the Plan or to enroll, please
contact our transfer agent to request a
Plan brochure and the forms needed to
start the process.
Annual Meeting
Colgate shareholders are invited to
attend our annual meeting. It will be
held on Friday, May 12, 2017, at 10:00
a.m. in the Broadway Ballroom of the
Marriott Marquis Hotel, Sixth Floor,
Broadway at 45th Street, New York, NY.
Even if you plan to attend the meeting,
please vote by proxy. You may do so by
using the telephone, the internet or your
proxy card.
Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP
Communications to the
Board of Directors
Colgate shareholders and other
interested parties are encouraged
to communicate directly with the
Company’s independent directors
and committee chairs by sending an
e-mail to directors@colpal.com or by
writing to Directors, c/o Office of the
Chief Legal Officer, Colgate-Palmolive
Company, 300 Park Avenue, 11th Floor,
New York, NY 10022-7499. Such
communications are handled in
accordance with the procedures
described on the Company’s
Governance website at
www.colgatepalmolive.com.
SEC and NYSE Certifications
The certifications of Colgate’s Chief
Executive Officer and Chief Financial
Officer, required under Section 302 of
the Sarbanes-Oxley Act of 2002, have
been filed as exhibits to Colgate’s
Annual Report on Form 10-K for the
year ended December 31, 2016. In
addition, in 2016, Colgate’s Chief
Executive Officer submitted the annual
certification to the NYSE regarding
Colgate’s compliance with the NYSE
corporate governance listing standards.
Forward-Looking Statements
This 2016 Annual Report may contain
forward-looking statements. These
statements are made on the basis
of our views and assumptions as
of this time, and we undertake no
obligation to update these statements.
We caution 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. Investors should consult
the Company’s filings with the
Securities and Exchange Commission
(including the information set forth
under the caption “Risk Factors” in the
Company’s Annual Report on Form
10-K for the year ended December
31, 2016) for information about
certain factors that could cause such
differences.
Investor
Relations/Reports
Copies of annual reports, press
releases, company brochures, SEC
filings and other publications are
available from Colgate’s Investor
Relations Department:
l by mail, directed to the corporate
address
l by e-mail,
investor_relations@colpal.com
l by calling 1-800-850-2654 or by
calling Investor Relations at
(212) 310-2575
Institutional Investors:
l call John Faucher at (212) 310-3653
Other Reports
Other reports available on our website,
www.colgatepalmolive.com, include
our most recent Sustainability Report
and Colgate’s policies on Global
Diversity, Code of Conduct, Ingredient
Safety, No Deforestation, Environ-
mental, Occupational Health & Safety,
Product Safety and Quality Research.
For information about our products
and our Programs and Policies on
Animal Research and Development
of Alternatives, please call
1-800-468-6502.
Consumer Affairs
For Oral, Personal and Home Care
1-800-468-6502
For Hill’s Pet Nutrition
1-800-445-5777
Corporate Communications
(212) 310-2199
More information about Colgate
and our products is available on
the Company’s website at
www.colgatepalmolive.com.
© 2017 Colgate-Palmolive Company
Design by Robert Webster Inc. (RWI),
www.rwidesign.com
Major Photography by Richard Alcorn
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EXHIBIT 12
Shareholder Information
COLGATE-PALMOLIVE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions Except Per Share Amounts)
Earnings:
Income before income taxes
Add:
Fixed charges
Less:
Income from equity investees
Capitalized interest
Income as adjusted
Fixed Charges:
Interest on indebtedness and amortization
of debt expense discount or premium
Rents of one-third representative of interest
factor
Capitalized interest
Total fixed charges
Ratio of earnings to fixed charges
2016
2015
2014
2013
2012
$
3,738
$
2,763
$ 3,533
$ 3,565
$ 3,874
229
216
212
196
157
(10)
(6)
3,951
$
(8)
(6)
2,965
(7)
(4)
$ 3,734
(5)
(3)
$ 3,753
(7)
(1)
$ 4,023
149
$
133
$
130
$
116
$
80
74
6
229
17.3
$
77
6
216
13.7
$
78
4
212
17.6
$
77
3
196
19.1
$
76
1
157
25.6
$
$
$
Corporate Offices
Colgate-Palmolive Company
300 Park Avenue
New York, NY 10022-7499
(212) 310-2000
Stock Exchange
The common stock of Colgate-
Palmolive Company is listed
and traded on The New York
Stock Exchange under the
symbol CL.
Transfer Agent and Registrar
Our transfer agent, Computershare, can
assist you with a variety of shareholder
services, including change of address,
transfer of stock to another person,
questions about dividend checks, direct
deposit of dividends and Colgate’s
Direct Stock Purchase Plan:
Computershare
PO Box 30170
College Station, TX 77842-3170
1-800-756-8700 or (201) 680-6578
E-mail:
shrrelations@
cpushareownerservices.com
Website:
www.computershare.com/investor
Hearing impaired:
TDD 1-800-231-5469
Direct Stock Purchase Plan
A Direct Stock Purchase Plan is avail-
able through Computershare, our trans-
fer agent. The Plan includes dividend
reinvestment options, offers optional
cash investments by check or automat-
ic monthly payments, as well as many
other features. If you would like to learn
more about the Plan or to enroll, please
contact our transfer agent to request a
Plan brochure and the forms needed to
start the process.
Annual Meeting
Colgate shareholders are invited to
attend our annual meeting. It will be
held on Friday, May 12, 2017, at 10:00
a.m. in the Broadway Ballroom of the
Marriott Marquis Hotel, Sixth Floor,
Broadway at 45th Street, New York, NY.
Even if you plan to attend the meeting,
please vote by proxy. You may do so by
using the telephone, the internet or your
proxy card.
Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP
Communications to the
Board of Directors
Colgate shareholders and other
interested parties are encouraged
to communicate directly with the
Company’s independent directors
and committee chairs by sending an
e-mail to directors@colpal.com or by
writing to Directors, c/o Office of the
Chief Legal Officer, Colgate-Palmolive
Company, 300 Park Avenue, 11th Floor,
New York, NY 10022-7499. Such
communications are handled in
accordance with the procedures
described on the Company’s
Governance website at
www.colgatepalmolive.com.
SEC and NYSE Certifications
The certifications of Colgate’s Chief
Executive Officer and Chief Financial
Officer, required under Section 302 of
the Sarbanes-Oxley Act of 2002, have
been filed as exhibits to Colgate’s
Annual Report on Form 10-K for the
year ended December 31, 2016. In
addition, in 2016, Colgate’s Chief
Executive Officer submitted the annual
certification to the NYSE regarding
Colgate’s compliance with the NYSE
corporate governance listing standards.
Forward-Looking Statements
This 2016 Annual Report may contain
forward-looking statements. These
statements are made on the basis
of our views and assumptions as
of this time, and we undertake no
obligation to update these statements.
We caution 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. Investors should consult
the Company’s filings with the
Securities and Exchange Commission
(including the information set forth
under the caption “Risk Factors” in the
Company’s Annual Report on Form
10-K for the year ended December
31, 2016) for information about
certain factors that could cause such
differences.
Investor
Relations/Reports
Copies of annual reports, press
releases, company brochures, SEC
filings and other publications are
available from Colgate’s Investor
Relations Department:
l by mail, directed to the corporate
address
l by e-mail,
investor_relations@colpal.com
l by calling 1-800-850-2654 or by
calling Investor Relations at
(212) 310-2575
Institutional Investors:
l call John Faucher at (212) 310-3653
Other Reports
Other reports available on our website,
www.colgatepalmolive.com, include
our most recent Sustainability Report
and Colgate’s policies on Global
Diversity, Code of Conduct, Ingredient
Safety, No Deforestation, Environ-
mental, Occupational Health & Safety,
Product Safety and Quality Research.
For information about our products
and our Programs and Policies on
Animal Research and Development
of Alternatives, please call
1-800-468-6502.
Consumer Affairs
For Oral, Personal and Home Care
1-800-468-6502
For Hill’s Pet Nutrition
1-800-445-5777
Corporate Communications
(212) 310-2199
More information about Colgate
and our products is available on
the Company’s website at
www.colgatepalmolive.com.
© 2017 Colgate-Palmolive Company
Design by Robert Webster Inc. (RWI),
www.rwidesign.com
Major Photography by Richard Alcorn
Printing by Universal Wilde
300 Park Avenue New York, NY 10022-7499
INDIA
For the sixth consecutive
year, The Economic Times
Brand Equity Annual Survey
in India ranked Colgate as the
Number One Most Trusted
Brand in 2016.
Colgate-Palmolive Company is a $15.2 billion global company serving people in more than 200 countries and territories
with consumer products that make lives healthier and more enjoyable. The Company focuses on strong global brands in
its core businesses – Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate follows a tightly defined strategy to
grow market shares for key products, such as toothpaste, toothbrushes, mouthwashes, bar and liquid soaps, deodor-
ants/antiperspirants, dishwashing detergents, household cleaners, fabric conditioners and specialty pet food.